The Value Gap and the new EU Copyright Directive proposal Xenia Iwaszko, LLM Director of International Trade, IFPI Ciudad de México, 13 de Noviembre 2018

Music Industry in the Digital Age

57 1,300 IFPI – representing the recording industry worldwide Legal and trade policy Antipiracy operations and litigation Industry data and market analysis Communications Technical standards development Work with member companies, 59 National Groups and over 75 recording industry Music Licensing Companies (MLCs) to improve protection of recorded music 57 countries with national organisations IFPI Offices 1,300 National Groups Affiliated music licensing company members worldwide

A portfolio business, majority digital… Music anytime, anywhere Revenue Mix In 2017 Digital accounts for 54% of total revenues* Hundreds of digital music services Millions of venues open to the public Thousands of TV, radio, cable and satellite broadcasters And many other licensed business partners ($17.3bn total revenues*) Physical Streaming Performance Rights Downloads Synchronisation Other Digital

The Value Gap & ISP safe harbours IFPI’s insight team recently looked into the impact of blocking in ten countries worldwide Summary of findings and focus on 3 countries

The Value Gap The mismatch between the value of music to certain online platforms and what they pay content owners. Results from the lack of legal clarity allowing some platforms to claim to be mere “hosting services” Services claiming the protection of safe harbours either refuse to enter into licence agreements, or offer “take it or leave it” terms that vastly undervalue music rights

The Value Gap The mismatch between the value of music to some online platforms and what they pay content owners.

Share of ‘on-demand’ streaming time by method: Services claiming the protection of safe harbours either refuse to enter into licence agreements, or offer “take it or leave it” terms that vastly undervalue the music licensed. The staggering difference between industry revenues from these services and those entering into licence agreements in the usual way illustrates the scale of the market distortion caused by the Value Gap. UUC video streaming sites such as YouTube were responsible for more than half – 52% – of global on-demand streaming time. YouTube alone made up 47% of on-demand streaming listening time. This is a key data point for campaigning on the value gap. It is a strong demonstration of the importance of YouTube and can be compared to the relatively low amounts returned to artists and record companies from the site. The distribution was similar across all region. While paid streaming was used by slightly fewer respondents (see slides 22 and 23), it accounted for more listening time than free streaming. This is unsurprising as more committed music listeners are more likely to pay for a streaming subscription. Source: Q17. In a typical week, how many hours do you spend listening to music in the following ways? Base: All listening 1+hrs per week (excluding those over 70 hours) (n.17671 respondents)

The Value Gap in the EU IFPI’s insight team recently looked into the impact of blocking in ten countries worldwide Summary of findings and focus on 3 countries

The Value Gap in the EU All 3 EU institutions (the EU Commission, the Council, the European Parliament) have recognised the need to address the Value Gap problem. Ongoing “trilogue” negotiations about how to structure the solution (Art.13). Key legal elements at play: Definition of activities making a service an “online content sharing service provider” Confirmation that a service falling within that definition communicates to the public Confirmation that the hosting safe harbour does not apply to an OCSSP Any additional obligations (e.g. preventive measures) or express exclusions?

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