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More evidence from Germany: ancillary copyright still not working

Over the last month the German publishers who are pushing for ancillary copyright for press publishers on the EU level have encountered two more setbacks in their attempts to turn the ancillary rights that they have in Germany into actual revenue.

Freedom to link upheld

First the Bundeskartellamt (the German competition authority) rejected claims made by the publishers that Google has acted in violation of competition rules by removing from its search results text snippets from publishers who have not granted them a royalty-free license. Google had started removing such snippets after the introduction of the ancillary copyright for press publishers to avoid having to pay for displaying the snippets. As a result, the publishers soon discovered that not having their stories findable via Google News cost them substantial amounts of visitors—and thus revenue. Because of this realization, the majority of publishers grant royalty-free licenses to Google to ensure that their content is included in Google News.

In their complaint to the Bundeskartellamt the publishers argued that Google was abusing its dominant position in the search and news aggregation markets if it would not display the snippets unless it was granted a royalty-free license. The Bundeskartellamt flat-out rejected this argument, stating that if an online service does not want to acquire a license for the display of snippets—and hence only display search results without a snipped portion of the underlying text—it is perfectly free to do so. According to the competition authority there is nothing in antitrust law that prevents companies from doing this, even if they hold the dominant market position.

It is worth highlighting that in issuing its rejection the Bundeskartellamt did not only look at the interests of Google and the publishers, but also that it based its decision on a fundamental concern for the public interest (my own translation of the German original, emphasis added):

The public has an interest in the search engine business model. Given the billions of existing web pages, the ability to find individual pages is of great importance for ensuring that each user has access to the available information and can use the historically unparalleled knowledge-potential of the Internet. The decision division (of the Bundeskartellamt) is not aware of a better method than a search engines for providing access to this knowledge-potential.It would also harm the interests of users If the concept of universal freedom to link – which necessarily includes the ability to describe the links – would be hampered because search engine operators are forced to enter into business negotiations with certain website operators or their representatives.

Excessive tariffs

The second blow to the German ancillary copyright system was dealt by the Copyright Arbitration Board of the German Patent and Trademark Office (GPTO). The Copyright Arbitration Board had to decide if the snippet tariff (Tarif Presseverleger) proposed by the collecting society VG Media for is adequate. VG Media acts on behalf of a number of press publishers who had transferred their ancillary copyright to the collecting society. VG Media had determined a tariff for users of snippets from the publishers it represents. It demands that search engine operators covered by the ancillary copyright pay 11% of the annual revenue they generate directly or indirectly by displaying snippets of news articles (the percentage is reduced to exactly 6.1084 as VG Media only represents about half of the German publishers). In other words, VG Media thinks that its members are entitled to 11% of the revenue of search engine operators that provide internet users with a way to find their content.

It’s not surprising that the GPTO found that asking for an 11% cut of someone else’s business ‘is not adequate in its current form’. According to the GPTO the calculation basis for the tariff was too broadly defined and therefore deemed unlawful and must be revised by VG Media. The arbitration board has not provided any specific requirements, but suggested a fixed compensation for every use.

Another issue covered by the GPTO decision is the length of snippets that fall under the (so far unspecified) exception for “single words and smallest snippets” spelled out in the law that establishes the ancillary copyright for press publishers. As far as the GPTO is concerned there is a need for a specific limit on length, and they suggest seven words—excluding the search keywords themselves. While seven words is fairly limited, this part of the decision also establishes that short snippets are not covered by the law and can be used without obtaining a license. This holding further undermines the applicability of the ancillary copyright.

What’s next?

The overall message of last month’s decisions is that the German implementation of the ancillary copyright concept is a failure. The publisher’s rights are not enforceable without violating the interest of the public and search engine operators. For the publishers. the introduction of the ancillary copyright remains a failure in their efforts to capture (excessive) parts of the revenue stream of search engine operators. As we have pointed out before, VG Media and the publishers it represents refuse to acknowledge that ancillary copyrights for press publishers are bad for the public and are ineffective at accomplishing what they intend to address. But the publishers still seem to be hell-bent on trying to save their ‘rights’ by exporting the concept to the rest of Europe regardless the collateral damage to the copyright system and to users rights.

While last month’s decision should undermine their case, we need to to remain vigilant to prevent this from happening. Both the Spanish and the German experiments with an ancillary copyright for press publishers are clearly showing that creating additional layers of rights that prevent the public’s ability to access information online is not the the answer to the problems faced by publishers struggling to transform their business models to the realities of the online environment.

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