The value gap

Music publishers have fully adapted to the digital world by providing licenses to all kinds of digital services and making it possible for consumers to access millions of tracks online. The fact that music publishers, as contributors to the creative process, are providing a broad availability of music has greatly benefitted internet intermediaries such as content distributors, search engines, social networks and ISPs.

However while ways to access culture are continuously changing, the creation of content is constant and is what adds value to these platforms. Nevertheless, despite the fact that music and creative content generates enormous profits for internet intermediaries, rightsholders are not in receipt of a fair remuneration for this exploitation of their work. More can be done therefore to allow composers, songwriters, artists and their business partners to be properly remunerated in the digital age and to better reap the benefits of the digital world.

Currently, the share of revenues from digital channels varies greatly and digital revenues alone are not enough for an artist to make a living or for publishers to invest in new talents. Many internet intermediaries are hiding behind safe harbour rules and are profiting from works while not contributing to their creation. The limited liability regime is no longer fit for purpose with several services that are currently profiting from safe harbour provisions not existing at the time of their adoption.

Similarly, the exemption for certain types of intermediaries, is being used by services that are not purely hosting content but by operators whose activity consists in the widespread and unlicensed sharing of copyrighted content. Clarification of the legal status of these internet intermediaries has not been possible through case law, since courts have been issuing dissenting opinions on the liability of intermediaries that make available content to the public.

Furthermore several internet intermediaries have achieved great market power, which they have acquired on the back of providing access to creative content, and are using their size and popularity as leverage when negotiating with rightsholders. The current situation, characterised by legal uncertainty and an unbalanced market, is resulting in huge losses for creators who are not able to sufficiently monetise the use of their works. In addition, licensed services are discouraged from entering the market since they cannot possibly compete with intermediaries who are profiting from a free ride.

The value gap concept is mainly used by the business community to refer to “the unexploited potential of a business division to increase the value of the overall organization” (http://cacm.acm.org/magazines/2014/5/174348-reducing-the-software-value-...) (IT business) or to describe “weakened links of ownership in an established value chain”.

Applied to copyright, the concept aims to tackle the limited appetite of some internet intermediaries, such as search engines and social networks, to properly or sufficiently remunerate rightsholders for copyright-protected content online. This concerns the overarching issue of “digital revenues” and the need for rightsholders to receive a fair share of the revenues generated by the dissemination of protected content online.

ICMP welcomes the fact that the European Commission has taken steps to address this situation and that it has acknowledged this grossly unfair divide between rightsholders and intermediaries.

While we believe that the value gap wording in the proposed Directive is a step in the right direction, we also think more amendments to the text are necessary to ensure that the status quo for intermediary liability will not prevail and that rightsholders will receive fair remuneration for their work.