Facebook in Australia: “READY, FIRE, AIM”

Source: http://www.shutterstock.com

Over the course of the past week or so, Facebook has managed what some thought impossible; pushing Google off the front pages as the “bad actor” when it comes to behemoth internet platforms thumbing their nose at a sovereign government, indeed at an entire nation, and instead putting itself in the spotlight. This took a degree of clumsiness that only Facebook could manage.

First There Was Google

For months, Google has been in the cross-hairs of the Australian government’s News Media Bargaining Code. The Code, in its original iteration, required that major internet platforms that use news content from Australian media sources (specifically Google and Facebook because of their dominant market share) compensate the content providers through contractual arrangements, failing which a government arbitrator would impose a settlement based on a “final arbitration” model (where each side makes a final offer and the arbitrator selects one of them). It’s not just about payment for news. The Code will also require the platforms to inform news providers in advance of any changes to algorithm settings that may materially affect referral traffic to news, as well as any substantial changes to the display of news and advertising directly associated with news, plus a requirement to share audience data. In other words, a peek behind the algorithmic curtain.

Google dug in, claimed the proposals were unworkable, unfair and would “break the internet”. It threatened to withdraw its online search engine from Australia and to delist Australian news services, while encouraging Australians to bombard their government with complaints about the new Code. In the past, Google has had similar encounters with governments in Europe (Germany, Spain, France) where it resisted reaching agreements to pay publishers for use of news content after publishers had been granted additional rights to the content to enable negotiations. In Germany, Google was able bring the publishers to heel by blocking access to their content on Google News unless they renounced claims to payment. In Spain, Google simply shut down Google News.

Google in France

More recently, in France they faced a determined government that took a stand and used its competition authority to require that Google enter meaningful consultations with publishers over payment for content. Google dragged its feet but finally reached an agreement with one of the major French publishing groups. It may not be out of the woods yet, however, as other publishers not included in the initial agreement have complained to the French competition authority that Google did not bargain in good faith (it has a tendency to approach negotiations on a “take it or leave it basis”), and apparently the Authority has concluded that there is merit to the complaint. The Australian Code will prevent the platforms from abusing their market power through “take it or leave it” offers by holding the arbitration stick in reserve.

Payment for News

Neither Google nor Facebook has refused to pay for access to news content, but they want to do it on their terms. Google has its Google News Initiative that involves some payment for content from selected partners. This was rolled out in some countries after pressure mounted to require quasi-monopoly online platforms that dominate advertising revenues to recognize the contribution of bona fide journalism to public discourse by providing some payment for content. Google tried to use its News Initiative as a lever in Australia by signing contracts with some small media players but making the contracts conditional on the News Media Bargaining Code not seeing the light of day. That didn’t work, and Google has now reached agreements with most of the major media players in Australia. Magically, the “unworkable” Australian proposals suddenly became workable when Microsoft inserted itself into the debate by announcing that it would be more than willing to abide by the Code and in fact, urged the US Government to adopt something similar.  

Facebook too has paid for news. In 2019 it reached a deal with major US publishers to pay for headlines for its news feed, and recently reached a similar deal in the UK to license news stories. For Facebook the motivation was largely to insulate itself from growing criticism that it has become a platform for fake news, alternate facts and conspiracy theories, becoming a closed-loop echo chamber for those who subscribe to such theories. However, Facebook has consistently maintained that it derives no value from news content and should not have to pay to access it. The head of public policy for Facebook Canada, Kevin Chan, claimed that the value of news to Facebook was “zero”.  

Is News of Value to Facebook?

Facebook’s position is that it does news media a service by allowing them to post content on Facebook, which in turn drives readers to the media outlets. Facebook’s VP of Global Affairs, Nick Clegg (a former Deputy Prime Minister of the UK, by the way) wrote that the company had directed 5.1 billion referrals to Australian media in 2020, worth over A$400 million. Yet news does provide “sticky” content that keeps users on Facebook longer—and thus exposed to more advertising which is the source of 98% of Facebook’s revenue. A Canadian researcher, Prof. Jean-Hugues Roy of the University of Quebec at Montreal, who analyzed 1.9 million Facebook posts in 2020 found that almost 20 percent were from media pages. These posts generated 7.3 percent of the total interactions in the sample. Based on that percentage and Facebook’s revenues in Canada he concluded that “Mark Zuckerberg’s company made $210 million thanks to Canadian journalism in 2020.” By way of contrast, Kevin Chan stated that Facebook had contributed $10 million to various news projects in Canada over the past four years. I am tempted to say, “big deal”.

Facebook Blocks News in Oz

So as we see, Facebook, like Google, is prepared in extremis to throw some dollars toward media providers, but does not like being required to do so. Negotiations with media content providers in Australia had been going nowhere, similar to the situation with Google, until the Australian government rolled out its big gun, the Media Code with its binding arbitration mechanism. Google decided that a strategic retreat was the best option, resumed negotiations with the major news providers, and disappeared off the front pages. They were helped by Facebook’s next move, which firmly planted a bullet in its own foot by threatening, and then following through with, a blockage of all Australian media content. It wasn’t as if Facebook’s engineers executed the move with much care. No. In addition to major news sources, they blocked public health information related to COVID-19 vaccinations, the website of the Australian Council of Trades Unions, information relating to women’s health, food banks, emergency services, cancer clinics, charities…. It couldn’t have been worse. Nick Clegg offered the lame excuse that;

“we had to take action quickly because it was legally necessary to do so before the new law came into force, and so we erred on the side of over-enforcement. In doing so, some content was blocked inadvertently”.

A Classic Backfire

An under-statement. The piling on began immediately. The former chief executive of Facebook Australia, now heading an NGO dealing with digital threats to democracy, described Facebook’s actions as a “shameless demonstration of corporate might”. Other descriptions ranged from “heavy-handed” and “reckless, arrogant and dangerous”, to “corporate bullying” and “unfriending Australia”. The blockage of responsible news sources left open the field for the alternate facts crowd. Facebook has been widely criticized for tolerating abusive content and misinformation on its platform but has argued that it lacks the means to monitor and control such content. Yet, in the blink of an eye it managed to take down just about every legitimate source of essential news in Australia. For a company that has been under constant scrutiny for various abuses, from failing to protect the privacy of users to allowing promotion of conspiracy theories to monopolistic practices, it could not have been a more perfect public relations and reputational disaster. It made (Sir) Nick Clegg’s political achievement of taking the Liberal Democrats in the UK from 57 seats to 8 look like a success.

The Compromise

Facebook back-pedalled, unblocked what should not have been blocked and entered into talks with the Australian government resulting in a compromise, of sorts. Like any good compromise, both sides can claim victory. The government agreed to amend the legislation to provide exemptions from application of the Code if companies subject to it (like Facebook and Google, based on market dominance) have already struck content deals. They also agreed to provide for a one month notice period (to allow for the completion of deals) if the Code is to be applied. Once the Code is triggered, there will be a longer mediation period before arbitration takes place, and platforms will be allowed to differentiate their offers depending on what kind and size of media company they are dealing with. The Code, with these amendments, has now been passed into law. At the same time Facebook announced that it would be restoring news feeds in Australia, that it had secured a content deal with one major Australian media conglomerate, Seven West Media, and was in discussions with others.

Who Won? Not Facebook.

So who won? Overall, certainly not Facebook, although they have likely managed to wriggle out from having the Code applied to them because they will have “voluntarily” reached content deals with media providers. This, of course, was the intent of the legislation all along. If it does not have to be applied, because the market is now working, that is so much the better. And, by the way, the Code is now law and will remain on the books as a back-stop. The outcome is probably even better for smaller players on the Australian media scene given the domination of Australian media by conglomerates such as News Corp. since the platforms are now allowed and encouraged to make differentiated offers. The requirements for disclosure of algorithmic information did not change significantly as the legislation worked its way through the Parliamentary process.

Facebook is claiming that it can still block news coverage, which is true, but this is a hollow victory since it was the blockage of news that caused it such huge reputational damage and ultimately led to the compromise by which Facebook will pay for content in order to avoid becoming subject to the Code. Facebook can still block content—if it wants to shoot itself in the foot yet again. It could also exit the Australian market. The Code does not stop that either, but neither of these things is going to happen.

Wider Implications

Not only was Facebook forced to accept reality in Australia, it will now be even more under the gun elsewhere as other governments, notably Canada and the UK, and possibly even the US, will move to ensure that it reaches fairer revenue sharing deals with media organizations. They will draw important lessons from what happened in Australia, as will the platforms. As Canada’s Heritage Minister Steven Guilbeault said in a radio interview on CBC, if Canada ever needed a reason to deal with the platforms, “Facebook just handed it to us on a silver platter”. The Australian experience has demonstrated that it takes determined and robust government action, backed up by application of competition law to deal with market dominance, to bring the platforms to the table. But it can be done.

Facebook was already headed for a fall before all this happened. It has just propelled itself closer to the cliff edge as governments around the world, and particularly in its home jurisdiction of the United States, will be looking ever more carefully at the company’s business practices and their impact on society, democracy and individual freedoms. Whatever “victory” Facebook salvaged from its antics in Australia, it was pyrrhic in the extreme. That’s what you get when your policy consists of “Ready, Fire, Aim”.

© Hugh Stephens 2021. All Rights Reserved.

This post has been updated with respect to the research conducted by Prof. Roy mentioned in paragraph 7.

Viola Desmond and Her Story of Courage and Creativity—And Some Thoughts on Race and Copyright

Photo: author. Powder case property of Black Cultural Centre of Nova Scotia

In this week’s blog post I am going to address the central issue of what Black History Month is all about; celebrating the courage and determination of people who made enormous sacrifices to advance the cause of racial justice. I want to highlight the case of an intrepid black woman, who was at the same time an entrepreneur and a creator of intellectual property herself–perhaps some of it even protected by copyright– who stood up (actually, sat down) for racial equality in Canada. Viola Desmond’s name may not be that well known outside Canada (or within it for that matter), and it is high time that her story was told to a broader audience.

Even though Viola Desmond’s story does not involve copyright itself, I also want to touch on the role of copyright with regard to race and racial discrimination. Why? Well, because this is a copyright blog and also because I believe that copyright can be an important instrument in helping to achieve greater racial and economic justice.

Is Copyright Colour-Blind?

We need to ask this fundamental question. Does copyright discriminate on the basis of race (or gender)? Does it better protect some racial groups better than others? On its face, I would say no, because at the end of the day an artist is an artist, an author is an author, a musician is a musician. Whether the holder of the copyright is a man or woman, or is of black, Asian, Indigenous or white racial origin, the copyright in a work that they have created belongs to them. It empowers them. The only qualification is that the creator must be human. (Recall the ridiculous attempt by the animal rights group, People for the Ethical Protection of Animals—PETA—to claim copyright for “Naruto” the macaque in the Monkey Selfie Case).  Animals don’t qualify, nor do machines.

Copyright prima facie is blind to factors of race or gender. Once a work is created, as long as it meets the established criteria (originality, fixation, and authorship) copyright is granted automatically, assuming the creator is a resident of a Berne Convention country.  An artist in Zaire, an author in Cuba, a composer in Greenland—they all qualify. I would argue that copyright is the ultimate enabler of democratic economic and moral rights because the simple act of creation confers the right. Unlike other forms of intellectual property, important as they are, copyright requires no formal process of registration. For example, it can be argued (and no doubt proven) that racialized or marginalized groups are under-represented in the patent filing process because of the barriers to filing—process, cost, access to “the system” and so on. There are no such overt barriers with copyright.

But Are Practices that flow from Copyright Colour-Blind?

Now, while I would argue that the establishment of copyright itself is colour and gender blind, I will readily admit that the exercise of the rights within copyright through business practices and application is not always free of bias. It is not difficult to find examples where the application of copyright in various business situations can be argued to be discriminatory, such as in reaching contractual agreements where one side may have disproportionate power. I would note, however, that power imbalance in negotiations over payment for use of copyrighted material (e.g. an author with a publisher, or a musician with a label) can and does happen quite frequently, independently of any racial considerations.  Nevertheless, I think there is a view that while copyright may be race or gender neutral, its application is not always so. This may explain the vigour with which I was criticized a couple of years ago when I wrote a couple of blogs (here and here) on gender and copyright.

Indigenous Cultural Expression

Another issue relating to copyright and societies not necessarily based on Western concepts of individualism and law is the problem of attributing copyright protection to group or collective works, particularly where those works were produced by Indigenous groups. This is a topic on which I have written in the past, arguing that a supplement to copyright laws is needed to protect forms of art loosely grouped under the rubric of “Indigenous Cultural Expression” (ICE). Both national governments and the World Intellectual Property Organization (WIPO) are looking at various means to do this.

Historical Application of Copyright

I also readily concede that historically copyright was not applied in the way that it is today. As with many things, it was reflective of the broader social values of the time and often embodied overt racial discrimination. Moreover, it was not until 1886 that the Berne Convention was established. This international convention established the principle of a creator’s “automatic right” to copyright, as well the virtual universality of reciprocal copyright recognition. Originally, it had just ten original signatories; today it has 179. (The US joined in 1988).

Phillis Wheatley

An obvious example of the historical context of copyright was its application to slaves in a slave-owning society (like the southern US states prior to 1864). Individual creators could hardly expect to avail themselves of their copyrights when they themselves were treated as chattels to be bought and sold. The earliest example of African-American literature, the poems of Phillis Wheatley, a slave girl in Massachusetts, published in 1773, illustrate the struggle faced by people of colour in trying to establish authorship. Wheatley had to appear before a group of notables (all white males of course, no doubt of a “certain age”) who eventually “established” that the poetry was produced by her, an authorship hurdle not known to have been forced on any other writer. Yet copyright prevailed in the end. The publication of her work was entered in Stationers’ Hall, London, the repository for copyrighted works at the time (since the publication predated US copyright and the US Constitution) although it was undoubtedly the British publisher, Archibald Bell of Aldgate, who ensured it was deposited.

Frederick Douglass

Another famous work of African-American literature, Frederick Douglass’ “Narrative of the Life of Frederick Douglass, An American Slave” (1845) and a later work, “My Bondage, My Freedom” (1855), both bear the inscription on the fly-leaf “Entered, according to Act of Congress, in the year 1845 (or 1855) by Frederick Douglass, in the Clerk’s office of the District Court of…”. It was Massachusetts for the first work and the Northern District of New York for the second. Prior to 1870, authors and publishers registered their claims to statutory copyright with the clerks of the U. S. District Court for the jurisdiction in which they resided. Douglass, a former slave who had gained his freedom by fleeing from the south to Pennsylvania, took pains to assert his copyright at a time when slavery was still thriving in parts of the United States. Despite the many hurdles and imperfections in application placed in the way of people of colour, copyright could still be harnessed as a means to assert individuality, dignity and creativity, albeit with difficulty.

Copyright Today

I would argue that copyright, imperfect though it may be, is today more of an instrument of empowerment than exploitation, more part of the solution than part of the problem. Even though there have been historical injustices, today copyright can be a liberator and equalizer, putting a powerful tool into the hands of individual creators, rather than being part of a system of oppression and exploitation. To cite but one example, an important argument in favour of creating an Artists Resale Right (about which I will be writing in a couple of weeks) is that it provides the means for an ongoing transfer of wealth from well-heeled art dealers and collectors in Europe to disadvantaged artists in the developing world. Without copyright this would not be possible.

Recent Scholarship

Not everyone will agree with this positive view of copyright, however, and I feel obliged to acknowledge here the learned treatise by Dr. Anjali Vats, Assistant Professor in Communication and African Diaspora Studies at Boston College. Her recent book, “The Color of Creatorship: Intellectual Property, Race and Making of Americans”, argues just the opposite. For her, intellectual property law (including copyright) is racialized and designed to perpetuate white privilege.

I contend that intellectual property law is organized through a racial episteme that consistently protects the (intellectual) property interests of white people and devalues the (intellectual) property interests of people of color”.

At the risk of gross oversimplification, her argument is based on the premise that if a society is racist as defined by its concepts of “citizenship” (a social rather than legal term), then everything that flows from that is racist. She says, “racial scripts can be baked into the seemingly colorblind ideals of American citizenship that, in turn, inform intellectual property law”. In her view, “the notion that intellectual property law has become equitable…is a dangerous one…” It is a system that is “ideologically rigged in favor of whiteness”. More recently, in what she calls the post-racial IP era, dating from Barack Obama’s accession to the White House in 2008, racism was perpetuated (according to Prof. Vats) by the imposition of maximalist IP policies on an infringing Global South—pharmaceutical patents being one example. But it is unfair of me to selectively quote and try to summarize an important work in a few sentences. Best you read it for yourself and make your own judgement.

At the end of the day, perhaps we are not that far apart. We all know that laws are not applied equally, (look at incarceration rates for racially marginalized groups) even though in theory they apply equally. If perceptions and values are imbued with racist assumptions, a colour-blind law or principle can be distorted. The case of Viola Desmond is a prime example of this.

Viola Desmond

Viola Desmond’s contribution to the ongoing struggle for racial equality does not directly engage copyright questions, although she was a creator of her own products and asserted her intellectual property rights. Her story is about dignity, determination, and courage. Viola Desmond (nee Davis) was born in Nova Scotia in 1914 to a black father and white mother and raised in the black community in Halifax. With career options limited for women, she trained as a beautician although she had to attend school in Montreal and in the US as there were no opportunities for black students at such institutions in Nova Scotia at that time. She opened a beauty culture studio in Halifax catering to women in the black community. This branched out into the Desmond School of Beauty Culture, and a line of beauty products that bore her name. (e.g. Sepia Face Powder by Viola Desmond).

Things were going well for Desmond until her run in with the unofficial but entrenched practice of racial segregation in Nova Scotia. In November, 1946, on her way to sell beauty products in the north of the province her car broke down in the town of New Glasgow. While it was being repaired, she decided to take in a movie at the Roseland Theatre. When she purchased her ticket, for thirty cents, it was for the balcony. Realizing that she could see better from the main floor she seated herself there, and was challenged by the ticket taker, who indicated her ticket was for the balcony. Main floor tickets cost forty cents. She offered to pay the difference and was told the main floor was for whites only. She refused to leave. This account from the Canadian Encyclopedia continues the story;

“Desmond was then confronted by the manager, Henry MacNeil, who argued that the theatre had the right to “refuse admission to any objectionable person.” Desmond pointed out that she had not been refused admission and had in fact been sold the ticket, which she still held in her hand. She added that she had attempted to exchange it for a main floor ticket and was willing to pay the difference in cost but had been refused. When she declined to leave her seat, a police officer was called. Desmond was dragged out of the theatre, injuring her hip and knee in the process, and taken to jail. There she was met by Elmo Langille, chief of police, and MacNeil — the pair left together, returning an hour later with a warrant for Desmond’s arrest. She was then held in a cell overnight.

In the morning, Viola Desmond was brought to court and charged with attempting to defraud the provincial government based on her alleged refusal to pay a one cent amusement tax (i.e., the difference in tax between upstairs and downstairs ticket prices). Even though she had indicated when she was confronted at the theatre that she was willing to pay the difference between the two ticket prices and that her offer had been refused, the judge chose to fine her $26.”

That of course is not the end of the story. Desmond could have just bitten her lip and suffered, as her husband advised her to do, but she did not. The NAACP in Nova Scotia took up her case which eventually went to the Supreme Court of Nova Scotia. It would be nice to tell you that she prevailed. She did not, on technical grounds, (the appeal of her fine had not been lodged within the statutory time limitations) but the Justice hearing the case noted acerbically;

One wonders if the Manager of the theatre who laid the complaint was so zealous because of a bona fide belief that there had been an attempt to defraud the Province of the sum of one cent or was it a surreptitious endeavour to enforce “Jim Crow” by misuse of a public statute”.

Her Legacy

Her case did not end racial discrimination in Nova Scotia or Canada but it was a courageous and singular act that led eventually to greater justice, and to long overdue apologies and attempts to rectify the injustice. The fact that this woman entrepreneur, who built a successful business that not only generated employment in the community and provided career opportunities for young people, but also demonstrated considerable ingenuity and vision through the creation and marketing of her own products, could be denied basic dignity by being ejected from a seat in a theatre is incomprehensible today. And then to be convicted of “tax fraud” for not paying the one cent difference in tax, even though she offered to do so. Although Desmond died in 1965, her sister is still living, and kept her story alive. In 2010 Desmond received a posthumous apology, in 2012 a Canadian stamp was issued in her honour and in 2016 it was announced that she would be the first woman, other than the sovereign, to appear on a Canadian bank note, the $10 bill. Recently Nova Scotia repaid the fine, with interest, to Desmond’s sister. The fine itself was 2,600 times the value of the one cent “fraud”, which was itself a ludicrous charge of the sort that brings the law into disrepute.

The recognition of Viola Desmond’s stand for equality was long overdue. Her act of courage did not change that much that quickly in her lifetime, but she was a pioneer. Many people know of Rosa Parks, who initiated the bus segregation protests in the US in 1955, and who is noted for that and for her many other contributions in fighting racial discrimination over many years, but she had kindred spirits in Canada; people like Viola Desmond who challenged segregation practices a decade earlier.

Racial discrimination today is perhaps less obvious, but no less pervasive. One of the ways to fight it is to provide equal opportunity. Not all creators get equal opportunity, but the rights conferred on them by copyright at least enable them to stand up for their rights. Discrimination can no doubt be argued to exist even today in the application of copyright law, but copyright itself is an important tool in prying open the box of equality.

© Hugh Stephens 2021. All Rights Reserved.

Google’s Tussle Over Payment for News Content in Australia: Microsoft Scrambles the Cards–With Positive Implications for Canada and Others

Source: http://www.shutterstock.com

The ongoing tussle between two major US online platforms (Google and Facebook) and the Australian government over proposed legislation that would require the two internet platforms to pay Australian media for using their news content has just been joined by a third party, Microsoft. The legislation would enshrine in law a proposed News Media Bargaining Code developed by Australia’s competition authority, the Australian Competition and Consumer Commission (ACCC). Microsoft has waded into the debate unequivocally on the side of Australia, and in a very timely manner. This positioning by a major US corporation will have wider implications for other countries, such as Canada, seeking to deal with the issue of requiring Google and other major platforms to compensate news content providers for content used on their services.

Does Microsoft’s alignment with the provisions of the ACCC’s Code spring from a genuine concern over the fate of news outlets, many of which are dying on the vine as advertising dollars shift from traditional media to online service providers, or from commercial interest? According to Brad Smith, President of Microsoft, it is both. In a personal blog released late last week, Smith makes the case for maintaining a free and financially healthy Fourth Estate as a critical element of democracy. He recognized that the Australian legislation, about which I reported last week, will help redress the imbalance that exists between technology and journalism by requiring negotiations, backed up by a binding arbitration mechanism, between the two internet giants (“tech gatekeepers”) and independent news organizations. Although the Australian legislation applies only to Google and Facebook, who are specifically named, Smith says that Microsoft would willingly submit itself to the proposed Australian disciplines. This would be both the right thing to do and would also be good business for Microsoft.

Google and Facebook are caught by the legislation because of their market dominance. The fact that two US companies are specifically targeted in the legislation of another country has led to intervention by the US government (the previous Trump Administration) through the US Trade Representative’s Office (USTR) and the US Embassy in Canberra. The USTR wrote to the Australian Senate committee reviewing the legislation that the US government is concerned that “an attempt, through legislation, to regulate the competitive positions of specific players in a fast-evolving digital market, to the clear detriment of two U.S. firms, may result in harmful outcomes”. Smith points out that it would have been better for the legislation to have targeted any company that exceeded a specified market share rather than call out specific named companies. He suggested a market dominance threshold of 20 percent to trigger the legislation. (Google dominates 95 percent of online search in Australia and is clearly a better search engine at the moment although if Bing attained scale and Microsoft invested more in it, it could become competitive).  If the legislation was contingent on a 20 percent market share, and if Microsoft was able to reach that threshold, then it would readily comply according to Smith;

“…the obligations…could easily be written to apply to any search business that has more than 20% market share in Australia. At Microsoft, we are fully prepared to aim for this search share and become subject to the law’s obligations the day we do.”

Google has resorted to various threats to try to stop the legislation. These range from curtailing or cutting its search function in Australia, removing news listings from Search, or even leaving the Australian market altogether. It has tried to mobilize Australian users to pressure their government to back off. At the same time, it rolled out—and then retracted—an offer to pay for some news content, but on its terms, called the Google News Initiative. Google’s “dangle of the carrot” payment proposal was very recently put back into play (after Microsoft entered the fray), restoring its offer to pay for some content but only on condition that it reserved the right to terminate any contracts reached if the Australian government followed through by legislating the Bargaining Code.

Smith also takes aim at the US government for intervening with Australia on this issue, expressing hope that the Biden Administration will not double-down on past representations made by USTR. In fact, he urges the US government to adopt a similar provision to that being enacted in Australia, “requiring tech companies to support a free press”. There are no current proposals in the US to do this although there was draft legislation in the previous Congress, the Journalism Competition and Preservation Act (HR 2054), that would have provided US news publishers with a four-year exemption from anti-trust restrictions, permitting them to combine to negotiate with major platforms.

The fact that Microsoft has waded into this issue is good news for Australia and will likely result in the US government standing back. When one or two US companies are on one side of an issue involving a foreign country it is relatively easy for the US government to take a position to “defend US interests”. When there are US companies on both sides of an issue it is much more difficult to intervene, especially when both are large, powerful entities with significant lobbying clout in Washington. My guess is that the US embassy in Canberra will be monitoring the legislation but staying out of the melee in future.

As for the legislation itself, the Australian Senate committee responsible for reviewing it has reported out, rejecting any changes after holding hearings and listening to various threats and proposals put forward by both Google and Facebook. Google’s arguments that the legislation is “unworkable” have been undermined by Microsoft’s endorsement of the proposal. The only new proviso put forward by the committee was a proposal that the legislation be reviewed a year after adoption, recognizing that there may be a need for tweaks to the binding arbitration process envisaged by the Code. The ultimate intent of the resort to binding arbitration, of course, is to avoid having to go there by encouraging the two sides to reach a commercial agreement on payment for news content. The legislation will now proceed with a view to adoption within the next few weeks.

These developments in Australia are being closely watched in Canada where news publishers are pushing for the adoption of a similar mechanism requiring the platforms to negotiate. As I wrote back in September (“A Day of Reckoning is Coming for Google, Facebook and other major Online Platforms that access News Content without Payment: Will Canada be Next?”), the Trudeau government has made no secret of its intention to rebalance the playing field between news content producers and the major internet platforms. The exact proposals are still being worked on, but draft legislation is expected soon. Heritage Minister Guilbeault has said that “publishers must be adequately compensated for their work…We must address the market imbalance between news media organizations and those who benefit from their work”.

Guilbeault has made it clear that even though Google is now rolling out its Google News Initiative in several countries (it has signed up two small players in Canada although the program is not currently offered to Canadian consumers), this will not stop him from introducing legislation to require payment to news producers. He has acknowledged that one of the issues to be taken into account in devising a “made in Canada” solution is the existence of the USMCA, the trade agreement between the US, Canada and Mexico that went into effect on July 1, 2020.

When Guilbeault first started talking about supporting the news industry, opponents of the publishers’ proposals argued that the new NAFTA (the USMCA; called CUSMA in Canada) would constrain any Canadian policy measures since action against the major platforms would violate the terms of the trade agreement. In their report submitted to the government, “Levelling the Digital Playing Field”, News Media Canada, representing the major publishers, addressed this point by including an opinion from a noted trade expert, Barry Appleton, rebutting the USMCA argument.

Appleton pointed to Article 32.6 of the USMCA, known as the “cultural exception”. The definition of a “cultural industry” in the Agreement includes the publication of newspapers. Article 32.6 exempts a Canadian cultural industry from any of the USMCA obligations but there is a catch; the other two Parties (the US and Mexico) are allowed to retaliate with equivalent commercial effect against any measure taken by Canada to protect a cultural industry.

Notwithstanding any other provision of this Agreement, a Party may take a measure of equivalent commercial effect in response to an action by another Party that would have been inconsistent with this Agreement but for paragraph 2 or 3.” (i.e. the exception).

This is a deterrent to ensure that Canada rarely, if ever, uses the cultural exception to override its obligations. It has never done so in the more than thirty years of the existence of the cultural exception (both the original Canada-US FTA and NAFTA had a similar clause) and if it did, it could be made to pay dearly. Retaliation could be applied against any sector, so if Canada’s other two CUSMA partners were really upset with a Canadian cultural measure that “violated” the Agreement they would exert pressure by hitting other, politically influential sectors unrelated to the cultural industry that was being protected. That is the criticism levelled at the cultural exception argument adopted by News Media Canada. I agree that the cultural exception is a pretty thin reed to rely on—it is more of a political fig-leaf than anything else–although it is certainly a defence that can be put forward.

But here is the key question. Is the cultural exception the only defence that Canada would have if it were to bring in a regime that required major internet platforms to strike compensation deals with news content providers, and would such a measure be challenged by the US? There are two angles to consider. The first is that it should be possible to deal with major global corporations like Google and Facebook through policies of general application (i.e. directed at any company meeting certain criteria—such as market dominance–regardless of national origin) in a manner that would be consistent with the CUSMA. For example the Competition Chapter of CUSMA, which happens to be exempt from the Dispute Settlement Mechanism of CUSMA by virtue of Article 21.6, requires that Each Party “shall ensure that the enforcement policies of its national competition authorities include…treating persons of another Party no less favorably than persons of the Party in like circumstances;”. In other words, if a compensation scheme for news publishers were dealt with as a competition issue, it could be devised in such a way as to be applicable to both Canadian and US or Mexican entities without running afoul of the CUSMA. Moreover, the decision could not be taken to dispute settlement by the US government.

The second is the willingness of the US government to invoke the USMCA if Canada established a requirement for certain platforms to negotiate payment for news content. Quite apart from devising measures of general application that would be CUSMA-proof, now that Microsoft has positioned itself in favour of a policy where internet platforms compensate news organizations, and is willing to do so itself, it is much less likely that the US government would invoke CUSMA to argue that US companies are being discriminated against. USTR’s hands are now effectively tied, if not legally than practically in terms of the internal politics affecting the US government’s position.

And it’s not as if Google itself could initiate action. The “investor-state” provision that existed in the previous NAFTA was dropped in the USMCA/CUSMA, ironically at US insistence. The Trump Administration felt that investor-state protections encouraged US companies to invest abroad, and so had it removed. The investor-state provision allowed a private party (a company) to invoke dispute settlement against a NAFTA government if that government had taken action that resulted in expropriation of the company’s property, or measures that were tantamount to expropriation. Changes of domestic policy that resulted in making it more difficult for a foreign NAFTA company to operate or generate expected returns on investment could be argued to violate investor-state protections. Canada lost several investor-state cases under NAFTA and the Canadian taxpayer had to compensate US companies as a result. Even where the investor-state clause was not invoked, it had the potential to exert a chilling effect over policy development and implementation if there was a possibility that a US (or Mexican) company might have grounds to object. No Canadian company ever succeeded in bringing a successful investor-state case against the US although there were a few such cases launched.

Microsoft’s entry into the debate in Australia will scramble the cards and make it easier for the Australian government to deal with Google. However, an added indirect bonus is to widen Canada’s scope for action given the decreased probability that Google will now be able to convince the US government to try to restrain Canadian action under the USMCA/CUSMA.

© Hugh Stephens, 2021. All Rights Reserved.

Google’s Latest “Stoush” with Australia: What’s the Lesson from Germany’s Failed Effort?

Source: http://www.shutterstock.com

Later this week, on February 12, the Australian Senate is scheduled to present its report reviewing important draft legislation, the tongue-twisting “Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill, 2020”. This legislation, when enacted, will implement the News Media Bargaining Code developed by the country’s  competition regulator, the Australian Competition and Consumer Commission (ACCC). Assuming the final law retains all or most of the provisions of the draft bill, it will require Google and Facebook—and only Google and Facebook by the way—to license Australian news content that they use in their search or social media offerings. In other words, the platforms will have to compensate Australian news content providers when they present the providers’ content. “News content provider” is defined in the legislation according to several professional and revenue criteria, but essentially the definition includes all major Australian news entities, both publishing and broadcasting. Why does the code apply to only Google and Facebook? It has to do with scale, dominance and market power. As I discussed in a blog on this topic two weeks ago, and in earlier blogs, Google and the Australian government have been engaged in real “stoush”, a big-time arm wrestle, over this legislation.

The Australian News Media Bargaining Code

Google has said the Code is unworkable and is threatening to pull out of Australia, or at least to shut down its search function, rather than comply with the legislation if it is enacted without amendment. Google says it doesn’t object to paying content providers for use of their content, but wants to do it on the company’s terms, through its “Google News Initiative”. (Last fall Google announced it was prepared to start paying news sources, but then suspended its offer after the ACCC refused to drop its code. Now, under pressure from the new legislation, it has decided to re-activate the program).

From the perspective of the ACCC, the Google News Initiative puts most of the cards into Google’s hands, and therefore the Code contains a requirement for binding arbitration if a voluntary agreement cannot be reached between the platforms and publishers. Google doesn’t like arbitration, and particularly objects to the form of arbitration proposed in the Australian legislation. Known as “final offer” arbitration, it requires the arbitrator (which will be ACMA—the Australian Communications and Media Authority) to select a final offer from one of the two sides. If the platforms refuse to negotiate, they could be subject to heavy fines of $10 million or 10% of annual turnover.  They could also be fined if they fail to comply with an arbitration decision or take retaliatory action against news media companies. Clearly, there are some real teeth in this legislation.

For Google (and Facebook), the only way to opt out of the legislation–other than by withdrawing their services entirely from Australia or, in the case of Google, closing down its search function—would be to remove all Australian news content from their services. Google has already started to test the latter option by blocking access to Australian news content for some users in Australia. Meanwhile, rival Microsoft has stepped up indicating that while it is not subject to the Code, it would willingly comply with it. The US company is eager to fill any gap left by Google. Google’s withdrawal from online search in Australia would be a boon for Microsoft’s Bing which currently has only about 5 percent of the Australian market.

Because of this competitive factor, and because of the importance of Australia as a leading OECD country and also the expressed determination of the Australian government to follow through with the legislation, I think that a compromise will be found in the end. But be under no apprehensions. Google plays hardball as was demonstrated a few years ago when Germany tried to grasp the same nettle, although using a different approach to that taken in Australia.

What Happened in Germany

Back in 2013 Germany passed legislation that gave publishers an ancillary right (Leistungsschutzrecht) to their news content (for one year) to enable them to negotiate with major internet platforms (read Google). The “publishers right” was considered necessary because, as it was phrased in an EU study on this topic, “Although print publishers have long been able to claim copyright indirectly from the contributions of their journalists, historically, copyright has not been a key part of their business model.” The intent was to create a “neighbouring right” similar to that enjoyed by investors in broadcasts, sound recordings and films. This would relieve publishers of the need to rely on the rights created and granted by journalists and photographers they employed in order to prove ownership of copyright in each work of journalistic output they published. This new right sits alongside, and is in addition to, regular copyright protection. I wrote about the push for a publishers’ right back in 2016 when the EU was considering bringing it into the EU Copyright Directive, a step that has now been taken.

Google didn’t want to negotiate payment for what was referred to at the time as “news snippets”, and as usual was a tough negotiator. At first Google dragged its feet, so an umbrella group of German publishers sued it for ignoring the law. Google then removed all German publishers from Google News, resulting in a huge loss of traffic to major news websites. For leading German publisher Axel Springer, this amounted to a decline in visits to its websites of 80 percent. Google announced that it would allow publishers to opt back in to Google News only if they waived their right to compensation. Faced with this ultimatum, the publishers caved in and Google emerged triumphant, wielding its market force like a club. It similarly played tough in Spain when a similar law was passed, simply shutting down Google News in that country.

EU Takes the Lead

Since then, a law similar to Germany’s Leistungsschutzrecht has been enacted by the EU, as Article 15 of the Copyright Directive (although the EU Directive confers two years of protection as opposed to the one year of protection in the original German law). It is the platform for passage of national laws to implement a publishers’ right. France is the first EU member state to have done so, although more will follow. In taking the lead, France was the first to tangle with Google under the new rules, as I wrote back in April of last year (here). France implemented the Directive by means of its Competition Authority, requiring Google to negotiate, much as Australia is doing.

Why German Publishers Failed to Tame Google

Dr. Heidi Tworek of the University of British Columbia, a scholar who specializes in the history of German media, has recently argued that people have forgotten about what happened in Germany in 2013 when they look at recent developments in France and Australia, and potentially in Canada, when it comes to requiring Google to pay for news content.  “Levelling the Digital Playing Field”, the report released last October by News Media Canada, the industry group representing the Canadian news publishers, leans heavily to the Australian model in its advocacy, while noting France’s rights-based approach. The German experiment is not mentioned. Tworek points out that the struggle between news providers and news disseminators is not a new phenomenon. She refers back to the 1920s when there was a push in Germany to create a new right for publishers to protect them from the incursions of radio into their hitherto exclusive news domain. The issue was framed as one of “who owns the news” but the attempt to create a special news right foundered, just as the attempts by German publishers in 2013 were unsuccessful.

The Impact of the German Example

While German publishers did not succeed in their attempt in 2013 to force Google to share revenues generated through news content, I would argue that regulators and legislators have not forgotten what happened in Germany a few years back (although I am sure none of them are aware of the earlier history of trying to regulate news content on radio unless they have read any of Professor Tworek’s articles on the subject.) The problem in Germany in 2013 was that Google was permitted to use its market power to bend the publishing industry to its will. It was able to dominate and split the industry by offering to allow some publishers back on to its platform if they renounced their right to payment, while punishing others for exercising their rights.  Simply providing publishers with an ancillary right to the content they produced was not sufficient to empower them to stand up to the market dominance of Google. Neither France nor Australia have made that mistake. They have put the full muscle of their Competition authorities behind the confrontation with Google, leaving the platform with only a couple of options; find a solution (as they have done in France), or exit the market in full or in part (by removing all news content).

Google cannot play the game it played in Germany by splitting the industry. “Divide and rule” will no longer work. The Australian code has a non-discrimination provision ensuring that the platforms cannot choose to negotiate with some content providers, but not others. There is also the requirement for binding arbitration.  If Google follows one of the extreme options of either leaving the market, or the news segment of the market, it will create a vacuum that its competitors Bing, Yahoo and others will be only too happy to fill.

Levelling the Playing Field

The example of what happened in Germany tells us that the playing field has to be levelled if there is to be a rebalancing between the publishers and major internet platforms, of which Google is the prime example. That can only be done by dealing directly with the issue of dominance and market power as part of the solution.

Developments in Canada

This holds lessons for Canada where the Heritage Minister, Steven Guilbeault confirmed in late January that a bill for online news compensation is in the works, and is expected to be presented to Parliament in the spring. Canada has apparently not yet decided what approach it will take (the French approach, or that of Australia or a “made in Canada” solution) but Guilbeault has been in touch with ACCC’s Chair Rod Sims, and Canada is closely following how the Google-Australia “stoush” is playing out. It has been reported that Guilbeault favours a binding arbitration model, as was advocated by News Media Canada in its report.

One thing is certain. If history holds any lessons for regulators when it comes to dealing with the giant international internet platforms, it is that they are too big for local content industries to be able to deal with directly without government support. Government muscle in the form of limiting market power and anti-competitive behaviour is required. The real lesson to be learned from the German example is not that Google cannot be brought to heel; it is that this has to be done using the right tools.

© Hugh Stephens 2021. All Rights Reserved.

The Regional Comprehensive Economic Partnership (RCEP) and Copyright

Back in mid-November, something significant happened in Asia, largely unnoticed. While most of the western world continued to grapple with daily reports of increasing COVID-19 hospitalizations and deaths, (well before the word “variant” became part of our everyday vocabulary), and while we watched transfixed to see whether Donald Trump would succeed in overturning the expressed will of the American people, fifteen countries came together on November 15, 2020 to sign the Regional Comprehensive Economic Partnership (RCEP) Agreement.

These countries, the ten members of the Association of Southeast Asian Nations, known as ASEAN (comprised of Myanmar, Thailand, Malaysia, Cambodia, Laos, Vietnam, Singapore, Indonesia, the Philippines and Brunei), plus China, South Korea, Japan, Australia and New Zealand will form the bloc. India was an original negotiating partner but elected not to join the others, largely from fear that its internal market would be swamped with Chinese goods. Even without India, the amount of trade within the bloc will encompass 30% of global trade.  This is not surprising given the presence of the world’s second and third largest economies, China and Japan, plus major trading countries like Korea and Indonesia. The RCEP was built on the foundation of several “ASEAN Plus” agreements, that is to say, ASEAN plus China, ASEAN plus Japan, ASEAN plus Korea and ASEAN plus Australia/New Zealand, all agreements negotiated some ten years back or more. RCEP brings these disparate ASEAN-centered agreements together under one umbrella, with common Rules of Origin (qualifying rules for preferential tariff treatment under the agreement). It is estimated that through its trade liberalizing provisions RCEP could lead to income gains of over $200 billion by 2030 and add $500 billion to world trade.

Because of the widely varying levels of economic development among the RCEP participating members, the level of “ambition” in accepting trade disciplines is not as great as in some other trade agreements, notably agreements like those between the US, Canada and Mexico (the USMCA/CUSMA), or between the EU and Japan or Korea. In fact, I have heard RCEP described as being “as wide as the Pacific and as deep as a puddle”. There is something to be said for this description. Compared to another regional trade pact, the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the eleven-country successor to the Trans-Pacific Partnership that included the United States until the US withdrew shortly after Donald Trump took office, the RCEP has fewer binding commitments to trade liberalization and is less aggressive in its reduction of tariffs. (Some of the countries in RCEP—Japan, Australia, New Zealand, Malaysia, Brunei, Vietnam and Singapore—are also members of the CPTPP. The others in the CPTPP are Canada, Mexico, Peru and Chile).

Unlike the CPTPP, RCEP does not contain chapters covering labour, the environment or state-owned enterprises, all issues of great importance in dealing with large emerging markets like China. It also does not provide for common commitments to liberalize trade in services, although there is improvement in some areas for some countries. However, it does contain a chapter on intellectual property (IP), including a number of provisions relating to copyright. While it would be fair to say that the RCEP’s IP chapter is not the most ground-breaking or sophisticated, the inclusion of a chapter on intellectual property is nonetheless important. It is worth remembering that this agreement covers 15 countries with widely differing levels of economic development and capacity, ranging from highly advanced countries like Japan, Korea, Singapore, Australia and New Zealand to rising emerging powers like China and Indonesia to lesser developed countries like Cambodia, Laos and Myanmar. A look at per capita GDP levels is revealing. They range from a high of $65,233 in Singapore to just $1,407 in Myanmar, with a huge variety in between including Australia at $55,060, Japan at $40,246, Korea at $31,846 and China at $10,261. (All figures are from the World Bank, 2019, expressed in USD).

What the IP chapter does do is to set some minimum standards across all these economies. It is based largely on the TRIPS commitments (the Agreement on Trade-Related Aspects of Intellectual Property Rights) in the World Trade Organization (WTO), and includes accession to several IP-related international treaties. In the area of copyright, these include the Berne Convention, the WIPO (World Intellectual Property Organization) Copyright Treaty and the WIPO Performers and Phonograms Treaty, commonly known as the WCT and WPPT, respectively. This will result in Cambodia and Myanmar acceding to Berne, and Cambodia, Myanmar, Laos, Thailand, and Vietnam acceding to the WCT and WPPT, although some of these countries have a grace period of up to a decade or more in which to implement their obligation. The IP chapter includes articles dealing with the protection of broadcast and encrypted program-carrying satellite signals and the establishment of collective management organizations. On this latter point, the wording is somewhat laboured and non-binding, i.e. “the parties shall endeavour to foster the establishment of appropriate organisations for the collective management of copyright and related rights”. Still, it is a start for countries where no such organizations exist.

There is also standard language on technological protection measures (TPMs) and rights management information (RMI). On TPM’s the agreement requires each party to “provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors, performers, or producers of phonograms in connection with the exercise of their rights…”, although exceptions can be provided in accordance with laws and regulations. RMI refers to information that identifies the work, performance, author and so on, of a recording, normally embedded in code. Signatories to the agreement will make illegal the removal or altering of any electronic RMI or allowing the import, distribution, broadcast etc. of works or recordings where the RMI has been removed or altered. All of this is pretty standard stuff in most modern trade agreements, but its inclusion in the RCEP will help propagate these minimum standards.

There is also language requiring the destruction of seized pirated and counterfeit products to avoid them simply being returned to channels of commerce (as often happens in developing countries), and provisions to suspend release of suspected pirate goods at a rights-holders request. Damages in civil cases will be commensurate with injury, i.e. statutory damages are not referenced.

What is not in the agreement is any reference to providing safe harbours for internet platforms, absolving them of any civil liability for content posted by their users. Of late, this has become one of the standard “asks” put forward by USTR when the United States negotiates trade agreements. The USTR language is based on Section 230 of the Communications Decency Act, 1996, a highly controversial piece of legislation in the US. I and others have argued that it has no place in the text of a trade agreement. Canada and Mexico agreed to a watered down version of Section 230 in the new NAFTA, known as the USMCA (CUSMA in Canada), but given calls in the US to amend or eliminate Section 230 it is hard to believe that its inclusion in the USMCA will have any material effect on any of the parties in terms of holding the platforms to greater account for hosting illegal or harmful content. With respect to the RCEP, this is all moot. Since the US was not a party to the negotiations, Section 230-type safe harbours didn’t come up and none of the fifteen RCEP countries had the least interest in raising the issue. Likewise, there is no inclusion of a safe harbour regime for intellectual property infringement as in some other agreements, where implementation of a notice and takedown (or equivalent) regime gives platforms protection against liability provided they respond expeditiously to bona fide takedown requests.

Some commentators have argued that the RCEP “focuses more on the balance of rights and obligations to prevent the abuse of IP rights”, but the language in the preamble, which talks about reducing impediments and distortions to trade, fostering innovation and creativity and maintaining an appropriate balance between rights-holders and users is not significantly different from the TRIPs preamble (1995) or the IP chapter preambles in more recent trade agreements like the USMCA/CUSMA. In fact, it’s a good beginning. It would have been very concerning had there not been an IP chapter in this large regional trade agreement.

For RCEP to come into effect it still has to be ratified by at least six ASEAN member states and three non-ASEAN states. Once ratified, it will join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) as an operating trade bloc in the Asia-Pacific region. The CPTPP has been ratified by seven (Australia, Canada, Japan, Mexico, New Zealand, Singapore, Vietnam) of its eleven members and has now been in effect for two years. The overlap between some RCEP and CPTPP members has led to talk of a long term aspirational goal of a Free Trade Area of the Asia Pacific (FTAAP) that would be an eventual merger of the two agreements. If that ever happened, the more comprehensive terms of the CPTPP’s IP chapter would undoubtedly prevail. (Right now, the US is the only major Asia-Pacific state not in either, but under the Biden Administration the US position may eventually change).

RCEP is a welcome step forward at a time when global trade has been threatened not only by the global pandemic but also by the increasing resort to unilateral protectionist policies on the part of some countries, such as the US under the Trump Administration. While the IP chapter and its copyright provisions are not the most sophisticated or far-reaching, they nevertheless provide a positive step forward in terms of levelling up standards of IP awareness, compliance and commitments across 15 economies–large and small, developed and developing–in the Asia-Pacific region.

© Hugh Stephens 2021. All Rights Reserved.  

Google Reaches a Deal on News Content with French Publishers but Goes to the Brink in Australia

Source: http://www.shutterstock.com

Finally, after months of negotiations, Google and the main French publishers’ organization (Alliance de la Presse d’Information GeneraleAIPG) have reached agreement on the principles under which Google will pay news publishers in France for use of their content in Google’s online offerings. This agreement, which reportedly covers issues such as daily volume, monthly internet traffic and contribution to political and general information will open the way for licensing deals with individual French publishers. As I wrote back in April of last year (Holding Google to Account: France Takes a Stand), it took months of protracted negotiations backed by a firm stance from the French government to reach a deal.

At that time, the French Competition Authority issued an order requiring Google to negotiate with French press publishers and news providers regarding licensing fees for news content appearing in Google search listings in France. The Authority gave Google three months to negotiate “in good faith” and come up with an agreement resulting in payment to publishers. France was the first EU member state to put in place measures to implement a new “neighbouring right” provided to publishers as part of recent revisions to the EU Copyright Directive. Google appealed the Authority’s ruling–and lost. As a result, Google started negotiating with major French publishers, including Le Monde and Le Figaro, on a revenue sharing deal, but some publishers remained opposed. The framework agreement with AIPG appears to resolve this. The conclusion of a deal in France demonstrates the need for government muscularity in dealing with this behemoth of a global corporation.

Google will fight tooth and nail to avoid any changes to its business model–through the courts, influencing public opinion, direct lobbying of national governments, and by seeking to enlist the support of the US government—as any powerful corporation would do. It takes political courage to stand up to Google, and a firm and consistent line is essential. Australia is another country learning that Google has sharp elbows and plays hardball.

Google pushed back—hard—when Australia announced it was going to introduce a new code (News Media Bargaining Code) regulated by its competition authority, the Australian Competition and Consumer Commission (ACCC), and it continues to do so. The code would require the major internet platforms (Google, Facebook) to enter into negotiations with Australian news content providers to reach revenue-sharing agreements regarding the use of news media content in the platforms’ online offerings. If no agreement is reached, an arbitrator would determine the direct and indirect value of news content to the platforms, the cost of producing it, and evaluate the impact of payment on the platforms. In response, Google launched a scare campaign threatening that Australians could lose free search, then urged Australians to swamp the ACCC with complaints.

The Australian government has not backed down to what it has termed “bullying tactics”, and it proceeded to introduce the legislation in December of last year. Meanwhile, Google was fighting rear-guard actions in other countries and, as part of its strategy, “blinked” to some extent by announcing that it was prepared to enter into licensing negotiations, on its terms, with some media outlets in some countries.  Among these countries was Australia, but no sooner were the agreements announced than Google pulled a bait-and-switch by announcing suspension of its Australian agreements because the Australian government was continuing to develop the news media bargaining code.

When the Australian legislation was finally introduced in December, it contained some concessions to Google and Facebook by explicitly recognizing that there is monetary value in the service that the platforms play by referring readers to news content. This value would have to be taken into account in any negotiations between the platforms and content providers over access to content. But this did not satisfy Google. It has gone nuclear by threatening during testimony with Senators on the legislation to once again block access to Google Search by Australians. First it “experimented” by blocking search results to Australian news sites and is now seriously threatening to close down the Search offering in Australia altogether.

Could it do so? Indeed, it could, as it has done in China, but would it? That remains to be seen. It is hard to believe that Google would abandon a market the size of Australia, where it dominates search to the tune of about 90%, and allow its competitors (Bing, Yahoo, DuckDuckGo and others) a leg up. It is also not clear whether closing down its search function would affect other Google offerings, such as Google Maps, Youtube etc. or if Australians could continue nonetheless to access Google offerings outside Australia, possibly by using Virtual Private Networks (VPNs) to skirt any geo-blocking imposed by Google. It’s all potentially very messy.

Google is also trying to get the US government to intervene, with some success. In a submission dated January 15, just five days before the Trump Administration left office, the US Trade Representative’s Office wrote that, “the U.S. Government is concerned that an attempt, through legislation, to regulate the competitive positions of specific players in a fast-evolving digital market, to the clear detriment of two U.S. firms, may result in harmful outcomes”. Harmful to whom, one wonders? Whether the Biden Administration will be as eager to take up cudgels for Google remains to be seen.

Is this about the money, or the principle? A bit of both, but mostly the latter. Google has demonstrated that it is prepared to throw some money at the problem by rolling out its $1 billion (over three years) news content initiative, announced back in October, but it wants to do it “voluntarily”, and on its terms. Its tussle with Australia is being watched by many countries (not the least of which is Canada, where news publishers have been pushing the government to take action to require the big internet platforms to share revenues generated through access to content that the publishers have produced). In France it took months of negotiations, backed up by pressure from the French government and the courts, to get a deal that satisfied both publishers and Google. The Australian government will not be easily cowed and Google is treading a dangerous path with its threats, but it also will not give way without a fight.

It is hard for me to believe that some compromise will not be found. Australia is too big and too important a market for Google to abandon. It reportedly generates about $4 billion per year in Oz, although only A$134 million of this is booked as profit. It can’t walk away from every market where it is under pressure to come to terms with news content providers. By the same token, Australia does not want to push Google so hard that it becomes the test case, but Australians, especially Australian politicians, don’t like to be threatened. That is not a wise thing to do. However, the legislation is not cast in concrete at this point; indeed the whole point of the Senate review is to assess the impact of what is being proposed and to identify areas where the legislation could be improved. I fully expect that a few tweaks will be made (the Senate Committee’s report with recommendations is due February 12) that in the end will be acceptable to Google—particularly tweaks to the arbitration process that is likely to take place after the news publishers and Google fail to agree on terms voluntarily, as seems almost inevitable. At the same time, the legislation will establish the principle of requiring payment for providing access to news content. The Australian government will settle for nothing less.

Google won’t like it, but its credibility is under threat from many sources, not the least of which are anti-trust suits in the US, and it doesn’t have many friends.  Other countries are watching and waiting to see how things will play out in Australia, after noting the agreement that was reached in France. One thing is clear. Without the threat of force majeure by governments, Google will carry on with business as usual.

France held the line, and a deal was reached. I expect something similar will happen in Australia (although if both sides are obstinate, this could go to the brink). Despite fighting to never give an inch, Google will likely have no choice but to accommodate demands from established news content providers for a reasonable degree of sharing of revenues generated from use of their content.

© Hugh Stephens 2021. All Rights Reserved.

Ay, There’s the Rub: When You Cannot (or Should Not) Copy Something Despite its Lack of Copyright Protection

Credit photo: author

Several decades ago, in my younger days, my wife and I spent a summer in England visiting the many historical sites of that great country. During that trip, we visited a number of cathedrals. I don’t remember them all, but Winchester was one for sure. I still have vivid memories of young students sprawled out on the floor of the cathedral taking rubbings from the brass effigies of knights and clergy inlaid in the stone floor. That was a popular pastime “back in the day” (and earlier going back to Victorian times) although today it is discouraged because of the obvious impact on the integrity of the originals from repeated rubbings. It can still be done, but normally from reproductions, such as those found at St. Martins-in-the-Fields in London, where reproductions of famous effigies from throughout England have been collected so tourists can take rubbings from them. You can also buy reproductions of the rubbings for a modest sum.

My mind flashed back to these brass tomb rubbings when I recently visited Gabriola Island, one of the southern Gulf Islands in the Salish Sea between Vancouver Island and the mainland of British Columbia. Gabriola is home to large numbers of petroglyphs (more than 70 in total), rock carvings executed by the native people of the area, the Snuneymuxw (pronounced Snoo-nai-mu), over many hundreds of years. While it is hard to date the carvings, most are believed to be several hundred years old, or older, although some may be of relatively recent vintage. They depict all manner of wildlife and anthropomorphic figures and are scattered around the island, some near the coast, others in auspicious rocky areas, most on private land.

Gabriola is also known for its unusual sandstone features. Over the centuries the soft sandstone has been eroded by the ocean to create waterside “galleries”, clearly visible at low tide. The most famous of these are the “Malaspina Galleries”, covered arcades that people can walk into. The galleries and the petroglyphs have been an attraction ever since the days of the first European explorers. The University of Washington has a photograph of an engraving dated 1792 made from a sketch drawn by Spanish explorer Jose Cardero showing European and native visitors viewing a petroglyph carved on the underside of one of the Gabriola gallery roofs.

Given the attraction of the petroglyphs, and in order to prevent damage to the originals, a few years ago a project was started to make casts of most of the glyphs and display the castings on the grounds of the local museum, laid out on the ground amongst the trees. As they soon became covered in the soft moss typical of the island, they took on the aura of the originals. People, especially student groups, were encouraged to visit the castings and the museum to learn the history of the Snuneymuxw people and as part of the educational experience, they were allowed—even encouraged—to take rubbings of the images displayed in the reproduced castings. The museum even supplied rubbing kits for a small fee.

That was then—a few years ago. Now the signs encouraging the making of rubbings have been (sort of) painted over and the rubbing kits are no longer for sale. The Gabriola Museum has posted a sign saying that after consultation with the Snuneymuxw Nation, the taking of rubbings from the castings is no longer permitted. Why the change? After all, these are “just” reproductions. And aren’t they public domain works? They are not protected by any form of copyright.

To answer this question, we need to look deeper at the origin and meaning of the glyphs, and also to understand the broader global context regarding the protection of indigenous cultural expression. As I discussed in a blog last October (Can Copyright Law Protect Indigenous Culture? If Not, What is the Answer?), a number of countries are grappling with how to adapt copyright laws to protect Indigenous Cultural Expression (ICE). One solution may be an international treaty which has been under negotiation at the World Intellectual Property Organization (WIPO) for a number of years, called the Treaty on Intellectual Property on Genetic Resources, Traditional Knowledge and Folklore, but this is a slow process that may ultimately not be productive. Another might be to establish a rights-management agency for indigenous culture, along the lines of what is being considered in Canada. This would allow users to gain consent and license the use of protected cultural expressions (images, designs, music, dances and so on) while at the same time protecting them and restricting their use, even if they are not subject to copyright. A key piece of the puzzle is the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) that has been endorsed by 144 countries, including the US and Canada. The Declaration, although not binding in domestic law in many countries (US and Canada are examples) gives indigenous peoples the right to maintain, control, protect and develop cultural heritage including literature, designs, visual and performing arts, and other aspects of traditional knowledge.

In line with the right to control and protect cultural artifacts, it may be that some are considered so sacred that they should not be reproduced at all. There are numerous petroglyph sites in the US (in Arizona, New Mexico, Nevada, Utah, Washington, Illinois, Michigan, Missouri, even Hawaii) and there is a major petroglyph site in eastern Canada, north of Toronto. At Petroglyphs Provincial Park all the glyphs are protected by a weatherproof building, and even photography of the images is not allowed. At the Petroglyphs National Monument in New Mexico, the National Parks Service has this advice for visitors; 

We encourage you to respect the beliefs of the descendants of those who carved the images on the rocks. The petroglyphs within the park are sacred to many people living in the area today. Out of respect and consideration of present day peoples, we currently do not post any images on our website or place any images in our publications that display the human form. We would encourage you not to use the images for commercial purposes.

As you can see, if even photography is often not allowed or is constrained, it is understandable that taking rubbings, even of reproductions, can cross the line of what is acceptable. There is obviously a balance somewhere between limiting access and reproduction for spiritual reasons, and promoting dissemination of the images for purposes of education and awareness.

It seems to me that the Snuneymuxw people and the Gabriola Museum have been able to find that balance by keeping reproductions of the glyphs on display in a natural respectful setting–along with providing suitable explanations and interpretative materials–while avoiding demeaning the symbolism of the images by allowing them to become a form of children’s activities or “entertainment”.

As for the connection with copyright, while copyright cannot be invoked to prevent unauthorized reproduction in this case—it’s just not the right instrument—many of the principles of copyright, including the concept of moral rights, are in play here. Fundamentally, it is a question of respect; respect for the artist (or artists) who created the work, and respect for the meaning and essence of the work. While the artists who created the works are not in a position to give or withhold permission to use or reproduce them, the stewards of the works (the current leaders of the tribe or First Nation) are entitled to do so. To me that is similar to basic elements of copyright—respect for the results of creative endeavour through appropriate use with permission (with or without an incentive as the case may be).

© Hugh Stephens 2021. All Rights Reserved.

Opera and Copyright: Why is Mozart Performed More Often than Modern Composers? (Is Copyright the Reason?)

Source: http://www.shutterstock.com

Early in the New Year I thought it might be fun and interesting to look at how copyright and opera intersect, not that much opera is being performed these days. However, if the COVID vaccines are rolled out quickly and effectively (right now this seems more like a hope than an expectation), allowing public performances to resume, then La Scala, the Met and all the other famous venues may be back in business by the end of 2021. That’s something for lovers of opera to look forward to.

Many of you may fall into the category of true opera aficionados. You’re able to hum famous arias, know all the main characters in The Magic Flute, can sing the libretto in Italian of The Barber of Seville, and are able to recite Beverly Sills’ most renowned performances. I also suspect that many others are a bit like me. We love to go to the opera occasionally, for the music, the costumes, the whole spectacle. And when we go, we usually choose to see some very familiar work—Carmen, or Marriage of Figaro or La Bohème, for example—because, well, they’re familiar.  We like to hear the music and songs that we remember, and follow the stories that we more or less know (while recalling that all opera plots are generally ridiculous and that most of the characters on stage will eventually come to a tragic and unhappy end). To keep us—the average opera-goer—coming back for more, artistic directors ensure that their programming includes a healthy dose of the classics. More avant-garde, experimental pieces are usually mixed in but the bread-and-butter of most companies, seeking to ensure balanced budgets and full houses where possible, are the tried and true “recognizable” works. There is nothing very surprising in this. Symphony orchestras work much the same way, balancing the need for popular appeal by regularly playing the classics combined with trying out new pieces to expose audiences to something different.

Thus it was with great interest that I recently read a research piece from WIPO, the World Intellectual Property Organization, that suggested copyright might be the reason why more classical operas, which are in the public domain, are performed than are modern pieces that are still under copyright protection. (There was the usual disclaimer for such think pieces that the views expressed were those of the authors, and did not necessarily reflect the views of WIPO or its member states.). The study’s focus is stated as follows; 

“Today, the works of almost no living composers are performed on global opera stages….Why are we not seeing more performances of modern operas? What are the factors that have driven new works off the stage? While previous research has focused around how copyright incentivizes composers to create new work, we’ll be taking a look at the economic role of copyright and how it affects opera houses’ decisions around staging and reusing works. Is granting exclusive rights to new opera works actually excluding them from the stage?”

The paper points outs that of the 50 most widely performed operas globally in 2017-18, only 1 percent of them were written by composers born in the 20th century (29% of composers were born in the 18th century and 70% in the 19th century). The only 20th century work in the top 50 was Leonard Bernstein’s Candide. It had 111 performances during this time period. The most popular, Verdi’s La Traviata, had 853.

To the question of whether copyright encourages creativity in the opera world, the paper argues that while in theory copyright incentivizes composers to create new operas by granting them exclusive rights, in the case of opera this might not be true because “new, avant-garde works tend to attract smaller crowds and sell at lower ticket prices compared to the many popular works in the public domain. Opera houses have low expected revenues from these performances so the cost of licensing them from composers becomes too high.”

The first part of this statement is certainly true, but does it follow that lower revenues mean that the cost of licensing new works is too high relative to anticipated income? To me this is a questionable conclusion although the paper states that it can document that works are performed more frequently (plus 15 %) once they are out of copyright than when they are under copyright protection.

The extension of the argument that new works are performed less often because of licensing costs is that artistic directors select which operas they will perform based on whether or not they have to pay royalties. Why not go for Mozart, when his work is in the public domain, over, say, John Adams, the composer of Nixon in China, Doctor Atomic and a number of other modern operas. Could licensing fees really be that significant a disincentive and does payment of royalties skew the decisions as to which works to produce? I think this is a dubious proposition where adding 2 plus 2 has yielded 5. Yes, many fewer modern operas are produced than classical works, and yes, modern operas require payment of copyright licensing fees whereas classical works don’t. But is there a direct correlation between these two sets of facts or are there other factors at play—factors such as the tastes of “average” opera-goers like me?

In a search to find out, I contacted the artistic director of my local professional opera company (Pacific Opera Victoria), Maestro Timothy Vernon, putting the question to him. He responded that “royalty payments are important in drawing up a workable budget, but are seldom if ever a determining factor in deciding to produce any given opera.” Maestro Vernon said that if a copyrighted work is chosen, there will be a negotiation with the publisher, taking into account factors such as the size of the company, its audience and budget, and the popularity of the work. As artistic director, while mindful of financial parameters, first and foremost he considers artistic aspects in making choices as to what works to offer to his audiences, recognizing that there are 400 years of opera creation to draw from.

That is only one view, but I suspect it is a common view among those who determine what works to offer audiences in the opera world. Artistic considerations come first.

Another factor to consider is the cost of royalties in comparison to the considerable expense in putting on an opera. I am not privy to what it costs to license an opera production but as Timothy Vernon noted, often a negotiation takes place. In the elusive search for truth, I went on the internet and tried to research the cost of vocal scores and full scores for a couple of modern operas, namely two by John Adams, Nixon in China and Doctor Atomic. Some well-known sources of musical scores are the famous British music publisher Boosey and Hawkes and the longstanding US firm of J.W. Pepper (which sells the Boosey and Hawkes produced vocal score of Nixon in China). Ordering the vocal score of Nixon directly from Boosey and Hawkes will cost $99 (all prices in USD). If ordered from J.W.Pepper the price is a bit cheaper at $85. The full score is available for only one piece from the opera, Chairman Dances, for $45. Boosey and Hawkes informed me that the full score for Nixon was not available for sale, but perhaps it could be available “to hire”. The full score of Doctor Atomic is available from J.W. Pepper for $175 and just the vocal score for $75. This seems like a pretty modest sum, but then I am not sure how many copies are required. I assume that if a large number are purchased for the choir, a bulk rate could be negotiated. In sum, the amounts involved are more than trivial but less than significant, and compared to the total cost of mounting an opera, the cost of copyright licensing can hardly be considered the key factor in determining whether or not to stage a particular work. To the question posed “Does copyright actually encourage the creation and promotion of new opera works?”, I would have to answer that it certainly does not discourage it.

While I disagree with the proposition that “copyright may act as a barrier to entry and licensing cost hurdle for new, more avant-garde operas, particularly for new productions that are outside of an opera house’s standard production repertoire” (because the WIPO research piece overstates the role of copyright fees in determining which works get air time), the issue of how new pieces can get performed in order to attract recognition and popularity among audiences is a real one. The author of the WIPO document (Alexander Cuntz) offers a couple of suggestions to remedy this problem. First, he proposes that consideration be given to establishing a new collective management system for licensing opera productions, which would require that a new collective rights management organization be established.

Another is to encourage the testing of new opera on both stage and on digital platforms, in order to give new productions greater exposure. If copyright fees are truly a disincentive to staging more new operas (a conclusion about which I have reservations), he argues that lower streaming royalties could be negotiated to encourage digital productions. However, if copyright fees are not the real problem but simply mask the basic issue which is the unfamiliarity of audiences with new works, distributing productions online will only partially solve the problem. Digital distribution will reach more audiences, but there are two issues that need to be addressed; production costs and revenue generation. Production costs for a digital opera production may be somewhat less given that it only needs to be performed once, and then recorded, but initial costs will still be close to a live performance. On the revenue side, it has proven difficult in many fields to raise significant revenue from digital offerings, or at least as much revenue as from a live performance. A livestream performance should bring more revenue than a recording, but even a livestream performance is unlikely to begin to match the cost of seat at a live opera. Views of a recorded performance will generate a much lower return. One can argue that the lower unit cost of a digital performance can be offset by repeated viewings, but this is unlikely to close the revenue gap.

The WIPO paper posits the conundrum that copyright exists to incentivize new production yet, if you buy the argument in the study (which I don’t), it also tilts the playing field in favour of public domain works because of the cost of royalties. However, you could make the same argument about plays or symphonies, but I doubt if the timeless popularity of Shakespeare is a result of Hamlet or Romeo and Juliet being in the public domain as opposed to the work of any modern playwright. Rather it is a result of audience choice, and familiarity with those classical works that have stood the test of time precisely because they are the best of the lot. Artistic directors have learned to their peril that while they may wish to “educate” their audiences and challenge them with new, sometimes avant-garde works, the operas that pay the bills come from a limited repertoire of classical favourites. The finger of copyright rests very lightly if at all on the scale that determines which operas get selected for production. In fact, I will wager that in almost all cases, copyright is scarcely a factor at all.

© Hugh Stephens 2021. All Rights Reserved.

Making Sausage: How the CASE Act Finally Became Law

To kick-off 2021, which we all hope will be a better year than the last annus horribilis, let’s look back at one of the closing chapters of 2020, the last minute passage in the US of the COVID-19 relief package and government funding bill which was finally signed into law by Donald Trump on December 27, 2020. While of primary interest to many Americans because of the COVID relief payments contained in the bill, it also included an important piece of copyright legislation, the CASE (Copyright Alternative in Small-Claims Enforcement) Act. How this welcome legislation ended up being included in the year-end spending bill is part of the “meat-grinder” story of US politics. It started with an individual Senator.

One of the unique features of the US congressional system is the power that elected members of Congress exert over the legislative process, unlike the Westminster system that readers in Canada, the UK, Australia, New Zealand, and India (among others) will be familiar with. Under the Westminster model, the executive branch, aka the “government”, usually controls the legislative branch (Parliament) through an elected majority or coalition. Once legislation has been introduced by the government, it is normally passed by Parliament and becomes law subject to the normal process of review through an all-party committee–which in most cases is dominated by government members. By contrast, in the US system there is no guarantee that legislation desired by the President will become law.  Congress is not easily controlled, especially if one or both Chambers of Congress are dominated by a party different from that of the President. Given the US system of checks and balances, as we have seen when an executive branch (Administration) does not control the legislative (Congress) branch, all sorts of things can happen—or not happen. Just ask Barack Obama.

Moreover, individual Members of Congress–normally Senators of long-standing–have far more power than individual Members of Parliament in a Westminster system. They can hold up legislation by placing a “hold”, thereby preventing it from reaching the floor for a vote (assuming they have the support of their Senate leader), or broker deals to add amendments to a piece of legislation or even add unrelated legislation to a “must pass” legislative bill, tacked on as a free rider. Usually the free riders are bills that have been unable to get legislative traction for one reason or another yet are sufficiently unobjectionable that their passage as part of a larger, important spending bill (which usually has bipartisan support by the time it goes to a vote) does not become a make-or-break issue. It is standard practice that many extraneous bills are added as “decorations” to the annual year-end spending bill, and 2020 was no different.

Assuming passage in both Chambers of Congress, there is one more step before a bill—with all its “decorations”—becomes law. It goes to the President for signature. The President can sign, not sign, or veto the bill. While it may seem strange, there is a distinction between not signing and vetoing. If the President does not sign a bill (but does not veto it), it still automatically becomes law ten days (excluding Sundays) after it has been physically conveyed to the White House. However, if the President vetoes the legislation by sending it back to Congress, it is blocked–but can still become law if the veto is overridden by a two-thirds majority vote in each Chamber, with both the House and Senate needing to sustain the override. So much for the civics lesson for those of you who have forgotten, or never knew, the arcane details of how the US system works.

So how does all of this relate to copyright? The history of the CASE Act is an illustrative example of how a determined and obstinate Senator can block the expressed will of both Chambers of Congress, but also a lesson in how a strategic move by supporters of the Act finally succeeded in getting it passed by attaching it to 2020’s critical year-end money bill, thus getting it through the meat-grinder and bypassing the obstruction of one Senator, Ron Wyden of Oregon.

The CASE Act may not be much of a household word to creators and those interested in copyright outside the United States, but in the US it is a welcome and important step forward in allowing smaller creators to deal with copyright infringements of their works without having to resort to expensive court procedures. Think small claims court for copyright holders. The CASE Act will establish a Copyright Claims Board within the US Copyright Office where small claims can be adjudicated. Claims Board findings will not be binding and can be appealed to the courts, but nonetheless will offer an important alternative to expensive litigation. The Act has been opposed by several anti-copyright groups, such as the Electronic Frontier Foundation, Public Knowledge and other “usual suspects”, who have attacked it on the basis that it becomes easier for copyright owners to file infringement claims. This is perfectly true, and is precisely the point of the legislation, which is to level the playing field for small creators. There are several limitations to prevent any supposed “abuse” of process, such as limits on the amount of damages that can be claimed ($15,000 per work and $30,000 per claim) as well as an opt-out for the accused infringer who has the option of declining to participate in the process, instead resorting to litigation.

The legislation in its present form was introduced into the House of Representatives in May, 2019 and in October of that year passed overwhelmingly by a bipartisan vote of 410-6, with 15 abstentions. A companion bill was introduced in the Senate sponsored by both Republican and Democrat Senators and was approved unanimously by the Senate Judiciary Committee. At that point, Senator Ron Wyden (D-ORE) placed a “hold” on the Senate bill, stopping it in its tracks and preventing it from moving forward until he released his hold. Wyden claimed that he was not opposed to the Bill per se but had concerns with some of its provisions. For example, he claimed the ceiling of $30,000 was too high, that minors posting memes could be targeted, that the small claims process would stifle fair use, and on and on. All these and other points were effectively and carefully rebutted in detailed post written by Terrica Carrington of the Copyright Alliance, which along with many other creative and pro-copyright groups, supports the legislation. Negotiations were undertaken with Wyden’s office over a period of several months to try to reach a compromise, but it became clear that he was not really interested in finding a solution. A group of professional photographers in Oregon even tried to shame Wyden, putting up a billboard in Portland in January of 2020 that asked “Why are you holding Oregon creators hostage?” Wyden would not be moved.

Fast forward to late December 2020 and the Congressional impasse over approval of the $900 billion COVID-19 relief bill, a piece of legislation with 5,593 pages, apparently the longest bill ever. Along with provisions that would provide immediate financial relief to American families and businesses, it included a $1.4 trillion spending bill to keep the US Government going, and a host of other measures bundled into the year-end legislation. The CASE Act was one of the add-ons, along with a number of other pieces of added legislation. The New York Times reported that among the additional items was legislation regulating horse-racing, a pet project of Senate Majority Leader Mitch McConnell from Kentucky, as well as measures as varied as eradication of murder hornets,  control of online sales of e-cigarettes to minors and authorization of federal land for the construction of the Teddy Roosevelt Memorial Library in North Dakota.

The Consolidated Appropriations Act, 2021, with all these inclusions, finally passed in the Senate near midnight on December 21 by a vote of 92-6 and in the House by 359-53. Such bipartisan action is rare in Washington these days, but the clock had run out both on funding the US government as well as getting needed relief during the COVID-19 pandemic to US families. After the key compromises on spending were worked out between the Republican and Democrat congressional leadership, the Bill passed quickly with little scrutiny. Donald Trump threatened to veto it for various reasons (none related to the Case Act) but in the end, he signed.

How much attention was paid by legislators to the “add-ons” such as the CASE Act and others? It’s fair to assume that not a lot of attention was paid to many of the add-on provisions in the dying days of the “Lame Duck” session in December 2020, but with respect to the CASE Act there had already been plenty of scrutiny over a number of years, as well as thorough review in Congress when it was first introduced. It hadn’t progressed legislatively because, as pointed out, it had become hostage to the individual agenda of one Senator despite widespread support. With its passage, there were the predictable “sky is falling” claims from anti-copyright groups, who criticized the legislative process as well as the legislation itself, but in the end the will of Congress was enacted through the omnibus mechanism of the Consolidated Appropriations legislation. The US Copyright Office, which has supported the CASE Act proposals since release of its own detailed study of the issue back in 2013, will now be required to establish detailed procedures to implement the legislation.

While omnibus bills are arguably not the most transparent legislative procedure for getting things done, they are increasingly being used, and not just by the US Congress. In Canada, the previous Conservative government of Stephen Harper had a proclivity for bundling many unrelated issues into omnibus finance bills. Critics claimed that this tactic made it impossible for Parliament to adequately scrutinize legislation. Indeed, the Harper government passed the last amendment to Canada’s Copyright Act, a provision that extended the term of copyright protection for sound recordings from 50 years after release to 70 years, in the 2015 omnibus finance bill. Despite criticism from opposition parties at the time, the subsequent Liberal government of Justin Trudeau has also resorted to omnibus legislation, with a budget bill that included legislation related to immigration, food and drug regulation, parks and indigenous services, and other unrelated items. Given the delays that legislatures often face today owing to legislative backlog, as well as the increasing inability to find bipartisan solutions as is evident in the US Congress, bundling legislation is becoming an increasingly common means of getting things done.

Was inclusion of the CASE Act provisions in the year-end spending bill the ideal legislative solution? That probably depends on your perspective. It has been said that politics is the art of the possible, so if Ron Wyden was justified in using the rules to block a piece of legislation that he didn’t like, proponents were equally justified in harnessing the rules to achieve their objective. The creative community in the US, which struggled for years to bring something like the CASE Act into being, was delighted with the outcome. Ron Wyden, who saw his one-man “hold” tactic defeated, probably less so.

Otto von Bismarck is reputed to have said, “Laws are like sausages. It’s better not to see them being made.” This particular sausage took a long time to get made, but in the end it emerged intact from the meat-grinder. It is now part of the menu; a welcome additional measure to help the creative community in the US protect its rights against widespread copyright infringement through what the Copyright Alliance describes as, a “voluntary, inexpensive and streamlined alternative”. That’s pretty tasty sausage.

© Hugh Stephens 2021. All Rights Reserved

2020. The Annus Horribilis—but Creators and Creative Industries will Bounce Back

Source: http://www.shutterstock.com

They say that hindsight is 20/20. Well, looking back at 2020, the annus horribilis, one could be forgiven for not having a clear view of what was to come when the year began, with vague rumours circulating of yet another virus in China emanating from wild animal markets. Surely it couldn’t be as bad as SARS? As this challenging year draws to a close, we are all a little bit wiser and a little bit more skeptical of the “don’t worry; it’s all under control” messages from those who are supposed to know.

COVID-19 around the World

Looking back at 2020 wearing a copyright lens, what do we see? It’s been a devastating year for creators, especially those who perform live for a living. Early in the pandemic, in March, just a couple of weeks after the first lockdowns were imposed, I wrote about the initial response from governments and others to the plight of creators who saw their livelihoods imploding. Concerts, plays, and other stage performances were cancelled overnight. Galleries, libraries, bookshops and record stores shut down. Half the world (the half with internet access) went online. Creators and creative industries responded with a range of virtual offerings and new online materials for adults and children. Unfortunately, others took advantage of the situation to advance their own agendas, like the Internet Archive’s unilateral declaration that it would be happy to make other people’s (copyrighted) works available online for free. As I wrote in April in this blog, (“COVID is Not an Excuse to Throw the Accepted Rules Out the Window: Copyright as the Canary in the Coalmine.”);

“…it is extremely disappointing to see special interest groups taking advantage of the COVID crisis to push their personal pre-COVID agendas. In the case of copyright, this consists of using the crisis to attack the fundamentals of copyright protection, namely the right of creators to control distribution of their work, and thereby to earn a return on the sweat equity they put into the creation in the first place.”

By the fall we were into the “second wave” and the impact of the pandemic on the copyright and cultural industries was even more apparent. My blog in November “Covid and Culture: What’s Around the Corner”) chronicled the damage to cultural institutions, such as museums and heritage sites in various parts of the world where the lack of visitors has, in some extreme cases, resulted in lack of maintenance, vandalism and a cessation of research and preservation activity. The economic damage to the creative sector even in western countries with generous government financial support programs and good internet infrastructure has been devastating. Brookings estimated that the cost to the creative sectors in the US for just the period April to July to be about $150 billion with the loss of 2.7 million jobs.

New Copyright Interpretations in Canada Compound the Challenge

The economic hit from COVID was compounded by the ongoing value gap faced by performers trying to live off the digital pennies distributed by online platforms and, in Canada, a court decision that had the effect of undermining an important element of copyright protection. This was the result of the ongoing legal saga pitting York University versus Access Copyright, a landmark case which took yet another twist. Back in 2017, Access Copyright (AC), the copyright collective representing authors and publishers, won a significant victory at the Federal Court regarding York University’s unlicensed use of materials in AC’s repertoire. The Court ruled that York (which was in effect acting as the proxy for most post-secondary institutions in English Canada) was required to pay the interim tariff (i.e. regulated license fee) established by the Copyright Board of Canada for use of AC’s materials, while it also dismissed York’s claim of fair dealing with regard to its use of these materials. In other words, the Federal Court ruled that if any content within AC’s repertoire was used, payment of the tariff was mandatory, not discretionary. York appealed.

In April of this year the Federal Court of Appeal (FCA) delivered a stunning decision. It overturned the initial ruling that had affirmed the mandatory nature of the interim tariff and went on to declare that all tariffs, interim or final, established by the Copyright Board are discretionary. Moreover, the FCA declared that payment of the tariffs always had been discretionary despite decades of practice based on the assumption that once certified by the Board, tariffs were applicable to all who used materials in a copyright collective’s repertoire, whether licensed from the collective or not. This stood the established copyright order on its head, as I wrote in a blog posting, “When is a Mandatory Copyright Tariff mandatory only if you Opt-in?”. The FCA’s decision has in turn been appealed to the Supreme Court of Canada, which has agreed to hear the case. This could, however, take years. In the meantime it would be far better for Parliament to address this anomaly by amending copyright legislation to undo the damage of the FCA’s decision. There are expected to be opportunities to do this in the next year or so as there are several copyright-related issues that need addressing.  

News Publishers vs Big Internet Platforms: Revenue Sharing in France, Australia and Elsewhere?

One such issue is that of the relationship between the big internet platforms and news providers. There is growing global pressure for the introduction of measures to require the platforms to share with content providers some of the online advertising revenues that are generated by using excerpts of their content in search listings and social media posts. France and Australia have been the first two countries out of the starting blocks on this, although the UK, Canada and some EU countries have not been far behind. There has been less pressure in the US, although a proposal has been floated in Congress to grant an anti-trust exemption to news publishers to allow them to negotiate collectively with the platforms without falling afoul of competition law.

As I wrote back in April (here), in France the authorities took the gloves off and gave Google three months to engage in good faith negotiations with publishers to come up with an agreement that would result in payment to news content providers. France was thus the first EU member state to put in place measures to implement a new “neighbouring right” provided to publishers as part of recent revisions to the EU Copyright Directive. Google appealed the French Competition Authority’s ruling, and lost. The result has been a recent announcement that Google has finally reached agreement with six major French news publishers, including Le Monde and Le Figaro, on a revenue sharing deal. This isn’t the first time that Google has blinked.

In October of this year, Google announced it was establishing a $1 billion fund (over three years) to pay for curated news content, starting initially with Germany, Brazil, Canada, the UK, Australia and Argentina. Most of the initial agreements were with smaller, lesser-known publications. Perhaps not surprisingly, these are countries where governments have been actively pursuing measures to level the playing field between those who create the content and those who benefit financially through distribution or indexing of this content. Australia has been particularly active, through its competition bureau, the Australian Competition and Consumer Commission (ACCC), which has developed a draft News Media Bargaining Code, targeted particularly at Google and Facebook.

Both platforms pushed back strongly, trying to mobilize Australian consumers to oppose the ACCC’s plans by threatening to reduce or curtail services. The Australian government indicated in no uncertain terms that it was not prepared to back down, and Google was denounced by Australian Treasurer Josh Frydenberg for using bullying tactics. Immediately after Google announced its media fund, (which included some smaller Australian media players), it promptly put its Australian program on hold because of its unhappiness with the ACCC’s draft code. As I wrote at the time, it was a classic case of bait and switch. (“Google in Australia: Dangle the Carrot, then Yank it Away”). That tactic didn’t work, however,  and in early December of this year Australia proceeded to introduce legislation that will require Google and Facebook to negotiate with Australian news organizations for use of their content in Facebook’s Newsfeed and Google search. If the two sides are not able to reach agreement, there is provision in the legislation for compulsory arbitration. Many countries, including Canada, the UK and the EU are watching to see what happens in Australia.

In Canada, after having announced that its newly announced media fund would include Canadian media, Google likewise suspended its program pending negotiations with major media outlets. It has managed to sign up only two small digital news platforms. The major players, who are all members of the industry association News Media Canada, have mounted a major campaign to get the Canadian government to follow the Australian example. In November they released a study “Levelling the Digital Playing Field”, that takes aim straight at Google and Facebook, seeking revenue sharing for the platform’s use of news content;

Google and Facebook are two of the biggest companies in the world.  You might say they’re modern-day Goliaths. They are using their monopoly power to scoop up 80% of online advertising revenues and to free ride on the news content produced by hardworking journalists and publishers across Canada. Maybe it’s time to start leveling the playing field a little, so the Davids of this world can start fighting back.”

Not that the major Canadian media players are exactly “Davids” but they are facing financial stresses like most media organizations globally. One response has been a Canadian government promise of tax credits to support the hiring of journalists, but this program has yet to be rolled out despite being announced two years ago. Back in 2017, publishers proposed direct subsidization of journalist wages, a proposal that provoked considerable debate and negative comment. These kinds of subsidy programs are controversial because they smack of government intervention, potentially compromising media independence, although the Local Journalism Initiative, a five-year $50 million government-funded program is now in effect, administered by none other than News Media Canada, along with some smaller non-profits.

Amending copyright legislation to create a “publishers’ right” (as is the case in the EU) is another proposal that would strengthen the hand of content creators in negotiating with the major digital platforms. Back in September I speculated that Heritage Minister Guilbeault might introduce such legislation in the fall session of Parliament, but this has not happened as the Ministry is instead preoccupied with legislation to amend the Broadcasting Act. Although providing additional neighbouring rights under copyright legislation is one option, News Media Canada seems to prefer the Australian approach of using competition law to force the platforms to negotiate revenue sharing. This ongoing tussle between the top digital platforms and news content providers is one of the big copyright stories of 2020, and the push to require Google and Facebook to share the wealth—ad revenues created in part from their unlicensed use of content created by others—is one of the few bright spots for creators coming out of 2020.  What the final result will be in 2021 remains to be seen.

The Coming Year

And speaking of 2021, let’s hope it will be a better year for everyone including those in the creative sector. As I write, the first vaccine shots are being given in several countries, and therein lies hope that the rhythm of life will resume a more normal pace in the coming year. If the pandemic has taught us anything, it is that the creative arts are among the things that make life worth living. A world without culture and creativity would be a pretty bleak place. The copyright world, along with many other sectors, took a huge hit in 2020, but the arts and its practitioners are resilient.

Speaking personally, I am looking forward to the resumption of live theatrical and musical performances, being able to escape to a big-screen experience at a local cinema and enjoying art and photographs at a gallery or museum without wearing a mask and keeping two metres away from everyone around me. (That is besides getting my hair cut properly!). We will only know from hindsight whether these hopes will be realized, but perhaps a year from now when we look back at 2021, we will declare it to have been the year of recovery. Fingers crossed.

© Hugh Stephens, 2020. All Rights Reserved.