New Copyright Directive – new restrictions to online business?

Karolina Wąsowska // 14 September 2018

In the second voting on the subject, the European Parliament approved the Directive on copyright in the digital single market.  438 MEPs voted in favour, 226 against and 39 abstained.

How will the implementation of the directive affect entrepreneurs? First of all, it will significantly reduce the ability to run a business online. This will not only affect small entities, which will cease to be profitable but also larger portals and online media conglomerates.

EU legislators want individuals and companies who posts links to websites other than their own to pay a license fee to the authors and publishers of the linked content. This could mean that portals such as Facebook, Twitter or Google News that link content to third-party material, will have to pay, even if only the title of an article and the link to the original text are posted. Such content aggregators link to articles of larger media companies as well as small blogs, the latter being badly hit by the proposed new regulation. Restricting the ability of online platforms to provide such links will reduce traffic on the websites of large media corporations, but they might benefit from additional revenues through the license fees. At the same time, smaller blogs and less visited online thematic portals will become isolated from the mainstream.

This concept has been already implemented by one of the largest publishing houses in Europe; Axel Springer.  They demanded a license fee from Google for sharing content and links to their original articles. As it turned out, without the information aggregators – in other words sites, which collect and share content from other websites — the number of readers decreased, which caused the traffic on the publishers’ websites to fall, ultimately resulting in a negative impact on the publisher’s profits.

On one hand, by providing links to articles of other publishers, content aggregators earn from ads on their websites – the larger the number of visits to the site the greater the profit. On the other hand, publishers benefit from it, because they reach a larger audience, which otherwise would not visit their website.

If a publisher believes that a portal infringes his copyright, then it can pursue the matter in court, using already existing mechanisms defined by the Civil Code and the Law on copyright and related rights in Poland. Similar legislation exists in other European countries as well. This has proven to be a satisfactory solution, so there is no need to introduce further restrictions.

The new directive also requires website owners to filter the content of their sites. This means that they must create algorithms that will assess whether content should be allowed – or banned due to copyright infringements. The development of such filters is expensive, which puts small enterprises at a disadvantage. The operation of large internet platforms will be significantly impeded, especially if they rely mainly on content added by the users, as Facebook or Twitter do.

Such algorithms can also malfunction, as YouTube users found out when trying to watch free online courses published by MIT OpenCourseWare in their channel. The viewers’ access was blocked by YouTube’s anti-piracy protection, an advanced pirate content detection system, which occasionally makes mistakes as well. The obligatory introduction of similar solutions on all blogs, portals, and online stores may bring similar results, especially as there is constantly new content being developed, which needs to be compared to an already existing database.

There are even further negative impacts on European entrepreneurs. The new legislation restricts access the aggregate data of users, with only some exceptions granted to certain research institutions, but not to commercial analytical centres. As a result, the European Union will become a less attractive business environment to conduct online business analysis.

Karolina Wąsowska is a lawyer at the Civil Development Forum (FOR), our Polish member think tank. This article was translated from Polish and originally appeared on FOR’s website.

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