Copyright fees should meet modern requirements, not be a relic of the past – EBA

01/ 06/ 2020

In May 2020, at the initiative of the European Business Association, the research company GfK conducted a study of consumer behavior in Ukraine regarding digital content protected by copyright. Thus, Ukrainians are charged with the fee for a hypothetical possibility to download, save, or share the copyrighted work with the gadget. By law, the fee amount for private copying is determined by the state-accredited organizations and included in the cost of devices and data medium. Therefore, initiatives to increase the fee by 3-4 times will lead to higher costs of electronic appliances and the growth of the shadow economy.

View the presentation on Facebook

The study surveyed more than 1,100 Internet users from all regions of Ukraine. The goal is to identify common preferences and behaviors in consuming digital content protected by copyright. In particular, the study was focused on the usage frequency of legal and illegal Internet resources, the probability of downloading and storing music and videos on devices and disks, the probability of printing e-books at home, and so on. The results of the study are extremely important for consumers, manufacturers, and distributors of electronic appliances and data medium as they are being forced to pay a 3-4 times higher fee, as well as for collective management organizations (OKUs) accredited by the Mineconomy. Certain data medium categories such as copiers and paper would be introduced with a completely new “tax” for a hypothetical possibility to make a copy of the book and share it to another consumer.

Viktoriia Kulykova Consumer Electronics Committee Manager
What is the logic behind this? If the content is used illegally, the right holder goes to court and get compensation for the incurred losses. If the content is used by the consumer legally, the right holder receives compensation from importers of equipment. But if the consumer illegally uses the content, it is not the fault of the manufacturers of equipment, so it is illogical to charge them with a fee by the method of "carpet bombing".

According to the manager of the EBA Consumer Electronics Committee, the fee for private copying has outlived itself: “Thus, the fee was introduced in the era of analog devices, when there was a mass copying of audio and video cassettes. At present, authors and consumers have every opportunity for direct communication without intermediaries such as collective management organizations that receive the fees and distribute them among the authors. As for the international practice, each country decides on its own whether to introduce such a fee or not and for which categories of equipment or data medium.

The GFK study showed that there is a change in the behavior and consumer preferences of Ukrainians regarding the use of copyrighted content on the Internet and its uploading. For example, most respondents use both legal and illegal resources at the same time (75% of video content consumers and 80% of music consumers).

Tetyana Sytnyk GfK Analyst Expert
Only one in ten Ukrainians uses legal resources exclusively. At the same time, according to the EU directive and the legislation of Ukraine, fees charges from the cost of equipment are justified only if the consumer downloads a file from a legal resource. Using and downloading copyrighted works from illegal resources are prohibited and are not subject to this regulation.

There is also a trend among Ukrainians to view content online, rather than downloading it to their gadgets. Thus, 82% of respondents watch movies online at least once a week without downloading it. Furthermore, 28% have not saved any video content in the last 6 months. Among the respondents who still download videos from the Internet: 65% – use torrents for this purpose; 48% – use legal but free resources; and only 16% – download files from paid platforms (thus, the fee for the use copyrighted content would be applicable solely to the gadgets of this particular small category of consumers). As for music consumers, the situation is similar. Thus, at least once a week – 83% of respondents listen to music online, and 41% – download files to the device. At the same time, 71% of those who download files use pirated file sharers, and 29% – torrents. Only 13% of consumers download music from paid platforms.

The study showed that the probability of using devices for private copying is quite low. For example, 36% of smartphone owners who watch videos / listen to music do not use them to store video or music files. And only 15% of e-book users print books on a home printer. At the same time, it is planned to charge fees for all devices and media devices legally imported or manufactured outside Ukraine.

Thus, the following devices and media are subject to regulation of reprographic reproduction with the rates proposed by OKU: printers – 4.71%; copiers – 2.7%; faxes – 2.61; risographs – 4.53%; paper for office equipment – 1.95%; fax paper – 1.53% are deduced from the price of goods. In terms of copying audiovisual works: MP3 player – 2.61%; computer recorder – 2.61%; hard drive – 2.61%; audio system or music center – 2.61%; TV – 0.44%; laptop or computer – 0.52%; mobile phone – 0.52%; disk or memory card – 3.01% are deduced from the price of goods.

The participants of the online conference noted that the fees proposed by the UCU are economically unreasonable and will not only lead to higher prices for legal equipment and data medium but also distort the competition in this market area. “The introduction of such charges to legal equipment will lead to a further increase in the number of illegal imports, the share of which for certain categories of equipment, such as mobile phones or TVs, and so is about 30% – adds Viktoriia Kulykova. The growth of illegal imports will not only distort competition but also brings less revenue to the state budget and increases the level of consumer insecurity. Therefore, according to the industry players, it is necessary until the end of the year to suspend the Law which provides those charges mentioned above. It is now important to negotiate normally to find a fair and logical solution. After all, the previously proposed format was not constructive and did not allow business representatives to fully participate in the negotiation process. It is inadmissible to introduce in rush additional unjustified fees for producers and consumers, especially during the current economic crisis and a sharp decline in the purchasing power of Ukrainians.

The detailed presentation and the results of the GfK study can be found at the links.

For the reference:

The EU Directive stipulates that in some cases, the state has the right to establish an exemption from fair compensation, provided that the damage caused to right holders in such cases is minimal. Thus, the states can set a threshold for such an exemption at their discretion.

Thus, according to the official reports of the UMA for 2018-2019, the total amount of fees charged for private copying in favor of right holders ranges from 6 to 6.5 million UAH for a year. According to expert estimates, the total amount of royalties collected by the OKU exceeds 80 million UAH for a year. That is, fees for private copying provide less than 9% of authors’ income, which within the meaning of Article 5 (2) (b) of Directive 2001/29 can be considered as minimal damage to right holders, which in turn entitles Ukraine to set a respective threshold to limit the copyright infringement and temporarily suspend the law in terms of charging a fee for private copying.

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