Page 158 - A Study on the Role of UGC Platforms in Copyright Law：An Intermediary-oriented Approach

A Study on the Role of UGC Platforms in Copyright Law: Chapter 5 Formulating a Non-commercial UGC Creation Levy Scheme
An Intermediary-oriented Approach

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privacy. A levy scheme based on the sale and importation of audio recording devices was
thus introduced as a way to reward copyright owners and meanwhile respect end users’
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fundamental right to privacy.
The goal of promoting cultural diversity has also played a crucial role in the formulation
of the levy scheme. Most EU countries require a certain percentage of the levy funds to be
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set aside for specified social and cultural purposes. For instance, France allocates 25% of
its levy revenues to public institutions for cultural purposes, such as funding performances
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and festivals. Despite the political controversies over the way levies have been allocated,
‘levies are at least a reasonable policy option’ according to the French economist Fabrice
Rochelandet. 187 Moreover, a levy scheme can promote culture diversity by cross-
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subsidising. Some countries have allocated additional shares of their levies to certain types
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of works and others have allocated a specified percentage to new authors. In an economic
sense, a levy scheme also narrows the gap between the revenue received by the most popular
and least popular works. Because private copying increases with a work’s popularity, the
income of popular works would be reduced more than the less popular works under a levy
scheme.
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5.4.5 Possible criticism: Cross-subsidisation

A major criticism of the levy scheme has been cross-subsidisation, which suggests that
users who do not extensively use copyrighted works to create UGCs should subsidise users
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who do. Because the amount of levies is based on the revenues of the leviable device or
service rather than on the number of instances of leviable use, and due to the difficulty of
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establishing different levels of fees for different customers according to the intensity of their
leviable use, some might contend that device and service providers will impose the levies on
customers equally. This means that customers who seldom engage in UGC creation would
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absorb the cost for customers who frequently engage in UGC creation.
However, this criticism has not gained support from empirical research. A report

183 Visser (n 105) 414; Stavroula Karapapa, Private Copying (Routledge 2012) 120.
184 Personalausweise, GEMA-Hinweis, German Federal Supreme Court (Bundesgerichtshof), 22January 1960, Case I ZR 41/58,
GRUR 1960, 340.
185 Deloitte & Touche, Report on the Collective Management of Copyright in the European Union, 10 (2000).
186 Kretschmer (n 74) note 30.
187 Ibid 66.
188 Lunney (n 73) 915.
189 Ibid.
190 Ibid.
191 Netanel (n 73) 67.
192 Section 5.5.2.
193 Ibid.

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