Why the copyright reform is useless for publishers

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NB: on September 12 the copyright provisions regarding publishers have been approved, and the content of the post is more valid than ever!

Is the current European copyright reform something really good for press and journalists? While mainstream newspapers publish appeals in support of the reform, the reality seems to be more complex and fragmented. Beside traditional publishers vehemently pushing for the approval of the new rules, innovative and online press are against. An important group of journalists sent a letter to the Parliament supporting the new bill, while others have started to publish opposite positions (see for instance Luca Sofri and Federico Ferrazza of WiredItalia. I have personally talked with various journalists and some of them do not understand or support the reform, while remaining silent (maybe to avoid potential retaliations by their publishers). Such discrepancies within the press sector is an evident signal that this reform is problematic and it may not be as good as it was conceived at be beginning.

It is all about Art. 11 of the Copyright Reform proposal providing for a remuneration (technically: an ancillary copyright) that online platforms (mainly news aggregators) should pay to the publishers for their news reported by them, entirely or via excerpts (the so-called snippets). No one has figured out how this payment should be collected and how much could amount at the end. However, it is unlikely that the most important target of publishers, such as Google, will pay a single penny to publishers. By contrast, Google may adopt different way to avoid such payment:

1. it will stop its aggregation service (Google News) in case of approval of the new rules, as it already happened in Spain, thus causing substantial damage to publishers which were profiting of his traffic;

2. it could limit the aggregation of news to the mere title of the article with the  hyperlink, as it already happened in Germany;

3. it could negotiate the ancillary copyright to an amount equal to zero, by bargaining its indexation and traffic service (which until now was for free). These conditions may be acceptable for some publishers but not to others. However, the latter will end up being excluded from the aggregation services and may suffer a competitive disadvantage against the publishers who have accepted it. Probably, at the end, everyone will have to accept the conditions offered by Google, because being the sole publisher excluded by Google News will be detrimental.

Without Google to pay, it is doubtful whether the reform will provide any penny to the publishers, since the other news aggregators left, small guys or start-ups, would probably close down that business or would be unable, in any case, to provide the cash flow expected from Google.

It has doubtful whether the reform could be applied to Google as such, that is to say to the search engine. In such a case Google could simply de-index the European press with an enormous damage for the publishers.

It has been argued that Facebook could be an alternative target for the publishers, but the current reform will not help on that. News on Facebook are uploaded by publishers themselves (which may also have agreements with Zuckerberg’s company) or shared by users. Thus, the ancillary copyright could not apply, although there might be some uncertainty with regard to the previews of articles (are such previews part of the hyperlinks or do they constitute a distinct act of communication to the public?).

To sum up, whatever will happen in the Parliament (on September 12, when the plenary session will have to vote) or later (in the Trilogue procedure) publishers are running the risk to remain with nothing, even if the reform will be approved in the best ideal form. So much ado about nothing.

How could we end up with this paradoxical situation? Everybody agree that press and journalists should be able to be remunerated adequately and that a solution should be found for the impact suffered because of the digital transition, which has drastically affected the traditional press business. However, the European copyright reform started in the wrong way, pushed by German publishers convinced that the solution simply consisted in a mechanism to force Google to share some of its profits. The German commissioner Oettinger endorsed the proposal.

However, this initiative has not worked out, firstly because the Google News business have been overestimated. Users have access to news mainly via Google search engine and Flipboard, and then via e-mail, apps and Facebook. Google News is well below in this rank and in fact Google would prefer to close it, instead of paying publishers. The rest of the news aggregation market is highly fragmented and poorly financed, therefore there is nobody else who could provide publishers with a substantial financial stream based on the news aggregation business.

But, more importantly, the press market is changing. The high-quality publishing industry is progressively migrating toward paying models, while free-to-view press, still remunerated with advertising, is left for generic or less qualified news services. This means that the current copyright reform is based on a model – Internet traffic and advertising – which is disappearing, at least in economic terms. In other words, this copyright reform is old-fashioned even before to exist in legal terms.

The new copyright rules would however be in force to operate some negative effects: the news aggregation business model would risk to be killed since, at the end, only Google was able to extract some money from that because of profiling activity of users. Such source of revenue would be excluded for other operators and start-up which do not own the same critical mass of data of Google. Therefore, they will close or will never start.

The good news is that other negative effects should be avoided (at least we hope): the latest legislative drafts seem to exclude the application of the ancillary right upon hyperlinks and upon users and individuals (other than digital companies). The bad news is the small and SME companies are in the scope of the linktax (while an exemption is foreseen for videosharing and filtrers under art. 13).

At the very end, the most dramatic consequence of this copyright reform is that politics and media believe that the legislative initiative will solve the economic problems of the press sector, while it will not. Unfortunately, it will take some years to understand the mistake, because of the time of the legislative process, the implementation period and the time for the assessment of the effects. Something between 5 and 6 years will be lost, while they could have been devoted, instead, to more effective and reasoned interventions.

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