Legal Briefing

The copyright hub: moving copyright licensing into the digital future

The In-House Lawyer Logo

Technology, Media and Telecoms | 01 November 2012

The current copyright licensing system is struggling to cope with the digital age. There is an increasing division between what consumers expect to be able to do with products they have bought – such as adding the music on a CD to their MP3 collection or sharing the music with members of the family – and what the law permits.


Even if users are prepared to take a licence, licensing of content is expensive and can involve negotiations with multiple organisations: it is hard to identify some rights owners and licence revenue is not always distributed evenly between them. There is a clear need to adapt to the digital world, with its high-volume but low-value transactions, but how can this be achieved?

The UK government has commissioned several reviews and it looks as though we may finally have a workable solution. A ‘digital copyright exchange’ (DCE) was first proposed in the Hargreaves Review. It has now been slimmed down to a more manageable size in the Hooper Report and become a ‘copyright hub’.

The hub’s aim is to be a one-stop shop 
for digital copyright works by streamlining the licensing process for low- to 
medium-value usage and enabling the 
fast and easy clearance of rights. Its 
focus is on a high volume of automatable, low monetary value transactions coming from a large number of users. It is hoped that the hub will transform currently inefficient copyright licensing practices and become a driver for economic growth through offering value to creators, rights holders and consumers.

The creative industries have been particularly affected by the digital world and the hub could be a force for improving their position. This article considers the potential impact of the hub on the UK and examines the benefits and pitfalls for both the copyright owner and the user.

WHAT IS THE COPYRIGHT HUB?

The original vision for a DCE was to have a single online marketplace for the licensing of digital content where users could find, clear, pay for and download digital content with a couple of clicks. This vision morphed into the more practical hub approach following the Hooper Report.

Unlike the DCE concept, the hub would be a portal that would connect different pre-existing digital clearing houses with the option for copyright works to be specifically listed on the hub itself.

The hub is intended to be not-for-profit and industry-led and funded. It will provide free copyright education and enable the easy search of copyright works. The hub should offer clarity to users as to both what the copyright owner is willing to license and what the user’s licence does (and does not) permit. It may also offer a form of dispute resolution. Although the references to dispute resolution (and enforcement of licensing arrangements) in the Hooper Report are minimal, many see this as essential to the hub’s success. Registration of copyright works will be voluntary, but it is hoped that the potential benefits will encourage early adoption from many different rights organisations and individuals.

BENEFITS

The hub proposal affects rights holders and users in different ways. The benefits for rights holders include easy recordal of rights, a substantial reduction in paperwork and the attendant licensing costs, together with the possibility of a dispute resolution mechanism within the licensing process. Meanwhile, users get easy clearance of rights in a transparent and affordable copyright licensing system. Everyone benefits from the increased clarity surrounding permitted uses and licence fees. As this is a much more automated process, it will be far easier to keep track 
of fee payments and licensed rights.

CRITICISMS

The copyright hub is less ambitious than the DCE but perhaps its vision is more realistic. One major criticism that has been levelled at the hub is that large-value licence transactions are excluded. However, the identification of rights will still be possible, and for more bespoke licensing, it is somewhere between hard and impossible to create an automatic service that would satisfy all parties and interest groups.

It has been said that there is a lack of incentive to join but as the current system is so chaotic, that fact alone is arguably sufficient reason to register. For larger organisations it should also enable quicker and easier management of their rights portfolio and it may enable smaller rights owners to highlight their content to a greater degree.

There is considerable concern that the way licensing currently works in different industries means that any uniform 
approach to licensing would be impossible. The oft-cited example is the difference between the music and the images licensing industries, which work on completely different models. However, there is no reason why the hub could not take account of the differing industry approaches within the one database, perhaps taking the best of both for its system.

The government does not propose to lead or fund the project but, if the funding can 
be found, this is not necessarily a problem and may even be a benefit. A lack of reliance on government funding from the outset provides greater stability and enables the rights industries to react and adapt in line with the ways that their industries develop. The onus will be on the creative industries to work together and make this a success.

The final concern is that the hub will fail and that ultimately the costs of the failure will be passed on to licensees. Failure is a potential pitfall in all plans for change but fear of failure is never a good reason not to try to improve an inadequate system.

WHAT ABOUT ORPHAN WORKS?

‘Orphan works’ is a term used to describe works without a traceable copyright owner. Many works can become ‘orphans’, particularly where they are very old or, in the case of digital works, the metadata and even watermarks are removed. With no identifiable owner, unauthorised use can be tempting for users. Works become ‘orphaned’ in Europe far more than in the US because there is no European (or UK) copyright registration system.

Orphan works have a societal cost as they tend not to be used for fear that the

copyright owner may come forward and claim a disproportionately large royalty. This is a particular problem for archive digitisation projects.

Somewhat controversially, the current 
plans for the hub include a proposal that almost creates a rights registry by default. If a diligent search has been carried out 
and verified, but has failed to identify the owner of a copyright work, it is intended to allow use of that work in return for a ‘reasonable’ licence fee. The fee will be payable to the hub, and then to the legitimate copyright holder on proof of ownership.

In essence, the hub is proposed to be 
one resource for verifying whether or not 
a work is an orphan. If a right does not appear on the hub’s databases, it may be presumed to be an orphan if, as seems possible, searching on the hub is deemed 
a ‘diligent search’.

How this will actually work is still being considered. If the hub gets the go-ahead, recording your work on it, or one of its feeder databases, is likely to be a good means of avoiding orphan work issues. However, to complicate matters, the European Council of Ministers adopted 
an Orphan Works Directive on 5 October 2012, focusing on use of orphan works 
for non-commercial purposes, which will come into force shortly. Quite how the 
UK proposals will fit with this is unclear.

If the UK proposal does go ahead, it 
could be hard to resist recording your 
work on the hub and it could arguably 
make registration on the hub essential in practice. It is likely that some form of compromise will be reached (such as a

list of works that are not orphans but 
are not open to licence). In any event, 
the proposal is surely better than the current system, where digital works are infringed online on a regular basis with 
little acknowledgement or recompense 
to the rights owners.

Sadly, the hub does not solve the 
problem of metadata stripping. However, the Hooper Report suggests that this problem can be reduced by industry introducing an image unique identifier ‘norm’, which would, ideally, link to an 
online database of current rights data. There is also talk of a voluntary code of practice among media organisations 
barring the stripping of metadata and 
the use of images without any metadata.

CONCLUSION

The hub is hugely ambitious. It requires significant input, including finance, 
from a wide range of content industries. 
There is a fine line between enabling the hub to be an effective signpost for identifying whether or not a work is an orphan and creating a de facto copyright registry. This is a very difficult balance 
to strike.

More positively, although there are some obvious obstacles, the hub offers immense revenue potential for the creative industry. The music industry has learned how much money there is in legal digital downloads provided that they are made easy and readily accessible. The same benefits will hopefully reach other rights-centric worlds thanks to the hub.