Maybe you thought the battle over online music copyright ended with the shutdown of Napster in 2001.
The players have changed, but the fight goes on.
A new European law will soon require internet platforms to remove music that infringes on copyrights, and in some cases force them to pay licensing fees. The main target of this measure is Google and its YouTube subsidiary, which is now the leading source of music in the world, with 1.9 billion global subscribers. Music publishers and artists complain that YouTube isn’t paying a fair price for all the music available on its site, much of which is uploaded by others.
The showdown over music is just the latest skirmish in a global showdown with Big Tech.
Governments everywhere are grappling with how to rein in Google, Facebook and other technology giants that now dominate so much of our online lives.
Europe is leading the way with legislation, stricter regulation and steep fines.
In the United States, there are growing calls to break up these giants on anti-trust grounds – as regulators once did with titans of earlier eras such as AT&T and Microsoft. This week, Facebook co-founder Chris Hughes warned that the power now held by CEO Mark Zuckerberg is “unprecedented and un-American,” and urged regulators to do something about it.
“We are a nation with a tradition of reining in monopolies, no matter how well-intentioned the leaders of these companies may be,” he wrote in a New York Times opinion piece last week.
For others, the solution lies in punitive taxes to get Google and Facebook, who now control half of global online advertising, to move to a subscription-based business model.
These companies are a more significant challenge for regulators than AT&T and Microsoft ever were. It isn’t just that the new tech giants may be leveraging their market heft to stifle competition and hog revenues, as critics claim. They’re also accused of destabilizing democracies by not doing enough to block the spread of disinformation and hate speech. All the while, they’re harvesting users’ personal data to sell targeted ads.
Given all that, governments have a duty to act to prevent a classic economic breakdown known as a “tragedy of the commons,” New York University economist Paul Romer argued in a recent New York Times op-ed. That’s a situation where individuals – or in this case, companies – undermine the well-being of society in the pursuit of their own gain.
Rather than break them up, governments should aggressively tax tech giants to prod them toward “a healthier, more traditional model,” argues Prof. Romer, a co-recipient of last year’s Nobel economics prize. He also advised the U.S. Justice Department in its anti-trust case against Microsoft.
“Our digital platforms may not be too big to fail. But they are too big to trust and … may already be too big to regulate,” he says.
The rate of the tax could be scaled up to make sure the dominant companies bear the brunt, without discouraging smaller players from entering online markets, Prof. Romer argues.
That may work in addressing Google and Facebook’s ad-based businesses.
But taxes and financial sanctions may not work elsewhere, including in the music business.
“Governments around the world are starting to realize that Google and the big tech companies have responsibilities in many different areas,” said John Phelan, director-general of the International Confederation of Music Publishers, which represents Sony, Warner, Universal and many independent publishers.
Through its YouTube subsidiary, Google has emerged as a giant in the music distribution business in part by exploiting what he calls “legal kinks” in copyright laws in the United States, Canada, Europe and elsewhere that exempt “passive” transfers of copyrighted material.
Unlike subscription streaming services such as Apple and Spotify, YouTube users can upload content (as they did 16 billion times last year). Mr. Phelan says Google has balked at paying licensing fees on a lot of that material, arguing that it has only a passive role in its distribution.
The new European legislation will effectively close that exemption by making YouTube and other companies legally liable for the material on their platform, according to Mr. Phelan. EU member countries have two years to bring their copyright regimes into line with the new law.
The music industry is pushing Canada and other countries to replicate the European copyright model.
Breaking up Big Tech makes for a great slogan.
But the challenge of YouTube is a reminder that it will take many different tools to bring order to the online world.