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Fair Remuneration for Authors and Performers in the Digital Content Directive: are you aware of your new obligations?

21 April 2022

You probably heard about the controversial Directive on Copyright in the Digital Single Market Directive [1] when it was first published back in 2019 (and supposed to be transposed into national law by 7 June 2021).

Only four countries made the deadline and Ireland became the seventh country to make it effective in November 2021 through the European Union (Copyright and Related Rights in the Digital Single Market) Regulations 2021.

Most of the controversy surrounded the changes to the content management and liability position for online content-sharing service providers like YouTube (OCSSPs) and the ambiguities in Article 17, which led those organisations at the time to protest strongly.

But a much less debated change has been the introduction in Article 18 of the Directive (Regulation 25 of the Irish Regulations) of provisions relating to the “fair remuneration in exploitation of contracts of authors and performers”.

New rules on remuneration

Contracts are rarely signed between individuals with level bargaining power and therefore the EU takes the view that it needs to prevent the stronger side from taking advantage, to ensure a healthy creative sector. Therefore, the Directive includes a section to promote greater protection for content creators.

Article 18 of the Directive says that member states shall ensure that where authors and performers license or transfer their exclusive rights for the exploitation of their works or other subject matter, they are entitled to receive appropriate and proportionate remuneration. In implementing this principle into national law, member states can use different mechanisms and take into account the principle of contractual freedom and a fair balance of rights and interests.

Article 19 (Regulation 26 of the Irish Regulations) introduces a transparency obligation – i.e. an audit right, so that performers and sub-contractors receive, at least once a year, up-to-date, relevant and comprehensive information on the exploitation of their works (for example about modes of exploitation and all revenues generated and remuneration to date). This could include quite sensitive information such as the amount paid by advertisers for ad impressions.

Article 20 (Regulation 20 of the Irish Regulations) provides that where the remuneration originally agreed turns out to be disproportionately low compared to the subsequent income resulting from the exploitation of the work (known as a ‘best-seller’ clause), authors and performers are entitled to claim appropriate and fair additional remuneration. This catches contracts agreed before the implementation of the Directive, but it excludes agreements concluded by collective management organisations.

Recital 78 of the Directive states that, when assessing if remuneration is disproportionately low to the revenue, all revenues relevant to the case in question should be taken into account, as well as the specific circumstances of each case, including the contribution of the author or performer, the practices in the different content sectors and whether the contract is based on a collective bargaining agreement. It also confirms that, where the adjustment cannot be agreed, the author or performer is entitled to bring a claim before a court or other authority. This gives member states some discretion and may leave some discretion for market practice.

The Directive also provides for revocation of licences or assignments where their works are not being exploited; and a new alternative dispute resolution procedure to resolve matters (Regulation 28(5) of the Irish Regulations provide for mediation and arbitration).

Articles 18–22 do not apply to contract authors of a computer program, as defined in the Computer Programs Directive (in Ireland the Copyright and Related Rights Act 2000).

Any application to the UK?

Although the UK voted in favour of the Directive while still a member of the EU, it decided not to transpose it into national law. However, it might still affect our readers in the UK if you use talent from the EU, and you can’t contract out of it unless you have a collective bargaining agreement - read on to find out why it matters.

What does this mean for rights holders?

Relevant businesses will need to:

  • consider their existing remuneration models for payments to authors and performers and whether they constitute “appropriate and proportionate” remuneration. This will probably involve assessing the value of a contribution to a work, as well as its effect on revenues, taking into account the overall work and exploitation models.
  • think about what happens with projects which produce more money than the parties originally predicted.
  • consider if any of the remuneration provisions in your current contracts could be up for renegotiation, taking into account similar successful works.
  • assess if you risk activating the revocation right? Are you taking too long to exploit works or not exploiting them for an extended period of time?
  • think about what methods you have to resolve disputes? And are you set up to provide information about how works are exploited so that you can comply with the transparency rights?

[1] Directive on Copyright in the Digital Single Market Directive.

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