Opinion: Why can web 2.0 companies hide behind ISP safe harbour exceptions?

Companies such as Google and Yahoo! are increasingly under fire from critics, who claim that the internet giants are copyright thieves on a huge scale. Recently, musicians wrote an open letter complaining that Google refuses to pay royalties for the music it plays on YouTube. A commentator, Henry Porter, adds that the company uses its’ monopoly position to determine the rules on royalties for music video’s played on the internet. The royalty rate is near zero. He compares Google to an 11-year old spoiled, amoral menace, who doesn’t understand the risk and skill involved in developing original content. He calls on a lack of any guilt-feeling by companies who are using copyrighted works without required licenses or permission.

The general opinion of the public is that artists need to stop whining, because YouTube offers them free publicity, which will result in CD sales. Another opinion is that Google is, in fact, the company being bullied, because they are forced to accept deals with spoiled rightsholders. What many people don\'t realise that to an increasing extent it is companies like Google who are (indirectly) setting the rules for content distribution and the treatment of copyright.

The problem is that Google and similar companies can hide behind a outdated law. This law is the safe harbor provision in the DMCA and its counterpart article 14 of the E-Commerce Directive in Europe, which were originally written to safeguard ISPs from lawsuits when they hosted copyrighted (or other illegal) material. These laws came into force in 1998 and 2000 respectively, ancient times in the developing digital world.

The services Google and other \'intermediary information society services\' offer are in themselves useful tools and are even used for legitimate purposes on a large scale. The gap in the law is currently that services such as YouTube are able to offer copyrighted material uploaded by others and are protected until the rights holder notifies the company of his copyright. YouTube pretends not to know which copyrighted material it hosts, because it doesn’t have an obligation to know according to the outdated law. This results in a copyright regime turned on its head. Google and other intermediary information society services benefit from copyrighted content without having to take responsibilty towards the artists.

In the world of television and radio, broadcasters know what copyrighted content is being used and royalties are paid to collecting societies, who distribute them to the artists. If Google would pay royalties for music, which is uploaded by users, it would admit it knows which content it hosts, so therefore it couldn’t hide behind the safe harbor exceptions any longer. The safe harbor exceptions, behind which Google hides to avoid lawsuits, such as the $1 billion claim from Viacom, prevent it from paying royalties for user-generated content. This does not only hurt the big record labels, but also smaller, independent artists, because it is harder for them to monetize their works.

To solve this situation, the safe harbors need to be reviewed, because it is obvious they’re being misused by new user-generated content providers. Another option, which is already being explored by bigger labels, is of self-regulatory nature: Artists can agree licensing deals with YouTube and similar services. However, due to artists’ dependence on some of the larger online content platforms, they’re in a weaker position to negotiate.