Demystifying Articles 11 and 13
The startup guide to the directive on copyright in the digital single market
The scoop
What do Youtuber Pewdiepie, German Christian Democratic Union politician Axel Voss, and the newly approved Directive on Copyright in the Digital Single Market have in common? Perhaps the internet would be ‘broken’ again if these three walked into a bar together, however jokes aside; In a bizarre twist of fate as the internet often gives birth to, these three elements have been hot topics in the discussion of what some are calling ‘the future of the internet in Europe.’ This refers to the ongoing debate surrounding the EU Directive on Copyright in the Digital Single Market which saw its final approval coming on the 15th of April 2019 amongst throngs of naysayers and a cacophony of criticism erupting on the internet. Pewdipie being the world’s most subscribed to YouTuber, and host of the show ‘meme review.’ Axel Voss, who people attempted to make a ‘meme format’ in order to get him ‘banned from the internet.’ The European Union who give rise to the policy-making this whole ordeal possible.
Whilst the above might seem to be rather odd, the fact is that the halls of Brussels and beyond have surely been alerted to the sirens sounding in the digisphere. What is perhaps more peculiar however is the fact that online chatter can be arguably said to be concentrated around the supposed banning of memes, whilst this directive was certainly not contrived with the meme as a primary consideration. It is, however, a very interesting concept to explain the resulting phenomenon. The concentration and discussion being lead primarily by the meme in one sphere, and concerns about data mining, or the future of innovation in other spheres is a prime example of how owing to the umbrella nature of this seemingly all-encompassing directive for the internet scape at large has caused factions of internet users to unite and simultaneously take opposing corners in this change they see affecting their relationship with the digital world around them. Whilst the European Commission has indeed made public the document and surrounding resources (here) the reality is that many people take their information from internet videos rather than a website containing policy archives.
For those who aren’t so concerned with using meme templates to spice up their social feeds, the concerns lie in what this actually means for startups and innovation. With this in mind, we will attempt to address a few key points to consider, and demystify what’s going on with the directive.
Where did it all begin?
The EU commission and those in favour of this being passed would argue the need arises from the drive towards a single digital market in its member states. This is an attempt to provide clarity and legislation that would fit the digital age. The laws, therefore, needed an ‘update’ in order to keep up with the rapidly changing marketplace. In doing so they address concerns in industries that have been facing the brunt of the challenge in terms of keeping up with the changes under laws that did not previously afford them protection. The reforms are meant to ensure changes occur in a manner which promotes and encourages a business model aimed at producing quality content.
Academics, however, would argue that the underlying legal and economic reasoning are far from conclusive. The reason for this being that the need for copyright reform suggests the identification of a market failure and has the support of robust empirical evidence, which many argue is not the case in this instance. Legacy publishers (or ‘big news houses’) report a failure, and inability under the previous law to recoup investments made to producing content, due to free riding by new intermediaries that exist in the digital space such as news aggregators. Those opposed to this new legislation argue that by supporting this narrative, the EU is of the verdict that current rules are unable to guarantee the equitable sharing of the value generated by some of the new forms of online content distribution along the value chain.
Many are not entirely convinced with the justification provided. They argue that in supporting this narrative the EU are simply falling prey to stakeholders with investments in this industry rather than truly taking an in-depth look into what may occur for others, should this happen. Those unsatisfied with the empirical evidence provided say that the decline in newspaper revenues is the outcome of significant changes to the market, and has nothing to do with the free riding of new intermediaries such as aggregators.
Some would go so far as to say that evidence suggests aggregators are actually complementary rather than competing services to newspapers original websites. In this light, content creators like newspapers actually benefit from intermediary bodies such as aggregators that increase interest and subsequent traffic to their websites. This along with the fact that there is no proven correlation between the now passed reforms, and their ability to minimize the spread and effects of ‘fake news’ which was a cornerstone problem that the Commission wished to tackle leaves naysayers wondering why it has been approved, and how it will benefit anyone other than large news publishing houses (or perhaps not them either). The concern, therefore, lies not in the introduction of reforms, but rather in the introduction of vague, and incomplete reforms according to some.
Despite all these criticisms, there is a compelling case to say that further reading into the matter declutters a lot of doubt. It places the reforms in a new light of stemming possibilities. It might therefore not be the case entirely that the directive for copyright contains vague laws, but rather that the presentation of them itself has been vague. Here are some important points to note:
There was an extensive impact assessment carried out in 2015/16, and these are public documents which are available here. It’s important to note and look into this to get a good base understanding of the motivations behind the changes. To say that this push is entirely based on the publishing industry reporting a failing internally, and the EU acting on this information without carrying out their own due process of inquiry is inaccurate.
To, therefore, extrapolate that the EU is following a ‘narrative’ or that they are falling prey to stakeholders in the big publishing industry is speculative in this new light. Evidence does not support this, and to the contrary public domain documents reveal the EU has looked into the matter thoroughly. To frame the entire reform document under a single narrative is in itself reductionist. It can be argued that this is not the case when a body like the EU commission is tasked with the goal of accounting for far more than a single industry or it’s stakeholders.
The Spanish and German case
Sceptics call attention to the Spanish and German cases as an argument as to why they are concerned about the reform and its vagueness. It is true indeed that similar updated practices which went into effect that resemble the currently passed reforms did not yield the results that were expected of them.
In the case of Germany and Spain, which saw what some term a ‘pilot run’ to the introduction of these reforms evidence from certain studies shows that a market expansion rather than a substitution effect took place. It is fair to say that data shows a decrease of traffic to legacy publisher websites in both Germany and Spain, along with Google news shutting down in Spain and removing many Spanish publications, which calls for some to claim this law is a deterrent to information. A fair consideration provided that the German and Spanish examples are very similar in nature, and furthermore that they both very closely mirror the newly past legislation for Europe. The fact, however, is that the conditions to place them together as an argument against this reform are not as strong as sceptics would have their audience believe. The reason being that it might be advantageous to an argument against these reforms to place the cases together as one, and use them as justification, however they are different circumstances enacted in different places, and therefore it would be inaccurate and incomplete to use them as the entire base of criticism. Whilst critics call it the ‘pilot test’ that didn’t yield the desired results, in light of the counterarguments, it is harder to see a justification for calling these pilot studies or cite them as forewarnings for the failure of a more refined worked through reform, one can argue.
What does this mean for startups?
The concern for startups lies in the apparent vagueness of the reforms. The worry is that, on one hand, it is stifling innovation, and on the other hand it enables larger bodies with larger budgets to both implement the additional technologies required to take ownership, and screen user content. Startups often do not have the budget to retain large legal teams or incur the fees of legal battles, should they not manage what some are terming the impossible task of screening & taking responsibility for all content on their platforms. Sceptics draw attention to the notion that this will result in VC’s being very hesitant in investing in platform startups that will be obligated to run layers of expensive software in order to be accountable for their users' uploads. Besides this, critics point out that it may act as a deterrent altogether for founders to set up in Europe. The reasons following the above-mentioned criticisms along with the notion that the incentives for founders to choose Europe are outweighed by the cons. It has been touted by some in online communities, and startup related blogs, that this change to the ecosystem could result in a drastic downfall to the amount of startups added to the economy, and the continuation of those already in existence with them being unable to cope. However is this really the case?
What is clear is that the presentation of the finalised copyright reform is far from clear to many. This seems to have stirred up a flurry of information being passed around that would make even the most stoic founder break a sweat if they were to believe the dissemination of all they have been reading, should they have been tracking the issue. Whilst the concerns do have valid issues they raise in the case of startups, there is weight to the idea that unlike the ancient proverb that goes ‘a little information is a dangerous thing,’ the other extreme is perhaps true in the digital world. This is to say, that in the case that one is flooded by a barrage of information it is just as easy to be confounded by it, rendering one unable to weed policy and it’s tangible effect through the muddy waters of opinion pieces. A good place to start however for those explorers amongst you seeking primary sources on the issue are these resources provided by the EU council responsible for this matter
If you aren’t the exploring type however, the most important points to note for startups are the following:
Article 17 includes a startup extension which came up late in discussions but is nonetheless present. This would oblige startups to conclude licenses and agreements if right holders offer licenses. Furthermore, they must remove illegal content upon request but do not have the obligation to engage in the costly task of implementing scanners and directing precious funds towards this.
There are checks and balances to ensure the startup ecosystem of Europe is receptive of innovation, and thirsty for founders to set up. Along with the drive for a digital single market comes a drive for Europe to be a seat of innovation, and a major startup hub going forward. A clear example of this push is the new special visas for tech talent in France which mirror those in place in the Netherlands currently. Besides this, the current tax incentives in the Netherlands, and fast track for startups could be cited as other pushes to boost a startup ecosystem rather than hamper it. It would appear to be contradictory towards this huge push and encouragement seen clearly in Europe’s manifesto is paradoxically met with a reform that would stifle this growth, which might make one question whether this is really the intention.
It aims to liberalize tech and data mining from previous copyright rules. In brief, this would ensure that data and analytics companies are able to carry out data mining on things like publications or journals without having to be concerned about running into red tape, or being charged by website owners. This aims to regulate several aspects of the economy in a balanced manner, simultaneously ensuring that it is easier for tech companies and startups to use copyrighted content. This could open up a wide range of possibilities previously unattainable to tech startups.
The verdict still lies out there in the wilderness of the world wide web perhaps. It is subject to speculation and the degree one finds the changes beneficial or detrimental to their personal spheres of being. What is clear however is that whilst doomsday profits and hardliners rouse interest by the speculations of the collapse of the internet as a whole in Europe, this is often far from the case. It is however of quintessential importance that with any change to tide a ship must plot for new conditions based on which it will navigate for the most effective course. In the same manner, a wealth of information regarding the policy will enable those plotting the futures of their ideas or investments to more accurately plot their own course to success. The memes survived, and the startups chart new territory perhaps.
