Beard, Ford and Stern (2018)
|Beard, Ford and Stern (2018)|
|Title:||Safe Harbours and the Evolution of Online Platform Markets: An Economic Analysis|
|Author(s):||T. Randolph Beard, George S. Ford, Michael Stern|
|Citation:||Beard, T.R., Ford, G.S., and Stern, M. (2018) Safe Harbours and the Evolution of Online Platform Markets: An Economic Analysis. 36 Cardozo Arts & Ent. L.J. 309|
|Key Related Studies:|
|About the Data|
|Data Description:||The study uses an economic model to determine how much liability should be ascribed to internet platforms where users upload infringing content. The model assumes two types of uploaders based on the legitimacy (or otherwise) of their uploads, and two types of websites based on whether they “vet” content, or are otherwise open.|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:|
"When a pirated version of a copyrighted work is shared over the Internet, many online intermediaries may participate, exposing these firms to liability through legal concepts such as direct, contributory and vicarious infringement. Safe harbors largely shield intermediaries from "crippling liability" in return for cooperative materials. Yet, digital piracy remains a problem. In this paper, we offer a simple economic model of safe harbor protection, demonstrating that de minimis liability for these platforms promotes infringing platforms to the detriment of responsible ones. Increasing the risk of liability for infringement results in a "separating equilibrium," with one platform offering only legitimate and high-value content and another offering a combination of illegitimate and low-value content. Effective platform liability should ultimately change the structure of the platform industry, which We believe should improve enforcement of copyright law. Legal changes similar to those prescribed here were recently been proposed in the European Union."
Main Results of the Study
Firstly, the study finds that open platforms (e.g. where all uploads are permitted) are at a higher risk of enforcement actions from rightsholders. This may especially be the case where the open platform in question derives some financial benefit. Secondly, the study finds that “vetted” platforms (e.g. where content is checked before upload), whilst costly, are the best solution for maintaining existing safe harbour protections (on the assumption that such vetting systems prevent infringing uploads in their totality).
In the current safe harbour system, platforms which voluntarily implement vetting systems are at an economic disadvantage (given the higher compliance costs for both the platform and uploaders). As such, open platforms which host both legitimate and illegitimate content disproportionately benefit (as there are no compliance costs for the platform or uploader). The study concludes that the current system of de minimus liability is therefore not conductive to a successful, and compliant, platform industry.
Policy Implications as Stated By Author
As a legislative solution, the authors suggest that new policies should compel internet platforms to vet content prior to upload in order to benefit from safe harbour protections. The authors find that article 13 of the proposed European Copyright Directive is an example of this, and should “encourage responsible behaviour by online intermediaries”.
In turn, this should result in the rise of two distinct types of platforms: the first would be fully compliant with vetting procedures, and presumably host entirely non-infringing content; the second would not be compliant with vetting procedures, and host either a mix of, or entirely, infringing content. This system would present a clearer “target” for enforcement measures than the current system.