Category Collective licensing

D-ERR. UK copyright owners no longer control the right to copy their work

The UK abolished copyright today. At least, they abolished a large part of the “framework” which supports it by doing away with the requirement, in many cases, to have permission from the owner before you use someone’s work. Now, if you don’t know who the owner is, you don’t have to ask them.*

The UK government, or more particularly people within the Intellectual Property Office, don’t see copyright as a “right”. They see it as “a framework“. Nothing fundamental, just a bit of meccano to be fiddled with and re-configured at will.

So they have decided to remove the foundations the framework stands on,  passing a piece of legislation, the Enterprise and Regulatory Reform Act (ERR), which includes a provision to allow politicians to give away your work at a whim. If your work is “orphan” (in other words if it’s not easy to track you down without any clues other than your actual work – and if you have ever tried this with a random photo you’ll know how hard it is) then other people can use it on terms and at prices set by a quango.

If these were “rights” they were messing about with, it would feel wrong. but since they’re only tinkering with a “framework” it’s OK.

“The powers do not remove copyright for photographs or any other works subject to copyright”, says a spokeswoman for the Department of Business, Innovation and Skills in a rather feeble attempt to make it sound innocuous.

She omits to point out that the powers do remove the right of the copyright owner to decide whether or not they want to licence their work, negotiate the terms on which they want to licence it, the price, the credit and the moral rights. In other words most of the “acts restricted by copyright”, the ones which are the “exclusive right” of the copyright owner (in the words of the Copyright Act), are now no longer in the hands of the copyright owner, but someone else.

Maybe the new powers don’t technically remove copyright from the work, but they certainly remove it from the copyright owner.

“Nor do they allow anyone to use a copyright work without permission and free of charge”, she continues. But someone other than the owner, who has no ideal who the owner is or whether they have any views on the matter, will giving permission and setting the price. Copyright – the “exclusive right” to decide who copies and on what terms – has been abolished for the owner of the work.

The right to say no is an important one. The right to set prices, to price yourself out of the market, or to be the cheapest, or simply not be in the market in the first place all matter.

The fact that someone wants to use your work doesn’t mean you have to let them – and it used to be your exclusive right to decide. If you have a desire to keep work private and restricted, or only licenced on carefully controlled terms, you can and many do. Now if you try that you might just be decreasing the chances of a “diligent search” tracking you down and so decreasing your chances of escaping this odious scheme. If your work is hard to find it becomes subject to compulsory licensing with no appeal and no compensation beyond whatever price a stranger decides to put on your work.

Just as bad as the legislation is the process by which it came about. There is no credible evidence or research which makes a compelling case for it producing any benefits at all. Opposition has been ignored, debate kept to a minimum.

It has been done in the form of “enabling legislation”, stuck into an entirely irrelevant Act, which transfers the making of specific rules from Parliament to a minister. This is frequently justified as allowing quick action to be taken in a fast-moving world. In this case it looks a lot more like a way to avoid discussion and give minsters a huge honeypot of free goodies to dish out to those upon whom they wish to bestow great gifts (in this case the beneficiaries – and the wealth we are passing to them – almost all reside in Silicon Valley).

Law-making based on whims and completely imagined, speculative benefits is best avoided, all the more so when the whimsical Utopia you hope to create comes at the price of an established and valuable contributor – professional creativity and the media – to the economy and culture.

Stupider still when the alternative future, in which creators benefit from increased competitiveness and a growing market for their work, has not had a chance to emerge thanks to piracy and some already demonstrably ill-conceived legislation which had already weakened the “framework” on which creativity depends.

Absurd when at the same time as you’re creating this giant gaping hole in your creative economy, you’re engaged in another process to solve the underlying problem which, if successful, would massively reduce or eliminate the perceived need for such drastic and sweeping change.

If you’re a creator, get your stuff off the internet. And best find another job too, since yours just became a whole lot more perilous.

*this is a slight oversimplification but not much. When the final text of the Act is published I’ll add it here.

What is a “temporary copy” and who cares?

An obscure and technical piece of copyright law has been stretched out of recognition by the aspirations of entrepreneurs. What is the “temporary copying exception” to copyright and what was it really supposed to do?

I sometimes wonder whether the history we are taught would be recognised by the people who were actually there.

Recently, perhaps due to age or perhaps due to the pace of change, I have heard people talking authoritatively about things I personally was involved with, and getting it completely wrong.

One such thing is “temporary copies”. This is a concept which exists in copyright law making certain kinds of copying legal even when there is no explicit licence, which featured in the NLA’s web licensing case with Meltwater. The claim that the legal exception for temporary copies covers  paid-for media monitoring was rejected by the courts – and some people are outraged. Browsing has been rendered illegal they say. The internet will break if the law stands.

Of course it’s fine to say that you think the law is wrong and should be changed – and equally fine for people like me to disagree. But to say that the law will destroy the internet is, aside from being self-evidently untrue, also a rather dishonest way of trying to post-rationalise poor business and legal judgements of the past.

The temptation of the entrepreneurs

The legal concept of temporary copies solves a lot of problems for entrepreneurs. Building a business involving copying other peoples work, but without the need to get permission from them, makes otherwise impossible businesses viable. If you can make your idea fit within the scope of “temporary copies” you have a business, if you can’t you don’t. Since some of the biggest businesses on the internet, such as Google, have been built on the idea of making copies without asking first, the prospect is tantalising and it’s easy to lull yourself into thinking you’re covered.

So it’s easy to see why the law on temporary copies has been subject to rather optimistic interpretation by those who need to stretch it to cover their business, and rather narrower interpretation by those who would rather avoid loopholes which reduce the control they have over their content. I come from the narrow interpretation side of that argument, and I actually had a small involvement in the process which led up to the law in question being enacted.

The rather less tantalising reality

But back to the law. What, according to it, are temporary copies?

Here’s what article 5.1 of the Copyright Directive (officially and pithily known as “Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society”) says:

1. Temporary acts of reproduction referred to in Article 2, which are transient or incidental [and] an integral and essential part of a technological process and whose sole purpose is to enable:
(a) a transmission in a network between third parties by an intermediary, or
(b) a lawful use
of a work or other subject-matter to be made, and which have no independent economic significance, shall be exempted from the reproduction right provided for in Article 2.

This is the clause whose drafting I got peripherally involved with, the little bit of history I glimpsed in the making. It is transposed, more or less word-for-word, into section 28A of the UK Copyright Designs and Patents Act.

I guess it’s easy to see how, by simply glancing at this wording, you could persuade yourself that your service – for example your media monitoring service – might fall within it.

It’s a little harder if you look at the wording carefully. Even if you can persuade yourself that “transient and incidental” applies to you, and that because your business depends on technology anything you do is automatically “an integral and essential part of a technological process” (and I would say neither applies to a business like media monitoring), it’s kind of tricky to get past the overarching stipulation that your activity has “no independent economic significance” when your whole business depends on it.

But what was the intention of the law?

Even if you do manage to convince yourself it’s all OK looking at the text, the Directive provides some explanations in the form of recitals which are designed to help interpretation.

Recital 33 says:

The exclusive right of reproduction should be subject to an exception to allow certain acts of temporary reproduction, which are transient or incidental reproductions, forming an integral and essential part of a technological process and carried out for the sole purpose of enabling either efficient transmission in a network between third parties by an intermediary, or a lawful use of a work or other subject-matter to be made. The acts of reproduction concerned should have no separate economic value on their own. To the extent that they meet these conditions, this exception should include acts which enable browsing as well as acts of caching to take place, including those which enable transmission systems to function efficiently, provided that the intermediary does not modify the information and does not interfere with the lawful use of technology, widely recognised and used by industry, to obtain data on the use of the information. A use should be considered lawful where it is authorised by the rightholder or not restricted by law.

This makes things a little trickier. It’s more explicit that the exception is designed to cover only very low-level technical things rather than whole business processes. It reminds us that anything with “separate economic value on [its] own” isn’t covered. It specifically states that acts which enable browsing ARE included, making any hyperbolic claims that this law outlaws browsing rather feeble. And it points out that if something isn’t authorised then it isn’t covered either, which makes it hard to depend on this law if you haven’t asked permission and harder still if you have actually been asked to stop.

If you (or your lawyers) thought hard about it, you would probably conclude that a court is the last place you want to have this argument. But it has been forced into court anyway, and it’s hard to see how they could have reached any different conclusions, given that courts decide cases based on what the law actually says rather than what people wish it would say.

How did it get written that way?

As it happens, this particular clause was subject to an incredibly long-winded and arduous process of negotiation, discussion and debate before it was finalised. One thing it is not is ill-considered. My small part was on the side of content owners; I worked for a newspaper company and participated in some meetings on behalf of them and a media industry trade group.

The heart of the issue as I remember it was a tension between ISPs (mostly at the time dial-up providers and the large telcos who provided the bandwidth and interconnections for them) and content owners.

Content owners were keen to maintain control over content and ensure that the law didn’t create loopholes for infringement to take place.

The telcos were worried that very often copies were made as an unavoidable part of the technical process of sending data around the internet – such as in routers, where technically data is copied, forwarded and then instantly deleted – should not be regarded by the law as infringing copies just because they weren’t specifically licenced.

Everyone was sympathetic to each others’ concerns, the question was how to get it worded in such a way that it didn’t create huge loopholes or unintended barriers. In other words, turning a clear understanding about the intention into workable language. Equally, using language which was too specific to the technical issues of the day would quickly make the wording obsolescent, along with the technology it referred to, so it had to try to find generic language which would still be relevant in the future.

The important thing to note is that this clause was intended to address a very small and narrow issue. This is reflected in the wording. Read it again, but now think about data packets passing through routers and switches, or caches being created by ISPs rather than media monitoring services being set up without the irritating need to ask permission to exploit peoples stuff.

It was a long time ago but I have some memories of some of the discussion of some of these phrases

“transient and incidental”. This was really about the copies made in routers. Technically speaking, data is copied, but only for as long as needed for the router to function. The copy is really an irrelevance, fleeting in duration and nobody ever sees it. It can also apply to cached copies which hang around a little longer but are not necessarily infringing (see below).

“an integral and essential part of a technological process”. There was a big discussion about caching here (among other things). At the time most internet access was dial-up and the biggest players provided services for free to users. To save money some of them operated large caches of popular content, serving their users directly from the cache rather than fetching the content from the original site’s servers. This caused some consternation, because it meant the owners of the sites never knew their content had been accessed, couldn’t charge for ads, sometimes old content was served instead of newer updates and so on. However, there is a technical way to control caching, using a setting in the (invisible) http headers which are served along with content. As long as ISPs respected these settings (which were integral to the technological process of serving web pages) then their caches were fine, as soon as they started ignoring them they weren’t. In other words the site owner should always have control.

“whose sole purpose is to enable a transmission in a network between third parties by an intermediary”. I email a file to you. The file goes from me to my ISP, my ISP to any number of routers operated by any number of third parties, then to your ISP and finally to you. Lots of copies are created, most of them in systems which have no direct relationship with either of us. These copies should not need their own licence so the law creates an exception for them.

“whose sole purposes is to enable a lawful use”. I look at a webpage. My computer creates a copy in memory and maybe on my hard disk. These copies are just allowing me to look at the webpage and so should not need their own separate licence (although I think it’s implied in any case). So the law created an exception for them.

“which have no independent economic significance”. This one seems to be one of the most wilfully misinterpreted. I have heard the argument made, with a straight face, that a company which keeps complete copies of entire websites in their servers in order to use them for their business is covered by this exception. The logic seems to be that although they keep copies of the entire content, and they depend on them to do business, they don’t make more than small snippets available to their users and so the copies in their servers have no economic significance. Since this is self-evidently asinine and self-justifying I don’t think it needs a lengthy deconstruction – it’s obviously absurd.

The legalities drag expensively on…

The NLA and Meltwater litigation rumbles pointlessly on, and so all this will be subject to even more scrutiny by the courts.

Fortunately for them, they have copious sources which can help them understand the process which led up to the wording. As well as the law in its final form, and the recitals explaining some of the intent,.the whole official and political process was documented as it went along. There are also plenty of people who participated who can help round out the picture if necessary. The courts won’t need to use the forensic skill of the ancient historian to determine what the law was intended to achieve – they can get the first-hand version. I find it hard to see how they could change the conclusion of the lower courts whose judgement, in my view, reflects the letter and intent of the law.

Meanwhile back in the real world, more sensible things are happening. Meltwater has agreed a licence with the NLA. They’re doing business, their clients are getting a service, so are the clients of their rivals who are on a level playing field. The internet is still there, it’s not broken. Browsing is still legal. A few angry businessmen, put out by the idea that someone else’s property isn’t available as a free resource for them, continue to scream and shout and look foolish.

Move along now, nothing to see. Time for a nice cup of tea.

DIsclosure: I am a former chairman of the NLA and still do occasional freelance work with them and their members

The German solution for newspaper revenues: two cheers, two boos

The German government is planning to introduce a new right for newspaper publishers to charge ISPs, search engines and aggregators for use of their stuff.

Two cheers, I suppose, because newspapers need all the help they can get when it comes to making money online. They have been pushing for this for a long time and it will provide a much needed new revenue stream.

But two boos, too, because it doesn’t fundamentally solve anything and in my view it risks making some things worse.

The logic, as I understand it, of this solution starts with the observation that consumers ARE paying for content online, they’re just not paying content companies.

Everyone buys a service from an ISP, for example, who makes money from providing users with access to content. Aggregators and search engines are exploiting content and making money from it by selling ads, but not giving any to publishers.

So the solution, in a similar vein to the blank tape levy of old (popular in some parts of Europe), is to collect money centrally from the businesses which are making it and then distribute it to the deserving content owners.

The reason it makes me uneasy is because it uses collective licensing as a primary revenue stream. You don’t sell your product to anyone, you just sit back and let a collective body go and and sort-of tax them, then bank the cheques when they come in.

That’s fine for secondary revenue streams (people photocopying your newspaper for example) where there is no practical alternative, and it works well in many different guises.

The problem in general with using collective licensing as a primary revenue stream is that doesn’t create many incentives to really innovate or invest. If your money comes rolling in from the levy more-or-less regardless of what you do, what is the incentive to differentiate your product and fight for the most customers and most attractive offer?

If you want to negotiate your own deals with aggregators. operate on different terms with different search engines, play one ISP off against the other, offer more rights in return for more money (and less to someone else) or do a whole range of the things successful businesses do, it is made harder or impossible with centralised, possibly mandatory, certainly regulated, licensing in place.

Now in this case I have a lot of sympathy with the German publishers, and they have clearly made their case well to the government.

The sad truth is that there is no primary revenue stream to fight for – advertising isn’t enough, paid models for newspaper content are notoriously hard to make a success of and few if any search engines or anyone else have any reason to negotiate and share revenue.

So given a choice between two inadequate and seemingly stagnant revenue streams what other options do they have? Securing some sort of revenue from those who financially benefit the most from their content seems a lot better than nothing.

But better yet would be to tackle the real root cause of this problem: the protection unfairly given by law to so many of the internet players. The failure of a true market to emerge for content products and companies online is a consequence, largely, of bad law and until it is tackled things won’t substantially change.

The Digital Millenium Copyright Act, the European E-commerce directive and other laws like them need to be substantially overhauled and re-balanced. Unfortunately that is beyond the scope of national governments, in Europe at least, so the best that can be done is to try to minimise the impact of the bad laws with new, slightly less bad ones.

It’s better than nothing. But a lot worse than a true and vibrant market for content products in the digital realm – and could inhibit that market from emerging if the collective approach becomes too entrenched.

What the Germans have here is a bird in their hand, in place of several thousand in the bush. But they’re all sparrows: not very nourishing either way.

The fact that newspaper publishers will soon be looking longingly at the resulting revenue in Germany is a sign of how bad things have got, not that this is really much of a solution.

Disruptors disrupted, part two (updated)

The NLA and Meltwater multi-pronged litigation passed a new milestone today. To remind yourself of the last one, and to get a bit more background on the case, have a look at a post I did previously.

This time the it was the copyright tribunal’s turn to issue a decision.

Meltwater were quick to claim victory. They called it “…a major decision in favour of Meltwater in the UK”. Elsewhere they said that they had been successful in reducing fees which would otherwise have been over £100 million over the next three years.

It’s a funny interpretation of victory. It’s hard not to think of the Black Knight in Monty Python’s Holy Grail, gamely fighting on with no limbs left. Meltwater’s position has at various times been to deny that they need a licence, deny that their clients need licences, deny that what they do infringes copyright, state that what they do benefits newspapers because of all the traffic they get and variously claim that this case criminalises web browsing.

They forced this issue to litigation in the first place, by refusing to take an NLA licence and making a referral to the copyright tribunal. That litigation has now taken them to the high court, the appeal court, the copyright tribunal and is still lumbering towards the supreme court. Costs run to millions of pounds.

So far no court or tribunal has agreed that they don’t need a licence, no court or tribunal has accepted that their clients don’t need licences, no court or tribunal has backed their view that their business exploiting other peoples property doesn’t require the agreement of those whose property they exploit.

So they resort to digging deep into the details of the copyright tribunal’s ruling to find a scrap of respite, something they can claim as victory, from this relentless failure to obtain backing for their stand. For what it’s worth (and I can assure you it’s not worth £100 million), they find it in the tweaks the tribunal has made to the NLA’s tariff (see Paragraph 260 for a summary of the whole decision or for a very detailed analysis of the thinking on fees start at around paragraph 183) which prevent the NLA from making planned increases in the next three years.

But if we’re rummaging around in the tribunal decision, and you should certainly read the whole thing not least because these snippets are selective, a few other points jump out at us.

For example, Meltwater claimed that they were sending out between 1 million to 5 million links per year to their clients (paragraph 78). Subsequent information (paragraph 80) revealed this to be about 70 million in reality.

Meltwater has also claimed on various occasions that their service benefits UK newspaper publishers by sending them traffic which they can then profit from.

In the tribunal it emerged that in 2009 Meltwater provided 94,000 click-throughs to UK newspaper websites (paragraph 86). “Not insignificant” they claimed.

When you consider that the top 5 UK newspaper websites currently reach about 170 million unique users per month it doesn’t seem particularly significant either. Even if you assume each of these only generates a single page impression each (in other words, dramatically underestimate their actual traffic), 94,000 click-throughs is, according to my dodgy maths, somewhere under a hundredth of one percent of their current annual traffic. Probably not the most enormously profitable opportunity they have, and a strong indication that Meltwater clients get most of what they need direct from the extracts Meltwater supplies.

This is significant for a number of reasons, not least in the light of another tribunal revelation. Meltwater claimed that NLA content is only responsible for 4% of their UK revenue (paragraph 77). The tribunal judged (paragraph 89) that 30% was a “much closer approximation”. And since Meltwater’s UK revenues are measured in millions of pounds, their argument that they should pay next to nothing, seems a little tenuous.

The reason I mention these is to highlight the point that some of Meltwater’s figures seem to be dramatically skewed to help them paint a picture. Or, in the words of the tribunal (paragraph 35) referring to Jens-Petter Glittenberg, Meltwater’s Founder and Director:

Either Mr Glittenberg genuinely had no idea about these numbers and was simply guessing wildly, which we find hard to believe, or he genuinely believed his estimates and therefore does not have much of an idea about his own business, which we also find hard to believe or he was simply deliberately seeking to withhold information to further his cause. We cannot resolve which it was and will not do so. However it does mean that we will treat Mr Glittenberg’s evidence with caution.

The tribunal found themselves “…not impressed with Mr Glittenberg as a witness” (same paragraph).

So with that in mind lets turn to one of the claims Meltwater has been making in the aftermath of the decision. They have saved UK businesses, they say, £100 million over the next three years. If true, this is a dramatic and impressive number. But where does it come from?

That, I’m afraid, I can’t answer. I simply don’t know. Not the NLA, I am sure. They currently raise £20m or so from licensing in general, of which this is a tiny proportion, and they have been talking about much lower figures. In fact according to the NLA it would take more like 50 years for the saving from the tribunal ruling to add up to £100 million. Nor can I find the basis for the claim made in various places that Meltwater won on “seven out of nine” points it put to the tribunal.

UPDATE: the NLA has published their own analysis of the Meltwater claims

So it would seem that the victory Meltwater are claiming is that a huge and seemingly made-up cost, which would never have been charged anyway, will now not be charged. It’s a far cry from their lofty ambition to effectively get the NLA licences abolished.

Finally a word about some of the other claims Meltwater have made. The quote at the start of this post, claming a major decision in their favour, comes from a longer article about a lawsuit filed against Meltwater in the USA by Associated Press to add to the ones they’re already fighting in Norwary, Canada and the UK. Valentines day 2012 probably won’t go down as the happiest in the Meltwater household.

But they are bullish. It appears AP “misunderstands” how the Meltwater service works, according to their statement. Their service is “complementary” and “directs users to publisher websites”. Meltwater is “just like any other search engine”. Meltwater “respects copyright”. They are “confident” that their service “is compliant with US law”.

It all sounds a bit familiar. It takes a lot of chutzpah, for sure, to make statements like that on the day when similar assertions have been so humiliatingly deconstructed in another tribunal.

I have a suggestion.

Perhaps Meltwater should stand back and think before spending yet more of their millions on yet another lawsuit. Perhaps they’re wrong. Perhaps publishers do, and should, have a right to say how their content is exploited. Perhaps setting up a company which treats other peoples property as a free resource is just not reasonable OR legal. And perhaps the courts will keep disappointing them,

Maybe what Meltwater ought to be doing is asking itself what a fair deal would be, sitting down and negotiating it with content owners who are willing, and operating a service everyone is happy with.

Just an idea.

Disclosure: I used to be Chairman of the NLA

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