Paul McCartney And Lady Gaga Find an Ally Against YouTube

(Bloomberg Opinion) -- A law designed to protect recording artists and penalize the tech giants may end up doing neither.

The music industry narrowly avoided an extinction event around the turn of the millennium, when online file-sharing and high-speed streaming made everything from The Beatles to black metal free of charge (albeit illegally). The fightback through licensing agreements with the likes of Spotify Technology SA and Alphabet Inc.’s YouTube has put a spring in the step of record company execs, and industry revenues are growing again.

Now, the hope for stars like Paul McCartney and Lady Gaga is that a reform of copyright law in Europe will help them fight back even harder against the powerful tech platforms, allowing them to demand more money for their songs. It’s a bet that may backfire.

One of the most lobbied-for parts of the EU’s copyright reform law — which the European Parliament is set to vote on in March or April — is “Article 13.” It proposes making companies like Google and Facebook Inc. directly responsible for preventing copyrighted material from being uploaded by their users without a license. The current regime puts the onus on users, and lets services like YouTube manage copyright infringement any way they like. While Google does use special tools to flag examples of unlicensed content uploads, it doesn’t usually take them down unilaterally and doesn’t bear legal liability.

But the real attraction of the new proposal for the likes of McCartney — who spent decades fighting for control of the rights to his music — is a possible beefing up of artists’ negotiating power with YouTube and its ilk over monetizing content. For the best part of a decade, the music industry has struck deals with tech upstarts like Spotify to allow legal streaming and downloads in exchange for cash. The problem for artists pushing for Article 13 is that they still feel underpaid; hence Taylor Swift pulling her music from Spotify at one point.

And Spotify is relatively generous. Music industry association IFPI estimated last year that while it paid out about $20 per user in royalties, YouTube shelled out less than $1. If the new copyright law inflicted punitive measures or litigation whenever YouTube failed to police this properly, that would probably strengthen the hands of artists when they’re wrangling over percentages on content payments.

But while this sounds like a pretty straightforward change, the reality is messier. A European Commission document outlining the final text of the law explains that tech platforms might still avoid liability if they can prove they made their “best effort” to obtain licensing, their “best effort” to remove unauthorized content, and their “best effort” to stop it being re-uploaded. Expect lawyers and court judges to fully test what the definition of effort really means.

And should the tech giants respond by doing more filtering of music content, it might just end up entrenching their power over what’s offered up to users.

Exemptions designed to favor small businesses and startups also seem slightly lopsided, offering a lighter touch regime for online service providers less than three years old, with less than 10 million euros ($11.3 million) in sales and fewer than 5 million monthly users. That does leave a potential loophole for small upstarts that don’t want to play by the rules.

While there are lots of good reasons to strengthen EU copyright law, this fight is far from won.

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.

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