What Is the Future of Creators’ Rights in an Increasingly Platform-Dominated Economy?

As lockdown regimes have forced nearly everyone to stay at home in many parts of the world, an increasingly larger portion of global audiences started relying upon a small number of digital platforms to access arts, culture and entertainment. When theatres, concert halls, clubs and other performing arts venues closed in response to COVID-19, many artists spontaneously started broadcasting live performances from their homes and recording studios. This unexpected change showed what the creative sector might look like if hundreds of millions of users had to simultaneously rely mostly on digital services to access music, films, TV programs and other artistic productions.

A major concern is that the largest online platforms, some of which have long exceeded one billion users, have acquired and exert too much economic power to the detriment of consumers, suppliers and competitors. The undisputed dominance of a handful of tech companies in controlling (or deeply influencing) access to creative works raises existential questions for cultural industries, their core businesses, and even more so for the authors and performers who must make a living.

A first question concerns the value of digital content: what is the function content plays in a platform-dominated economy? This question arises from the technical reality that platforms’ commercial value is not so much in the content as it is in their personal data collection and very sophisticated and secret algorithms. Social media platforms such as YouTube and Facebook, as well as on-demand content suppliers like Spotify and Netflix, are ultimately data-analytics businesses. Appealing content is a bait to keep their users active on their platforms as much and as long as possible. The main commercial purpose of these businesses is to collect, process and sell targeted advertising based on extensive user data.

In these data-driven media environments, creative works are either made available for free as user-generated content (for instance, YouTube and Facebook) or in exchange for a monthly subscription fee (for instance, Spotify Premium and Netflix). Moreover, in the last decade social media have changed and expanded the same notion of content creation.¹

YouTube is by far the most prominent example of this phenomenon. As a first mover in the social media industry, YouTube has gone through a process of radical transformation since 2007, when Google acquired and restructured it, enabling and encouraging new forms of grassroots professional productions. This new content production model cuts off intermediaries and instead relies on well-developed content management technology and legal infrastructure. In this ecosystem, for instance, YouTube’s own proprietary technology, “Content ID”, allows creators and copyright holders to enforce and monetise their rights inside the platform. Facebook relies on third-party technology (Audible Magic) to perform the same tasks. The data shows that an increasingly relevant number of today’s artists consciously decide to partner directly and exclusively with YouTube, entering into individual agreements under which each artist (and their production teams) earn a little more than half of the advertising revenue their content generates.² This is a clear example of how a very large platform is changing the nature of content production to serve its own data-analytics business.

A second question is whether the phenomenon of “content platformisation” can be ultimately beneficial to artists and content creators, broadly defined. The answer, in my view, is “no”, at least for the vast majority of copyright holders. While social media services have allowed creators to keep building their digital audiences, the logic underlying online platforms, as a whole, systematically penalises creators.

• First, platforms’ algorithms and filter bubbles inevitably increase existing inequalities between superstars and other professional creators. Predictive technologies and network effects can easily help very few contents become viral by giving prominence only to works users are expected to like on the grounds of their behaviour on the platform or other users’ preferences and suggestions.

• Second, although social media help artists and creators market their own image and reputation, it also triggers a race to the bottom in the price and remuneration of professionally created content. Historically, for more than a decade social media have taken advantage of a legal principle of technological neutrality and broad liability exemptions to scale up without having to worry, at least in advance, of contents their users made available to the public.³ This long-term privilege, which the EU formally abolished in 2019, is still considered to be the main source of the so-called “value gap” between the content creators’ earnings from a service like YouTube and on-demand subscription-based services such as Spotify and Deezer, whose licensing fees are estimated to be ten times higher.⁴

• Third, the creative sector, and in particular the music industry, still lacks an adequate repertoire information infrastructure. It is only through content management technologies and detailed rights management information that online platforms can reward individual creators in a fair and proportionate way. In data-driven businesses, a single music rights database seems indispensable for creators to effectively exercise their rights. Commercial deals in digital music are very complex as they require detailed information on the intellectual property of each musical composition and sound recording. Moreover, musical compositions and phonograms belong to different rightholders, who are often difficult to identify. Even subscription services such as Spotify, Apple Music and Deezer, which choose and curate their content, negotiating and paying remuneration based on the effective popularity and success of a certain track or album, cannot ensure proportionate remuneration if they cannot count on reliable, standardised and unequivocal rights ownership information coming from the creative sector.

• Finally, there is an inevitable problem of information asymmetry across online platforms, whose owners treat information about artist and content producers’ compensation as a trade secret. The data we know of comes either from certain artists’ disclosures in breach of confidentiality clauses in their contracts with the platforms⁵ or from tech companies’ spontaneous statements.⁶ In this environment, creators cannot easily negotiate deals because they have no idea of the value of their works and how much a platform is earning through their exploitation.

A third question is whether the law can help creators make their intellectual property more effective and whether regulation, in this scenario, would be justified from a public policy perspective. This a complex question that the EU and the US are addressing in very different ways. We are currently in the midst of a political and trade war in which the EU, as a data- and knowledge-rich economy, is seeking to protect its citizens and legacy content industries from the way in which US-based “over-the-top” digital service suppliers exploit personal information and creative output.

Unlike the US, whose economy benefits directly from its own internet and communication industry, the EU has decidedly moved towards forms of ex ante regulation of online platforms. A prominent example of such a move was the adoption of the 2016 General Data Protection Regulation (GDPR). In 2018 the European Commission clearly showed its intent to create a legal framework where the largest social media platforms have enhanced responsibilities and must play a decisive role in preventing, removing and keeping offline a broad variety of illegal content, including copyright-infringing materials.⁷

At a later stage, EU law distanced itself even further from an original principle of platform neutrality by adopting new measures aimed at promoting fairness towards copyright holders and companies whose business relies on online intermediaries’ and online platforms’ services.

The first of such measures is Directive 2019/790, where its well-known Art. 17 establishes a higher standard of copyright accountability for social media.⁸ Veering away from the safe harbour provision embodied in Art. 14 of the 2000 e-Commerce Directive, Art. 17 requires social media companies to obtain a licence for all contents uploaded by their users and to restrict access to unauthorised works. The main goal of this provision is to protect legacy content industries, which are pillars of Europe’s cultural and linguistic diversity and produce outside the domain of online platforms. Moreover, this copyright directive codifies a principle of fair and transparent remuneration, addressing the issue of asymmetric information by granting individual authors and performers an access right regarding data on profits that all online platforms derive from different types of content exploitation.⁹

This transparency-enhancing objective is common to another 2019 EU regulation, which seeks to force online platforms and search engines to disclose to their business customers how their services determine their ranking of search results, the possibility of influencing such ranking (through direct or indirect remuneration) and different conditions and channels through which platform users can offer their goods and services to the public.¹⁰

These measures are totally alien to US law, where broad implementation of the 1998 Digital Millennium Copyright Act’s liability exemptions and platform neutrality regulations (such as Sec. 230 of the 1996 Communications Decency Act) reveal a radically different policy.¹¹ Although in today’s US political and legal discourse it is common to hear that Google, Facebook and Amazon have become a threat to democracy and should be broken up under antitrust law, US law seems unfit to remedy the extreme corporate power that the largest platform owners have acquired.¹² As the Supreme Court held in a leading antitrust decision, a monopoly is an important element of a free-market economy and is desirable because it induces the risk-taking that produces innovation and economic growth.¹³ Moreover, as Tim Wu recently emphasised, the US merger control system is currently based on a “consumer welfare” standard under which the US government cannot block a merger if it is unable to prove that it would result in increasing prices for consumers.¹⁴ This standard is inapplicable in the platform economy, where large tech companies offer their services for free and instead are compensated through the acquisition of users’ personal data. This situation sharply contrasts with Europe, where the EU Commission, acting as the EU antitrust authority, has used competition law against tech companies’ abuses of their dominant position and certain anticompetitive practices with the aim to protect competitors, and not only consumers.¹⁵

The only front where EU and US policymakers seem to align is the development of rights information infrastructures. The EU pursued this goal indirectly, when it passed a 2014 directive that obliges collecting societies to use technologies and databases that make their licensing activities fit for purpose in the digital age.¹⁶ In the US, a 2018 music copyright law reform assigned to the Copyright Office the task of supervising the creation of a musical works database to support the ability of a newly established State-backed collecting society (“Mechanical License Collective” or MLC) to identify music rightholders in streaming services and to remunerate them.¹⁷ This is a more radical model, which is surprising for a jurisdiction with an unparalleled commitment to capitalism and industry-led solutions.

Despite their different approaches, the fact that EU and US legislative measures place so much emphasis on data infrastructures and codification of rights to transparency shows that there is a common understanding on how crucial data have become for the exercise of creators’ rights. Access to information on content-related exploitations would strengthen creators’ bargaining power and make their rights more effective and commercially valuable. Enforcement mechanisms, such as the convoluted ones incorporated into Art. 17 of Directive 2019/790, per se, will be of little or no help if creators cannot have access to information that, so far, has been kept secret in tech companies’ black boxes or in collecting societies’ records and archives.