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How Paying for Links Will Change the Internet

By Zsuzsa Detrekői

Free hyperlinks are the essence of the Internet. They have been with us from the early days of the internet to help spread information. Now hyperlinks are facing a formidable challenge: copyright. Copyright challenges hyperlinks in different ways in the EU and in Australia — and other countries may follow.

Major platforms not only have an important influence on people’s opinion due to their size but also a dominant economic position in advertising all over the world. On the one hand, with their effective and sophisticated advertising solutions based on their users’ data, they draw advertising money away from the publishers. This leaves publishers with the cost of content production but without access to revenue needed to finance this production. On the other hand, linking to articles either in search engines or by user shares also generates traffic for publishers and increases the number of their visitors, attracting advertisers.

Platforms have changed the economic model of publishing and make publishers struggle for survival worldwide.

Two regulatory solutions are on their way on two continents to level the playing field between publishers and tech giants.

Australia passed the News Media Bargaining Code in February obliging the platforms and the news publishers to find an economic solution to the problem in one year, otherwise the state will figure out regulation. The reason for adopting the Code was that, in 2018, out of every A$100 (€65) spent by Australian advertisers, A$49 went to Google and A$24 to Facebook. Facebook and Google reacted differently to the planned regulation. Google started to negotiate with the publishers while Facebook tried to prevent the regulation and blocked news on its platform in Australia. But the Parliament of Australia went ahead and adopted the Code, asking the platforms and the publishers to self-regulate within a year and find a solution about how the platforms can pay for linking to publishers.

Meanwhile in Europe, the deadline for the implementation of Article 15 of the amended copyright directive approaches.

The concept behind Article 15 is to protect publishers with a so-called neighboring right, similar to copyright, and to enable them to authorize or prohibit two rights: the reproduction of their articles and making them available to their public, both necessary for online appearance. Although according to Article 15, the protection shall not apply to hyperlinking and to usage of individual words or very short extracts of a press publication, the purpose of the Article, among other things, is to compensate publishers for the loss of advertising revenue.

Previously, Germany and Spain tried legal solutions to the economic problem. In 2013, the German parliament passed an “Ancillary copyright for press publishers,” introducing a so-called “quotation tax,” forcing news aggregators and search engines to pay a certain fee to gain the right to quote from German news publishers. Google’s response was harsh. The company refused to pay for licenses and opted out all the news publishers from its platform unless they agreed to grant Google free licenses. Given the huge decrease of traffic from Google search that publishers experienced, around 40%, they decided to opt back in and gave permission to Google to provide snippets of their content without a fee. Spain in its version of the law excluded the free licensing of articles to avoid a similar situation. Hence Google shut down Google News in Spain, which caused a decline in traffic ranging between 5% and 13%.

Despite the approaching deadline, 7 June 2021, for its implementation, very few member states have introduced laws to enact the Directive. The first one to do so was France, which has adopted a law implementing Article 15. First, Google refused to pay for using news snippets in France. However, after almost one and a half years of negotiations, last January, Google announced that members of an association of French publishers will receive compensation for the reuse of their content.

At the same time, the Court of Justice of the European Union also challenged the recent practice of linking in its preliminary ruling. In a German case, the Court examined the copyright aspects of embedding and framing, the technique where the content of a third-party website is posted with an embedded link without making it apparent to users that the content is from another website. For a user, no difference appears between an image or video embedded in a webpage from the same server and one embedded from another website. According to the Court, if a copyright holder adopted or imposed measures to restrict framing/embedding of a work on a third-party website, authorization from the copyright holder is necessary because the content was “[made] available to a new public.”

Both the Australian and the EU regulation, and the European Court’s ruling might interfere with our actual internet usage. Authorization for restricted embedding appears less important in practice, but it might be challenging to recognize and authorize such content.

But introducing the obligation to pay for links changes the fundamental nature of the internet. Moreover, discriminating between the type of content (news versus other types of content) is a totally new regulatory development. Copyright law in Europe has so far only looked at the content to see whether it had an individual and original quality to decide if it is covered by copyright. Now, the type of content will also matter in this decision as news will be given protection not offered to other kinds of content. Legally distinguishing between news and other types of content is a fundamental change in the online regulation that is likely to have a significant impact on how we use the internet.

Zsuzsa Detrekői is a TMT lawyer and the former general counsel of a major Hungarian online content provider. Currently she is legal counsel of a major ISP in Hungary. She also provides legal support for the Association of Hungarian Content Providers. Her research area is online content and internet related regulations about what she wrote her thesis on and achieved PhD in 2016. She is a Fellow at the Center for Media, Data and Society.

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