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Everything is fully automated, so that the entire world repertoire of individual industries could soon be found on various platforms. Users thought they were in paradise because they could consume content that was otherwise only accessible for a fee, unlimited and free of charge. The latest music recordings and films were available worldwide at any time and in any version. No release went unnoticed and was always immediately available on one of the platforms. The platform operators also thought they were in paradise because they could monetize content without having to pay for it. They operated an almost fantastic business model, because a distributor who did not have to buy the products it marketed beforehand generated fantastic margins and profits soared.

However, this also buried a principle that had been prevalent not only in the content industry, but in every business. Anyone who wants to sell someone else's goods must first ask the owner's permission and then make an offer. The owner can accept or reject the offer. It is up to the owner to decide whether the goods are sold and at what price. OCSSPS has turned this principle on its head. The content has been used without prior permission, without the rights holder being able to prohibit its use, and without the rights holder being able to set a price.

The OCSSPS model was based on the assumption that they could monetize the content available on their platforms without restrictions, but at the same time did not have to assume any responsibility for the content. In Europe, they argued that they were merely technical service providers but not content providers who were not liable for copyright-protected content provided by users. They referred to Art. 14 Directive 2000/31/EC and today to Art. 6 DSA - Hosting. This states:  

1. Where an information society service is provided that consists of the storage of information provided by a recipient of the service, Member States shall ensure the service provider is not liable for information stored at the request of a recipient of the service, on the condition that:

(a) the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or

(b) the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.

In the USA, the services argued similarly and invoked Section 512 (c) of Title 17 DMCA - safe harbour, which limits an online service provider's liability for infringement if it meets certain conditions.

Such a system means the creeping death of the content industry. The content that is available on the platforms is produced by film and music producers, music and print publishers at great expense and should then be sold so that the investment is amortised. However, selling content that can be consumed free of charge on the OCSSPS is only possible to a limited extent, if at all.

For a long time, content producers were unable to find a solution and were effectively expropriated by the uncontrollable use. GEMA finally sued one of the world's largest platforms in 2009 to put an end to the hustle and bustle. The dispute lasted seven years and ended with a settlement in 2016. GEMA was able to enforce remuneration in this settlement, but the question of liability remained unresolved. Not least because of this legal dispute, which was also discussed by the general public, the European legislator took action with the aim of closing the obvious regulatory gap that threatened all rights holders. At the end of a long debate, which also led to public demonstrations in various member states, Article 17 DSM was adopted with the harmless-sounding title for platforms: “Use of protected content by online content-sharing service providers”.

The essential part of the provision reads as follows:

Article 17

Use of protected content by service providers for the sharing of online content

1. Member States shall provide that an online content-sharing service provider commits an act of communication to the public or an act of making available to the public for the purposes of this Directive when it provides the public with access to copyright-protected works or other subject-matter uploaded by its users.

A service provider for sharing online content must therefore obtain permission from the rightholders referred to in Article 3(1) and (2) of Directive 2001/29/EC, for example by concluding a licence agreement, in order to reproduce works or other subject-matter in public or make them publicly available.

2. Member States shall provide that an authorisation obtained by a service provider for the sharing of online content, for example by concluding a licence agreement, shall also apply to acts carried out by users of services falling within the scope of Article 3 of Directive 2001/29/EC, provided that those users do not act on the basis of a commercial activity or do not generate significant revenues from their activity.

3. Where a service provider engages in an act of communication to the public or making available to the public for the sharing of online content under the conditions set out in this Article, the limitation of liability provided for in Article 14(1) of Directive 2000/31/EC shall not apply to the situations described in this Article.

In Art. 17, the Directive stipulates that an OCSSP make the content on its platform itself publicly available within the meaning of Art. 3(1) and (2) of Directive 2001/29/EC, even if the content is not uploaded by the OCSSP but by its users and even if the upload is fully automated and the OCSSP is not aware of individual content. In other words, the OCSSP is obliged to obtain permission and pay remuneration for the use of copyrighted content on its platform. Furthermore, the Directive expressly stipulates that an OCSSP can no longer invoke the above-mentioned fundamental liability privilege - Art. 14 ... - see Art. 17 para 3. According to the new rules, exemption from liability is only possible within very narrow limits and is regulated in Art. 17 para 4. This means that the safe harbour in Europe is a thing of the past.

The directive was subsequently implemented into national law in all EU member states, and in Germany a completely new law was created: "Law on the copyright liability of service providers for the sharing of online content" with 22 sections. In Section 1, the principle of liability was placed at the very start of the regulation. Section 1 was given a heading with the unmistakable message of the liability of the platforms:

Section 1 Communication to the public; liability of the service provider

(1) A service provider (section 2) performs an act of communication to the public if it gives the public access to copyright-protected works uploaded by its users.

Against this backdrop, a German film distributor sued TikTok in the Munich Regional Court in 2022 - based on the new law - for unauthorised use of short films to which it holds the rights. He demanded information from TikTok about how often his films were streamed and compensation accordingly. The court ruled in favour of the film distributor in full on 9 February 2024: the ruling reads as follows:

The defendant is ordered to provide information on the extent to which the films have been made available to the public.

The information must contain the following details in particular:

•  how often the films were uploaded via the service and subsequently accessed;
•  the amount of the defendant's net income attributable to this use (gross income less applicable VAT);
•  The profits realised by the defendant through this use, stating the total turnover and all cost factors (broken down by cost type).

The court also found that the defendant was obliged to pay damages and to refrain from unauthorised use. This means that for the first time in almost 20 years, rights holders now have the opportunity to restore the principles that always applied until the advent of the OCSSPS and - among proper and honourable business people - should always apply: The person who wishes to distribute music, films, images, texts or other copyright-protected content is obliged to ask the rights holder for permission before he begins distribution. He is also obliged to pay the price requested by the rights holder. It is not the buyer but the seller who determines the price and this should also apply to OCSSPS. If the OCSSP does not receive the authorisation or is not prepared to pay the desired price, it is obliged to refrain from using the work. If it fails to do so, it is liable for the infringement - there is no longer a safe harbour.

When enforcing their rights on the basis of Art. 17 DSM, rights holders will in future also be able to pay greater attention to the hitherto limited transparency. In many cases, the use of OCSSPS is not traceable, the reporting is incomplete or none at all. A lack of transparency is one of the reasons for inadequate remuneration and therefore one of the most important aspects in relation to the OCSSPS.

Once the rights holders have regained control of their business, they can also take care of the two other areas that are crucial to their survival. These include the usage and user data generated by their content. Even though the battle for remuneration has always been at the forefront over the last 20 years, this has never been the actual value of using copyrighted content. The real currency was and is the user and usage data that is generated when copyright-protected content is used. This is not about passive, European-style data protection, but about the precious treasure trove of data that can be harvested and monetised by those who control the data, and these are currently not the rights holders, but still the OCSSPS. This needs to change.

However, the uncontrolled use of content over the last 20 years has not only meant that rights holders have had to operate without data, but also that the content has been used for free and unlimited training for a wide range of AI. The rights holders' content has thus paved the way for its own demise. This must be averted.

In future, the content industry will stand on two pillars: precious, emotional content on the one hand and precious, sober data on the other hand. With the decision of the Munich Regional Court, the rights holders are back in the game. They should be aware that none of the platforms can exist without their content, that the valuable data does not exist without the use of their content and that the AI cannot be trained without their content either. Nothing works without content. It should therefore be the content industry, and not the platforms, that determines the terms of cooperation.

GERMANY

No Save Harbour for OCSSPS/ OSPs anymore

Written by Dr Matthias Lausen

Lausen

With the rise of the major online content-sharing services from 2005 onwards, the uncontrolled distribution of films, music, texts and images to an unlimited global public began. The disruptive innovations of OCSSPS (EU) / OSP (USA) consisted in the fact that copyright-protected content was not purchased or licensed by the rights holders, but was uploaded to the platforms by the users without the rights holders being asked for permission or paid. Anyone with an internet connection could add any song, film, image or text to the platforms and each of these people had access to this content from anywhere in the world. Access was free of charge for everyone. According to the operators of these platforms, there was no control.

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Dr Matthias Lausen

Dr. Matthias Lausen advises publishers, producers and rights holders in the music, film and image industries. He has particular expertise in developing tailor-made licensing models and negotiating licenses and conditions for global rights holders with over 100 platforms and streaming services worldwide. Among others, he led the GEMA vs. YouTube and Nikita vs. TikTok cases. Dr. Lausen's advice focuses not only on the legal aspects, but also on the economic considerations. Founded the law firm in 1995 with a focus on copyright and media law. From 1994 to 2016 Managing Director of the Institute for Copyright and Media Law, Munich. From 2003 to 2011, lecturer on media law at the Ludwigs-Maximilians-Universität, Munich. Since 2006, lecturer of the qualification training for specialised lawyers for copyright and media law.

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