David Balfour examines the Safe Harbor debate and whether a change to European law could still damage YouTube’s business

24 June 2016 - Editorial

Things are hotting up in the Safe Harbor debate on both sides of the Atlantic. This week, 58 MEPs added their signatures to a letter calling on the top brass of the European Commission to refine the Safe Harbor provisions within European law under which many platforms operate.

The MEPs call current European law, which has allowed platforms to build huge businesses around unlicensed content, a 'distortion in the digital market'. There's no doubt which business is their primary target in the letter: YouTube is the only business to be specifically named. The letter also makes clear that the MEPs believe that the current European law threatens to seriously undermine the creative industries, giving platforms like YouTube an unfair advantage over other platforms and content owners alike.

In the US meanwhile, 180 artists including Macca and Taylor Swift took out ads in Washington DC political mags calling for a comprehensive review of the nation's own Safe Harbor laws, as defined by the 1998 piece of legislation, the Digital Millennium Copyright Act. The US majors also put their names to the ads.

There is undeniably a growing consensus that the original Safe Harbor laws have been stretched way beyond their originally intended purpose. That consensus is of course not shared by YouTube. We wonder if a letter from MEPs will have any direct impact on the European Commission's lawmaking recommendations. We're not experts in European policy making.That said, it draws further attention to what seems abundantly clear: that YouTube's ability to fall back on existing Safe Harbor laws gives it an unfair advantage over other fully-licensed Europe-based services such as Spotify or Deezer. Added to that: the value of intellectual property created in Europe is potentially undermined by the continued failure to address these laws. 

It's worth noting that the majority of labels now have direct licensing agreements with YouTube. They might argue that they would not have signed these agreements, were it not for the fact that they were hamstrung by Safe Harbor legislation. We wonder however, if they would be able to step away from such licenses if there were to be a change in European law? Such changes would be unlikely to be retrospective. This poses the question of whether, even if the law were to change at this point, would it really harm YouTube's business? Perhaps it would take time for those direct licenses to lapse, at which point labels would find themselves in an altogether stronger negotiating position. 

In the US, artist and the recorded music industry are seemingly aligned in their arguments to legislators. In Europe however, a rather pointed letter sent to EC legislators this week from the Independent Artist Organisation's president Paul Pacifico, calls into question whether the wider industry is really as united around Safe Harbor as it might seem. In short, the IAO's letter wholeheartedly backs calls for changes to legislation, but calls into question the big labels' ability to cast themselves as downtrodden. 

Pacifico argues that many labels, whilst claiming foul to YouTube's position in the market, themselves offer poor transparency to artists. He writes that 'neither platforms nor labels should be able to use contractual gymnastics to remove value from the table and deny the stakeholders further down the value chain their fair and legitimate share from the use of their works.' The IAO complains that big labels routinely hide value from their licensors, using tactics such as NDAs and unattributable advances. These are serious allegations, though many artists and managers would fully support them, especially those representing pre-digital heritage acts.

Should we be concerned that our industry is failing to present a united front towards the European Commission? Probably not; everyone is united on the precise issue of Safe Harbor. The IAO has its own battles to fight and causes to draw attention to. With so many now unanimously claiming that Safe Harbor is being abused, it will be fascinating to watch how the European Commission respond.