Creative sector concerned by Germany's draft bill transposing EU's Copyright Directive as it introduces too many new exemptions

By Emmanuel Legrand

The German government has approved a draft legislation that would transpose into German law the European Union's Copyright in the Digital Single Market Directive. The revised draft falls short of the expectations of the creative sector as it introduces exceptions that were not in the original Directive.

  "By implementing the largest European copyright reform of the past 20 years into German law, we are making copyright fit for the digital age," said Minister of Justice Christine Lambrecht (pictured, below). She added: "Our draft provides for a fair balance of interests that will benefit creatives, rights exploiters and users alike. Creatives and copyright holders should receive a fair share of the platforms' profits."

  The new draft, which will nor be discussed by the Parliament (Bundestag), updates some provision that were circulated last year in a first draft version of the legislation. However, representatives from the creative sector are still not satisfied with the outcome.

Highly problematic draft

  One Germany-based executive said the new draft was "still highly problematic." The original draft authorised the use of audio or video snippets of up to 20 seconds by platforms without a need for licenses. Considering that TikTok's video are 20-second long, this would have left a whole range of services outside of the framework of the legislation. The new draft has been adjusted with snippets of 15 second and exceptions including quotations, caricatures, parodies and pastiche.   

  
  The draft needs to be adopted by the Bundestag at some time between now and the end of May. "You can only expect some editorial changes, [but] the general concept will remain," said a music industry executive, who surmises that even if the Bundestag further reduce the 15 seconds exception, it will "not change the fact that the law allows services to use snippets without permission, and only for a statutory remuneration via collecting societies."

  Goetz von Einem, Managing Director of peermusic GSA and Board member of the German music publisher association DMV, said: "We are disappointed that the German government has adopted a draft law which will severely impact the German music industry as a whole. Despite our numerous efforts to explain the facts, it still shows a lack of understanding of how creators license their rights and are being remunerated for it."

Creating special rules for Germany

  For von Einem, the draft "also falls short of the requirements of the DSM Directive: Where there should be an obligation for platforms to license, there are numerous loopholes; where there should be limited exceptions for certain non-commercial usages, the law jeopardises existing licensing structures for commercial services; where there should be more responsibility of digital services for content on their platform, liability for uploaded content remains with the uploader and the burden of proof with the rights holder; whereas the Directive ought to provide harmonisation across Europe, there will now be exceptions and special rules for Germany alone."

  Simply put, said von Einem, the German initiative "does not create the level-playing field between rights holders and digital services which the Directive intended to achieve." He added that the industry's "hopes are now on the members of Parliament to correct these shortfalls."

  Dr. Florian Drücke (pictured, below), Chairman and CEO of Bundesverband Musikindustrie (BVMI), which represents the major record companies and indie labels, echoes a similar feeling. He said the draft shows "a regrettable and rather irritating political despondency." 

Releases platforms from liability

  He elaborated: "It knowingly and willingly disposes of the exclusive rights of artists and their partners, starts to regulate markets that are well-established and releases platforms from liability in many places. This is all the more difficult to comprehend since the demand for responsibility on the part of the platforms as well as the need for harmonised legal spaces is a general social consensus elsewhere."

  For Drücke, the goal of the European Directive was to have "a fair balance between the various interests," for the benefit of all parties involved, from start-ups to consumers. However, he said, the German draft "moves away from this, and many rights holders are now partially disenfranchised in the digital market. For our industry, which now generates three quarters of its revenues exclusively online and for which digital licensing has become the lifeline, this is an unacceptable kick against the digital mainstay."

Damage limitation at the Bundestag

  Creative industry representatives will still try to get their point across all parties during the discussion at the Bundestag. "Right now everyone seems to be focusing on damage limitation as the draft has been released by the government," said a Berlin-based source, from a music organisation, who added that the government is "putting extraordinary time pressure on proceedings" and "can rely on a big majority in parliament now that they have agreed to force this through." For this source, opposition parties such as the Left, Greens, Liberals and AfD "are not expected to be helpful – probably more the opposite." 

  Executives said German policy-makers took notice of the rallies in 2019 against the Directive, and the ability for YouTube and other tech companies to get people in the streets, even though some believe the messaging spread by the digital platforms was akin to "disinformation."

  Some 650 artists, from Kraftwerk to the Berlin Philharmonic, as well as hundreds of young artists signed a petition expressing "anger" at what was happening to the EU Directive because of what they refer to as the netizen/internet lobby.

Damaging creative industries

  “Instead of finally addressing the longstanding problems in the online market caused by companies like Google and Facebook refusing to accept responsibility for the content they disseminate, the German government’s draft implementation of the EU copyright directive would damage the creative industries and the European single market," said Mark Chung, Chair of the board of VUT, the organisation representing independent music companies. "While France and the Netherlands are implementing the Directive as adopted at European level, the German government, driven by an irrational fear of netizen protests in an election year, has added ridiculous and impractical regulatory constructs that would substantially interfere with existing and future licensing."

  There are also attempts to "internationalise" the issue and get Brussels to step in as the German draft is drifting away from the Directive. For example, VUT has been working with Brussels-based organisation IMPALA.

  “This feels like a giant step back in time," commented Helen Smith, Executive Chair of IMPALA. "The de-minimis provision completely ignores services like TikTok which are fantastic, as long as they can also be covered by licenses, so that revenues can be shared with creators. It also ignores years of debate and a carefully crafted compromise, and would distort the digital single market in Europe by seeking to establish a distinct and divergent national system compared to the rest of Europe.”

Legal challenges ahead

  Some sources said they are now considering legal challenges since the draft introduces new exemptions from copyright such as the 15-second requirement, that were not in the initial text of the Directive. 

  Another key issue for labels and publishers is the requirement by law to have all the licensing and royalties collections for the use of content on uploaded platforms go through collective management societies such as GVL, the neighbouring rights society which licenses sound recordings, or GEMA for authors' rights society, limiting the capacity for rights holders to directly license to platforms.

  "The shocking thing was that when we pointed this out to the people drafting the law, they clearly had not understood that would be the effect," said a German executive. "That they now knowingly push it through regardless is one of the reasons we are getting rather angry."

Support from GEMA

  However, GEMA welcomed the draft bill, stating that the proposed regulations "represent a good basis for further deliberations in the Bundestag" but suggested that there was "a need for improvement" on specific points. GEMA CEO Dr. Harald Heker said the law will "strengthen the bargaining position of music authors" and promotes "fair license agreements between rights holders and online platforms."

  GEMA also welcomed that introduction of the "clear responsibility" of online platforms. “Until recently, some of the world's largest online platforms denied being responsible for copyrights," said Heker. "That time is definitely coming to an end."