Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte

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1 Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte European Commission International Market Directorate General, Unit D-1 Rue de Spa 2 Office 06/ Brussels Belgium markt-d1@ec.europa.eu Statement by GEMA in response to the Green Paper on the online distribution of audiovisual works in the European Union: opportunities and challenges towards a digital single market (COM(2011) 427/3) Preliminary remark GEMA is the German collecting society for musical copyrights. In this capacity, it collectively administrates the copyrights of composers, lyricists and music publishers. The topics and questions dealt with in the Green Paper affect GEMA and its members to the extent that works of music are used in the production and utilisation of audiovisual works. As distinct from other rights in audiovisual works, the copyrights to musical works are usually not transferred to the producer of the audiovisual work, but administrated by the rights owner himself or the collecting societies. In the following, GEMA will comment on the questions raised in the Green Paper only in so far as these relate to its field of activity. 1. What are the main legal and other obstacles copyright or otherwise - that impede the development of the digital single market for the cross-border distribution of audiovisual works? Which framework conditions should be adapted or be put in place to stimulate a dynamic digital single market for audiovisual content and to facilitate multi-territorial licensing? What should be the key priorities? In the introductory part of the Green Paper, the EU Commission emphasises the importance of digital technology for the changes in the way audiovisual contents are marketed and distributed and the increased number of parties involved in the distribution chain, as well as the diversity of existing business models.

2 This having been said, there is a need from GEMA s point of view to ask with respect to the different business models whether the basic assumption is correct that obstacles of a legal or other nature exist and that possible consequences might arise from this in relation to rights clearance. Particularly, in cases where also in the offline-segment there is a fragmentation of the single market caused by cultural traditions or by factors resulting from different national languages, this effect may extend into the online-market as well. This, however, does not necessarily have to indicate the existence of obstacles in the field of rights clearing. a) The linear (re-) transmission of audiovisual works in television programmes is subject to a territorial confinement of the respective provider to a broadcasting area that is usually delimited by language. The lack of a cross-border character with these business models therefore remains the same, even if there is a linear (= simultaneous) online distribution of audiovisual works, i.e. on an IP basis. In cases such as these (especially in the case of so-called simulcasting and webcasting), under German law it is not the right of making available to the public but the broadcasting right that is used. In the field of broadcasting rights there is, however, a tried and tested administrative framework for musical copyrights that meets the providers requirements in these cases. Currently, there is no rights fragmentation such as the one observed in other fields of the rights administration for linear online uses of musical works. b) The development of the digital single market for audiovisual media in the field of interactive use, however, is confronted with some practical challenges resulting from the fragmentation of online rights that arose from the implementation of the EU Commission s Online Recommendation of Share-based licensing which has already been successfully introduced in the pure music segment, requires notification of the use of the copyrighted works by the licensees. In the field of audiovisual media, such notification is proving to be extremely difficult for users, since they usually only have at their disposal the information pertaining to the audiovisual work, but not the information pertaining to the musical works it contains. There are, however, already numerous initiatives that are working on improving the information flow in this respect. So these problems can be expected to be clarified in the medium term

3 c) A further difficulty occurs with respect to some of the audiovisual media, namely the use of works as part of socalled programme-accompanying online uses by broadcasting organisations. Here there is an express desire for the combined one-stop shop licensing of broadcasting and online rights. d) The interactive online use of audiovisual works is also territorially limited to a very much greater extent than is the case with the use of music. Language barriers and country and/or region-specific contents can often be an obstacle to cross-border distribution. This applies particularly to On-Demand offers by the national broadcasting organisations within the framework of so-called programme-accompanying online uses. There are, however, regularly different language versions with offers such as, for instance, Hollywood content, that are not territorially bound in terms of their contents. Therefore, it may be assumed that even with a possible cross-border licensing, unlike in the music segment, in some countries there might be at least a partial involvement of other rights-owners,. e) A further obstacle to the development of a digital single market for the cross-border licensing of audiovisual works is the increase in piracy in the audiovisual segment that can be observed along with the expansion of the broadband networks. Systematic and unified action to combat this phenomenon is therefore of major importance. 3. Can copyright clearance problems be solved by improving the licensing framework? Is a copyright system based on territoriality in the EU appropriate in the online environment? Basically, the grant of rights limited in terms of territoriality is not necessarily an obstacle to cross-border offers. Here, too, a distinction must be made, based on the type of business model involved. a) As explained under Question 1), their structure may frequently impose territorial limits on linear online offers. Indeed, a territorially limited grant of rights may even be desirable on the part of users from an economic point of view, as the amount of remuneration is then commensurable with the extent to which the provider uses the rights. Cross-border licensing would then go beyond the extent of the use made of the rights by the user. The Satellite and Cable Directive 93/83/EC already reflects this within the scope of the granted freedom of contract, as, under recital 16, the assessment of the remuneration is made by taking account of the actual and potential audience share and the language version

4 b) As shown above, in the field of audiovisual media, interactive offers frequently have a territorial reference, so that, when considered from the user s point of view, a limitation of this kind presents no problems. A certain degree of fragmentation in the audiovisual segment cannot be avoided even in cases of cross-border licensing owing to the different language versions of an individual audiovisual work. To this extent, it can be assumed that the effects brought about by pan-european licensing are not directly comparable with those in the mere audio-segment. In other respects, from our point of view, the applicability of the principle of territoriality under copyright law within the EU does not lead in general to any major difficulties when it comes to licensing in the online segment, because the existing EU legislative acts already guarantee a high, in many respects harmonised standard of copyright protection and market-based solutions are found for nonharmonised details. What might be helpful, if need be, is further harmonisation in individual questions such as the legal assessment of the linear online distribution of audiovisual works, which sometimes simply on account of its online reference is allocated to the right of making available to the public. A technology-neutral assessment does not support this view, however, but leads from our point of view correctly to linear online distribution being allocated to the broadcasting right. Any ambiguities arising from this different appraisal could be eliminated by way of harmonisation in selected points. 5. What would be the feasibility, and what would be the advantages and disadvantages of, extending the "country of origin" principle, as applied to satellite broadcasting, to online audiovisual media services? What would be the most appropriate way to determine the country of origin" in respect to online transmissions? Article 1 (2a) and (2b) of Directive 93/83 EEC stipulates that the only location that counts as the location at which communication to the public takes place is where, under the control and responsibility of the broadcasting organisation, the programme signals intended for reception by the public are introduced into an uninterrupted chain of communication leading to the satellite and down towards earth. This unambiguous allocation based on technical criteria cannot be readily applied to the online-segment

5 Providers of satellite broadcasts and online-providers of audiovisual media services are not comparable. The establishment of a satellite station is a project requiring significant financial effort owing to the necessary technical installations and the frequency assignment stipulated by law. The number of providers is quite limited for this reason. All that is required to operate a service for offering audiovisual works, on the other hand, is a server with an internet connection. The location of the server can be easily changed at any time and at little cost. What is more, it is sometimes quite impossible to ascertain the location of the server. It is technically quite simple to fake a location that is different from the real location of the server. It is also highly likely that recent technical developments such as cloud computing will make it impossible in future, or may already have rendered it impossible, to determine the location of a server. In Germany, the services described here are subject to quite different legal requirements owing to the aforementioned differences in the technical and economic framework conditions. The operation of a radio station is subject to authorisation and regulated by the state (cf. the German Interstate Broadcasting Agreement for public-service broadcasting and the respective media laws governing private broadcasters in the German states). The operation of internet platforms, on the other hand, is not subject to authorisation and does not require registration (cf. Telemedia Act). As a result of the contrasting regulatory environment there is reason to fear that an application of the country of origin principle in the field of audiovisual media services would lead to forum shopping where the location offering the greatest economic advantages and the lowest level of legal protection is deliberately selected as the reference point. One would also have to reckon with the deliberate establishment of subsidiaries outside the European Union which would not fall under European copyright legislation if the country of origin principle were applied. A control of the use and the assertion of rights by the rights owners would in this case would be fraught with considerable difficulty. As a precautionary measure against such a development, consideration might be given to the idea of starting out from the provider s main business activity (for example based on the tax liability) instead of the location of the service. In this context, it needs to be pointed out that, owing to the broad harmonisation of copyright in the European Union, the application of a unified copyright in the European Union does not lead to a substantial simplification of the rights clearing. In particular, a regulation of the law to be applied (= international civil law) would have no direct influence on the - 5 -

6 spread of split-copyrights or territorial rights fragmentations. What must also be considered is that providers could offer services in which audiovisual works only constitute a part of the offer. In this case, different national legal systems would have to be applied to one and the same service provider, because the country-of- origin principle would only apply to the offer of audiovisual works. 6. What would be the costs and benefits of extending the copyright clearance system for cross-border retransmission of audiovisual media services by cable on a technology-neutral basis? Should such an extension be limited to "closed environments" such as IPTV or should it cover all forms of open retransmissions (Simulcasting) over the internet? The legal framework for collective rights administration established by the Satellite and Cable Directive 93/83/EC has proved its worth in the current technology-specific area governed by the directive, from the point of view of the rights owners as well as from the point of view of the users. In practice, owing to digitalisation, a large number of cabled or wireless retransmission services that are comparable to cable retransmission have come into being. One example is the transmission of traditional television programmes by mobile network operators or by internet service providers. For these wireless and cabled forms of retransmission, regulations in line with the cable-regime of the amended version of the Satellite and Cable Directive make just as much sense as they do for the forms of traditional cable retransmission. From the point of view of the users, a technology-neutral extension of this regime would eliminate possible distortions of competition between traditional broadband cable network operators and providers of cable or wireless transmission technologies. This again would be to the benefit of the final consumers, as, in this way, it facilitates the development of wide variety of offers irrespective of the technology used for retransmission. From the point of view of the rights owners, a technologyneutral arrangement also recommends itself, because, in the cases mentioned, just as in the case of traditional retransmission via cable networks, the act of use is performed by a third party which, in doing so, once again exploits the works of music contained in the programmes with regard to the primary broadcaster. In other words, it exploits the works for a second time. It is appropriate to give the authors a fair share of the benefits that are generated in addition to the first exploitation. Simulcasting, however, cannot accommodate - 6 -

7 the cable regime, because what we are dealing with here is an internet broadcast of a radio programme carried out parallel to other transmission channels on the responsibility of the broadcasting organisation and not by a third party. The Green Paper goes one step further by making the extension of the cable regime to on-demand services the subject of discussion. A difference should be made here on the basis of the business model in question. This might make sense in cases where third parties, along with the technology-neutral cable retransmission of audiovisual works fully take over the offers of programme-accompanying online uses for which broadcasting organisation have responsibility and thereby, as it were, carry out a secondary commercial exploitation for interactive retransmission. 7. Are specific measures needed in light of the fast development of social networking and social media sites which rely on the creation and upload of online content by end-users (blogs, podcasts, posts, wikis, mash-ups, file and video sharing)? The rights owners are interested in their works being disseminated as far as possible, also within the framework of new business models. What is crucial from the point of view of the authors here is that their claim to appropriate remuneration is also ensured within the framework of new services. Social networks and similar websites become GEMA s concern, if they are used for uploading and/or using musical works protected by copyright. Legal service providers face massive competition through internet piracy. This hits authors especially hard. Distributions in the online-segment fail to reflect the importance of the media. So far, it has been almost impossible to realise significant increases, and this is accompanied by a strong decline in the audio-carrier market. There are basically two conceivable ways of prosecuting internet piracy. One possibility is the prosecution of users of illegal offers and the other is to proceed against the service providers. A particular difficulty in prosecuting individual infringers is their identification. Users on the net are anonymous. The infringers leave behind if anything their IP address, which is generated during the dial-up via the access provider and which can be allocated to a loadable address by that person. The legal framework for identifying infringers in the Internet has changed a great deal in Germany and the European Union in recent years. When the Enforcement Directive of 2004 was implemented, it created a right to obtain information un

8 der civil law from internet access providers, making it possible to identify the owner of the connection that was used to perpetrate the rights infringement. Even so, for GEMA, it is not the prosecution of the final user that has priority. The fight against internet piracy requires that action be taken against services that make it possible to violate these rights and derive an economic benefit from them. For the most part, it involves download portals and hence also social networks, the configuration of which is used to infringe copyright on a massive scale. Frequently, the providers derive their economic advantage from exploiting contents protected by copyright by placing advertisements or offers for a subscription that attracts a fee, without taking responsibility for any copyright infringements. The author is systematically deprived of his appropriate share in the exploitation of his works guaranteed under constitutional law. Taking action against Internet portals can sometimes also prove to be difficult in legal reality. This primarily concerns the providers of user-generated content or the providers of file-sharing platforms. The providers frequently insist that it is not them, but the users that are responsible for copyright infringements without taking account of the fact that it is the providers that profit economically from these legal infringements. A reform of the European legal framework must draw a clear line between the making available of third-party contents that is of no relevance under liability law and the economic exploitation of contents that are posted by users in contravention of copyright law. If the success of a business model depends on the making available of contents protected by copyright, the service provider is obliged to acquire the appropriate licences. Otherwise, he must bear the costs of the damage caused. Reference to a possible responsibility on the part of the user must be considered irrelevant if the service provider benefits economically or in any other form from the illegal exploitation of works protected by copyright. 8. How will further technological developments (e.g. cloud computing) impact upon the distribution of audiovisual content, including the delivery of content to multiple devices and customers' ability to access content regardless of their location? Currently, the consumer stores musical and audiovisual works on a local storage device on a wide variety of equipment. The acts of reproduction this involves are if the originals have been legally obtained private copies that are not subject to - 8 -

9 authorisation. The appropriate remuneration for these acts of reproduction is therefore not paid directly by the users to the authors and holders of related rights. Rather, they receive appropriate compensation for the reproduction of their works by means of a copyright levy on the equipment on which the works mentioned above are stored. The remuneration is thus paid directly by the manufacturers and operators of such equipment. If the consumer stores music and films locally there is the problem that the devices are not always compatible and that the storage space is limited. Cloud computing solves both problems. Music and films are no longer stored locally but decentrally on large server farms. The available storage space is therefore unlimited and the works can be called up with any device. It is to be expected that the use of music works and films will increase significantly owing to unlimited availability on all types of device and owing to the unlimited storage capacities. Against this background, it is important to ensure that the authors and holders of related rights receive appropriate remuneration for the massive use of their works and achievements by European consumers in the cloud. The right to remuneration must not be dependent on the location of the server used for cloud computing the server farms are located in countries mainly in the USA in which, for private copies, there are no levies on equipment or on operators. Finally, some cloud-based services offer not only storage space, but also a matching service. After matching, the user no longer accesses his possibly illegally acquired works, but the respective (matched) works of the providers. This leads to the unlimited and completely uncontrollable laundering of illegally copied contents. This unlimited possibility for laundering throws the doors wide open to illegal offers and threatens the economic livelihood of the rights owners. 9. How could technology facilitate the clearing of rights? Would the development of identification systems for audiovisual works and rights ownership databases facilitate the clearance of rights for online distribution of audiovisual works? What role, if any, is there for the European Union? In so far as this question refers to the clearing of rights that are not administrated by GEMA as a collecting society for musical copyrights, it is not possible for us to comment on any technical facilities. As the question seems to relate to - 9 -

10 the current initiative in favour of a so-called Global Repertoire Database, we should like to take the liberty of pointing out that the current deliberations, which have not yet been concluded, focus on the development of a database for rights in musical works. Whether this will function in the case of audiovisual works is so far not a part of the considerations. From our point of view, the inclusion of audiovisual works is an important component of rights clearing in the online segment, because there are strong shifts in user behaviour towards online use in the audiovisual works segment as well. It can therefore be assumed that an incorporation of audiovisual works and the extension to include further copyrights and related rights and the respective groups of rights owners which this involves would in fact facilitate the online distribution of audiovisual works. At the same time, it should be mentioned that this approach can be expected to complicate the already complex project of a global rights database even further. 13. What are your views on the possible advantages and disadvantages of harmonizing copyright in the EU via a comprehensive Copyright Code? As already explained under Question 3, from GEMA s point of view there is no urgent need for action as regards the complete harmonisation of copyright in the EU by means of a comprehensive copyright code, because, basically, the existing EU legislative acts already ensure a high standard of copyright protection. 14. What are your views on the introduction of an optional unitary EU Copyright Title? What should be the characteristics of a unitary Title, including in relation to national rights? The concept of an optional unitary EU copyright title, as described in the Green Paper, is based on the registration of the works protected by a single title in a database. The costs incurred by such administration can be justified only by an additional benefit for the rights owners and/or licensees. From the point of view of GEMA, the additional value created by an optional unitary copyright title does not justify the administrative effort and expense it involves and leads to an unnecessary complication and further fragmentation of the rights landscape. GEMA cannot see any additional benefit for the author in an optional unitary copyright title, because of the already existing high level of protection of his rights under the re

11 spective national copyright legislation (bundle of rights). The material copyright has already been harmonised to a great extent through the implementation of Directive 2001/29/EC. From a procedural point of view, first successes have meanwhile been achieved through Directive 2004/48/EC, which has largely been implemented in the meantime. The optional unitary copyright title would therefore only lead to an improvement in the situation of authors, if it included a Europe-wide uniform level of protection that is greater than the level of protection already in existence in the separate Member States. Apart from this, there is also no apparent benefit for the licensee. Providers of audiovisual works on the internet require a large number of rights for the operation of such a platform. The question of rights clearance is therefore paramount. A unitary copyright title, however, does not promote the necessary aggregation of the rights and thus does not contribute to a system of one-stop shop licensing. All that this would amount to is that the same legislation would be applicable to the different rights owners and this only if all rights owners had opted for protection under the single title. The problem of split-copyright cannot be solved in this way. Apart from this, the unified copyright title based on the Green Paper is only optional and applicable only to future authors and producers. It must also be considered here that an obligation to register would be in contravention of the Revised Berne Convention (Art. 5 (2)) which states that the enjoyment of copyright shall not be subject to any formality. In view of the limited scope of application of the unified copyright title, there is no reason to expect a measurable improvement; on the contrary, this coexistence would lead to greater complexity and higher administrative costs. 15. Is the harmonisation of the notion of authorship and/or the transfer of rights in audiovisual productions required in order to facilitate the cross border licensing of audiovisual works in the EU? A harmonisation of the notion of authorship does not seem to be necessary in the field of musical copyrights, as a uniform legal framework already exists at EU and international levels. 16. Is an unwaivable right to remuneration required at European level for audiovisual authors to guarantee proportional remuneration for online uses of their works after they transferred their making available right? If so, should such a remuneration right be compulsorily administered by collecting societies?

12 GEMA basically welcomes any measures that strengthen the collective administration of rights by collecting societies. With regard to music authors (composers and lyricists), however, there is no need for any action in this respect. Film music works are so-called pre-existing works to which the legal assumption of a grant of rights in favour of the producer of the film, as stipulated by German copyright law, is not applied. Rather, the rights in pre-existing works have to be principally separated from rights arising from creative participation in cinematographic works. The problems described therefore do not exist in the field of musical copyrights. The appropriate remuneration of the author is ensured by the provision of Section 32 UrhG [German Copyright Act]. The provision is mandatory and is not subject to contrary agreement. In this respect, a high level of protection for the author is already enshrined in law. 21. Are legislative changes required in order to help film heritage institutions fulfil their public interest mission? Should exceptions of Article 5(2)(c) (reproduction for preservation in libraries) and of Article 5(3)(n) (in situ consultation for researchers) of Directive 2001/29/EC be adapted in order to provide legal security to the daily practice of European film heritage institutions? GEMA feels deeply committed to Europe s cultural heritage, and in particular its musical heritage and therefore supports any efforts to make possible the digital use of the treasures in the archives. The problem here is that the owners of rights in works of this kind are often unknown or impossible to ascertain. As a consequence, it is impossible therefore to obtain the rights owner s consent necessary for using such works. This is the well-known problem of how to deal with orphan works, a problem that is meant to be resolved as part of the planned directive governing certain admissible forms of use for orphan works. The current proposal for a directive by the EU Commission also and especially affects institutes that are active in the field of our cinematographic heritage. For GEMA, therefore, it is unclear what the relationship is between a possibly envisaged project within the scope of the Green Paper and the Commission s proposal for a directive. Notwithstanding the above, we should like to point out that the problems mentioned have no noteworthy significance in the field of musical copyrights: owing to the comparably farreaching scope of rights administration of the collecting so

13 cieties active in this field, the first and secondary exploitation rights for domestic and foreign rights owners, and especially their successors in title, there exists very comprehensive documentation about the rights owners in this field. Thus, there is no need for exceptions and limitations that admit the use of copyrighted works of music without the consent of the rights owner and which deprive the rights owner of his right to prohibit, to which he is otherwise entitled. Above and beyond this, there is also a need to consider the three-step test codified in Art. 5 (5) of the Directive within the framework of exceptions and limitations under Art. 5 (2) and (3) of the Directive on the harmonisation of certain aspects of copyright and related rights in the information society. From GEMA s point of view, a royalty-free use is not necessary for raising cultural treasures, if one considers that a royalty-free use is entirely unconnected with the question of rights clearing. Exceptions and limitations therefore may be considered only if the rights owner receives appropriate remuneration and can therefore only exclude the rights owner s right to prohibit but not his right to remuneration. Munich, 18th November