Kiri

Estonian Ministry of Culture Att: Minister Anneli Ott [email protected] 21 June 2021 Comments from Epidemic Sound in relation to the implementation of the Directive 2019/790 on Copyright in the Digital Single Market Dear Madam, Epidemic Sound is the market-leading platform for restriction-free music, headquartered in Stockholm, Sweden. We aim to democratise access to music for storytellers. Our innovative digital rights model paves the way for creators - everyone from YouTubers to small businesses to the world’s largest brands - to use restriction-free music to take their content to the next level, whilst simultaneously supporting the musicians we work with both financially and creatively. We are proud to be a European company, with clients all over the world. We have built our model on two cornerstones of the European cooperation: a strong belief in intellectual property and a belief in a free market in which music and services can flow freely. We are firm believers in a free market, with free competition. We also believe in the exclusive rights of rights holders. In our opinion, these are European values. Our plans to continue investing in European music may be hindered by some of the suggestions currently on the table with regard to the Directive 2019/790 on Copyright in the Digital Single Market (the “Directive”). As the member states are working on implementing the Directive into national law, Epidemic Sound wishes to emphasise the following important principles that we urge the member states to protect during their implementation of the Directive, especially articles 12, 17 and 18. 1. Rights management by CMOs shall be an option - not an obligation. Contractual freedom must be preserved It is the aim of the Directive to strengthen rights holders, not limit them. Article 18, together with articles 19-21, secures creators’ rights to receive fair remuneration for their works. Article 18 also states that the principle of contractual freedom must be upheld. It is essential that rights holders shall have the right to choose how they wish to manage their rights - if they wish to do so themselves, through a collecting society or through another third party. Collective licensing is not always the most favorable or desired option for a rights holder. Other options and means of administration could be more beneficial and lucrative. Moreover, licensing through collective management organisations (‘CMOs’) increases the number of intermediaries, and with that the costs of administration, and such costs are deducted from the rights holders’ income. It is essential that rights holders should not be forced into any mandatory or statutory licensing schemes for the administration of their works and the rights related thereto. Instead, rights holders must always have the possibility to exclude their rights from collective management - if they wish to do so. Collective management via CMOs should be an option for those who want to manage their rights through such an organization, not something rightholders are forced to. The transposition of the Directive should not be used to create new monopolies through mandatory or compulsory licensing through collective management organisations (CMOs), for example by implementing unwaivable rights to remuneration that can only be administered through a CMO. It is of utmost importance for both rights holders, users, platforms and the market as a whole, that the interpretation of the Directive does not create monopolies for CMOs. Such monopolies are radical and extreme measures which have been demonstrated to produce an array of negative effects for both rights holders and the rest of the market, by unduly restricting the principle of contractual freedom. Article 18 provides for fair remuneration for authors and performers. We see no reason to assume that only CMOs can meet the standards set out by Article 18. There is of course more than one way to provide fair compensation to creators, for example, we at Epidemic Sound pride ourselves on being perfectly equipped to live up to and fulfil these legal requirements. Giving one entity a monopoly to license certain necessary rights should not be done unless there are compelling reasons for doing so and no other possible solutions available. That is not the case and there are no such reasons. Moreover, such monopolies would be contrary to EU competition law and the freedom to provide services to creators. It is of great importance for both rights holders and users that fair competition is upheld. We also note that the proposals regarding the introduction of an unwaivable right to remuneration administered via CMOs were consistently rejected by the European Parliament during the adoption process of the Directive. Instead, article 18 states that the principle of contractual freedom must be upheld. It can also be noted that the Commission states in the Guidance on Article 17 published on 4 June 2021 (the “A17 Guidance”), that Member States “may rely on individual and voluntary collective licensing solutions” and that “Collective licences with an extended effect could be considered in specific cases and for specific sectors, provided that they comply with all the conditions set out in EU law, notably in Article 12 of the Directive” (see p.6). Compulsory licensing is not listed as a possibility by the A17 Guidance. Hence, according to the A17 Guidance mandatory collecting schemes shall not be applied. Hence, we want to reiterate that the implementation of the Directive should not lead to any mandatory licensing through CMOs without the possibility for rights holders to exclude their rights. Such regulations would pose a serious intervention in the freedom of contract, which cannot be justified. Collective management via CMOs should be a possibility for rightsholders, not a requirement. Preserving the freedom of contract, maintaining the rights holders' choice on how to manage their rights and counteracting monopolies are key principles, and these should be observed when transposing the directive into local law. 2. Where extended collective licensing solutions are used – effective, rapid, easy and frictionless opt-out mechanisms are essential We recognize that extended collective licensing (‘ECL’) exist and that they are being legitimated by the Directive’s article 12. However, throughout the years, we have experienced various and significant difficulties with being able to opt-out of existing ECL schemes and would like to offer our thoughts in relation to the implementation of new ECL schemes by the members states of the EU. Where extended collective licensing (‘ECL’) solutions are being implemented, it should be clear that rights holders who want to opt out of the application of ECL regarding their works, may do so easily, effectively and in a frictionless manner. It is essential that CMOs are not permitted to undermine one of the fundamental conditions of ECLs and create cumbersome withdrawal/opt-out processes, that in practice eliminates or significantly limits the possibility for rights holders to withdraw rights from ECL. 3. Article 17 must not be used to introduce new limitations to rights holders’ exclusive rights Regulations (such as ‘minor exception’ and similar) where the use of up to a certain amount of content, such as a set number of seconds/words/data volume, is allowed, are in contradiction with the legal framework for exceptions under EU and international copyright law and must not be introduced in the implementation of the Directive. As stated in the Guidelines, the length of an extract is not as such a legal criterion to determine whether a use is legitimate. Such ‘minor exception’ regulations do not solve any matters or questions in relation to article 17.7 of the Directive. Instead, the introduction of such conditions would go far beyond the text of the Directive and introduce unlawful limitations to rights holders’ exclusive rights, which have not been legislated. Kind regards, Oscar Höglund, CEO Epidemic Sound Caroline Ekström, General Counsel Epidemic Sound