A link tax in New Zealand?

Tuesday 7 May 2019

Authors: Tania Goatley and Julius Hattingh

​​​​A controversial payment to publishers for content in Europe has implications for New Zealand – despite escaping mention in a recent paper that set out the key issues for review for our own copyright laws. 

On 15 April this year, the European Parliament approved the Copyright Directive, initiating a major development in European copyright law. Article 15 of that Directive (Draft Article 11) – the so called 'link tax' – is one of the more contentious initiatives that was passed.

The link tax is intended to require online platforms to pay publishers when they use their content. Although known as a link tax, in practice it is more akin to a licencing fee or royalty payment, depending on how the payment is managed. For example,​ where Google displays some of the text of an article in its search feed it would be required to remunerate the copyright owner for that use, either directly, or as mediated by an industry body​. The law, however, expressly excludes from the payment requirement uses that solely provide a link to the article, and (more controversially) use that is limited to "isolated words or very short excerpts". This exception is intentionally vague, the purpose being to provide scope for Member States to legislate the specific boundaries of the link tax for themselves. 

It is therefore unclear at present how the link tax will come to be applied, and whether States will adopt more or less liberal interpretations of what is considered free use. While providing much needed clarity, the implementation of the Directive by Member States will likely vary between jurisdictions, giving on-lookers the opportunity to assess the efficacy of different approaches. It does, at present, seem a lot like the legal piece of string that is currently "a substantial part".

The introduction of such a tax in New Zealand would likely be divisive – if Europe is anything to go by. Those in favour of the link tax argue that it will increase traffic to publishers and increase their revenue (both through increased readership and payment of the link tax itself). In other words, the tax will either incentiv​ise a limit on the amount of the publishers' content displayed by the platform – thereby increasing the amount of clicks the publisher gets (so that readers are no longer satisfied by the quantity of an article displayed by a publisher) – or it will guarantee that the publisher is remunerated where the platform displays more than a mere snippet of the article.

There are a number of positions against the link tax. First, some argue that it will disproportionately affect small publishers. Bigger publishers will more easily negotiate free licence deals with platforms. Platforms will also be less willing to display the content of lesser known publishers if they have to pay to display. The introduction of the link tax could thereby stagnate the innovation facilitated by the current online model and create bigger monopolies.

Second, it is unclear whether consumers are actually deterred from clicking links in the ordinary case that a platform like Google displays content from the publisher's article. It is therefore doubtful that the tax will actually function as compensation for value taken from the publisher rather as merely an additional form of revenue for the publisher. Finally, it is uncertain whether this new mechanism will on balance lead to more engagement with the publisher's content.

MBIE's Copyright Review Issues Paper soliciting submissions on the review of the Copyright Act 1994 released only a month ago does not mention a link tax in the context of updating New Zealand's copyright regime. But, given that Europe has taken the lead in modernising its intellectual property law, we can expect that New Zealand will at least consider the point in the near future. It will be important to continue to monitor the success or otherwise of the European link tax in the coming months and years.

If you would like to discuss any of the matters raised in this article please contact the authors or your usual Bell Gully advisor.


Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Tania Goatley

    Partner Auckland
  • Alan Ringwood

    Partner Auckland
  • Kristin Wilson

    Senior Associate Auckland
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