YouTube vs Indian music industry: The revenue problem of the creator economy

In the era of User Generated Content (UGC), it has become increasingly frustrating for Indian copyright holders to establish liability for copyright infringement on online platforms. This is due to two key reasons: The rise in unauthorised use of copyright-protected content and the misuse of intermediary safe harbours by new forms of interactive UGC platforms. The Indian recorded music industry suffers potential revenue losses of between Rs 506 crore and Rs 700 crore due to the value gap (which is a mismatch between the value that online user upload services, such as YouTube, extract from music [raw material] and the revenue returned to the music community) as a result of misuse of safe harbours. Additionally, there is a further revenue loss of Rs 145 crore to Rs 200 crore attributable to unauthorised content made available on short-form UGC apps.

Section 79 of the Information Technology Act, 2000 (IT Act) provides for intermediary safe harbour regime in India. The current safe harbours redefined via the IT Amendment Act of 2008 closely correspond to the safe harbour under the Digital Millennium Copyright Act (DMCA) of the US and the intermediary liability regime under the E-Commerce Directive (ECD) of the EU.

In the past few years, due to an increase in copyright infringement on the internet and lack of accountability of online services, authorities across the globe have recognised the need to tighten existing safe harbours. In 2020, the US Copyright Office published a report analysing whether Section 512 of the DMCA is working effectively and as intended. The final report concluded that “the balance Congress intended when it established the section 512 safe harbour system is askew”. Similarly, owing to the growing concerns regarding whether copyright holders receive a fair price for their content made available on online platforms, the EU introduced a sector-specific regulation in the area of copyright in the form of a new Directive “Copyright in Digital Single Market” (CDSM) in 2019, placing a much higher standard of obligations on online content-sharing service platforms.

In light of the changing dynamics around the safe harbour regime and its impact on copyright owners, it becomes important for the creative industry stakeholders, policymakers, academicians, and the public at large to examine the accuracy of the bemusing numbers that have been identified in the YouTube 2022 report assessing YouTube’s creator economy in India.

The report found that YouTube’s creative ecosystem contributed Rs 6,800 crore to the Indian economy in 2020 and supported 6,83,900 jobs. This was estimated based on survey data and official statistics on music industry revenues. Three anonymised surveys were conducted merely comprising 4,032 India-based users, 1,203 creators, and 1,020 businesses, in contrast to the enormous market share YouTube observes in India. As per the Ministry of Information and Broadcasting, YouTube witnessed 44.8 million Indian unique monthly users accessing the platform in 2021, forming 2.4 per cent of the total 1.86 billion YouTube global users. Along with its enormous user base, the platform also enjoys a growing number of content creators in India. For instance, as per the report, in India, over 40,000 channels have over 1 lakh subscribers as of June 2021. As per Prince Khanna, co-founder of influencer marketing firm Eleve Media, there were more than 1,700 Indian YouTube channels with more than 1 million subscribers in 2020. In contrast to the total number of Indian creators and India’s share of the total YouTube global user base, the sample size of 4,032 India-based users and 1,203 creators is evidently insufficient to get a clear picture of the economic impact of the YouTube creator economy. While the platform implies proportionate payouts towards a few of the Indian YouTube creators, the sample size is too small to demonstrate the same, thereby making the study unreliable.

The report takes into account the published information on music industry revenues as one of the ingredients for calculating the estimated direct GDP contribution of YouTube’s creative ecosystem. As per the IMI estimates, the Indian recorded music industry suffers potential revenue losses between Rs 867 crore and Rs 1,200 crore due to the phenomena of value gap, growing digital music piracy and unauthorised content being shared on short video UGC apps. Therefore, considering the music industry revenues without taking into consideration the losses borne by the stakeholders — due to the misuse of safe harbours by UGC platforms like YouTube itself — makes the report flawed for the purpose of reflecting the state of the Indian creative community.

New forms of UGC services such as short video apps have evolved into breeding grounds for copyright infringement, making it necessary to re-evaluate the existing safe harbours in India. Therefore, it becomes important for the Ministry of Electronics and Information Technology to conduct an extensive study on reviewing the current safe harbour framework in India while drafting the new IT laws in the form of the Digital India Act. The goal of the study should be to determine the working of Section 79 of the IT Act and provide appropriate recommendations to the Parliament in order to address the misuse of safe harbours by online interactive UGC platforms.

The writer is legal associate, IMI

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