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The European Audiovisual Reform – So Little Time, So Many Issues

by Maud Sacquet on September 25, 2017

Last July, the European Commission, Parliament and Council officially started the final round of negotiations on the EU’s audiovisual reform, before leaving Brussels soon after for their respective holidays destinations. They reconvened as usual in September, with the next round taking place on September 28th.

The start of these negotiations follows the adoption of the European Parliament’s report and of the European Council’s general approach last May. Unfortunately, several crucial issues we identified last February were not addressed by these institutions, and new ones appeared. Will they – including those listed below – be addressed before it’s too late and the Digital Single Market (DSM) is strongly distorted?

1) The Country of Origin Principle Must Be Preserved

One crucial issue of the European Commission’s proposal was the undermining of the Country of Origin (COO) principle with the introduction of national levies, thereby unravelling the DSM (see here for more details on the COO).

Unfortunately, neither the Parliament nor the Council chose to fix this provision – despite it contradicting the entire European Union’s strategy on digital growth. In fact, the European Parliament preserved the COO principle for linear video services (i.e., for television channels) but eliminated it for emerging on-demand services with respect to national levies. Such discrimination among audiovisual media service (“AVMS”) providers tilts the playing field in favor of established providers and ensures the European Union will trail the global marketplace in innovation. To remedy this, the final text should preserve a level playing field for AVMS providers, ideally maintaining the decades-old COO framework.

Calls to Backtrack on Copyright Balance Put Tech Backing for NAFTA in Doubt

by Matt Schruers on September 22, 2017

As negotiators converge on Ottawa to resume talks over updating the 1994 North American Free Trade Agreement (NAFTA), content interests have barraged U.S. trade officials with letters demanding that the U.S. Government abandon critical balancing mechanisms in the agreement’s copyright chapter, regarding fair use and safe harbors for Internet services.

How these issues are resolved is critical, since it will affect Internet and technology industries’ support for the IP chapter of the agreement, and potentially NAFTA itself.

There are two major moving parts here: (1) whether USTR undermines well-established safe harbors for online intermediaries, and (2) whether USTR abandons the policy of promoting balanced copyright in free trade agreements.

As previously noted here, acceding to Hollywood and recording industry demands would break with existing U.S. law, and Congressional direction in trade promotion legislation. This would also walk back priorities that were laid out by USTR itself earlier this year. Nevertheless, some in the entertainment industry are urging U.S. negotiators to do exactly that, at the risk of crossing red lines for Congress, negotiating partners, and various U.S. stakeholders.

A New Vending Machine Echoes Old Concerns

by Isabelle Styslinger on September 21, 2017

When two tech execs announced Internet-connected vending machines last week, they met a social media furor that uncannily echoed the past.The startup, named “Bodega,” drew news headlines and a viral hashtag when a business magazine highlighted their plan to “make bodegas and mom-and-pop corner stores obsolete” through the installation of unmanned vending machines.

Bodega argues its innovation will supplement corner stores, not replace them, but many remain unconvinced. However, traditional vending machines initially evoked similar concerns in the 20th century but have come to be regarded as a complement to corner stores. A similar path forward may be possible for Bodega.

SESTA Hearing: Searching for Common Ground, Fixes to Unintended Consequences

by Matt Schruers on September 19, 2017

A Senate Commerce Committee hearing on SESTA today found considerable consensus that improvements can be made to the controversial bill.

As covered on DisCo last month here and here, the anti-sex trafficking legislation aimed at the website Backpage.com has received considerable criticism from industry and public interest groups.

Many critics of SESTA, including Section 230 author Sen. Ron Wyden, have cautioned against a liability system that would undermine a cornerstone of Internet law and return the Internet to the mid-1990s era of content moderation, when online services either (a) aggressively vetted every online communication by third parties, or (b) adopted a “head in the sand” approach and refused to police any content, lest moderators incur liability for missing one needle in the haystack.

In testimony, Section 230 expert and Santa Clara Law Professor Eric Goldman described this problem, which his written submission identified as the “moderation dilemma.” Faced with liability for “missed calls,” smaller Internet intermediaries without the technical capacity to affirmatively police all user activity might simply err on the side of legal certainty, and stop making calls entirely. MORE »

Germany Joins Other EU Countries in Doubts over Article 13 of the Copyright Reform

by Maud Sacquet on September 19, 2017

Following a brief lull during the summer break, the European copyright debate is decidedly back in full swing since the end of August, with not one but two very interesting leaks so far on Statewatch.

Faithful followers of EU politics might indeed remember that, a couple of weeks ago, Statewatch leaked a European Council document in which several European countries were strongly questioning the compatibility of the copyright reform (specifically its article 13) with European fundamental rights. Today, Statewatch published another European Council document, revealing this time that Germany has also strong concerns with that same article.

First, a quick reminder – what is article 13? This article is at the center of a very heated copyright debate in Brussels, as it threatens the survival of an open and free Internet in the European Union. In short, if implemented, this article would make online platforms liable for every piece of content uploaded by their users – thereby killing the open platform model. It would also force a very broad range of websites to implement mechanisms to filter all comments, pictures, videos, etc. uploaded by their users, causing broad censorship across the Internet.

With such a threat looming over the future of Europe’s tech industry, it is crucial to see Germany join the fight against these provisions – and in such an interesting way.

As Banks Slam Bitcoin, They Invest in Blockchain

by Isabelle Styslinger on September 19, 2017

At a conference last week J.P. Morgan Chase & Co. chief executive, Jamie Dimon, slammed Bitcoin, after which the cryptocurrency’s prices plunged. Dimon referred to Bitcoin as “a fraud” and asserted it was “worse than tulip bulbs” — basically the worst currency insult you can levy.

Some speculate Dimon’s skepticism is rooted in fear of cryptocurrencies’ potential to disrupt the financial industry, which has attracted harsh criticism for its conduct leading up to the financial crisis.

While Dimon, and others like him, continue to denounce cryptocurrencies, at the same time, J.P. Morgan and other critics are investing in Bitcoin’s underlying technology — blockchain — in an attempt to keep pace with cryptocurrencies’ capabilities.

The Sorry State Of The Digital Union

by Christian Borggreen on September 18, 2017

When European Commission President Jean-Claude Juncker gave his State of the Union last week, he called the rise of the continent’s long dormant economy a sign of clear skies. In a burst of rhetorical flourish, Juncker proclaimed that “the wind is back in Europe’s sails”!

But for Europe’s digital economy, the wind is blowing in the wrong direction. Back in 2015, the Commission launched an ambitious reform plan. A wave of proposals – including a revamp of copyright and an overhaul of telecom rules – promised to build a thriving European digital single market.

Since then however, only a few successes are visible: Consumers won this past summer when telcos were forced to stop gouging them with expensive data roaming charges. A new proposal could end national data localisation rules which harm competition and block startups from scaling up.

Overall, though, Juncker’s digital Europe is drifting way off course, imposing heavy-handed, inappropriate regulations. Instead of creating a unified digital single market encompassing more than 500 million consumers, Juncker’s misguided policies are fragmenting it. New European regulations threaten to be ineffectual or, worse, to throttle business and innovation.

Competition in the Online Classified Ad Marketplace

by Isabelle Styslinger on September 7, 2017

As Craigslist turns 22 this year, many believe its time as a leader in the online classified ad business is coming to a close, specifically pointing to Craigslist’s unwillingness to expand into mobile. New entrants are attempting to seize on its absence, creating mobile classified ad marketplaces.

In the more than two decades since Craigslist’s inception the company has grown significantly: it now totals 55 million users per month; its revenue surpassed more than $690 million last year; and, by Forbes’ estimates, the company is worth $3 billion (at least).

Craigslist’s platform, however, remains relatively unchanged. When Craigslist was released in 1995 its website contained a list of blue hyperlinks similar to what you see when you log on to the site today.

More surprising than its long-standing bare-bones aesthetic: Craigslist remains a platform exclusively for desktop.

This is particularly surprising considering mobile and e-commerce trends.

VidAngel, ReDigi, and the Sale of Digital Content

by Jonathan Band on August 31, 2017

Last week saw developments in two cases involving the sale of digital content. In Disney v. VidAngel, the Ninth Circuit affirmed the district court’s preliminary injunction against VidAngel. Meanwhile, on the other side of the continent, the Second Circuit held the oral argument in Capitol Records v. ReDigi. After the oral argument, Capitol’s lawyer sent the Second Circuit a letter drawing its attention to the VidAngel decision, suggesting that the Ninth Circuit’s opinion should influence the Second Circuit’s reasoning. However, because of significant differences in the facts of the two cases, the Second Circuit should give the VidAngel decision little weight.

VidAngel

VidAngel operates a service that streams films with objectionable content removed. VidAngel purchases multiple copies of DVD or Blu-Ray discs for each film title it offers. It would decrypt one disc for each title, and upload a copy to its computer. It would then break the copy into segments that it tagged for different categories of inappropriate content. VidAngel reencrypted the segments and uploaded them to its cloud server as a master copy.

Customers could then purchase a specific disc from VidAngel’s physical inventory. Although ownership of the disc was transferred to the customer, the physical disc remained in VidAngel’s possession. The customer selected the type of content she wanted filtered, and VidAngel would stream the filtered film from the master copy. (The filter could be as trivial as removing the credits.) After watching the film, the customer could sell the disc back to VidAngel for a dollar less than VidAngel sold her the disc.

Disney and several other studios sued VidAngel for copyright infringement and violation of the Digital Millennium Copyright Act’s prohibition on the circumvention of technological protection measures. The district court found that the studios were likely to prevail on both claims.

Member States Battle Over Ditching Publishers’ Rights

by Maud Sacquet on August 31, 2017

Surprise Thursday: a leak of the Estonian presidency first compromise proposal on Articles 1, 2 and 10 to 16 of the Copyright directive proposal has suddenly dropped in DisCo’s inbox.

The first glaring conclusion is that Member States are considering dropping the publishers’ right. The second is that Articles 11 (on the publisher’s right) and 13 (on the so-called “value gap”) are still extremely divisive. The Estonian presidency presented two (sometimes widely) different options for both Articles, highlighting strong divergence between Member States despite pressure from the European Commission to reach a deal quickly.

Let’s look first at the Presidency’s proposals for the publishers’ right.

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