1. Extended Collective Licensing 2016 Martin Gormsen

2. Introduction The digital environment means an exponential increase in the number of copyright protected acts (increase in number of works made available (long tail), both making available and copying involved in on-line, increase in number of commercial users) We are moving from analogue Euros to digital Eurocents Risk of to high transaction costs in many areas Good examples are re-use of broadcast and Store-TV (cloud-based PVR) But also old areas such as TV at public premises Conclusion: It is simply needed to create new tools to handle mass use of rights. Especially in the audio-visual sector, because this sector has a high fragmentation of rights (even short clips of moving pictures include many different right holders).

3. Danish agreements Denmark is properly the country with the most widespread use of ECL in terms of value of agreements Value of agreements based on ECL is more than 200 million Euros in 2016 or approximately 50 Euros pr. capita pr. year Relatively most widespread for digital tv-services (for instance catch up on tv-programs, both for broadcasters’ own use and tv-distributors’ use) N-PVR (cloud based PVR): Copying of tv-programs for personal use will soon be launched and licensing is in place. Both specific ECL provisions and a general ECL (section 50 (2)) in the Danish Copyright Act.

4. Building bridges It is fair to say that collective agreements based on ECL are not the hottest wish from neither the user side nor the right holder side. ECL is a trade off for both users and right holders. There are advantages and disadvantages for both sides. Users prefer exceptions. But exceptions will result in lack in production of new works and create incentives to establish other barriers than copyright for access such as encryption, DRM and/or contractual ban of sale of subscriptions for audio-visual content to for instance schools and cultural institutions. Right holders will in many cases prefer administration based on exclusive rights because it gives them maximum control to the content. But transactions cost will mean less exploitation of works and solutions based on purely contractual basis are very slow, especially in areas with mass use of rights. Need for broad and general agreements with backing from national legislation to solve problems with non-represented right holders (something between compensation schemes and fragmented exclusive rights) The dilemma is: Security of supply of rights versus incentives and control for right holders ECL is only one possible tool. Each EU-country can have their own solutions.

5. ECL deconstructed Many countries ask themselves: “Well, ECL seem to be a good system – but what do we do, when we do not have representative organizations for many categories of right holders?” The key point in ECL is how to deal with non-represented right holders Users need legal security regarding non-represented right holders (outsiders). But how can that be defended by lawmakers? The thinking in the ECL is that non-presented right holders may be happy to be treated as represented right holders. A critical mass of rights holders within their own category of rights have accepted the terms, and therefore is it “a prima facie evidence”, that the payments will be on market level.

6. ECL deconstructed 2 One way is to give incentives for right holders to organize. A carrot can be to give representative organizations a strong negotiation position. For instance in tribunal cases place the burden of proof for unfair tariffs on the commercial users. It is also important that it is clear that corporation between right holders do not violate competition law. An example of the stick is a “use or loose it” rule; once in Australia there existed a rule saying that schools should be entitled to use tv-programs for teaching purposes, unless the right holders offer schools a one stop agreement. Another example is the satellite and cable directive art. 9, where cable retransmission rights only can be exercised through a collecting society. Another way could be to create a system for access to works, where tariffs/prices are set by an independent body to market price or a little above market price, where the user can use the works without permission and where right holders are able to opt out. Such a system could in some cases be a valuable supplement to exercise of exclusive rights. Of course such a system can only be justified in areas outside the main market for the works in question.

7. Opt Out “Opt in” and “opt out” is two different worlds. Many many services will never be realized on an “opt in” basis. Simply because it is extremely time consuming to identify, contact and negotiate with individual right holders. A user need a critical mass of rights to invest. But it is not without concerns to create “opt out” rules for right holders. Because even if the right holder can opt out, it will weaken the control over the exploitation. And further more; the right holder have to be aware of the service/exploitation of the work in order to opt out. An example of opt out systems that cannot be defended is YouTube, where the “safe harbor rule” in reality seems to create a opt out system. It’s not sufficient to change the rules on notice and stay down. It’s necessary to entirely remove the safe harbor rule for music videos, film and tv-content (and leave the safe harbor rule to handle user generated content). Opt out rules shall only apply in areas, where it can be justified. For instance cases, where a type of use is a supplement to an already licensed use. Example: Retransmission, start over, catch up and Store-TV regarding works, where the primary broadcast is licensed. It can also be justified in areas far from the main market for the works. Examples: Schools, archives and libraries for audio-visual content. Opt out is also generally acceptable, when the terms is negotiated by a representative organization for the same category of rights.

8. Other issues An important thing is non-discrimination of non-represented right holders. But bear in mind, that there also should be incentives for right holders to be organized, It’s fair to have rules saying a representative organizations is able to claim payment on behalf of non-represented right holders. It’s a fair trade off, when ECL makes limitations in the exclusive right, and many (especially American producers) prefer to remain non-represented, but never the less rely on they will receive payment for there rights. Government involvement? There a different traditions and schools. In Sweden ECL exist with close to no government involvement and in Denmark there is more government involvement. I tend to favor some involvement because, both right holders and users behave more nicely, when somebody look over there shoulder. And involvement also gives the regulator the knowledge to adjust the rules, if the rules do not work as intended.