An economic analysis of the impact of some online intermediaries on the distribution of copyright protected content : final report.
Date: 2017-02-17
Institutions: Directorate-General for Communications Networks, Content and Technology
Subjects: cloud computing, copyright, digital distribution, digital single market, digital technology, economic analysis, literary and artistic property, trade intermediary

Ref. Ares(2017)5134709 - 20/10/2017

An economic 
analysis of the 
impact of some 
online intermediaries 
on the distribution of 
copyright protected 
content 

FINAL REPORT 

A study prepared for the European Commission 
DG Communications Networks, Content & Technology 
by: 

Digital 
Single 
Market 

 
 
 
 
This study was carried out for the European Commission 
by 

Correspondence 

ECORYS Nederland B.V. 

Watermanweg 44 

3067 GG Rotterdam 

P.O. Box 4175 

3006 AD Rotterdam 

The Netherlands 

T +31 (0)10 453 88 00 

F +31 (0)10 453 07 68 

E netherlands@ecorys.com 

Registration no. 24316726 

Internal identification 

Contract number:   30-CE-0762270/00-25   
SMART number: 2015/0080 

DISCLAIMER 

By  the  European  Commission,  Directorate-General  of  Communications  Networks,  Content  & 
Technology.  

The  information  and  views  set  out  in  this  publication  are  those  of  the  author(s)  and  do  not 
necessarily reflect the official opinion of the Commission. The Commission does not guarantee the 
accuracy of the data included in this study. Neither the Commission nor any person acting on the 
Commission’s behalf may be held responsible for the use which may be made of the information 
contained therein. 

ISBN 978-92-79-73858-6  

doi:10.2759/75012 

©  European  Union,  2014.  All  rights  reserved.  Certain  parts  are  licensed  under  conditions  to  the 
EU.  

Error! Reference source not found. 

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
About the consortium 

This study was conducted by: Ecorys, IDEA Consult, Gartner and KEA. 

Ecorys 

At  Ecorys  we  aim  to  deliver  real  benefit  to  society  through  the  work  we  do.  We  offer  research, 

consultancy  and  project  management,  specialising  in  economic,  social  and  spatial  development. 

Focusing on complex market, policy and management issues we provide our clients  in the public, 

private  and  not-for-profit  sectors  worldwide  with  a  unique  perspective  and  high-value  solutions. 

Ecorys’  remarkable  history  spans  more  than  85  years.  Our  expertise  covers  economy  and 

competitiveness;  regions,  cities  and  real  estate;  energy  and  water;  transport  and  mobility;  social 

policy, education, health and governance. We value our independence, integrity and partnerships. 

Our  staff  comprises  dedicated experts  from  academia  and  consultancy,  who share  best  practices 

both within our company and with our partners internationally. 

IDEA Consult 

IDEA Consult (www.ideaconsult.be) is a private economic research and consultancy organisation, 

located in Brussels. For more than 15 years now,  we provide research-based economic advice in 

all  stages  of  the  ‘policy  programming  cycle’,  ranging  from  policy  relevant  research  and  analysis, 

through specific advice and strategic planning, to monitoring, evaluation and impact assessment. 

Gartner 

Gartner  (subcontractor)  is  a  global  research  organization  that  offers  the  combined  brainpower  of 

1,280  research  analysts  and  consultants  who  advise  executives  in  85  countries  every  day.  The 

analysts  and  consultants  are  in  steady  contact  with  60,000  clients,  representing  10,000  distinct 

organizations worldwide. These continuous interactions allow Gartner to publish tens of thousands 

of pages of original research annually, and answer to 250,000 client inquiries every year. 

KEA 

KEA  (subcontractor)  provides  longstanding  experience  in  the  field  of  copyright  and  cultural  and 

creative  industries.  KEA’s  mission  is  to  highlight  the  contribution  of  culture  and  sport  to  the 

European  project,  economic  and  social  development  and  sustainability.  KEA  investigates  the 

substance  of  policy  measures  and  their  logic  in  relation  to  the  promotion  of  creative  expressions 

and media. 

Error! Reference source not found. 

4 

 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Content 

1 

Introduction 
1.1  Policy context 
1.2  Legal context 
1.3  Online intermediaries 
1.4  About this study 
1.5  Reading guide 

2  The market for online intermediaries 

2.1  Technological development and trends 

2.1.1 A rising Internet penetration worldwide 
2.1.2 More connected devices 
2.1.3 Increase in data transfer 

2.2  The new ecosystem of cultural services 
2.2.1 Web 2.0 and content providers 
2.2.2 The audio-visual sector 
2.2.3 The music sector 
2.2.4 The images sector 
2.2.5 Online consumption trends 
2.2.6 Value chain and business models 

2.3  Sector revenues 

2.3.1 The audio-visual sector 
2.3.2 The music sector 
2.3.3 The images sector 

2.4  Use of technology in different sectors 
2.4.1 Main types of technologies 
2.4.2 Content recognition technology applications 
2.4.3 Suppliers of technologies 
2.4.4 Content identification used by online intermediaries 
2.4.5 Cost of the content recognition technology 

3 

Impact per sector 
3.1  Approach 
3.2  Impact per sector 

3.2.1 Audio-visual sector 
3.2.2 Music sector 
3.2.3 Images sector 

Annex 1 Case Study YouTube 

Annex 2 Case study Dailymotion 

Annex 3 Case Study Pinterest 

Annex 4 Case Study SoundCloud 

8 
8 
8 
10 
11 
11 

13 
13 
13 
14 
15 
17 
17 
18 
21 
22 
24 
30 
34 
34 
37 
39 
40 
40 
41 
42 
51 
52 

55 
55 
56 
56 
60 
66 

73 

89 

103 

117 

Error! Reference source not found. 

5 

 
 
 
 
 
Annex 5 Case Study Vimeo 

Annex 6 Case Study Flickr 

Annex 7 Case Study Google Images 

Annex 8 Case Study Facebook 

Annex 9 Case Study Vbox7 

Annex 10 Online intermediaries 

129 

139 

151 

165 

175 

181 

Error! Reference source not found. 

6 

 
 
 
 
 
 
Error! Reference source not found. 

7 

 
 
 
 
 
 
1 

Introduction 

Online  platforms  have  become  increasingly  present  in  today's  online  world.  Examples  of  such 

platforms  include  social  media,  music  and  video  streaming  services,  e-commerce,  travel  and 

accommodation  and  many  other  services.  The  rise  of  online  platforms  has  brought  new  points  of 

attention. This study focuses on the role and impact of certain online intermediaries on the online 

distribution of copyright protected content. 

1.1  Policy context 

The  European  Commission,  as  part  of  its  Digital  Single  Market  Strategy,  aims  to  clarify  the  rules 

applicable  to  the  activities  of  online  intermediaries  in  relation  to  copyright  protected  content.  In 

particular, the Commission looks to create more legal certainty and to ensure a  level playing field 

on the online content market. 

Some  online  service  providers  which  allow  users  to  upload  content  may  use  copyright  protected 

content  without  obtaining  a  license  from  the  relevant  right-holder  due  to  legal  uncertainties.  This 

may lead to a distortion of competition between online services, as other online content providers 

are obliged to obtain licenses and, as a result, may find themselves at a competitive disadvantage. 

Another  effect  of  this  situation  is  that  rightholders  do  not  obtain  any  revenue  for  the  use  of  their 

content, or only obtain revenue which they consider to be unfair, from, by the user uploaded content 

platforms. 

Under the  current  legislative  framework,  rightholders  claim  strong differences in  terms of  revenue 

generated 

for 

their  content  depending  on  whether  content 

is  provided  by 

traditional 

providers/retailers  (e.g.  in  music:  Spotify,  Deezer  etc.)  and  online  platforms  (e.g.  YouTube). 
Especially  rightholders  in  the  music  sector  have  been  quite  vocal  about  the  issue1.  In  Chapter  3 
(section 3.2.2), the differences in revenue generation and payments are outlined.  

1.2  Legal context 

In  this  section,  we  briefly  explain  the  current  regulatory  environment  for  online  intermediaries 

storing and providing access to copyright protected content uploaded by their users. 

Relevant copyright law: scope of application 

The relevant framework for rights and obligations for use of copyright protected content is above all 
defined  in  the  Information  Society  Directive  (Infosoc  Directive2).  The  Infosoc  Directive  provides 
general  rules  on  copyright  with  a  specific  focus  on  the  information  society.  This  Directive  would 

apply  to  any  copyright  relevant act performed  by  a  user of  copyright  protected  material  (also  end 

users). 

1  

2  

For example: IFPI (http://ifpi.org/news/IFPI-GLOBAL-MUSIC-REPORT-2016) and ICMP ( http://www.icmp-
ciem.org/node/574). 
Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain 
aspects of copyright and related rights in the information society, Official Journal L 167, 22/06/2001 P. 0010 – 0019. 

Error! Reference source not found. 

8 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Definition of online intermediaries 

There  is  no  legal  definition  of  intermediaries  (or  online  intermediaries,  for  this  matter)  in  the 

Directive.  The  Court  of  Justice  of  the  EU  (CJEU)  has  shed  some  light  on  the  notion  of 

intermediaries  in  a  sense  that  the  term  is  interpreted  broadly  and  covers  ISPs  as  well  as  online 

market places, search engines, social media and possibly other platforms. The focus of this study, 

however,  is  concentrated  only  on  platforms  that  facilitate  users  to  upload  (copyright  protected) 

audio-visual, music and images content which can be accessed by other users. Pure data transfer, 

as provided by Internet Service Providers, is excluded, as well as peer-2-peer file sharing services. 

General rule on the use of copyright protected works and other subject matter 

The general rule set out in the Infosoc Directive is that whoever uses copyright protected materials 

has  to  obtain  an  authorisation  (license)  from  the  rightholder.  In  this  context,  the  word  ‘use’  is 

defined as reproduction, communicating to the public or making available to public.  

Reproduction  (Article  2  of  the  Infosoc  Directive)  covers  reproduction  (copying)  by  any  means,  in 

any form and in whole or in part. Communication to the public (Article 3(1) of the Infosoc Directive) 

means  all  non-tangible  transmissions  and  re-transmissions  of  the  work  to  the  public  by  wire  or 

wireless  means.  The  transmission  shall  originate  in  the  place  where  the  public  is  not  present 

(Recital  23  of  the  Infosoc  Directive).  Making  available  to  the  public  (Article  3(2)  of  the  Infosoc 

Directive) is a part of communication to the public, but means that a work is made available in such 

a way that members of the public can access it individually at a place and time of their choice.  

Licensing 

Licenses are given for each and every individual work, although works may also be grouped for a 

single license (if license conditions are the same for all works). Also general licenses (for all works 

and  all  rights)  may  be  negotiated.  When  negotiating  a  license,  the  right-holder  and  licensees  will 

have  different  interests  with  regard  to  the  following  issues.  These  are  also  the  core  subjects  of  a 

license: 

  Duration of the license; 

  Which rights shall be licensed: right to reproduction or right of communication to the public, or 

both. These rights need to be procured not only from the author(s), but, under circumstances, 

by the holders of the neighbouring rights (producer of the phonogram, performer of the artistic 

work). The rights to be licensed depend on the business of the licensee; 

  License can limit the means of exercise/ exploitation of these rights. For instance, a license can 

foresee  that  only  streaming,  but  not  downloading  of  works  is  allowed;  or  only  the  use  on  the 

(fixed)  internet,  not  via  mobile  applications.  The  means  of  exploitation  of  rights  to  be  licensed 

also depend on the business of the licensee; 

  Exclusivity (i.e. use only on the specific platform and on a specific national territory.  

As a rule, licenses also foresee monitoring measures for the exploitation of the content used (e.g. 

number  of  times  a  song  was  downloaded)  because  the  royalties  for  the  copyright  protected  work 

depend on the actual exploitation. 

Exceptions from the general requirement to obtain license 

Article  5  of  the  Infosoc  Directive  allows  for  a  number  of  exceptions  and  limitations  to  the  rights 

harmonised by the Directive.  

Limitation of liability of intermediaries ("safe harbours") 

If  there  is  a  violation  of  the  requirement  to  obtain  permission  for  the  use  of  copyright  protected 

works and no exception applies, then the relevant entity is liable for copyright infringement and can 

Error! Reference source not found. 

9 

 
 
 
 
 
 
 
 
 
 
 
be sued for damages and/or injunction can be imposed on it. Both the primary perpetrator and the 
contributor  to  the  infringement  can  be  sued.  However,  the  eCommerce  Directive3  provides  for  a 
limited  liability  for  certain  service  providers.  An  intermediary  is  not  liable  for  the  information 

transmitted in the case of: 

 

‘Mere conduit’ (Art. 12): the service provider: 

-  does not initiate the transmission; 

-  does not select the receiver of the transmission; and  

-  does not select or modify the information contained in the transmission. 

 

‘Caching’ (Art. 13): the service provider: 

-  does not modify the information; 

-  complies with conditions on access to the information; 

-  complies with rules regarding the updating of information; 

-  does not interfere with the lawful use of technology; and  

-  acts  expeditiously  to  remove  or  to  disable  access  to  information  that  is  removed  at  the 

original network. 

 

‘Hosting’ (art. 14): the service provider: 

-  does not have actual knowledge of illegal activity or information; or 

- 

removes  or  disables  access  to  the  information  upon  obtaining  knowledge  that  the 

information is illegal. 

Yet, injunctions (i.e. requirements to terminate infringement) may still be imposed on them.  

This  study  does  not  analyse  the  status  of  the  services  covered  and  notably  whether  they  could 

claim to be hosting service providers under article 14 of e-commerce directive and thereby benefit 

from the limited liability. The focus of the study is solely on the copyright aspects and the impact of 

a possible clarification of the applicable copyright rules to certain online services, without taking into 

account the possible effect of the eCommerce directive on the services covered. 

1.3  Online intermediaries 

Online  intermediaries  can  be  defined  as  services  that  "bring  together  or  facilitate  transactions 

between  third  parties  on  the  Internet.  They  provide  access  to,  host,  transmit  and  index  content, 

products and services originated by third parties on the Internet or provide Internet-based services 
to third  parties"4.  In addition  to pure  transmitting  they  also  support  the  outreach  of content  (being 
spread through different networks, access habits etc.). 

Given  that  the  purpose  of  this  study  is  to  assess  the  impact  of  a  possible  clarification  of  the 

application  of  the  rules  set  out  in  the  Infosoc  Directive  on  certain  types  of  intermediaries,  this 

assignment focuses on those online intermediaries which: 

1.  Store and provide access to the public to copyright protected content uploaded by their users; 

2.  Have content on their websites that is audio-visual, audio and images. 

Figure 1.1 below illustrates how online intermediaries are defined in this study. 

3  

Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information 
society services, in particular electronic commerce, in the Internal Market ('Directive on electronic commerce') Official 
Journal L 178, 17/07/2000 P. 0001 – 0016. 

4   OECD (2010): The Economic and Social Role of Internet Intermediaries. 

Error! Reference source not found. 

10 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 1.1 Study definition of online intermediaries 

Source: Ecorys. 

1.4  About this study 

This study assesses the impact of possible measures to clarify copyright rules applicable to online 

intermediaries when distributing protected content.  

The work conducted for this study aims at allowing the Commission to assess better different policy 

options while focusing on one of the options. More specifically, the study provides: 

i. 

A  mapping  of  the  main  online  intermediaries  that  reuse/redistribute/retransmit  copyright 

protected content online; 

ii. 

Case-studies analysing in more detail a sample of the online intermediaries. 

The scope of the study is limited to three sectors: images, music, and audio-visual. 

1.5  Reading guide 

Chapter 2 describes a number of main players of the market for the sectors covered with a focus on 

online intermediaries,  starting  with a definition of online  intermediaries  in  the  context  of this study 

and a description of the general context in which they are active followed by the business models of 

online intermediaries and further elaboration on sector specificities. The chapter also describes the 

use of content identification technologies in the various sectors. 

Chapter  3  describes  the  expected  impact  of  a  possible  clarification  of  copyright  rules  on  the 

services investigated. This analysis is based on case studies conducted, which are presented in the 

Annexes.  

Error! Reference source not found. 

11 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Error! Reference source not found. 

12 

 
 
 
 
 
 
2  The market for online intermediaries 

The expansion of the Internet has created diverse digital markets. Demand for online services such 

as hosting, transmitting and spreading content have appeared and continues to increase.  

The  first  part  of  this  chapter  describes  the  underlying  technological  context  that  triggered  and 

allowed the growth of intermediaries in the worldwide web. The second part presents the emerging 

ecosystem of creative and cultural industries with a focus on the sectors of interest, the new value 

chain  and  business  models  and  the  online  consumption  trends  on  which  it  relies.  The  part  that 

follows  provides  with  an  overview  of  revenues  and  trends  that  result  from  these  evolutions.  The 

chapter is concluded by a description of the use of content recognition technologies in the different 

sectors. 

2.1  Technological development and trends  

2.1.1  A rising Internet penetration worldwide 

Since the invention of the internet, the internet penetration has continuously been rising all over the 

world. Fixed internet penetration is expected to be able to  even reach 40% worldwide in 2019. In 

recent years with technological progress on the market for smartphones and mobile internet, mobile 

internet  penetration  progresses  even  faster,  having  surpassed  fixed  Internet  installations  in  2011. 
According to estimates, it could be available to half of the world population by 20195. 

Figure 2.1 Evolution of fixed and mobile Internet penetration worldwide,2010-2019 (%) 

Source: IDATE (July 2015): State of OTT markets worldwide Markets. 

This  rising  penetration  of  Internet  differs  from  continent  and  countries.  In  terms  of  the  number  of 

users  in  1995,  35  million  people  were  using  the  Internet,  of  which  61%  from  the  USA,  22%  from 

Europe and 0% in China. Less than a decade later, this figure reached 2.8 billion across the globe, 

representing  a  penetration  rate  of  39%.  The  USA  accounted  10%  of  them,  Europe  19%,  while 
China  had  the  biggest  share  of  users  with  28%6.  In  10  years,  from  2003  to  2013,  the  number  of 
Europeans (EU27) using Internet increased from 42% to 75% of the population7.  

IDATE (July 2015): State of OTT markets worldwide Markets. 

5  
6   Mary Meeker KPCB (May 2015): Internet Trends 2015. 
7  

PWC (2013 – updated 2015): The impact of digitization and the Internet on the creative industries in Europe. 

Error! Reference source not found. 

13 

 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2.2 World Internet Users 1995/2014 

Source: Mary Meeker KPCB (May 2015): Internet Trends 2015. 

In  Europe,  the  internet  penetration  has  improved  over  the  years.  In  December  2013,  this  rate 

reached  77%  in  the  European  Union.  The  trend  is  still  pursuing  upwards.  In  several  EU  Member 

States, the penetration rates  were reaching even more than 90%, hence approaching a complete 
coverage of the EU population.8 

Figure 2.3 Internet penetration in Europe (Dec. 2013) 

Source: Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

2.1.2  More connected devices 

Simultaneously,  the  increase  in  the  use  and  access  of  internet,  connected  devices  (e.g. 

smartphones,  tablets  and  e-readers)  have  also  become  more  popular.  In  2014,  the  smartphone 

household coverage rate reached 100%. Between 2012 and 2015, it is estimated to have grown by 
21%, meaning more than one active smartphone per person in Europe in 2015. 9. 

8  
9  

Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 
Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

Error! Reference source not found. 

14 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2.4 Connected devices coverage rate (Household coverage; Europe: 2012 – 2015) 

Source: Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

In terms of volume, the number of connected devices continues to increase, following their placing 

on the market. In 2014, more than 500 million smartphones were circulating in Europe. Estimates 
foresee more than 2 billion connected devices in Europe by 202010.  

Figure 2.5 Installed Connected Devices in Europe (millions) 

Source: European Broadcasting Union: Connecting to a Networked Society. 

2.1.3 

Increase in data transfer 

Smartphone storage capacities have been multiplied by 4 over the last 5 years. At the same time, 

mobile  connectivity  has  improved  due  to  the  enhancement  of  wireless  communication  standards 

from  EDGE  in  2007  to  4G  (LTE)  in  2013.  The  average  mobile  data  connection  speed  has  been 

increasing since 2012. According to the Roland Berger study which distinguishes between Western, 

Central  &  Eastern  Europe,  this  speed  is  expected  to  reach  in  Western  Europe  more  than  7  000 

10   European Broadcasting Union: Connecting to a Networked Society. 

Error! Reference source not found. 

15 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
kilobit  per  second.  Although  this  trend  is  global,  it  is  noticeably  faster  in  Europe  and  in  the  US11. 
These  trends  are  likely  to  continue  as  new  devices  are  being  put  on  the  market  and  new 

communication standards such as 5G arise. In the meanwhile, consumers embed these progresses 
calling upon more technological advances.12 

Figure 2.6 iPhone evolution example and the mobile data average connection speed 

Source: Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

Technological progress in terms of devices and capabilities as well as the accessibility in terms of 

Internet penetration rates result in growing data consumption. The data traffic continues to rise to 
unprecedented levels. The volume of data is now calculated in Exabites13, and is expected to grow 
by more than 100% between 2015 and 2019, from 72.4 EB to 168 EB per month14. 

Figure 2.7 World Internet Traffic per Month (in Exabites) 

Source: Cisco VNI Global IP Traffic Forecast, 2014–2019. 

Technological  progress unlocked  new  possibilities in  the  digital  sphere,  notably  for  entertainment. 

By creating content platforms, online intermediaries occupied the centre of an emerging ecosystem 

located at the cross-road of virtual and physical worlds. 

11   Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 
12   Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 
13  
14   Cisco VNI Global IP Traffic Forecast, 2014–2019. 

1 EB = 10006bYouTubees = 1018bYouTubees. 

Error! Reference source not found. 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
2.2  The new ecosystem of cultural services 

While the Internet initially gathered a small number of content producers for numerous consumers, 

the  Web  2.0  has  since  turned  every  user  into  a  potential  content  producer.  The  arrival  of  OTT 

services  (services  that  allow  distribution  of  voice,  video  and  data  services  via  Internet  or  mobile 

Internet with no control and involvement of telecommunications and cable operators) strengthened 

the  emerging  concept  of  ATAWADAC  (anytime,  anywhere,  any  device,  any  content)  increasing 

disruptions  of  traditional  markets,  particularly  content  based  markets  such  as  creative  industries. 

This  part  tries  to  explain  this  complex  rising  ecosystem  and  its  impact  on  traditional  audio-visual, 

music and images industries. The first section presents a general overview of the Web 2.0 followed 

by  a  description  of  each  market  and  their  main  stakeholders.  The  new  value  chain  and  business 

models are presented at last. 

2.2.1  Web 2.0 and content providers 

With  the  Web  2.0,  consumers  are  no  longer  passive  and  can,  collaborate,  interact  and  become 

content  producers.  It  includes  a  large  range  of  websites  and  software  characterized  by  their 

interoperability, user-generated content and usability. User Uploaded Content (UUC) websites are 

the  core  of  it.  These  cloud-based  platforms  allow  users  to  upload,  create  and  share  content 

between active audiences. Collaborative and social curation platforms, social Media gathers users 
within  sometimes  huge  interest-driven  communities15.  We  can  mention  blogs  (Tumblr  and 
WordPress), Internet forums, Wikipedia, crowdfunding platforms (Kickstarter), photos sharing sites 

(Picasa, Flickr and Pinterest), Customer review sites (TripAdvisor), music platforms (SoundCloud) 

and  audio-visual  platforms  (YouTube,  Daily  Motion).  The  mainstream  social  networking  sites  are 

Facebook, Twitter, Instagram or VK.  

Most  of  these  platforms  use  extensive  content  as  a  key  to  attract,  retain  and  engage  users.  The 

most  popular  websites  are  content-linked  and  content-rich.  Except  Amazon,  the  GAFA  (Google, 

Apple, Facebook and Amazon) provide online access to different kind of content. In 2012, 8 out of 

the  10  most  popular  websites  in  Europe  were  content  related.  Most  of  this  content  is  of  cultural 
nature (music, photos, audio-visual).16  

33 Digital + Hotwire (2014): Digital Trends Report. 

15  
16   Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

Error! Reference source not found. 

17 

 
 
 
 
 
 
 
 
 
                                                            
Figure 2.8 European websites (m visitors in 2012) 

Source: Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

Usually,  these  vivid  and  aggressive  new  competitors  do  not  produce  their  own  content  although 

they capture an increasing part of revenue at the expense of traditional creative and cultural sectors 

(industries that develop, create, produce and disseminate good or services of cultural values and/or 
artistic and other creative expressions17). The new distribution of profits that result from the activity 
of online intermediaries is profoundly changing the audio-visual, music and images sectors. 

2.2.2  The audio-visual sector 

By definition the audio-visual sector covers content which consists of audio and visuals. The audio-

visual  sector  includes  the  movie  industry  and  television.  The  European  Audio-visual  Observatory 
(EAO)18  includes  in  the  scope  of  television  and  audio-visual  services  providers  of  audio-visual 
services  (television  or  on-demand  audio-visual  services)  and  operators  of  distribution  platforms 

(terrestrial  transmission,  cable,  satellite,  IPTV,  etc.).  What  increases  the  complexity  is  that  audio-

visual content is sometimes used only for its visual aspects or only for its audio aspects. 

The audio-visual sector has certain intrinsic specificities:  

  The AV sector is a capital-intensive industry (the average cost of a European film is around 3 

million Euro); 

  The  use  of  “windows  of  exploitation”  -  exclusive  periods  of  time  within  market  regions 

(territories)  to  enable  repeated  commercial  exploitation  of  a  film’s  copyrights  (to  protect 

sequential exploitation in theatres, pay TV, sell through, etc.) - enable to maximize revenues; 

  The  industry  is  relying  on  pre-financing  provided  by  traditional  players  (distributors  and 

broadcasters/pay TV) which have an interest in safeguarding the existing model; 

  The  bargaining  power  of  theatres  in  the  value  chain  adds  to  the  reluctance  in  the  sector  for 

simultaneous  releases  on  digital  platform.  Successful  deployment  of  digital  cinema  has 

reinforced the market position of theatres in that respect; 

  Few  distributors  control  worldwide  rights  that  enable  cross  frontier  exploitation;.  International 

sales agents are attempting to aggregate rights; 

17   Regulation (EU) No 1295/2013 establishing the Creative Europe Programme (2014 to 2020)  

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2013.347.01.0221.01.ENG&toc=OJ:L:2013:347:TOC. 
http://mavise.obs.coe.int/about. 

18  

Error! Reference source not found. 

18 

 
 
 
 
 
 
 
 
 
 
                                                            
  Language  versioning  of  films  (subtitling  and  dubbing)  is  very  important.  Versioning  is  highly 

sensitive to linguistic and cultural parameters. The marketing of each content is specific for each 

territory. Each geographic version carries an added value because of adaptation and marketing. 

Different versions cannot be substituted for one another. This makes films, TV series etc. a far 

less global product than music; 

  Versioning helps  to discriminate  between  different consumers .  Premium high quality  versions 

will target consumers with the highest willingness to pay; 

  For  European  films,  there  are  few  economies  of  scale  in  negotiating  contracts  for  multiple 

territories. It is relative to investment risks taken by the local distributor; 

  No online  intermediaries or ICT companies have taken on Hollywood‘s  distribution power (like 

Apple  did  for  music)  or  is  investing  significantly  in  production  to  own  worldwide  rights  content 

(market entry is costly).  

Price  discrimination  to  earn  revenues  is  key  in  rightholders'  strategies.  The  versioning  and 

exploitation  on  a  territorial  basis  to  maximize  revenue  is  hindering  the  expansion  of  digital 

distribution. Digital revenue is forecast to grow; however, the growth remains slow and monetization 

prospects do not satisfy a capital-intensive industry. VoD platforms compete with free pirate sites. 

More  generally,  the  abundance  and  the  easy  access  to  content  transformed  the  competition, 

notably for advertising budgets: TV channels compete  with online services, pay-TV channels  with 
SVoD, DVDs, Blu-Ray and cinemas with TVoD19. Today, online advertising is no longer considered 
as  complementary  to  traditional  advertising  even  if  regularly,  advertisers  combine  TV  and  online 

advertising campaigns. Thus, the market has become extremely complex. 

The audio-visual stakeholders 
The  audio-visual  sector20  has  always  been  an  international  industry  with  producers  establishing 
international distribution networks of local branches to reach national markets. Cable and satellite 

changed  that  situation  by  allowing  cross-border  services.  Nevertheless,  the  distribution  remained 

under  control  of  satellite  operators  and  broadcasters.  The  Internet  erased  borders  allowing  new 

digital native companies to break into the audio-visual market. Nevertheless, TV and movie markets 

are still mainly dominated by large media corporations. Their activities usually cover all the movie 

and  TV  industries,  as  well  as  the  print  and  online  media.  Advertising  and  licensing  represent  a 

major  part  of  their  revenues.  The  world  top  20  is  largely  dominated  by  US  corporations  including 
Google, Apple and Facebook. Two European countries, Germany and France, rank 9th and 14th.  

Table 2.1 Top 20 - International Media Corporations 2015 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

Comcast (Philadelphia / USA) 

Google Inc. (Mountain View/ USA) 

The Walt Disney Company (Burbank / USA) 

News Corp. Ltd. / 21st Century Fox (New York/ USA) 

DirecTV, LLC (El Segundo/ USA) 

Viacom Inc./CBS Corp. (New York / USA) 

Time Warner Inc. (New York / USA) 

Sony Entertainment (Tokyo / JP) 

Bertelsmann SE & Co. KGaA (Gütersloh/GER) 

10.  Apple Inc. (Cupertino / USA) 

€ 51.769 billion 

€ 49.681 billion 

€ 35.308 billion 

€ 30.441 billion 

€ 24.318 billion 

€ 20.767 billion 

€ 20.594 billion 

€ 20.169 billion 

€ 16.675 billion 

€ 13.596 billion 

19   European Audio-visual Observatory (November 2015) - On-demand Audio-visual Markets In The European Union - 

Developments 2014 and 2015.  

20   European Audio-visual Observatory (November 2015) - On-demand Audio-visual Markets In The European Union - 

Developments 2014 and 2015. 

Error! Reference source not found. 

19 

 
 
 
 
 
 
 
 
                                                            
11.  Cox Enterprises Inc. (Atlanta /USA) 

12. 

Liberty Media Corp./Liberty Interactive (Englewood, CO / USA) 

13.  Dish Network Corporation (Englewood, CO / USA) 

14.  Vivendi S.A. (Paris / FRA) 

15.  Tencent (Shenzen / China) 

16.  Thomson Reuters Corporation (New York / USA) 

17.  Facebook, Inc. (Palo Alto / USA) 

18.  Rogers Comm. (Toronto / CA) 

19.  The Hearst Corporation (New York / USA) 

20.  Microsoft Corporation (Redmond/ USA) 
Source: Institute of Media and Communications Policy21. 

€ 12.872 billion 

€ 11.253 billion 

€ 10.990 billion 

€ 10.089 billion 

€ 9.643 billion 

€ 9.484 billion 

€ 9.384 billion 

€ 8.765 billion 

€ 7.753 billion 

€ 7.247 billion 

European VoD providers are mainly owned by telecommunications companies (Orange, 
Vodafone,  etc.)  or  media  groups  (Bertelsmann  SE  &  CO.  KGaA,  etc.).  American  VoD 
providers  are  also  media  groups  (Walt  Disney  Company,  Viacom  etc.)  present  in  the 
European  audio-visual  landscape  (cable  TV,  TV  channels  etc.)  or  OTT  players  (Google, 
Apple, Netflix)22. There is a clear lack of data when it comes to on-demand audio-visual 
services in the world and in Europe23. Worldwide distribution makes them complicated 
to list precisely, as 40% of them may be established in a different country than the one 
of their consumption24.  

The online advertising market is highly concentrated. In the USA, 10 companies share 72% of total 

revenue.  In  Europe,  figures  do  not  seem  to  be  available  but  according  to  the  EAO,  the  situation 
should  be  similar25.  player.  Main  online  advertising  players  are  pure  players  (companies  that 
operate only on the Internet26) such as Google sites (AdWords and YouTube), Facebook or Apple. 

Audio-visual online intermediaries 

Video online intermediaries provide a variety of offer based on different business models. Google-
owned  YouTube  is  by  far  the  largest  with  1.3  billion  users27  in  2015  (33%  of  Internet  users).  Its 
content database increases exponentially: 400 hours of video per minute were uploaded between 

May 2013 and July 2015. Annual revenue follows an increasing trend from $3.5bn in 2013, $4bn in 

2014 and $9bn in 2015. A large share of these revenues comes from advertising ($1.86bn in 2013, 

$3.04bn in 2014, and $4.28bn in 2015). Its value is estimated at $70bn. Dailymotion is the second 

largest user uploaded content platform, and records a much smaller market share with 300 million 
users  worldwide  and  3.5  billion  views  a  month28.  Unlike  YouTube,  70%  of  its  audience  pays  for 
premium  content.  Owned  by  French  Vivendi  (90%)  and  Orange  (10%),  Dailymotion  is  valued  at 
almost $295 mn. Vimeo29 is a very popular audio-visual online intermediary owned by the American 
media and Internet group IAC/InterActive Corp. Vimeo differs from YouTube and Dailymotion as its 

users  are  mainly  creative  professionals,  artists  and  film  makers.  It  grew  from  100  million  monthly 

http://www.mediadb.eu/en/data-base/international-media-corporations.html. 

21  
22   European Audio-visual Observatory (November 2015) - On-demand Audio-visual Markets In The European Union - 

Developments 2014 and 2015. 

23   MAVISE database: http://mavise.obs.coe.int/about. 
24   MAVISE database: http://mavise.obs.coe.int/about. 
25   European Audio-visual Observatory (November 2015) - On-demand Audio-visual Markets In The European Union - 

Developments 2014 and 2015. 

26   See http://digitalmarketing-glossary.com/What-is-Pure-player-definition. 
27   See case study on YouTube. 
28   See case study on Dailymotion. 
29   See case study on Vimeo.  

Error! Reference source not found. 

20 

 
 
 
 
 
 
 
 
                                                            
viewers  in  2013  to  170  million  in  2015  with  500,000  paid  users.  Vimeo  reported  in  October  2015 

$40mn annual revenues. 

Annex 10 presents an overview of the main 16 online services more active in this sector with details 

about  their  business  model,  reach  and  traffic  from  EU  citizens.  A  quarter  (Dailymotion,  Tape.tv, 

Viewster  and  Liveleak)  is  headquartered  in  Europe.  Except  Hulu  which  specifically  targets  Japan 

and  the  USA,  all  mentioned  online  intermediaries  seek  a  worldwide  audience.  Europe  traffic 

represents no more than a third of total traffic, except for the German-based company tape.tv which 

gets  100%  of  its  visitors  from  Europe.  In  the  case  of  YouTube  and  Vimeo,  this  share  represents 

30%. The dominant business models are subscription and advertisement based. 

2.2.3  The music sector 

Music  industry  representatives  say  that  there  has  never  been  so  much  music  on  offer.  While  the 

1990s can be described as the decade of CDs, the 2000s were the decade of downloads and the 

2010s are becoming more and  more the decade of  streaming  with music  streaming  services  and 

mixed  content  providers.  It  has  never  been  easier  and  cheaper  to  access  music.  These  fast 

evolutions are profoundly transforming the music value chain (see 2.2.4). With the development of 

digital sales and subscription models, main changes have taken place in the management of rights 

as this has become a central point of revenue collection for the music business: 

  Major  record  companies  are  negotiating  individual  deals  with  platform  operators  and  digital 

distributors  thus  withdrawing  their  catalogues  for  such  rights  management  (right  of  making 

available) from collecting societies representing producers; 

 

Independent  record  companies  either  negotiate  individually,  mandate  local  collecting  societies 

or use ,MERLIN, a rights agency set up by independent labels; 

  Collecting  societies  representing  authors,  composers  and  music  publishers  are  beginning  to 

regroup  to  ease  the  licensing  process.  The  streamlining  is  progressing  slowly  around  2 

structures – Harmony (SACEM/SGAE) and ICE Copyright Enterprises (STIM- PRS). 

The music stakeholders 

The  music  sector  is  composed  of  record  companies,  music  publishers,  live  sector,  collecting 

societies, artists, musicians, authors and composers. The configuration and structure of the industry 

have  changed  with market concentration  in  the  recorded  music  business.  There  are  now  3 major 

companies (Universal, Sony and Warner) controlling 80% of recorded music sales and a large part 
of catalogues available online (there were 6 at the end of the 20th Century, 4 in 2012). A multitude 
of smaller labels accounts for the remaining 20% of the market.  

At  the  physical  distribution  level,  large  music  stores  such  as  HMV,  Virgin,  Tower  Records  have 

disappeared.  They  have  been  replaced  by  digital  operators  such  as  Spotify,  Amazon,  iTunes, 

iMusic, and Google. This has not affected the overall split of revenues between the different actors 

in  the  value  chain.  However,  music  companies  are  taking  stakes/shares  in  some  online  music 

operators (Spotify). 

Other music online intermediaries 

The online music market is not limited to Apple, Spotify or Amazon. Many online intermediaries with 

different  offers  and  business  models  provide  streaming  access  to  large  repertoires  of  music.  For 
instance,  SoundCloud30  became  popular  by  targeting  first  music  uploaders  and  creators.  This 

30   See case study on Sound Cloud. 

Error! Reference source not found. 

21 

 
 
 
 
 
 
 
 
 
 
 
                                                            
strategy proved being successful as it registers a growing number of 250 million users (up from 11 

million in 2011) and revenues increase from €1.37mn to €17.4m in 2014. 

A  list  of  15  other  digital  audio  streaming  companies  targeting  a  worldwide  audience  is  given  in 

Appendix  10  together  with  a  short  description  of  their  business  model,  reach  and  traffic  from  EU 

citizens. Six out of those 15 services are Europe-based. The two with the most traffic from Europe 

are Qobuz and Rhapsody, at 85% and 75%  respectively, though Qobuz has a  limited reach,  with 

only  110,000  subscribers  mainly  from  France.  The  dominant  business  models  are  subscription, 

advertisement but without any possibility for private users to monetise their uploads. 

YouTube and Dailymotion can also be considered as music online intermediaries. They are used by 

users  as  online  jukebox.  This  situation  is  analysed  in  section  2.2.5  related  to  online  music 

consumption. 

2.2.4  The images sector 

Among the creative and cultural industries, the images sector (photographic and design activities) is 
considered a visual art, together with museums and visual arts creation. According to CEPIC31, the 
pictures  and  photography  creative  industry  is  not  very  well  organized  since  photographers  are 

mostly  individual  or  small  players  and  can  hardly  coordinate  or  regroup  in  a  single  collective 

representation. The starting problem of the photo industry is alleged to be the lack of awareness of 

users with respect to copyrights. Online users are generally not aware that, when sharing photos, 

they  are  infringing  the  copyright  of  others.  Moreover,  the  problem  is  that  when  seeing  a 

photo/image it is not immediately clear who has made it. While persons listening to music may like 

or  dislike  the  author  and  therefore  search  for  more  of  such  content,  users  of  photos  may  be 
interested more in what is in the photo than in the person who made it.32 Some new online services 
have  made  the  situation  increasingly  difficult  for  traditional  photographers  to  make  their  business 

valuable. According to the images industry, 45% of Google’s search traffic relates to the search for 

images  and  1.8  billion  photos  were  shared  daily  on  Flickr,  Snapchat,  Instagram  and  Facebook, 

albeit that not all pictures are necessarily copyright protected.  

The images stakeholders 

The  stakeholders  involved  in  the  value  chain  of  the  images  industry  have  increased  in  types  and 

diversity.  They  range  from  manufacturers  of  cameras  and  accessories,  to  editing  of  all  kinds, 

production  services,  the  management  and  sharing  of  photography  to  image  security  and  others. 

The following figure attempts to visualise the landscape of the photography industry and provides 

examples of companies active in each segment. 

Figure 2.9 Photography industry landscape 

31  
Interview by Ecorys on the 2nd February 2016. 
32   Based on an interview with sector representative. 

Error! Reference source not found. 

22 

 
 
 
 
 
 
 
 
 
 
 
                                                            
Source: http://taylordavidson.com/photo-industry. 

Traditional photography agencies have been in existence since the 1920s and have experienced a 

consolidation  period  in  the  1990s  with  Getty  Images  and  Corbis  becoming  the  two  largest 

companies.  The  rise  of  the  internet  has  however  opened  the  floor  again  for  online  companies 

competing for the same segments. In the year 2000, iStockphoto started selling photographs for $1 
and thereby changed the market.  33 This has led to a division of agencies which can be described 
as: 

  Microstock agencies: agencies which provide rights for the use of photographs for low prices 

($1-10) and  who make use  of many photographers including amateurs. Photographs provided 

by  these  agencies  are  usually  royalty  free  which  means  that  they  can  be  re-sold  countless 

times. Examples of such microstock agencies include iStockphoto, 123RF.com, Depositphotos, 
Dreamstime, Shutterstock, Can Stock Photo, and Fotolia; 34 

  Macrostock  agencies:  agencies  which  operate  in  the  traditional  way  offering  quality 

personalized services for specific and strict requirements. The largest examples are Corbis and 
Getty Images. Prices of photographs are offered for a range between $100 – 10,000.35 

Social  media  are  increasingly  and  heavily  reliant  on  the  use  of  images.  Some  of  them,  such  as 

Pinterest,  Instagram  or  Flickr  even  specialize  only  or  at  least  mainly  in  images.  Additionally,  an 

important  player  for  the  consumption  of  images  is  an  aggregation  service  and  above  all  Google 

Search  Images.  Google  does  not  (yet)  directly  monetize  its  picture  search  function  through 

advertising or paid subscriptions, however it uses the increased functionality to keep users attached 

to the Google search engine. 

33   Kalazic, Z. et al: The Stock Photography as a Part of Cultural and Creative Industries of the Digital Age. 
34   Kalazic, Z. et al: The Stock Photography as a Part of Cultural and Creative Industries of the Digital Age. 
35   Kalazic, Z. et al: The Stock Photography as a Part of Cultural and Creative Industries of the Digital Age. 

Error! Reference source not found. 

23 

 
 
 
 
 
 
 
 
 
                                                            
Other online intermediaries for images 
Google Images36 is the picture component of Google search engine. Owned by Alphabet, Google is 
the biggest search engine in the world with more than 100 Billion search queries per month in 2015 

and around 54,000 search queries per second in April 2016. 40% of all the keyword searches on 

Google  return  image  results.  Alphabet’s  revenue  is  estimated  at  $570  Billion  (January  2016). 
Pinterest37 is a social media platform that has become one of the main online image intermediaries 
with 176 million registered users in January 2015, 67% of them  aged under  40, 34%  aged below 
30. Pinterest is valued at $11bn. Flickr38 is owned by Yahoo and targets general public as well as 
bloggers  and  photographers.  It  reported  112  million  users  in  October  2015  and  a  database  of  10 

billion photos in July 2015. 

A total of 15 online digital image libraries are listed in Annex 10,  with details about their business 

model,  reach  and  traffic  from  EU  citizens.  Of  the  companies  listed,  only  1  out  of  15  is 

headquartered in Europe (Pixabay from Germany). Traffic from Europe is fragmented, with the top 

sites  receiving  no  more  than  35-25%.  The  dominant  business  models  are  subscription  and 

advertisement based followed by sales of images. 

2.2.5  Online consumption trends 

This section summarises several analyses to better understand the online behaviour of consumers 

of  cultural  goods.  Online  consumption  is  becoming  more  important  for  all  types  of  entertainment 

year by year. The highest number of uses goes into watching video clips (NOTE: video clips may 

also be music videos which causes an overlap between audio-visual and music), followed by online 

games  and  listening  to  music.  Online  entertainment  activities  have  become  core  of  all  online 

activities given that about half of all users engage in at least one of the listed activities per day (see 
figure below).39 

36   See case study on Google images. 
37   See case study on Pinterest. 
38   See case study on Flickr.  
43   European Publishers Council (2015): Global Social Media Trends 2015. 

Error! Reference source not found. 

24 

 
 
 
 
 
 
 
 
 
                                                            
 
Figure 2.10 Online entertainment in 2013 - 2014 

Source: Volume 2: Global Social Media Trends 2015 – European Publishers Council. 

In the following sections, some key trends per sector under observation in this study (audio-visual, 

music, images) are outlined. 

Online consumption of audio-visual content 

Thanks  to  better  devices  and  improved  connectivity,  online  video  consumption  has  changed  and 

has become multi-screen sequentially from one device to another and simultaneously with different 
devices at the same time40. As a result, the number of videos watched across the globe increased 
by  around  50  billion  between  June  2013  and  August  2014,  reaching  a  total  of  300  billion  videos 
viewed  per  month41.  All  types  of  videos  including  music  are  considered.  This  worldwide  upward 
trend is also confirmed in Europe. From 2012 to 2013, the online video usage increased on average 
by 45% in Europe42.  

40   European Parliament (2013): Public And Commercial Models Of Access In The Digital Era. 
41   European Publishers Council (2015): Global Social Media Trends 2015. 
42   Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

Error! Reference source not found. 

25 

 
 
 
 
 
 
 
 
                                                            
Figure 2.11 Worldwide video consumption (by month 06/13-08-14) 

Source Volume 2: Global Social Media Trends 2015 – European Publishers Council. 

The biggest share of video consumption is limited to several  websites. In the case  of France and 

Germany for example, main providers of videos are Google websites (mainly YouTube), VEVO and 

Facebook. In France in 2012, Google websites got 35% of videos per viewer and 38% of minutes 

per  viewer.  At  the  same  period  in  Germany,  Google  videos  per  viewer  represented  54%  of  all 
views,  but  time  wise  Google  websites  accounted  for  only  35  %  of  the  total43.  This  said,  online 
intermediaries accounted for more than half of the overall number of video views. 

Figure 2.12 Online video consumption per player 

Source: Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

In terms of content, music videos are becoming a more and more important part of mixed services 

such as audio-visual platforms (as shown by the example of YouTube). The figure below presents 

an  estimate  of  the  part  of  video  views  per  type  on  YouTube.  Results  show  that  cultural  content 

43   Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

Error! Reference source not found. 

26 

 
 
 
 
 
 
 
 
 
 
                                                            
could  represent  up  to  66%  of  YouTube  views.  The  musical  cultural  content  gets  59%  of  total 
views44. 

Figure 2.13 Share of videos per type (% of videos view in 2013) 

Source: Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

This result is also confirmed by a HADOPI study which analysed the popularity of videos per type 
on YouTube based on a sample45 of 3000 videos. Its findings show that music videos are the most 
popular with an average of 40 000 daily views, far above other categories. 

Nevertheless, these figures are estimates that have not been confirmed by more recent studies. In 
fact, latest estimates show that music represents 12% of all YouTube viewing time46 and that music 
videos and music-related video content account for just 4.3% of overall YouTube traffic47. 

Online consumption of music 

Music is consumed in two forms online: 

  Audio files which are either streamed or downloaded; 

  Video  files  which  are  either  watched  (music  videos)  or  streamed  in  the  background  only  for 

listening. 

The availability of online music has changed consumer approach to music. Downloaded music hit 

first sales of CDs with consumers paying (or not) to save songs on their devices. Today, streaming 

music appears to be replacing both products. Between 2013-2014, sales of CDs and digital tracks 

(downloaded  music)  went  down  by  15%  and  13%  while  stream  sales  reached  an  increase  of 
54%48.  This  rapid  increase  allowed  some  experts  to  predict  an  “inevitable”  end  of  downloaded 
music49 replaced by streaming music. 

44   Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 
45   Qualification et quantification des contenus de YouTube. See http://www.hadopi.fr/sites/default/files/page/pdf/DREV-

20130319-YouTube%20Resultats.pdf. 
https://www.midiaresearch.com/blog/the-state-of-the-youtube-music-economy/ 
http://www.digitalmusicnews.com/2016/08/16/music-5-percent-youtube/ 
http://www.theatlantic.com/business/archive/2015/01/buying-music-is-so-over/384790/. 
http://www.computerworld.com/article/3070416/apple-ios/the-end-of-itunes-music-sales-is-inevitable.htm. 

46  
47  
48  
49  

Error! Reference source not found. 

27 

 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2.14 Change in music sales and streams 2013-2014 (in %) 

Source: http://www.theatlantic.com/business/archive/2015/01/buying-music-is-so-over/384790/. 

Audio streams are not the only major change in music consumption. It is accompanied by a rising 
trend in online music video consumption. According to estimates50 based notably on YouTube/Vevo 
Channel,  views  of  music  videos  have  doubled  in  a  year  from  85.4  to  172.4  billion  (+101.9% 

increase). This growth overtakes audio music listening (+83.1%). 

Figure 2.15 On-demand music streams in 2014-2015 (in billion uses) 

Source: http://www.nielsen.com/us/en/insights/reports/2016/2015-music-us-year-end-report.html. 

The  popularity  of  online  music  videos  remains  complicated  to  evaluate  precisely,  as  only  general 

estimates are available. Nevertheless, HADOPI’s analysis of a sample confirmed the strong use of 

videos  for  music  consumption  but  also  outlined  that  the  most  popular  sub-category  within  the 

category of music videos is official videos with 110 000 views a day. The three following categories 

50  

http://www.nielsen.com/us/en/insights/reports/2016/2015-music-us-year-end-report.html. 

Error! Reference source not found. 

28 

 
 
 
 
 
 
 
 
 
 
                                                            
(non-original  music  videos,  videos  with  non-original  music,  non-official  original  versions)  average 
20 000 views51. 

Figure 2.16 Number of views per music subcategories of videos 

Source: Qualification et quantification des contenus de YouTube - Hadopi. 

These estimates suggest that online platforms rely mostly on cultural content and that music videos 

are  their  most  popular  content,  user-generated  or  official.  More  generally,  music  consumption 

trends are driven by streams whether purely audio (free and paid) or video (free). 

Online consumption of images 

Digitalisation and the simplicity in uploading and downloading images on the  web make images a 
means  of  communication  in  our  society52.  Estimates  state  that  approximately  657  billion  pictures 
are uploaded on the web53. In particular, social media has become a limitless world of pictures. Just 
the  leading  photo-friendly  networks  Facebook,  Photobucket  or  Flickr  have  stored  over  160  billion 

photos  globally.  Already  in  2011,  some  1.75  billion  photos  per  week  were  uploaded  globally  on 
Facebook  with  an  increasing  tendency54.  According  to  rightholders,  the  number  has  increased  to 
daily photo sharing of 1.8 billion photos on Flickr, Snapchat, Instagram and Facebook55. The trends 
are visible on all types of platforms, and social media as well as online galleries are profiting from 

increased popularity. As for many online services, a clear demographic split is visible where most 

younger users have an increased interest in using pictures as a means of communication and up- 
and or download images56. 

http://www.theatlantic.com/technology/archive/2015/11/how-many-photographs-of-you-are-out-there-in-the-world/413389/. 

51   Qualification et quantification des contenus de YouTube – Hadopi. 
52   Photokina (2012): Trends in the Photo and Imaging Market. 
53  
54   Photokina (2012): Trends in the Photo and Imaging Market. 
55   OLSWANG (2015): CEPIC’s campaign for a better protection of images online. 
56   Photokina (2012): Trends in the Photo and Imaging Market. 

Error! Reference source not found. 

29 

 
 
 
 
 
 
 
 
 
                                                            
Data from 2013 suggests that the most popular sites for photo sharing are Snapchat and Facebook 
with  more  than  40%  market  share.57  Recent  statistics  show  however  that  also  sites  such  as 
Pinterest  are  attracting  attention  from  marketing  websites  with  social  widgets  (currently  8.4%  use 
Pinterest).58 

In addition, increased functionality of search engines translates the image search into a competitor 

to  image  databases.  Rightholder  representatives  report  that  about  45%  of  Google’s  search  traffic 

relates to the search for images whereas at the same time revenues for image providers declined. 

In  the  EU,  Google  Images  is  the  dominating  image  search  provider  with  about  90%  of  market 
share. It generates 519 million unique visitors per month.59 

To  get  most  of  the  trends  in  online  consumption,  online  intermediaries  are  developing  innovative 

business  models  based  on  a  disrupting  value  chain  that  opposes  digital  distribution  of  immaterial 

goods to physical distribution of material goods. 

2.2.6  Value chain and business models 

By  becoming  a  delivery  platform  for  content,  Internet  has  triggered  a  change  of  paradigm. 

Traditional  content  producers  have  lost  control  over  their  creations  while  audiences  acquired  the 

capability  to  control  their  content  consumption.  Consumption  trends  are  rapidly  changing  and  an 
increasing  demand  for  online  cultural  content  can  be  observed.  The  active  role  of  users60  who 
create  and  share  content  though  different  online  services  contributes  to  this  disruption.  This  is, 

amongst others, shown in the rapid increase in the demand for most known online providers such 

as Amazon, Netflix, Google or Facebook.  

Figure 2.17 Figure 2.21 Disruptive business models: key figures 

Source: EY(2014): Creating growth – Measuring cultural and creative markets in the EU. 

Value chains 
The “old” value chain of cultural content exploitation relied mostly on stored usage61. This “physical” 
value  chain  includes  several  stages:  production,  publishing,  distribution  and  sales  and  eventually 

storage  and  copy.  Distribution  is  divided  between  sales  of  physical  products  and  broadcasted 

content (e.g. on radio, TV).  

Consumption  was  only  possible  with  a  physical  ownership  of  a  cultural  product  or  through 

broadcast.  To  be  able  to  use  a  cultural  product  specifically  as  they  pleased,  a  consumer  had  to 

physically own it. The process of consumption could then be repeated infinitely (or at least as long 

as the copy could last).  

https://w3techs.com/technologies/details/so-pinterest/all/all. 

57   Statista: http://www.statista.com/statistics/282007/photo-sites-daily-uploads-distribution/. 
58  
59   OLSWANG (2015): CEPIC’s campaign for a better protection of images online. 
60   European Parliament (December 2015) Over-the-Top players (OTTs): Market dynamics and policy challenges. 
61   Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

Error! Reference source not found. 

30 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2.18 The traditional value chain of the creative industries 

Source: Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

The rise of online services has led to a disaggregation of the value chain. This results mainly from 

the shift from a physical stored usage of content to a flow-based connected usage enabled by the 
emergence of websites using the cloud to store and share content62.  

Figure 2.19 Comparison of stored usage and connected usage 

Source: Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

Flows  of  data  supplant  storage  by  allowing  constant  and  immediate  access  to  content.  Online 

intermediaries facilitate this access to all and by all through telecom operators’ infrastructures and 
connected objects63. In principle, anyone, both companies or private individuals, has the possibility 
to  upload  and  consume  online  products.  By  doing  so,  digital  services  and  online  platforms  oust 

traditional  physical  publishing,  distribution  and  outlet  with  and/or  without  the  control  of  original 

producers. Once online, content can be available everywhere at any time.  

62   Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 
63   Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

Error! Reference source not found. 

31 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2.20 The digital value chain of the creative industries 

Source: Roland Berger (2015): Cultural Content in the online environment: analysing the value transfer. 

The business models 

The  new  value  chains  for  creative  content  have  opened  room  for  new  business  models.  Such 

business models in the digital world are based on two main principles: 

  Monetizing offer (e.g. selling products or use, advertise offer, sell user information etc.); 

 

Increasing  outreach  and  importance  to  fulfil  other  objectives  (e.g.  show  presence,  collect 

user information etc.). 

Monetizing offers can be either based on direct or indirect monetization: 

  Direct monetization: customers pay for purchase or use of the offer (these can be pay-per use 

payments or flat rate payments); 

 

Indirect  monetization:  the  service  or  product  provider  offers  its  products/services  for  free.  In 

exchange the user accepts to either provide data (which can then be valued or sold) or is being 

addressed through advertising. 

Both  options  of  monetization  of  content  are  not  new  and  are  already  well  known  in  the  world  of 

television (free-TV financing itself through advertising and Pay-TV through subscription fees), radio 

or printed newspapers. 

Increasing  outreach  and  importance  is  usually  either  part  of  an  overall  strategy  to  collect 

information that might be useful for other business activities or to create a certain scale for future 

penetration of markets and monetize at a later stage. 

In  the  case  of  online  intermediaries,  the  focus  lies  on  non-possessive  goods  (watching  a  movie, 

listening  to  music,  using  a  picture  in  a  presentation  etc.).  The  main  strategies  observed  have 

changed over time, but appear to have stabilised across operators. They are based on the following 

four pillars: 

  Free  offer;  The  idea  behind  offering  free  content  is  usually  to  attract  consumers  to  access 

online  services.  Online  intermediaries  use  such  offer  to  either  raise  their  market  value  due  to 

high transfers on their platform and increasing customer knowledge through data collection; 

  Advertising; Advertising is used to monetise content provided on the platform; 

  Subscription; Subscription models are used to receive a steady income stream; 

  Pay-per-use. Pay-per-use is the possibility to pay per stream (e.g. rent a video). 

Based on these pillars the following main business models emerged for certain sectors: 

Error! Reference source not found. 

32 

 
 
 
 
 
 
 
 
 
 
 
 
 
Premium 

Premium is the term often used for subscription offers largely used by the music industry and VoD 

(see  below).  However  also  UUC  platforms  further  diversify  their  services  and  start  providing 

subscription services. Subscription services function in the way that users pay a periodic amount of 

money (for example, €9.99 for music streaming platforms) to get an unlimited streaming access to 

the  service’s  repertoire  with  no  advertising.  It  can  also  include  particular  features.  Content  is 

licensed. Rightholders usually receive a revenue for every stream played. 

Freemium 

On demand-ad supported streaming services is called freemium. Users register to get free access 

to  all  or  a  part  of  the  repertoire.  User  profiles  are  then  monetized  with  targeting  advertising  or 

through data collection and selling of big data. Advertising is broadcasted usually before or during 

the song or the video or presented  on the webpage (banner ads). In the case  of video platforms, 

the business model is often the freemium supported by massive advertising. Advertisers can have 

different choices of format. For instance: 

  Display ads that appear beside the video; 

  Overlay ads that appears in a translucent way below the video; 

  Skippable video ads after 5 seconds; 

  Non-skippable video ads that must be watched before your video can be viewed; 

  Long non-skippable video ads may be up to 30 seconds long. 

A mix of both 

A  mixture  of  premium  and  freemium  is  a  popular  business  model  using  freemium  to  attract  and 

convert visitors into premium customers. This is the case for instance of the on-demand services. 
According  to  the  industry64,  VoD  provides  “access  on  demand  to  a  catalogue  of  films  or  audio-
visual  programmes  independently  of  any  television  broadcast  of  those  works.  VoD  services  are 

provided by a wide range of companies: distributors of TV services (IPTV, cable, satellite, pay-DTT 

operators), film companies, video publishers, retailers, newspapers, companies created just for this 

activity.” The EAO classification of on-demand services includes notably Catch-up and Premium TV 

(provided by broadcasters as free or paying - pay-per-view, subscription or part of a subscription – 

services),  video  sharing  platforms  (YouTube  and  DailyMotion)  and  social  network  allowing  video 

upload by users (Facebook) and Video-on-Demand (VoD). 

Several VoD business models exist (non-exhaustive)65: 
  TVoD (Transactional Video on-Demand, Pay Per View VoD); 

  EST (Electronic sell-through, digital retail for a limited or unlimited period); 

  AVoD/FVoD  (Advertising-supported  Video  on-Demand/Free  Video  on-Demand,  on-demand 

audio-visual services supported by advertising); 

  SVoD (Subscription Video on-Demand, unlimited access to a wide range of programmes for a 

monthly  flat  rate).  SVod  are  mainly  provided  by  OTT  services  (mostly  pure  players  such  as 

Netflix,  Amazon),  TV  groups  (HBO,  CanalPlay)  and  telecommunications  groups  (BT  Vision, 

Club SFR). 

In  the  music  segment,  traditional  providers  such  as  Spotify  and  Deezer  use  the  freemium  plus 

premium model. YouTube applies the freemium with extensive advertising model. SoundCloud first 

monetized certain features such as an increased volume of uploads for paying customers. Now, it is 

64   European Audio-visual Observatory (November 2015) - On-demand Audio-visual Markets In The European Union - 

Developments 2014 and 2015. 

65   European Audio-visual Observatory (November 2015) - On-demand Audio-visual Markets In The European Union - 

Developments 2014 and 2015. 

Error! Reference source not found. 

33 

 
 
 
 
 
 
 
 
 
                                                            
moving towards a model similar to Spotify’s. Picture platforms tend not to monetize content directly 

(meaning that consumers do not pay for accessing specific pictures and there are no advertisings 

attached  to  specific  pictures,  but  more  advertising  banners  etc.).  Inevitably,  the  adoption  of  a 

certain business model implies strategic choices to maximise revenues. 

2.3  Sector revenues 

In  2013,  total  worldwide  revenue  for  cultural  content  industry  (CCIs)  reached  $2  253bn  for  29 

million jobs. In Europe, the second world market,  CCIs have generated $709bn of turnover  which 

corresponds  to  4.2%  of  Europe’s  GDP.  This  makes  the  industry  Europe’s  third-largest  employer 

(directly  or  indirectly  it  employs  7  million  people  which  corresponds  to  3.3%  of  the  EU’s  active 
population)66.  

CCIs represent also a major driver of the digital economy with almost $200bn digital sales in 2013. 

Cultural goods amount for $65.6bn of these sales. The worldwide sales of digital content of digital 

movies and video come second with $13bn (19.8%) followed by digital music ($10.3bn, 15.7%) and 
digital books ($8.5bn, 12.9%)67.  

Figure 2.21 Worldwide sales of digital cultural content in 2013 ($bn) 

Source: EY (December 2015): Cultural Times, the first global map of cultural and creative industries. 

2.3.1  The audio-visual sector 

According  to  the  European  Audio-visual  Observatory,  the  overall  worldwide  audio-visual  market 

revenues  have  increased  between  2009  and  2013,  mainly  due  to  the  growing  US  market  (37%). 

Over the same period, the European market has decreased by 13%.  

66   EY(2014): Creating growth – Measuring cultural and creative markets in the EU. 
67   EY (December 2015): Cultural Times, the first global map of cultural and creative industries. 

Error! Reference source not found. 

34 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2.22 Worldwide audio-visual market breakdown 2009 – 2013 (In million $) 

Source: European Audio-visual Observatory, Yearbook 2014. 

Television  was  the  major  source  of  revenue  in  2013  with  $477  bn,  mainly  from  North  America 

(38%). It provided 3.5mn jobs  worldwide, 55% of them  in  Asia. In Europe, web TV and digital TV 

content  were  the  most  popular.  The  movie  industry  recorded  in  2013  $77  bn  sales.  37%  of  total 
sales are originated in the USA alone. It employed 2.5 people, 31% in Asia and Europe68.  

The impact of digital TV has led to a strong reduction of the DVD/Blue Ray market which has yet to 

be  replaced  by  a  “transactional  model  to  own”.  DVD/Blu-Ray  turnover  follow  a  decreasing  trend 

from €9 078mn revenue in 2008 to €5484mn in 2012.  

The European Gross Box Office reports an opposite trend. In 2015 in the EU, the Gross Box Office 

reached a record after reaching €7.3bn thanks to an increase in admissions and rising price tickets. 
Yet, the market share of European movies decreased to 26.1%69. Advertising and VoD markets are 
slowly  increasing  since  2008  but  continue  to  be  minor  sources  of  revenue.  There  is  a  lack  of 

transparency  in  terms  of  financial  data,  clear  ownership,  catalogues  and  audiences  of  World  and 

European on-demand audio-visual markets. 

68   See Figure 28 Revenue and employment per CCI sectors in the world in 2013. 
69   European Audio-visual Observatory (4 May 2016): Box office hit record high in the European Union in 2015. 

Error! Reference source not found. 

35 

 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2.23 Distribution of revenues in the European film industry (mn €) 

Source: EY(2014): Creating growth – Measuring cultural and creative markets in the EU. 

TV  advertising  continues  to  be  the  first  category  of  advertisement  spending  (€33.5bn).  In  2014 
followed  by  online  advertising  (€30.7bn  -  26  IAB  European  countries70).  Cinema  ranks  last  with 
€700mn  spending.  The  general  trend  is  towards  more  online  advertising  spending.  In  five  years, 

between 2009 and 2014, online advertising total spending in Europe has doubled from €15.8bn to 
30.7bn71.  Online  video  advertising  market  is  forecast to  reach €1.768bn  in  2017 (from  €764mn  in 
2011). 

Figure 2.24 Advertisement spend by category in Europe in 2014 (bn €) 

Source: IAB Europe for 2011-2014. 

70  

26 IAB European countries are EU countries missing are Cyprus, Estonia, Latvia, Lithuania, Luxembourg, Malta and 
Portugal and non-EU countries included are Norway, Russia, Serbia, Switzerland and Turkey). 

71   European Audio-visual Observatory (November 2015) - On-demand Audio-visual Markets In The European Union - 

Developments 2014 and 2015. 

Error! Reference source not found. 

36 

 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2.25 Total online advertising spent (bn €) 

Source: IAB Europe for 2011-2014; 2006-2011 retropolated based on HIS growth. 

2.3.2  The music sector 

The amount of music available on the online shelves is vast (30 million tracks on Spotify alone) but, 

again as a whole, the revenue of the music industry has severely declined over the last 10 years. 

This  is  essentially  due  to  the  decline  in  sales  of  packaged  music  (recorded  music  in  the  form  of 

CDs) - the turnover of the recorded music industry was effectively halved since 2000. However, the 

situation  is  changing.  For  the  first  time  in  almost  20  years,  in  2015,  the  global  music  revenue 
(physical, digital, performance rights and synchronisation) 72 reported a significant year-on-year rise 
of  3.2%,  amounting  to  US$  15.0  billion.  Digital  revenues  have  overtaken  physical  sales  (45%  vs 

39%).  In  19  markets,  digital  revenues  bring  now  more  revenue  than  the  recorded  physical  music 

market. Download revenues decreased by 10.5% to $3bn, faster than in 2014 (-8.2%), representing 

20% of the global recording music industry revenue. Full  album downloads brought $1.4bn (more 

than  in  2010  -  $983mn  -  and  2011  -  $1.3bn).  Physical  sales  continue  to  decline:  4.5%  (2014  – 

8.5%,  2013  –  10.6%).  The  global  market  for  concerts  has  boomed  over  the  years.  Performance 

rights (broadcast and public venues) increased by 4.4% to $2.1bn (14% of total industry’s revenue). 

There is also concentration in this sector with Ticketmaster/Live Nation Entertainment (7.6bn USD 

turnover in 2015 up 11% from 2014) controlling a large share of the festival and event ticket sales 

market worldwide.  

72  

IFPI Global Music Report 2016. 

Error! Reference source not found. 

37 

 
 
 
 
 
 
 
 
 
                                                            
Figure 2.26 Global recorded music industry revenues 2005-2015 ($bn) 

Source: IFPI Global Music Report 2016. 

Digital revenues reached $6.7bn (10.2% growth)73. With a revenue of $2.9bn, streaming increased 
by 45.2%. It remains the industry's fastest-growing revenue source and represented in 2015 19% of 

total revenues (4% in 2014).  

Figure 2.27 Streaming growth year on year 2011-2015 

Source: IFPI Global Music Report 2016. 

Per IPFI74, 900 million music freemium users have generated $634mn revenue with advertising. On 
the other hand, 68mn premium subscribers have paid subscription services around $2bn in 2015. 

The two main streaming services are Spotify and iMusic. Launched in summer 2015 Apple’s iMusic 
has  topped  10mn  paying  subscribers  in  its  first  six  months75.  It  took  Spotify,  launched  in  2008, 
around six years to reach this same number.  

73  
74  
75  

IFPI Global Music Report 2016. 
IFPI Global Music Report 2016. 
http://www.ft.com/intl/cms/s/0/742955d2-b79b-11e5-bf7e-8a339b6f2164.html. 

Error! Reference source not found. 

38 

 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2.28 Subscription and ad supported revenues versus users in 2015 

2.3.3  The images sector 

The estimates on revenues for the images sector largely depend on the delineation and definition of 

the  sector.  This  is  visible  when  comparing  estimates  provided  by  different  sources.  According  to 
EY76  for  example,  all  visual  arts  accounted  for  $391bn  revenues  in  2013.  Other  analysts  on  the 
other  hand  estimate  the  market  for  digital  photography  at  $82.6bn  for  2016  (5.9%  growth),  which 
already includes material products like cameras for a total of more than $68.5bn77. The global stock 
image market on the other hand is estimated to generate revenues of $2.88bn.78  

While  more  photos  are  consumed  than  ever  before,  the  revenues  for  the  image  providers  have 

declined in the  same  time. Industry  representatives  express  their fear of  a further deterioration  of 

prices.  This  fear  is  combined  with  the  increased  fear  of  copyright  infringements  and  intellectual 
property  right  issues.79  Particularly  problematic  for  the  industry  is  the  new  search  function  on 
Google which allows users to see high quality pictures within the frame of the Google website and 

not  necessarily  noticed  by  consumers  that  they  have  been  linked  to  content  stored  on  other 
websites.80  

Furthermore,  with  the  increased  spread  and  decreasing  price  of  high  quality  photo  equipment, 

combined with the ease of sharing such photos, the willingness of consumers to pay for high quality 

images  is  decreasing.  Photographers  need  to  find  niche  markets  and  models  to  remain  on  the 
market.81  Private  (amateur)  photographers  share  more  and  more  pictures  on  platforms  such  as 
Pinterest or Flickr. In the US alone, Pinterest has grown in terms of visitors from 1.22 million unique 
visitors in July 2011 to almost 50 million visitors in July 201582. 

In  comparison,  Flickr  has  remained  relatively  stable  with  11  to  18  million  unique  visitors  between 
2012 and 2015.83 

76   EY (December 2015): Cultural Times, the first global map of cultural and creative industries. 
77   Digital Photography Market - Global Industry Size, Share, Trends, Analysis And Forecasts 2012 – 2018. 
78   Glückler, J., Panitz, R. (2013): The Global Stock Image Market, Global Survey 2012. 
79   Glückler, J., Panitz, R. (2013): The Global Stock Image Market, Global Survey 2012. 
80   OLSWANG (2015): CEPIC’s campaign for a better protection of images online. 
81  
82  
83  

https://www.themoderntog.com/photography-business-industry-trends-predictions-2014/. 
http://www.statista.com/statistics/277694/number-of-unique-us-visitors-to-pinterestcom/. 
http://www.statista.com/statistics/252566/number-of-unique-us-visitors-to-flickrcom/. 

Error! Reference source not found. 

39 

 
 
 
 
 
  
 
 
 
 
 
 
 
                                                            
2.4  Use of technology in different sectors 

Content  recognition  or  identification  technologies  (or  Automatic  Content  Recognition84)  recognise 
different  types  of  copyright  protected  content.  By  the  means  of  such  technologies,  copyright 

protected content can be detected and the right owners can have control over their content. It can 
be deployed at various locations such as an app on an electronic device (like Shazam85) or on the 
server of the service offering the content. 

Currently,  content  identification  technologies  are  used  in  media  and  entertainment  sectors.  The 

span  of  customers’  ranges  from  movie  and  music  studies,  television  networks,  audience 

measurement organisations, to individual photographers and associations. 

2.4.1  Main types of technologies 

There are currently two main types of content recognition technologies: 

  Fingerprinting; and 

  Watermarking. 

Fingerprinting  can  be  used  for  audio,  video,  and  image  content  recognition.  By  this  technology, 

easily recognisable features of the content can be extracted and thus identified as unique features 

of the content which are later compared against a reference database. For example, fingerprinting 

technology can look for a given musical pattern or melody in a soundtrack, match it to a melody in a 

database.  Using  special  features,  or  fingerprints,  content  owners  can  easily  find  out  whether 

someone  uploaded  their  content  to,  for  example,  YouTube.  The  level  of  accuracy  of  a  fingerprint 

can  be  very  high  allowing  to  trace  almost  any  content.  Examples  of providers using fingerprinting 
technologies are Audible Magic86 and Vobile87. 

Figure 2.29 Graphical representation of the process of watermarking and fingerprinting 

Source: 
https://www.smpte.org/sites/default/files/users/user26068/BBTB%20109%20Watermarking%20and%20Fingerprinting%20-
%20Wim%20Bus.pdf. 

Like fingerprinting, watermarking can also be used for audio, video and image content recognition. 

Digital  watermarks  that  could  be  undetectable  by  eyes  and  ears  are  embedded  into  the  content. 

This  way  such  watermarks  make  each  copy  of  the  content  a  unique  copy.  Watermarks  are 

commonly included in theatrical movie releases allowing to trace any illegally recorded version back 
to the original one. Civolution88 and Music Trace89 use digital watermarking. 

84  

85  
86  
87  
88  

http://www.civolution.com/wp-content/uploads/2014/02/ACR-Creating-Content-Aware-Ecosystems-Civolution-White-
Paper-Jan2013.pdf. 
http://www.shazam.com. 
https://www.audiblemagic.com/about/. 
http://www.vobileinc.com/about/. 
http://www.nexguard.com/. 

Error! Reference source not found. 

40 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Neither  of  the  technologies  can  provide  a  100%  fool-proof  system  to  identify  copyright  protected 

materials. 

2.4.2  Content recognition technology applications 

Providers  of  technologies  offer  various  services  to  their  clients,  whether  these  are  rightholders  or 

individual users. 

Originally,  the  main  services  offered  by  content  technology  providers  served  to  enforce  the 

copyright  legislation  by  identifying  and  thus  preventing  unauthorised  traffic  of  copyright  protected 
content90.  Increased  digitalisation  has  facilitated  the  offering  of  a  diversified  range  of  services  at 
present  times.  These  services  include,  besides  the  original  service  of  identification  of  copyright 

protected content:  

  Tracking content usage; 

  Management of rights; 

  Monetisation of content.  

Digital content has features that can be slightly adjusted while not changing its quality, like cropping 

an  image,  reducing  the  length  of  a  song,  illegally  recording  a  video  that  poses  a  threat  for 

recognition  of  original  content  and  thus  recognition  of  a  rightholder.  Therefore,  identification  of 

copyright  protected  content  is  a  critical  issue.  While  being  originally  created  for  security  reasons, 

monetisation  of  the  content  becomes  more  and  more  relevant.  Right  owners  wherever  they  are 

would like to be able to earn money for their work or other protected subject matter.  

The  services  offered  can  be  grouped  into  several  categories:  content  identification  and 

authentication,  copyright  compliance,  tracking  content  usage,  monetisation  of  the  content, 

organisation of the content and rights management, and specific applications for users. 

Content Identification and authentication 

The  main  service  that  technology  providers  offer  is  identification  of  the  content  displayed  on  the 

web, on TV, or on a street. Given the continuously increasing digitalisation, the volumes of digital 

audio, video and image content is enormous. Content identification enables rightholders to maintain 

control over how their content is used.  

Most  technology  providers  deploy  fingerprinting  technologies.  Such  technologies  require  that  a 

reference  database  has  to  be  maintained.  By  maintaining  which  also  includes  updating  this 

database,  content  owners  ensure  that  technology  providers  can  check  and  match  any  of  their 

content against such a database. 

Tracking content usage  

Content  owners  and  rightholders  can  identify  where  and  how  consumers  are  engaging  with  their 

content  and  the  length  of  time.  In  this  way,  the  reach  of  media  assets  can  be  measured  and 

contractual compliance, potential misappropriation, and moreover new sales opportunities, can be 

identified. Once content is identified, advertisers  and  broadcasting agencies can measure  directly 

http://www.musictrace.de/products/products.en.htm. 

89  
90   Digital watermarking techniques and technologies exist since 1990s while digital fingerprinting is bit newer coming to 

existence in the beginning of 2000. For more details, see Frank Y. Shih (2007), Digital Watermarking and Steganography: 
Fundamentals and Techniques (Hardcover), ISBN-13:978-1420047578, December 17, 2007, 
https://www.audiblemagic.com/2002/01/15/sesac-signs-agreement-with-audible-magic-to-begin-audio-fingerprinting-tests/.  

Error! Reference source not found. 

41 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                                   
how consumers are engaging with the content, how big the audience is. This way they can target 

advertising and offer only specific content relevant for consumers. 

Monetisation of content 

The rightholders would certainly like to earn money with displaying their content online. ‘New digital 

processes are changing how media is created, distributed and monetized. Traditionally, the media 

industry  focused  on  creating  content  and  optimizing  distribution,  but  today  many  companies  are 

automating this, digitizing catalogues and inventories, launching new rights management systems, 
optimizing  content  creation  workflows  and  writing  algorithms  to  create  content.’91  Monetisation  on 
online intermediaries’ websites happens via subscription models and via advertising.  

Organisation of the content and Rights management 

Once  content  is  identified,  technologies  can  help  organise  and  store  the  content  in  an  easily 

accessible way. This assists platforms to offer additional functionalities to users, for example, in the 

form of tools to organise personal digital files and libraries, find other content and identify how they 

can purchase it. In case of right owners, organised content can allow them to be able to manage 

their digital assets and can prevent confidential information from leaking.  

Other applications 

Image  recognition  creates  large  possibilities  for  e-commerce.  Content  recognition  technologies 

allow to identify specific products that can be directly searched and bought and compared in price.  

Other  applications  include  Geolocation,  visual  geolocation,  Augmented  reality,  TV  and  Mobile 

commerce. 

2.4.3  Suppliers of technologies 

Increased  digitalisation  resulted  in  increased  demand  for  the  content  identification  technologies, 

thus  creating  market  opportunities  for  technology  providers.  In  the  past  decade,  the  number  of 

technology  providers  has  increased.  Proposed  clarification  of  legislation  might  strengthen  the 

position  of  technology  providers  with  most  likely  increased  number  of  services  for  online 

intermediaries. Potentially content identification providers could become an intermediary serving the 

needs of right owners and allowing online intermediaries earn money. 

Content  recognition  technologies  are  now  widely  available  from  various  suppliers.  Several  online 

intermediaries have developed such technologies in-house like YouTube, while others are using the 
services of technology providers92. A non-exhaustive list of providers is presented below: 

Table 2.2 Core content recognition technology providers 

Provider 

Offered services 

Website 

Audio content only 

SoundHound 

  Sound recognition; 

www.soundhound.com/ 

Dubset 

  Sound recognition (in mixes); 

www.dubset.com 

  Sound search. 

Images content only 

  Analytics. 

Google Inc. 

  Detection of objects on images; 

https://cloud.google.com/vision/ 

91  

http://reports.weforum.org/digital-transformation-of-industries/wp-content/blogs.dir/94/mp/files/pages/files/wef-dti-
mediawhitepaper-final-january-2016.pdf. 

92   For more detail see Chapter 2.7.2. 

Error! Reference source not found. 

42 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Provider 

Offered services 

Website 

  Detection of inappropriate content; 

  Detection of emotional facial attributes; 

  Extraction of text from images. 

LTU technologies 

  Content  Tracking  (Media 

intelligence,  Brand 

www.ltutech.com/ 

protection,  Social  media  monitoring,  Copyright 

protection); 

  Brand Intelligence; 

  Mobile Visual Search; 

  Online Visual Search; 

 

Investigations. 

Recognize 

  Object recognition; 

https://www.recognize.im/ 

  Similar images recognition; 

  Multiple object recognition. 

Slyce 

  Visual product recognition. 

slyce.it 

Audio and video content 

Audible Magic 

  Copyrighted content identification; 

https://www.audiblemagic.com/ 

  Ensuring copyright compliance; 

  Collegial compliance insurance; 

  Content identification on devices and apps; 

 

(creation  and)  maintenance  of  media  works 

database; 

  Anti-piracy. 

Civolution 

  Copyright compliance; 

http://www.nexguard.com/ 

  Copyright management. 

Gracenote 

  Creation and maintenance of works database of 

http://www.gracenote.com/ 

TV shows, sports, movies and music; 

  Music, video and media recognition; 

  TV listings; 

  Radio recommendations. 

INA 

  Monitoring for right payment optimization; 

http://www.institut-national-

  Content monetization; 

audiovisuel.fr/ 

 

Incoming video stream filtering. 

Shazam 

  Music recognition; 

http://www.shazam.com 

Images and video content 

  TV recognition. 

Attrasoft 

  Single site image search engine; 

http://www.attrasoft.com/ 

  Video Search Engine; 

 

Image recognition; 

  Object detection within an image; 

  Video object detection; 

 

Image tagging; 

  Surveillance video analysis; 

  Steganography. 

Catchoom 

  Cloud image recognition; 

http://catchoom.com/ 

  On-device image recognition; 

 

Image recognition on client servers; 

  Augmented Reality; 

  Analytics. 

Clarifai 

 

Image and video recognition; 

https://www.clarifai.com/ 

  Automatic  tagging  of  images  and  video  by 

content; 

  Search (query) for similar images. 

Error! Reference source not found. 

43 

 
 
 
 
 
Provider 

Offered services 

Website 

Audio, video and images content 

Enswers 
Source: 
http://www.marketsandmarkets.com/Market-Reports/image-recognition-market-222404611.html. 

  Analysis of sound, image and video content. 

https://www.abiresearch.com/market-research/product/1016869-automatic-content-recognition-technology-a/, 

http://www.enswers.net/ 

Table 2.3 presents the services and products offered by content recognition technology providers.

Error! Reference source not found. 

44 

 
 
 
 
 
 
Table 2.3 Offered services, products by content recognition technology provider 

Provider 

Description of offered services 

Products  /  payment 

Price 

Description of products/payment plans covered 

plan 

Attrasoft Inc. 

  Single site image search engine; 

  A 

number 

of 

Upon request. 

Products 

include: 

Attrasoft  Mini-AttraSeek, 

Attrasoft 

  Video Search Engine; 

products 

ImageDeepLearner, 

Attrasoft 

ImageFinderLite, 

Attrasoft 

 

Image recognition; 

featuring 

the 

ImageFinderSeg, 

Attrasoft 

ImageFinder, 

Attrasoft 

  Object detection within an image; 

services offered. 

VideoFinderLite, 

Attrasoft 

FlashFinderLite, 

Attrasoft 

  Video object detection; 

 

Image tagging; 

  Surveillance video analysis; 

  Steganography. 

IFSurveillance,  Attrasoft  VideoFinderLive,  Attrasoft  VideoFinder, 

Attrasoft TransApplet 8.0, Attrasoft SecureImageMessage, Other 

Products. 

Audible Magic 

  Copyrighted content identification; 

Several 

specific 

Music  /  Film,  TV  for 

  Audible  Magic  offers 

flexible,  multi-tiered  pricing  plans 

  Ensuring copyright compliance; 

products, : 

(depending  on 

the 

designed  to  meet  the  needs  of  broad  range  of  customers. 

  Collegial compliance insurance; 

  Compliance 

number 

of 

Monthly service fees start at $500 for use of Audible Magic’s 

  Content identification on devices and 

Automation 

for 

transactions): 

Film/TV  database  and  $1,000  for  use  of  Audible  Magic’s 

apps; 

Media 

Sharing 

  $1,000/$500 for up 

Music Database; 

 

(creation and) maintenance of media 

platforms. 

to 

5,000 

  One time setup fee $2,500; 

works database; 

  Anti-piracy. 

transactions; 

  Pricing for this service is based on the number of transactions 

  $1,500/$750 

for 

sent to Audible Magic in a billing month. Subscribers are only 

between 

5,0001 

billed  for  the  transactions  that  are  used,  according  to  the 

and 10,000; 

monthly transaction ranges in the following table. 

  Etc.; 

  $5,500/$2,750 

for 

between 

45,001 

and 50,000. 

Gracenote 

  Creation  and  maintenance  of  works 

Several  products 

in 

Price is upon request. 

Description  of  features  depends  on  the  chosen  product  in 

database  of  TV  shows,  sports, 

music 

(music 

consultation with Gracenote. 

movies and music; 

recognition, 

music 

  Music, video and media recognition; 

data, 

music 

  TV listings; 

discovery), 

in  video 

  Radio recommendations. 

(on  entertainment),  in 

auto 

(automatic 

Error! Reference source not found. 

45 

 
 
 
 
 
Provider 

Description of offered services 

Products  /  payment 

Price 

Description of products/payment plans covered 

plan 

content 

recognition), 

in  sports  (live  scores, 

play-by-play 

data, 

historical  results  and 

records, 

schedules, 

etc.).  

Catchoom 

  Cloud image recognition; 

Starter plan. 

99€/month. 

  100 images; 

  On-device image recognition; 

 

Image recognition on client servers; 

  Augmented Reality; 

  Analytics. 

  100,000 cloud visual scans/mo; 

  1 collection; 

  Content Management System (web and API access); 

  CraftAR Creator Unlimited On-Device Visual Scans; 

  On-Device Bundle Generation Tool Email Support. 

Plus plan.  

249€/month. 

  1000 images; 

  150,000 cloud visual scans/mo; 

  Unlimited collections; 

  EverYouTubehing in Starter plan; 

  Analytics; 

  Chat support. 

Civolution 

  Copyright compliance; 

A number of products 

Price is upon request. 

Description  of  features  depends  on  the  chosen  product  in 

  Copyright management. 

and  solutions  to  help 

consultation with Civolution. 

Pro. 

Upon request. 

  Upon request. 

media 

content 

owners, 

holders 

rights 

and 

distributors  to  protect 

and  manage 

their 

assets throughout the 

entire  lifecycle,  from 

the 

Pre-Release 

stage  through  Digital 

Error! Reference source not found. 

46 

 
 
 
 
 
Provider 

Description of offered services 

Products  /  payment 

Price 

Description of products/payment plans covered 

plan 

Cinema,  B2B  and 

B2C distribution. 

Clarifai 

 

Image and video recognition; 

Plan 1. 

0 

  5,000 units per month; 

  Automatic  tagging  of  images  and 

video by content; 

 

Image Tagging; 

  Video Tagging. 

  Search (query) for similar images. 

Plan 2. 

$ 19/month. 

  20,000 units per month; 

Plan 3. 

$ 99/month. 

  40,000 units per month; 

 

Image Tagging; 

  Video Tagging. 

 

Image Tagging; 

  Video Tagging; 

  Prioritised Support. 

Plan 4. 

$ 219/month. 

  100,000 units per month; 

 

Image Tagging; 

  Video Tagging; 

  Prioritised Support. 

Plan 5. 

$ 479/month. 

  40,000 units per month; 

 

Image Tagging; 

  Video Tagging; 

  Prioritised Support. 

Plan 6. 

Upon request. 

  Billions of units per month; 

 

Image Tagging; 

  Video Tagging; 

  Prioritised Support; 

  Dedicated account manager. 

Enswers 

  Analysis  of  sound,  image  and  video 

ACR development kit.  Upon request 

It provides access to a library of software that helps you develop 

content. 

Audience 

measurement. 

content  recognition  applications  and  utilities  and  includes  APIs, 

utilities, extensive documentation and sample demos. 

It is a system that uses personal mobile devices to automatically 

detect audio from TV to measure individual viewership. The only 

Error! Reference source not found. 

47 

 
 
 
 
 
Provider 

Description of offered services 

Products  /  payment 

Price 

Description of products/payment plans covered 

plan 

hardware  our  system  requires  are  servers  that  fingerprint  TV 

broadcasts in real-time, and all the subjects need to do is install a 

mobile app on their phone and enter their profile information. The 

audio  source  from  real-time  TV  broadcast  feeds  and  subject’s 

mobile devices are fingerprinted and matched against each other, 

then stored with individual profiles for data analytics. 

Embedded ACR 

This  product  allows 

to  provide  a  platform 

that  enables 

applications 

to  deliver  engaging 

interactive  programming 

synchronized  in  real-time  to  what  the  user  is  watching  on 

television. 

Google 

  Detection of objects on images; 

  Cloud Vision API 

0 

  1-1,000 units per month; 

  Detection of inappropriate content; 

  Detection 

of 

emotional 

facial 

attributes; 

  Label  Detection,  Optical  Character  Recognition,  Explicit 

Content  Detection,  Facial  Detection,  Landmark  Detection, 

Logo Detection. 

  Extraction of text from images. 

Price per feature. 

  1,001 – 1mln units per month; 

  $5 for Label Detection; 

  $2.5  for  Optical  Character  Recognition,  Explicit  Content 

Detection,  Facial  Detection,  Landmark  Detection,  Logo 

Detection. 

  1,000,0001 – 5 mln units per month; 

  $4 for Label Detection; 

  $2 

for  Optical  Character  Recognition,  Explicit  Content 

Detection,  Facial  Detection,  Landmark  Detection,  Logo 

Detection. 

  5,000,001 – 20 mln units per month; 

  $2 for Label Detection; 

  $0.6  for  Optical  Character  Recognition,  Explicit  Content 

Detection,  Facial  Detection,  Landmark  Detection,  Logo 

Detection. 

LTU 

  Content Tracking (Media intelligence,  Hajime. 

99€/month. 

  500 images in the database; 

Error! Reference source not found. 

48 

 
 
 
 
 
Provider 

Description of offered services 

Products  /  payment 

Price 

Description of products/payment plans covered 

technologies  (as 

Brand  protection,  Social  media 

part of Jastec) 

monitoring, Copyright protection); 

plan 

  2,500 queries; 

  Bug only support. 

  Brand Intelligence 

  Mobile Visual Search; 

  Online Visual Search; 

 

Investigations. 

Kenschusei. 

249€/month. 

  25,000 images in the database; 

  125,000 queries; 

  Email support. 

Hyojun. 

599€/month. 

  100,000 images in the database; 

  500,000 queries; 

  Email support. 

Puro. 

1,299€/month 

  250,000 images in the database; 

  1,000,000 queries; 

  Email & Phone support. 

Senpai. 

2,199€/month. 

  500,000 images in the database; 

  2,500,000 queries; 

  Email & Phone support; 

  Free image consulting. 

Sensei. 

3,499€/month. 

  1,000,000 images in the database; 

Customised. 

Upon request. 

  High volumes of images; 

  5,000,000 queries; 

  Email & Phone support; 

  Free image consulting. 

Recognise.im 

  Object recognition; 

Start. 

0 USD. 

  Similar images recognition; 

  Multiple object recognition. 

  Dedicated server; 

  High performance guaranteed; 

  Multi Search API on different sites; 

 

Integration in your own system. 

  Scan limit: 500; 

  Photo limit: 100; 

  Valid for 3 weeks. 

Startup Package. 

$ 300 net/month. 

  Scan limit: 50,000; 

  Photo limit: 10,000. 

Standard Package. 

$1,700 net/month. 

  Scan limit: 100,000; 

Error! Reference source not found. 

49 

 
 
 
 
 
Provider 

Description of offered services 

Products  /  payment 

Price 

Description of products/payment plans covered 

plan 

  Photo limit: 50,000. 

Premium Package. 

$ 3,000 net/month. 

  Scan limit: 300,000; 

  Photo limit: 100,000. 

Enterprise Package. 

$ 4,000 net/month. 

  Scan limit: 1,000,000; 

  Photo limit: 500,000. 

Customised. 

Upon request. 

  Upon request. 

Slyce 

  Visual product recognition. 

  Snap-to-buy; 

Upon request. 

  Snap-to-discover; 

  Snap-to-list; 

  Snap-to-Coupon; 

  Scout. 

Shazam 

  Music recognition; 

  Shazam app. 

Free. 

It  creates  an  acoustic  fingerprint  based  on  the  sample  and 

  TV recognition. 

compares  it  against  a  central  database  for  a  match.  If  it  finds  a 

match,  it  sends  information  such  as  the  artist,  song  title,  and 

album back to the user. 

SoundHound Inc 

  Sound recognition; 

  Mobile 

app 

Price is upon request. 

Description  of  features  depends  on  the  chosen  product  in 

  Sound search. 

‘SoundHound’; 

  Voice  recognition 

virtual  assistant 

app ‘Hound’; 

  Voice 

enabled 

developer 

platform 

‘Houndify’. 

consultation with SoundHound. 

Error! Reference source not found. 

50 

 
 
 
 
 
 
2.4.4  Content identification used by online intermediaries 

Across various online intermediaries’ subject to case studies, the most common technology in place 

is  Audible  Magic.  While  it  is  common  technology,  not  all  the  intermediaries  make  use  of  their 

services. Some intermediaries make use of in-house technologies, while others combine in-house 

technologies  with  the  services  of  Audible  Magic.  Below  we  illustrate  in  more  detail  the  content 

identification solutions of YouTube, SoundCloud, Pinterest, Vimeo and Dailymotion. 

Content identification on YouTube 

Since  2007,  YouTube  makes  use  of  Content  ID,  a  technical  developed  by  Google  to  enable 

rightholders  uploading  content  to  fix  the  terms  of  usage  (country,  time  etc.).  Content  ID  allows  to 

screen  visuals,  phonographic  data,  etc.  The  files  that  are  uploaded  on  YouTube  are  matched 

against a reference database submitted by content owners: the content owner provides “hashes” to 

YouTube (fingerprinting mechanism). Currently there are more than 35 million active reference file 
in the database93. 

Once a new video is uploaded to YouTube and a match is found against a ‘hash’, the owner of the 
original content can decide that (see below)94: 
  Content must be taken down; 

  Content can be viewed freely and viewing statistics are gathered; 

  Content is being monetized (add advertisements). 

Figure 2.30 Screenshot of the choice and steps a content owner can take 

Source: https://thetrichordist.com/2015/03/04/YouTubes-content-id-375-00-per-million-views-this-is-what-were-fighting-for/.  

Content identification on SoundCloud 

SoundCloud  makes  use  of  audio  fingerprinting  content  recognition  technology.  There  are  two 

different content recognition technologies in place: 

  Since 2010, SoundCloud makes use of Audible Magic services; 

  Since  2012,  SoundCloud has  in-house content  recognition  technology  as  a result  of acquiring 

specialised companies95. 

93  
94  
95  

https://www.YouTube.com/YouTube/press/statistics.html. 
https://support.google.com/YouTube/answer/2797370?hl=en-GB. 
http://techcrunch.com/2014/10/11/SoundCloud-posted-a-29m-loss-in-2013-on-revenues-of-14m/. 

Error! Reference source not found. 

51 

 
 
 
 
 
 
 
 
 
 
                                                            
The  two  technologies  use  different  fingerprinting  algorithms  and  have  different  reference 

databases. As a result, once a piece of content is uploaded to SoundCloud, it is matched against 

both databases. In case of a match, the content is blocked. The company fingerprints and matches 

every audio file at the time of upload, and again after 40 hours and again after 14 days.  

In addition, SoundCloud also has a so-called emergency upload tool  which enable  rightholders to 

deliver  individual  reference  files  directly  into  the  reference  database  -  this  enables  rightholders  to 

act  quickly  in  the  event  of  leaks,  rather  than  waiting  for  a  reference  file  to  be  delivered  via  their 

usual supply chain.  

SoundCloud’s own estimates state that it has spent approximately EUR 5-10 million in developing 

its content identification system, plus the substantial historical and ongoing cost of employing 7 full 

time  engineers  and  product  managers  to  develop  and  maintain  the  technology,  and  5  full  time 

employees to manage takedown notices, copyright disputes and account terminations. 

Content identification on Pinterest 

It is not known whether Pinterest is using a content identification software. It nevertheless acquired 
an  image  recognition  and  visual  search  start-up  ‘VisualGraph’  in  201496.  As  part  of  the  license 
agreement  with  Getty  Images,  Pinterest  makes  use  of  PicScout  API,  a  subsidiary  of  Getty 
Images97. This tool allows to trace only images represented by Getty Images where Getty Images 
provides metadata to Pinterest. 

Content identification on Vimeo 
Vimeo makes use of ‘Copyright Match’98. Vimeo partnered with Audible Magic to implement the use 
of  this  technology.  Once  a  video  is  uploaded  to  the  website,  it  is  cross-referenced  with  the 

fingerprints database of Audible Magic. The result is sent to Vimeo mentioning whether there is a 

potential  match and  the  name of  composition  it  matches to.  Once  a match  is  detected,  the  file  in 

question is removed. If a user decides to continue with the upload, he or she must submit an appeal 

to Vimeo or replace the file. 

Content identification on Dailymotion99 
Since  2007,  Dailymotion  make  us  of  a  technology  developed  by  Audible  Magic.  Similarly,  to  the 

cases outlined above, once a piece of content gets uploaded to Dailymotion, it is cross-referenced 

with Audible Magic fingerprinting database. If a match is detected, the content is removed.  

Besides  this,  Dailymotion  also  makes  use  of  ‘Signature’  developed  by  INA100.  While  audio  of  a 
certain piece of content is cross-referenced with Audible Magic database, a video of a certain piece 

of  content  is  matched  against  ‘Signature’  database.  If  a  match  is  detected,  the  content  will  be 

removed.  

2.4.5  Cost of the content recognition technology 

When analysing the cost of content recognition technology, a distinction needs to be made between 

platforms  using  technology  providers  and  platforms  developing  the  technology  in-house  –  with  in 

some cases platforms using both. 

http://www.visualgraph.com/, http://techcrunch.com/2014/01/06/pinterest-visualgraph/. 
http://www.picscout.com/what-is-picscout/. 
https://vimeo.com/blog/post/copyright-match-on-vimeo, https://vimeo.com/help/faq/legal-stuff/copyright-match. 
http://www.dailymotion.com/gb/legal/contentprotection. 

96  
97  
98  
99  
100   http://www.institut-national-audiovisuel.fr/en/products-services/signature.html. 

Error! Reference source not found. 

52 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Prices for using technology providers 

For  online  intermediaries  of  smaller  size,  the  volume  of  content  is  limited  and  the  required 

technology  can  be  quite  simple.  Usually,  these  intermediaries  may  decide  to  make  use  of  the 

products  and  services  offered  on  the  market.  Table  2.1  provides  a  sample  of  prices  of  offered 

products  and  services  by  technology  providers.  It  can  be  noted  that  price  of  content  recognition 

software depends on a range of dimensions: 

 

 

the product to be monitored (audio, video, image); 

the level of verification (not only identify that it belongs to a specific right owner, but how many 

times  a  specific  piece  of  content  has  been  seen,  how  many  objects  are  recognised  on  an 

image); and 

  provision of additional services (rights management, possibilities for monetisation). 

Larger  intermediaries  may  still  make  use  of  services  offered  by  technology  providers,  but  usually 

the  prices for  these services  are  personalised.  Although  technology  providers are not  at liberty  to 

disclose specific information on contractual deals with platforms, they did indicate a range of 10,000 

USD  to  100,000  USD  annually  during  the  interviews  for  the  cost  of  a  fair-sized  (not-specified) 

intermediary. 

Development of in-house software 

While  content  recognition  technologies  can  be  procured  from  external  parties,  they  can  also  be 

developed  by  online  intermediaries  in-house.  Since  online  intermediaries  differ  in  user  base  and 

usage  and  maintenance  costs  largely  depend  on  the  traffic  of  users,  potentially  the  size  of  the 

company  plays  a  role  in  determining  the  costs  of  content  recognition  technologies  and  choice  of 

development  of  in-house  technology.  Interviewees  indicated  that  costs  associated  with  content 

recognition technologies go together with the costs associated with maintenance of the website with 

respect to notice-take-down system. A choice of deployment of more than one technology could be 

also  determined  by  the  expansion  of  reference  databases  against  which  uploaded  content  is 

matched  against  (in  case  of  fingerprinting  technologies).  This  way  a  larger  share  of  copyright 

protected content can be identified. 

Larger  platforms  such  as  YouTube  and  SoundCloud  have  technology  in  place  developed  by 

themselves,  bearing  larger  costs  associated  with  content  identification  technologies  (including 

maintenance  and  continuous  tracking  of  the  content).  For  SoundCloud,  the  cost  of  in-house 

technology is estimated to be around EUR 400,000 on average annually (see Box 1 below for exact 

calculation), which includes depreciation for one-off investments. 

Box 1. Costs of technology by SoundCloud 
SoundCloud  indicated  to  spend  in  total  about  5-10  million  euros101  including  costs  associated  with 

development  and  maintenance  of  their  own  content  recognition  software,  costs  to  external  parties  for 

usage  of  their  content  recognition  software,  costs  associated  with  people  and  costs  for  acquiring  new 

business  (dedicated  to  content  recognition  software  development)  since  their  existence.  Assuming  that 

about  2-4  million  euros  are  spent  only  on  technology  development  and  maintenance,  yearly  costs  on 

technology  are  about  EUR  400,000  (2  million  divided  by  5  years  that  SoundCloud  has  the  technology  in 

place).  

In the case of online intermediaries that belong to a holding (or another larger company), such as 

Vbox7 or Dailymotion, the content identification technology may be produced by other companies 

101  

Information is obtained during interview with SoundCloud. 

Error! Reference source not found. 

53 

 
 
 
 
 
 
 
 
 
 
 
                                                            
belonging to the mother organisation.  This  technology  might  also be sold  by  external parties.  For 

example, Google owns an image recognition software that is available for sale to external users.  

Error! Reference source not found. 

54 

 
 
 
 
 
3 

Impact per sector  

To  assess  the  impact  of  a  possible  clarification  for  the  three  sectors  (audio-visual,  music  and 

pictures), nine case studies have been conducted. The case studies concerned: 

1.  YouTube; 

2.  Dailymotion; 

3.  Pinterest; 

4.  SoundCloud; 

5.  Vimeo; 

6.  Flickr; 

7.  Google Images; 

8.  Facebook; 

9.  Vbox7. 

The results of the case studies are presented in the annexes of this report. This chapter discusses 

the approach and the main findings per sector. 

3.1  Approach 

The case studies consist of two parts: 

  Descriptive; 

  Analytical. 

The descriptive part presents current, information on each of the platforms. This includes, inter alia, 

the  business  model  (sources  of  revenue),  functionalities  and  services  offered  to  the  users,  the 

audience and license agreements with rightholders (if any). 

The analysis focuses on the (hypothetical) response of the intermediaries to a possible legislative 

clarification  in  copyright  law  which  may  lead  to  the  obligation  to  obtain  a  licence,  for  those  not 

covered  by  the  safe  harbour  provisions  under  the  e-commerce  directive.  First,  the  impact  of  the 
clarification on the business model of the intermediaries is analysed102. This impact on the business 
model follows three steps: 

1.  What is the impact of the clarification on the costs of the platform for the UUC part? 

2.  How could the platform absorb the costs? 

3.  How  could  the  new  obligation  and  resulting  costs  impact  the  business  model,  notably  to 

generate the necessary additional revenues? 

The  principal  logic  of  the  assessment  is  based  on  distinguishing  two  main  perspectives  that  online 

intermediaries can take if, as a result of the clarification, they need to take a license with  rightholders for 

distributing copyright protected content uploaded by their users: 

Situation  A:  the  online  intermediary  wishes  to  keep  the)  copyright  protected  content  uploaded  by 

users and thus wishes to reach an agreement with rightholders (obtain a license) on the upload and 

102   The assumption for the Impact assessment is that the possible clarification with regard to use of copyright protected 

content by some online intermediaries who store and give access to the public to protected content may lead to the need 
for such services to obtain a license from the relevant rightholders. The assessment is without prejudice to the possible 
application of the limited liability regime under e-commerce directive to these online services, who may fall under Article 14 
of e-commerce directive. 

Error! Reference source not found. 

55 

 
 
 
 
 
 
 
 
 
 
 
                                                            
distribution  of  copyright  protected  content.  Therefore,  once  new  copyright  protected  content  is 

uploaded, an online intermediary can potentially: 

1.  Keep it on the website, add advertising and thus make money to cover royalty costs; 

2.  Keep  it  on  the  website,  add  advertising,  add  an  option  for  a  subscription  fee  to  be  able  to 

view/listen/stream without advertising; 

3.  Ask money from the uploader to cover the royalty costs; 

4.  Absorb the royalty costs. 

Situation B: the online intermediary does not (want to or cannot) reach an agreement with rightholders 

for  all  or  for  certain  types  of  content).  Copyright  protected  content  is  removed  (for  content  already 

present on the website) or gets blocked (for future content). Therefore, once new copyright protected 

content  is  uploaded,  an  online  intermediary  will  take  it  down  and  block  it  thus  no  revenue  will  be 

collected.  

The  identification  and  blocking  efforts  of  intermediaries  should  be  sufficient  to  demonstrate  serious 

efforts to block this content. The exact percentage of required accuracy is impossible to present. As 

described in section 2.4, a 100% fool-proof technology doesn’t exist.  

Once  the  expected  changes  to  the  business  model  are  identified,  the  impact  on  a  range  of 

stakeholders can  be  identified. In the case studies,  we  analyse the  impact of the clarification –  in 

addition to the platform itself - on: 

  Consumers; 

  Rightholders; 

  Other online content providers. 

3.2 

Impact per sector 

Using  the  analysis  of  the  individual  case  studies  as  a  basis,  possible  impacts  per  sector  can  be 

estimated. 

3.2.1  Audio-visual sector 

To assess the possible impact of the clarification specifically on the different stakeholders involved 

in  the  online  distribution  and  consumption  of  audio-visual  (AV)  content,  we  make  a  cross-case 

analysis of the following online intermediaries dealing with AV content: 

  YouTube; 

  Dailymotion; 

  Vimeo; 

  Vbox7; 

  Facebook. 

In  relation  to  YouTube  and  Dailymotion,  in  this  section  we  specifically  focus  on  their  audio-visual 

content  excluding  music  videos.  Since the  latter involve licensing  deals  with  rightholders  from  the 

music industry, this will be discussed in the next section on the music sector.  

Current situation (prior to legislative change) 

Table  3.1  summarises  the  current  business  strategy  of  each  of  these  five  online  platforms  with 
respect to their AV content.103  

103   See annexes for more detailed information about the five case studies. 

Error! Reference source not found. 

56 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Table 3.1 Current business strategy of AV case studies 

YouTube 

Dailymotion 

Vimeo 

Vbox7 

Facebook 

Current  dominant 

Freemium  ad-

Freemium  ad-

Freemium  ad-

Freemium  ad-

Freemium 

ad-

business model 

based 

based / 

free / 

based 

based 

Subscription 

Subscription 

License  deals  with 

Few  AV  deals 

Some 

AV 

Direct 

No 

licensing 

No info on existing 

rightholders 

(primarily 

for 

deals 

licenses  with 

info found 

licenses 

with 

media 

content) 

(primarily 

for 

creators 

rightholders  

media 

content) 

Current CRT 

Yes,  Content 

Yes, 

Yes, 

<unknown> 

Rights Manager 

ID 

(internally 

Signature  and 

Copyright 

developed) 

Audible Magic 

Match 

In general (and irrespective of the possible clarification), the AV sector  is rather reluctant to make 

licensing deals with online intermediaries (unlike the music sector) for premium content above all. 

To  most  of  the  AV  rightholders  the  current  business  models  of  online  intermediaries  are 

unsatisfactory.  Especially for  premium movies and TV series there seem to be  no  licensing deals 

between  major  rightholders  and  user  uploaded  content  (UUC)  platforms.  The  movie  sector  has 

generally opted to remove their content from UUC platforms, and not to enter licensing agreements 

with  them,  although  with  some  exceptions.  By  blocking  their  content  on  user  uploaded  content 

platforms,  they  primarily  try  to  protect  the  current  model  where  they  try  to  maximise  revenue 

generation through different windows of exploitation (cinema, (prime) TV, DVD, VOD…). 

Future scenario (after possible legislative change) 

It could be expected that even after a possible clarification, at least the premium AV content will not 

be licenced to user uploaded  content  platforms. At the same time  with a clearer legal framework, 

some AV content may still be licenced. Examples in the latter category could be sports and other 

events,  news,  TV  shows,  old  films  etc.  For  these  categories  of  AV  content,  the  current  model  of 

revenue generation is different from that of movies and TV series.  

Based on the impact assessment of the different individual cases, the following observations at the 

sector level appear. 

Impact on UUC platforms 

The  potential  clarification  may  increase  costs  for  the  user  uploaded  content  platforms  at  three 

different levels:  

  Costs for monitoring (Situation A and B); 

  Costs for negotiation (Situation A, possibly Situation B in case of failed negotiations); 

  Costs for royalties/payments (Situation A only). 

Costs for monitoring 

All user uploaded content platforms may have to increase their monitoring efforts (right technology 

and human capacity in place for the recognition of copyright protected AV content and consequent 

blocking/license).  For  those  platforms  that  already  have  content  recognition  technology  (CRT)  in 

place,  the  higher  (compared  to  the  current  situation)  monitoring  costs  will  primarily  relate  to 

increased  efforts  to  continuously  update/improve  the  CRT  library  against  which  new  uploads  are 

being screened. We expect these additional costs to be relatively modest. If the current system of 

‘notice and take down’ would change into a system of ‘notice and stay down’, in the medium term 

Error! Reference source not found. 

57 

 
 
 
 
 
 
 
 
 
 
 
 
this might lower monitoring costs for both the UUC platforms and rightholders. Those platforms that 

currently  have  no  CRT  in  place,  will  have  to  invest  in  such  technology.  The  exact  cost  of  the 

technology  will  depend  on  the  size  of  the  platform.  The  costs  for  development  are  estimated  to 

range  between  10,000  and  100,000  USD  for  small  platforms,  whereas  it  will  increase  to  a  few 

million euros for large platforms.  

Costs for negotiation 

Until  now,  negotiations  between  user  uploaded  content  platforms  and  AV  rightholders  have  been 

limited (if any). After the clarification and depending on the profile of the platform and the type of AV 

content  they  want  to  show,  deals  will  have  to  be  negotiated  if  platforms  wish  to  (still)  display 

copyright protected AV content. This will increase negotiation costs for the platforms. Moreover, the 

fact that the landscape of AV rightholders is rather fragmented, further increases these negotiation 

costs.  

The  willingness  of  user  uploaded  content  platforms  to  bear  these  negotiation  costs  after  a 

clarification  will  depend  on  how  they  value  the  presence  of  (certain  types  of)  AV  content  on  their 

platform, what the level of royalties/type of deals is that rightholders are willing to accept and what 

the platform’s financial possibilities are:  

  For  a  platform,  such  as  YouTube,  such  content  is  clearly  of  less  strategic  importance  than 

music. It is expected that this will also be reflected in the behaviour of YouTube; 

  For Facebook – the other financially strong player and newcomer in the market – it remains to 

be seen which position it will take in the market and how AV content will fit in that strategy; 

  For  user,  uploaded  content  platforms  such  as  Dailymotion  AV  content  has  become  more 

important  to  position  itself  as  a  niche  player.  Dailymotion  already  has  some  deals  with  AV 

content  providers,  although  for  geographically  restricted  areas.  It  is  expected  that  Dailymotion 

will  make  efforts  to  further  increase  this  type  of  content  on  the  platform.  However,  its  current 

financial situation may limit the room for negotiation; 

  UUC  platforms  such  as  Vimeo  will  continue  focusing  on  original  AV  content  uploaded  by 

creators. It cannot be excluded that some of the content uploaded contains protected content of 

a third party requiring an agreement. It remains to be seen whether the creator or Vimeo makes 

arrangements with the respective rightholders in those specific situations; 

  Small platforms such as Vbox will have a very difficult time trying to settle deals because of their 

financial  situation.  It  is  expected  that  they  will  move  to  a  position  as  niche  player  such  as 

Dailymotion if they manage to negotiate some deals.  

Costs for royalty payments 

Based  on  the  above  analysis,  it  is  expected  that  royalty  payments  to  the  AV  sector  will  not 

drastically  increase.  For  premium  AV  content,  we  expect  that  the  status  quo  remains  after  the 

clarification, i.e. most rightholders do not want to make deals for premium content and thus will not 

receive any royalty payments either, leading to a Situation B for the entire sector with respect to this 

kind  of  content.  For  other  types  of  AV  content  such  as  news,  sports  events,  old  and  short  films, 

licensing deals may  be possible (Situation  A) and royalty  payments might increase. However, the 

increase  is  expected  to  be  modest  given  the  fact  that  this  type  of  AV  content  is  either  not 

strategically  important  for  the  platform  and/or  the  right-holder  (e.g.  old  AV  content  such  as  past 

events  or  TV  shows),  or  that  the  platform  is  in  a  too  weak  financial  position  to  pay  much  higher 

royalties (unless they change the business model drastically).  

Impact on business models 

Whatever position the user uploaded content platforms will take with respect to AV content on their 

platform (Situation A or Situation B), they may all be facing higher cost for monitoring of the content 

Error! Reference source not found. 

58 

 
 
 
 
 
 
 
 
 
uploaded compared to today. However, these higher costs are expected to be relatively modest for 

those platforms that already have CRT systems in place. It is expected that these additional costs 

will be absorbed and will not set high pressure on the platforms to drastically change their business 

model.  For  smaller  platforms,  such  as  Vbox  however,  it  is  expected  that  the  possible  clarification 

will put pressure on them to negotiate some deals and to move to a position as niche player such 

as Dailymotion, based on which they can build a sustainable business model.  

Impact on consumers 

The impact of a possible clarification on consumers is expected to be twofold: 

 

 

It might have an impact on the offer of AV content on UUC platforms for users; 

It might have an impact on the possibilities of consumers to upload content. 

The possible clarification may make it more difficult for users to upload content to UUC platforms for 

which  they  hold  no  rights,  including  when  using  third  party  content  in  their  home  videos.  The 

monitoring procedures are expected to become more rigorous due to the risk of liability (for those 

not qualifying as hosting services under Article 14 of e-commerce directive) for content that is not 

covered by an agreement with rightholders, which is most likely the case for premium AV content. If 

the  UUC  platforms  do  not  manage  to  arrange  deals  with  rightholders,  AV  content  will  likely  be 

blocked.  At  the  same  time,  premium  AV  content  is  already  removed  from  UUC  platforms  and 

therefore  the  impact  on  users  is  not  expected  to  be  significant.  Moreover,  new  licences  covering 

other  than  premium  content  may  increase  the  possibility  for  users  to  upload  their  home  videos 

containing third party content.  

In terms of watching content, we expect that a potential clarification will have less of an impact on 

consumers  as  the  overall  offer  of  AV  content  (which  to  a  great  extent  also  includes  content 

uploaded  by  rightholders  or  their  representatives)  is  likely  not  to  change.  Some  of  the  following 

impacts may however occur: 

  movies and TV series (i.e. premium content) or videos containing extracts of these are expected 

to be blocked even more proactively than today; 

  Some UUC platforms might manage to conclude deals about premium content with specific AV 

rightholders  that  target  niche  content  (e.g.  specific  geographical  scope  or  specific  types  of 

content).  In the case  of Dailymotion  and Vbox7,  this involves especially  media content owned 

by their respective mother company; in the case of Vimeo, this involves original content created 

by  users  for  which  they  own  the  rights  (or  have  licence  agreement  to  use  it).  This  type  of 

content will therefore remain available on those platforms; 

  For  sports,  other  cultural  or  media  events,  news  etc.,  we  can  expect  that  a  clarification  might 

lead to more deals with rightholders. Until now, in general it has not been an outspoken strategy 

of  UUC platforms to actively  look for  deals  with AV  rightholders  for  these types of content,  as 

this  type  of  content  is  not  considered  to  be  of  core  strategic  importance  for  the  growth  of  the 
business104 and rightholders are highly fragmented. This could change after the clarification (or 
they must block the content). We believe that for this type of AV content, rightholders might be 

more willing to enter an agreement with UUC platforms. We therefore expect that the impact of 

the  clarification  on  the  availability  of  this  type  of  content  for  consumers  will  be  limited  in  the 

longer run (in the short run there might be a decrease, as negotiations will take time). 

In line with the above analysis, the availability of AV content for viewers is likely to remain relatively 

unaffected on UUC platforms.  

104   A number of deals for specific types of AV content do exist (e.g. YouTube already stroke deals in the past for live 
streaming of several premium sports and cultural events such as e.g. live streaming of the Indian Premier League 
Championship), but it has not been an active growth strategy so far. 

Error! Reference source not found. 

59 

 
 
 
 
 
 
 
 
 
                                                            
Impact on other AV content services 

Given  the  fact  that  the  catalogues  of  AV  content  (primarily  premium  AV  content)  on  all  user 

uploaded content platforms is relatively  limited  now  and that this  will not drastically change in the 

future, we assume that the impact of a clarification on subscription based AV content services (e.g. 

Netflix) due to a possible shift of consumers will be rather limited. Consumers that are interested in 

viewing  premium  AV  content  and  are  willing  to  pay,  most  likely  already  have  turned  to  such 

subscription  based  AV  content  in  the  current  situation  because  of  the  limited  availability  of  such 

content on UUC platforms already now.  

Impact on AV rightholders 

For premium AV content (movies, TV series), it is expected that a possible clarification will have no 

(or a very limited) impact on the current (lack of) openness of rightholders to make deals with user 

uploaded  content  platforms,  and  thus  have  no  impact  on  the  volume  of  royalties  that  they  will 

receive for this type of AV content. Premium AV content will be more proactively blocked by UUC 

platforms.  

For  other  types  of  AV  content,  the  rightholders  might  be  more  open  to  make  deals  with  online 

intermediaries  after  the  clarification.  It  remains  to  be  seen  to  what  extent  and  how  this  would  be 

translated into royalties (result of commercial negotiations).  

3.2.2  Music sector 

Music content is available on a wide range of types of online intermediaries. To assess the impact 

of a potential clarification, different types of intermediaries are considered since they have different 

dynamics.  The  following  intermediaries  dealing  with  music  content  have  been  analysed  in  more 

detail: YouTube, DailyMotion, and SoundCloud.  

We distinguish between three main types of online intermediaries in the music sector: 

  Big audio-visual intermediaries offering music content (e.g. YouTube); 

  Smaller audio-visual intermediaries offering music content (e.g. DailyMotion); 

  Music intermediaries offering only or mainly audio content (e.g. SoundCloud). 

It  is  necessary  to  make  the  distinction  between  audio-visual  intermediaries,  since  small  AV 

intermediaries  have  either  very  little  or  no  licenses  with  major  music  record  labels  (Universal, 

Warner,  Sony)  unlike  big  AV  intermediaries.  Having  licenses  with  major  labels  is  crucial  for 

attracting sufficient number of customers, as most users are looking for mainstream popular songs, 

which are usually produced by the major labels. Below we outline several differences between the 

three cases each representing one main type of online intermediary  in the current situation (current 

situation) and what kind of impact clarification may have in the future (future scenario). 

Current situation (before a legislative change) 

Table  3.2  summarizes  the  main  features  of  the  online  intermediaries  that  may  be  impacted  by  a 

clarification: 

Table 3.2 Current major features of online intermediaries (before legislation change) 

Feature 

YouTube 

DailyMotion 

SoundCloud 

Type 

of 

online 

Major  AV 

intermediary 

AV  intermediary  offering 

Music  intermediary  offering 

intermediary 

offering music content. 

music content. 

primarily audio content. 

Current 

business  Freemium, ad-based. 

Freemium, 

ad-based,  Freemium, subscription. 

Error! Reference source not found. 

60 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Feature 

model 

YouTube 

DailyMotion 

subscription 

SoundCloud 

License deals 

Deals  with  major  music 

Possibly 

deals 

with 

Deals  with  major  music 

record  labels  and  some 

smaller  record  labels  (not 

record 

labels  and  some 

other 

labels 

/ 

specified). 

other  labels  /  organisations 

organisations 

representing authors. 

representing authors. 

Parties  with  whom 

Record labels  

Unknown 

Record labels:  

license  deals  have 

  Warner Music Group; 

  Warner Music Group; 

been concluded 

  Sony; 

  Universal Music. 

Indies, 

authors 

- 

examples: 

  Teosto; 

  Koda; 

  SABAM; 

  PRS. 

  Sony; 

  Universal Music Group; 

  Merlin. 

Indies, authors – examples: 

  National 

Music 

Publishers  Association 

(US)authors 

societies, 

e.g.  PRS, 

SACEM, 

UMPI.  

Note: Detailed description and analysis of potential clarification is presented in Annexes 1, 2 and 4. YouTube and DailyMotion 
display not only music content but also audio-visual content that is analysed in more detail in Chapter 3.2.1. 
Note: Detailed description of analysed online intermediaries is provided in Annex 10. 

Differences in current business models  

Starting point for comparison is the difference in revenue generation by the service providers and 

the payments made to rightholders. 

Table 3.3 Current business models of online intermediaries 

Indicator 

YouTube 

DailyMotion 

SoundCloud 

Revenue  generation 

Advertising. 

Advertising, Subscription (paid). 

Subscription  (paid)  & 

model 

freemium/advertising. 

Tools 

used 

to 

Adjust 

and 

improve 

Adjust  and  improve  individual 

Introduce  advertising 

increase revenue 

individual  advertising 

to 

advertising 

to 

maximise 

+ paid tier. 

maximise 

advertising 

advertising income. 

income. 

Payments 

to 

55%  of 

the  advertising 

2  possibilities:  50%  of  the  next 

rightholders 

revenue  is  shared  with 
s/rightholders.105 

No 

advertising  revenue  or  70%  of 

the  net  subscription  or  rental 

minimum pay per stream. 

revenues.  This  is  available  only 

for partners. 

Note: Detailed description and analysis of potential clarification is presented in Annexes 1, 2 and 4. 

Depends on the right-
holder106. 

Differences in licenses/agreements concluded so far 

Licenses/agreements  with rightholders are important for intermediaries to attract users. Especially 

licenses  with  the  major  labels  and  authors’  societies,  who  can  provide  access  to  most  of  the 

popular  music,  are  desired  as  these  most  popular  numbers  also  attract  the  largest  audience.  In 

addition, having a deal with all the major rightholders is much more valuable than having a deal with 

a single major  rightholder; consumers have little  interest in a platform that provides  only a limited 

supply of the songs they want to listen to. 

105   http://www.digitalmusicnews.com/2014/06/23/fk-heres-entire-YouTube-contract-indies/. 
106   See descriptive part in Annex 4 for more details. 

Error! Reference source not found. 

61 

 
 
 
 
 
 
 
 
 
 
 
                                                            
While  some  intermediaries  have  been  able  to  come  to  agreements  with  rightholders  (e.g. 

SoundCloud),  other  intermediaries  have  not  managed  to  do  so  (e.g.  DailyMotion).  The  main 

difference  between  both  categories  is  the  ability  or  willingness  to  pay  the  fees  requested  by  the 

rightholders and notably major labels. The platforms that have an agreement with rightholders are 

able, or  at least  expect  to  be  able,  to  pay  the  requested  fee  and still maintain a  financially  viable 

business  case.  The  platforms  without  licence  agreements  consider  a  viable  business  case  not 

possible under the requested licence fees. 

Difference in payments in the sector 

The  comparison  of  income  for  rightholders  is  usually  based  on  payments  per  stream.  Strong 

differences reported throughout the services are based on the following factors: 

  Scope of streams involved (freemium and premium, selected artists, etc.); 

  Geographic dimension (specific countries, regions etc.); 

  Amount of advertising a platform can attract in relation to the number of streams. 

This difference in payments is illustrated by comparing YouTube and Spotify. 

For  YouTube,  for  example,  differences  reported  range  from  about  $0.0003  to  $0.00175107  per 
stream108.  Spotify,  in  comparison,  claims  to  pay  depending  on  the  stream  between  $0.006  and 
$0.0084109.  On  average  Spotify  is  referred  to  pay  about  $0.00521  per  stream110.  Using  these 
figures  means  that  Spotify  pays  between  2.9  and  up  to  28  times  more  per  stream  to  artists  than 

YouTube. This situation is said to be based on the fact that YouTube concludes agreements on the 

basis  of  a  different  legal  situation  and  with  a  stronger  bargaining  power  (leading  to  no  minimum 

payments)  and  the  different  focus  of  the  revenue  generation  (YouTube  focusses  on  maximising 

advertising  incomes,  advertising  in  Spotify  mainly  aims  at  “funnelling”  users  into  the  premium 

subscription  model).  Comparing  YouTube  only  to  Spotify  freemium  on  the  other  hand  is  short 

sighted,  based  on  the  fact  that  Spotify  needs  the  premium  part  to  finance  its  contractual 

agreements.  YouTube  considers  the  comparison  with  other  platforms  not  fair,  indicating  that  no 
other platforms give as much money back to creators as YouTube (in nominal terms).111 

Data distinguishing between revenues of Spotify on free users and subscribers is limited. Moreover, 

differences between countries appear to be large. Data for January 2016, for example, shows that 

in  the  US  Spotify  pays  rightholders  a  share  of  advertising  income  from  free  users  up  to 
approximately $0.017 per stream, in GB $0.0015, IE $0.0006, Brazil $0.0004 and Chile $0.003.112 
However,  the  problem  when  comparing  such  numbers  is  that  the  numbers  of  usage  differ  largely 

which has a strong impact on the average payment per stream. This might bias the judgment on the 

numbers and needs to be taken into consideration. 

Differences in current content recognition technologies for music 

To  be  able  to  detect  copyright  protected  content,  online  intermediaries  have  content  recognition 

software/technology in place. It could also be used to identify to which parties payments need to be 

made.  Currently,  YouTube  allows  to  monetise  content  that  is  uploaded  by  third  parties,  while 

Interviews with music labels confirm the order of magnitude of these figures. 

107   https://thetrichordist.com/2014/11/12/the-streaming-price-bible-spotify-YouTube-and-what-1-million-plays-means-to-you/. 
108  
109   http://www.spotifyartists.com/spotify-explained/. 
110   https://thetrichordist.com/2014/11/12/the-streaming-price-bible-spotify-YouTube-and-what-1-million-plays-means-to-you/. 
111   https://www.theguardian.com/music/musicblog/2016/apr/28/YouTube-no-other-platform-gives-as-much-money-back-to-

creators. 

112   http://musicstreamingindex.com/. 

Error! Reference source not found. 

62 

 
 
 
 
 
 
 
 
 
 
 
                                                            
DailyMotion and SoundCloud offers opportunities for monetization for rightholders, but not for third 

parties. 

Table 3.4 Current features of application of CRT by online intermediaries 

Feature 

YouTube 

DailyMotion 

SoundCloud 

Current CRT 

‘Content 

ID’  developed 

CRT  of  Signature  and 

CRT  of  Audible  Magic 

internally. 

Audible Magic. 

and  internally  developed 

software. 

Features of CRT 

Once  a  file  is  uploaded, 

The  content  is  removed 

The  content  is  removed 

the  owner  of  the  original 

when it is uploaded by 3d 

when it is uploaded by 3d 

content can decide to (1) 

parties  without  the  rights 

parties  without  the  rights 

take  it  down;  (2)  have  it 

to do so. 

to do so. 

viewed 

freely 

and 

viewing 

statistics 

are 

gathered;  (3)  Content  is 

to  be  monetized 

(add 

advertisements). 

Future scenario (after a possible legislative change) 

In  case  of  a  a  legislative  intervention,  online  intermediaries  may  need  to  take  a  license  with 

rightholders for distributing copyright protected content uploaded by their users. As explained above 

on the current situation, there is a difference between platforms in the extent in which they expect to 

be able to pay licence fees and maintain a financially viable business model; those platforms that 

currently  have  agreements  in  place,  consider  a  viable  business  model  possible,  those  platforms 

that do not have agreements – and especially those that have negotiated with the labels but were 

not able to reach an agreement - do not consider it possible to pay the requested license fees as 

part of a financially viable business model. 

We do not expect that a clarification will lead to rightholders to lower the requested licence fees, nor 

that the clarification  will open new business opportunities for intermediaries where these currently 

are not foreseen by them.  

Based  on  the  interviews  and  case  studies,  it  is  expected  that  the  sheer  number  of  new  license 

agreements following the clarification may remain relatively low. Either the intermediaries foresee a 

viable  business  case  and  they  try  to  obtain  agreements  with  rightholders  -  as  some  of  them  are 

doing already today -  or they do not foresee such a viable business case and they will decide to 

block uploads containing third party copyright protected content. 

Without  a  license  and  with  a  potential  liability  for  hosting  then  illegal  content  (except  for  services 

that  can  still  qualify  as  hosting  services  under  Article  14  of  e-commerce  directive),  intermediaries 

that do not come to an agreement with rightholders, will be forced to proactively block the upload of 

user  videos  that  contain  third  party  copyright  protected  content.  To  ensure  that  this  content  gets 

blocked, the content recognition technology needs to be applied (which is already the case for the 

major  services  studied)  and  cooperation  from  the  rightholders  is  needed  for  the  registration  of 

copyright protected materials in databases used for the content recognition. 

Table 3.5 summarises expected impact per online intermediary in music sector. 

Error! Reference source not found. 

63 

 
 
 
 
 
 
 
 
 
 
 
 
Table 3.5 Expected impact for online intermediaries (after legislation change) 

Feature 

YouTube 

DailyMotion 

SoundCloud 

Type 

of 

online 

Major  AV 

intermediary 

AV  intermediary  offering 

Music  intermediary  offering 

intermediary 

offering music content. 

music content. 

primarily audio content. 

Situation  A:  the online  intermediary  wishes  to keep  the)  content  uploaded  by  users  which  contains  third  party 

copyright protected content and thus wishes to reach an agreement with rightholders (to obtain a license)  

Changes in costs 

Increase  in  costs  related 

Increase  in  costs  related 

to  monitoring, 

royalty 

to  monitoring, 

royalty 

payments. 

payments. 

Change in revenues 

To 

compensate 

for 

To 

compensate 

for 

increase 

in 

costs, 

increase 

in 

costs, 

additional revenues would 

additional revenues would 

have to be generated. 

have to be generated. 

Increase  in  costs  related  to 
monitoring, 
royalty 
payments. 

To  compensate  for  increase 
in costs, additional revenues 
would have to be generated. 

Change  in  business 

A 

possible 

change 

A 

possible 

change 

model 

depending  on  how  high 

depending  on  how  high 

Probably  no  change  as 
Soundcloud 
already 
getting licences. 

is 

the  costs  would  be,  but  a 

the 

costs 

would 

major change is unlikely 

be.rightholders 

Situation B: the online intermediary does not (want to or cannot) reach an agreement with rightholders for all or 

for certain types of content). User uploads containing third party copyright protected content not covered by an 

agreement are removed  

Changes in costs 

Increase  in  costs  related 

Increase  in  costs  related 

Increase  in  costs  related  to 

to monitoring. 

to monitoring. 

monitoring. 

Change in revenues 

Potentially 

reduction 

in 

Potentially 

reduction 

in 

No  change 

in 

revenues 

advertising revenues. 

advertising revenues. 

given 

that 

SoundCloud 

continues  to  roll  out  current 

revenue generation model. 

Change  in  business 

If increase in costs is less 

If increase in costs is less 

No  change 

in 

revenues 

model 

than 

reduction 

in 

than 

reduction 

in 

given 

that 

SoundCloud 

revenues  ,  no  change  in 

revenues,  no  change  in 

continues  to  roll  out  current 

business model. 

business model. 

revenue generation model. 

Assessment 

Assessment 

of 

Situation  A  is  most  likely: 

Situation  A  may  apply  to 

Situation A as Soundcloud is 

situation A versus B 

YouTube  coming 

to  a 

some 

content 

and 

already  obtaining 

licenses 

licensing  agreement  with 

situation  B 

for  other 

rightholders 

rightholders  (due  to  the 

content: 

(Dailymotion 

importance of YouTube). 

unable 

to 

agree  on 

licensing 

deals 

with 

majors (as is currently the 

case). 

Note: Detailed description and analysis of potential clarification is presented in Annexes 1, 2 and 4. 

Impact on UUC platforms 

Upon  clarification,  intermediaries  active  in  the  music  sector  may  face  three  types  of  additional 

costs:  

  costs related to negotiation of agreements;  

  cost related to payments of royalties/fees where none were paid in the past; and  

  costs for improvement of technologies, where necessary. 

Error! Reference source not found. 

64 

 
 
 
 
 
 
 
The  costs of negotiation of  agreements  will  only  be incurred  by  intermediaries  that  will  engage in 

negotiations.  This  does  not  necessarily  cover  all  intermediaries.  The  first  group  of  exceptions  are 

intermediaries that already have agreements in place. For these intermediaries, no additional costs 

of negotiation  will  be  incurred,  unless  rightholders  will  seek to renegotiate existing  agreements  or 

arrangements.  This  group of  platforms  are  already  in  situation  A  for  at least  the  content currently 

offered  on  the  platform.  The  second  group  consists  of  intermediaries  that  consider  the  chance  of 

successful negotiation to obtain an agreement too small to be worth the effort of negotiating. This 

may particularly apply to platforms that have attempted to obtain agreements in the past, but did not 

manage to come to an agreement (like DailyMotion). These intermediaries may opt for Situation B, 

at least for parts of the content. 

For those intermediaries that do enter negotiations and do manage to obtain agreements (Situation 

A), payments must be made in line with the agreement. The size of the payments is dependent on 

the    commercial  negotiations  –  and  the  amount  of  copyright  protected  content  available  on  the 

service of the intermediary. 

Technological costs are related to the implementation of improved content recognition technologies 

and  human  capacity  necessary  to  maintain  the  technology.  The  need  for  improvement  of  the 

technology  is  dependent  on  the  extend  in  which  the  technology  currently  in  place  is  sufficient  to 

monitor content being viewed (in case of Situation A and payment schedules based on the number 

of uploads or views) or to block the upload of copyright protected content to a sufficient degree to 

avoid liability for hosting illegal content (in case of Situation B), where applicable. For those online 

intermediaries  that  already  have  in  place  CRT,  higher  costs  may  be  associated  with  increased 

efforts  to  continuously  update  and  improve  the  CRT  reference  databases  against  which  new 

uploaded content is matched, unless the rightholders feed the databases.  

Impact on business models 

Since the clarification may lead to an increase in costs (costs of technology and, payments where 

agreements  are  reached)  some  of  the  online  intermediaries  may  need  to  adjust  the  existing 

business models to generate more revenue. 

For the intermediaries entering into agreements (Situation A), the copyright protected content that 

becomes  available  under  the  agreement  may  be  used  to  generate  the  additional  revenue.  The 

number of  different  business  models in the  sector  seems  limited  to either  an  ad-based  streaming 

service,  a  subscription-model,  or  a  combination  of  both.  All  intermediaries  opting  for  a  licensing 

agreement are expected to adopt either of the currently existing models.  

For  intermediaries  not  engaging  in  an  agreement  with  rightholders,  the  need  to  adopt  a  new 

business model may be dependent on the costs of the technology required. If the additional costs of 

technology  are  little  to  none  and  the  intermediaries’  current  success  is  not  to  a  significant  extent 

dependent on user uploads containing third party copyright protected content, the current business 

model  of  these  intermediaries  may  be  continued  with  slightly  higher  costs.  In  case  the  costs  of 

technology  are  not  negligible  or  the  platform  is  to  a  significant  extent  dependent  on  copyright 

protected content, these intermediaries are faced with the choice of  either adjusting their business 

model, for example by building  a business model  with a strict regional focus (e.g. Dailymotion for 

French speaking regions, or Vbox7 for the Bulgarian region) or developing a platform with a clear 

focus on specific niche content (and trying to settle more deals with rightholders of such content).  

Impact on consumers 

The clarification may have an impact on consumers both as uploaders of content and as users. 

Error! Reference source not found. 

65 

 
 
 
 
 
 
 
 
 
 
 
Those  platforms  that  do  no  conclude  agreements  with  rightholders  (Situation  B)  will  be  forced  to 

restrict  uploads  from  consumers  by  blocking  uploads  that  contain  third  party  copyright  protected 

content..  However,  as  more  agreements  may  be  concluded  than  today,  users  may  be  able  to 

upload more of their content covered by such agreements.  

For  users  of  content,  the  overall  impact  is  expected  to  remain  limited  as  the  offer  of  content  by 

intermediaries concluding agreements may increase, even if there may be a decline on websites of 

intermediaries not concluding agreements. No estimates on the amount of user uploads containing 

third  party  copyright  protected  (i.e.  unofficial  content)  is  available  per  service,  so  the  size  of  the 

impact is also not known. 

The  elimination  of  certain  copyright  protected  content  from  platforms  may  lead  to  a  switch  from 

users to other platforms (with licenses) in case those users wish to maintain access to the content. 

The number of users switching is dependent on the amount of content that is no longer accessible 

and the willingness to switch, or at least to use additional platforms, of users. No firm information on 
either aspect is available. However, a Eurobarometer survey113 shows that consumers’ willingness 
to pay for content is quite low. Insofar consumers will switch, the switching will mostly be towards 

channels providing the content for free.  

Impact on other music content platforms 

Other platforms which currently offer users access to music which is fully covered by licenses, (for 

example Spotify) are expected to be affected little (or no effect at all) by the potential clarification, 

as the content offer on the intermediaries is likely not to decline much compared to today. 

Impact on music rightholders 

Impact of clarification on rightholders depends on the result of negotiations between intermediaries 

and rightholders. If no renegotiation on current contract will take place, the net increase of royalties 

paid  to  rightholders  follows  from  new  license  agreements  closed  after  the  clarification.  As 

mentioned previously, it is expected that the number of new agreements following the clarification 

may remain limited but the actual number will depend on the terms of commercial negotiations.  

3.2.3 

Images sector 

Images can be found on a wide range of online services storing and giving access to images. Each 

of  these  service  providers  has  different  dynamic,  and  thus,  distinguishing  the  different  type  of 

service  providers  allows  a  more  granular  analysis  of  the  expected  impacts  of  a  possible 

clarification. In addition, images can be found online through online search engines. 

We distinguish between two main types of online intermediaries in the images sector: 

1.  Image  hosting  services  (e.g.  Pinterest,  Flickr);  these  service  providers  typically  allow  users  to 

upload images; 

2.  Search  engines  (e.g.  Google  Images);  these  service  providers  typically  display  (links  to) 

pictures on websites as part of user searches on internet. 

3.   

The  scenario  sections  comparing  the  current  situation  and  the  future  scenarios  focus  on  the  first 

category (hosting services). The specific case of search engines is further elaborated upon below. 

113   Eurobarometer, Flash 437. 

Error! Reference source not found. 

66 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Current situation (before a possible legislative change) 

Table  3.5  summarizes  the  main  features  of  the  image  hosting  services  that  have  been  analysed 

and may be impacted by a possible clarification: 

Table 3.6 Current major features of images hosting services (before legislative change) 

Feature 

Pinterest 

Flickr 

Type 

of 

online 

Images hosting services. 

Images hosting services. 

intermediary. 

Current business model. 

Freemium,  Advertising,  promoted  and 

Freemium, Advertising, Subscription. 

License deals. 

A  number  of  license  agreements  for 

No license agreements. 

buyable pins. 

attribution  (giving  proper  credit  to  the 

creator by naming the creator). 

Current CRT. 

Assumingly Picscout. 

Magic  View  that  recognises  what  is  on 

Note: detailed description of analysed online intermediaries is provided in Annexes 3 and 6. 

pictures and allows to tag it. 

Search  engines  require  no  license  agreements for  the  images  that are  part  of the  search results. 

Google Images has put a few clauses in place to allow search results to show whether the content 

owner has put any usage rights to its content.  

Differences in current business models  

The  starting  point  for  comparison  is  the  difference  between  the  way  service  providers  generate 

revenue and the possible payments made to rightholders. 

Table 3.7 Current business models of online intermediaries 

Indicator 

Pinterest 

Flickr 

Type 

of 

online 

Images hosting services. 

Images hosting services. 

intermediary. 

Primary 

revenue 

Advertising. 

Advertising, Subscription. 

generation model. 

Tools  used 

to 

increase 

Promoted and Buyable pins. 

Marketplace to sell photos. 

revenue 

Payments to rightholders. 
Note: detailed description of analysed online intermediaries is provided in Annexes 3 and 6. 

No. 

51% from the sale on Marketplace. 

Google Images does not have an independent revenue generating model, but rather supports the 

overall Google business case. 

Differences in concluded licenses  

The following table summarises the license agreements of hosting services in the sector. 

Table 3.8 Current license deals of online intermediaries 

Indicator 

Pinterest 

Flickr 

Type 

of 

online 

Images hosting services. 

Images hosting services. 

intermediary. 

License 

A  number  of  agreements  through 

Agreements with photographers/sellers that sell 

deals/agreements 

attribution recognition. 

on Marketplace. 

with rightholders. 

Parties  with  whom  Attribution  recognition  agreements 

Individual  photographers  and  photographers’ 

Error! Reference source not found. 

67 

 
 
 
 
 
 
 
 
 
 
 
 
license 

with  Dreamstime,  Flickr,  YouTube, 

associations. 

deals/agreements 

500px, Etsy, Getty Images*. 

have been concluded. 
Note: detailed description of analysed online intermediaries is provided in Annex 3 and 6. 
* Additional agreement on metadata in place with Getty Images. 

Differences in the content recognition technologies used 

To  be  able  to  detect  copyright  protected  content,  online  intermediaries  have  content  recognition 

software/technology in place. The following table provides an overview of the features of CRT used 

by hosting services in the images sector. 

Table 3.9 Current features of the CRT used by hosting services 

Feature 

Pinterest 

Flickr 

Type 

of 

online 

Images hosting services 

Images hosting services. 

intermediary. 

Current CRT. 

Assumingly Picscout. 

Magic View. 

Features of CRT. 

As  part  of  the  deal  with  Getty 

It recognises what is on pictures and allows 

Images,  Pinterest  uses  Scout  API 

to  tag  it.  It  is  unknown  if  there  is  any  CRT 

for only Getty Images photos. 

that  allows  to  trace  copyright  protected 

Note: detailed description of analysed online intermediaries is provided in Annex 3 and 6. 

content. 

Future scenario (after a possible legislative change) 

In case of legislative intervention, online intermediaries may need to take a license with rightholders 

for distributing copyright protected content uploaded by their users. Online intermediaries that wish 

to  keep  the  copyright  protected  content  uploaded  by  users  and  displayed  on  their  platform,  for 

example  because  they  consider  a  viable  business  model  possible,  may  wish  to  reach  a  licensing 

agreement  with  rightholders  (obtain  a  license).  Other  online  intermediaries  might  not  (want  to  or 

cannot) reach an agreement with rightholders. Table 3.11 summarises expected impact per online 

intermediary in images sector. 

Table 3.10 Expected impact for online intermediaries (after a possible legislative change) 

Feature 

Pinterest 

Flickr 

Type 

of 

online 

Images hosting services. 

Images hosting services. 

intermediary. 

Situation A: the online intermediary wishes to keep the) copyright protected content uploaded by users and thus 

wishes to reach an agreement with rightholders (obtain a license). 

Google Images is not affected if the clarification leaves untouched hyperlinking (including farming). If there was 

a change with regard to hyperlinking, two cases could be of relevance:  

(1) 

license may be necessary solely for content displayed directly at online intermediaries’ platform. This 

would have no implications for Google Images and thus is excluded from the analysis; 

(2)  Any pictures made available by an online intermediary in a format that is similar to the original (high 

resolution) regardless of the location of the picture (at intermediary’s server or source website) must 

be covered by a license. This would have implications for Google Images and it is considered below. 

Changes in costs. 

Increase 

in  costs 

(possible 

royalty 

Increase 

in 

costs 

(possible 

royalty 

payments and potentially CRT). 

payments and potentially CRT). 

Change in revenues.  To  cover  the  costs  revenues  would  have 

To cover the costs revenues would have to 

to increase. 

increase. 

Change  in  business 

Dependent  on  the  importance  of  third 

Dependent on the importance of third party 

model. 

party 

copyright 

protected 

content, 

copyright  protected  content,  possible 

possible adjustment of business model to 

adjustment  of  business  model  to  generate 

Error! Reference source not found. 

68 

 
 
 
 
 
 
 
 
 
Feature 

Pinterest 

Flickr 

generate more revenue and cover costs. 

more revenue and cover costs. 

Situation B: the online intermediary does not (want to or cannot) reach an agreement with rightholders for all or 

for certain types of content). Copyright protected content is removed  

Changes in costs. 

Increase  in  costs  if  CRT  has  to  be 

Increase 

in  costs 

if  CRT  has 

to  be 

improved. 

improved. 

Change in revenues.  Depending on the need to improve CRT 

Depending on the need to improve CRT. 

Change  in  business 

No  change  unless  to  investments  are 

No  change  unless  to  investments  are 

model. 

Assessment 

needed in CRT. 

needed in CRT. 

Assessment 

of 

Situation B is likely to happen. 

Situation B is likely to happen. 

situation A versus B. 
Note: detailed description of analysed online intermediaries is provided in Annex 3 and 6. 

Impact on UUC platforms 

UUC platforms are likely to be affected by a potential copyright clarification. Where licenses were to 

be  obtained  (Situation  A),  a  platform  would  have  no  negative  impact  on  its  business  case  due  to 

potential decrease in traffic if copyright protected materials were to be removed. In addition, there 

would be no liability risks contrary to a situation where content is uploaded without a license. On the 

other hand, license fees would have to be paid. Also, improvement to the technologies needed to 

identify copyright protected materials to pay the rightholders, may be needed. 

On the contrary, in case no licenses are obtained (Situation B), the platforms would avoid costs of 

licenses, but may face costs to block copyright protected materials from being uploaded, including 

costs  of  possible  improvement  of  technology  to  identify  and  block  the  content,  and  the  risk  of 

liability for  materials not properly blocked. 

Facing a choice between  reaching an agreement  with rightholders for  copyright protected content 

and  paying  the  consequent  license  fees  or  blocking  the  content  to  avoid  having  to  pay  the  fees, 

both  platforms  investigated  in  the  case  studies  (Pinterest,  Flickr)  are  likely  to  choose  blocking  of 

user uploads containing copyright protected content (Situation B) as the expected costs for royalty 

payments would outweigh the expected additional revenues of monetization of the licensed content 
or the reduced income due to any switching of users to other platforms114. Other intermediaries in 
the sector are likely to follow the same pattern if the bulk of uploads is not copyright relevant  (like 

personal  photos  of  individuals)  but  it  would  in  the  end  depend  on  the  mutual  interest  in  an 

agreement and on the conditions of rightholders for concluding agreements with specific services. 

Impact on business models 

As  a  big  part  of  intermediaries  in  this  sector  may  not  be  willing  to  enter  licensing  agreements, 

unless  copyright  relevant  content  constitutes  a  major  part  of  content  uploaded  on  their  websites, 

(Situation B), it is likely that no (additional) payments will be needed. However, intermediaries will 

be required to block third party copyright protected materials from being uploaded. The size of the 

costs  for  recognition  technologies  to  prevent  the  upload  of  such  materials  are  unclear  and 

dependent on the volume of images displayed on the platform. In interviews, technology providers 

considered  the  development  of  technologies  to  identify  copyright  protected  content  for  mid-sized 

intermediaries in the images sector as ‘easy and cheap’.  

114   Copyright owners will still be able to use the platforms (e.g. Flickr) has regularly offered opportunities for monetization of 

content. 

Error! Reference source not found. 

69 

 
 
 
 
 
 
 
 
 
 
                                                            
These  additional  costs  can  be  incurred  if  a  platform  can  absorb  the  costs  by  means  of  cross-

subsidisation (e.g. in the case of Flickr, which belongs to Yahoo, the costs might be cross-financed 

by  other  parts  of  Yahoo)  or  if  the  platform  can  launch  new  revenue  generating  initiatives  (or 

accelerate already existing initiatives, such as in case of Pinterest) which are more closely related 

to the current business of the platform. 

For the larger platforms, such as Pinterest and Flickr, the relative impact of the costs of technology 

may be limited in comparison to the overall business case. Their chances of a sustainable business 

case  may  be  slightly  negatively  influenced  by  the  clarification  (and  associated  need  to  cover 

additional  costs  of  technology),  but  the  relative  impact  is  considered  to  be  limited.  For  smaller 

platforms,  the  cost  of  technology  will  be  relatively  much  higher.  For  them,  managing  to  find  a 

sustainable  business  case  will  become  significantly  less  likely  under  the  clarification.  Overall,  the 

most  likely  impact  of  the  clarification  will  be  a  shake-out  of  smaller  platforms,  with  the  larger 

platforms (Pinterest, Flickr) choosing to block upload of copyright protected content by third parties. 

Any  platform  choosing  to  enter  licensing  agreements  (Situation  A),  would  need  to  find  ways  to 

generate additional revenue streams with the licensed content to pay the royalties. Typically, selling 

copyright protected images is done via photo stock services, where consumers can pay for the use 

of  copyright  protected  images.  A  business  model,  where  the  copyright  protected  content  is 

displayed for a fee and revenues covering royalty payments being generated by other services of 

that platform, is not foreseen in the sector. 

Impact on consumers 

As overall the existing intermediaries in this sector are not expected to enter licensing agreements 

(Situation  B),  users  may  face  additional  removals  of  content  for  which  they  hold  no  rights. 

Uploaders will still be able to upload personal content (which may be the biggest part of content at 

least for some of the intermediaries)\ or content that is free from copyright. 

For  consumers  who  are  searching  for  images  on  these  platforms,  the  expected  decision  of  the 

platforms not to enter licensing agreements will mean that a part of third party copyright protected 

content  (not  falling  under  art.  14  ECD)  may  eventually  be  taken  down  depending  on  transitory 

measures.  Consumers  who  want  to  access  those  pictures  or  images  can  either  access  service 
providers that do offer this content (at a fee or for free), or to find substitutes115. Detailed information 
on  consumer  behaviour  in  case  of  a  clarification  is  unknown,  but  it  may  be  assumed  that  for 

images, users’ willingness to pay is quite low, similarly as in the music sector. Thus, consumers will 

probably stay on the platforms they currently use after the clarification, accepting alternative images 

as a substitute for the copyright protected images. 

In case a platform would enter licensing agreements (Situation A), consumers would have a similar 

experience  as  today  with  the  non-copyright  protected  content  and  possibly  different  offers  of 

protected content, for a fee or for free.  

Impact on other services providing images  

With consumers expected to most likely remain at their original platform (Situation A and B), notably 

where such  platforms are  above  all  used  for  sharing  users'  own  content,  the  expected  amount  of 

additional traffic to other platforms that offer copyright protected content, like photo stock platforms, 

is also likely to be small as the use cases would differ. Insofar as consumers will start using other 

115   This is assumed due to the fact the majority of consumers find it important that access to images is for free 

(Eurobarometer Flash report 437). 

Error! Reference source not found. 

70 

 
 
 
 
 
 
 
 
 
 
 
                                                            
platforms  offering  copyright  protected  content  (for  a  fee),  a  slight  increase  of  revenues  for  these 

platforms may be expected. 

Impact on rightholders in the images sector 

If  a  majority  of  platforms  do  not  conclude  additional  agreements  with  rightholders,  but  rather 

remove third party protected content, and if the traffic to the platforms offering copyright protected 

materials is not increased,, the change in royalties received by rightholders is also expected to be 

small to negligible.  

Clarification and search engines 

Search  engines  (e.g.  Google  Images)  are  a  specific  category  of  platforms  providing  images  to 

users, as they link and frame images rather than store them. It is presumed for the purposes of this 

study that  linking and framing of copyright protected content remains as today. Search engines are 

expected to restrict themselves to linking and framing after the clarification to avoid the need for a 

licensing agreement and the need to pay royalties.  

As  long  as  the  possible  clarification  does  not  change  the  current  situation  for  linking  to  content 

freely available on internet, there are neither changes, nor additional costs for search engines to be 

expected. Any costs to be made are technical costs to change the output of search results from the 

current  format  to  links  and  frames  only.  The  size  of  these  costs  are  unknown,  however,  it  is 

estimated to be quite low and likely not to be needed in many cases.  

Nonetheless,  the  impact  of  a  potential  (different  kind  of)  clarification  of  the  legislative  framework 

could  be  investigated.  Under  this  alternative  clarification,  it  is  assumed  that  search  engines  must 

obtain licences for framing images in full quality (even if on someone else's servers). Thus, search 

engines are faced with the choice between monetization of the full quality images (most likely in the 

form  of  a  photo  stock  provider)  to  cover  the  licensing  fees  to  be  paid,  or  displaying  images  in 

reduced versions (‘thumbnails’) to avoid licensing fees to be charged. As the image search is only a 

supportive part of the business for search engines, there are no easy options for monetization of full 

quality  pictures  (other  than  starting  a  photo  stock  service).  Meanwhile,  avoiding  licensing  fees  is 

quite  straightforward  by  limiting  output  of  search  queries  to  thumbnails  instead  of  full  quality 

pictures. 

Error! Reference source not found. 

71 

 
 
 
 
 
 
 
 
 
 
 
Annex 1 Case Study YouTube 

Descriptive Part 

A) DESCRIPTIVE PART 

IDENTIFICATION 

Name 

of 

YouTube 

service  

About 

the 

A  video  streaming  &  sharing  website,  owned  by  Google.  The  site  allows  users  to  view,  upload,  rate, 

company 

share and comment on videos.  

Sector 

Video Hosting Service: ranging from music, sports, movies, tutorials, reviews, cartoons, TV clips, etc. 

Business 

While most of the content on YouTube is accessible for free, YouTube uses a combination of business 

model 

models/sources of revenue listed below: 

1)  Freemium – users have the ability to watch most of the videos for free. This generates user profile 

information  e.g.  for  targeting  advertising  and  as  a  basis  for  making  premium  offers  (not  direct 

monetization); 

2)  Advertising:  A  major  portion  (over  47%  reported  in  2015)  of  YouTube’s  revenue  comes  from 

advertisement, with ads featuring before, during, and after a video, or across various sections of 

the  webpage/screen.  If  the  uploader  has  associated  their  YouTube  and  AdSense  account,  and 

has  enabled  their  videos  for  embedding,  ads  will  be  automatically  shown  in  the  video.  The 

uploader, of the  video, has the right to enable or  disable ads on their videos. The uploader gets 

55% of the revenue generated by the ad, displayed on their video, while the remaining 45% is kept 

by  YouTube.  The  type  of  ad  displayed  is  decided  by  AdSense,  the  uploader  does  not  have  the 

authority 

to 

select 

which 

ad 

should 

be 

displayed.  

Source: https://support.google.com/YouTube/answer/6175006?hl=en&ref_topic=12633; 

3)  Subscription:  user  can  now  access  the  content  (YouTube  Red  or  paid  channels)  in  certain 

territories  (Australia,  Mexico,  New  Zealand,  and  the  United  States)without  any  advertisement 

being 

displayed 

on 

the 

videos, 

by 

subscribing 

for 

a  monthly 

fee.  

Source: 

http://techcrunch.com/2015/04/08/YouTube-confirms-plans-for-an-ad-free-subscription-

based-service/.  

Source: https://support.google.com/YouTube/answer/6307365?p=red_countries&hl=en&rd=1; 

4)  Pay-per-use:  certain  type  of  paid  services  allow  the  user  to  purchase  or  rent  individual  videos 

(rather than a channel), made available by the third party (rightholder of the video).The user can 

view  the  video  an  unlimited  number  of  times  during  the  period  of  time  displayed  at  the  time  of 

payment.  The  purchased  video  is  stored  in  a  digital  locker  for  the  user  to  view  in  future,  and 

remains 

in 

the 

locker 

for 

5 

years 

from 

the 

date 

of 

purchase. 

Source: https://www.YouTube.com/t/usage_paycontent. 

Web address 

www.YouTube.com  

Year 

of 

May, 2005  

foundation 

Source - https://www.YouTube.com/YouTube/about/ 

Targeted 

Worldwide  except  blocked  countries  which  are  China,  Iran,  North  Korea,  Sudan,  Tajikistan, 

countries 

Turkmenistan. 

Source - http://www.statista.com/statistics/280685/number-of-monthly-unique-YouTube-users/; 

Source - https://en.wikipedia.org/wiki/Censorship_of_YouTube. 

Target group 

  67% of all the people that visited YouTube in 2015 are within age bracket of 18-34 years; 

Source: 

http://www.adweek.com/socialtimes/which-industries-create-the-most-engaging-content-

on-YouTube/620315; 

Error! Reference source not found. 

73 

 
 
 
 
 
A) DESCRIPTIVE PART 

  Out of all the teens using internet, about 21.6 million teens, i.e. about 54%, are on YouTube; 

Source: https://greggbanse.com/social-media-demographics-for-higher-ed-2014-2015/. 

  80% of YouTube traffic comes from outside of US. Nothing is specific available for EU; 

Source: https://www.YouTube.com/YouTube/press/statistics.html. 

  35% of United Kingdom residents are active on YouTube as of 2014, with people falling in the age 

bracket of 18-24 contributing 76% to the statistic. 

Source: http://thesocialskinny.com/YouTube-around-the-world-infographic/; 

Source: 

http://www.takeonetv.com/blog/2015-08-17-37-amazing-facts-stats-about-video-on-

YouTube. 

  According to a report, the usage of YouTube is greater in U.K, Germany, and India. All 3 countries 

have billions of views on YouTube’s Top 100 channels. Canada and France are next to follow in 

the list. Source: http://alexnoudelman.com/top-10-YouTube-viewing-countries/. 

Turnover 

  The annual revenue for YouTube amounted to $3.5 billion in 2013, $4 billion in 2014, and $9 billion 

and/or  market 

in  2015.  According  to  a  report  by  Bloomberg,  the  company  estimates  a  gross  revenue  of  $12.8 

share 

billion by 2017. The company’s revenue through mobile services is up over 100% year on year; 

Source: http://www.tubefilter.com/2015/02/26/YouTube-2014-revenue-four-billion; 

Source: http://www.digitalmusicnews.com/2016/02/15/YouTube-is-growing-at-a-ridiculous-rate/; 

Source: 

http://www.musicbusinessworldwide.com/YouTube-will-earn-9bn-in-revenue-this-year-

towering-over-spotify/. 

  The annual net advertising revenue of YouTube amounted to $1.86 billion in 2013, $3.04 billion in 

2014, and $4.28 billion in 2015; 

Source: http://www.statista.com/statistics/289658/YouTube-global-net-advertising-revenues/; 

  As of October 2015 the company has 1.3 billion users, i.e. 33% of internet users; 

Source: https://www.YouTube.com/YouTube/press/statistics.html; 

Source: http://www.statisticbrain.com/YouTube-statistics/. 

  The growth of uploaded content had quadrupled between May 2013 and July 2015 to 400 hours of 

video per minute; 

Source: http://www.tubefilter.com/2015/07/26/YouTube-400-hours-content-every-minute/. 

  The company is now valued at $70 billion on its own; 

Source: http://www.digitalmusicnews.com/2016/02/15/YouTube-is-growing-at-a-ridiculous-rate/. 

Size  of 

the 

Large (1,000 – 5,000 employees, not publicly available information); 

company  

Source - https://www.crunchbase.com/organization/YouTube#/entity. 

Place  of  legal 

San Bruno, California, United States; 

seat 

https://www.YouTube.com/t/contact_us. 

Language(s) 

  YouTube is available in 76 different languages, and its localized version in more than 70 countries 

of 

platform 

(covering 95% of the Internet population); 

(does 

not 

Source - https://www.YouTube.com/YouTube/press/statistics.html/. 

need 

to  be 

  The majority of videos are uploaded in English (93.5%), followed by Portuguese (1.2%),  Spanish 

exhaustive)  

(1%), German (0.5%) and Russian (0.45%); 

Source - http://blog.pexe.so/what-YouTube-looks-like-in-a-day/. 

1.  DETAILED DESCRIPTION 

List 

of 

The  content  available  on  YouTube  can  be  uploaded  by  individuals  as  well  as  by  partners.  For 

functionalities 

uploading content, one needs to have an account on YouTube. The users who wish to monetize their 

and  services 

content need to enter into a partnership program, where they can earn money by allowing YouTube to 

offered 

display  ads  on  their  videos.  YouTube  partners  have  a  commercial  agreement  with  YouTube  to 

monetize their content. 

YouTube offers the following functionalities:  

Error! Reference source not found. 

74 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

For a unregistered user/simple viewer: 

View  videos,  Stop  videos,  Video  Resolution  change,  Speed  of  Video  play,  Subtitles,  Auto-play  a  list, 

Screen-mode  to  view,  Search  by  Keyword,  Share,  Statistics,  Browse  Channels,  Best  of  YouTube, 

Recommended Channels, Recommended videos. 

For  an  Uploader  or  a  free  registered  user,  list  of  functionalities  available,  including  the  one’s 

mentioned above, are:  

Video  length,  Create  Channel,  Upload  Videos,  Like,  Comment  &  Rate,  Subscribe,  History,  My 

Channel,  Watch  Later,  Monetization,  Liked  Videos,  Create  Playlists,  Live  Streaming,  Community, 

Analytics, Audio Library, Video Editor, Dashboard, Report abuse. 

For a Paid user, additional functionalities offered are:  

Exclusive content, Digital locker, Offline viewing. 

Source - http://www.wired.com/2015/11/YouTube-music-opens-sites-enormous-music-collection-to-all/; 

Source - https://www.crunchbase.com/organization/YouTube#/entity; 

Source - https://www.YouTube.com/features; 

Source - https://www.YouTube.com/. 

Description  of 

Functionalities for a Guest/Unregistered user: 

functionalities 

  Video Resolution: The user has the option of selecting the quality of the video. If someone has a 

and  services 

slow  internet  connection,  he/she  can  still  watch  the  video  without  waiting  to  much  for  a  video  to 

offered 

buffer by selecting a lower quality for the video; 

  Speed: the user can adjust the speed at which the video is played; 

  Subtitles: the user can switch on/off the subtitles for a video; 

  Auto  play:  if  turned  on  the  video  player  plays  the  next  recommended  video  automatically.  The 

user has the ability to turn it on/off; 

  Mode of screen: the user can view the video in the normal mode, theatre mode or the full-screen 

mode; 

  Search: this option allows the user to search for the video by typing in text in the search bar. This 

could be a keyword or the name of the video by which it exists on the platform; 

  Share:  any  video  can  be  shared  to  different  platforms  such  as  Facebook,  Twitter  etc.  Once  this 

option is selected a new window opens up which directs the user to the required platform; 

  Statistics:  the  user  can  have  a  quick  view  of  limited  statistics  related  to  the  video  they  are 

watching such as number of view, shares etc.; 

  Browse  Channels:  this  section  contains  a  category  wise  list  of  channels  such  as  music,  sports, 

movies etc., under which is a collection of videos relating to each category; 

  Best of YouTube: it contains the list of videos from the most popular categories of YouTube. As 

soon as the user goes to the site, the section is displayed on the left hand side of the webpage; 

  Recommended  Channels:  it  gives  you  a  list  of  recommended  channels  which  the  user  can 

subscribe to; 

  Recommended videos: they appear an YouTubeime a user watches a video?  

Functionalities for Registered Users which includes Uploaders (including the above ones): 

  Video Length: Maximum length of a video, from an un-verified account, is 15 minutes. Once the 

account  is  the  verified  (registered  via  a  code  received  by  mobile  phone),  the  maximum  bar  is 

increased to 128 GB and 11 hours; 

  Create Channel: a registered user can create their own channel; 

  Upload: once a user signs in to the account they can upload a video of their own; 

  Like,  Comment  and  Rate:  only  once  the  user  signs  in  is  when  they  can  rate  comment  or  like  a 

Error! Reference source not found. 

75 

 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

video; 

  Subscription: lets the user subscribe to the channel they like. By subscribing to the channel, the 

user receives a notification under subscriptions section, which in turn tells them the number of new 

videos posted by that channel; 

  History: tells the user the videos they have watched in the past; 

  My Channel: here a user can create a channel which other can subscribe to, so as to refer to the 

various videos this user has uploaded; 

  Watch Later: lets the user to keep a list of videos to be watched in the future; 

  Monetization:  the  uploader  has  the  option  to  monetize  the  video  by  agreeing  to  the  terms  of 

agreement set by YouTube and thereby enabling AdSense on their videos; 

  Liked Videos: gives the user a list of videos which they have liked in the past; 

  Playlist: the user has the ability to create a playlist, to be watched in the future; 

  Live  Streaming:  a  registered  user  has  the  ability  to  stream  live  an  event,  to  viewers  across  the 

world; 

  Community: it lets a user create a group of user with common interest, and add or comment on 

videos within the community; 

  Analytics: user can access the advanced analytics option, by YouTube, which gives them a better 

understanding of the response their content is getting, from audiences around the world; 

  Audio Library: the user has the ability to download audio files, which they can use in their videos 

or  for  listening  purposes.  In  case  they  use  the  audio  in  their  video  then  they  need  to  specify  the 

source; 

  Video Editor: lets the user create a new video, or edit an existing version of a video wherein they 

can  change  the  length,  Rename  the  video,  add  music  or  photos,  or  change  its  transition  to  the 

screen; 

  Dashboard: it gives the user a customize view of their channels, where in the can adds/delete the 

widgets they wish to see; 

  Report: it lets the user to report a video for inappropriate content or infringement of copyright; 

  Offline Viewing: the user has access to download the paid content and watch it even when they 

do not have an internet connection. 

Functionalities for Paid Users (including all the above ones): 

  Exclusive  Content:  the  user  has  access  to  content  which  is  not  available  to  free  users,  or  is  a 

limited edition. When a user purchases a subscription to a channel or package of channels, they 

have access to stream any content currently available within that subscription, an unlimited number 

of times; 

  Digital Locker: this locker stores the content purchased by the user for a period of 5 years so that 

they can view it an YouTubeime. 

Apart from the functionalities mentioned above, the company also offers a range of products each with 

its own set of features: 

YouTube Red – A subscription based service which lets users watch videos ad free, was launched in 

October  2015.  With  a  subscription  of  $9.99  per  month,  users  can  watch  ad-free  videos  across 

YouTube, YouTube Music, and YouTube Gaming. This removes all ads before and during a video, as 

well as banner ads, search ads, and video overlay ads. 

Source - https://support.google.com/YouTube/answer/6308116?hl=en; 

Source - http://www.universityobserver.ie/comment/YouTube-red-can-it-make-an-impact/. 

YouTube Kids - It limits the content to curated, family-friendly videos, channels, and educational clips. 

Error! Reference source not found. 

76 

 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

There are four sections—Shows, Music, Learning and Explore—to explore within the app. It includes 

features  like  timer  settings.  This  application  has 10  million  users and  as  of  now  it  is  available  in US, 

UK, Ireland, Australia, Canada and New Zealand. 

Source - http://www.wired.com/2015/02/YouTube-kids/; 

Source 

- 

http://www.androidheadlines.com/2015/11/YouTube-kids-now-available-five-new-

countries.html/. 

Audience 

for 

  Music  is  the  most  watched  category  on  YouTube,  as  per  an  IFPI  report,  9  out  of  10  of  the  most 

services 

watched  videos  are  music  related.  27%  of  internet  users  listen  to  music  on  YouTube  without 

watching the video; 

Source: http://www.ifpi.org/downloads/Digital-Music-Report-2015.pdf. 

  The number of people watching YouTube per day is up by 40% year on year since March 2014. In 

Germany alone, 40% of users within the age bracket of 18-29 years, and 16% of users within the 

age of 30-49, use YouTube every day; 

Source: https://www.YouTube.com/YouTube/press/statistics.html; 

Source: 

http://www.statista.com/statistics/429774/daily-use-of-YouTube-in-germany-by-gender-

and-age-group/. 

  According to OpenSlate, when measured by monthly views, music is the second-biggest category 

on YouTube, behind entertainment, and ahead of gaming; 

Source: http://digiday.com/platforms/YouTube-already-music-streaming-giant-just-now-app/. 

  Music is growing with 73 percent and 94 percent increases in subscribers and views, respectively, 

year-on-year. Music videos represent 13% of all content on YouTube. A quarter of them (25.47%) 

are  "official"  that  is  to  say  made  available  by  official  accounts  of  artists,  companies,  production 

houses, broadcasters, etc. The three remaining quarter include original versions, or versions with 

sound or whose image has changed, has not been posted by official accounts; 

Source: http://digiday.com/platforms/YouTube-already-music-streaming-giant-just-now-app/; 

Source:  http://www.hadopi.fr/actualites/actualites/qualification-et-quantification-des-contenus-de-

YouTube. 

  Music videos are by far the most popular content on the platform. They account for an average of 

40,000  views  per  day.  These  are  the  "official"  versions  totalling  more  audience  (over  110,000 

views  per  day  on  average).  The  rest  of  the  audience  is  divided  mainly  between  non-official 

versions, including those whose band sound or video media were changed. Among the unofficial 

content, it is noted that 36.68% of pages have links to a platform to buy the work on the video; 

Source:http://www.hadopi.fr/actualites/actualites/qualification-et-quantification-des-contenus-de-

YouTube. 

  The categories that make the top 3 on YouTube are - Amateur Creation (22.60%), Media (22.18%) 

and Music (13%), from a set of 3000 videos. This means that YouTube is more skewed to the self-

made  videos  than  other  professional  videos  and  shows  that  YouTube  users  tend  to  upload  self-

created  content.  The  "media",  excerpts  or  entire  audio-visual  programs  originally  broadcast  on 

television or radio station, for example, make up 22.18% of contents and are varied in nature: the 

majority  of  sports  clips,  up  to  33  92%,  a  significant  portion  of  entertainment  (30.25%)  and 

information (25.24%) and a significant amount of documentary, which represents 8.55% of content 

"media”; 

Source: https://hal-institut-mines-telecom.archives-ouvertes.fr/hal-01073492/document; 

Source:https://translate.google.co.in/translate?hl=en&sl=fr&u=http://www.hadopi.fr/actualites/actua

lites/qualification-et-quantification-des-contenus-de-YouTube&prev=search. 

Advertising 

  Display/Banner Ads – These type of ads appears to the right of the feature video and above the 

video suggestions list or on the webpage/screen as banners. It is only available on desktop version 

of YouTube. 

Error! Reference source not found. 

77 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

Apart for the above generic ads, once an uploader enables video monetization, or enables ads while 

uploading the video, 4 more types of ads may start to appear on their videos: 

  Overlay  Ads  –  These  are  a  small  semi-transparent  banner,  typically  across  the  bottom  of  the 

video.  The  ad  banners  appear  during  the  course  of  a  video's  broadcast,  displaying  streaming  ad 

units to the viewer of the video content. The viewer has the option to click on the ad space to open 

up a larger advertising display content or for redirect to the advertiser's website.  YouTube shows 

such ads only on desktop; 

  Skippable  video  ads  -  Skippable  video  ads  allow  viewers  to  skip  ads  after  5  seconds,  if  they 

choose. Publishers specify the duration limit for skippable ads and they are inserted before, during, 

or  after  the  main  video.  YouTube  uses  desktop,  mobile  devices,  TV,  and  game  consoles,  as  a 

platform to display such ads; 

  Non-skippable video ads - Non-skippable video ads are the ones that must be watched,  by the 

viewer of the content, before their video can be viewed. Long non-skippable video ads may be up 

to  30  seconds  long.  These  ads  can  appear  before,  during,  or  after  the  main  video.  YouTube 

displays such ads on its desktop and mobile applications; 

  Sponsored cards – This format of advertising displays content that may be relevant to the users 

video, such as products featured in the video. The Viewers will see a teaser for the card for a few 

seconds.  They  are  activated  automatically  by  YouTube  if  the  monetization  option  is  activated  by 

the users. These ads are available on desktops and mobile applications of YouTube. 

Source - https://support.google.com/YouTube/answer/2467968?hl=en. 

  Google  Preferred  –  This  aggregates  YouTube’s  top  content  into  buyable  packages  for  brand 

advertisers to build programmatic campaigns for targeted audiences. This allows access to the top 

5% of content on YouTube, and provides measurement of viewing results; 

Source: https://www.thinkwithgoogle.com/products/google-preferred.html. 

License 

There are no license agreements, unless the user wants to monetize the content.  

agreements 

There  are  companies  who  do  not  wish  to  make  their  content  available  on  YouTube  and  enter  into  a 

content ID contract that prohibits YouTube from publishing their videos on their portal. Others may wish 

to  display  and  monetize  the  content  by  entering  into  a  partner  agreement.  When  a  partner  wants  to 

monetize,  the  agreement  contains  additional  provisions  giving  rise  to  a  revenue  sharing  agreement 

(the financial conditions vary on a case by case basis): 

  YouTube  has  agreements  with  the  major  record  labels  and  authors  associations  (a.o.  Record 

labels  Warner  Music  Group,  Sony,  Universal  Music,  indies,  authors  such  as  Teosto,  Koda, 

SABAM, PRS). A few agreements are stated below: 

Example of absence of agreement: 

  YouTube  and  GEMA:  the  two  parties  have  not  signed  any  license  agreements.  YouTube  has 

been battling music rights group GEMA in several court cases for more than half a decade. In one 

of the most prominent cases the music group, which claims to represent 70,000 artists, argued that 

YouTube is liable for the content its users upload. However, as per the ruling of Higher Regional 

Court of Munich of 28 January 2016, YouTube is not liable for the infringing material uploaded by 

its 

users. 

Source:http://www.authorsocieties.eu/alt/search?mact=Search%2Ccntnt01%2Cdosearch%2C0&cn

tnt01returnid=32&cntnt01searchinput=YouTube&submit=+. 

Examples of agreements with authors' societies 

  YouTube  and  Teosto:  YouTube  and  Finnish-based  music  creators’  rights  organization  Teosto, 

representing  27  000  Finnish  music  authors  and  publishers,  have  reached  a  licensing  agreement 

that will allow Finnish and international music creators, composers and authors to earn revenue in 

Error! Reference source not found. 

78 

 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Finland on YouTube. It allows rights holders and affiliates represented by Teosto to be paid when 

their  music  is  accessed  on  YouTube  in  Finland.  Revenue  is  generated  when  advertisements  are 

displayed against YouTube partner’s videos and Fan Picked Videos; 

Source: http://www.authorsocieties.eu/mediaroom/122/32/Teosto-and-YouTube-Reach-a-Deal-For-

Music. 

  YouTube and Koda – Danish organization, Koda, and YouTube have entered into an agreement 

on 1 November 2013 which will be based on revenue generated by advertisements shown  when 

YouTube-partners’ videos are accessed; 

Source: 

http://www.authorsocieties.eu/mediaroom/129/32/Koda-and-YouTube-enter-into-

agreement. 

  YouTube  and  PRS  –  The  organization,  PRS,  represents  over  100,000  songwriters,  composers 

and  music  publishers,  it  was  one  of  the  first  societies  outside  of  the  US  to  license  YouTube,  in 

2007.  The  new  license  agreement,  is  one  of  the  most  extensive  yet  covering  more  than  130 

territories  in  Europe,  Middle  East  and  North  Africa.  The  license  covers  the  use  of  the  collection 

represented  by  PRS  for  Music  in  videos  streamed  e.g.  Official  music  videos  and  content,  live 

footage, soundtracks and user uploaded content (UUC). The license also includes the rights to a 

growing  range  of  independent  collection  available  through  PRS  for  Music’s  IMPEL  initiative  such 

as  David  Bowie  (Bucks  Music),  Justin  Timberlake  (Imagem),  Lou  Reed  (Spirit)  and  Goldie 

(Westbury).  

Source: 

http://www.authorsocieties.eu/newsletternews/27/32/PRS-for-Music-and-YouTube-sign-

licensing-deal 

  YouTube  and  SABAM -  A  new  deal  struck  between  the  parties  which  means  SABAM  members 

are  compensated  when  fans  view  their  music,  receiving  payment  when  advertisements  are 

displayed  against  YouTube  partners’  videos.  A  priority  for  SABAM,  the  Belgian  authors’  society 

representing 36,000 composers, lyricists, publishers, and music video makers, has been to ensure 

that the artists draw as much benefit from it as their fans;  

Source: http://www.authorsocieties.eu/mediaroom/6/32/SABAM-and-YouTube-working-together-to-

ensure-musicians-get-a-fair-deal.  

Revenues 

to 

  Per October 2015, YouTube had generated over $2 billion in revenue for the music industry in the 

rightholders 

last few year; 

Source:http://www.musicbusinessworldwide.com/YouTube-says-paid-2bn-music-rightsholders-

really-mean/. 

  Royalties paid by YouTube have increased to 370% in 2015, as per Tunecore Reports. 

Source: http://www.digitalmusicnews.com/2016/02/15/YouTube-is-growing-at-a-ridiculous-rate/. 

YouTube  (Google)  takes  45  percent  of  the  advertising  revenue  from  videos  in  the  Partner  Program, 

with  55  percent  going  to  the  uploader.  Same  model  is  also  followed  for  the  revenue  earned  through 

subscription, where YouTube keeps 45% of the share and the rightholder gets 55% of the share before 

taxes. No split of revenue is mentioned for pay-per-use model. 

Use of content 

  Content  ID  -  It  acts  as  a  pre-upload  blocking  system.  It  creates  an  ID  File  for  copyrighted  audio 

recognition 

and video material, and stores it in a database. When a video is uploaded, it is checked against the 

technologies  

database,  and  flags  the  video  as  a  copyright  violation  if  a  match  is  found.  When  this  occurs,  the 

content  owner  has  the  choice  of  blocking  the  video  to  make  it  unviewable,  tracking  the  viewing 

statistics  of  the  video,  or  adding  advertisements  to  the  video.  As  of  July  2015,  there  are  8,000+ 

partners  using  Content  ID  —  including  many  major  network  broadcasters,  movie  studios  and 

record labels — who have claimed over 400 million videos, helping them control their content on 

YouTube  and  make  money  on  videos  containing  copyrighted  material.  If  the  file  is  matched  with 

content ID, the system takes whatever action is outlined by the copyright holder. That action varies 

from work to work and can include blocking the uploaded video, tracking its use or monetizing the 

Error! Reference source not found. 

79 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

content.  Content  ID  is  either  (i)  built  in  the  partner  contracts,  or  (ii)  content  ID  used  even  if  you 

have no commercial agreement with YouTube; 

Source: https://support.google.com/YouTube/answer/3244015?hl=en&ref_topic=4515467. 

Source: 

http://www.gartner.com/document/1359013?ref=solrResearch&refval=162978369&qid=357fba483

8b5294a3b7d001f44828c22. 

Comparison 

YouTube Vs Spotify: In terms of royalty payments the two companies differ a lot: Spotify admits the 

with 

average "per stream" payout to rights holder’s lands somewhere between $0.006 and $0.0084. Spotify 

traditional 

claims to have paid out more than $3 Billion USD in royalties to-date (more than $300m of which was 

providers 

paid  out  in  the  first  three  months  of  2015).  In  comparison  YouTube  claims  to  have  paid  2  billion  in 

content ID claims, with its royalty payment increasing by 370% year on year. 

The below chart gives out a comparison of royalty payments by different companies, as of 2014: 

Average $ Paid per play 

Per Million Plays 

Service 

Deezer 

Spotify 

$0.00754  

$0.00521  

YouTube 

$0.00175  

Google Play 

$0.00457 

$7,540 

$5,210 

$1,750  

$4,570 

Source  -  https://thetrichordist.com/2014/11/12/the-streaming-price-bible-spotify-YouTube-and-what-1-

million-plays-means-to-you/. 

The  total  global  revenues  to  record  companies  generated  by  certain  content  platforms  including 

YouTube amounted to US$641 million in 2014. Spotify and Deezer combined paid more than double 

this amount. According to a report published by Ipsos, which was conducted across 13 of the world’s 

leading music markets in 2015, 57 per cent of internet users have accessed music or music videos on 

internet  video  sites  such  as  YouTube  in  the  last  six  months,  compared  to  38  per  cent  for  music 

streaming sites such as Spotify and 26 per cent for download services like iTunes. 

Source - http://www.investopedia.com/articles/investing/111815/YouTube-red-vs-netflix-vs-spotify.asp; 

Source - http://www.ifpi.org/downloads/Digital-Music-Report-2015.pdf; 

Source - http://www.theverge.com/2015/12/7/9861372/spotify-year-in-review-artist-payment-royalties; 

Source - http://www.spotifyartists.com/spotify-explained/. 

Error! Reference source not found. 

80 

 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Additional 

YouTube  and  Vevo:  Vevo  is  a  joint  venture  that  hosts  music  videos  from  Universal  Music  Group, 

Information 

Sony  Music  Entertainment  and  EMI.  YouTube  has  renewed  its  agreement  with  music  video  service 

Vevo and is making an estimated $50 million investment. This investment gives Google, which owns 

YouTube,  a  10  percent  stake  in  the  company  and  puts  Vevo’s  valuation  at  about  $500  million.  Vevo 

holds the rights to music videos for most major music artists and is YouTube’s top channel partner. Its 

library of content attracted 50.2 million unique viewers to YouTube in May 2013. 

Ripping files from YouTube: there are a lot of tools and software’s available online which allow the 

users to make an unauthorized copy of the content available on YouTube. This has a major drawback 

for partners whole are looking to monetize their videos online. Mostly music companies are at a loss, 

as this leads to illegal copies of the video, especially in countries were cyber law are not strict: 

  Content  flagging  -  YouTube  has  a  team  working  24/7  to  review  content  reported  by  users  as 

infringing copyright or breaking other parts of the terms of service. But this relies on users reporting 

content in the first place — which, by definition, means that objectionable content is viewed at least 

once. It also leaves the reporting to the subjectivity of individuals. 

Error! Reference source not found. 

81 

 
 
 
 
 
 
 
 
 
Impact analysis of the intervention by stakeholder affected  

Disclaimer: the impact assessed is only that of a potential clarification of the rules 
applicable  to  the  activities  of  online  intermediaries  in  relation  to  copyright 
protected  content,  without  taking  any  position  on  whether  any  of  the  services 
covered can claim to be covered  by  art 14 of  e-commerce  and the limited liability 
exemption.  

In  the  next  paragraphs  the  impact  analysis  looks  into  the  impact  of  a  potential 
clarification on the following stakeholders specifically: 

  YouTube itself; 

  Rightholders; 

  Consumers; 

  Other online content providers. 

The  principal  logic  of  the  assessment  is  based  on  distinguishing  two  different  perspectives  that 

YouTube  can  take  if  it  is  faced  with  the  obligation  to  remunerate  copyrightholders  for  distributing 

copyright protected content in case of a clarification: 

  Situation A: YouTube wishes to (still) use (also) copyright protected content and thus wishes to 

reach  an  agreement  with  rightholders  (a  license)  on  the  upload  and  distribution  of  copyright 

protected content (by users uploading it); 

  Situation B: YouTube does not (want to) reach an agreement with rightholders (for certain types 

of content). Copyright protected content is removed (for content already present on the website) 

or gets blocked (for future content). 

The  impact  assessment  looks  into  both  options  (which  can  live  alongside  each  other, 
meaning  that  there  are  agreements  being  concluded,  but  also  lack  of  agreement  for 
certain contents).  

B) ANALYSIS PART 

YouTube 

Impact on business model 
Situation A: YouTube (re)negotiates agreements with rightholders: 

  YouTube  already  has  numerous  commercial  deals  in  place  with  rightholders,  although 

primarily  with  music  industry  (including  all  major  labels).  The  clarification  may  lead 

YouTube to renegotiate current deals with rightholders (terms for monitoring, monetization 

and  remuneration),  the  outcome  depending  on  the  negotiation  process  and  bargaining 

power of both parties involved; 

  Given  the  burdensome  procedure  of  the  current  ‘notice  and  take  down’  system,  it  is 

expected that rightholders will push YouTube to shift from a ‘notice and take down’ system 
to a ‘notice and stay down’ system;116 

  Given  the  strong  preference  of  consumers  for  free  consumption  (see  Eurobarometer 

survey), we assume that YouTube will keep the free streaming advertising model, although 

implementing a more robust Content ID for licensing purposes; 

116   Notice and Stay Down means that the right-holder is obliged to notify only once to the OI for the latter to take action with 

content ID to be operational. YouTube would no longer be able to request new notice for a copyright protected content 
already notified. This would significantly lower the monitoring costs of both YouTube and right-holders compared to the 
current ‘notice and take down’ procedure. 

Error! Reference source not found. 

82 

 
 
 
 
 
 
 
 
 
                                                            
B) ANALYSIS PART 

 

In addition to the free streaming advertising model, YouTube - based on current experience 

in  the  US  (YouTube  Red)  -  might  further  promote  its  subscription  services  or  develop 

additional  and  subscription  services  (films?)  to  have  a  more  diversified/sustainable 

business  model  and  to  generate  higher  revenues  and  develop  dedicated  services  to 

compete with Spotify and iTunes; 

  YouTube may need to improve and have more transparency on content identification and 

monitoring tools, subject to negotiations with rightholders; 

  With  Content  ID  further  developing,  YouTube  is  in  a  position  to  manage  rights  and  pay 

rightholders  according  to  the  exploitation  of  the  content,  but  this  depends  on  the 

commercial negotiations (which model of monetization is chosen); 

  YouTube  will  have  to  find  a  business  model  that  is  acceptable  to  the  audio-visual  (AV) 

sector with a view to make deals. The AV sector is looking for a transaction model with a 

satisfactory  pricing  point,  something  which  they  haven’t  found  with  YouTube  (not  other 

online intermediaries) so far; 

  YouTube will make deals with other content rightholders if it feels the content is valuable to 

develop its service (e.g. TV news). Today the main priority of YouTube seems to focus on 

licensing  music  videos,  which  is  currently  the  most  viewed  content  on  YouTube  (see 

Hadopi study results).  

Situation B – no agreement with rightholders: 

 

In  the  absence  of  a  license  agreement  with  rightholders,  YouTube  would  have  to  block 

copyright  protected  content  on  YouTube  and  focus  only  on  user  uploaded  content  that 

does  not  involve  copyright  protected  content.  This  would  be  a  major  issue  in  relation  to 

music (cfr. Hadopi study results). It would be less important for other types of content which 

are less popular; 

  Also  in  situation  B,  Content  ID  technology  will  need  further  optimisation,  in  this  case  to 

ensure  that  copyright  protected  content  cannot  be  viewed  on  YouTube.  Some  copyright 

protected content is likely to go through the filtering system, thus generating liability risks. 

Situation B is very unlikely to happen given the high popularity of copyright protected content 
with viewers, in particular music (cfr Hadopi analysis). YouTube needs such content to thrive. 
However  taking  into  account  YouTube’s  strong  position  and  thus  strong  bargaining  position, 
this  situation  might  potentially  happen  for  some  rightholders  (with  a  less  strong  catalogue)  if 
they  cannot  reach  consensus  on  a  license  deal.  YouTube  might  install  this  situation 
(temporarily) as part of the negotiation process (to make rightholders feel the pain of not being 
present on YouTube). 

Impact on revenues 
Situation A: YouTube (re)negotiates agreements with rightholders: 

  There will be a push on YouTube to generate higher revenues as a result of the pressure to 

better  remunerate  rightholders.  But  in  general,  revenues  of  YouTube  are  expected  to 

further  increase  thanks  to  continued  growth  of  the  platform  (double  digit  growth  rate  year 

on  year  (turnover)  over  the  last  5  years,  and  expected  to  continue  growing.  YouTube 

growing faster than the more mature Google business – source: investment bank Evercore 

ISI)). The potential clarification will not change this forecast in situation A; 

  Considering  YouTube  current  strong  market  position  and  by  making  deals  with 

rightholders,  YouTube  will  develop  an  even  stronger  market  position.  This  is  likely  to  be 

reflected in higher ad revenues; 

Error! Reference source not found. 

83 

 
 
 
 
 
 
 
 
B) ANALYSIS PART 

 

It is expected that YouTube will look for additional revenue streams (through YouTube Red, 

and  possibly  by  monetizing  its  content  ID  technology  for  copyright  management),  to 

compensate for the higher costs incurred because of the clarification (see further); 

  YouTube  could  generate  new  revenues  if  more  content  is  allowed  by  rightholders  to  be 

present  on  their  website  (notably  AV).  In  that  context,  YouTube  Red  might  be  a  better 

alternative than the free ad-based model to present to the AV in discussing potential deals. 

Situation B – no agreement with rightholders 

Valuable  content  driving  views  will  be  blocked  from  YouTube.  We  assume  that  in  case  this 
would  happen  for  all  rightholders,  this  will  negatively  affect  the  number  of  users/viewers  on 
YouTube,  thus  negatively  affecting  advertising  revenue.  However,  this  is  a  very  unlikely 
situation.  

Impact on costs 

The potential clarification will affect the costs of YouTube primarily in two ways: 

  Costs related to increased monitoring efforts; 

  Costs related to negotiating agreements/licences and payment of royalties. 

Situation A: YouTube (re)negotiates agreements with rightholders 

Costs related to monitoring: 

  To  monitor  the  upload  of  content  on  YouTube,  YouTube  already  has  the  content 

identification  technology  in  place  (Content  ID)  and  already  can  identity  different  types  of 

content whether music, AV, images etc. Content ID is already developed to a large extent, 

but  might  need  further  improvement  and  therefore  further  investments  to  decrease  rights 

management  costs  or  better  monetisation  of  usage  (see  below).  There  is  no  one-time 

investment needed; 

  There will be operational costs related to the further completion of the content identification 

library of Content ID; 

  There will be increased monitoring costs for YouTube in monitoring uploaded content (but 

YouTube  could  potentially  monetize  rights  management  services  thus  compensating  the 

higher costs - see revenues).  

Costs related to negotiations and payment of royalties: 

  Payment of royalties is currently linked to usage and advertising revenues; 

  However,  music  industry  complains  that  advertising  monetisation  on  YouTube  is  poor 

(information  interviews).  It  is  expected  that  rightholders  will  push  YouTube  to  monetise 
better ad enabled content117; 

  Pay  per  stream  will  most  likely  be  the  model  that  rightholders  in  music  will  push  forward, 

including  a  guaranteed  agreed  pay  per  stream.  (e.g.  by  expanding  YouTube  Red).  Such 

business  model  allows  for  higher  remuneration  of  rightholders  because  of  a  different 

revenue structure compared to the free ad-based model; 

 

In the AV sector YouTube will most likely have to agree a pay per view system if it wishes 

to acquire premium AV content; 

 

It is difficult to draw any conclusions on how the price of audio streaming and pay per view 

on YouTube will evolve compared to e.g. Spotify, as the business models and volumes of 

users/stream  for  Spotify  vs  YouTube  are  different  (in  the  first  model  revenues  come  from 

117  

i.e. content that right-holders allow to monetize with advertising. 

Error! Reference source not found. 

84 

 
 
 
 
 
 
 
 
 
                                                            
B) ANALYSIS PART 

subscriptions  and  ads,  in  the  second  revenues  currently  still  primarily  come  from 

advertising -> basis to negotiate about ‘fair remuneration’ is different); 

  The royalty fees would depend on negotiations. However, it is likely that for  YouTube the 

total  amount  of  royalties  will  increase,  both  due  to  renegotiation  of  existing  deals  and 

negotiations with rightholders where YouTube has no agreement with yet.  

Situation B – no agreement with rightholders: (very unlikely scenario): 
Costs related to monitoring: 

  To  monitor  the  upload  of  content  on  YouTube  and  block  copyright  protected  content, 

YouTube  already  has  the  content  identification  technology  in  place  (Content  ID)  and 

already can identify different types of content whether music, AV, images etc. Content ID is 

already  developed  to  a  large  extent,  but  would  need  further  improvement  and  therefore 

further investments. There is no one-time investment needed; 

  There will be operational costs related to the further completion of the content identification 

library of Content ID; 

  There will be increased monitoring costs for YouTube in monitoring uploaded content more 

strictly, as the potential clarification will increase liability for YouTube (and unlike situation 

A,  YouTube  could  not  monetize  rights  management  services  to  compensate  the  higher 

costs because of lack of copyright protected content). 

Costs related to payment of royalties: 

  No royalties are being paid by YouTube, as content is blocked. 
Situation A: YouTube (re)negotiates agreements with rightholders: 

Rightholders 

  Clarification  will  potentially  result  in  the  conclusion  of  license  agreements  with  more 

rightholders  than  YouTube  has  now,  especially  in  other  sectors  than  music  (it  is  felt  that 

YouTube  already  has  concluded  license  agreements  with  a  substantial  number  of  music 
rightholders118  –  no  exact  figure  from  Google  on  number.  That  YouTube  would  have 

concluded  license  agreements  with  too  little  music  rightholders  was  not  highlighted  as  an 

issue by any stakeholder during interviews); 

 

In case of already existing licenses, rightholders and YouTube will most likely engage into 

renegotiation  over  the  terms  of  the  previously  concluded  license.  The  clarification 

strengthens  the  bargaining  power  of  rightholders,  as  the  online  intermediaries  can  no 

longer  ‘neglect’  the  rightholders  if  they  would  not  come  to  an  agreement.  This  has  been 

confirmed in different interviews with rightholders. Rightholders will ask for a larger share of 

revenues from YouTube considering its ability to pay (Source: IFPI, IMPALA, GESAC); 

  The change of legal environment may reinforce rightholders’ bargaining position, but on the 

other  hand  being  present  on  YouTube  also  has  its  value.  This  creates  a  kind  of 

countervailing power, as there is a mutual dependency between the two. E.g. record label 

also  use  YouTube  to  scout  new  talent  (decrease  risk  +  cost  of  finding  new  artists)  + 

benefits  from  the  huge  YouTube  audience.  The  exact  outcome  of  the  (re)negotiated 

agreement will depend on the commercial negotiations taking place; 

  Can Content ID further develop into a tool for more efficient rights management on behalf 

of  rightholders?  YouTube  could  argue  that  its  proprietary  technology  facilitate  rights 

management  and  therefore  contribute  to  reduce  management  costs  for  rightholders.  This 

might be part of the negotiation package that YouTube brings to the table. 

118   Audio-visual industry is currently still very much focused on ‘notice and take down’ instead of licensing and monetization of 

content on YOUTUBE. Licensing in film is not widespread as not seen as viable by audio-visual community.  

Error! Reference source not found. 

85 

 
 
 
 
 
 
 
                                                            
B) ANALYSIS PART 

Situation B – no agreement with rightholders (very unlikely): 

  Consumers  listening  to  copyright  protected  content  uploaded  by  third  parties  will move  to 

alternative channels of access where copyright protected content is made available (either 
through  subscription  or  free  (ad-based)  services119).  These  alternatives  might  provide 

royalties to rightholders, when consumers don’t move to illegal sites. The exact amount of 

royalties depends on the substitution rate legal/illegal sites, the business model of the legal 

platforms where consumers move to (e.g. platform with a pay-per-listen model or a platform 

with free ad-based model) and the types of agreements that the alternative platforms have 

with rightholders; 

  The  substitution  rate  between  the  pay-per-listen  model  and  the  free  ad-based  model  is 

uncertain.  However  as  the  power  of  free  music  appears  to  be  large  and  a  key  driver  in 

consumer choice (according to recent Eurobarometer), the free – ad based model might be 

the main alternative; 

  Uploads of copyright protected content would be blocked where there is no agreement for 

these contents. They would have to find alternative platforms. But very difficult proposition 

considering the reach of YouTube and its popularity throughout the world; 

  Rightholders would have to provide the necessary information for Content ID to be effective 

(also in the case of notice and stay down); 

  When installing a system of ‘notice and stay down’ instead of the current ‘notice and take 

down’,  this  will  considerably  reduce  the  monitoring  cost  for  rightholders.  The  cost  for 

providing fingerprints will remain. 

Consumers 

Situation A – agreement with rightholders: 

  Consumers  that  are  uploading  non-copyright  protected  content  will  be  able  to continue  to 

upload content; 

  Depending on the type of agreement that YouTube has with rightholders, consumers might 

be  more  restricted  from  uploading  certain  content  that  make  use  of  copyright  protected 

works. 

Situation B – no agreement with rightholders: (very unlikely); 

 

In  case  YouTube  is  made  liable  for  copyright  infringement  for  UUC,  YouTube  would  be 

forced to strictly enforce rights to avoid penalties and fines. This means that less valuable 

(for  YouTube  in  terms  of  ad  revenue  generation)  and  less  popular  content  is  made 

available  to  viewers,  leading  to  a  reduced  offer  to  viewers.  It  could  result  in  reduced 

attractiveness  of  YouTube  for  viewers.  Some  might  leave  YouTube  switching  to  other 

online intermediaries or distributors, leading to a drop in number of viewers (and thus loss 

of attractiveness of YouTube for advertisers); 

  The free experimentation zone remains, so no impact on amateur creation uploaders; 

  Any  upload  containing  copyright  protected  content  will  be  blocked,  to  the  extent  it  is 

technologically feasible (through Content ID screening); 

 

It might push unrightful uploaders of copyright protected content to get to another platform, 

thus potentially creating competition to YouTube; 

  For  copyright  protected  content,  viewers  will  move  to  other  platforms  where  copyright 

protected content is still freely available. 

Other 

online 

 

If  YouTube  takes  licenses,  this  may  contribute  to  creating  a  better  level  playing  field  with 

119   As the power of free music appears to be large and a key driver in consumer choice (according to recent Eurobarometer 

mentioned by EC), this might be the main alternative 

Error! Reference source not found. 

86 

 
 
 
 
 
 
 
                                                            
B) ANALYSIS PART 

content 

providers 

other  online  music  services  (as  well  as  set  standards  for  other  free  ad-based  online 

intermediaries  in  their  negotiations  with  rightholders).  Online  music  services  such  as 

SPOTIFY  and  DEEZER  may  see  their  number  of  subscribers  to  streaming  services 

increase, if YOUTUBE would decide to further expand paid services to cover for any higher 

royalties to be paid to rightholders. However service substitution is not guaranteed as: 

1)  YouTube usage is different from music only streaming services; and  

2) 

free  music  seems  to  remain  a  powerful  mean  to  drive  music  consumption 

(Eurobarometer study). 

  The potential clarification could ease Facebook entry into the market as YouTube will lose 

one  of  its  main  competitive  advantages:  the  current  availability  of  valuable  copyright 

protected  content  without  a  licence.  After  the  clarification  a  large  chunk  of  this  catalogue 

will have to be negotiated and paid for if YouTube wants to make use of it, thus significantly 

lowering  the  competitive  advantage  vis-à-vis  Facebook,  since  YouTube  will  also  have  to 

(re)start negotiations.  

Summary of the possible impact  

  YouTube is atypical in the sector of online intermediaries in different ways: 

-  dominant market position (in term of users, geographical reach and library of content); 

-  powerful  parent  company  Google  +  ability  to  generate  positive  spill-over  effects  between 

different businesses within the Google-group; 

- 

relative importance (in terms of volume) of non-copyright protected content. 

 

In light of the above, a potential clarification is likely not to affect YouTube too negatively, even if 

they may face additional costs where licences do not exist or where renegotiations are needed. 

For  such  cases  they  need  to  find  ways  to  compensate  the  additional  costs  linked  to 

remuneration  to  rightholders  (situation  A)  or  taking  down  more  copyright  protected  content 

(situation B)). Situation A is the most likely situation to happen. It is highly unlikely that YouTube 

will opt for situation B; 

  Consumers  (both  uploaders  and  viewers)  may  be  affected  to  a  different  degree.  In  case  of 

agreements  between  YouTube  and  rightholders,  consumers  may  be  able  to  upload  more  of 

their content that contains third party protected content covered by such agreements, while they 

might be more restricted from uploading creations that make use of copyright protected content 

where such content (mainly for premium AV content) is not covered by an agreement; 

  The impact on rightholders is likely to vary  per type of content/sector. On the one hand, there 

are  higher  negotiation  costs  when  rightholders  want  their  content  to  remain  on  YouTube 

(something  that  most  rightholders  (apart  from  film)  want),  but  on  the  other  hand  more  of  their 

content  would  generate  incomes.  The  impact  on  revenues  is  assumed  to  be  positive  due  to 

increased  bargaining  power  and  new  licensing  deals,  but  the  exact  outcome  depends  on  the 

commercial negotiation process; 

Error! Reference source not found. 

87 

 
 
 
 
 
 
 
 
 
Annex 2 Case study Dailymotion 

Descriptive Part 

A) DESCRIPTIVE PART 

IDENTIFICATION 

Name of service  

Dailymotion 

About 

the 

Dailymotion  is  a  video-sharing  website,  owned  by  Vivendi  (90%),  and  Orange  (10%). 

Service 

The  platform  offers  a  mix  of  content  from  independent  users  (individuals/end  users), 

creators  and  premium  partners  where  a  user  has  the  ability  to  browse,  upload,  like, 

share and rate a video. 

Sector 

Video Sharing Website: the platform delivers video in almost every category, including 

music, movies, entertainment and art. 

Business model 

Dailymotion’s  economic  model  is  based  on  advertising.  The  content  available  on  the 

platform 

is  mostly 

free.  Any  revenue  made  comes  most  prominently 

from 

advertisement (information not disclosed).  The service incorporates different business 

models as mentioned below: 

1)  Freemium  –  users  have  the  ability  to  watch  most  of  the  videos  for  free.  This 

generates  user  profile  information  e.g.  as  a  basis  for  targeting  advertising  and 

making premium offers (not direct monetization); 

2)  Advertisement  –  revenue  earned  by  ads  is  the  highest  contributor  to  the 

company’s revenue. It has both video streaming ads as well as static banner ads. 

The uploader has the authority to enable monetization on their account. However, 

Dailymotion  reserves  all  rights  on  the  type  of  ad  displayed  on  the  content, 

advertising rates and the look, feel and placement of the ads. The revenue earned 

from  advertising  is  shared  on  a  50-50  basis.  It  also  has  a  separate  platform  for 

advertisers, known as advertising.dailymotion.com, where they attract advertisers, 

by providing them customized advertising solutions for their brands, For example, 

an advertiser can set up a campaign by uploading the advertisement link, decide 

on budget, and choose the target audience; 

3)  Subscription  –  also  known  as  SVOD,  is  a  subscription  service  launched  by 

Dailymotion  in  collaboration  with  premium  partners  of  the  company  who  offer 

original and exclusive content to users willing to pay a fee for the service, where 

premium  partners  are  uploaders  whose  channels  have  maximum  viewership  or 

big labels recognized round the globe. The service eliminates advertisement from 

videos  and  is  available  across  devices  such  as  computers,  smartphones,  and 

tablets and connected TV; 

4)  Pay-Per-Use  -  certain  videos,  such  as  movies  or  TV  series,  are  available  to  the 

end  user  for  a  one-time  fee.  The  user  has  the  ability  to  watch  the  purchased  or 

rented video for a maximum variable time stated in the conditions document. This 

allows  the  user  to  not  pay  for  the  channel  but  only  for  a  particular  video  on  the 

channel.  Pay-Per-Use  is  targeted  more  towards  users  who  not  interested  in 

paying for a subscription, but who may still be interested in paying for single ‘must 

see’ videos; 

5)  Website Monetization – this feature allows users (can be the uploader of video, 

or someone else who feels that the audience of their website would be interested 

in  this  video)  to  earn  revenues  from  embedding  videos  on  their  own  website. 

Error! Reference source not found. 

89 

 
 
 
 
 
A) DESCRIPTIVE PART 

When  someone  accesses  videos  via  their  website,  they  are  redirected  to 

Dailymotion page, where the video plays, and in turn the website owner receives a 

portion of the revenue earned via advertising. 

Source - http://www.dailymotion.com/monetization. 

Web address 

www.dailymotion.com  

Year 

of 

March, 2005 

foundation 

Source - http://press.dailymotion.com/?p=1198. 

Targeted 

countries 

Worldwide, available in 38 countries as of now, and has 15 regional offices. 

Source - http://advertising.dailymotion.com/key-figures/. 

Target group 

  Most  of  the  traffic  on  the  site  comes  from  Pakistan  (11.6%),  followed  by  Japan 

(11.2%), United States (10.10%), India (10.1%), and France (7.3%); 

Source: http://www.alexa.com/siteinfo/dailymotion.com. 

  More  than  85,000  websites  are  using  the  Dailymotion  videos,  and  70%  of  the 

Dailymotion audience comes for the premium content (produced exclusively and for 

premium channels), where premium content comprises of the top viewing categories 

on Dailymotion such as movies, gaming, comedy etc. 

Source - http://advertising.dailymotion.com/key-figures/. 

Turnover  and/or 

  Dailymotion is valued at almost $295 million; 

market share 

Source: 

http://techcrunch.com/2015/06/30/vivendi-buys-80-of-frances-dailymotion-

valuing-the-YouTube-rival-at-295m/. 

  The Website has an Alexa rank of 116, it attracts 300 million users from around the 

world, who watch 3.5 billion videos on its player each month; 

Source: http://www.freewebsitereport.org/www.dailymotion.com. 

  Dailymotion Games, website of Dailymotion where users from across the globe can 

watch  recorded  or  live  game  play,  or  pay  video  games  online,  currently  generates 

more  than  180  million  video  views  per  month*  and  according  to  comScore,  also 

attracts more than 11 million unique visitors per month globally; 

Source: http://press.dailymotion.com/?p=1217. 

Size 

of 

the 

201-500 employees (No publicly available information); 

company  

Source - https://www.linkedin.com/company/dailymotion/. 

Place  of 

legal 

Paris, France 

seat 

http://www.dailymotion.com/sg/about. 

Language(s)  of 

18 languages in 35 countries. 

platform  

Source - http://press.dailymotion.com/?page_id=722. 

DETAILED DESCRIPTION 

List  of  services 

The  content  available  on  Dailymotion  can  be  uploaded  by  individuals  as  well  as  by 

offered 

partners. If a user only wants to view the video they can go to the site, and browse the 

content  available.  To  make  searching  easier  the  platform  has  categorized  videos  into 

different sections for the ease of browsing. For uploading content, one needs to have an 

account on Dailymotion. The users who wish to monetize their content need to enter into 

a  partnership  program,  where  they  can  earn  money  by  displaying  ads  on  their  videos. 

The  company  also  has  a  different  platform  for  gamers,  who  want  to  play  and  compete 

with  other  games  across  the  globe.  The  platform  offers  different  functionalities 

depending on the type of user, as explained below: 

  For  a  guest/unregistered  user,  list  of  functionalities  available  on  Dailymotion  are: 

Quality  of  video,  Size  of  the  screen,  Search,  Share,  Who  To  Follow,  Categories, 

What To Watch, Trending Videos, Most Popular; 

  For  an  Uploader  or  a  free  registered  user,  the  list  of  functionalities  available,  in 

Error! Reference source not found. 

90 

 
 
 
 
 
A) DESCRIPTIVE PART 

addition to the one’s mentioned above, are: Upload Videos, Like, Comment, Follow, 

Recently  Watched,  Your  Channel,  Purchases,  Monetization,  Liked  Videos,  Create 

Playlists,  Analytics,  Dailymotion  Stream,  Promoted  Videos,  Connections,  Repost, 

Dailymotion badge, Age Gate, Contest, Create a TV App, Featured Video, Facebook 

Video Tab, Groups, Jukebox, Mass Uploader, Snap, Watch Later, Live Streaming; 

  For a paid user, additional functionalities offered are: SVOD (Subscription Video On 

Demand), OpenVoD. 

Source - http://www.dailymotion.com/sg/extras; 

Source - https://faq.dailymotion.com/hc/en-us/articles/203921193-A-Z. 

Description 

of 

Functionalities for a Guest/Unregistered user: 

services 

  Video Quality – the user has the ability to watch videos in different qualities ranging 

from 240p to 1080p (HD). The first video plays in 720p format, however once a user 

selects a resolution, the next video will be played in the same format; 

  Screen Size – the user has the option to switch modes of the screen to their liking, 

they can increase/decrease the size of the video player, or watch in the full screen 

mode; 

  Search – this option allows the user to search a video by its tags i.e. Key words that 

are used to define and describe the content of a video; 

  Share  –  a  video  can  be  shared  on  multiple  social  media  platforms,  also  there  are 

separate sharing icons for Facebook and Twitter; 

  Who To Follow – this section on the screen gives user a suggestion on the list of 

channels which they can follow; 

  Categories  –  this  section  lets  the  user  know  to  which  category  the  video  belongs. 

Categories  have  been  defined  by  Dailymotion  and  cannot  be  modified  by  users. 

Main channels are: news, sport, videogames, short films, fun and music; 

  What To Watch – it gives a list of videos which the user may like to watch, usually 

the list includes videos from native countries; 

  Trending Videos – this section lists down the most trending videos in recent days, 

from all over the world; 

  Most Popular – here the user can know that which videos are most popular on the 

site, these videos usually have lot of view and likes. 

Functionalities  for  Registered  Users  -  both  viewers  and  uploaders  (including  the  above 

ones): 

  Upload  Videos  –  by  signing  into  the  account  the  user  has  the  ability  to  upload 

videos of their choice; 

  Like and Comment – lets the user like and comment on videos of their choice; 

  Follow – gives user the ability to follow channels on the portal; 

  Recently Watched – gives a list of recently viewed videos of the user; 

  Purchases  –  keeps  a  collection  of  purchases  made  by  the  user  till  date  for  their 

future use; 

  Liked Videos – lets the user know which all videos they have liked in the past; 

  Create Playlists – here the user can create a list of videos which they can access at 

one go; 

  Analytics  –  the  user  can  monitor  the  performance  of  their  video  by  viewing  the 

statistics. They can access this by clicking the graph icon below your video player; 

  Dailymotion  Stream  –  user  can  play  videos  across  screen  in  high  quality,  by 

remotely connecting to devices; 

  Promoted  Videos  –  this  feature  lets  user  to  boost  content  and  target  audience 

Error! Reference source not found. 

91 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

specific to their content; 

  Connections  – it allows user to  access extra functions by linking their Dailymotion 

accounts to external applications; 

  Repost – it lets the user to repost an edited version of the video where they can edit 

the title and length of the video; 

  Dailymotion  badge  –  using  this  feature  the  user  can  promote  their  videos  by 

displaying a preview of their channel on their website or blog; 

  Age Gate – when turned on it blocks videos which are inappropriate for viewing of 

audience below the age of 18; 

  Contest  -  this  feature  allows  users  to  create/  participate/  vote/  follow  a  video 

competition; 

  Create a TV App – this app is a Dailymotion tool that enables the user to generate 

an application from your existing Dailymotion videos; that means an artist, filmmaker, 

musician,  or  Motionmaker  Member  on  Dailymotion,  can  now  create  a  "home"  app 

that their fans can download for their content, and owner of the channel can put their 

whole library on it; 

  Featured Video – it lets the user to make the video stand out on their  channel, by 

making it a featured video; 

  Facebook Video Tab – this app lets the user create a Dailymotion video section on 

their Facebook page; 

  Groups – these are topic oriented communities created by the users of Dailymotion. 

Members  of  these  groups  curate  the  Dailymotion  catalogue  to  select  the  most 

relevant videos in accordance to the group's theme; 

  Jukebox – it lets the user to broadcast their videos on any website or blog, and the 

video can be opened by any browser; 

  Mass  Uploader  –  this  app  lets  the  user  to  upload  multiple  videos  on  Dailymotion, 

without visiting the web page. It installs a software on the user computer which it turn 

gives the ability to do so; 

  Snap – lets a user to take a picture, extract an image or preview their video; 

  Watch Later – this feature allows the user to gather all the videos in one place and 

watch them later; 

  Live Streaming – the user can stream video in HD (up to 1080P) and keep track of 

ever YouTubehing afterwards using our video analytics; the user must be a partner 

to use this feature. 

Functionalities for Paid Users (including all the above ones): 

  SVOD  –  also  known  as  “Subscription  Video  on  Demand”,  is  a  service  that  lets 

subscribers,  for  a  fixed  fee,  have  unlimited  access  to  targeted  streaming  content 

during a specific time period; 

  OpenVoD  -  is  a  Video  on  Demand  program  which  allows  content  creators  to  sell 

their  programs,  and  choose  the  price,  format,  player,  and  promotion,  as  well  as 

access  their  stats.  They  can  broadcast  on  the  Dailymotion  website  as  well  as  on 

apps (through tablets, smartphones and other connected devices) and anywhere on 

the  web.  OpenVoD  is  currently  open  to  professional  partners,  official  users  and 

individual creators who are part of Dailymotion’s Motionmaker program. This feature 

eliminates  advertisement  from  videos,  and  lets  the  uploader  earn  revenue  only  via 

paid rentals and subscription. 

Audience 

for 

  Arts and Entertainment (TV and video – 14.35%) is the most viewed category; 

services 

Source: http://www.similarweb.com/website/dailymotion.com#overview. 

Error! Reference source not found. 

92 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

  Each month, 8 in 10 Dailymotion visitors are paying for some form of digital content. 

Music  downloads  top  the  list  here  –  4  in  10  buy  at  least  one  each  month  but 

Dailymotion  visitors  are  also  twice  as  likely  to  be  regularly  paying  for  a  TV/film 

streaming service (30% do each month). 

Source: 

http://www.globalwebindex.net/blog/dailymotion-versus-

YouTube#comments. 

The  most  represented  on  Dailymotion  category  is  that  of  media  -  including  extracts  or 

entireties of original content broadcast on television or radio. They represent more than a 

third of content (37.52%), but are not the most popular.  

The  proportion  of  music  videos  on  Dailymotion  (6.54%)  is  twice  smaller  than  YouTube 

(13.00%). Moreover, if this category is far the most popular on YouTube, its popularity is 

low relative to other categories of Dailymotion. In details: 

  There  is  a  greater  proportion  of  "Official"  Live  Clips  on  Dailymotion  compared  to 

YouTube (12% against 1.16% for Dailymotion to YouTube); 

  However,  this  trend  is  reversed  for  "Official"  Clips,  with  only  8.5%  on  Dailymotion 

against 24.31% on YouTube; 

  However, overall, the proportion of "Official" Clips (Official Music Videos and Official 

Live Clips) is the same on Dailymotion (20.5%) and YouTube (25.47%); 

  Finally, 5.56% of Dailymotion pages hosting unofficial videos (i.e. excluding “Official” 

Live Clips and “Official” Clips) have a link to a platform to buy the video.  They were 

more than one third of YouTube (36.68%). 

Source:  https://www.hadopi.fr/actualites/actualites/qualification-et-quantification-des-

contenus-sur-dailymotion.  

Advertising 

The  Internet  users  who  post  on  the  platform  and  gather  a  number  of  views  for  their 

videos  are  proposed  by  Dailymotion  to  advertisers;  provided  the  user  has  enabled  the 

monetization  feature  on  their  account.  Advertisers  then  can  make  their  choice.  The 

Dailymotion  system  is  based  on  redistribution:  companies  pay  to  the  platform,  and 

Dailymotion then transfers a part of to uploaders. 

Display/Banner Ads – This type of ads appear to the right of the feature video or on top 

of the video player on the webpage/screen as banners.  

Source: https://faq.dailymotion.com/hc/en-us/articles/203886583-Ad-formats. 

Apart from banner ads when a video is played on Dailymotion, the user sees in-stream 

advertisements.  In-stream  ads  are  ads  that  are  served  within  the  Dailymotion  video 

player.  Advertisements  are  always  labelled  or  closable.  They  serve  4  types  of  in-

stream ads: 

  Pre-Roll: These advertisement are played before the video starts. Depending on the 

type  of  ad,  the  user  has  the  option  to  skip  it  after  5  seconds,  or  has  to  watch  the 

complete ad; 

  Mid-Roll: These advertisement are played in the middle of the video. The video will 

pause, the ad will play, and then again video will resume. Mid-Rolls are usually only 

served with videos that exceed 5 minutes in length; 

  Post-Roll:  These  advertisement  are  played  after  the  video  is  over  (and  before  a 

consumer view the next one); 

  Overlay: In such ads a text/image floats over the bottom of the video. 

Source: https://faq.dailymotion.com/hc/en-us/articles/203886583-Ad-formats. 

Error! Reference source not found. 

93 

 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Apart from the above options for advertising, Dailymotion offers different platforms for 

external advertisers  

  Dailymotion  Advertising,  which  markets  in-stream  offer  for  computers,  mobile 

devices, and tablets and connected TVs, with a wide range of consumer targets. The 

service  offers  sponsorships  of  premium  contents,  and  provides 

ideas  and 

technologies for custom video and web production dedicated to brands; 

Source - http://advertising.dailymotion.com/. 

  Dailymotion  Exchange,  the  Dailymotion  marketplace  launched  in  2014,  which 

enables  local  and  international  trading  desks  (agencies  and  advertisers)  to  build 

programmatic campaigns for highly targeted audiences. The advertisers can access 

premium  video  inventory  across  desktop,  mobile,  tablet,  game  console,  and 

connected TV all over the world; 

Source 

- 

http://www.multichannel.com/prfeed/dailymotion-reinforces-worldwide-

video-advertising-partnership-aol-platforms/395980. 

License 

Dailymotion  does  not  have  license  agreements  with  rightholders  other  than  users 

agreements 

owning the videos they upload. 

Dailymotion's economic model is based on advertising, where it displays ads on videos 

to earn revenue. To safeguard itself from copyright claims, and illegal usage of content, 

Dailymotion makes two kind of agreements with uploaders.  

They  have  is  a  partnership  program  (optional)  where  the  uploader  not  only  agrees  to 

the terms but also agrees to earn revenue on their content by displaying ads on them. 

However  the  authority  on  the  type  of  advertising  stays  with  Dailymotion,  meaning 

Dailymotion  decides  which  advertisement  to  place  on  the  content  The  partners  can 

also agree to let other uploaders use their content, in return to which they are given a 

portion of the revenue earned. 

Source: http://www.dailymotion.com/in/legal. 

Revenues 

to 

The  uploaders,  who  enable  monetization  feature  on  their  account  are  referred  to  as 

rightholders 

partners. These are people who allow Dailymotion to show ads on their content and in 

return  earn  some  revenue.  Dailymotion  has  two  separate  payment  plans  for  partners 

on their sites: 

  They  pay  the  partner  a  revenue  share  equal  to  50%  (fifty  percent)  of  the  Net 

Advertising  Revenues  related  to  the  Website  Monetization  Feature  i.e.  the  money 

earned  via  advertisements.  The  right  for  terms  negotiated  with  advertisers, 

advertising rates, and look and feel of ads is reserved with Dailymotion; 

Source - http://www.dailymotion.com/legal/partner. 

 

they also pay to rights holders a revenue share equal to 70% of the Net Revenues, 

which comes from subscriptions or rentals; 

Source - http://www.dailymotion.com/legal/partner. 

No public information on the actual revenue of Dailymotion till date is available. 

Use  of  content 

Dailymotion uses two content recognition technologies: 

recognition 

Audible  Magic.  -  This  filtering  solution,  based  on  the  recognition  of  audio  and  video 

technologies -  

fingerprints,  can  automatically  detect  copyrighted  videos.  Each  time  a  video  is 

uploaded  to  Dailymotion,  a  fingerprint  is  created  and  compared  with  Audible  Magic's 

fingerprint database. If the match is positive and the rightholder asked that the content 

Error! Reference source not found. 

94 

 
 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Comparison with 

traditional 

providers 

be blocked, the content will be automatically rejected. Dailymotion uses Audible Magic 

database  in  order  to  verify  the  content  uploaded  on  the  site.  This  is  a  third  party 

software  were  users  register  their  copyrighted  content.  Some  owners,  instead  of 

demanding that any infringing content be taken down, chose to promote their material 

or insert links to pay music sites where you could purchase the songs that were being 

played. Also it shows that the content in use is copyrighted and a part of the revenue 

earned goes to the copyright owner.  

Signature  -  This  technology  recognizes  video  fingerprints  i.e.  it  enables  detection  of 

protected  videos  as  they  are  uploaded?  on  the  platform.  If  content  is  first  signed  and 

protected  by  a  producer  or  a  broadcaster  using  "Signature"  technology,  it  can  be 

automatically detected, and thus rejected, before being put online; so it helps to know if 

the  content  being  uploaded  is  already  copyright  protected  or  not.  This  software  is 

helpful for videos categorized under tutorials, comedy (without audio), arts etc. where 

the  uploader  only  uses  the  video  from  a  copyrighted  material  and  adds  customized 

audio behind. This also helps to earn revenue, provided the copyright owner wishes to 

lend the content to be used by other uploaders but there are not many takers for this. 

Source - http://www.dailymotion.com/in/legal/contentprotection. 

Name Of Service 

Dailymotion 

Hulu Plus 

Netflix 

Products 

Price 

Video 
Sharing 
Website;  with  range 
of  videos  such  as 
movies, 
music, 
education, 
speech 
etc. 

Video  on  demand; 
primarily  TV  shows, 
including 
current 
season shows. 

is 

Essentially free. When 
there 
a 
subscription,  no  fixed 
cost  for  subscribing, 
but  pay  per  view,  as 
the  rightholder  has 
the 
to 
authority 
change 
prices 
whenever they want. 

Hulu  Plus  is  $7.99 
per  month;  basic 
service  is  free  but 
not  all  shows  are 
available  with  the 
basic  service  and  it 
does  not  work  on 
smartphones 
and 
tablets. 

Video  on  demand, 
online  DVD  and  Blu-
ray 
rental; 
primarily  movies  and 
older TV shows. 

disc 

$8 

to 
Monthly: 
stream on 1 screen at 
in  standard 
a  time 
for 
$9 
definition; 
streaming 
2 
on 
screens 
simultaneously  in  HD; 
$12  to  stream  on  4 
screens 
simultaneously. 
Additional  $8/month 
for 
DVD-by-mail 
service  and  an  extra 
$2/month  for  Blu-ray 
discs. 

Ads 

Yes. 

Yes;  but  now  there 
is  an  option  where 
user can pay $11.99 
for no ads. 

No. 

Subscribers 

3  billion  video  views 
per month, 20 million 
desktop 
unique 
viewers per month. 

9 million (2015). 

More  than  75  million 
(2016) 

Video Quality 

240p,  380p,  480p, 
720p 
(HD),  1080p 
(HD). 

288p,  360p,  480p 
and 
sometimes 
720p HD. 

Tier 

Tier  1:  DVD  Quality 
(1.5Mbit/s connection 
needed), 
2 
than  DVD 
(Better 
Quality 
3Mbit/s 
needed)  Tier  3:  720p 
(5Mbit/s 
needed). 
Tier  4:  1080p  has 
been introduced. 

Revenue 

100  million 
Dollars 

U.S 
per 

1 Billion (2013) U.S Dollars 

6.78  billion 

(2015)  U.S 

Error! Reference source not found. 

95 

 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

year (Estimated) 

(894 million Euros). 

Dollars 

(89 million Euros). 

(6.064 million Euros). 

Additional Info 

Dailymotion  and INDMUSIC  -  Music-focused digital network INDMUSIC has inked a 

content  deal  with  Dailymotion.  As  per  the  agreement,  the  two  companies  will  work 

together to produce and distribute branded content exclusively for Dailymotion. 

Dailymotion and Whistle Sports - The partnership between the two networks allows 

Whistle  Sports  to  share  its  original  video  content  to  Dailymotion  on  26  channels  thus 

far.  Whistle  Sports  has  been  fostering  a  community  among  the  one  billion  millennials 

by  partnering  with  a  diverse  group  of  professional  athletes,  leagues,  Olympic 

franchises  and  YouTube  creators,  to  share  original  content  that  engages  this  new 

generation of sports fans.  

Dailymotion  and  Warner  Bros  –  The  two  parties  signed  a  deal  which  allows 

Dailymotion to distribute the American company's catalogue to its French users. More 

than 300 programs are available now and it gives the users the option of renting videos 

that  will  be  available  for  48  hours  each  or  as  a  full  season  package.  Moreover, 

previews of the first few minutes of every program will be available for free. 

Impact analysis of the intervention by stakeholder affected  

Disclaimer: this impact assessed is only that of a potential clarification of the rules 
applicable  to  the  activities  of  online  intermediaries  in  relation  to  copyright 
protected  content,  without  taking  any  position  on  whether  any  of  the  services 
covered can claim to be covered  by  art 14 of  e-commerce  and the limited liability 
exemption.  

In  the  next  paragraphs  the  impact  analysis  looks  into  the  impact  of  a  potential 
clarification on the following stakeholders specifically: 

  Dailymotion itself; 

  Rightholders; 

  Consumers; 

  Other online content providers. 

The  principal  logic  of  the  assessment  is  based  on  distinguishing  two  different  perspectives  that 

Dailymotion can take if it is faced with the obligation to remunerate copyrightholders for distributing 

copyright protected content in case of a clarification: 

  Situation A: Dailymotion wishes to (still) present (also) copyright protected content uploaded by 

their users not owning the rights for that content  and thus  wishes to reach an agreement  with 

rightholders (a license) to cover that content; 

  Situation  B:  Dailymotion  does  not  (want  to)  reach  an  agreement  with  rightholders  (for  certain 

types  of  content).  User  uploads  containing  third  party  copyright  protected  content  is  removed 

(for content already present on the website) or gets blocked (for future content); 

The impact assessment looks into both options (which can live alongside each other).  

Error! Reference source not found. 

96 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
REMARK:  Dailymotion  is  clearly  in  a  transition  phase  linked  to  the  change  of  its  ownership.  This 

analysis may be affected by this state of affairs, as Vivendi  - the new owner - is a large owner of 

copyright  protected  content.  This  might  influence  Dailymotion’s  future  business  development. 

However, this impact assessment does not take into account any potential influence of this change 

in ownership, as the exact influence is still highly uncertain.  

B) ANALYSIS PART 

Dailymotion 

(DM) 

Impact on business model 
Currently Dailymotion does not concentrate its offering on highly popular copyright protected 
content  (whether  in  music,  film  or  TV  series)  (interviews,  Hadopi  data).  It  mainly  focuses  on 
news extracts, games and a limited amount of TV series. Until now Dailymotion has not been 
able to agree terms with most of the (major) rightholders in the music industry (terms set by 
the music industry are considered too costly by  Dailymotion). It therefore focuses on content 
less  costly  to  access.  Dailymotion  has  no  international  deals.  Deals  vary  according  to  local 
audiences and can be negotiated by local rightholders (as opposed to international deals that 
cover larger regions of multiple countries) 

The content of the platform is less focused on popular repertoire with international appeal. For 
major international rightholders, Dailymotion has a limited reach when compared to YouTube 
(audience), nor does the business model give sufficient incentives for rightholders to negotiate 
deals  (For  instance  IMPALA  did  not  even  attempt  to  negotiate  with  Dailymotion.  It  is  not 
considered a priority).  

Situation A: Dailymotion (re)negotiates agreements with rightholders: 

  Dailymotion  might  try  to  (re)negotiate  licensing  terms  with  rightholders  for  uploads  of 

content  for  which  they  have  no  deal  yet  (primarily  with  music  industry).  However, 

Dailymotion  will  have  to  find  new  ways  to  generate  revenues  to  be  able  to  present 

acceptable deals to rightholders. With the current business model this appears to be not 

possible  (apart  from  some  regional  rightholders  in  distinctive  territories  such  as  France). 

So far, Dailymotion has not been pursuing deals aggressively, focusing on other contents 

(mainly news); 

  Dailymotion will continue to concentrate on content which rightholders are ready to keep 

up  under  existing  agreements  (game,  news,  short  series).  Dailymotion  might  further 

develop into a platform with a clear focus on specific niche content, trying to settle more 

deals with rightholders of such content; 

  Given  the  fact  that  the  clarification  will  not  significantly  affect  the  bargaining  position  of 

Dailymotion (which is currently not comparable to  YouTube's), this situation will be most 

likely to happen; 

  DM  will  be  obliged  to  more  closely  monitor  uploaded  content  and  block  or  take  down 

copyright protected content for which Dailymotion has no agreement; 

  Given  the  burdensome  procedure  of  the  current  ‘notice  and  take  down’  system,  it  is 

expected that rightholders will push Dailymotion (and in general all online intermediaries) 
to shift to a ‘notice and stay down’ system for content they don't want on the platform.120 

Situation B: Dailymotion reaches no agreement with rightholders: 

 

In the absence of any license agreement from rightholders, Dailymotion will have to block 

user uploaded copyright content for which they have no agreements.  

120   Notice and Stay Down means that the right-holder is obliged to notify only once to the OI for the latter to take action and 
remove the content permanently (unless otherwise indicated by the right-holder). This would significantly lower the 
monitoring costs of both the OI and right-holders compared to the current ‘notice and take down’ procedure. Remark: 
notice and action only applies if the OI can still claim to be covered by art 14 of the e-com directive. 

Error! Reference source not found. 

97 

 
 
 
 
 
 
 
 
 
                                                            
B) ANALYSIS PART 

  Dailymotion  will  have  to  increase  monitoring  efforts  to  better  screen  content  being 

uploaded.  It  is  to  be  seen  whether  the  combination  of  Audible  Magic  and  Signature  (i.e. 

the  content  recognition  technologies  currently  used  by  Dailymotion  will  be  seen  as  a 

sufficient  monitoring  tool  for  rightholders  (although  we  do  not  have  any  indication  based 

on the research that it is considered insufficient by rightholders); 

  Risk of liability continues to exist in relation to uploaded copyright protected content that 

has not been detected by the technology.  

This situation is not very realistic. 

As  long  as  Dailymotion  does  not  (drastically)  change  its  business  model  and  succeeds  in 

generating  more  revenues  to  obtain  necessary  licenses,  the  clarification  will  not  really 

influence  the  bargaining  power  of  Dailymotion  vis-à-vis  rightholders,  which  according  to  our 

research currently do not make attractive licensing proposals to Dailymotion. 

In  the  short  term  it  is  most  likely  that  Dailymotion  will  continue  working  with  some 

copyright/content  industries  (i.e.  excluding  major  rightholders  in  music,  which  in  interview 

have expressed no interest in Dailymotion’s activities). The clarification will therefore not have 

any  significant  impact.  In  the  longer  term  it  depends  on  the  internal  strategic  choices  being 

made  about  the  business  model  (including  the  impact  of  the  change  in  ownership)  and  the 

type of content Dailymotion wishes to make available. 

Impact on revenues 

Situation A: Dailymotion (re)negotiates agreements with rightholders: 

  When Dailymotion decides to clear rights  with rightholders (thus increasing the costs for 

Dailymotion), this will most probably affect overall revenue in a negative way, considering 

Dailymotion’s market position and weak bargaining position relative to large rightholders. 

Currently,  Dailymotion  cannot  offer  agreements  that  are  financially  satisfactory  for  the 

major  rightholders  (primarily  in  music)  because  it  cannot  be  justified  business  wise  (it  is 

not  related  to  the  legal  framework).  On  the  other  hand,  it  might  increase  advertising 

revenues  because  video  music  is  popular.  However  this  is  not  certain  as  Dailymotion 

would  be  competing  with  more  powerful  platforms  (such  as  YouTube)  that  can  already 

offer  very  large  -  both  national  and  international  –  catalogues  as  well  as  a  very  large 

audience.  The  situation  also  depends  on  how  advertisement  companies  evaluate  the 

evolution in popularity of Dailymotion as platform both at local and international levels; 

  More  likely  Dailymotion  will  have  to  look  for  alternative  models  of  revenue  generation  to 

be  able  to  remunerate  rightholders.  It  might  e.g.  expand  the  current  pay-per-view  or 

subscription models; 

 

If  Dailymotion  decides  to  concentrate  on  its  current  programming  of  more  niche  content 

(news, gaming, DIY). Dailymotion will continue to share advertising revenue as part of its 

licensing agreements and thus revenue will not be affected.  

Situation B: Dailymotion reaches no agreement with rightholders 

In  situation  B  valuable  content  driving  views  will  be  blocked,  thus  negatively  affecting 
advertising revenue. 

Impact on costs 

The potential clarification will increase the costs of Dailymotion primarily in three ways: 

Error! Reference source not found. 

98 

 
 
 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

  Costs related to increased monitoring efforts; 

  Costs related to (re)negotiation; 

  Costs related to payment of royalties. 

Situation A: Dailymotion (re)negotiates agreements with rightholders: 

Costs related to monitoring: 

  Dailymotion  will  have  to  proactively  monitor  uploaded  content  to  filter  non  licensed 

content. This will affect costs. 

Dailymotion currently uses two external content recognition technologies: Audible Magic and 
Signature.  It  is  not  clear  to  what  extent  these  technologies  are  sufficient  to  enable  the 
management of licenses and distribution of royalties. The technology enables identification of 
copyright protected content. However, it is not developed as a full rights management system 
like Content ID. The technology identifies, but does not process royalty claims. Reinforcement 
of copyright protection technology to comply  with regulation  possible legislative change may 
trigger additional monitoring costs. It is assumed that cost of monitoring will increase anyway 
for Dailymotion, to prevent liabilities.  

Costs related to (re)negotiation: 

 

In  situation  A  Dailymotion  is  forced  to  (re)negotiate  deals  with  rightholders.  Given  its 

current  relatively  weak  bargaining  position  in  the  market,  this  process  will  be  time 

consuming and the results are highly uncertain; 

 

It will also ask time and resources internally to reflect on a possible new business model 

that  is  both  satisfactory  to  present  to  rightholders  during  the  negotiation  process  and 

allows the further development of a sustainable organisation. 

Costs related to payment of royalties: 

  Payments are currently linked to advertising revenues; 

  Royalty  fees  would  depend  on  negotiations  with  rightholders.  It  is  expected  that 

Dailymotion  will  have  to  pay  larger  amounts  of  royalty  fees  if  it  decides  to  enter  into 

negotiation with rightholders; 

  Considering  Dailymotion’s  business  situation,  it  is  however  unlikely  that  they  can 

negotiate  deals  with  rightholders  that  are  currently  unwilling  to  close  deals  with 

Dailymotion  (primarily  for  official  content),  unless  they  switch  to  a  new  business  model 

(subscription or pay per view for instance, with the risk of losing viewers for sites that have 

larger content libraries) to be able to change their offer towards those rightholders. 

Situation B: Dailymotion reaches no agreement with rightholders 

Costs related to monitoring: 

  Due to the higher liability risks after the clarification, it can be expected that there will be 

increased  monitoring  costs  for  Dailymotion  in  monitoring  user  uploaded  content  more 

strictly, as well as further liability risks. 

In  situation  B  there  are  no  costs  related  to  (re)negotiation  of  deals  nor  costs  related  to 

payment of royalties. 

Rightholders 

Situation A: Dailymotion (re)negotiates agreements with rightholders: 

  Clarification  will  potentially  result  into  conclusion  of  license  agreements  with  more 

rightholders than Dailymotion has now (although it is felt that Dailymotion may not want to 

enter  into  such  contractual  relationships  for  financial  reasons  or  may  have  problems 

Error! Reference source not found. 

99 

 
 
 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

attracting owners of content to its platform); 

  Also when Dailymotion would choose to further develop into a platform with a clear focus 

on  specific  niche  content,  they  will  be  pushed  to  settle  more  deals  with  rightholders  of 

such content. The outcome will depend on commercial negotiations and DMs offering to 

these rightholders compared to Dailymotion ‘s competitors; 

  The amount of any  royalty fees  being paid to  rightholders is unclear and  will depend on 

negotiations; 

  Unlike e.g. with YouTube, it is expected that rightholders with whom Dailymotion currently 

already has a deal have rather low incentives to renegotiate existing deals. The potential 

clarification will not really change the current bargaining position of Dailymotion.  

Situation B: Dailymotion reaches no agreement with rightholders: 

  Consumers accessing copyright protected content uploaded by users move to alternative 

channels  of  access  where  copyright  protected  content  is  made  available  (either  through 
subscription  or  free  (ad-based)  services121).  These  alternatives  can  provide  royalties  to 

rightholders; 

  Uploaders of third party copyright protected content would be blocked. They would have 

to  find  alternative  platforms  (such  as  e.g.  YouTube)  where  the  uploading  of  copyright 

protected content might still be allowed. The effect on the rightholders will depend on the 

agreements that rightholders may have with these alternative platforms; 

  When installing a system of ‘notice and stay down’ instead of the current ‘notice and take 

down’122, this will considerably reduce the monitoring cost for rightholders.  

Consumers 

Situation A: Dailymotion (re)negotiates agreements with rightholders  

 

If Dailymotion can make deals with rightholders, viewers will get access to more copyright 

protected content; 

  However,  if  Dailymotion  continues  focusing  on  less  popular  (and  less  costly)  copyright 

content,  the  available  content  on  Dailymotion  will  not  change  drastically.  Dailymotion 

might  further  evolve  into  a  specific  niche  of  content,  thus  increasing  attractiveness 

towards a specific target group that fits the niche profile; 

  Uploaders will be more closely monitored.  

Situation B: Dailymotion reaches no agreement with rightholders: 

 

If  Dailymotion  would  reach  no  agreement  with  rightholders  (a  relevant  risk  for  music 

rightholders), the availability of user uploaded copyright protected content may decrease 

substantially.  The  upload  of  amateur  creations  that  do  not  make  use  of  third  party 

copyright protected content remains unaffected.  

Other  online 

 

In  both  situation  A  and  B  it  is  expected  that  overall  there  will  be  a  negligible  effect 

content 

considering Dailymotion’s market positioning; 

providers 

 

In situation B consumers might substitute Dailymotion for alternative service providers to 

search for user uploaded copyright protected content.. Depending on the substitution rate, 

the potential clarification might lead to more business for alternative service providers. 

121   As the power of free music appears to be large and a key driver in consumer choice (according to recent Eurobarometer 

mentioned by EC), this might be the main alternative. 

122   Notice and Stay Down means that the right-holder is obliged to notify only once to the online intermediary for the latter to 
take action to permanently block that specific content as of then. Dailymotion would no longer be able to request new 
notice for a copyright protected content already notified. This would significantly lower the monitoring costs of both 
Dailymotion and right-holders compared to the current ‘notice and take down’ procedure. 

Error! Reference source not found. 

100 

 
 
 
 
 
 
 
 
                                                            
Summary of the possible impact  

  A  potential  clarification  may  affect  negatively  Dailymotion  in  terms  of  costs  (especially  higher 

monitoring costs (in both situation A and B). Given the financial situation of Dailymotion, it is in 

no  position  to  pay  substantial  royalty  fees,  whether  for  large  or  small  rightholders,  so  the 

situation B would be the most likely outcome of the clarification; 

  For  consumers,  the  possibility  to  upload  or  view  uploads  containing  third  party  copyright 

protected works may diminish due to more proactive monitoring (although third party protected 

content  is  also  removed already  today,  upon a notification  from  a right-holder).  The  degree  of 

switching of consumers to other services is unknown; 

  The  impact  on  rightholders  will  depend  on  their  willingness  to  reach  agreements  with 

DailyMotion  and  the  switching  levels  of  current  DailyMotion  users  to  access  content  on  other 

platforms  that  offer  the  content  removed  from  DailyMotion  (and  associated  revenue  for 

rightholders). The impact on rightholders is unknown, like the switching levels, but expected to 

be limited; 

  Dailymotion  is  not  seen  as  an  alternative/competitor  to  YouTube  considering  its  catalogue  of 

content,  its  financial  strength  as  well  as  rightholders’  behaviours  in  supporting  the  free 

advertising model. 

Error! Reference source not found. 

101 

 
 
 
 
 
 
 
 
Annex 3 Case Study Pinterest 

Descriptive Part 

A) DESCRIPTIVE PART 

IDENTIFICATION 

Name 

of 

Pinterest 

service  

About 

the 

Pinterest  is  a  digital  scrapbook.  It  is  a  web  and  mobile  application  company  that  operates  a 

company 

photo  sharing  website.  It  allows  users  to  upload  (e.g.  directly  from  their  camera  roll  on  their 

smartphone  or  from  PC),,  link,  search,  save,  sort,  and  manage  images—known  as  pins—

through  collections  known  as  pin  boards.  These  pins  (images)  are  hosted  on  Pinterest  and 

can be re-pinned (saved) by other users. Since 2013 videos can also be pinned in the form of 

links, similar to other social media like Facebook, and which are hosted on third party websites 

like YouTube, Daily Motion, Vimeo etc. Pinterest acts as a personalized media platform. Each 

account holder can create personal pin boards by pinning images/videos of their interest that 

can be shared with friends. Pins technical cover both storage of images and links to images 

hosted on other websites.  

Sector 

Photo sharing, visual discovery, collection, and storage tool used by people to share images, 

while  searching  for  particular  products  or  tips  and  also  by  the  marketers  to  promote  their 

brand, products and services.  

Source: 

http://www.businessinsider.com/pinterest-as-a-brand-platform-2014-

Business 

model 

11?IR=T&r=US&IR=T. 

Pinterest has a Business model based on a: 

1)  Freemium: All the content available on the site is free for viewing. Although this does not 

add  to  direct  monetization,  this  generates  user  profile  information  e.g.  for  targeting 

advertising and as a basis for making premium offers. The site is where people go to pin 

pictures of  what  they  want to buy,  wear, decorate, visit, eat, which represent significant 

future 

monetization 

potential; 

Source 

-  http://www.investopedia.com/articles/personal-finance/022415/how-pinterest-

makes-money.asp. 

2)  Advertising / Promoted Pins / Buyable Pins: Only recently Pinterest started a service 

called “Promoted Pins” which lets companies who want to amplify the reach of a pin and 

can  advertise  it  in  category  and  search  feeds  on  Pinterest.  This  service  has  started  in 

the UK as of April 2016. A small number of brands from across different industries like 

ABC Family, Banana Republic, Expedia, GAP, General Mills, Nestle etc. participated in 

the  launch  of  their  Ad  program.  The  launch  of  paid  ads  is  a  considerable  revenue 

generation and the company can effectively monetize its user base. The maximum cost 

per 

click 

(CPC) 

is 

$1.00. 

A new feature known as “Buyable Pins”, started in November 2015, and is as of yet only 

available to retailers in the US making use of a selection of commerce platforms. It lets 

retailers add a “buy” button to pins and enables users to buy those products (as shown 

in  the  picture)  straight  through  Pinterest.  Pinterest,  as  of  now,  does  not  charge  for  this 

service 

nor 

does 

it 

take 

a 

commission. 

Source: 

http://techcrunch.com/2014/05/12/pinterest-launches-paid-ads-with-select-

Error! Reference source not found. 

103 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

brands-in-form-of-promoted-pins/; 

Source:  https://business.pinterest.com/en/blog/do-it-yourself-promoted-pins-now-open-

all-smbs; 

Source 

-  http://www.cnbc.com/2015/06/02/is-pinterest-inching-closer-to-making-real-

money.html; 

Source: 

http://www.socialmediaexaminer.com/use-pinterest-promoted-pins/; 

Source: 

http://www.thedrum.com/news/2016/04/06/pinterest-opens-promoted-pins-uk-

advertisers-john-lewis-and-madecom-among-launch; 

Source: http://moneymorning.com/2015/04/20/how-does-pinterest-make-money/. 

Additional information: 

Funding:  According  to  the  report  released  by  Techcrunch  in  October  2015  Pinterest  has 

raised  over  $1.3  billion  in  capital  from  notable  investors  including  SV  Angel,  Rakuten  and 

Bessemer Venture Partners; 

Source - http://techcrunch.com/2015/10/16/leaked-pinterest-documents-show-revenue-growth-

forecasts/; 

Source 

- 

https://www.quora.com/How-does-Pinterest-generate-revenue-What-is-the-

companys-business-model. 

Web address  www.pinterest.com. 

Year 

of 

March 2010 

foundation 

Source - https://thesocialmediahat.com/active-users. 

Targeted 

countries 

Worldwide  

Target group 

  30%  of  online  adults  in  the  age  group  of  18-65  use  Pinterest  for  uploading  and  viewing. 

28.1%  of  Pinterest  users  have  an  annual  household  income  of  $100K  and  users  of 

Pinterest  spend  70%  more  money  on  buying  products  on  Pinterest  as  compared  to 

referrals from other channels or websites; 

Source: http://wersm.com/2015-social-media-demographics-for-marketers/; 

 

In  January  2015,  Pinterest  reported  176  million  registered  users.  Out  of  these  only  100 

million are monthly active users as of September 2015; 

Source: http://expandedramblings.com/index.php/pinterest-stats/; 

  42%  of  online  women  are  on  Pinterest  compared  to  only  13%  of  men.  Pinterest has 

traditionally  attracted  a  largely  female  audience,  as  high  as  80%  actually.  But  now  men 

are also joining it; 

Source: http://expandedramblings.com/index.php/pinterest-stats/; 

Source: http://wersm.com/2015-social-media-demographics-for-marketers/; 

  A  recent  report  by  TechCrunch  said  more  men  are  now  using  Pinterest  in  the  US  than 

those reading Sports Illustrated and GQ combined; 

Source: 

http://techcrunch.com/2014/11/13/men-are-now-pinterests-fastest-growing-

demographic/The most popular categories on Pinterest (male and female combined) are: 

Food & Drink, DIY & Crafts, Home Décor; 

Source: https://blog.bufferapp.com/pinterest-marketing-guide-tips; 

  Pinterest revealed  that it has over 30  billion pins on its platform  with a regular growth of 

25% per quarter; 

Source: http://wersm.com/men-are-now-the-fastest-growing-demographic-on-pinterest/. 

  67%  of  the  total  Pinterest  users  are  under  the  age  of  40  years.  Out  of  which  34%  are 

below 30; 

Error! Reference source not found. 

104 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

Source: http://expandedramblings.com/index.php/pinterest-stats/2/; 

  Around 62% of the users have been to a college and 22% are high school or less; 

Source: http://sproutsocial.com/insights/new-social-media-demographics/; 

  46%  of  Pinterest  traffic  comes  from  US  alone,  8.3%  from  India  and  3.6%  from  UK  and 

2.6% from Spain; 

Source: http://www.alexa.com/siteinfo/pinterest.com; 

  The  research  firm  comScore  estimates  that  in  May  2015,  Pinterest  attracted  10.3  million 

unique  visitors  in  the  UK:  54%  only  visiting  from  a  mobile  device,  34%  only  from  a 

computer, and 12% using both; 

Source:  https://www.theguardian.com/technology/2015/jun/25/pinterest-british-users-diy-

cookery-decorating. 

  Valuation of Pinterest in 2015 was $11 Billion; 

Source: 

http://techcrunch.com/2015/10/16/leaked-pinterest-documents-show-revenue-

Turnover 

and/or 

market share 

growth-forecasts/ Source: http://www.inc.com/jeff-bercovici/pinterest-11-billion.html; 

  Documents  published  by  TechCrunch  indicate  that  the  company  generated  about  $25 

million in sales in 2014, the documents indicate that Pinterest generates $1.44 per active 

user as of 2015—and the network has plans to grow that figure to $9.34 by 2018; 

Source: 

http://techcrunch.com/2015/10/16/leaked-pinterest-documents-show-revenue-

growth-forecasts/; 

  Pinterest  also  expects  to  grow  its  user  base  to  329  million  by  2018  thus  generating  the 

revenue of 2.8 billion; 

Source: 

http://techcrunch.com/2015/10/16/leaked-pinterest-documents-show-revenue-

growth-forecasts/; 

  A 2014 Globalwebindex study found that Europe lags behind the U.S. in user adoption of 

Pinterest. Specifically, they found that: only 8 percent of European Internet users have a 

Pinterest  account  and  only  3  percent  of  European  Internet  users  are  active  users  of 

Pinterest; 

Source: http://www.cision.com/us/2015/01/25-pinterest-facts-and-pr-best-practices/; 

  Region  wise  Market  Share  of  Pinterest:  USA  –  66.36%,  Italy  –  8.11%,  Great  Britain  – 

6.60%,  Germany  –  3.31%,  Canada  –  3.24%,  Australia  –  3.04%,  France  –  2.70%, 

Netherlands – 2.01%, Spain – 1.52% Other – 3.16%; 

  Source – https://trends.builtwith.com/widgets/Pinterest/Market-Share.  

Size  of 

the 

Midsize company with 500+ employees 

company  

Source - https://about.pinterest.com/en/press/press 

Place of legal 

San Francisco, California, United States  

seat 

Source - https://about.pinterest.com/en/press/press. 

Language(s) 

of platform  

  As of 2016, Pinterest is available in 30+ languages; 

Source – https://about.pinterest.com/en/press/press. 

DETAILED DESCRIPTION 

List 

of 

  For  a  Personal  Account  the  list of  functionalities available  are:  Search,  Creating  Boards, 

services 

offered 

Follow Boards,  Follow Account, Add Pin, Re-pin, Like Pins & Comment, Send (Sharing), 

Embed (Widget), Report. The Personal Account allows for free use and is not allowed to 

be used for commercial purposes, as per the user license agreement; 

  For a Business Account the additional list of functionalities are: Rich Pins, Promoted Pins, 

Analytics.  The  Business  Account  consists  of  a  license  for  marketing  purposes.  No 

information on the number of business accounts is available; 

Source – www.pinterest.com. 

Error! Reference source not found. 

105 

 
 
 
 
 
A) DESCRIPTIVE PART 

Description 

Functionalities in Personal Account: 

of 

services 

  Search: This option allows the user to search for the content (images/video) by typing the 

offered 

text in the search bar. This could be a keyword or the name of the image/board/video/pin 

by which it exists on the platform; 

  Create  Boards:  Pinterest  users  need  to  build  boards  in  order  to  collect  and  organize 

items they're interested in. To create a Board, they need to fill in the name of the board, 

add  a  description,  and  categorize  it.  Once  a  board  is  created  user  can  pin  the  items 

(pictures) to it. In essence this is a digital version of a ‘pin-board’ in one’s kitchen where 

pictures  can  be  pinned  to.  A  board  can  contain  diverse  information,  or  only  specific 

content like pictures of your cat, and users can create multiple boards; 

  Follow / Unfollow Boards: Pinterest users can choose to follow or unfollow boards from 

different categories such as Food & Drink, Design, Geek, Technology etc. to fill their feed 

based  on  their  interest.  As  the  users  navigate  the  site  they  can  keep  on  adding  other 

boards they wish to follow; 

  Follow  /Unfollow  Accounts:  Users  can  also  follow  other  users’  accounts  (or  friends)., 

Most  accounts  have  multiple  boards,  so  if  the  user  follows  an  account  he  automatically 

follow all its boards; 

  Adding pins: Users can add pins to their Pinterest boards from their own content or from 

the  Web  (linked),  Pinterest  will  prompt  to  enter  a  link  to  the  page  being  pinned  from.  All 

pins must include an image or a video in order to be added to Pinterest; 

  Re-pin:  Users  can  "re-pin"  content  from  other  Pinterest  users.  This  technique  is  quite 

similar  to  re-tweeted  messages  on  Twitter.  It  increases  the  exposure  of  images  and 

therefore  increases  brand  visibility  when  a  picture  of  a  branded  product  has  been  re-

pinned thousands of times; 

  Likes:  Liking  a  pin  will  notify  the  user  whose  pin  is  liked  and  the  user  can  access  their 

liked pins from the "Likes" tab on their profile page to keep track who and how many times 

it was liked; 

  Comments:  Users  can  add  comments  to  other  users'  pins.  Under  the  pin  there  is  a 

comment box where users can type in and share comments; 

  Send / Sending pins: any image/video can be shared with different users and on different 

platforms such as Facebook, Twitter etc. Once this option is selected a drop down menu is 

displayed with names of followers and icons for different platforms which directs the user 

to the required platform; 

  Embed / Pin Widget: The Pin widget lets the user show a Pin on their website; 

  Report: This option lets users report the content which they feel is inappropriate. 

Additional functionalities available for the Business Account:  

  Rich Pins: These pins include extra information beyond just the image, click-through link 

and the pinner's description. These pins are right now limited to six categories i.e. place, 

product, movie, recipe, app and article; 

  Promoted  Pins:  This  is  a  paid  advertising  option  for  businesses.  This  option  allows 

businesses’  to  pay  to  promote  their  best  pins.  In  doing  so,  users  can  target  specific 

audiences,  choose  to  pay  for  either  pin  engagement  or  visits  to  their  website,  and  track 

how the ads are performing. This is available only in USA currently and will be starting in 

UK in mid of 2016; 

Source: http://www.businessnewsdaily.com/7552-pinterest-business-guide.html; 

Source: 

http://www.adweek.com/socialtimes/pinterest-opens-up-ads-manager-to-all-u-s-

smbs-beefs-up-targeting/635576; 

  Pinterest  analytics:  Through  analytics  users  can  find  out  about  their  audience 

Error! Reference source not found. 

106 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

demographics, like gender, location and other interests, what device visitors are using to 

use the page, along with what the most popular pins are; 

Source - https://developers.pinterest.com/docs/getting-started/introduction/; 

Source - http://www.pcmag.com/article2/0,2817,2418048,00.asp. 

Audience  for 

  Pinterest states it has more than 100 million monthly active users (MAUs). 

services 

Source:  http://venturebeat.com/2015/09/16/pinterest-finally-shares-its-size-100m-monthly-

active-users-and-counting/; 

Source: https://www.pinterest.com/pin/224194887670486832/; 

  10% of the users are from Europe; 

Source: http://www.statista.com/statistics/321679/pinterest-penetration-regions/; 

  2 million people pin products per day; 

Source: https://www.shopify.in/infographics/pinterest; 

  93% of Pinterest users use the platform to plan purchases; 

  Orders from Pinterest on mobile devices has increased by 140% in the last two years, and 

orders from non-US countries has increased 130% from 2013 to 2014. The average order 

value of sales coming from Pinterest is $50 – higher than any other major social platform; 

Source - https://in.pinterest.com/pin/136656169912978016/; 

Source - http://www.pewinternet.org/2015/08/19/the-demographics-of-social-media-users/; 

Source - http://expandedramblings.com/index.php/pinterest-stats/5/. 

Advertising 

  Pinterest  has  recently  started  advertisements  with  Promoted  Pins  which  appear  on  the 

website at the user’s home page along with the pins they follow, and the suggested pins. 

A  promoted  pin  is  a  paid  ad  that  ensures  pins  appear  in  the  most  relevant  places 

(category  they  belong  to)  on  Pinterest.  Marketers  target  specific  consumer  groups,  track 

data and pay on an engagement or click-through basis; 

Source: 

https://www.marketingweek.com/2015/11/17/what-marketers-need-to-know-

about-pinterests-new-ad-platform/; 

  Cinematic  Pins  –  Pinterest  plays  brand  videos  through  these.  It  has  tested  this  with 

consumer goods manufacturers like Nestle & Unilever where a video ad is played on the 

pin-board of the business. The cinematic pins are seen in motion as the user scrolls, but 

the motion stops when the scrolling stops; 

Source: 

http://www.business.com/social-media-marketing/pin-it-to-win-it-the-dos-and-

donts-of-advertising-on-pinterest/. 

  No numbers for the above are publically available. 

License 

agreements 

There  are  no  licensing  agreements  struck  with  rightholders  by  Pinterest.  However,  multiple 

partnerships have been concluded, as mentioned below in the section ‘Additional Information’. 

While not a license agreement, Pinterest has resolved copyright issues with partners through 

attribution ("credit") recognition: Dreamstime, Flickr, YouTube, 500px, Etsy, Getty Images. 

Pinterest’s  signs  an  Attribution  deal  with  Dreamstime  to  End  Battle  over  Watermarked, 

Copyrighted Images:  

Dreamstime  is  a  community  based  agency  sourcing  stock  photos  and  illustrations  from 

worldwide  contributors.  To  resolve  legal  issues  regarding  the  pinning  of  copyright-protected, 

watermarked  images  shared  on  Pinterest,  both  parties  agreed  to  an  arrangement  which 

incorporates an attribution line which appears beneath the photo in question and links back to 

the photo’s page on Dreamstime.com. This is the same solution that Pinterest offers to other 

members  of  its  “attribution  program,”  including  Flickr,  YouTube,  500px,  Etsy,  and  others. 

Dreamstime created an API per Pinterest’s specifications in order to operate with the service’s 

existing suite of tools for attribution. Pinterest also confirms that partners do have to implement 

Error! Reference source not found. 

107 

 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

at least a simple API on their end, as opposed to merely adding some provided code to their 

website in order for attribution to properly work. 

Source:  http://techcrunch.com/2012/10/13/pinterests-attribution-program-grows-dreamstime-

joins-to-help-end-battle-over-watermarked-copyrighted-images/. 

Pinterest Closes Another Copyright Hole, Inks A Deal With Getty Images, Will Pay A Fee 

For Metadata: 

As part of the arrangement between Getty Images and Pinterest, Pinterest makes use of 

PicScout  API  to  detect  Getty  Images’  images.  Financial  terms  of  the  deal  have  not  been 

disclosed,  but  Pinterest  is  offering  a  fee  for  image  metadata,  which  will  help  make  sure  that 

any images pinned that belong to Getty Images will be properly  attributed Getty  states it will 

share the proceeds with its contributors. 

Source: http://techcrunch.com/2013/10/25/pinterest-inks-deal-with-getty-images-will-pay-a-fee-

for-the-photo-agencys-metadata/. 

Pinterest does not pay out for content (no licensing agreements) 

However, Pinterest pays Getty Images for its metadata. 
Source:  http://techcrunch.com/2013/10/25/pinterest-inks-deal-with-
getty-images-will-pay-a-fee-for-the-photo-agencys-metadata/. 

Revenues  to 

rightholders 

Use 

of 

content 

recognition 

Pinterest does not do a copyright check of content uploaded or shared - instead it places that 

responsibility on users to be responsible for all the content that they post on the website and 

are  authorized  to  use  it.  Apart  from  this,  Pinterest  has  a  page  relating  to  copyright  where 

technologies  

artists and their representatives can contact it to have infringing material removed. Pinterest in 

turn will take whatever action, in its sole discretion, it deems appropriate, including removal of 

the  challenged  material  from  the  Site.  If  Pinterest  removes  or  disables  access  to  content  in 

response  to  a  Notice,  it  may  notify  the  user  with  details  about  the  Notice  so  that  they  can 

submit  a  counter-notice.  Pinterest  may  also  send  a  complete  copy  of  the  Notice  to  users 

where appropriate. 

Source: 

http://venturebeat.com/2015/05/28/pinterest-improves-related-pins-with-deep-

learning-plans-product-recommendations-using-object-recognition/; 

Source: 

http://www.pcworld.com/article/250700/what_you_should_know_about_pinterest_and_copyrig

ht.html; 

Source: https://about.pinterest.com/en/copyright. 

Pinterest  is  making  big  changes  to  its  search  functionality  which  involves  machine  learning 

and image recognition techniques, through acquisitions and in-house development. 

Source: http://www.fastcompany.com/3053408/fast-feed/pinterest-unveils-new-image-search; 

Source: http://techcrunch.com/2014/01/06/pinterest-visualgraph/; 

https://www.YouTube.com/YouTube/press/statistics.html/. 

Comparison 

Pinterest vs Facebook, Twitter, Google 

with 

traditional 

providers 

Pinterest is different from other traditional social media, in that is performs like a search engine 

for ideas, e.g. for eating, travelling, shopping or usage. This makes Pinterest very attractive to 

marketeers, as the focus on goods sets it apart. Pinterest’s audience is dominated by women 

in  their  30s  with  young  families—a  group  that  does  the  majority  of  the  shopping.  Pinterest 

draws  this  demographic  because  it  conveniently  delivers  information  on  a  range  of  products 

and services women need for their families. 

Source:  http://adage.com/article/ad-age-homepage/pinterest-s-difference-social-media-lures-

quaker/299872/; 

Error! Reference source not found. 

108 

 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Source: http://www.socialmediaexaminer.com/pinterest-set-to-surge-in-2016-new-research/; 

Source  -  http://www.business2community.com/infographics/post-visual-content-pinterest-vs-

tumblr-infographic-0814808#3ZoxLsfYEzr7wxPj.97; 

Source - https://omnomedia.wordpress.com/2012/12/11/tumblr-vs-pinterest/; 

Source 

- 

http://www.investopedia.com/articles/investing/040915/how-tumblr-makes-

money.asp. 

Pinterest vs Getty Images 

Pinterest is different from Getty Images, as it does not sell images, but acts as a digital scrap 

book  where  user  scan  upload  their  own  images  as  well  as  pin  those  they  came  across. 

However,  as  mentioned  above,  Pinterest  entered  into  a  commercial  arrangement  with  Getty 

Images to use its metadata. 

Additional 

There  are  no  licensing  agreements  struck  with  rightholders  by  Pinterest.  However,  multiple 

information 

partnership have been concluded: 

1. Pinterest partners with Apple 

Pinterest  entered  into  a  partnership  with  Apple.  Originally  on  Pinterest,  users  could  only  pin 

photos. Now, users can pin links to individual iOS apps on their boards. This can  change the 

way Pinterest is used, as it can now become an app discovery site as well as a social media-

cyclopean.  The  goal  of  Pinterest  in  this  partnership  is  to  make  it  simpler  to  locate  apps  that 

adhere to the needs of its users. Pinterest offers a new “corkboard” feature which allows users 

to save app links in their browser. Also, Pinterest has made it easy to transition back and forth 

between  the  site  and  the  Apple  app  store,  as  each  pin  containing  an  app  link  has  an  install 

button in the corner which will take users directly to the app store. 

Source: 

http://www.inquisitr.com/1927037/pinterest-just-entered-a-partnership-that-may-put-

facecbook-in-jeopardy/. 

2. Pinterest partners with eight 8 ad-techs 
Pinterest  partnered  with  4C,  Adaptly,  Ampush,  Brand  Networks,  HYFN,  Kinetic  Social, 
SocialFlow and SocialCode. These vendors built services that make it easier to plan paid and 
free  posts  on  Pinterest.  These  companies  integrated  Pinterest  advertising  into  their 
technology,  which  offered  its  clients  the  ability  to  plan,  deploy,  optimize  and  report  on  paid 
media campaigns across Pinterest."  

Source: 
get-first-dibs-ads-there-165425. 

http://www.adweek.com/news/technology/pinterest-reveals-marketing-partners-will-

3. Partnership with Stripe:  

Stripe  is  Pinterest's  payments  processor  for  Buyable  Pins.  Pinterest's  buy  buttons  work 

with Apple Pay and other payment methods. 

Source: http://readwrite.com/2015/06/02/pinterest-buyable-pins/. 

4. Pinterest Partners with Brands to add Information to Pins: 

Pinterest partnered with several brands, including eBay, Target, ModCloth, Sony and Netflix, 

to introduce more descriptive pins. The content of these pins varies based on the brands who 

post  them.  The  option  to  list  more  information  on  pins  will  give  brands  the  opportunity  to 

advertise specific product detail to Pinterest users. 

Source: http://mashable.com/2013/05/20/pinterest-brands-upgrade/#bV0gdUU2Jaq0. 

5. Pinterest Partners with Telefonica in Exclusive Android Deal:  

Error! Reference source not found. 

109 

 
 
 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Telefonica Digital and Pinterest partnered to bring Pinterest to Telefonica's Android customers. 

As part of the strategic agreement, each Telefonica mobile business, including Vivo, O2 and 

Movistar will  have  the  exclusive  rights  to  provide  the  new  Pinterest  Android  Widget  to 

its customers. This resulted in the Pinterest Android Widget exclusively distributed and 

available  for  immediate  download  on  Android  devices  sold  by  Telefonica,  starting 

initially in the UK. The Widget, built by Pinterest for the partnership, will be pre-installed 

on  Android  devices in  participating Telefonica territories. In  the UK, it was featured in 

O2 Recommends and the Android Widget folder, as well as promoted through multiple 

channels. 

Source:http://www.prnewswire.com/news-releases/pinterest-partners-with-telefonica-in-

exclusive-android-deal-227208801.html. 

Pinterest compared to other photo-sharing intermediaries: 

Pinterest vs Instagram 

Pinterest  and  Instagram  are  visual-sharing  social  networking  sites  where  user  can  upload 

photos and images for other people to see (as  well as pin links). The main difference lies in 

the  fact  that  people  use  them  differently.  Instagram  is  about  sharing  personal  photos  while 

Pinterest is more about curating visual content that users have found on the internet.  

1.  Usage:  Instagram  users  are  looking  for  a  much  more  personal  experience  with  the 

brands  they  follow  and  engage  with.  The  content  shared  on  Instagram  should  give  an 

audience  an  authentic  view  into  a  business.  With  Pinterest,  a  user’s  intent  tends  to  be 

focused on the discovery and curation of other users’ content; 

2.  Target audience: Pinterest users are predominantly female. In fact, women account for 

about 70 percent of Pinterest users. Pinterest users also tend to  skew a little bit  older, 

although the core demographic is still 18-34 year olds, representing 56 percent of users. 

Compared with Pinterest, men and women are more evenly represented on Instagram. 

Fifty percent of the Instagram users are outside of the United States, making for a more 

global  demographic.  This  network  is  also  more  popular  with  the  younger  crowd—two-

thirds are between the ages of 18 and 34 and popularity drops with the older part of this 

demographic; 

3.  Content:  The  main  difference  between  the  two  platforms  is  definitely  on  the  content 

side. On Instagram, followers expect to see visual content about the user. On Pinterest, 

they are looking to discover content, in all forms, to be inspired, learn and share. If user 

is  mainly  creating  useful  content  on  his  blog,  and  curate  useful  content  from  others, 

Pinterest is the right match; 

4.  Revenue  Generation:  Pinterest  has  recently  started  paid  advertising  services  in  USA 

called  Promoted  Pins.  Instagram  makes  its  money  from  advertising,  just  like  its  parent 

company Facebook. Facebook does not break out Instagram’s financials, but Facebook 

overall derived about 93% of its fourth-quarter revenue from ads in 2015. Ad revenue for 

the quarter was $3.59 billion and a major portion of it is attributed to Instagram. 

Source:  http://www.investopedia.com/articles/personal-finance/030915/how-instagram-makes-

money.asp; 

Source - http://www.agorapulse.com/blog/pinterest-or-instagram-for-business; 

Source - http://www.commsaxis.com/pinterest-vs-instagram/. 

Tumblr vs Instagram 

Tumblr  is  a  platform  generally  used  for  microblogging:  short  posts  consisting  of  a  phrase, 

image or video clip. Unlike other blogs, microblogs are common platforms for photography or 

animations, memes, web comics and other media for the reader to consume in a few seconds. 

Error! Reference source not found. 

110 

 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Tumblr is capable of long-form blogging, but microblogging is more common. 

Instagram is a social network mostly used for posting personal photographs. Instagram users 

use the smartphone app to post their pictures and view the material other users post. It is not 

a blog, unlike Tumblr but only visual media sharing. 

Pinterest vs Tumblr  

Both Tumblr and Pinterest serve as media-heavy  feeds and collections of images that users 

keep  on  their  own  profiles  by  Liking  and  re-blogging  or  re-pinning.  Each  of  these  Social 

Sharing  venues  allow  for  commenting  and  participation,  though  Pinterest  makes  it  visually 

simpler to add comments and Tumblr users tend to only promote the best comments on each 

post. In whole, both Tumblr and Pinterest serve as popular Search Engine Optimization tools 

which are used for driving traffic to websites and promoting personal interests. 

1.  Content:  The  most  popular  content  on  Pinterest  is  repinning  already  existing  images  on 

female  lifestyle,  whereas  on  Tumblr  it  is  self-uploaded  images  and  shared  photos  of 

celebrities; 

2.  Audience:  Most  popular  age  group  on  Pinterest  is  25-34  years  with  number  of  females 

more  than  males.  In  Tumblr  16-24  is  the  most  popular  age  group  with  number  of  males 

being  equal  to  number  of  females.  Tumblr  has  550  million  monthly  users  (Dec  2015) 

compared to Pinterest which has 100 million users (Sept 2015); 

3.  Browsing  device:  More  than  75%  of  Pinterest  usage  takes  place  on  phone  &  tablets. 

More  browsing  of  Tumblr  comes  from  computer  browser.  However  50%  of  Tumblr  users 

access content through mobile app; 

4.  Revenue  Generation:  Pinterest  has  recently  started  Promoted  Pins  or  paid  advertising 

services in US also it lets businesses sell their products on the site. Tumblr has four main 

sources of revenue – with sponsored posts making up the bulk of it. Tumblr’s sponsored 

posts  are  highly  targeted.  Tumblr  recently  started  displaying  new  ads  called  Tumblr 

Sponsored  Apps  which  directs  the  buyer  to  the  app.  Additionally,  Tumblr  has  a 

marketplace  where  designers  and  users  can  buy  and  sell  premium  blog  themes.  Tumblr 

also has agreements with developers who license the Tumblr newsfeed for their apps. 

Source: http://expandedramblings.com/index.php/tumblr-user-stats-fact/; 

Source: http://expandedramblings.com/index.php/pinterest-stats/. 

Impact analysis of the intervention by stakeholder affected 

Disclaimer: the impact assessed is only that of a potential clarification of the rules 
applicable  to  the  activities  of  online  intermediaries  in  relation  to  copyright 
protected  content,  without  taking  any  position  on  whether  any  of  the  services 
covered can claim to be covered  by  art 14 of  e-commerce  and the limited liability 
exemption.  

In the  next  paragraphs the impact analysis looks into the impact of a potential clarification  on the 

following stakeholders specifically: 

  Pinterest itself; 

  Rightholders; 

  Consumers; 

  Other online content providers. 

Error! Reference source not found. 

111 

 
 
 
 
 
 
 
 
 
 
The assessment is relevant only for content that is uploaded by users and not when users 

use links to freely available content on internet. The principal logic of the assessment is based 

on distinguishing two different perspectives that Pinterest can take if it is faced with the obligation to 

remunerate copyrightholders for storing and giving access to copyright protected content in case of 

a possible clarification: 

  Situation A: Pinterest enters into license agreements with rightholders, has to pay a license fee 

and can look for opportunities to monetize the content; 

  Situation  B:  Pinterest  takes  down  the  third  party  copyright  protected  content  uploaded  by  its 

users . 

The impact assessment looks into both options (which can live alongside each other). 

Scoping issue: 

  Regarding  copyright  issues  on  Pinterest,  only  photographers  or  graphic  designers,  whose 

content  is  shared  and  stored  on  Pinterest,  is  of  relevance  for  this  study.  Linking  and  framing 

falls outside the scope of the clarification. 

B) ANALYSIS PART 

Online intermediaries 

Effect on costs 

Technology identification software: 

  Given that Pinterest has a number of attribution deals with a few rightholders and 
acquired  an  image  recognition  company123  (thus  Pinterest  is  able  to  detect  the 

copyright protected content to some extent), it is assumed that Pinterest already 

has  a  (some)  technology  in  place.  Therefore  no  one-time  investment  in 

technology  identification  software/technology  is  needed.  (It  is  not  clear  how 

advanced  the  technology  is  currently  in  place  in  Pinterest:  Not  known  whether 

Pinterest has in-house technology able to scan newly uploaded content to detect 

copyright protected content uploaded by those that don’t hold the right to do so; 

  Besides the possible use of in-house technologies, Pinterest uses PicScout API, 

as part of an agreement with Getty Images; 

  Situation A - Since there would be (more) licenses, Pinterest would have slightly 

more  monitoring  costs  given  that  monitoring  costs  depend  on  the  number  of 

licensed pictures that have to be checked once new content is being uploaded. 

In case current technology is not sufficiently capable of identifying the copyright 

status of each items being uploaded, additional investment in technology in order 

to  achieve  an  (as  good  as)  100%  accurate  identification  will  be  needed.  These 

investments will incur associated costs. This situation Otherwise, no change on 

technology costs is foreseen; 

  Situation B - additional investments may be needed to identify and block content 

from being uploaded in the first place if current content recognition technology is 

not capable of detecting it. The costs for this technology are estimated to be low, 

but no figure or bandwidth estimate was obtained from Pinterest. 

Royalties: 

  Situation A: 

- 

[Assumption]  The  license  agreements  will  involve  payment  to  rightholders 

depending  on  the  number  of  views  per  image  or  downloads.  Other,  non-

financial  agreements  for  use  of  copyright  protected  images,  for  example 

123   See Descriptive Part for more details. 

Error! Reference source not found. 

112 

 
 
 
 
 
 
 
 
 
                                                            
B) ANALYSIS PART 

based  on  attribution,  may  be  possible.  With  increasing  number  of  licenses, 
the total royalty payments would also increase.124 

  Situation B 

-  No royalty payments as no license agreements will be concluded. 

Effect on revenues: 

  Situation A: 

-  Since costs may increase (see above), Pinterest would have to find ways to 

generate more revenues to cover the increased costs. [Assumption]; 

- 

It  is  not  clear  how  much  revenues  need  to  increase  (and  are  able  to 

increase) under the current business model. This might lead to an expansion 

of  the  models  currently  introduced  in  the  US  and  UK  (promoted/buyable 

pins). 

  Situation B  

-  No change in revenues (related to the clarification). The content uploaded by 

those  that  don’t  have  the  right  to  do  so  will  be  removed  and  not  offered  as 
advertised ‘pin’;125 

- 

If additional investments in technology are needed, Pinterest  would have to 

find ways to generate more revenues (besides further roll out of Advertising / 

Promoted  Pins  /  Buyable  Pins).  The  amount  of  additional  revenues  that 

would  need  to  be  generated  is  estimated  to  be  lower  than  the  revenues 

needed under Situation A. 

Effect on business model: 

  Situation A: 

- 

In  order  to  generate  more  revenues,  Pinterest  might  turn  to  other  business 

models: 

 

 

Introduce subscription fees to be able to access Pinterest; 

Introduce  advertisements 

(besides  buyable  pins)  and  accelerate 

expansion  of  buyable  and  promoted  pins.  In  addition,  Pinterest  could 

expand its service of buyable pins and start charging for it (expanding e-

commerce functionality); 

  Diversification  of  business  model:  introduction  of  services  similar  to 

Shutterstock:  access  to  a  database  of  images  for  a  subscription  where 

buyers pay a monthly fee and get to download a number of images per 

month. 

-  The  first  option  is  considered  highly  unlikely  as  it  would  ‘scare’  consumers 

(resulting in huge demand drop), potentially harmful for business model; 

-  The other 2 options are considered as most likely to happen, with especially 

the introduction of new services envisaged to offer more earning potential. 

  Situation B: 

-  Depending  on  the  increased  costs  of  technology  (see  above),  additional 

124   Potentially royalties might take form of those adopted by Shutterstock where royalty payments are around around $0.33 

per image download in case the license agreement will have a monetary component 
(http://www.shutterstock.com/contributorsupport/articles/kbat02/000006640?l=en_US&fs=Search&pn=1.). 

125   An exception could be third parties using copyright protected images and willing to pay copyright-holders a fee to be 

allowed to keep using these images on Pinterest. As there is no clear revenue model for these third parties, there seem no 
clear motivation for these third parties to pay to keep these images displayed on Pinterest. Consequently, the expected 
revenue streams for payments by third parties is considered as good as non-existent. 

Error! Reference source not found. 

113 

 
 
 
 
 
 
 
 
                                                            
B) ANALYSIS PART 

revenues  may  or  may  not  be  necessary.  In  case  significant  investments  in 

technology turn out to be necessary and additional revenues are needed to 

cover  these  costs,  Pinterest  might  either  look  for  a  one-off  investment  to 

cover the costs or turn to other business models: 

 

Introduce advertisements (besides buyable pins). 

Rightholders 

  Situation A: 

- 

If license agreements are concluded, royalties will be paid to rightholders; 

-  Royalty payments will depend on the number of downloads/views per image 

[Assumption],  with  non-financial  condition  possible  in  addition  or  instead  of 

financial payments; 

-  Thus income for rightholders may increase; 

- 

License  agreements  could  potentially  mean  that  more  exposure  will  be 

created  for  rightholders  due  to  proper  attribution/accreditation  that  could 

result  in  improved  reputation  and/or  awareness  of  the  original  artist  and 

possibly indirectly more business for the right-holder. 

  Situation B: 

-  No license agreement – no payments for rightholders; 

Consumers 

  Situation A  

-  With  possible  licenses  concluded  with  rightholders  whose  content  may  be 

uploaded  by  users  on  Pinterest,  no  reduction  in  content  displayed  on 

Pinterest is expected. In case additional sources of monetisation of copyright 

protected  content  are  offered  to  rightholders,  rightholders  might  decide  to 

allow their content to be displayed on Pinterest. In case only limited content 

was  offered  on  Pinterest  prior  to  the  clarification,  after  the  clarification 

rightholders  may  decide  to  display  more  of  their  content,  and  availability  of 

content will therefore increase.  

  Situation B  

-  Since  there  may  be  no  licenses  concluded  and  copyright  protected  content 

will  be  more  actively  prevented  from  being  uploaded,  availability  of  content 

mayl decrease; 

-  Since  availability  of  content  on  Pinterest  may  decrease,  the  2  situations 

could occur. In case other online intermediaries in the sector do not conclude 

licenses either, consumers may not be able to find content not displayed on 

Pinterest anywhere else but this is rather unlikelyIf other intermediaries in the 

sector conclude licenses, consumers might shift to those intermediaries from 

Pinterest  to  be  able  to  access  the  content  not  available  on  Pinterest  but 

available on other intermediaries websites. 

Other  online  content 

  Situation A: 

providers 

-  No  change  for  other  services  providing  for  images,  except  for  possible 

increased  competition  faced  by  platforms  that  offer  similar  services  as  the 

new services to be offered by Pinterest after clarification; 

  Situation B: 

-  Potentially a shift of consumers to other providers of images if they want to 

download  an  image,  most  notably  photo  stock  providers,  that  do  offer 

copyright protected content that Pinterest may need to block.  

Error! Reference source not found. 

114 

 
 
 
 
 
 
 
 
Summary of the impact analysis 

  A  potential  clarification  may  have  a  negative  effect  on  Pinterest  but  the  actual  impact  will 

depend  on  the  importance  of  user  uploaded  content  compared  to  content  that  is  amade 

available  through  linking.  This  effect  would  be  due  to  potential  costs  (Situation  A:  higher 

monitoring  costs,  possibly  payments  or  higher  technology  costs  to  be  able  to  take  down 

copyright protected content (Situation B)). Situation B is most likely to occur, as Pinterest has no 

interest in a commercialisation of user upoaded copyright protected content; 

  Consumers may face some difficulties when uploading third party protected content not covered 

by  an  agreement  with  rightholders  or  less  content  for  viewing  insofar  as  there  is  currently  a 

certain  amount  of  copyright  protected  content  on  the  platform.  No  switching  of  consumers  to 

other  platforms  offering  the  copyright  protected  content  is  expected.  Rather,  consumers  are 

expected  to  accept  similar  images  which  are  not  copyright  protected  as  an  alternative  for  the 

copyright protected content; 

  Rightholders  will  likely  see  little  change  in  revenues  due  to  the  expected  lack  of  Pinterest 

entering into a licensing agreement and the low consumer switching levels to other platforms; 

  Most  likely  Pinterest  is  an  atypical  example  within  a  sector  as  the  services  currently  offered 

differ  significantly  from  other  picture  platforms.  Namely,  Pinterest  doesn’t  provide  access  to  a 

database  of pictures (like Shutterstock), and doesn’t focus on  uploading  your  own content but 

rather  focuses  on  pinning  and  repinning  others’  work  and  has  a  potential  of  expanding  e-

commerce  services.  Hence,  Pinterest’s  case  may  not  be  applicable  to  other  platforms  in  the 

images sector. 

Error! Reference source not found. 

115 

 
 
 
 
 
 
 
 
Annex 4 Case Study SoundCloud 

Descriptive Part 

A) DESCRIPTIVE PART 

IDENTIFICATION 

Name 

of 

SoundCloud 

service  

About 

The 

Audio streaming & sharing website which allows users to listen, record, upload, like, share 

Company 

comment  on  Audio.  Apart  from  its  desktop  version,  the  service  is  also  available  in  free 

android and IOs app. 

Sector 

Online  Audio  Distribution  Platform  (Audio  Streaming  in  the  form  of  Music,  Audio  Books, 

Talks, TV Audio Stream, Radio, Lectures etc.) 

Business 

  Free – SoundCloud primarily has a free Business Model for Listeners as per which they 

model 

can listen to unlimited Music and Audio Streaming; 

Source - https://SoundCloud.com/pro. 

  Subscription  –  They  gather  revenue  from  Subscription  services  from  Creators  and 

Uploaders of Music wherein, a Creator can upload about 180 minutes of free content. In 

order  to  be  able  to  upload  more,  they  are  required  to  subscribe  to  either  the  paid  Pro 

Membership or the paid Pro Unlimited Membership; 

Source - https://SoundCloud.com/pro. 

  Advertisement Based (Started in 2014  – Not available in EU) – SoundCloud allows 

Premier  Account  holders  to  monetize  their  content  by  placing  Audio  &  Visual 

Advertisements  alongside  particular  tracks.  This  is  currently  only  available  in  the  US. 

The revenue from this Business Model is undisclosed; 

Source  -  http://www.billboard.com/articles/business/6228878/SoundCloud-monetization-

advertising; 

Source - https://advertising.SoundCloud.com/; 

Source - https://on.SoundCloud.com/premier. 

  Other  sources  of  Income  -  SoundCloud  collects  referral  fees  (unpublished  amount) 

when it drives listeners to buy music on other platforms, such as iTunes or Amazon; 

Source  -  http://www.billboard.com/articles/business/6228878/SoundCloud-monetization-

advertising; 

Source - https://advertising.SoundCloud.com/. 

Additional information: 

  Private  Funding  -  SoundCloud  has  received  a  total  Equity  Funding  of  about  123.32 

million US Dollars in 5 rounds from 9 investors; 

Source - https://www.crunchbase.com/organization/SoundCloud#/entity.  

Web address 

www.SoundCloud.com. 

Year 

of 

Launched in 2008 (as per company website press information) 

foundation 

Source - https://SoundCloud.com/press. 

Targeted 

countries 

Worldwide except Turkey (Was blocked in Turkey on 24th January 2014) 

Source - http://SoundClouddirect.com/has-turkey-banned-SoundCloud/. 

Target group 

One  of  their  major  target  group  is  Uploaders/Creators  like  labels,  publishers,  aspiring 

musicians,  mainstream  artists,  DJs,  podcasters  etc.,  in  addition  to  the  general  public 

listening to uploaded content: 

Error! Reference source not found. 

117 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

  According to the British digital consumer research firm, Global Web Index, 1 in 10 total 

online  users  of  the  age  between  16  and  64  are  using  SoundCloud  at  least  once  a 

month; 

Source  -  http://www.pastemagazine.com/articles/2015/02/is-SoundCloud-more-popular-

than-spotify.html. 

  SoundCloud has approximately 250 million registered users currently and had about 150 

million registered users in 2015 which was up 142% from the 11 million users in 2011; 

Source - http://www.bloomberg.com/news/features/2015-07-10/can-SoundCloud-be-the-

facebook-of-music-. 

  SoundCloud.com  has  an  audience  breakdown  as  follows:  29.1%  from  US,  6.5%  from 

Egypt, 4.8% from India, 4.5% from UK, 3.5% from Germany; 

Source - https://trends.builtwith.com/media/SoundCloud/Market-Share. 

  Usage  Statistics  for  SoundCloud  (2015):  Germany  –  18.59%,  Great  Britain  –  9.67%, 

France  –  4.93%,  Netherlands  –  2.52%,  Italy  –  0.84%,  Spain  –  0.79%.  EU  –  37.34% 

Non-EU – 62.66%; 

Source - https://trends.builtwith.com/media/SoundCloud/Market-Share. 

  About  37%  of  people  use  it  for  Music  Downloading,  another  32%  for  Music  Streaming 

and more than 30 percent of the people use SoundCloud for TV/Film Audio Streaming & 

Download Service; 

Source  -  http://www.pastemagazine.com/articles/2015/02/is-SoundCloud-more-popular-

than-spotify.html. 

  About 80% SoundCloud users paid for at least one online content in November 2014; 

Source  -  http://www.pastemagazine.com/articles/2015/02/is-SoundCloud-more-popular-

than-spotify.html. 

Turnover 

SoundCloud generated €1.37m in 2010, €4.32m in 2011, €8.04m in 2012, €11.28m in 2013, 

and/or  market 

and  now  €17.4m  in  2014.  However,  its  losses  have  also  increased  over  that  five-year 

share 

period: €1.55m in 2010 to €3.74m in 2011, €12.43m in 2012 and €23.11m in 2013, and now 

€39.1m in 2014. 

No publicly available information separately for EU. 

Source - http://musically.com/2016/02/09/SoundCloud-financial-results-2014/; 

Source 

- 

https://www.documentcloud.org/documents/2711288-

SoundCloud.html#document/p5/a277029; 

Source  -  http://www.factmag.com/2014/10/13/SoundCloud-posted-an-18-1m-loss-in-2013-

on-revenues-of-8-8m/; 

Source - http://www.statisticbrain.com/top-music-listening-internet-websites/.  

Size  of 

the 

SoundCloud has nearly 300+ full-time staff currently; 

company  

Source - https://www.linkedin.com/company/SoundCloud; 

Source - https://www.crunchbase.com/organization/SoundCloud#/entity. 

Place  of  legal 

Rheinsberger Strasse 76/77 

seat 

Berlin, Berlin 10115 

Germany 

Source - https://www.crunchbase.com/organization/SoundCloud#/entity; 

Source - https://SoundCloud.com/imprint. 

Language(s)  of 

English (US) and Portuguese (Brazil); 

platform  (does 

Source - https://SoundCloud.com/. 

not  need  to  be 

exhaustive) 

Error! Reference source not found. 

118 

 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

DETAILED DESCRIPTION 

List 

of 

Non Registered Users – Free Music & Audio Streaming. 

services 

offered 

Free  Registered  Users  –  Free  Music&  Audio  Streaming,  Music  Sharing,  Free  Downloading 

(Partial), Radio Streaming, Record and Upload Limited Music. 

Description 

of 

services 

offered 

Paid  Registered  Users  -  Record  and  Upload  Music,  Music  Sharing  and  Promotion,  Music 

Distribution, Audience Metrics & Statistics, Tier Wise Subscription Services, On SoundCloud 

(Pro, Unlimited, Premier). 

Other Products - SoundCloud App, SoundCloud Pulse; 

Source - www.SoundCloud.com. 
For Non Registered Users (FREE) –  

  Search; 

  Music & Audio Streaming – It allows to access to Free Music Streaming; 

  View  Statistics  –  It  allows  one  to  view  the  number  of  times  a  particular  track  has  been 

played and the number of users who have Liked a particular track; 

  Viewing Charts – One can view most played charts and other categories; 

  Related  Tracks  –  One  can  also  see  a  list  of  tracks  which  are  related  to  the  currently 

played audio files;; 

Source - https://SoundCloud.com/stream; 

Source  -  http://www.pivotl.com/2015/07/24/as-SoundCloud-moves-to-subscriptions-how-

long-can-free-music-last/. 

For Free Registered Users –  

Apart  from  the  features  mentioned  above  for  the  Non  Registered  Users,  A  Free  Registered 
user has access to the following functionalities: 

  Music Sharing – A user can follow their favourite Artists, Labels & Friends and  promote 

the same by sharing it on different social media websites.  SoundCloud distributes music 

using Widgets & Apps. Users can place the widgets on their own websites or blogs; 

  Create  Playlists  –  A  registered  user  can  create  their  own  playlists  and  Like,  Share,  Re 

Post their tracks; 

  Real  Time  Comments  -  Audio  Tracks  are  depicted  graphically  as  wave  forms  which 

allows users to post timed comments on specific parts of any track; 

  Free Downloading – SoundCloud supports free  downloading of  certain songs (however 

this has led to many music companies and labels turn against them on Royalty payment 

issues and Monetization Reasons); 

  Radio  Streaming  –  SoundCloud  has  recently  added  a  new  feature  by  the  name  of 

Stations  to  its  App  which  allows  Users  to  create  a  radio  station  using  any  track  on  their 

platform; 

  Record  and  Upload  Limited  Music  –  A  Free  registered  user  is  allowed  to  record  and 

upload their own music or audio for about 180 minutes post which they have to move to a 

Paid Registered Account; 

  Report  Abuse  –  A  user  can  report  a  file  for  inappropriate  content  or  infringement  of 

copyright; 

Source-http://thetechportal.in/2015/07/25/now-its-SoundCloud-which-plans-to-launch-a-

two-tiered-subscription-service-later-this-year/; 

Error! Reference source not found. 

119 

 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Source  -  http://www.pastemagazine.com/articles/2016/02/5-reasons-you-should-be-using-

SoundClouds-new-radi.html; 

Source  -  http://techcrunch.com/2016/02/02/SoundCloud-gets-its-own-radio-feature-with-

launch-of-stations-on-ios-and-android/. 

For Paid Registered Users –  

A  paid  Registered  user  has  access  to  the  following  functionalities  apart  from  the  ones  listed 
under the Free  Registered Users: Record and Upload Music, Music Sharing and  Promotion, 
Music Distribution, Audience Metrics & Statistics, OnSoundCloud: 

  Record & Upload Music – There are different tiers of subscription services for Creators 

depending upon how much content they want to Record and Upload; 

  Music  Sharing  and  Promotion  –The  website  offers  them  a  platform  to  monitor  their 

audiences,  statistics,  demographics,  comments  and  messages.  It  also  builds  a  bridge 

between new talented Artists, Music Directors and Labels; 

  Music  Distribution  –  SoundCloud  also  allows  creators  to  distribute  music.  Apart  from 

grass  root  level  artists  a  lot  of  established  Music  Artists  also  use  the  portal  to  distribute 

their new releases at the same time ensuring easy accessibility to their music; 

  On SoundCloud – It is a new partner program designed for Creators which works on Pro 

Accounts and Freemium based membership plan. It currently offers the following types of 

subscriptions: 
1)  Partner  –  This  is  free  of  cost  and  requires  the  user  to  just 
register  with  the  website.  It  offers  a standard  profile  with  an 
Upload  limit  of  about  3  hours.  It  provides  the  creator  with 
Basic  Statistics  of  the  uploaded  content  and  support  via 
Email and online; 

2)  Pro – This is a paid subscription which allows the creator to 
upload  up  to  6  hours  of  music  while  providing  extensive 
Statistics and online support via Priority email. It additionally 
provides the user with a few control tools and a Promotional 
tool called Spotlight. It is priced at 7$/month or 63$/year; 
3)  Pro  Unlimited  –  This  has  the  same  features  as  the  pro 
account  but  lets  the  user  upload  Unlimited  Content.  It  is 
Priced at 15$/month or 135$/year; 

4)  Premier  –  Premier  Membership  can  be  availed  by  Invite 
only. It allows the user to upload unlimited content and have 
a  visual  profile.  It  shells  out  comprehensive  and  detailed 
statistics  along  with  online  support,  email  and  account 
management.  It  provides  control  tools  like  Quiet  mode  and 
Geographic  control  and  promotional  tools  like  Spotlight. 
SoundCloud also promotes the Tracks and Profile of Premier 
account holders at the same time allowing them to monetize 
their  tracks  by  Revenue  Sharing.  In  addition,  Premier  users 
gain access to all of the features of the pro unlimited tier; 
Source - https://on.SoundCloud.com/pro; 

Source - https://on.SoundCloud.com/premier; 

Source - https://on.SoundCloud.com/;  

Error! Reference source not found. 

120 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

Source-http://thetechportal.in/2015/07/25/now-its-
SoundCloud-which-plans-to-launch-a-two-tiered-
subscription-service-later-this-year/; 

Source  -  http://createdigitalmusic.com/2013/03/SoundCloud-
more-affordable-for-creators-as-service-attempts-balancing-
acts-analysis/; 

Source 
https://blog.SoundCloud.com/2014/08/21/introducing-on-
SoundCloud/. 

- 

Other Products –  

  SoundCloud App – SoundCloud offers free Mobile Apps for Android and IOS; 

  SoundCloud  Pulse  –  SoundCloud  Pulse  is  a  dedicated  app  for  Creators  and  is  the 

mobile counterpart of OnSoundCloud.com. The app allows its users to share their sounds 

publicly  and  privately,  track  their  stats  and  performance,  reply  to  comments,  and  follow 

other users. 

Source 

-  http://techcrunch.com/2015/11/02/SoundCloud-rolls-out-a-dedicated-app-for-

creators/. 

Audience  for 

On SoundCloud: about 7.2% of the total monthly active users are Creators sharing well over 

services 

110 million tracks.  

No other Publicly shared statistics are available. 

Source - https://trends.builtwith.com/media/SoundCloud/Market-Share; 

Source - http://www.factmag.com/2016/02/11/SoundCloud-financial-report-44m-losses/; 

Source - http://www.alexa.com/siteinfo/SoundCloud.com. 

Advertising 

  SoundCloud  lets  Premier  Account  holders  monetize  their  content.  A  Premier  account 

holder can choose to let SoundCloud place Audio & Visual Advertisements alongside their 

tracks/audio content. The revenue from this advertising is shared between the artist and 

SoundCloud,  where  the  artist  will  be  compensated  for  each  time  an  ad  appears  on  any 

track they uploaded. Details of this revenue split is not publicly available. This is currently 

only  applicable  in  the  US,  expected  to  launch  soon  in  other  markets  soon.  The  revenue 

from this Business Model is undisclosed; 

Source  -  http://thenextweb.com/apps/2014/08/21/SoundCloud-introduces-ads-first-time-

brings-revenue-sharing-creators/#gref; 

Source - http://techcrunch.com/2015/06/01/SoundCloud-royalties/; 

Source  -  https://www.budivoogt.com/insight-into-SoundCloud-premier-monetization-ads-

and-visual-profiles/. 

  Premier  accounts  offer  a  variety  of  exclusive  features  such  as  visual  banners,  special 

artwork  on  tracks  and  the  ability  to  geographically  restrict  content.  In  April  2015,  the 

platform  reported  having  brought  on  over  100  of  these  invite-only  premier  partners,  to 

which they paid out more than $1.000.000 in advertising revenues; 

Source  -  https://www.budivoogt.com/insight-into-SoundCloud-premier-monetization-ads-

and-visual-profiles/; 

Source - http://www.theverge.com/2014/8/21/6052211/ads-are-coming-to-SoundCloud. 

  On  artist-driven  campaigns,  as  with  more  widespread  audio  pre-rolls,  SoundCloud  takes 

Error! Reference source not found. 

121 

 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

an  undisclosed  portion  of  the  ad  revenue  and  hands  the  rest  to  the  artists.  For  pre-roll, 

artists get “the majority” of the revenue; 

Source - http://digiday.com/platforms/SoundCloud-makes-rain-ad-dollars/. 

  SoundCloud does not put up any Static Banner Ads on the WebPage/Screen.  

License 

  SoundCloud lets Creators monetize their content via paid subscriptions, royalty payments 

agreements 

and Advertisements (currently not available in EU). As on January 13th, 2016, Universal 

Music  Group  and  SoundCloud  announced  that  they  have  reached  an  agreement  that 

creates  a  host  of  new  creative,  commercial  and  promotional  opportunities  for  UMG’s 

artists. The agreement allows SoundCloud to benefit from UMG’s recording artists, as well 

as  songwriters  signed  to  Universal  Music  Publishing  Group,  as  they  roll  out  advertising 

and  introduce  subscription  services  in  the  US  and  other  markets  later  this  year.  In 

addition,  UMG’s  labels  and  publishing  company  will  gain  access  to  SoundCloud’s 

promotional tools, analysis and data to provide recording artists and songwriters with new 

opportunities to generate revenue and to strengthen their connections with fans; 

Source 

- 

http://www.universalmusic.com/universal-music-group-and-SoundCloud-

announce-landmark-partnership/. 

 

In  April  2015,  independent  label  organization  Merlin,  which  represents  over  20,000 

independent labels, signed a contract with SoundCloud which allows Merlin’s members to 

monetize  the  revenue  from  uploads  to  the  service  through  advertisements.  It  was  to 

provide  those  members access  to  a  richer  set  of  data  analytics,  as  well  as  the  ability  to 

remove infringing content from the service; 

Source  -  http://www.billboard.com/articles/business/6589965/SoundCloud-merlin-deal-on-

SoundCloud. 

  A 

leaked  contract  between  SoundCloud  and 

the  National  Music  Publishers 

Association, outlines a tool called Deck, which gives those signed to the company's On 

SoundCloud  program  enhanced  data  access  --  as  well  as  the  ability  to  takedown  music 

from  any  third-party  Uploader.  Only  those  who  have  signed  contracts  with  SoundCloud 

are given access to Deck; 

Source 

-  http://www.billboard.com/articles/business/6583316/SoundCloud-takedown-dj-

mixes-dmca-safe-harbor. 

  SoundCloud, recently resolved its lawsuit with PRS, a group which represents the rights of 

115,000 songwriters, composers and music publishers in the UK about repeatedly failing 

to remunerate its members. Following this, the two parties signed a licensing agreement. 

The terms of this deal have not been disclosed; 

Source - http://variety.com/2015/digital/news/SoundCloud-prs-deal-1201666363/; 

Source  -  http://www.billboard.com/articles/business/6814232/SoundCloud-prs-for-music-

deal. 

  SoundCloud has tied up licensing deals with Warner Music Group in XX (date); 

Source: 

https://www.theguardian.com/technology/2014/nov/04/SoundCloud-licensing-

warner-music-group-deal; 

  SoundCloud has concluded deals with (almost) all artists or artists associations; 

Source – interview with a representative of SoundCloud. 

Revenues  to 

 

In May 2015, SoundCloud & National Music Publishers  Association announced that they 

rightholders 

had  struck  a  deal  and  an  unsigned  copy  of  the  contract  was  released  as  per  which 

SoundCloud  would pay 10.5 percent of its revenue including ads or  about  22 percent of 

what  it  makes  on  sound  recording  rights  —  whichever  is  higher.  To  seal  the  deal, 

SoundCloud would pay the group of independent music publishers a $350,000 advance, 

split  between  them  based  on  market  share  of  the  independent  music  listened  to  on  the 

service.  Under  the  terms,  SoundCloud  would  continue  to  offer  a  free  ad-supported  tier, 

Error! Reference source not found. 

122 

 
 
 
 
 
A) DESCRIPTIVE PART 

and  wouldn’t  pay  additional  royalties  beyond  it  on  free  trials  designed  to  upsell  users  to 

Premier subscriptions; 

Source - http://techcrunch.com/2015/06/01/SoundCloud-royalties/; 

Source 

- 

http://www.theguardian.com/technology/2014/aug/21/SoundCloud-ads-

musicians-major-labels; 

Source - https://blog.SoundCloud.com/2015/03/02/on-SoundCloud-reaches-100-partners/. 

  Since the launch of their ad program in 2014 (available only in US), SoundCloud has paid 

out  more  than  1  million  dollars  to  the  early  content  partners.  SoundCloud  currently  has 

four ad products: standard display ads, audio pre-rolls, native ads for brand channels and 

custom  sponsorships.  In  the  later  months  of  2014,  the  company  paired  emerging  artists 

with Jaguar and Microsoft to create exclusive tracks sponsored by those brands, and ran 

an  “Open  Call”  music  competition  with  Green  Label  Sound  (part  of  Mountain  Dew).  On 

those  artist-driven  campaigns,  as  with  more  widespread  audio  pre-rolls,  SoundCloud 

takes an undisclosed portion of the ad revenue and hands the rest to the artists. For pre-

roll, artists get “the majority” of the revenue. 

Source - http://digiday.com/platforms/SoundCloud-makes-rain-ad-dollars/; 

Source 

- 

http://www.universalmusic.com/universal-music-group-and-SoundCloud-

announce-landmark-partnership/. 

Use 

of 

  SoundCloud  uses  a  Content  Identification  System  to  identify  and  control  copyrighted 

content 

material. To make sure the material is properly protected, the rightholders’ catalogue has 

recognition 

to  be  fed  to  AudibleMagic.  The  system  is  used  primarily  for  identifying  audio  that  rights 

technologies  

holders  have  requested  to  be  taken  off  SoundCloud.  This  is  good  because  it  makes  it 

easier  for  artists,  labels  and  other  content  owners  to  control  how  the  content  they  have 

created is available. And when one uploads their own audio to SoundCloud, it is possible 

to  find  out  more  quickly  if  somebody  is  uploading  a  copy  to  their  own  page  without  the 

owner’s permission. 

Source - https://blog.SoundCloud.com/2011/01/05/q-and-a-content-identification-system/; 

Source 

- 

http://www.cdamusicgroup.com/partner/2013/6/5/SoundCloud-qa-our-new-

content-identification-system. 

Comparison 

Comparison with Spotify and Deezer -  

with 

1)  User  Base  –  SoundCloud  has  about  250  million  users  as  against  the  75  million  on 

traditional 

providers 

Spotify  and  the  16  million  members  on  Deezer.  When  compared  with  SoundCloud 

which is mostly active in XXX, Spotify maintains a stronghold over certain key regions 

like North America and Europe; 

Source  -  http://www.pastemagazine.com/articles/2015/02/is-SoundCloud-more-popular-

than-spotify.html  

2)  Revenue  Paid  To  Rightholders  –  SoundCloud  has  a  fairly  poor  system  of 

remuneration to Rightholders as compared to Spotify’s. Spotify claims to have paid out 

more  than  3  billion  USD  till  date  as  royalties.  They  pay  out  approximately  70%  of  the 

total  revenue  while  retaining  about  30  %  internally.  However  SoundCloud  has  had  a 

comparatively poor royalty Mechanism in place. As per a recent unsigned contract copy 

with National Music Publishers Association, SoundCloud would pay 10.5 percent of its 

revenue including ads or about 22 percent of what it makes on sound recording rights 

— whichever is higher. As opposed to this, Deezer in the first 6 months of 2015 made 

93 million euros  ($104 million) in  revenue and paid back 76.4  percent of that to  rights 

owners -- a bit more than the 70 percent of Spotify; 

Source 

-  http://www.theguardian.com/technology/2015/apr/03/how-much-musicians-

make-spotify-itunes-YouTube; 

Source  -  http://www.bloombergview.com/articles/2015-09-22/can-deezer-make-money-

Error! Reference source not found. 

123 

 
 
 
 
 
A) DESCRIPTIVE PART 

streaming-music-; 

Source 

-  http://techcrunch.com/2015/10/15/deezer-is-losing-subscribers-but-growing-

revenue/. 

3)  Artists  –  SoundCloud  is  an  easy  portal  for  new,  aspiring  artists  as  well  established 

Artists  and  Labels  as  compared  to  Spotify,  where  the  labels  and  artists  are  more 

established. 

Source 

- 

https://www.reddit.com/r/Monstercat/comments/3exzfn/SoundCloud_vs_spotify/.  

Error! Reference source not found. 

124 

 
 
 
 
 
 
 
 
Impact analysis of the intervention by stakeholder affected 

Disclaimer: the impact assessed is only that of a potential clarification of the rules 
applicable  to  the  activities  of  online  intermediaries  in  relation  to  copyright 
protected  content,  without  taking  any  position  on  whether  any  of  the  services 
covered can claim to be covered  by  art 14 of  e-commerce  and the limited liability 
exemption.  

In the  next  paragraphs the impact analysis looks into the impact of a potential clarification  on the 

following stakeholders specifically: 

  SoundCloud itself; 

  Rightholders; 

  Consumers; 

  Other online content providers. 

The  principal  logic  of  the  assessment  is  based  on  distinguishing  two  different  perspectives  that 

SoundCloud  can  take  if  it  is  faced  with  the  obligation  to  compensate  copyrightholders  for 

distributing copyright protected content in case of a clarification: 

  Situation A: SoundCloud enters into license agreements with rightholders, has to pay a license 

fee and can look for opportunities to monetize the content; 

  Situation B: SoundCloud takes down the copyright protected content uploaded by third parties, 

and blocks the upload of new similar content. 

In  case  (new)  copyright  protected  content  is  uploaded  on  SoundCloud,  SoundCloud  can  do  the 

following (distinguishing between Situation A and B as indicated above):  

  Situation A: 

1. Keep it on the website, add advertising, add an option for a subscription fee (this is the 

current situation); 

2. Ask money from the uploader to cover the royalty costs; 

3. Absorb the royalty costs. 

  Situation B: 

4. Take down and block of new copyright protected content uploaded by third parties (no 

revenue collected). 

The current situation of SoundCloud compares most closely to situation 1.  

B) ANALYSIS PART 

Online 

Effect on costs:  

intermediaries 

Technology identification software – potential slight increase in costs:  

  SoundCloud has a content identification technology in place. Thus no further one-

time investment is foreseen in principle; 

  Since currently SC has a technology in place that checks every upload immediately 

and copyright protected content uploaded by someone who doesn’t have the right 

to  do  so  is  removed.  Monitoring  costs  can  be  expected  to  increase  if  further 

licensing agreements are concluded in the future; 

  The increase in costs associated with the expansion of SC is not considered here, 

as it is not related to clarification. 

Royalties: 

 

currently,  SoundCloud  is  already  concluding  licences.  This  development,  means 

Error! Reference source not found. 

125 

 
 
 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

SoundCloud  will  be  paying  royalties  to  rightholders  as  a  result  (once  again,  not 

related to the clarification). This development also shows that SoundCloud is willing 

to negotiate with rightholders and is likely to continue doing so in the future; 

 

It  is  unclear  whether  renegotiation  of  current  contracts  might  take  place.  It  is 

assumed the odds of renegotiations taking place will be limited, as parties already 

managed  to  reach  an  agreement  under  the  current,  pre-clarification  situation. 

Everything  will  depend  on  the  way  the  current  deals  are  structured  and  how  they 

were negotiated. 

Effect on revenues:  

It  is  expected  that  SoundCloud  continues  to  roll  out  their  current  models  based  on 

advertising and subscriptions: 

  The  need  for  additional  revenues  is  already  in  place  due  to  the  choice  to  seek 

licenses.  No  additional  impact  can  be  expected  from  the  clarification,  unless 

renegotiations  of  the  licenses  will  take  place,  in  which  case  more  additional 

revenue would need to be generated. 

Effect on business model:  

SoundCloud  will  need  to  come  up  with  new  business  model  to  be  able  to  generate 

profit.  This  is  associated  with  the  current  choice  to  seek  licenses,  rather  than  any 

clarification. Clarification would anchor the need for SoundCloud to find a new business 

model.  

Rightholders 

 

In  general:  the  clarification  will  result  into  the  conclusion  of  license  agreements 

where they didn’t exist before, provided a commercial agreement can be achieved. 

This will result in payments to rightholders; 

 

In  case  of  already  existing  licenses,  rightholders  and  SoundCloud  might  engage 

into renegotiation over the terms of the previously concluded licenses. As indicated 

before, odds of this happening seem quite low; 

  Rightholders will not ask more from SoundCloud than SC can actually afford to pay 

(as  they  don’t  want  to  kill  off  SoundCloud  completely).  It  is  unknown  whether 

rightholders that currently have deals with SoundCloud would ask for higher royalty 

payments. 

  Situation A: 

-  The already existing deals between SoundCloud and rightholders are expected 

to  remain  in  place.  It  is  not  known  is  current  deals  will  be  re-negotiated  as  a 

result of the increased bargaining powers of rightholders after the clarification; 

- 

In cases where no deals exists, SoundCloud is expected not to close additional 

deals, meaning there will be no additional payments to rightholders. 

Consumers 

  Assuming  additional  license  agreements  will  be  closed  (either  because  of 

SoundCloud  current  business  model  or  because  of  the  obligation  to  close  such 

deals  following  the  clarification),  the  availability  of  content  for  consumers  will 

increase. 

  Situation A: 

-  Availability of content will not change.  

Other 

online 

  With the impact of the clarification on SoundCloud expected to be quite limited, as 

content providers 

the  main  changes  within  SoundCloud  being  driven  by  their  own  strategy,  no 

Error! Reference source not found. 

126 

 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

significant impact from the clarification on the situation of other content providers is 

expected.  The  impact  of  the  current  SoundCloud  strategy  on  these  other  content 

providers falls outside the scope of this study. 

  Situation A: 

-  Shift of consumers to or from other platforms would depend on the changes in 

offer of these other platforms. With little to no changes to the SC offer, impact 

of SC on other content providers seems quite limited.  

Summary of the impact analysis 

  A  potential  clarification  would  result  into  little  impact  on  SoundCloud,  as  the  main  changes  to 

the  SoundCloud  business  model  are  already  taking  place  in  the  current,  pre-clarification 

situation. SoundCloud is expected to continue its current strategy to find licensing agreements 

with  rightholders  and  opportunities  to  monetize  this  content.  The  entering  into  license 

agreements  could  be  qualified  as  Situation  A,  although  SoundCloud  is  doing  this  on  its  own 

accord. The added value resulting from a clarification is expected to be little to none; 

  For consumers, the current strategy of SoundCloud is expected to lead to more content being 

available; 

  For  those  rightholders  that  manage  to  come  to  an  agreements  with  SoundCloud,  additional 

revenues  can  be  expected. Where  no such agreement can  be found,  the  content of the  right-

holder will be blocked and those rightholders will not receive additional revenues; 

 

Error! Reference source not found. 

127 

 
 
 
 
 
 
 
 
 
 
 
 
Annex 5 Case Study Vimeo 

Descriptive Part 

A) DESCRIPTIVE PART 

IDENTIFICATION 

Name of service  

Vimeo 

About 

the 

It is a video hosting & sharing website, owned by IAC / InterActive Corp. The site allows 

company 

users  to  view,  upload,  rate,  share  and  comment  on  videos.  Apart  from  its  desktop 

version, the service is also available in android and IOS.  

Sector 

Video Hosting / Sharing Service. Apart from general Viewers, the target audience of the 

uploaders  are  amateur  and  professional  film  makers  and  creative  artists.  Only  PRO 

users  are  allowed  to  upload  videos  which  are  not  created  by  them  but  to  which  they 

have licensing rights. 

Source: 

http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=105810806. 

Business model 

Vimeo uses a combination of business models listed below: 

1)  Freemium: Most of the content (videos) available on the site is for free viewing for 

users. This generates user profile information e.g. for targeting advertising and as a 

basis for making premium offers (not direct monetization); 

Source:  http://www.investopedia.com/articles/markets/111315/how-vimeo-makes-

money.asp. 

2)  Subscription:  A  major  portion  of  Vimeo  revenue  comes  from  paid  subscribers’ 

accounts which is a 3 - tier pricing scheme, from free up to $249 per year and paid 

content for viewers. No information on the ratios between the tiers is available; 

Source: http://www.diffen.com/difference/Vimeo_vs_YouTube. 

3)  Pay-per-use:  Vimeo  has  an  online  video  store  called  Vimeo  on  demand.  Every 

time the user accesses a service they pay a certain amount of money for viewing 

the content which is pre decided by the creator of the content. This also provides 

user’s exclusive access to videos which are not available for free users. (Vimeo On 

Demand (for PRO users only) allows users to sell their videos directly to viewers, 

keeping  90%  of  the  profits.  Another  way  is  the  Tip  Jar  (for  PRO  and  Plus  users) 

that  lets  viewers  leave  tips  for  videos  they  like  or  appreciate.  The  third  option 

(available  to  all  users)  is  to  license  their  videos  through  Getty  Images  for  stock 

content.); 

Source:  http://www.investopedia.com/articles/markets/111315/how-vimeo-makes-

money.asp. 

4)  Advertising:  Some  portion  of  Vimeo’s  revenue  come  from  advertisement,  with 

banner  ads 

featuring  on 

the  webpage/screen.  Vimeo  does  not  display 

advertisement on the videos themselves; 

Source 

- 

http://digiday.com/platforms/dstilleryes-vimeo-betting-10-million-

Web address 

www.vimeo.com. 

advertising/.  

Year of foundation  November, 2004 

Source 

- 

http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=105810806. 

Error! Reference source not found. 

129 

 
 
 
 
 
A) DESCRIPTIVE PART 

Targeted countries  Worldwide except blocked countries which are Indonesia, Kazakhstan and Turkey 

Source - https://www.techinasia.com/days-launch-indonesia-considers-blocking-netflix; 

Source - http://vestnikkavkaza.net/news/Vimeo-blocked-in-Kazakhstan.html; 

Target group 

  While anyone  with a basic account can upload their home-made  movies, Vimeo is 

more attractive than YouTube for creative & professional people, artists, film makers 

due  to  the  more  select  audience  which  pay  subscriptions  and  leave  more  serious 

comments; 

Source 

- 

http://socialjournalism.tumblr.com/post/1468610725/vimeo-limiting-

yourself-to-a-target-audience. 

  Vimeo reported 170 million monthly viewers in 2015. This figure was a 100 million in 

2013. Of its 170 million viewers, about 42 million are in the United States; 

Source: 

http://www.investopedia.com/articles/markets/111315/how-vimeo-makes-

money.aspSource: http://expandedramblings.com/index.php/vimeo-statistics/. 

 

In Oct 2014, Vimeo reported 500,000 paid users; 

Source: http://expandedramblings.com/index.php/vimeo-statistics/. 

  More than 73% of Vimeo users are between age groups 25-35; 

Source: 

http://www.digitalinformationworld.com/2014/11/vine-vs-vimeo-launch-to-

latest-stats-infographic.html. 

  70% of Vimeo traffic comes from outside of US. 3.9% of users out of these are from 

UK alone; 

Source: http://www.alexa.com/siteinfo/vimeo.com. 

 

In 2015, 12% of the total users were high school graduates; 

Source: http://expandedramblings.com/index.php/vimeo-statistics/. 

  A breakdown of audience based on content is not publically available. 

Turnover 

and/or 

  As  of  October  2015,  the  latest  available  figures  indicate  Vimeo  contributes  $40 

market share 

million revenue annually to the much larger IAC; 

Source: 

http://www.investopedia.com/articles/markets/111315/how-vimeo-makes-

money.asp. 

  Social network market share held by Vimeo monthly in the United Kingdom (UK) in 

February 2015 was 0.01% and in the US it was 0.9% in 2015; 

Source: 

http://www.statista.com/statistics/280547/social-networks-market-share-

held-by-vimeo-in-the-united-kingdom-uk/. 

  Region wise Market Share of Vimeo: Great Britain – 8.46%, Germany – 5.27%, Italy 

– 1.66%, France – 3.53%, Netherlands – 3.04%, Spain – 2.14% Other – 75.9%; 

Source: https://trends.builtwith.com/media/Vimeo/Market-Share.  

Size 

of 

the 

Midsize company with approx. 300 employees 

company  

Source 

-  https://www.owler.com/iaApp/poll/526105e6e4b06937d9664d96/vimeo/how-

many-employees-does-vimeo-have-.htm. 

Place of legal seat 

New York City, New York, United States  

Source - https://vimeo.com/about. 

Language(s) 

of 

  As of January 2016, Vimeo is available in four languages: English, Spanish, French 

platform  (does  not 

and German; 

need 

to 

be 

Source – http://www.adweek.com/socialtimes/vimeo-french-german/117078. 

exhaustive)  

  The most played videos on Vimeo are in English; 

Source - https://vimeo.com/channels/top/videos.  

2.  DETAILED DESCRIPTION 

List  of  services 

For a Guest/unregistered user, list of functionalities available on Vimeo are:  

offered 

  Video Resolution change, Screen-mode to view, Search by Keyword, Share, Basic 

Statistics, Browse. 

Error! Reference source not found. 

130 

 
 
 
 
 
A) DESCRIPTIVE PART 

For an Uploader or a free registered user (Vimeo Basic), list of functionalities available, 

including the ones mentioned above, are:  

  Create,  Upload  Videos  (500  MB/week  limited  upload),  Like,  Comment  &  Rate, 

Subscribe, My Feed, My Channel, Subtitles, Watch Later Playlists, Update video. 

  For  a  Paid  user,  including  the  services  mentioned  above:  Vimeo  Plus,  Vimeo  Pro, 

Vimeo on Demand. 

  Other products: Original Content; 

Source - https://vimeo.com/. 

Description 

of 

Functionalities for a Guest/Unregistered user: 

services offered 

  Video Resolution: The  user has  the option of selecting the quality of the video. If 

someone  has  a  slow  internet  connection,  he/she  can  still  watch  the  video  without 

waiting too much for a video to buffer by selecting a lower quality for the video; 

  Mode of screen: the user can view the video in the normal mode, theatre mode or 

the full-screen mode; 

  Search; 

  Share:  any  video  can  be  shared  to  different  platforms  such  as  Facebook,  Twitter 

etc. Once this option is selected a new window opens up which directs the user to 

the required platform; 

  Statistics:  the  user  can  have  a  quick  view  of  limited  statistics  related  to  the  video 

they are watching such as number of view, shares etc.; 

  Staff  Picks:  this  section,  on  the  homepage,  allows  the  user  to  view  the  most 

trending videos in the past few days; 

  Browse: This section contains a category vise list of categories.  

The Vimeo website appearance is clean and free of ads. 

Functionalities  for  Registered  Users  which  includes  Uploaders  (including  the  above 

ones): 

  Create:  This  feature  lets  you  create  your  own  videos  with  the  variety  of  tools 

available and share other videos with the followers; 

  Upload: once a user signs in to the account they can upload a video of their own; 

  Like,  Comment  and  Rate:  only  once  the  user  signs  in  is  when  they  can  rate 

comment or like a video; 

  Subscription: lets the user subscribe to the channel they like. By subscribing to the 

channel,  the  user  receives  a  notification  under  subscriptions  section,  which  in  turn 

tells them the number of new videos posted by that channel; 

  My  Feed:  allows  the  user  to  follow  someone  on  Vimeo,  their  activity  will  show  up 

here.  You  can  also  follow  Channels,  tags,  and  other  things  you  want  to  keep  up 

with.  Your  subscriptions  and 

friend  activity  are 

listed 

together  with  your 

recommendations; 

  My channel: This feature lets users showcase their videos by giving their viewers a 

slick destination to watch the user’s videos, or set up a Channel to showcase videos 

the user particularly like from other Vimeo members. Other people can subscribe to 

the user’s Channel, and the videos the users add will show up in their fee; 

  Subtitles: Vimeo offers subtitles of videos to its users in any language they desire 

by  paying  a  pre-defined  amount  and  purchasing  it.  These  can  then  be  enabled  by 

the  user  by  clicking  an  enable  button  in  settings  once  the  payment  is  received  by 

Error! Reference source not found. 

131 

 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Vimeo; 

  Playlist: the user has the ability to create a playlist, to be watched in the future; 

  Update Video: Vimeo allows the user to replace a video after it has been uploaded 

without losing that video’s statistics. 

Functionalities for Paid Users (including all the above ones): 

  Vimeo Plus: As of October 2015, Vimeo Plus costs $10 per month, allows up to 5 

GB per week and 250 GB per year to be uploaded; it is only available to individuals 

–  Vimeo  does  not  allow  this  account  to  be  used  for  commercial  purposes  or  by 

companies internal (e.g. for training); 

  Vimeo  Pro:  Vimeo  Pro  was  added  in  2011.  It  is  designed  for  professionals  and 

businesses, costs $249 per  year, and allows 20  GB per  week and 1 terabyte  (TB) 

per year of content to be uploaded; 

  Vimeo  on  Demand:  Vimeo  on  Demand,  which  launched  in  early  2013  as  a 

filmmaker-friendly  distribution  alternative.  Participants  must  be  Pro  members.  The 

fee gives the filmmaker the ability to design his own video player, including artwork 

and  logos.  Uploaded  videos  can  then  be  sold  or  rented  at  whatever  price  the 

filmmaker  sets,  and  Vimeo  keeps  10%  of  the  proceeds  plus  processing  costs. 

Vimeo  added  another  aspect  to  this  service  in  June  2015  when  it  included  a 

subscription  service.  Filmmakers  can  charge  a  recurring  monthly  fee  that  gives 

subscribers unlimited access to their work. Vimeo again takes 10% of the fee. Below 

are the add-ons available in Vimeo On Demand: 

Source: http://www.reelseo.com/5-ways-vimeo-beats-YouTube/; 

Source: 

http://blogs.techsmith.com/tips-how-tos/YouTube-vs-vimeo-whats-the-

difference/; 

Source - https://vimeo.com/forums/topic:40958; 

Source: https://vimeo.com/forums/help/topic:268591. 

  Advanced  Analytics  -  Vimeo  offers  analytics  which  gives  Plus  Vimeo  members 

information on who is watching the video and how they are viewing it. It also gives 

insights  on  stats  on  views,  comments,  likes,  shares,  total  plays,  and  geographical 

data; 

  Custom Domains for Vimeo Pro Portfolio - As a Vimeo Pro member, you can use 

a custom domain name for your Portfolios (example: example.com). You can easily 

use a domain you already own, or purchase a domain name elsewhere; 

  Custom  URLs  -  Vimeo  also  gives  you  the  option  to  customize  the  URL  of  your 

video, which makes them easier to remember; 

  Privacy  Controls  -  Vimeo  offers  password  protection  to  videos,  so  they  can  be 

shared  with  friends  before  setting  them  as  public.  Another  Vimeo  feature  allows 

users to protect their content — Vimeo Plus and Pro users are able to restrict which 

domain names (if any) can embed their videos. When you upload a video to Vimeo, 

you  can  also  control  the  playback  features  for  it.  One  really  handy  feature  is  the 

ability  to  limit  playback  except  via  your  own  website,  or  another  website  of  your 

choosing; 

  Paid  Subtitling  and  Translation  Services-  Vimeo  has  options  for  subtitling  and 

translation  that  it  helps  its  Vimeo  Pro  and  Vimeo  On  Demand  customers  get  a 

bigger return from their content worldwide. The tools are available to all Vimeo users 

and  are  priced  by  the  minute.  The  fee  for  subtitling  an  English  language  video 

currently starts at $3.95/minute for "full-service" captioning at Amara's best quality, 

with  an  additional  per-minute  charge  for  translation  that  ranges  from  $11.20  to 

Error! Reference source not found. 

132 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

$13.45,  depending  on  the  language.  "Standard-quality"  English-language  subtitles 

can be had for as little as $1.70/minute.  

Source: 

http://www.studiodaily.com/2014/11/vimeo-adds-paid-subtitling-and-

translation-services/. 

Other Products: 

Original Content - Vimeo on Demand's also published original content, with 20-minute 

episodes priced  at $2 each, or $8 for  all 6 episodes of a series. The revenue  was not 

announced  publicly.  Vimeo  subsequently  announced  it  would  invest  $10  million  in 

producing original content; 
Source 
- 
money.asp. 

http://www.investopedia.com/articles/markets/111315/how-vimeo-makes-

Audience 

for 

  As  of  December  2014  Vimeo  has  170  million  monthly  viewers  and  25  Million 

services 

monthly members with a total of approx. 715 Million monthly video views; 

Source  -  http://www.digitalinformationworld.com/2014/11/vine-vs-vimeo-launch-to-

latest-stats-infographic.html. 

  Age based Viewership breakup: 73% (10 – 35 years), 14% (Teenagers), 13% (35 – 

60 years); 

  Around 22% viewership coming  from EU  (4.5%  UK, 4.5% Germany, 4.1% France, 

9% others) and 31% from US; 

Source - http://www.alexa.com/siteinfo/vimeo.com. 

  Vimeo  is  male  dominated  with  more  number  of  male  users  than  femaleVimeo 

attracts film makers and award winning exclusives, musicians and brands; 

Source  -  http://www.digitalinformationworld.com/2014/11/vine-vs-vimeo-launch-to-

latest-stats-infographic.html. 

Advertising 

  Vimeo has no Advertisements policy and it does not display advertisements  while, 

at  the  time  of  or  before  playing  a  video.  It  has  simple  Google  AdSense  banner 

advertisements on the website; 

 

It  has  the  capability  of  earning  more  than  $500,000  monthly  through  banner 

advertisements which is already incorporated through Google AdSense; 

Source - http://www.siteprice.org/website-worth/vimeo.com. 

  Vimeo  does  not  show  pre-roll  advertisement,  thereby  foregoing  an  estimated 

additional $25 million per year if it were to serve ads against its videos; 

Source 

- 

http://digiday.com/platforms/dstilleryes-vimeo-betting-10-million-

advertising/. 

License 

agreements 

No  publicly  available  information  on  license  agreements  with  rightholders.  Normal 
registered  users  are  only  allowed  to  upload  videos  they  have  created  themselves  and 
are the rightholders of, while only PRO users are allowed to upload videos which are not 
created by them but they are right-holder. 

Revenues 

to 

  Vimeo On Demand (for PRO users only) allows users to sell their videos directly to 

rightholders 

viewers,  keeping  90%  of  the  profits.  Vimeo  On  Demand,  a  totally  open  platform 

enables the right-holder to sell their work directly to the audience. Rightholders keep 

83% - 96% of revenue after transaction fees; 

  Licensed Videos: allowing uploaders to license their videos through Getty Images 

for stock content, although this depends on Getty selecting any video for inclusion to 

the program; 

  Brand  Creator  Fund:  which  pairs  filmmakers  with  brands  to  create  promotional 

content  on  the  site.  It’s  a  new  potential  source  of  funding  for  filmmakers  using  the 

site. 

Error! Reference source not found. 

133 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

No publically available information on numbers. 

Source - http://www.diffen.com/difference/Vimeo_vs_YouTube; 

Source 

- 

http://www.pbs.org/pov/filmmakers/diy-digital-distribution-

platforms.php#.VtV6ffl95D9. 

Use  of  content 

Copyright  Match  -  This  system  unknown  if  this  is  an  in-house  facility  or  a  third  party 

recognition 

offered service  -  automatically  removes copyright-infringing videos from the site. While 

technologies  

Vimeo decided to employ a copyright “fingerprinting” system that samples an audio clip 

to  see  if  it  matches  that  of  certain  third-party  copyrighted  material,  the  company 

explained that it will provide an easy-to-use appeals process if the uploader believes he 

or she has permission or that the use qualifies as “fair use” under federal copyright law.  

Source: 

http://arstechnica.com/tech-policy/2014/05/vimeo-unveils-copyright-match-

system-to-remove-infringing-videos/ 

https://www.YouTube.com/YouTube/press/statistics.html/. 

Comparison  with 

Vimeo vs Netflix 

traditional 

providers 

Netflix  is  the  largest  Subscription  Video  On  Demand  service,  which  allows  the 

subscriber  to  watch  all  available  content,  but  not  to  upload  content.  While  Vimeo 

recently launched Video On Demand, this is different from Netflix in the sense that each 

creator uploading on Vimeo can opt to charge their fans for their content. 

Source: https://www.cloudswave.com/entertainement-lifestyle/s/netflix/compare/vimeo/; 

Source: 

http://variety.com/2015/digital/news/vimeo-launches-subscription-vod-but-its-

not-like-netflix-for-now-1201510310/. 

Additional 

It  appears  that  Vimeo  has  no  traditional  licence  agreements  for  the  use  of  copyright 

Information 

protected  content  of  rightholders  against  payment  of  a  license  fee.  Rather,  Vimeo  has 

made the following partnership agreements: 

1.  Vimeo partners with Maker Studios 

Beginning of 2015 Vimeo struck a deal with YouTube's biggest content network, Maker 

Studios,  which  Disney  purchased  in  2014.  The  companies  are  collaborating  to  fund 

exclusive content for Vimeo on Demand. That means Maker creators will sell content on 

Vimeo, before they make it available for free and with ads on YouTube. 

Source: 

http://www.cnbc.com/2015/01/15/vimeo-to-challenge-YouTube-with-maker-

partnership.html. 

2. 

Indiegogo and Vimeo Partner to Support Filmmakers 

Beginning  of  2015  Indiegogo  and  Vimeo  announced  a  partnership  directed  at 

filmmakers. 

  Featured collection on Vimeo: An “Indiegogo Funded Films” collection is featured on 

Vimeo, reaching over 170 million global users a month; 

  Free unlimited fulfilment: Participating campaigns will have access to free fulfilment 

on all digital download perks via Vimeo VOD.1; 

  Discounted Vimeo PRO: Indiegogo film campaigners will be eligible for a substantial 

discount on Vimeo PRO membership; 

  Matching  funds:  Vimeo’s  new  Creator  Fund  will  commit  up  to  a  million  dollars  in 

matching funds for select Indiegogo film campaigns in 2015. 

Vimeo  marketing  dollars:  Vimeo  will  contribute  digital  marketing  spend  and  social 

promotion  for  campaigns  in  the  matching  funds  program  and  other  selected  Indiegogo 

film 

campaigns.  Source:  https://go.indiegogo.com/blog/2015/01/indiegogo-vimeo-

Error! Reference source not found. 

134 

 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

partnership.html. 

Vimeo vs YouTube –  

Vimeo  focuses  on  delivering  high  quality  HD  content  in  a  clutter-free  and  ad-free 

experience.  YouTube  is  more  of  a  free-for-all  space  that  offers  content  spanning  the 

entire  spectrum  of  content  from  how-to  videos  and  online  courses,  to  viral  marketing, 

political campaigns, and candid home video: 

  User  Base:  Vimeo  is  used  by  filmmakers,  videographers,  and  professionals  from 

fields that focus on film- and video-making. YouTube is a convenient way for anyone 

to upload quick videos of ever YouTubehing from tutoring to home videos to music 

performances; 

  User Experience: The overall appearance of a Vimeo channel is designed to have 

the  feel  of  a  professional  portfolio.  YouTube  has  a  more  cluttered  and  distracting 

layout and is less geared toward displaying professional productions. As there is no 

time limit on the length of a video, the site is particularly attractive to filmmakers and 

fans; 

  HD  Support:  Vimeo  supports  up  to  full  1080p  HD  video,  and  users  can  set  the 

default viewing of their videos to HD. While videos can be uploaded in HD, they are 

not  played  at  that  setting  by  default,  and  many  users  do  not  bother  with  switching 

their settings; 

  Pricing and Limits: Vimeo has a 3-tier pricing scheme.  YouTube is free, and has 

no structured pricing plan. Videos on XX are limited to 15 minutes in length for most 

users, and there is no limit to the amount of videos that may be uploaded or viewed; 

  Generating Revenue: Vimeo On Demand (for PRO users only) allows users to sell 

their videos directly to viewers, keeping 90% of the profits. On demand videos can 

be viewed on mobile devices and full HD TVs. Another way is the Tip Jar (for PRO 

and  Plus  users)  that  lets  viewers  leave  tips  for  videos  they  like  or  appreciate.  The 

third option (available to all users) is to license their videos through Getty Images for 

stock  content.  YouTube's  monetization  program  allows  video  uploaders  to  receive 

55% of the revenue generated from advertisements shown with their content, but it 

usually  requires  millions  of  views  on  a  video  for  the  ad  revenue  to  become  an 

YouTubehing  substantial.  Another  avenue  is  to  create  a  paid  YouTube  channel, 

where users must pay a monthly or yearly subscription fee to view content; 

  Ads:  The  Vimeo  website  appearance  is  clean  and  free  of  banner  ads.  There  are 

also fewer in-video pop up ads. This makes for a much less distracting experience 

for the viewer. Watching a video on YouTube entails viewing ads before, during, and 

after the video. Sponsored messages often appear before a video starts, pop up ads 

appear  during  playback,  and  related  content  videos  are  suggested  after  the  video 

ends; 

  Privacy  options:  Vimeo  offers  password  protection  to  videos,  so  they  can  be 

shared  with  friends  before  setting  them  as  public.  This  is  different  from  creating  a 

private video on YouTube in that one doesn't need to be logged into the account to 

view it. You just forward the video to a recipient along with the password to type in; 

  Viewership: Vimeo has nearly 20 million members and receives 100 million unique 

visitors  each  month.  YouTube  is  by  far  the  most  popular  video  hosting  site  in  the 

world, receiving more than 1 billion unique visitors every month. 

Source - http://www.diffen.com/difference/Vimeo_vs_YouTube. 

Error! Reference source not found. 

135 

 
 
 
 
 
 
 
 
Impact analysis of the intervention by stakeholder affected  

Disclaimer: this impact assessed is only that of a potential clarification of the rules 
applicable  to  the  activities  of  online  intermediaries  in  relation  to  copyright 
protected  content,  without  taking  any  position  on  whether  any  of  the  services 
covered can claim to be covered  by  art 14 of  e-commerce  and the limited liability 
exemption.  

In  the  next  paragraphs  the  impact  analysis  looks  into  the  impact  of  a  potential 
clarification on the following stakeholders specifically: 

  Vimeo itself; 

  Rightholders; 

  Consumers; 

  Other online content providers. 

The  principal  logic  of  the  assessment  is  based  on  distinguishing  two  different  perspectives  that 

Vimeo  can  take  if  it  is  faced  with  the  obligation  to  remunerate  copyrightholders  for  distributing 

copyright protected content in case of a clarification: 

  Situation  A:  Vimeo  wishes  to  allow  user  uploads  containing  third  party  copyright  protected 

content and thus wishes to reach an agreement with rightholders (a license); 

  Situation B: Vimeo does not (want to) reach an agreement with rightholders (for certain types of 

content). User uploaded third party copyright protected content is removed. 

The impact assessment looks into both options (which can live alongside each other).  

B) ANALYSIS PART 

Vimeo 

Impact on business model 

Situation A: Vimeo (re)negotiates agreements with rightholders: 

  Vimeo has chosen a business model where it concentrates on attracting exclusive 

content for its platform; 

  As  long  as  Vimeo  doesn’t  change  its  business  model,  it  will  be  very  difficult  to 

make deals with rightholders, which involve payments of royalties. Vimeo currently 

has  no  business  model  that  generates  income  from  free  content  views  (no  ad-

based monetization present). 

Situation B: Vimeo reaches no agreement with rightholders: 

  Since  it  is  not  Vimeo’s  ambition  to  reach  license  agreements  with  rightholders  of 

for user uploaded third party copyright protected content, Vimeo is only marginally 

affected (if at all) by situation B in case of a clarification. Vimeo currently already 

blocks  non-authorised  third  party  content.  Depending  on  the  effectiveness  of  the 

current  system  in  place  to  screen  and  block  unlicensed  copyright  protected 

content, some stricter monitoring might be needed; 

  Vimeo  continues  concentrating  on  attracting  uploaders  with  exclusive  content  for 

its platform; 

  There is no need to make additional agreements compared to the current situation, 

unless Vimeo decides to change its business offering; 

  As  a  consequence  of  the  clarification  Vimeo  may  be  forced  to  apply  stricter 

monitoring  of  uploads,  depending  on  the  effectiveness  of  the  current  screening 

Error! Reference source not found. 

136 

 
 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

system in place. 

Impact on revenues 

In  both  situation  A  and  B  it  is  expected  that  there  will  be  no  or  negligible  impact  on 

revenues.  

Impact on costs 

Situation A: Vimeo (re)negotiates agreements with rightholders: 

  Vimeo  might  face  increased  cost  of  monitoring  to  prevent  liabilities  and  block 

copyright protected content for which there are no deals; 

  Vimeo will pay royalties to content companies that have agreements with Vimeo to 

produce or make available content, similar to the current situation. There will be no 

direct impact of the potential clarification as such. UUC that is third party content 

uploaded by users is blocked, as is currently the case. 

Situation B: Vimeo reaches no agreement with rightholders: 

  Vimeo  might  face  increased  cost  of  monitoring  to  prevent  liabilities  and  block 

copyright protected content; 

  Vimeo will pay no royalties in this situation, and hence no costs can be expected. 

Rightholders 

In  situation  A,  payment  to  rightholders  may  increase  in  case  Vimeo  decides  and 

manages  to  change  its  current  business  model.  No  changes  are  foreseen  under 

situation B. 

Consumers 

In both situation A and B, some content may get blocked due to stricter  monitoring of 

uploads, resulting in a reduced availability of uploads. 

Other 

online 

 

In  both  situation  A  and  B  it  is  expected  that  overall  there  will  be  no  effect 

content providers 

considering  Vimeo’s  market  positioning  in  amateur  and  professional  editing  of 

short films; 

  Vimeo  takes  the  view  that  in  general  the  clarification  will  be  detrimental  to  new 

online  intermediaries  that  want  to  enter  the  market,  as  they  need  to  make 

agreements with rightholders from the start (increase barriers to entry). Also, sites 

will  become  more  costly 

to  administrate  due 

to 

the  stricter  monitoring 

requirements. 

Summary of the impact analysis 

  Vimeo  will  most  likely  choose  not  to  enter  into  license  agreements  (Situation  B)  and  will  be 

forced to more strictly monitor uploads and block third party copyright protected content. This is 

likely associated with an increase in monitoring costs; 

  For  consumers,  no  change  is  to  be  expected  as  long  as  Vimeo  already  removes  third  party 

protected content; 

  For rightholders, no or limited impact if no agreements are concluded; 

  Vimeo  can  be  considered  as  an  atypical  online  intermediary  for  the  sector,  given  its  specific 

business  model  (no  ad-based  monetization)  and  the  particular  niche  that  they  serve  (amateur 

and professional editing of short films). 

Error! Reference source not found. 

137 

 
 
 
 
 
 
 
 
 
 
 
 
 
Annex 6 Case Study Flickr 

Descriptive Part 

A) DESCRIPTIVE PART 

IDENTIFICATION 

Name of service  

Flickr 

About 

the 

Flickr functions like an Online Photo Album. It is an Images/Video Hosting website that 

Company 

allows users to Upload, Organise and Share Images/Videos with their friends or general 

public.  Flickr  also  allows  sharing  content  onto  other  social  media  websites  like 

Facebook, Twitter, Pinterest and Tumblr. It acts as a personalised platform by allowing 

people to follow other users and “tag as favourite”, “share”, “download” and “comment” 

on pictures uploaded by others.  

Sector 

Image (primarily) / Video Hosting Services 

Business model 

Flickr’s Business Model is based on:  

  Freemium  –  All  content  available  on  the  site  is  free  for  viewing,  and  some  of  the 

images  are  free  for  download.  Flickr  offers  all  its  free  registered  users  1TB  of 

storage that they can use to upload photos or videos. Individual photos and videos 

are limited to 200MB and 1GB each. Flicker allows uploads and downloads in full 

original quality and without any restriction in number of uploads.  

One can also choose to be a part of Flickr Marketplace wherein they can sell their 

images in the Wall Art Program (explained below). 

Source: https://www.flickr.com/about 

Source: https://www.flickr.com/help/forum/en-us/72157648435795352/ 

Source: http://i.imgur.com/XZfWPSs.png 

  Subscription  –  Apart  from  the  Free  Registered  account,  there  are  2  subscription 

plans offered:  

1) Flickr Pro – Monthly plan for USD 5.99 and 2) Flickr Pro+ - Annual plan for USD 

49.99. Both subscription plans have similar offerings like advanced stats on photos, 

ad free browsing and sharing, Desktop Auto uploader etc. including all the features 

of a Free Account.  

Source: https://www.flickr.com/account/upgrade/pro. 

  Advertising  –  Flickr  monetizes  through  advertisements.  They  have  been  criticized 

for making Ad Free accounts extremely expensive in order to force people to watch 

more  advertisements.  It  has  been  quoted  that  Flickr  has  never  generated  a  lot  of 

revenue from its Pro subscriptions as it has from the advertisements. Two types of 

ads are displayed on Flickr – Banner Ads (using Google AdSense) and Interactive 

Ads (using Yahoo advertising) (more details in the advertising section below). 

Source: 

http://www.pcworld.com/article/2039414/the-new-flickr-goodbye-customers-

hello-ads.html. 

Source: 

http://thenextweb.com/insider/2013/05/21/flickr-once-a-posterchild-for-the-

freemium-model-is-now-all-about-ad-revenue/#gref. 

Source:  http://arstechnica.com/gadgets/2013/05/yahoo-gives-flickr-a-new-face-a-new-

Error! Reference source not found. 

139 

 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

app-and-a-new-business-model/. 

Source: 

http://www.businessinsider.com/the-economics-on-yahoos-big-flickr-storage-

2013-9?IR=T&r=US&IR=T 

  Flickr  Wall  Art  -  Flickr  lets  its  users  create  Wall  Mounts,  Canvas  Wraps, 

personalised  Photo  Albums  wherein  one  can  choose  a  particular  picture(s)  from 

their own collection or from the Flickr Curated collections to get it developed. When 

uploading pictures on Flickr, one can reserve few rights to their content through the 

Creative Commons Licenses. For the images bearing Creative Commons licenses 

that allow for commercial use, Flickr initially kept all of the revenue generated from 

sale  of  prints.  However  for  handpicked  photos  from  other  members  which  did  not 

have  the  Creative  commons  License,  Flickr  shared  51%  of  the  sales  with  the 

Creator.  This  has  been  highly  debated,  like  in  one  of  the  cases,  a  photographer 

who  had  filed  a  copyright  suit  over  his  photo  being  used,  lost  the  copyright 

infringement lawsuit simply because the court pointed out that he had given up his 

copyright  protection  with  his  choice  of  Flickr  Licensing.  In  lieu  of  the  damaged 

goodwill  and  opposition  from  professional  photographers  who  believed  that  their 

work  was  unjustly  used  by  Flickr  for  monetisation,  this  practice  was  eventually 

suspended  by  the  end  of  2014.  Flickr  issued  an  apology  for  this  and  vouched  to 

refund all the sales till date (no confirmation on the matter could be obtained). 

Source: http://www.wsj.com/articles/fight-over-flickrs-use-of-photos-1416875564. 

Source: https://www.flickr.com/create. 

Source: http://aci.info/2014/12/02/yahoo-starts-selling-flickr-users-photos/. 

Source 

-  http://petapixel.com/2015/08/24/photographer-loses-copyright-suit-over-cc-

licensed-photo-on-flickr/. 

Source  -  http://petapixel.com/2014/12/18/flickr-sorry-selling-creative-commons-photos-

wall-art-will-refund-sales-date/. 

Source  -  http://www.cnet.com/news/flickr-ends-sale-of-prints-uploaded-under-creative-

commons/. 

Additional information: Funding – Undisclosed amount of Equity Fundin; 

Source: https://www.crunchbase.com/organization/flickr#/entity. 

Web address 

www.flickr.com. 

Year of foundation 

Founded in 2004, Flicker was acquired by Yahoo in 2005 

Source: http://techcrunch.com/2014/08/23/flickrs-acquisition-9-years-later/  

Targeted countries 

  Flicker  is  banned  completely  in  China.  In  Singapore,  Hong  Kong,  or  Korea,  only 

safe content based on Terms of Service is available — with no option to toggle off 

SafeSearch; 

Source: 

http://www.businessinsider.in/9-incredibly-popular-websites-that-are-still-

blocked-in-China/Flickr/slideshow/48194751.cms. 

  Flickr has users in 63 countries as of October 2014; 

Source:  http://techcrunch.com/2014/02/10/flickr-at-10-1m-photos-shared-per-day-

170-increase-since-making-1tb-free/. 

  Flickr is banned in UAE, Myanmar and Iran; 

Source:  http://www.addictivetips.com/internet-tips/get-access-to-flickr-in-countries-

where-it-is-banned/; 

Source: http://www.aboutonlinetips.com/flickr-proxy/. 

Error! Reference source not found. 

140 

 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Target group 

  Apart  from  the  general  public,  Flickr’s  target  audience  is  primarily  bloggers, 

amateur/professional  photographers  and  the  general  public  looking  to  share  their 

pictures without facing heavy publishing costs; 

  As per a survey in the Q3 of 2012, about 4% of the users were from the age group 

of 0-17 years, about 10% between 18-24 years, 21% users were between 25 – 34 

years, 29% users were between 35 – 44, 19% users were between 45 – 54 years, 

10  %  users  were  between  55  –  64  and  about  5  %  which  were  65+  years.  The 

survey also showed that about 40% users were male and about 60% were female; 

Source: 

http://vator.tv/news/2012-08-22-age-gender-24-social-network-

demographics. 

  As  on  Feb  2014,  Flickr  had  92  million  users  which  increased  to  about  112  million 

users worldwide in October 2015; 

Source: http://blog.flickr.net/en/2015/06/10/thank-you-flickr-community/; 

Source:  http://techcrunch.com/2014/02/10/flickr-at-10-1m-photos-shared-per-day-

170-increase-since-making-1tb-free/. 

  Average number of photos shared daily on Flickr amounts to 1 million as of October 

2014; 

Source:  http://techcrunch.com/2014/02/10/flickr-at-10-1m-photos-shared-per-day-

170-increase-since-making-1tb-free/. 

 

In 2010, Flickr was known to have 5 billion photos which had increased to about 10 

billion in July 2015. At present, Flickr is estimated to have about 15 billion photos. 

Over the years from 2007 – 2012 – Flickr experienced an increase in uploads at the 

rate of about 20% year over year; 

Source: http://blog.flickr.net/en/2015/05/07/flickr-unified-search/; 

Source: 

http://www.theverge.com/2015/5/7/8562387/flickr-camera-roll-uploadr-

mobile-redesign; 

Source:  http://techcrunch.com/2015/12/09/flickr-comes-to-gear-vr-with-360-degree-

photo-viewing-experience/. 

  As on March 2015, there are more than 4 million images under Creative Commons. 

This collection had been viewed more than 1.3 billion times; 

Source  -  http://blog.flickr.net/2015/03/25/the-flickr-commons-welcomes-our-100th-

institution/. 

  As per Alexa.com, the audience geography of Flickr is as follows – United States – 

30.3%, India – 6.8%, United Kingdom – 5.0%,Japan – 3.9%, Spain – 3.3%; 

Turnover 

and/or 

Flickr’s market share in photo streaming viewership:  

Source - http://www.alexa.com/siteinfo/flickr.com. 

market share%,  

  US – 62.06%, Germany – 9.57%, Great Britain – 8.56%, France – 4.11%, Canada 

–  4.11%,  Italy  –  3.62%,  Spain  –  2.80%,  Australia  –  2.17%,  Netherlands  –  2.12% 

and Others – 0.96%; 

Source - http://trends.builtwith.com/widgets/Flickr-PhotoStream/Market-Share. 

  Flickr  attracted  around  4.1  million  unique  UK  users  during  January  2012,  with 

approximately 10% of UK internet users using the service in some way; 

Source - http://www.techradar.com/news/photography-video-capture/cameras/flickr-

not-trying-to-replace-social-networks-1067613. 

  As of July 2015, 17.49 million unique visitors from the United States visited Flickr, 

up from 14.3 million in April 2015; 

Source  -  http://www.statista.com/statistics/252566/number-of-unique-us-visitors-to-

flickrcom/. 

 

In 2013, there were about 3.79 million internet users among the German-speaking 

Error! Reference source not found. 

141 

 
 
 
 
 
A) DESCRIPTIVE PART 

population  aged  14  years  and  older,  who  posted  pictures  of  themselves  on  the 

internet frequently; 

Source:  http://www.statista.com/statistics/429773/frequency-of-posting-pictures-on-

the-internet-germany/. 

  A survey in France about the usage of social networking platforms by internet users 

between 2013 and 2014 showed that 1% of Internet users had used Flickr in 2014, 

which and the users stood stagnant at 1% in 2014 as well; 

Source:  http://www.statista.com/statistics/433036/social-network-sites-apps-usage-

france/. 

  As of Feb 2014, Flickr also quoted that photo uploads on the site were up by 170 % 

since it made 1TB of storage for free; 

Source:  http://techcrunch.com/2014/02/10/flickr-at-10-1m-photos-shared-per-day-

170-increase-since-making-1tb-free/. 

  No publicly available information is present about the turnover of Flickr by Yahoo. 

Size 

of 

the 

Small sized company with a team of 72 employees.  

company  

Source: https://www.flickr.com/about 

Place of legal seat 

701 1st avenue 

Sunnyvale, CA 94089 

USA 

Source: https://www.crunchbase.com/organization/flickr#/entity. 

Language(s) 

of 

Offered in Chinese, English, French, German, Indonesian, Italian, Korean, Portuguese, 

platform  (does  not 

Spanish, Vietnamese. 

need 

to 

be 

exhaustive)  

Source: https://www.flickr.com/about. 

DETAILED DESCRIPTION 

List  of  services 

Anyone can register a free account, which allows automatic or manual upload of photos 

offered 

from their device, which can be kept private or shared publicly. 

For  a  Free  Registered  User,  list  of  functionalities  available  are  –  Search,  View, 

Upload,  Organise,  Edit,  Create  Album,  Follow/Unfollow,  Pick  Favourites,  Join/Create 

Groups,  Explore,  Create  (Wall  Art  –  Paid),  Comment,  Share,  Tag,  Download,  Flag 

Photo,  Provide  Feedback,  View  Sharing  History,  Edit  Profile,  Manage  Testimonials, 

Flickr Marketplace. 

Pro  and  Pro+  Users  –  Apart  from  the  functionalities  of  a  free  registered  user,  a 

Pro/Pro+ Account user can  – View Advanced stats on photos, Ad Free Browsing and 

Sharing,  Desktop  Auto  Uploader,  Save  on  Standard  Shipping  of  Flickr  Photo 

Merchandise,  avail  discounts  on  Adobe  Creative  Cloud  Photography  plan,  Adobe 

Photoshop  CC  and  Lightroom  CC  for  the  first  year.  Both  the  account  types  carry  the 

same benefits however the difference lies in the time period of subscriptions. Flickr Pro 

is a monthly subscription plan priced at USD 5.99 per month whereas Flickr Pro+ is an 

Annual Subscription plan priced at USD 49.99 per annum. 
Functionalities in Free User Account: 

  Search  –  This  allows  users  to  search  (images,  videos,  groups,  other  users)  by 

typing  the  text  in  the  search  bar.  This  could  be  a  keyword  or  the  name  of  an 

image/video/user/group which exists on the platform; 

  View – A free registered user can view images/videos uploaded by their friends or 

other  people/groups.  However  the  viewing  experience  of  a  free  user  is  subject  to 

Description 

of 

services offered 

Error! Reference source not found. 

142 

 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

advertisements both in terms of Banner ads as well as advertisements in the middle 

of photo streaming; 

  Upload – Flickr offers registered Free users 1TB of storage and they can upload an 

unlimited  number  of  photos  or  videos.  Individual  photos  and  videos  are  limited  to 

200MB  and  1GB  each,  uploads  and  downloads  in  full  original  quality  and  an 

unlimited monthly bandwidth; 

  Organise –  Flickr allows one to organise their content by sorting it date wise and 

arrange them in whichever manner they want; 

  Edit – Flickr consists of an inbuilt photo editor which lets the user edit and enhance 

any picture that they upload to the portal; 

  Create  Album  –  This  feature  allows  a  user  to  create  an  online  photo  album  of 

selected pictures from their uploaded content; 

  Follow/Unfollow  –  Users  can  follow  other  users  (or  friends).  Once  you  follow 

another person, their activity or uploads automatically show up on your newsfeed; 

  Pick  Favourite  –  If  one  likes  a  particular  picture  they  can  choose  to  pick  it  as 

favourite. Doing so will notify the uploader of that picture and at the same time will 

also get saved in the favourites section of the viewer; 

  Join/Create Groups – One can create their own group catering to a particular type 

of content or discussion. One can also join and existing group of their interest and 

contribute content to the same; 

  Explore – This section lets the user explore Trending pictures, different Galleries, 

go through the Weekly Flickr Update, Flickr Blog etc.; 

  Create  (Wall  Art  –  Paid)  –  This  feature  allows  a  user  to  create  and  buy  Wall 

Mounts, Wall Art or Photo Books out of their own selected images. One can either 

choose from Flickr Curated images or other featured images. The user can choose 

from different sizes and hardware all of which  differ in pricing.  One has to pay for 

this service; 

  Comment  –  Users  can  add  comments  under  other  user’s  content.  Under  the 

image/video,  there  is  a  comment  box  where  users  can  type  in  and  share 

comments; 

  Share  –  Flickr  allows  users  to  share  their  uploaded  content  onto  third  party 

websites like Facebook, Twitter, Tumblr, Pinterest and even to their personal blogs; 

  Tag – One can choose to tag other users/people in the images/videos uploaded by 

them.  One  can  also  use  tags  by  adding  certain  attributes  to  the  pictures.  When  a 

particular Tag is clicked upon, all the relevant pictures with that Tag would open up 

on the screen; 

  Download – Few images can also be downloaded from the website. Not all images 

are  available  for  download,  however  depending  upon  the  strictness  of  settings  by 

the rightholder, quite a bit of content is available for downloading; 

  Flag  Photo  –  This  option  lets  users  report  the  content  which  they  feel  is 

inappropriate; 

  Provide Feedback – This lets a user provide feedback to Flickr about any changes 

that have recently been made to the website in terms of user interface; 

  View Sharing History - As per this feature, a user can keep tab on their accepted 

and  pending  invites  from  other  users.  They  can  also  view  the  items  they  shared 

with others and when; 

  Edit  Profile  –  Flickr  allows  one  to  personalize  their  profiles  by  editing  profile 

information, profile privacy, buddy icon, screen name etc.; 

  Manage  Testimonials  –  A  user  can  also  write  testimonials  for  their  friends  or 

Error! Reference source not found. 

143 

 
 
 
 
 
A) DESCRIPTIVE PART 

people  who  inspire  them.  These  testimonials  are  then  displayed  onto  the  other 

person’s  profile.  One  can  also  view  the  testimonials  written  by  friends  for 

themselves; 

  Flickr Marketplace – A user can choose to sell their photos/images via Flickr and 

make use of the Create - Wall Art program which Flickr has in place. One can list 

themselves  by  agreeing  to  the  terms  and  conditions  Flickr  has  as  per  which  the 

seller  will  get  about  51%  of  the  proceeds  from  the  sale  of  Wall  Art  while  Flickr 

retains the rest. People who are a part of the program can get their work featured 

across the Yahoo Network.  

Source - https://www.flickr.com/marketplace. 

Functionalities of a Pro and Pro + Account User – Apart from the functionalities of a 
Free  registered  user,  a  Pro  or  a  Pro+  account  user  has  access  to  the  following 
functionalities: 

  View Advanced stats on photos – This allows a user to view in detail the kind of 

audience breakdown which is viewing their content. The audience breakdown can 

be seen geographically as well as Recent Views and Source Breakdowns. This is 

good for new Bloggers and Aspiring Photographers as it helps them ascertain the 

kind of traffic their posts generate; 

  Ad  Free  Browsing  and  Sharing  -  A  Pro/Pro+  Account  provides  a  user  with  Ad 

Free browsing experience where their news feed would not consist of any ads; 

  Desktop Auto Uploader – This is a tool which allows a user to upload thousands 

of  photos  together  within  1000  GB  storage  and  quickly  and  safely  back  up  ones 

entire photo collection from a computer, hard drive, I photo etc.; 

  Save  on  Standard  Shipping  of  Flickr  Photo  Merchandise  –  If  a  Pro/Pro+ 

account  holder  chooses  to  create  their  own  Wall  Art  using  the  Create  feature  of 

Flickr, they can save on the standard shipping of that Merchandise; 

  Discounts on Adobe Creative Cloud Photography plan, Adobe Photoshop CC 

and  Lightroom  CC  for  the  first  year  –  The  above  three  are  photography  and 

editing  tools  which  lets  one  enhance  pictures  and  is  often  used  by  Professional 

Photographers.  Flickr  provides  Pro/Pro+  account  users  a  20  %  discount  on  the 

above three for the first year of membership. 

Source: www.flickr.com. 

Audience 

for 

Overall  Flickr  figures  are  presented  above.  No  numbers  are  available  for  specific 

services 

audiences,  like  the  number  of  users  of  Flickr  Marketplace  or  sales  numbers  for  Flickr 

Wall Art. 

Advertising 

Flickr consists of 2 types of advertising:  

  Banner Advertising – Banner ads that can often be seen on the homepage and is 

available in 2 different sizes (using Google Ad Sense); 

Source: https://adspecs.yahoo.com/properties/flickr/. 

 

Interactive  Ads  (Using  Yahoo  Advertising)  –  Apart  from  Banner  Ads,  Flickr 

subjects the free users to strategically placed ads while viewing images or videos. 

When  one  is  going  through  a  couple  of  pictures  or  a  gallery  for  instance,  while 

scrolling 2- 3 strategically placed ads pop into the stream, making it look like it is a 

part of the content. This has been highly criticized by the users. 

Source: https://adspecs.yahoo.com/properties/flickr/; 

Source: https://www.flickr.com/help/forum/en-us/72157644731869086/. 

Flickr has been trying to monetize heavily through their Ad Structures. So much so that 

Error! Reference source not found. 

144 

 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

they have been criticized for making Ad Free accounts extremely expensive in order to 

force  people  to  watch  more  advertisements.  It  has  been  quoted  that  Flickr  has  never 

generated a lot of revenue from its Pro Subscriptions as it has from the advertisements 

it rolls out and consequently forces people to watch.  

Source: 

http://thomashawk.com/2013/07/yahoo-and-flickr-renege-on-their-paid-

advertising-free-accounts.html; 

Source: 

http://www.businessinsider.com/the-economics-on-yahoos-big-flickr-storage-

2013-9?IR=T&r=US&IR=T. 

No  publicly  available  numbers  could  be  found  for  the  revenue  that  Flickr  generates 

through these Ad Structures: 

  However, Yahoo’s overall Display Ad Revenue, which makes up about 41% of the 

Company’s total, fell by 5.6 % in the 4th quarter of 2013; 

  Their  display  ad  market  in  US  shrank  to  5.8  %  in  2013  as  compared  to  6.8%  in 

2012. 

Source: 

http://www.wsj.com/articles/SB10001424052702304007504579349053082682172  

License 

Flickers  Licenses  with  Photographers/Sellers  -  Flickr  has  license  agreements  with 

agreements 

the  members  of  Flickr  Marketplace  (which  are  the  sellers  who  choose  to  sell  their 

content  via  Flickr).  As  per  these  agreements,  the  uploader  retains  all  ownership  of 

copyrights  to  their  content  and  receive  51%  from  the  sales  proceeds  of  their  images. 

The remaining amount is kept by Flickr. 

Source: https://www.flickr.com/atos/contributor. 

Revenues 

to 

  Flickr Marketplace program – A seller can sell their content on Flickr via the Wall 

rightholders 

Art Program. One can list themselves by agreeing to the terms and conditions Flickr 

has as per which the seller will get about 51% of the proceeds from the sale of Wall 

Art while Flickr retains the rest; 

Source: 

http://blog.flickr.net/en/2015/10/13/the-time-has-come-for-flickr-

marketplace-photos-in-search/; 

Source: 

http://connect.dpreview.com/post/2892483123/flickr-launches-image-

marketplace-initiative; 

Source: https://www.flickr.com/atos/contributor. 

  Flickr  is  placing  ads  in  the  photo  streams  of  uploaders  in  the  form  of  Interactive 

Ads without offering them a share of the ad revenue; 

Source: https://www.flickr.com/help/forum/en-us/72157648435795352/. 

Use 

of 

content 

Magic  View  –  This  feature  takes  advantage  of  computer  vision  technology  to 

recognition 

automatically recognise what is in the photos and tags them accordingly. For example, 

technologies  

this  tool  recognises  if  the  photos  are  landscapes,  screenshots,  text  photos,  photos  of 

people, children, animals, vehicles, architecture, sunsets, water etc. This was launched 

in May 2014. The role of this technology is primarily to categorise the uploaded pictures 

and add tagging to them for ease of searching. There are no cost figures available for 

this technology, nor is there any information whether it is also suitable for identification 

of content from rights holders. 

Source:  http://techcrunch.com/2015/05/07/flickr-now-recognizes-whats-in-your-photos-

revamps-site-search-and-apps/; 

Source: 

http://www.techtimes.com/articles/51462/20150507/flickr-gets-major-

overhaul.htm. 

Error! Reference source not found. 

145 

 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Comparison  with 

Flickr vs Dreamstime 

traditional 

providers 

The main difference between Flickr and Dreamstime is that while for Flickr the focus is 

primarily  on  freemium  upload  and  storage  of  consumer  photos  supported  by  ad 

revenues,  for  Dreamstime  the  focus  is  the  monetization  through  subscriptions  that 

allows the download of a set number of images. For Dreamstime, the subscription price 

starts at $167, for 1 month for 1 user, allowing the download of up to 750 images. Flickr 

also offers paid subscription, with Flickr Pro, starting at $6.95, for 3 months for 1 user, 

which allows unlimited upload and ad-free browsing. 

Additional 

information 

Flickr Licenses with its Users - While uploading content on Flickr, one can choose to 

offer  their  work  under  a  Creative  Common  License  which  is  a  Non-Profit  organization 

that offers an alternative to Full Copyrights in the form of some rights being reserved. 

One can choose the kind of security they are looking for by tagging their content as per 

different levels of settings.  

Source: https://www.flickr.com/creativecommons/; 

Source: https://creativecommons.org/licenses/by-nc-sa/2.0/legalcode. 

Flickr/Yahoo does not claim ownership of content. However, with respect to content one 
submits  or  makes  available  for  inclusion  on  publicly  accessible  areas  of  the  Yahoo 
Services,  one  grants  Yahoo  royalty-free  and  non-exclusive  license  to  use,  distribute, 
reproduce,  modify,  adapt,  publicly  perform  and  publicly  display  such  content  on  the 
Yahoo Services solely for the purpose for which such content was submitted or made 
available. 

Source: https://policies.yahoo.com/us/en/yahoo/terms/utos/index.htm. 

Impact analysis of the intervention by stakeholder affected 

Disclaimer: the impact assessed is only that of a potential clarification of the rules 
applicable  to  the  activities  of  online  intermediaries  in  relation  to  copyright 
protected  content,  without  taking  any  position  on  whether  any  of  the  services 
covered can claim to be covered  by  art 14 of  e-commerce  and the limited liability 
exemption.  

In the  next  paragraphs the impact analysis looks  into the impact of a potential clarification  on the 

following stakeholders specifically: 

  Flickr itself; 

  Rightholders; 

  Consumers; 

  Other online content providers. 

The  principal  logic  of  the  assessment  is  based  on  distinguishing  two  different  perspectives  that 

Flickr  can  take  if  it  is  faced  with  the  obligation  to  remunerate  copyrightholders  for  distributing 

copyright protected content in case of a clarification: 

  Situation A: Flickr enters into license agreements with rightholders, has to pay a license fee and 

can look for opportunities to monetize the content; 

  Situation  B:  Flickr  takes  down  the  user-uploaded  content  with  third  parties’  copyright  that  is 

currently available on the platform, and blocks the upload of new similar content. 

Error! Reference source not found. 

146 

 
 
 
 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

Online 

Effect on costs 

intermediaries 

Technology identification software: 

  Flickr  already  has  a  (some)  technology  in  place.  It  is  not  clear  whether  further 

investments  in  technology  need  to  be  made  to  be  able  to  track  newly  uploaded 

copyright protected content; 

  Situation  A  -  Since  there  would  be  (more)  licenses,  Flickr  would  have  more 

monitoring  costs  given  that  monitoring  costs  depend  on  the  number  of  pictures 

uploaded  on  the  platform  that  need  to  be  checked.  In  case  current  technology  is 

not capable of checking whether images belong to rightholders, it is expected that 

technology related costs would increase to be able to do that. If current technology 

is  able  to  track  newly  uploaded  copyright  protected  content,  no  change  in 

technology costs are envisaged besides increase in monitoring costs; 

  Situation B - additional investments may be needed to identify and block content 

from being uploaded in the first place. The costs for this technology are estimated 

to be equal to or higher than the costs in situation A. Overall cost level is assumed 

to  be  low  (similar  to  Pinterest  case).  However,  no  cost  estimates  have  been 

obtained. 

Royalties: 

  Situation A: 

-  Newly  concluded  licenses  with  rightholders  could  take  different  forms. 

According to the interviews, it is expected that license agreements will involve 

payments  to  rightholders  depending  on  the  number  of  views  per  image  at 

least; 

-  As the number of licenses will increase, the royalty payments would increase; 

  Situation B: 

-  No royalty payments as no license agreements will be concluded. 

Effect on revenues 

Flickr continues to have subscriptions, a marketplace, ads to generate revenue.  

  Situation A: 

-  Since  costs  will  increase  (see  above),  Flickr  would  have  to  find  ways  to 

generate more revenues to cover the increased costs; 

- 

It  is  not  clear  by  how  much  revenues  need  to  increase  (and  are  able  to 

increase) under the current business model.  

  Situation B: 

-  No change in revenues (related to the clarification); 

- 

If  additional  investments  in  technology  are  needed,  Flickr  would  have  to  find 

ways  to  generate  more  revenues  (besides  further  roll  out  of  current  revenue 

generating options). The amount of additional revenues generated is estimated 

to  be  significantly  lower  than  the  revenues  needed  under  Situation  A  (since, 

contrary to Situation B, under Situation A payments to rightholders have to be 

done. 

Effect on business model: 

  Situation A: 

Error! Reference source not found. 

147 

 
 
 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

- 

If the costs associated with investments in technologies and royalty payments 

increase negligibly, no change in business model could be expected; 

- 

If  the  costs  increase  substantially,  Flickr  might  have  to  look  for  ways  to 

increase  revenue  and  adjust  business  model,  for  example  through  higher 

subscription  fees  (but  this  is  difficult  to  accomplish,  as  [assumption]  current 

fees are already near optimal. Hence, the (increased) monetisation of content 

by selling photos can be envisaged. 

  Situation B: 

-  No change, unless significant investments in technology are foreseen. 

Rightholders 

  Situation A: 

- 

- 

If license agreements are concluded, revenues would increase for rightholders; 

License  agreements  could  lead  to  more  exposure  for  rightholders  due  to 

proper attribution/accreditation that could result in improved reputation and/or 

awareness  of  the  original  artist  and  possibly  indirectly  more  business  for  the 

right-holder. 

  Situation B: 

Consumers 

  Situation A: 

-  No license agreement – no direct increase in revenues for rightholders.  

-  With licenses concluded with rightholders that currently have content on Flickr, 

no  reduction  in  content  displayed  on  Flickr  is  expected.  In  case  additional 

sources  of  monetisation  of  copyright  protected  content  are  offered  to 

rightholders,  they  might  decide  to  have  more  content  displayed  on  Flickr.  In 

case prior to clarification, only limited content was offered on Flickr, and after 

the clarification rightholders decide to display more of their content, availability 

of content will increase.  

  Situation B: 

-  Since  there  are  no  licenses  concluded  and  rightholders  decide  to  remove 

content displayed on Flickr, availability of content will decrease; 

-  Since availability of content on Flickr will decrease, 2 situations could occur. In 

case other online intermediaries in the sector do not conclude licenses either, 

consumers will not be able to find content not displayed on Pinterest anywhere 

else. Therefore there will be no shift of consumers to other platforms. If other 

intermediaries in the sector conclude licenses, consumers might shift to those 

intermediaries from Pinterest to be able to access the content not available on 

Pinterest but available on other intermediaries websites. 

Other 

online 

  Situation A: 

content providers 

- 

In case availability of content will remain the same, no change for other online 

intermediaries is expected; 

- 

In  case  additional  content  becomes  available  on  Flickr,  there  may  be  an 

increase in attractiveness of Flickr compared to other content providers and a 

decrease of visitors to other content providers could occur. It is expected that 

the  amount  of  additional  content,  and  consequently  the  size  of  the  impact  of 

this additional content, is relatively small.  

  Situation B: 

-  Most  likely  no  change  (as  consumers  most  likely  will  not  move  away  from 

Flickr, see above). 

Error! Reference source not found. 

148 

 
 
 
 
 
 
 
Summary of the impact analysis 

  A  potential clarification  would  affect  Flickr in  a similar  way  as other platforms  offering  a  social 

photo sharing service (Situation A: increased costs and potentially change in business model to 

generate  more  revenue;  or  Situation  B:  investments  in  improved  technology).  Situation  B  is 

most likely to happen, as Flickr indicated not to have any interest in developing services aimed 

at monetizing copyright protected content; 

  For  consumers,  the  clarification  is  likely  to  mean  some  reduction  as  user  uploaded  copyright 

protected  content  that  for  which  no  agreement  with  rightholders  is  in  place,  will  likely  be 

eliminated from the platform; 

  Rightholders will benefit due to royalty payments where these do not exist today (Situation A) or 

the  situation  will  stay  the  same  for  them  (Situation  B).  The  exact  outcomes  and  magnitudes 

depend on the commercial negotiation process; 

  Most  likely,  the  situation  of  Flickr  is  representative  for  the  entire  sector,  as  its  core  service  – 

upload and sharing of images – is typically the type of services expected from intermediaries in 

the sector. 

Error! Reference source not found. 

149 

 
 
 
 
 
 
 
Annex 7 Case Study Google Images 

Descriptive Part 

A) DESCRIPTIVE PART 

IDENTIFICATION 

Name of service  

Google Images  

About the company 

Google  Images is  a search service  owned  by Google  that  allows  users  to 

search  the Web for image content. The search  results  are  based  upon  the 

keywords used for searching. Google Images’ algorithm prepares the results by 

checking whether these keywords are in the image Metadata (i.e. filename of an 

image,  URL  pointing  t  o  the  image,  image  description  etc.).  Google  stores  the 

metadata  of  all  the  images  it  has  indexed  in  its  database.  Search  by  image  is 

also possible, where a user can paste the image URL or upload an image from 

file  to  search  instead  of  giving  keywords,  and  Google  Images  will  search  and 

display the same or visually similar images in the results. 

Sector 

Image Search Engine 

Business model 

Free – search and other functionalities are free to all internet users without the 

need  to  register.  After  the  search  results  are  displayed,  all  the  images  in  the 

search  result  are  freely  available  to  view,  and  also  to  save  that  image  in  the 

original  resolution  without  being  directed  to  the  parent  URL  of  that  image.  This 

model  does  not  bring  in  direct  revenue  but  generates  user  profile  information 

mostly used for targeted advertising.  

Advertising - Google's majority revenue comes from two advertising platforms —

 Google AdWords and Google AdSense: 

  Google  AdWords:  An  advertising  service  by Google for  businesses  wanting 

to  display  ads  on Google and  its  advertising  network  (i.e.  the  websites  that 

use  AdSense).  The AdWords program  enables  businesses  to  set  a  budget 

for advertising and they only pay when people click the ads. The ad service 

is  largely  focused  on  keywords.  On  the  Google  Images  search  return  no 

AdWords  are  placed,  though  of  course  brand  names  can  be  displayed  in 

both  the  image  categories  (displayed  at  top,  e.g.  Nike  for  an  image  search 

on shoes) and the images themselves (e.g. a picture of Cadbury or Frito-Lay 

products for an image search on snacks); 

  Google  AdSense  is  an  advertising  placement  service  by  Google.  The 

program  is  designed  for  website  publishers  who  want  to  display  targeted 

text,  video  or  image  advertisements  (from  other  businesses  that  are 

AdWords  program  clients  of  Google)  on  website  pages  and  earn  money 

when site visitors view or click the ads. (More details below in the Advertising 

section). 

Source: http://www.webopedia.com/TERM/A/adwords.html; 

Source: http://www.webopedia.com/TERM/A/adsense.html. 

Web address 

https://images.google.com/. 

Year of foundation 

July 2001 

Source: 

http://www.odysseyfsp.com/new.asp?news-

features/TMG11522279/How-Jennifer-Lopezs-Grammys-dress-launched-

Error! Reference source not found. 

151 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

Google-Images.html; 

Source:  http://www.nYouTubeimes.com/2001/07/01/technology/news-watch-a-

quick-way-to-search-for-images-on-the-web.html; 

Source: https://en.wikipedia.org/wiki/Google_Images#cite_note-1. 

Targeted countries 

Worldwide  except  China  and  Russia  where  it  is  banned,  and  these  countries 

promote their domestic search engines Baidu and Yandex respectively. 

Target 

group 

and 

The target group for Google Images is the general public. 

statistics 

By end of 2015, Google had more than 100 Billion search queries per month.  

Source: 

http://mashable.com/2015/10/12/google-mobile-

searches/#quDjaj5njaqE. 

Currently (April 29 2016), around 54,000 search queries are fired every second 

on Google which is up 25% since 2012. 

Source: http://www.internetlivestats.com/. 

By end of 2012, Google search had around 1.2 Billion monthly unique searchers 

(including  all  platforms  and  reference  websites  that  use  Google  search).  The 

pattern  of  this  figure  is  (in  billions)  –  37  in  2007,  56  in  2008,  88  in  2009,  95  in 

2010, 105 in 2011.  

Source: 

http://searchengineland.com/google-worlds-most-popular-search-

engine-148089. 

By 2013, there were more than 50 Billion webpages indexed by Google. 

Insurance  and  other  financial  services  are  the  top  spenders,  with  a  combined 

annual  spend  of  $4  billion  according  to  Google  AdWords  and  Wordstream 

statistics. 

Source: 

http://techcrunch.com/2014/06/21/will-google-enter-the-insurance-

industry/?ncid=rss. 

Google received more than 345 million Digital Millennium Copyright Act (DMCA) 

notices  in  2014.  These  numbers  were  62  in  2008  and  441,300  in  2012.  These 

notices were from copyrightholders to remove link to pirated content. 

Source: 

https://searchenginewatch.com/sew/news/2388720/googles-dmca-

notices-increase-exponentially-year-to-year. 

40% of all the keyword searches on Google return image results 

On average, 64% of traffic on any website is through Google search. 

Source: 

https://searchenginewatch.com/sew/study/2355020/organic-search-

accounts-for-up-to-64-of-website-traffic-study. 

Turnover  and/or  market 

Google’s  parent  company  Alphabet  is  estimated  to  be  worth  $570  Billion  in 

share 

January 2016 

Source:  http://expandedramblings.com/index.php/by-the-numbers-a-gigantic-list-

of-google-stats-and-facts/. 

In 2016, Google’s 88% market share of all the internet searches worldwide, has 

slightly dipped from 90% in 2010. 

Source: 

http://www.statista.com/statistics/216573/worldwide-market-share-of-

Error! Reference source not found. 

152 

 
 
 
 
 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

search-engines/. 

By  end  of  2014,  Google  search  market  share  in  terms  of  number  of  search 

queries was 63% and 88% in Germany and UK respectively. 

Source:  http://www.statista.com/statistics/279797/market-share-held-by-google-

in-the-united-kingdom-uk/; 

Source:  http://www.statista.com/statistics/452198/search-engines-market-share-

germany/. 

Google’s total revenue in 2015 was $74.5 Billion. Google’s revenue trends (in $ 

Billion) – 38 in 2011, 50 in 2012, 55 in 2013, 66 in 2014. 

Source: 

http://www.statista.com/statistics/266206/googles-annual-global-

revenue/. 

In 2015, 90% of Google’s total revenue came from Advertising, which is a down 

from 99% in 2007, but this takes into account expansion into other products by 

Google  like  Android.  In  2015,  Google’s  advertising  revenue  was  $67  Billion. 

Google’s advertising revenue trends (in $ billion) – 36 in 2011, 44 in 2012, 51 in 

2013, 60 in 2014. 

Source: 

google/; 

Source: 

http://www.statista.com/statistics/266249/advertising-revenue-of-

http://www.statista.com/statistics/266471/distribution-of-googles-

revenues-by-source/. 

Out  of  the  above  advertising  revenue,  65%  comes  from  Internet  Search  Ad 

constituting to $44.6 Billion. Trends ($ billion) - 38 in 2013 and 33 in 2012. This is 

estimated to grow to around $70 billion by 2019. 

Source: 

http://www.chinainternetwatch.com/13014/top-5-biggest-search-

engines-the-world-by-revenue/. 

In Europe, Google’s share of paid search ad spending is more than 80% of total 

spending done by businesses on online ads. 

Source: http://www.emarketer.com/Article.aspx?R=1013586. 

Google makes 33% of the total worldwide online ad revenue across all platforms. 

It accounted for almost $39 Billion in 2013. 

Source: https://www.statista.com/chart/1409/global-online-ad-revenue/. 

Size of the company  

Google  has  more  than  61,000  employees  currently.  This  figure  was  57,000  in 

2015  Q2  and  52,000  in  2014  Q2.  Out  of  these  almost  25,000  are  software 

developers. 

Place of legal seat 

California, United States 

Language(s)  of  platform 

More than a 100 languages. 

(does  not  need  to  be 

exhaustive)  

DETAILED DESCRIPTION 

List of services offered 

Using  google  images  is  completely  free  for  both  registered  and  unregistered 

users.  

Below are the functionalities of an unregistered user: 

Search, Apply filters to result - Size (Resolution), Colour, Type, File Type, Time, 

Error! Reference source not found. 

153 

 
 
 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

Usage Rights, Visit Page, View Image, SafeSearch On/Off. 

Description  of  services 

offered 

Below are the additional functionalities of a registered user: 

Save,  View  Saved,  History,  Private/Non-Private  Results,  ‘Right  to  be  forgotten’ 

(deletion of personal information). 
Below are the functionalities of an unregistered user: 

1.  Search:  a  searcher  can  search  for  an  image  through 
keyword/phrase  (input  via  text  or  speech)  or  also 
search  by  image  by  uploading  an  image,  to  which 
google will give similar looking images in result; 

2.  The  search  results  can  be  filtered  using  the  below 

options –  
  Size: filter the images in search results according 

to resolution; 

  Colour:  filter  as  per  colour  hue  of  the  image  or 

black/white; 

  Type:  filter  by  type  of  graphic  included  in  the 

image e.g. Clipart, line drawing, photo etc.; 

  File Type: filter by type of the file e.g. Gif, png, jpg 

etc.; 

  Time:  filter by  time  of  upload  of  the  image  e.g.  In 

last 24 hours, in last 1 week, etc.; 

  Usage  Rights:  filter  by  usage  rights  of  the  image 
specified  (if  any)  by  the  uploader  of  the  image. 
Namely  the  usage  rights  mentioned  are:  1.  Not 
filtered by license 2. Reuse with Modification 3. 
Reuse 
reuse  with 
modification  5.  Non-commercial  reuse.  Google 
gets  this  information  from  Site  owners,  who  can 
use licenses to let google know if and how content 
on their sites can be reused. 

4.  Non-commercial 

3.  Visit  Page:  clicking  on  the  thumbnail  image  in  search 
results  will  open  the  image  in  larger  resolution  where 
we have a link to visit the page or the original url where 
this image is indexed from; 

4.  View  image:  instead  of  going  to  the  original  link  from 
above, searcher also has an option to directly view the 
image,  that  will  open  the  image  in  browser’s  new 
window from the original website’s repository; 

5.  SafeSearch  on/off:  the  searcher  can  toggle  on  or  off 
to  show  or  not  show 

the  safe  search  option 
explicit/censored/adult results. 

Additional to above, below are functionalities of a registered user: 

1.  Save:  after  clicking  on  the  thumbnail  image  from 
search  results,  searcher  gets  an  option  to  save  the 
image link in the form of a bookmark; 

Error! Reference source not found. 

154 

 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

2.  View Saved: the saved links by the above functionality 

can be viewed by this; 

3.  History: this contains a list of history of all the search 

queries put by a searchers; 

4.  Private/Non-private  results:  this  toggle  when  set  at 
Private  helps  the  searcher  search  for  his  private 
content  that  is  connected  with  google  for  a  certain 
query. E.g. searching for the key words ‘my photos’ will 
show  the  searcher  his  private  collection  of  photos 
uploaded to google photos. If set on non-private, it will 
show a generic search; 

5.  Right  to  be  forgotten.  Consumers  may  demand  to 
to  be 
relevant  or 

to  search  results 
irrelevant  or  no 

that  appear 
longer 

have 
links 
inadequate, 
excessive, removed. 

Others: 

1.  Google Image search lets the searchers download all 
through  browser 
image’ 
‘save 
full  resolution  without 
that 

the 
images 
functionality, 
reverting them to the original image owner website; 
2.  The  searchers  can  report  incorrect  usage  of  their 

too 

in 

image through google search forum. 

Audience for services 

There  is  no  publically  available  information  on  audience  for  usage  of  specific 

Advertising 

By 2012, there were more than 1 million businesses using AdWords.  

services or functionalities. 

Source: 

http://searchengineland.com/are-small-businesses-abandoning-

adwords-a-reality-check-137194. 

Businesses  make  an  average  of  $2  in  revenue  for  every  $1  they  spend  on 

AdWords. 

AdWords brings in roughly 70 per cent of Google’s advertising revenue. 

Source:  http://www.channel4.com/news/if-google-is-free-how-does-it-make-so-

much-money. 

By 2013, there were more than 2 million AdSense publishers, who earned a total 

of $7 billion in ad revenue. 

Source:  https://blogger.googleblog.com/2013/06/celebrating-10-years-of-shared-

success.html. 

For  displaying  ads  with  AdSense  for  content,  publishers  receive  68%  of  the 

revenue  recognized  by  Google  in  connection  with  the  service.  For  AdSense, 

publishers receive 51% of the revenue recognized by Google. 

In 2013, in US alone, 1.5 Million businesses generated a gross revenue of $111 

Billion through Google search and advertising tools. 

Source:  https://googleblog.blogspot.in/2014/07/americas-businesses-are-using-

web-to.html. 

Error! Reference source not found. 

155 

 
 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

License agreements 

Google  has  no  license  agreements  for  search  results.  But  it  has  added  ‘image 

may be subject to copyright’ when clicked on a one from a search results. Some 

images may contain a watermark depending on whether the content owner has 

put any usage rights to its content. 

Google Usage Rights 

Usage rights helps the searchers find content that can fall in various categories 

of  use  i.e.  1.  Not  filtered  by  license  2.  Reuse  with  Modification  3.  Reuse  4. 

Noncommerical  reuse  with  modification  5.  Noncommercial  reuse.  Google  gets 

this information from Site owners, who can use licenses to let google know if and 

how content on their sites can be reused. 

The  usage  rights  filter  shows  content  that  is  either  labelled  with  a Creative 

Commons or  similar  license,  or  is  in  the  public  domain.  For  images,  the  usage 

rights 

filter 

also 

shows 

images 

labelled  with 

the GNU 

Free 

Documentation license. 

Source: https://support.google.com/websearch/answer/29508?hl=en. 

Revenues to rightholders 

There is no revenue for rightholders for showing their content/URLs in the search 

results.  Google  only  indexes  the  pages/content  and  shows  them  in  search 

results  pointing  to  the  parent  URLs.  Also,  Google  does  not  index  the 

pages/content  of  the  websites  which  are  requested  not  to  be  indexed  by  the 

Website/Content Owners.  Hence the copyrightholders can prevent Google from 

indexing  their  images  and  displaying  them  in  the  image  results  by  using 

either robots.txt as well as using Google’s URL removal tool.  

Of  course  this  will  not  work  if  the  images  have  been  pirated  and  posted 

elsewhere, in which case Google Images will find and index those copies stored 

on third party websites. 

Google Image search lets the users view or save (through browser ‘save image’ 

functionality) all the images in full resolution without reverting them to the original 

image owner website in a compulsory way. This may lead to others using these 

images  on  their  website  and  leading  to  copyright  infringement.  In  April  2015 

Getty  reported  that  Google  Images  is  harvesting  its  photographs  in  a  way  that 

siphoned  traffic  away  from  Getty’s  paid-for  website.  Getty  brought  a  claim  to 

court  in  the  US,  pointing  to  a  sharp  drop  in  traffic  and  revenue  after  Google 

Images started with displaying larger and better resolution images.  

Source: 

https://www.searchenginejournal.com/partial-ruling-on-google-image-

search-copyright-infringement/2978/; 

Source: 

http://www.theverge.com/2016/4/27/11516366/google-getty-images-

photo-piracy-eu-antitrust; 

Source: 

http://www.thesempost.com/getty-images-blames-google-not-

competitors/. 

Use 

of 

content 

Google  images  gives  an  option  to  the  searcher  to  Search  by  Image  instead  of 

recognition technologies  

keywords  in  the  search  bar.  Google  uses  its  Vision  technology  to  find  images 

similar to the uploaded one and present them in the results. 

Few  image  owners  have  been  using  this  feature  to  check  whether  other 

Error! Reference source not found. 

156 

 
 
 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

people  violated  their  copyright.  To  do  this,  image  owners  search  by  the 

particular image they want to check if has been used by others, and if they get 

that same image in the result, it confirms a violation.  

The  use  of  this  feature  creates  a  contradictory  problem;  every  time  an  image 

owner  searches  by  image,  the  uploaded  images  used  to  search  is  stored  in 

Google servers. Though google confirms that these images are never showed in 

future  search  results,  this  practice  creates  a  sense  of  discomfort  for  the  image 

owner for the risk of misuse of these stored images in future. 

Source: 

https://productforums.google.com/forum/#!topic/websearch/9ow0pUyvJlM. 

Error! Reference source not found. 

157 

 
 
 
 
 
 
 
 
 
Analysis 

Disclaimer:  this  impact  assessed  is  only  that  of  a  potential  clarification,  without 
taking  any  position  on  whether  any  of  the  services  covered  can  claim  to  be 
covered by art 14 of e-commerce and the limited liability exemption.  

I  

As  a  search  engine,  Google  Images  is  not  a  similar  type  of  intermediary  as  the  other  services 

studied and therefore the following case study looks at the different options if a another type of legal 

intervention was made than the one discussed above. 

B) ANALYSIS PART 

Google 

Images (GI)  

Impact on business model 
Situation A: Google Images negotiates agreements with rightholders: 

  Google  Images  is  a  search  engine,  rather  than  an  online  intermediary  storing  and  giving 

access  to  user  upaloded  content.  The  Google  Images  interface  itself  contains  thumbnails 

(miniature  versions  of  the  images)  and  “previews”  (images  in  original  resolution  that  are 

displayed generally in a smaller format and with a Google Imagesframe. By right-clicking, the 

image can be saved to a computer); 

 

If a consumer opts to see the image in its original format, Google Images always refers to the 

original website of the source of the image and does not display the original size in its frame; 

  The business model of Google Images is not based upon direct  monetization of the pictures 

themselves  but  rather  upon  collection  of  user  information  (e.g.  what  key  words  they  search 

for).  In  the  EU,  there  is  no  monetization  directly  linked  to  Google  Images  in  the  form  of 

advertisement;  

  A  small comment  under  each  picture  explains  that  the  “picture  may  be  subject  to copyright”. 

However,  even  if  a  picture  is  copyright  protected  it  is  not  blocked  from  being  showed  in  full 

resolution. Although the picture is never displayed in Google Images interface itself but 

at the original source website; 

  Google indexes  (= complements  with  underlying  word tags) all pictures available online, that 

allow to be indexed. This means that unless the owner protects its image, it will be included in 

Google  Images  search.  Owners  of  the  copyright  may  contact  Google  with  a  request  to  take 

down the content from their Google Images search gallery. Upon a takedown notice, Google 

“breaks” the link between Google Images search and the flagged website where the image is 

posted without right-holder’ s consent. However, if the image is re-posted or appears at other 

site “illegally”, the rights owner has to report this website again separately; 

 

If  obligations  of  online  intermediaries  with  regard  to  use  of  copyright  protected  content  are 

clarified, different implications may arise dependent on the nature of the possible clarification: 

which could be of the two types as follows: 

Case I: License is necessary solely for content displayed directly at online intermediaries’ platform:  

  The clarification will not be relevant for Google Images since it solely leads a user to websites 

where  pictures  are  stored  and  generally  does  not  open  a  picture  in  its  original  format  in  its 

interface; 

  The necessity of license may nevertheless affect the ability of users to see pictures in a format 

similar  to  its  original  one  and  save  a  full-resolution  picture  directly  from  Google  Images 

interface and this function is likely to disappear, allowing to save a picture only after its display 

at host’s website. This means that Google Images will become slightly less attractive for users;  

  Clarification of the position of online intermediaries would mainly impact Google Images in the 

case  that  contributes  to  support  dissemination  of  illegally  posted  copyright  protected 

Error! Reference source not found. 

158 

 
 
 
 
 
 
 
 
B) ANALYSIS PART 

content via search engines is prohibited; 

  For more info check Situation B since agreement with rightholders is irrelevant in this case. 

Case  II.  Any  pictures  made  available  by  an  online  intermediary  in  a  format  that  is  similar  to  the 

original  (high  resolution),  regardless  of  the  location  of  the  picture  (at  intermediary’s  server  or 

source website) must be covered by a license:  

 

In this case Google Images would attempt to sign agreements with copyrightholders (directly 

or via umbrella associations) to cover the displayed content;  

 

Images  would  need  to  be  indexed  with  digital  fingerprint  to  identify  if  they  are  covered  by 

copyright agreements/identifying who is the copyright-holder; 

  The search would still work in the similar way with a difference that:  

-  Content covered by an agreement would still contain a possibility to display image in full 

resolution and save it; 

-  Content where copyright-holder is unclear would not contain the possibility to display and 

save the full picture directly in the Google interface. 

  Google  would  have  to  either  cross  subsidize  its  Google  Images  search  or  start  heavily 

monetizing: 

- 

- 

- 

Individual pictures;  

Inserting advertisement directly to the picture interface; 

Inserting advertisement to the search function; 

-  Picture views via subscription model or freemium model. 

  Google Images will become more of a commercial picture database rather than a free search 

engine and its logics, functioning and consumer usage and experience are likely to completely 

change.  

Situation B – no agreement with rightholders 

Case I: License necessary solely for content displayed directly at online intermediaries’ platform:  

  Google  Images  would  have  to  carefully  verify  if  pictures  are  copyright  protected  and  better 

resolve takedown notices not to display or help to disseminate content that is posted without 

rightholders’ consent; 

  Rightholders feedback suggests that the current takedown system with notices of rightholders 

allows promotion of sites where copyright protected content is displayed illegally; 

 

Images that are subject to copyright would have to be indexed with digital fingerprint to identify 

the  right-holder  and  Google  Images  would  have  to  hold  the  database  of  websites  where  the 

copyright protected content is posted with rightholders’ consent to make sure its engine refers 

solely to the “legal” web locations;  

  The search would still work in the similar way with a difference that:  

-  Content  allowed  by  rightholders  at  particular  websites  would  still  contain  a  possibility  to 

display image in full resolution and save it with fingerprinting their material (or using digital 

stamps); 

-  With regard to websites where the copyright protected content is posted “illegally”, Google 

Images  would allow only the display of a thumbnail (this  will allow to search all the sites 

where image is being displayed), however would not allow to view the image at the “illegal” 

site. 

Case  II.  Any  pictures  made  available  by  an  online  intermediary  in  a  format  that  is  similar  to  the 

original  (high  resolution),  regardless  of  the  location  of  the  picture  (at  intermediary’s  server  or 

source website) must be covered by a license:  

  The  view  function  and  the  possibility  to  see  pictures  directly  via  a  path  from  GI  will  be  fully 

Error! Reference source not found. 

159 

 
 
 
 
 
 
 
 
B) ANALYSIS PART 

blocked  or  substantially  limited  only  to  those  pictures,  for  which  rightholders  gave  an  explicit 

consent that the image can be used freely by any user free of charge; 

  The search engine will have a very limited functionality and significantly lose attractiveness for 

users;  

  Google  will  not  be  able  to  profit  from  the  same  amount  of  data  collected  via  Google  Images 

and the current business model will not be able to work anymore; 

  Google could modify Google Images concept to not be anymore as search engine.  

Impact on revenues 
Situation A: Google Images negotiates agreements with rightholders  

Case I: License necessary solely for content displayed directly at online intermediaries’ platform:  

  Not relevant (viz. previous section). 

Case  II.  Any  pictures  made  available  by  an  online  intermediary  in  a  format  that  is  similar  to  the 

original  (high  resolution),  regardless  of  the  location  of  the  picture  (at  intermediary’s  server  or 

source website) must be covered by a license:  

  Google  will  not  be  able  to  indirectly  profit  from  large  amounts  of  data  collected  via  Google 

Images and thus will lose part of its revenues; 

  Google  will  need  to  increase  the  monetization  of  pictures  in  the  Google  Images  search  to 

compensate  for  increased  costs  for  new  license  agreements.  This  means  new  revenue 

stream, however only to cover new costs; 

  New revenues from advertisement and subscription fees (to compensate necessary licensing 

fees); 

  Google might be able to compete with licensed picture database and profit from advertisement 

revenues if it decides to push monetization to gain higher revenues that costs acquired. 

Situation B – no agreement with rightholders 

Case I: License necessary solely for content displayed directly at online intermediaries’ platform:  

 

 

No direct revenue impacts since Google Images does not monetize pictures directly; 

However indirectly, Google Images (as  well as other pictures search engines) may become 

slightly  less  attractive  for  users  (since  less  search  results  will  be  linked  to  the  source 

websites) and thus Google Images will collect less data for later monetization. 

Case  II.  Any  pictures  made  available  by  an  online  intermediary  in  a  format  that  is  similar  to  the 

original  (high  resolution),  regardless  of  the  location  of  the  picture  (at  intermediary’s  server  or 

source website) must be covered by a license:  

  No  direct  revenue  impacts.  However  indirectly,  Google  will  lose  on  revenues  indirectly  since 

Google Images will be significantly less attractive for users; 

  Limitation of the features of the search engine may lead to significant lose of users and thus 

drop in revenues.  

Impact on costs 
Situation A: Google Images(re) negotiates agreements with rightholders 

Case I. License necessary solely for content displayed directly at online intermediaries’ platform:  

  Not relevant (viz. previous section). 

Case  II.  Any  pictures  made  available  by  an  online  intermediary  in  a  format  that  is  similar  to  the 

original  (high  resolution),  regardless  of  the  location  of  the  picture  (at  intermediary’s  server  or 

Error! Reference source not found. 

160 

 
 
 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

source website) must be covered by a license:  

  Limited extra costs for technology development and change in the logics of the search engine; 

  Significantly  increased  costs  necessary  in  order  to  acquire  licence  agreements  with  the 

rightholders.  

Situation B – no agreement with rightholders:  

Case I. License necessary solely for content displayed directly at online intermediaries’ platform:  

  Google Images would have to introduce changes in its takedown notices system to allow the 

user to access solely websites where the content is displayed with copy-rightholders’ consent; 

  Google would have to identify copyright protected images (via associations and participation of 

users)  and  acquire  lists  of  “legal”  websites  displaying  the  content.  Google  Images  would 

display a limited number of websites only; 

  The  list  can  be  easily  accessible  to  the  right  -holders  who  can  edit  the  websites  that  display 

legal content;  

  This  means  one-time  extra  costs  for  Google  Images  to  change  its  take-down  system  and 

some rolling costs for keeping the search gallery up to date with “legal content websites” list. 

Case  II.  Any  pictures  made  available  by  an  online  intermediary  in  a  format  that  is  similar  to  the 

original  (high  resolution),  regardless  of  the  location  of  the  picture  (at  intermediary’s  server  or 

source website) must be covered by a license:  

  Only one minimal on-time costs to change the structure of the Google Images search engine 

that  will  block  display  of  any  pictures  in  full  size  or  to  allow  only  those  where  an  explicit 

Rightholders 

consent of a right-holder was given. 

Situation A: Google Images negotiates agreements with rightholders 

Case I. License necessary solely for content displayed directly at online intermediaries’ platform:  

  Since Google Images doesn’t directly display images (in original format) in its interface, there 

is no agreement needed. Thus, this is not relevant (viz. previous section). 

Case  II.  Any  pictures  made  available  by  an  online  intermediary  in  a  format  that  is  similar  to  the 

original  (high  resolution),  regardless  of  the  location  of  the  picture  (at  intermediary’s  server  or 

source website) must be covered by a license:  

  As license agreements will be concluded, some royalties will be paid to rightholders; 

  This could be done for example  via number of downloads/views per image.  Thus income for 

rightholders is likely to increase; 

  Rightholders wanting to show their content for free on Google Images with full functionality will 

need  to  make  an  agreement  or  give  a  direct  consent  to  Google.  This  means  extra 

administrative obligation for rightholders who wish to circulate their content freely.  

Situation B – no agreement with rightholders 

Case I. License necessary solely for content displayed directly at online intermediaries’ platform:  

 

Images  posted  without  rightholders’  consent  will be  only  previewed  but  impossible  to  display 

via Google Images pathway; 

  Rightholders  can  benefit  since  more  traffic  is  expected  at  sites  that  display  the  copyright 

protected content “legally” and who pay royalties to the rightholders; 

  On the other hand, right-holder’s content, unless offered for free circulation at the internet, can 

become less attractive and users may move towards different sources of pictures;  

  Rightholders, if they decide to protect their content against being displayed at illegal websites, 

will have to spend extra resources in order to keep up to date a list of “legal sites”. If they fail to 

Error! Reference source not found. 

161 

 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

do so, they may face:  

-  Decrease in popularity of the content; 

-  Disputes with those who paid for copyright, but their sites are not displayed in the list and 

thus GI (and other pictures search engines) will not allow users to visit these sites via the 

search engine’s interface.  

Case  II.  Any  pictures  made  available  by  an  online  intermediary  in  a  format  that  is  similar  to  the 

original  (high  resolution),  regardless  of  the  location  of  the  picture  (at  intermediary’s  server  or 

source website) must be covered by a license:  

  No images  will be shown  with the full functionality/high resolution via Google Images or only 

those where an explicit consent for free use was given by a right-holder; 

  On  one  hand,  promotion  of  sites  that  show  copyright  protected  content  without  right-holder’s 

consent will not be promoted via Google Images; 

  On the other hand, user will not be able to visit licensed sites via Google Images either since 

the click-through function is likely to be disabled or substantially limited; 

  As a result also legally displayed copy-right protected content (at websites holding the license) 

may lose visibility which would be disadvantageous for the rightholders.  

Consumers 

Situation A – agreement with rightholders: 

Case I. License necessary solely for content displayed directly at online intermediaries’ platform: 

  Not relevant (viz. previous section). 

Case  II.  Any  pictures  made  available  by  an  online  intermediary  in  a  format  that  is  similar  to  the 

original  (high  resolution),  regardless  of  the  location  of  the  picture  (at  intermediary’s  server  or 

source website) must be covered by a license:  

  Less content will be available to be displayed in full resolution via Google images; 

  Consumers are likely to be exposed to heavy advertisement that Google Images will introduce 

to fund the license agreements with rightholders. 

Situation B – no agreement with rightholders:  

Case I. License necessary solely for content displayed directly at online intermediaries’ platform: 

  Less content will be available with full resolution and content via Google images; 

  Consumers may find it difficult to search for images via engines and may start accessing some 

sites directly; 

  Less variety of content available for EU users compared to other areas. 

Case II. Any pictures presented made available by an online intermediary in a format that is similar 

to the original (high resolution), regardless of the location of the picture (at intermediary’s server or 

source website) must be covered by a license:  

  No (or very limited) full resolution images available at Google Images and consumers’ ability to 

search for pictures online will be substantially limited; 

  Consumers will not be able to use Google Images search engine the way they used to and will 

have to resort to other ways how to search for images at the World Wide Web; 

  EU  consumer  would  have  limited  orientation  at  the  online  environment  compared  to  its 

counterparts for example in the USA.  

Other  online 

Situation A – agreement with rightholders: 

content 

Case I. License necessary solely for content displayed directly at online intermediaries’ platform: 

providers 

  Not relevant (viz. previous section). 

Case II. Any pictures presented made available by an online intermediary in a format that is similar 

Error! Reference source not found. 

162 

 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

to the original (high resolution), regardless of the location of the picture (at intermediary’s server or 

source website) must be covered by a license:  

  With a full license system that  would be covering Google images, Google Images  is likely to 

become competitor of other fully licensed database; 

  Competitive  advantage  of  Google  Images  will  be  a  combination  of  fully  licensed  content  and 

free content and coverage of all sources of the Internet; 

  Since Google is less likely to gain revenues for license agreements via subscription schemes 

and more likely to resort to advertisement, Google Images is likely to compete for users who 

do not wish to pay directly for the pictures.  

Situation B – no agreement with rightholders: (rather unlikely) 

Case I. License necessary solely for content displayed directly at online intermediaries’ platform: 

  The  clarification  is  likely  to  strengthen  position  of  already  licensed  picture  databases  since 

Google Images search will allow users to access only licensed content via its interface;  

  Similar search engines offering pictures search (e.g. Yahoo) will compete with Google Images 

on  how  to  allow  user  to  see  as  much  content  as  possible  without  leading  them  to  sites  with 

illegally posted copyright protected content.  

Case II. Any pictures presented made available by an online intermediary in a format that is similar 

to the original (high resolution), regardless of the location of the picture (at intermediary’s server or 

source website) must be covered by a license:  

  Licensed sites are likely to record less traffic from Google Images since the link will be broken;  

  A part of consumers might resort to search directly via licensed and paid databases; 

  Benefit  or  loss  of  licensed  sites  depends  on  the  proportion  of  consumers  who  will  resort  to 

suing licensed databases directly and those who will attempt to find free pictures in other ways 

than via Google Images search (e.g. via searching websites and downloading images from the 

website).  

Error! Reference source not found. 

163 

 
 
 
 
 
 
 
 
 
Annex 8 Case Study Facebook  

Descriptive Part 

A) DESCRIPTIVE PART 

IDENTIFICATION 

Name of service  

Facebook 

About the service 

Facebook  is  an  online  social  networking  service.  Users  after  registering  can 

create  a  user  profile,  add  other  users  as  "friends",  exchange  messages,  post 

status  updates  and  photos,  share  videos,  use  various  apps  and  receive 

notifications  when  others  update  their  profiles.  Apart  from  profiles,  users  can 

also  create  ‘Facebook  pages’  A  Facebook  page  is  a  public  profile  specifically 

created  for  businesses,  brands,  celebrities,  causes,  and  other  organizations. 

Unlike  personal  profiles,  pages  do  not  gain  "friends,"  but  "fans"  -  which  are 

Sector 

Social Networking Service 

people who choose to "like" a page. 

Business model 

1.  Freemium: It is free for all users to create a profile or page on Facebook. 

All the services like adding friends, sharing/uploading content, exchanging 

messages, adding posts etc. are all free to be used by all registered users. 

This generates user profile information e.g. for targeting advertising and as 

a basis for making premium offers (not direct monetization); 

2.  Advertising: All the users (and businesses) who have created their Pages 

(and  Apps  such  as  games)  on  Facebook  have  an  option  to  promote  their 

Page/Apps  using  Facebook  advertising.  These  users  set  their  target 

audience  and  budget  of  advertisement,  and  Facebook  charges  them  per 

engagement with advertisement, which is chosen by the users themselves 

in  the  promotion  campaign.  These  advertisements  roll  on  other  users’ 

Facebook homepage (within the Newsfeed and on the Sidebar) as well as 

Apps that have been marked for monetization; 

3. 

In-App  purchases:  There  are  many  Apps  in  the  Facebook  platform 

developed by the users and for users. These apps and games are mostly 

free to use, but have extra features that can be paid for if a user wants to 

take advantage of that. Facebook keeps almost a 30% share of this in app 

purchase revenue per app; 

Source: https://www.quora.com/How-does-Facebook-make-money; 

4.  Ecommerce:  there  are  sellers  that  sell  using  the  Facebook  ecommerce 

apps,  but  there  was  no  information  found  about  how  much  commission 

Facebook charges for this feature. 

Web address 

www.Facebook.com  

Year of foundation 

Feb 2004 

Source: 

http://www.businessinsider.com/how-Facebook-was-founded-2010-

3?IR=T. 

Targeted countries 

Accessible worldwide except China, North Korea, Cuba and Iran; 

Source:  http://qz.com/68323/china-lists-all-the-countries-in-the-world-that-block-

Facebook-except-for-china/; 

Source: 

https://www.indexoncensorship.org/2014/02/10-countries-Facebook-

banned/. 

Error! Reference source not found. 

165 

 
 
 
 
 
A) DESCRIPTIVE PART 

Target group 

  Total  Monthly  active  users  has  reached  1.65  Billion  in  2016.  This  number 

was  1.27  Billion  in  2014  and  1.49  Billion  in  2015.  This  amounts  to  a  15% 

year over year growth; 

 

In  Europe,  the  number  of  monthly  active  users  has  reached  333  Million  in 

2016.  This  number  was  289  Million  in  2014  and  307  Million  in  2015.  This 

amounts to a 9% year over year growth; 

Source: 

http://venturebeat.com/2016/04/27/Facebook-passes-1-65-billion-

monthly-active-users-54-access-the-service-only-on-mobile/. 

  91% of the Facebook users are in the age group of 15 to 34 years old. Out 

of these, 76% use Facebook to check what their friends are up to and 58% 

use Facebook to watch videos, read articles, blog posts etc.; 

Source:  https://www.americanpressinstitute.org/publications/reports/survey-

research/millennials-social-media/. 

  69 % of Facebook users aged 16-64 years shop online; 

Source: 

http://www.adweek.com/socialtimes/social-shopping-

online/503081?red=at. 

  By the end of 2015, more than 500 Million users watch videos daily, which 

accounts to 8 Billion views and a total of 100 million hours of video; 

Source: http://techcrunch.com/2016/01/27/Facebook-grows/?ncid=rss; 

Source: 

http://www.theverge.com/2015/11/4/9671708/Facebook-videos-8-

billion-views-per-day. 

Source: 

http://venturebeat.com/2015/11/04/Facebook-sees-more-than-8b-

video-views-daily-from-500m-users/. 

Turnover  and/or  market 

 

In June 2015, Facebook market value was nearly $245 Billion; 

share 

Source: 

http://money.cnn.com/2015/06/23/investing/Facebook-walmart-

market-value/. 

  By  end  of  2015,  Facebook  earns  around  $6  per  1000  ad  impressions  and 

$640 per 1000 ad clicks; 

Source:  http://www.adweek.com/socialtimes/nanigans-instagram-Facebook-

benchmarks-report-december-2015/631104. 

  Facebook’s  Q1  2016  Revenue  is  $5.4  Billion.  In  2015  during  the  same 

period  it  was  $3.54  Billion.  In  2014  during  the  same  period  it  was  $2.5 

Billion; 

Source:  http://venturebeat.com/2016/04/27/Facebook-reports-5-38-billion-in-

revenue-79-from-mobile-advertising/; 

Source: 

http://techcrunch.com/2014/04/23/Facebook-q1-2014-

earnings/?ncid=rss. 

 

In  2016,  Facebook  has  3  million  advertisers  which  is  a  50%  growth  since 

last  year.  Facebook  has  50  million  small  businesses  on  Pages  up  from  45 

million last quarter; 

Source: http://techcrunch.com/2016/01/27/Facebook-grows/?ncid=rss; 

Source: https://www.Facebook.com/business/news/3-million-advertisers. 

  Facebook’s  Europe  Q1  2016  Revenue  is  $1.3  Billion.  In  2015  during  the 

same period it was USD 900 Million. In 2014 during the same period it was 

$700 Million; 

Source: 

http://www.statista.com/statistics/223279/Facebooks-quarterly-

revenue-in-europe/. 

Size of the company  

As of Mar 2016, Facebook had 13,598 employees 

Source: http://newsroom.fb.com/company-info/ 

Error! Reference source not found. 

166 

 
 
 
 
 
A) DESCRIPTIVE PART 

Place of legal seat 

California, US 

Source: http://newsroom.fb.com/company-info/ 

Language(s)  of  platform 

Available in around 100 languages 

(does  not  need 

to  be 

Source: https://www.Facebook.com/ 

exhaustive)  

DETAILED DESCRIPTION 

List of services offered 

Functionalities of a Registered user: 

Create  Page,  Upload  Photographs/Videos  (on  their  profile  and  page  if  any), 

Promote Page/Post. 

Description  of  services 

1.  Create  Page:  All  registered  users  have  the  option  to  create  pages  on 

offered 

Facebook. A user can create a page for their Business, a Product, a cause 

or also a Celebrity Fan page. These are informative pages that contain the 

product information and also give users a method to promote it; 

2.  Upload Photos/Videos: All users can upload as many Videos or Photos on 

their profile or page. The difference is that uploads on a page can also be 

promoted  but  not  the  profile  ones.  Also,  there  is  an  option  to  publish  Live 

Videos through Page: 

- 

Live  Video:  On  pages  users  have  access  to  publish  Live  Videos. 

Facebook claims, a computer webcam cannot be used for this but only 

a  professional  setup  or  an  encoding  software.  They  can  then  create 

Key (passcode) to restrict viewership of these videos to only the users 

who  have  these  Keys.  Page  owners  can  publish  and  promote  these 

Live Video events on their Page and other users who accept and have 

been given a Key can then view these Videos. No mention of whether 

these Live Videos are publicly available to view/ to which audience they 

are accessible. Also, in order to get Live Video notifications, users have 

to  toggle  on  this  setting  in  their  profile,  but  this  setting  is  not  available 

globally, as it was found in India but not in some parts of Europe.  

3.  Promote  Page:  Facebook  gives  page  owners/modulators  an  access  to 

promote  their  page  or  posts  on  that  page.  This  is  done  in  the  form  of 

advertisements  which  the  users  can  create  by  starting  an  Ad  Campaign. 

Page  owners  have  complete  access  to  set  their  budgets  and  target 

audience  of  the  ads.  These  ads  can  be  used  to  promote  Product  sales, 

Page likes, Website visits etc. 

Audience for services 

  By  Sep  2013,  Facebook  had  over  250  Billion  pictures  uploaded  to  its 

servers, which was due to increase by 350 Million new uploads every day. If 

going  by  this  estimate,  total  number  of  photo  uploads  has  crossed  500 

Billion by now. 

Source:  http://www.businessinsider.in/Facebook-Users-Are-Uploading-350-

Million-New-Photos-Each-Day/articleshow/22709734.cms. 

Advertising 

97% of Facebook’s total revenue is through Advertisements. 

No numbers available on users of Live Video. 

All  the  users  who  have  created  their  Pages  and  Apps  on  Facebook  have  an 

option to promote their Page/Apps using Facebook advertising. These users set 

their target audience and budget of advertisement, and Facebook charges them 

Error! Reference source not found. 

167 

 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

per engagement with advertisement, which is chosen by the users themselves in 

the  promotion  campaign.  These  advertisements  roll  on  other  users’  Facebook 

homepage  (within  the  Newsfeed  and  on  the  Sidebar)  and  also  on  user 

developed Facebook apps who have opted for app monetization. 

Types of ads:  

1.  Domain Ad: It is the most simple one that redirects the user after clicking on 

the  ad  to  the  advertiser’s  specified  URL  -  it  can  only  be  displayed  In  the 

right column of the screen; 

2.  Page  Post  link:  these  are  the  ads  that  are  shown  in  the  newsfeed  of  the 

users just like any other post from their friends. This ad performs very well 

and hence has gained a lot of popularity; 

3.  Product  ads:  extremely  useful  for  e-Commerce  advertisers  looking  to 

promote  multiple  products  from  their  store,  or  for  marketers  looking  to 

promote different posts and offers. 

Video ads – In July 2015, Facebook confirmed it will be launching a Suggested 

Videos  feed  in  the  videos  that  are  shared  and  uploaded.  This  will  curate  a 

sequence of clips and also show adverts. Facebook also suggested, it will share 

the advert revenue with the video right-holder. There has been no update on this 

since then. Source: http://www.bbc.com/news/technology-33362722. 

License agreements 

Facebook  is  currently  holding  some  license  agreements  and  exclusive  license 

agreements  with  rightholders  and  is  working  on  extending  the  network  of 

Revenues to rightholders 

Not applicable. 

licensed rightholders. 

Use 

of 

content 

recognition technologies  

Additional information 

Facebook  ACR:  In  May  2014,  Facebook  released  a  new  audio  recognition 
feature. When writing a status update – user can choose to turn the feature on – 
they will have the option to use their phone’s microphone to identify what song is 
playing  or  what  show  or  movie  is  on  TV.  Facebook  claims  it  will  not  listen  to 
voices or other background noise, and none of the recordings (fingerprints) will 
be stored. In the future, brands can partner with Facebook and have access to 
data  about  what  media  people  consume.  Brands  will  then  be  able  to  use  this 
targeting  data  to  partner  with  big  TV  channels,  movie  producers,  and  record 
labels to buy ad campaigns. 

It does not take care of the copyrighted of content. 

Source: http://smghec.co.uk/wp/Facebook-automatic-content-recognition-acr/. 

In April 2016, Facebook has officially unveiled its Rights Manager service, which 

mirrors  YouTube’s  Content  ID  system  in  its  ability  to  identify  and  strike  down 

freebooted  uploads.  This  service  can  cut  on  copyright  infringement.  Like 

Content ID, Rights Manager uses a “fingerprinting” system that matches source 

files  provided  by  rights  holders  to  unlicensed  re-uploads  on  Facebook.  An 

important  point  of  note  is  that  the  source  files  need  not  come  from  Facebook 

themselves; they can be culled from other online video sites and TV broadcasts. 

Source: http://www.tubefilter.com/2016/04/13/Facebook-rights-manager-tool/. 
Users/Developers  who  have  developed  Facebook  apps  can  earn  money  by 
choosing  to  use  App  Monetization  functionality.  Herein,  their  app  or  game  will 
show adverts by Facebook to the users using it, and the ad revenue will be split 
between the app owner and Facebook. There is no information available on the 

Error! Reference source not found. 

168 

 
 
 
 
 
 
 
 
 
A) DESCRIPTIVE PART 

revenue split percentage between them. 

Source: https://developers.Facebook.com/products/app-monetization/. 

Developers  have  in-App  purchase  option  for  users,  example  virtual  money  to 
play  the  poker  game.  Users  use  real  money  to  pay  for  these  kinds  of  virtual 
goods  to  play  a  game  or  use  extra  features  on  an  app.  This  money  travels 
though  Facebook’s  payment  gateway  into  the  app  owner’s  account.  For  this 
Facebook keeps a 30% share of this money.  

Source: https://www.quora.com/How-does-Facebook-make-money. 

Analysis 

Disclaimer: the impact assessed is only that of a potential clarification of the rules 
applicable  to  the  activities  of  online  intermediaries  in  relation  to  copyright 
protected  content,  without  taking  any  position  on  whether  any  of  the  services 
covered can claim to be covered  by  art 14 of  e-commerce  and the limited liability 
exemption.  

In the  next  paragraphs the impact analysis looks into the impact of a potential clarification  on the 

following stakeholders specifically: 

  Facebook itself; 

  Rightholders; 

  Consumers; 

  Other online content providers. 

The  principal  logic  of  the  assessment  is  based  on  distinguishing  two  different  perspectives  that 

Facebook can take if it is faced with the obligation to compensate copyrightholders for distributing 

copyright protected content in case of a clarification: 

  Situation A: Facebook enters into license agreements with rightholders, has to pay a license fee 

and can look for opportunities to monetize the content; 

  Situation  B:  Facebook  takes  down  the  copyright  protected  content  uploaded  by  third  parties, 

and blocks the upload of new similar content. 

The  following  case  study  describes  the  different  options  Facebook  has  for  both  situations.  The 

analysis  is  relevant  only  for  activities  linked  to  storing  and  giving  access  to  the  public  of  user 

uploaded third party protected content. 

B) ANALYSIS PART 

Facebook 

(Facebook)  

Impact on business model 
Situation A: Facebook negotiates agreements with rightholders: 

  Facebook  has  a  business  model  based  on  ads  and  extensive  data  collection  and  no 

subscription fee per user applies; 

 

It  is  important  to  note  that  Facebook  has  far  outreach  and  ability  to  target  users  based 

upon their demographic data and personal preferences; 

  Facebook  is  not  yet  a  classic  content  sharing  platform.  However,  the  content  sharing 

features are on up-rise. The possibility to share with audience in very populated groups is 

Error! Reference source not found. 

169 

 
 
 
 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

at the edge between social network and online intermediary;  

  The  service  that  is  the  closest  to  “online  intermediary”  is  Facebook  Video  –  users  are 

encouraged to upload their videos directly to Facebook. However, as noted, this service is 

still in development and is gaining popularity; 

  Facebook  Video  gains  revenues  by  advertisement  slotted  in  the  videos  in  (regular)  time 

sequences.  However,  this  system  is  still  under  testing  as  Facebook  Video  is  a  new 

service  under  development,  and  Facebook  still  needs  to  adjust  and  optimise  the  best 

revenue-generating model; 

  Clarification would likely impact its future development rather than the current setting. The 

concept  of  Facebook  Video  faces  similar  copyright  issues  as  e.g.  YouTube  –  in  case  a 

user  that  is  not  the  copyright  owner  choses  to  upload  videos  which  become  publicly 

available; 

  The copyright issues arise if a video is uploaded directly to Facebook and shared publicly. 

Links/framing of videos or other content from other platforms (e.g. YouTube) are currently 

out of the scope of the possible intervention; 

 

It  shall  be  noted  that  already  now  Facebook  negotiates  partnerships  with  rightholders  to 

have  the  content  available  in  its  video  service  covered  by  copyright  agreements,  and 

seeks  together  with  its  partners  (=rightholders)  mutually  beneficial  revenue-sharing 

models;  

 

In  order  to  check  the  copyright  status  of  the  video,  Facebook  uses  Audible  Magic  and 

runs  filter  to  proactively  block  uploading  of  “illegal”  content.  It  applies  “Video  Rights 

Manager”  (equivalent  to  content  ID)  and  works  on  a  development  of  its  own  content-

checking technology to allow more efficient control of the videos uploaded to Facebook by 

its users; 

 

In  situation  A,  for  the  future  development  of  Facebook  video,  Facebook  would  have  to 

strengthen  Video  Rights  Managers  and  offer  remuneration  for  the  use  of  the  videos  – 

similarly to YOUTUBE and other online intermediaries that allow users to upload videos; 

  Facebook  would  need  to  reach  agreements  with  RHs  for  user  uploaded  content  on  its 

own  video  platforms  –  again,  the  impact  would  be  similar  as  for  YOUTUBE  since 

Facebook video is developing towards a direct competitor of the platform; 

 

Impact on Facebook would depend on the exact clarification regarding the role of online 

intermediaries; 

  Facebook would be motivated to multiply its partnerships in order  to increase number of 

exclusive videos available on Facebook; 

  Clarification  may  backlash  in  both  situation  A  and  B  (follows  below)  if  online 

intermediaries  hold  a  full  responsibility  for  the  content  regardless  the  limitations  of  the 

technology (= current software for checking of content cannot assure that 100% reliability 

when  it  comes  to  identifying  the  copy-right  protected  content  and  blocking  it  from  being 

published).  If  this  happens,  Facebook  may  consider  stopping  the  development  of 

Facebook Video; 

  With  licensed  content,  Facebook  would  compete  with  other  online  platforms  –  for  both 

music and videos. Especially, as mentioned, it would directly compete with YOUTUBE; 

  Facebook  can  potentially  get  a  large  market  share  of  direct  views  from  existing  online 

intermediaries. 

Situation B – no agreement with rightholders: 

 

In  the  absence  of  a  license  agreement  with  rightholders,  Facebook  would  have  to 

strengthen  Video  Rights  Managers  and  block  protected  content.  Facebook  would 

therefore  have  the  possibility  to  focus  only  on  user-generated  content  that  does  not 

Error! Reference source not found. 

170 

 
 
 
 
 
 
B) ANALYSIS PART 

involve  copyright  protected  content.  This  would  be  a  major  issue  in  relation  to  music. 

Music video might no longer be available on the Facebook. It would be less important for 

other types of content, which are less popular; 

 

If online intermediaries are held fully responsible for the content regardless the limitations 

of  the  technology  (=  current  software  for  checking  of  content  cannot  assure  that  100% 

reliability when it comes to identifying the copy-right protected content and blocking it from 

being  published).  If  this  happens,  Facebook  may  consider  stopping  development  of 

Facebook Video fully, as well as limit sharing of other types of media (music, picture); 

  This  means  Facebook  would  continue  operating  solely  as  a  social  media  platform  with 

user  uploaded  content  not  protected  by  copyright  and  leave  the  developing  concept  of 

Facebook; 

 

video  as  a  platform  competing  with  YOUTUBE  (who  may  nevertheless  abandon  its 

services if the responsibilities of online intermediaries are defined too widely as described 

above); 

  Situation  B  seems  unlikely  given  Facebook  ’s  development  with  the  recent  Facebook 

Video service and the existing efforts to reach agreements with rightholders; 

  Another (unlikely) scenario is Facebook blocking all protected content and allowing it only 

through links to video platforms (e.g. users may share videos posted on YOUTUBE). 

Impact on revenues 
Situation A: Facebook negotiates agreements with rightholders  

  There will be a push on Facebook to generate higher revenues as a result of the need to 

remunerate rightholders on the basis of a licence fee; 

  But  in  general,  revenues  of  Facebook  are  expected  to  further  increase  thanks  to 

continued growth of its video service;  

  Platform  is  likely  to  have  some  advantages  over  YOUTUBE  since  it  would  offer 

combination of online intermediary features and ability to share content via social network; 

  Facebook  will  further  generate  revenues  via  advertisements  linked  to  the  videos  and  on 

top  of  that  will  be  able  to  monetise  data  of  new  users  who  will  be  driven  to  Facebook 

thanks to its new features. 

Situation B – no agreement with rightholders: 

  Valuable  content  driving  views  to  the  new  Facebook  video  service  will  be  blocked  from 

users. 

Impact on costs 

 

In  both  scenarios,  there  will  be  increased  costs  related  to  the  Videos  Rights  Manager  – 

the tool will have to be strengthened from the technical perspective to correctly identify the 

copyright  protected  content.  Current  tool  is  quite  effective  according  to  Facebook  who 

says being constantly working on its improvement; 

  There  will  be  increased  monitoring  costs  for  Facebook  (but  Facebook,  similarly  as 

YOUTUBE could potentially monetize rights management services thus compensating the 

higher costs - see revenues – other online intermediaries want to use the Rights Manager 

developed by Facebook).  

Situation A: Facebook negotiates agreements with rightholders: 

  The situation is likely to be similar as for YOUTUBE; 

  Facebook will have to negotiate and pay rightholders; 

Error! Reference source not found. 

171 

 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

  Additional costs will arise out of these partnerships given the need to pay rightholders for 

the use of third party uploads. 

Situation B – no agreement with rightholders: (rather unlikely scenario): 
Costs related to monitoring  

  There  will  be  increased  monitoring  costs  for  Facebook  in  monitoring  uploaded  content 

(and  unlike  situation  A,  Facebook  could  not  monetize  rights  management  services  to 

compensate the higher costs because of lack of protected content); 

  No payments are made by Facebook, as content is blocked. 
Situation A: Facebook negotiates agreements with rightholders: 

Rightholders 

  Clarification will result in conclusion of more agreements with rightholders;  

 

In  case  of  already  existing  licenses  (Facebook  is  currently  in  the  process  of  negotiating 

licenses in order to develop its new Facebook Video service), rightholders and Facebook 

could also engage into renegotiation over the terms of the previously concluded license; 

  The  clarification  strengthens  the  bargaining  power  of  rightholders  –  however  since 

Facebook  Video  is  still  in  development,  the  clarification  is  more  likely  to  influence  future 

deals; 

  Since Facebook would become a direct competitor of YOUTUBE, both services are likely 

to compete for the best deals with rightholders; 

  Rightholders  are  likely  to  benefit  from  new  competition  between  Facebook  and 

YOUTUBE,  who  will  attempt  to  make  as  good  deal  as  possible  and  potentially  also 

conclude exclusive partnerships. 

Situation B – no agreement with rightholders (rather unlikely)  

  Consumers listening to/watching copyright protected content uploaded by third parties will 

move  to  alternative  channels  of  access  where  copyright  protected  content  is  made 

available – e.g. YOUTUBE; 

  Rightholders would have to provide necessary information for Video Rights Manager to be 

effective (also in the case of notice and stay down); 

  Rightholders gain no payments from Facebook and its Facebook Video service. 

Consumers 

Situation A – agreement with rightholders: 

  Consumers  that  are  active  uploaders  of  non-copyright  protected  content  will  be  able  to 

continue to upload content and share it;  

  Consumers  may  benefit  from  increased  competition  between  YOUTUBE  and  Facebook 

Video;  

  On the other hand, due to the exclusive partnerships, the copyright protected content can 

become less centralised and available solely with the provider holding exclusive rights;  

  Consumers  will  enjoy  a  hybrid  Facebook  video  service  offering  both  popular  and  user-

generated content with a possibility to share with friends and on social platforms directly; 

  Consumers may become more exposed to advertisement on Facebook as a result of the 

need for more revenues to pay rightholders.  

Situation B – no agreement with rightholders: (rather unlikely): 

  Facebook  would  be  forced  to  strictly  enforce  rights  to  avoid  penalties  and  fines.  This 

means  that  only  less  valuable  (for  Facebook  in  terms  of  ad  revenue  generation)  user 

uploaded content is made available to viewers, leading to a reduced offer to viewers.  

Error! Reference source not found. 

172 

 
 
 
 
 
 
 
 
B) ANALYSIS PART 

Other  online 

Situation A – agreement with rightholders: 

content 

  Facebook  becomes  a  new  competitor  for  platforms  providing  licensed  content  with  a 

providers 

competitive advantage of combining videos with social platform. 

Situation B – no agreement with rightholders: (rather unlikely): 

  YouTube and Facebook won’t face competition from Facebook Videos. 

Error! Reference source not found. 

173 

 
 
 
 
 
 
Annex 9 Case Study Vbox7 

Descriptive Part 

A) DESCRIPTIVE PART 

IDENTIFICATION 

Name of service  

VBOX7 

About the service 

It is the largest video sharing website in Bulgaria. Users can create their 

accounts  and  then  upload  videos  for  others  to  view.  It  is  100%  owned 

by Netinfo company since 2007. 

Sector 

Video sharing and hosting. 

Business model 

1.  Free: All users,  registered or unregistered, can view all the videos 

for free. This generates user profile information that can be used for 

targeted advertising; 

2.  Advertising:  vbox7  makes  money  only  through  advertising.  The 

website  shows  two  kinds  of  ads.  One  is  the  banner  ads  that  are 

shown on the website like in the sidebar. The other kind of ads are 

the video ads that play while viewing a Video on the website. 

www.vbox7.com. 

2006 

The  website  is  accessible  worldwide,  but  its  major  presence  is  in 

Bulgaria with 92% visitors from there. 

Web address 

Year of foundation 

Targeted countries 

Target group 

 

In  April  2016,  VBOX7  has  been  visited  14.8  million  times  which 

much lower than the 30 Million visits it had in Nov 2015; 

  92.5% of the visits are from Bulgaria. Net major share of visits are 

from UK – 1.25%, US – 0.65%, Germany – 0.59%, Spain – 0.49%; 

Source: https://www.similarweb.com/website/vbox7.com. 

  Vbox7 has an estimated 58,000 daily unique visitors who view more 

than 170,000 videos every day. 

Source: http://www.siteworthtraffic.com/report/vbox7.com. 

Turnover and/or market share 

  According to the traffic on the website, the advertising revenue only 

through  Banner  Ads  is  estimated  to  be  around  USD  72,000  per 

annum. There is no revenue numbers according to Video Ads; 

  The website worth is also estimated based on the traffic considering 

only banner ads at around USD 400,000. 

Source: http://vbox7.com.websiteoutlook.com/ 

Size of the company  

Place of legal seat 

Not found. 

Bulgaria. 

Language(s) of platform (does not 

Bulgarian (but the videos are in  multiple languages with Bulgarian and 

need to be exhaustive)  

English being the majority). 

3.  DETAILED DESCRIPTION 

List of services offered 

For a unregistered user/simple viewer: 

View  videos,  Subtitles,  Screen-mode  to  view,  Search  by  Keyword, 

Share, Statistics, Browse Channels, Similar videos, Top Categories. 

For  an  Uploader  or  a  free  registered  user,  list  of  functionalities 

Error! Reference source not found. 

175 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

Description of services offered 

available, including the one’s mentioned above, are:  

Create  Channel,  Upload  Videos,  Like,  Comment  &  Rate,  Subscribe, 

History,  My  Channel,  Monetization,  Create  Playlists,  Live  Streaming, 

Dashboard. 
Functionalities for a Guest/Unregistered user: 

  Subtitles: the user can switch on/off the subtitles for a video; 

  Mode  of  screen:  the  user  can  view  the  video  in  the  normal  mode, 

theatre mode or the full-screen mode; 

  Search: this option allows the user to search for the video by typing 

in text in the search bar. This could be a keyword or the name of the 

video by which it exists on the platform; 

  Share:  any  video  can  be  shared  to  different  platforms  such  as 

Facebook,  Twitter  etc.  Once  this  option  is  selected  a  new  window 

opens up which directs the user to the required platform; 

  Statistics: the user can have a quick view of limited statistics related 

to the video they are watching such as number of view, shares etc.; 

  Browse  Channels:  this  section  contains  a  category  wise  list  of 

channels  such  as  music,  sports,  movies  etc.,  under  which  is  a 

collection of videos relating to each category; 

  Top  Categories:  it  contains  the  list  of  most  popular  videos  and 

channels; 

  Similar  videos:  these  are  the  videos  recommended  to  the  viewer 

that is similar to the current playing. 

Functionalities  for  Registered  Users  which  includes  Uploaders 
(including the above ones): 

  Create Channel: a registered user can create their own channel; 

  Upload: once a user signs in to the account they can upload a video 

of their own; 

  Like, Comment and Rate: only once the user signs in is when they 

can rate comment or like a video; 

  Subscription:  lets  the  user  subscribe  to  the  channel  they  like.  By 

subscribing  to  the  channel,  the  user  receives  a  notification  under 

subscriptions  section,  which  in  turn  tells  them  the  number  of  new 

videos posted by that channel; 

  History: tells the user the videos they have watched in the past; 

  My  Channel:  here  a  user  can  create  a  channel  which  others  can 

subscribe  to,  so  as  to  refer  to  the  various  videos  this  user  has 

uploaded; 

  Monetization: the uploader has the option to monetize the video by 

agreeing  to  the  terms  of  agreement  set  by  Vbox7  and  thereby 

enabling Ads on their videos; 

  Playlist: the user has the ability to create a playlist, to be watched in 

the future; 

  Live  Streaming:  a  registered  user  has  the  ability  to  stream  live  an 

event, to viewers across the world; 

  Analytics: user can access the advanced analytics option, by vbox7, 

which  gives  them  a  better  understanding  of  the  response  their 

Error! Reference source not found. 

176 

 
 
 
 
 
 
A) DESCRIPTIVE PART 

content is getting, from audiences around the world; 

  Dashboard:  it  gives  the  user  a  customize  view  of  their  channels, 

where in the can adds/delete the widgets they wish to see. 

Audience for services 

No information found on this. 

Advertising 

The website shows three kinds of ads.  

Banner ads: These are the ones that are shown on the website like in 

the sidebar. The banner ads that show on the website use ‘Adwise’ and 

‘Google Adsense’ advertising network. 

The  below 

two  ads  show,  only 

if  an  uploader  has  opted 

for 

monetization. 

Video Ads: The other kind of ads are the video ads that play before or 

in-between of viewing a Video on the website.  

Overlay  Ads:  These  are  the  small  semi-transparent  banner  ads, 

typically across the bottom of the video. 

No licensing information found. 
There is an option for uploaders to opt for monetization through ads in 
videos,  but  no  more  information  on  revenue  sharing  numbers  is 
provided. 

License agreements 

Revenues to rightholders 

Use  of 

content 

recognition 

No information found. 

technologies  

Comparison  with 

traditional 

No information found. 

providers 

Impact analysis of the intervention by stakeholder affected 

Disclaimer: the impact assessed is only that of a potential clarification of the rules 
applicable  to  the  activities  of  online  intermediaries  in  relation  to  copyright 
protected  content,  without  taking  any  position  on  whether  any  of  the  services 
covered can claim to be covered  by  art 14 of  e-commerce  and the limited liability 
exemption.  

In the  next  paragraphs the impact analysis looks into the impact of a potential clarification  on the 

following stakeholders specifically: 

  Vbox7 itself; 

  Rightholders; 

  Consumers; 

  Other online content providers. 

The  principal  logic  of  the  assessment  is  based  on  distinguishing  two  different  perspectives  that 

Vbox7  can  take  if  it  is  faced  with  the  obligation  to  remunerate  copyrightholders  for  distributing 

copyright protected content in case of a clarification: 

  Situation A: 

-  Enter into license agreements with rightholders other than the mother company Netinfo, for 

which access to its content is assumed to be already present; 

-  Do we expect a lot of licenses to be concluded?  

Error! Reference source not found. 

177 

 
 
 
 
 
 
 
 
 
 
 
- 

- 

If yes, then probably Vbox7 might launch subscription model; 

If no, then probably no diversification of services. 

  Situation B: 

-  No (new) license agreements will be concluded; 

-  Take  down  and block new  copyright  protected  content  uploaded  by  third  parties.  Materials 

owned  or  licensed  by  the  mother  company,  seemingly  mainly  related  to  news  and 

entertainment, will still be available to Vbox. 

B) ANALYSIS PART 

Online 

Effect on costs 

intermediaries 

Technology identification software: 

 

It is not clear if there are copyright content identification technologies in place. In order to 

be able to monetise the content, an individual has to declare that they have the rights for 

the videos, which is checked by editors of the website. Thus most likely Vbox7 has some 

technology  in  place  to  detect  the  ownership  of  the  videos.  In  that  case,  no  one-time 

investment is expected; 

  Situation A - Since there would be (more) licenses, Vbox7 would have more monitoring 

costs but these  will depend on the number  of videos that  have to be checked). In case 

current technology is not capable of verifying if video´s are copyright protected content, it 

is expected that technology related costs would increase to be able to do that. Otherwise, 

no impact on the costs relating to the technology; 

  Situation  B  -  additional  investments  may  be  needed  to  identify  and  block  content  from 

being uploaded in the first place if current content recognition technology is not capable 

of detecting it or if VBox has not technology in place. Costs could be similar to or lower 

than that of DailyMotion. 

Royalties: 

  Situation A: 

- 

[Assumption]  The  license  agreements  will  involve  payment  to  rightholders  (e.g.  ad 

revenue sharing, license); 

-  As the number of agreements will increase, payments would increase. 

  Situation B:  

-  No payments as no license agreements will be concluded. 

Effect on revenues 

  Situation A: 

-  Since  costs  will  increase  (see  above),  Vbox7  would  have  to  find  ways  to  generate 

more  revenues  to  cover  the  increased  costs  or  absorb  them  (cross  finance  through 

other sources of income of the mother company); 

- 

It  is  not  clear  by  how  much  revenues  need  to  increase  (and  are  able  to  increase) 

under  the  current  business  model.  This  might  lead  to  expansion  of  the  services 

offered  (in  terms  of  geographic  coverage  or  the  type  of  services  offered)  or  even 

change in business model. 

  Situation B:  

-  No change in revenues; 

- 

If additional investments in technology are needed, Vbox7 would have to find ways to 

generate more revenues. The amount of additional revenues generated is estimated 

to  be  lower  than  the  revenues  needed  under  Situation  A  (similarly  to  other  case 

studies). 

Effect on business model 

  Situation A: 

-  Potentially Vbox7 needs to find other ways to generate revenue thus change (adjust) 

Error! Reference source not found. 

178 

 
 
 
 
 
 
 
 
 
B) ANALYSIS PART 

current business model or mother company can cross-finance it via other sources of 

income. 

  Situation B: 

-  Potentially  a  change  in  model  (higher  revenue  generation)  is  needed  to  cover  the 

increased costs associated with the need to monitor the content that is uploaded by 

third parties. Potentially Vbox7 could have (even) stronger focus on the region. 

Rightholders 

  Situation A:  

-  As agreements will be concluded, more payments will be made to rightholders; 

-  Thus income for rightholders will increase. 

  Situation B: 

-  No license agreement will be closed. No payments from Vbox to rightholders; 

-  Additional  revenues  for  rightholders  will  only  be  achieved  if  content  eliminated  from 

the  Vbox7  platform  is  viewed  at  other  content  providers  that  do  have  arrangements 

with rightholders which include a per-view component.  

Consumers 

  Situation A: 

-  All  content  currently  available  will  remain  available.  Depending  on  the  license 

agreements,  additional  content  with  sufficient  potential  for  monetization  may  be 

added to the content available on the platform.  

  Situation B: 

-  Any copyright protected content that is currently available on the platform will have to 

be removed, reducing the amount of content available on the platform. The amount of 

copyright protected information available is not known; 

- 

If  there  is  less  copyright-protected  content  uploaded  by  third  parties,  potentially 

consumers might shift to other online intermediaries. They might turn to YouTube or 

other  similar  online 

intermediaries  offering  Bulgarian  coverage  (subtitles 

in 

Other  online 

  Situation A: 

Bulgarian). 

content 

providers 

- 

In  case  the  current  offer  on  Vbox7  would  remain  the  same,  there  is  no  impact  on 

other content providers. If the offer of Vbox7 is expanded, there could be a move of 

users from other online content providers to Vbox7. 

  Situation B: 

-  Since some consumers might have to deal with reduced availability of content, other 

online content providers could benefit from the shift of consumers to their platforms. 

This could mean increased revenues for the rights holders. 

Summary of the impact analysis 

  A  potential  clarification  would  require  Vbox7  to  decide  between  entering  into  licensing 

agreements (Situation A) or blocking content from its platform (Situation B). As the opportunities 

to  monetize  content  for  Vbox7  are  unknown,  but  estimated  to  be  relatively  meagre,  the 

expected  outcome  of  the  clarification  will  be  that  Vbox7  decided  to  not  enter  into  license 

agreements  (Situation  B).  As  a  result,  Vbox7  would  likely  need  to  improve  the  technology  to 

take down copyright protected content uploaded by others than the rightholders; 

  For consumers, the amount of content on Vbox7 would decline, as copyright protected content 

would be blocked. It is unclear to what extend consumers would switch to other platforms; 

  Rightholders’  benefit  from  the  clarification  is  unclear.  As  Vbox7  will  likely  choose  to  block 

copyright  protected  content  rather  than  seeking  licensing  agreements  with  rightholders, 

Error! Reference source not found. 

179 

 
 
 
 
 
 
 
 
 
additional revenue streams would have to come from consumers switching to platforms that do 

offer revenues for rightholders. This amount of switching is unknown; 

  Vbox7  seems  to  be  representative  for  many  intermediaries  in  the  sector,  as  its  key  service  – 

upload and viewing of content - are typical for the services in the sector. 

Error! Reference source not found. 

180 

 
 
 
 
 
 
 
Annex 10 Online intermediaries 

Examples from the audio-visual sector 

Place 
Legal Seat 

of 

Name 

Description 

Business 
Model 

User 
monetization 

Reach 

% 
of 
Europe 
Visits 

United States  Ustream 

Germany 

Tape.tv 

United States  VIMEO 

United States 

YouTube 

United States  Vevo 

France 

DailyMotion 

is  a  company 
Ustream 
founded 
that 
in  2007 
provides  video  streaming 
services  to  more  than  80 
million 
and 
broadcasters. 

viewers 

tape.tv  is  a  music  video 
streaming  provider  based 
in  Berlin.[1]  The  company 
was co-founded in 2008 by 
Conrad 
and 
Stephanie  Renner.  tape.tv 
hosts  upwards  of  45,000 
music  videos  from  major 
German 
labels  and  a 
collection of indie labels. 

Fritzsch 

Vimeo  is  a  video-sharing 
website in which users can 
upload,  share  and  view 
It  was  the  first 
videos. 
video 
to 
sharing 
site 
support 
high-definition 
video. 

video 

streaming  & 
A 
sharing  website, 
now 
owned by Google. The site 
allows  users 
view, 
upload,  rate,  share  and 
comment on videos. 

to 

Subscription 
& 
Advertising 

No 

million 

10 
monthly 
views 

- 

Advertising 

No 

4 million users 

100% 

Subscription 

Yes,  "Vimeo 
On  Demand" 
in 
Service 
pay 
which 
view 
per 
option 
is 
available  for 
users 
pro 
only 

100  million 
unique 
visitors 
month 

per 

30% 

Advertising, 
Subscription, 
Pay-per-use 

Advertising 
revenue split 

1 billion users 

30% 

is  a  multinational 
Vevo 
video 
service 
hosting 
owned  and  operated  by  a 
joint  venture  of  Universal 
Music 
(UMG), 
Group 
Google, 
Sony  Music 
Entertainment  (SME),  and 
Abu Dhabi Media 

is 

Dailymotion 
French 
video-sharing  website  on 
which  users  can  upload, 
watch  and  share  videos.  It 
is  one  of  the  biggest  video 
in  the  world, 
platforms 

Advertising 

of 

All 
Universal’s, 
Sony’s 
and 
EMI’s  music 
are 
videos 
monetized by 
Vevo  across 
all 
the 
platforms. 

billion 
per 

6 
viewers 
month 

25% 

Advertising, 
Subscription, 
Pay-per-use 

Advertising & 
subscription 
revenue split 

148  million 
unique 
viewers 
month 

per 

20% 

Error! Reference source not found. 

181 

 
 
 
 
 
Place 
Legal Seat 

of 

Name 

Description 

Business 
Model 

User 
monetization 

Reach 

% 
of 
Europe 
Visits 

offering  a  mix  of  content 
independent 
from  users, 
premium 
creators 
partners. 

and 

Switzerland 

Viewster 

United States 

Break.com 

United 
Kingdom 

LIVELEAK 

Palestine 

Viddler 

demand 

Viewster  is  a  global  video 
service. 
on 
Viewster  offers  a  wide 
range of ad-supported free 
TV  shows  and  movies.  On 
top of that, Viewster runs a 
film 
quarterly 
festival and claims that it’s 
the largest worldwide of its 
kind. 

online 

Advertising 

Advertising 
revenue split 

million 

20% 

per 

39 
unique 
visitors 
month 

Break.com  was  founded  in 
1998  as  Big-boys.com,  a 
humour  website  featuring 
comedy 
flash 
games, and other material. 

videos, 

LiveLeak 
is  a  UK-based 
video  sharing  website  that 
lets  users  post  and  share 
It  aims  to  take 
videos. 
reality 
footage,  politics, 
war,  and  other  world 
events  and  combine  them 
with  the  power  of  citizen 
journalism. 

Targeted 
Advertising 

No 

Approx. 
352,338  Daily 
Page Views 

15% 

Freemium 

No 

10 
million 
unique  visits 
per month 

15% 

is  an 

Viddler's 

uploading 

support, 
Flash 

Viddler 
interactive 
online  video  platform  for 
managing, 
uploading, 
and 
viewing, 
on 
tagging/commenting 
paid 
videos. 
includes 
business  service 
and 
secure 
a 
viewing, 
customizable 
or 
HTML5  player,  the  ability 
to  create  a  private  online 
community, 
video 
analytics, 
file  encoding, 
and player branding. Other 
video 
features 
management, 
contest 
opt-in 
subscriptions, 
advertising, 
in-timeline 
tagging/commenting,  and 
webcam recording. 

include 

Subscription 

No 

121,794  Daily 
page views 

15% 

Error! Reference source not found. 

182 

 
 
 
 
 
Place 
Legal Seat 

of 

Name 

Description 

Business 
Model 

User 
monetization 

Reach 

% 
of 
Europe 
Visits 

United States  Vine 

United States 

Crackle 

United States  Metacafe 

Vine  is  a  short-form  video 
sharing 
service  where 
users can share six-second-
long 
looping  video  clips. 
Vine's app can also be used 
to  browse  through  videos 
posted  by  other  users, 
along  with  groups  of 
theme,  and 
videos  by 
trending, 
popular, 
or 
videos 

Freemium 

No 

200  million 
monthly 
active users 

12% 

is 

an 

Crackle 
online 
distributor  of  original  web 
shows,  Hollywood  movies, 
and TV shows. 

Advertising 

Advertising 
revenue split 

28 
unique 
visitors 
month 

million 

5% 

per 

in 

site 

brands 

The 
is  advertising 
supported,  working  closely 
with 
the 
entertainment,  consumer 
electronics, 
telecommunications, 
consumer packaged goods, 
food  &  beverage,  and 
automotive 
sectors. 
Metacafe is a video-sharing 
website  that  specializes  in 
short-form 
video 
the 
entertainment 
categories of movies, video 
games,  sports,  music  and 
TV. 

in 

Targeted 
Advertising 

the 
gets. 

Metacafe will 
pay  $5 
for 
every 
thousand 
views 
video 
Payment 
starts 
your 
reaches 
20,000  views 
and  when  it 
has  a  rating 
of  3.00  or 
higher 

after 
video 

million 

40 
unique 
monthly 
viewers  with 
300  million 
monthly 
visitors 

5% 

United States  Hulu 

Hulu is an online streaming 
service offering a  selection 
of TV shows, clips, movies, 
and other streaming media 
on Hulu.com. 

Freemium 

No 

million 

0 

per 

24 
unique 
visitors 
month 

The music sector 

Place 
Legal Seat 

of 

Name 

Description 

Business Model 

User 
monetization 

Reach 

% 
of 
Europe 
Visits 

United 
States 

Rhapsody/ 
Napster 

Rhapsody  is  an  online 
music  streaming  service 
that  gives  members  ad-
free  access  to  more 
than  32  million  songs. 
Members 
worldwide 
can  gather  and  enjoy 
new  original  content 
including 
videos, 
playlists,  reviews,  and 

Trial, 
Subscription.  

No 

3  million 
members 

75% 

Error! Reference source not found. 

183 

 
 
 
 
 
 
 
Place 
Legal Seat 

of 

Name 

Description 

Business Model 

User 
monetization 

Reach 

% 
of 
Europe 
Visits 

radio  stations  at  any 
given point of time. 

Luxembourg 

Jamendo 

the 

Jamendo  was  originally 
introduced  as  a  service 
releasing  music 
for 
Creative 
under 
licenses.  As 
Commons 
2015, 
of 
Jamendo 
longer 
advertises  its  music  as 
Creative  Commons  but 
rather  free  to  play  and 
download  for  personal 
use.  

October, 
no 

United 
Kingdom 

audioBoom 

United 
States 

Beatport 

United 
Kingdom 

Mixcloud 

United 
States 

BandCamp 

Germany 

SoundCloud 

allows 
audioBoom 
smartphone 
and 
website users to record, 
upload,  and  playback 
digital audio recordings, 
broadcast 
and 
consumption  of  audio 
across  multiple  global 
media outlets.  

is  an  online 
Beatport 
music 
store,  music 
streaming  service,  and 
social  community.  The 
primarily 
service 
is 
oriented 
towards 
electronic music. 

Free  Music  Streaming 
Website 
which 
facilitates  listening  and 
distribution  of  Radio 
Shows,  DJ  Mixes  and 
Podcasts  and  allows 
Uploads 
well. 
Mixcloud  specializes  in 
Radio  Content  like  Talk 
Shows 
and  basically 
Longform Audio. 

as 

Bandcamp  is  a  privately 
held  company  founded 
in  2007  providing  an 
online  music 
store 
launched 
in  2008,  as 
well  as  a  platform  for 
artist  promotion,  that 
caters 
to 
independent artists. 

mainly 

SoundCloud  is  a  global 
audio 
online 
platform 
distribution 

Advertisements, 
Voluntary 
Donations 

Jamendo 
compensates 
artists 
their 
Agreements. 

its 
as  per 
Licensing 

4  million 
users 

60% 

Free, 
Subscription, 
Advertising  

No 

3.14 
million 
monthly 
visitors 
(2014) 

35% 

Subscriptions, 
Selling Music 

Users  get  paid  in 
terms  of  Royalty 
for  every  song 
mix 
by 
sold 
Beatport 

50  million 
users 
(December 
2014) 

30% 

Free, 
Subscriptions, 
Advertisements, 
Promotions 

No 

10  million 
active 
users 

30% 

Advertising, 
Subscription, 
Revenue Split 

Yes,  85%-90%  of 
track  sales  go  to 
respective artists 

500,000 
unique 
visits 
everyday 

20% 

Subscription, 
Advertisements, 

Yes 

40  million 
registered 

20% 

Error! Reference source not found. 

184 

 
 
 
 
 
Place 
Legal Seat 

of 

Name 

Description 

Business Model 

User 
monetization 

Referrals 

% 
of 
Europe 
Visits 

Reach 

users 

based 
Berlin, 
in 
Germany,  that  enables 
to  upload, 
its  users 
record,  promote,  and 
share  their  originally-
created sounds.  

Tidal  is  a  subscription-
based  music  streaming 
service  that  combines 
lossless  audio  and  high 
definition  music  videos 
with curated editorial 

Audio 
Online 
platform 
distribution 
which  allows  users  to 
Upload,  Promote  and 
Share  their  DJ  Mixes  to 
a  worldwide  audience 
and  for  fans  to  follow 
their  favourite  artists. 
Also  caters  to  Music 
Club 
Listeners, 
Radio 
Promoters, 
Stations 
Event 
Organizers  

and 

is 

8tracks.com 
an 
internet radio and social 
website 
networking 
revolving  around 
the 
concept  of  streaming 
playlists 
user-curated 
consisting  of  at  least  8 
tracks.  

Jango  is  a  free  online 
music  streaming  service 
that  allows  users  to 
create 
share 
and 
custom  radio  stations. 
Users  choose  artists  to 
stream,  and  the  station 
plays music from similar 
artists. 

Norway 

Tidal 

United 
States 

Mixcrate 

United 
States 

8Tracks 

United 
States 

Jango 

The images sector 

Subscription 

No 

3  million 
global 
subscribers 

20% 

Channel 
Sponsorships 
Targeted 
Advertising 
Content 
Programs 
Sponsored 
Posts 
Sponsored 
Playlists 

No 

4.8  million 
page  views 
each 
month 

18% 

Advertisement, 
Subscriptions 

8Tracks  pays  out 
royalty 
to 
Copyrightholders. 

Advertising 
Revenue  (Audio 
+  Banner  Ads), 
Transaction 
Fee, 
Music 

Selling 

No 

8  million 
monthly 
active 
users 
(2014) 

12% 

6 

10% 

Jango 
claimed 
about 
million 
monthly 
visitors. 
(2011) 

Place  of 
Legal 
Seat 

Name 

Description 

Business 
Model 

User 
monetization 

Reach 

United 
States 

TinyPic 

It  is  a  photo  and  video 
sharing service that allows 
users  to  upload,  link  and 

Advertising 

No 

% 
of 
Europe 
Visits 

35% 

Error! Reference source not found. 

185 

 
 
 
 
 
 
 
 
Place  of 
Legal 
Seat 

Name 

Description 

Business 
Model 

User 
monetization 

Reach 

% 
of 
Europe 
Visits 

share  their 
videos on the web. 

images  and 

United 
States 

ImageShack 

Subscription  based  image 
hosting website 

Advertising, 
Subscription 

No 

3.8K  unique 
visitors  per 
months 

30% 

is 

an image 
Flickr 
hosting website  and web 
services suite 
that  was 
by Ludicorp in 
created 
acquired 
2004 
by Yahoo in 2005. 

and 

Advertising, 
Subscription, 
Selling 

revenue 

Sale 
split 

100  million 
registered 
members 

25% 

Online  image  sharing  and 
image  host  that  allows 
users  to  create  profiles 
and share images. 

is 

a  photo 
Pinterest 
sharing  website 
that 
allows  users  to  manage 
images—known  as  pins— 
through collections known 
as pinboards. 

community 

Online 
for 
artists and art enthusiasts, 
where  they  can  exhibit, 
promote,  and  share  their 
work  with  a  art-centric 
community. 

Advertising 

No 

Advertising 

No 

Advertising 

No 

No 

No 

an 

Instagram is 
online mobile photo-
that 
sharing service 
enables  its  users  to  take 
pictures,  and  share  them 
either 
or 
privately. 

publicly 

Advertising, 
Affiliate 
network 

150  million 
unique 
visitors 
every 
month 

25% 

176  million 
registered 
users. 

25% 

38  million 
registered 
members, 
65  million 
unique 
visitors  per 
month 

22% 

100  million 
registered 
members 

22% 

400  million 
monthly 
active users. 

20% 

United 
States 

Photobucket 

Image  hosting  and  video 
hosting  website,  widely 
used  for  both,  personal 
and business purposes. 

Advertising, 
Affiliate 
Networks 

United 
States 

Flickr 

United 
States 

Imgur 

United 
States 

Pinterest 

United 
States 

DeviantArt 

United 
States 

Instagram 

Canada 

Istock 

Germany 

Pixabay 

iStock is an online, royalty 
free, 
international 
microstock  photography 
provider  operating  with 
the 
micropayment 
business model. 

Pixabay.com is 
an 
international  website  for 
sharing high quality public 
domain photos, 

Subscription 

Download 
options 
pay 
download. 

are 
per 

567K unique 
users 
per 
month in US 

20% 

Advertising 

No 

300,000 
daily  unique 
visits 

18% 

Error! Reference source not found. 

186 

 
 
 
 
 
Place  of 
Legal 
Seat 

Name 

Description 

Business 
Model 

User 
monetization 

Reach 

% 
of 
Europe 
Visits 

United 
States 

WeHeartIt 

Canada 

500px 

illustrations, vector 
graphics, and film footage. 

We  Heart  It  is  an  image-
network 
social 
based 
focused 
visual 
on 
inspiration and expression 

a 

photo 
500px 
is 
community 
and 
marketplace  for  sharing, 
buying,  
and  selling  photography 
by  people  around 
the 
world. 

Advertising 

No 

40  million 
registered 
users 

18% 

Subscription, 
Selling 

The  Store  is  a 
Service 
by 
provided 
that 
500px 
allows users to 
post 
photos 
and images for 
the 
to 
sale 
public. 

United 
States 

Shutterfly 

Image  publishing  service, 
to 
which  helps  users 
gifts; 
create 
including text. 

photo 

Advertising, 
Selling 
products 

No 

United 
States 

SmugMug 

Paid 
image  sharing  and 
photo  hosting  website; 
not 
registration 
required 
viewing 
for 
images  but  is  mandatory 
for uploading 

is 

Advertising, 
Subscription, 
Selling 

Yes 

million 

7 
users 

15% 

5.7  million 
as of 2014 

10% 

315000 
registered 
users  (9,563 
subscribers 
per  day 
US) 

in 

10% 

Error! Reference source not found. 

187 

 
 
 
 
 
 
 
 
 
P.O. Box 4175 

3006 AD Rotterdam 

The Netherlands 

Watermanweg 44 

3067 GG Rotterdam 

The Netherlands 

T +31 (0)10 453 88 00 

F +31 (0)10 453 07 68 

E netherlands@ecorys.com 

W www.ecorys.nl 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
European Commission 

An economic analysis of the impact of some online intermediaries 
on the distribution of copyright protected content 
Luxembourg, Publications Office of the European Union 

2017 - 190 pages 

ISBN 978-92-79-73858-6 
doi:10.2759/75012 

 
 
 
 
 
 
 
 
K
K
-
0
4
-
1
7
-
8
6
2
-
E
N
-
N

doi:10.2759/75012  

 ISBN 978-92-79-73858-6