EU regulators eye copyright levies in the cloud

Cloud storage services are proving a challenge to the private copying exception to European copyright law

The European Commission is considering whether to make cloud storage services pay musicians, songwriters and filmmakers when users store copies of their works online.

Currently, most E.U. member states allow the copying of songs or films for "private use" without the consent of the copyright holder. To compensate rights holders for this private copying exception to copyright law, the states impose a levy on sales of storage media including blank CDs, memory sticks, hard disks and smartphones. The levies typically vary with the capacity of the medium.

Because consumers can use cloud computing services to duplicate their content in order to access it from different devices, questions have been raised about whether, and how, to collect the levies for such copying that rights-holders believe is their due. According to a European Commission Cloud Computing Strategy document leaked on Monday, "questions arise on the possible collection of private copy levies for any private copying of content to, from or within the cloud."

On Wednesday, a group of 12 organizations representing authors' rights said that "private copying generates an essential part of rights holders' remuneration."

"This compensation for hundreds of thousands of creators across Europe has not hampered device sales in countries where it is applied. Our members do not understand the heavy lobbying of electronics manufacturers to abolish this remuneration system, which, although perhaps not entirely perfect, clearly achieves its objectives," said the group in a statement.

However, by the very nature of the cloud there is no obvious limit to the memory capacity available to a user, so it is difficult to work out how levies could be applied.

The Commission says it will "assess whether there is a need to clarify the scope of the private copying exception and the applicability of levies, in particular the extent to which cloud computing services allowing for the direct remuneration of right holders are excluded from the private copy levy regime." Some cloud storage services that allow users to synch their content for different devices, such as iTunes Match, Spotify's Local Music Files and Kindle directly remunerate the rights holders.

Under the E.U. Information Society Directive from 2001, member states may introduce an exception to the reproduction right for private copying accompanied by "fair compensation" for right holders. However, the Directive does not explain the means for calculating fair compensation in detail. Furthermore, this rule allowing the private copying of works is not considered a "right" under E.U. law, rather it is an allowed "exception" to the law.

In October 2010, the European Court of Justice ruled in a case that "levies should be calculated according to the harm sustained by right holders by the private copying in question."

It seems unlikely that users' rights (or legal exception) to copy unlicensed content to the cloud will be revoked. Nominal levies are a possibility, but this would cause problems for free services such as GDrive, Skydrive or Dropbox. However, according to a source familiar with the strategy, it seems most likely that rights holders will be directly remunerated, "so there is probably no need to compensate anyone via a levy system if the compensation for the copy is inherently collected and distributed."

Digital rights activists were quick to condemn any possible extension of the copyright regime. "It's really quite amazing that the Commission put levies in the strategy in the first place as levies as they stand are an insult to the single market, and for the Commission to add another level of bureaucracy is incomprehensible," said Joe McNamee, of European digital rights group EDRi.

Pirate Party member of the European Parliament, Christian Engstrom, had this to say: "It's yet another example of how copyright legislation is completely out of touch with the reality and the times we live in."

Former European Commissioner for Justice and Home Affairs, Antonio Vitorino, is currently leading a working group on private copying levies that was set up in November 2011. The aim is to lay the groundwork for legislative action on private copying levies at the E.U. level in 2013 with a view to more harmonization across the E.U. His findings are expected by the end of the year.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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