UGC Exception: For the Love of Amateur and the Profit of Everyone Else

Creating YouTube videos incorporating copyright protected works is a commonplace, often amateur pursuit of today’s tech-savvy cultural ‘consumers’ and no one is making money off of it, right?… Wrong!

True, Canada’s recently enacted exception for ‘Non-commercial User-Generated Content’ (section 29.21(1)(a) of the Copyright Act) allows dissemination of derivative works yet admonishes that:

[T]he use of, or the authorization to disseminate, the new work or other subject-matter is done solely for non-commercial purposes.

However, as Teresa Scassa notes in her chapter “Acknowledging Copyright’s Illegitimate Offspring: User-Generated Content and Canadian Copyright Law” in The Copyright Pentalogy: How the Supreme Court of Canada Shook the Foundations of Canadian Copyright Law, section 29.21(1)(a) does not stop disseminators from capitalizing on the creative output by fans.

Furthermore, according to the recent annual release by the International Federation of the Phonographic Industry (IFPI) of their Digital Music Report 2014, UGC fan music videos are generating more money for the copyright owning recording industry than official music videos.[1] This can in part be explained by the increased interest in the works by growth of the fan base not as passive consumers but rather by actively engaging with the copyright protected works. Allowing the audience to feel as though they can contribute by participating in the creative process is a powerful tool that a few large industries have only recently caught on to. Moreover, the more popular a work (even a derivative one) becomes, either via pay-per-click or page views, the more income generating ad revenue is earned. More ads viewed equates to greater revenue for the advertisers and hence greater justification for those companies to want to continue to purchase more online ad space on the intermediary’s website. Some intermediaries that have become known for their vast dissemination of UGC works have established these profit sharing incentives regarding works that bring in a lot of internet traffic, especially for those that go viral.

According to the IFPI report “YouTube is the biggest single access point to music for consumers internationally, with one billion users worldwide”.[2] On YouTube, Google searches for videos which incorporate copyright protected songs. They then inform the record companies of this video. But, rather than US takedown notices interfering with the rights of UGC creators, copyright owners of pre-existing works find that it is more advantageous and profitable to get a piece of the action by monetizing the work. The record companies, instead of trying to have the videos taken down, appear to be licensing the video and then making “ad dollars” from the number of views. It is from this process that record companies are making more money from the UGC than the official music record. In so doing, copyright owners likely do not feel as threatened by the popularization of any derivatives from their works while UGC creators are kept from contravening subsection 29.21(1)(a) of the Copyright Act or having to argue fair dealing/use.

There is a pragmatic realization that demonizing and increasing restrictiveness of copyright law against users who appropriate the works of others, be it solely for enjoyment of the work or to make use of it in a UGC context, can have negative consequences for all parties concerned; less content gets distributed among the public (which has negative societal effects) and there is less respect for the legitimacy of copyright holders leading to even more appropriation which cannot realistically be stopped.

Furthermore, the popularity that comes from fandom and UGC communities also informs the larger consuming public of what original content is trending among fellow community members and can act as advertising for the copyright owner.

It appears that this symbiotic relationship between users who want to express themselves personally and the copyright owners (and intermediaries who stand to gain from providing a forum in which users may have access to the fresh or at least alternative perspectives that UGC has to offer) promotes the purported purpose of copyright – to incentivize creativity.

While this can be a positive business model, benefiting all parties concerned, I would like to note a concern which arises. The Copyright Act legislatively permits, as part of a recognized greater social good, UGC creators to appropriate and use works of others in whole or in part when making solely non-commercial derivative works. Although some may describe these UGC creators as “amateur” in a pejorative way, in many cases these amateurs, while consuming society’s cultural works, produce high quality mash-ups, remixes and a host of other derivative works, copyrightable in their own right but typically not greeted with the respectable title of “author”. However, when a UGC work is being uploaded, the uploader agrees to the non-negotiable click-wrap contract (which stipulates that unless they own all elements with the work being uploaded the uploader is not entitled to enable revenue-generating ads). Should this necessarily give the copyright owner of the existing work the right to muscle-in or impose their influence by obstructing the viewers’ ability to fully enjoy the presentation of the UGC work without attention-distracting ads in or around the work? Furthermore, if the UGC generates huge hits, benefiting the host site and advertisers, it raises the question as to whether the UGC creator should be expected to forego any such benefits in order to avoid the risk of liability. I realize that the current system is a licence-based economic model contractually formulated to support the dissemination of UGC derivative works which may otherwise be taken down, and thus is arguably still a better alternative. However, in utilizing this business model, there should still be respect of the UGC work and its author when placing any ads. The Online Etymology Dictionary defines “amateur” as:

amateur (n.) 1784, “one who has a taste for (something),” from French amateur “lover of,” from Latin amatorem (nominative amator) “lover,” agent noun from amatus, past participle of amare “to love”. Meaning “dabbler” (as opposed to professional) is from 1786.

If we consider it from its origins, doing something for the love of doing it would be a seemingly appropriate context for the rationale of the UGC exception. On the other hand, would it be fair to deny amateur creators the ability to gain any profit from the skill and judgment of their original (albeit derivative) work while permitting others to free ride on the commercial value of their works? This goes to whether Parliament’s restrictively phrased ‘solely non-commercial’ is appropriate in light of the way users actually engage with works and whether an appropriate balance of interests is achieved.

Eliot Kalmanson is a JD candidate at Osgoode Hall Law School and is enrolled in Professor Carys Craig’s “Copyright in the Digital Age” class. As part of the course requirements, students were given the option of writing a legal blog on a topic of their choice.


[1] See page 20.

[2] Ibid.

  1. Great write-up, Eliot.
    Toward the end of your post, you mention the skill and judgment that amateur creators invest in these derivative works and I cannot shake the feeling that this might be an interesting notion for future scholarship to address. More specifically, although UGC cannot be used for commercial purposes, the fact remains that they are to be considered new works given the wording of s 29.21. That being said, while their use of the UGC exception might make them less than what we might call “traditional” authors, it seems clear that these amateur creators are entitled to benefit from some semblance of authorship.
    Whether a popular mash-up of a song or two can be called a work of joint or collective authorship is debatable, but all authors are afforded some kind of copyright interest upon creation of a new work. It certainly feels counterintuitive to say that the original copyright owner alone should hold a copyright interest in relation to all resulting UGC, especially given this growing remix culture of ours where all finished creative products, no matter how polished, can still be used as raw materials. With that in mind, a number of interesting questions come to light.
    How does the UGC creator’s copyright interest mesh with that of the original copyright owner?
    Although direct monetization is out of the question, would a UGC creator still be able to bring an action for infringement of his/her copyright subsisting in the new work and, if successful, claim statutory damages?
    Might a UGC creator be able to exercise any moral rights in relation to the new work, perhaps on the grounds that using it in association with a product, service, cause, or institution (i.e., as an instrument for generating ad revenue) is to the prejudice of his/her honour or reputation as described in s 28.2(1)?
    While a UGC test case is probably far off, I am nonetheless interested in finding answers.

  2. This is an excellent post Eliot and comment Joseph.

    I also am wondering, like Joseph, whether a UGC which meets the requirements contained in the Act could in certain circumstances bring an action for copyright infringement. There is something circular about a new work created solely for non-commercial purposes grounding an action being brought to compensate the creator for unauthorized copying/use with money. But – as Joseph rightly points out – the Act identifies the UGC as a new work.

    My own thoughts – I don’t think it was a “slip” of Parliament that Google and the original owners can generate revenue from UGC. Not that Eliot is suggesting that he thinks it was oversight, but just mentioning that I think it was deliberately structured this way, as the standard form contract you mention seems purposively designed so that UGC uploaders will fall within the requirements of the Act, in particular 29.21(1)(a). Whether Parliament ought to change it is another question. As Eliot recognizes, the result actually seems to produce the desired result of wider dissemination. Copyright law has widely been criticized as being out of touch with realities, both from a technological and business standpoint. Put simply – I think Parliament designed it, whether rightly or wrongly, to accommodate new technology based on submissions of this exact business model proposed by Google and copyright owners.

  3. Great piece, Eliot. I hope you don’t mind a late comment.

    I find the layered copyright rights in UGC to be particularly interesting, and agree with Joseph that we must give greater credibility to the content created as an adaption of the original work. The UGC exception is certainly a bone thrown in the direction of balancing the public’s interest in innovation and dissemination of works against those of copyright holders. What the exception does is normalize and codify adaptations that have been created for generations. This provides a greater scope for the work than the fair dealing provisions would allow, which is certainly a coup for greater creativity and the creation of works.

    The fact that the original copyright interest is eligible for commercialization while user-generated work, in which copyright does subsist, is barred from similar monetization to benefit the content creator muddies the usefulness of the UGC exception. Of course, much of UGC made available digitally has no aim or purpose for commercialization, but like you mention, there is quite a lot of highly sophisticated, professional-quality derivative works that are produced. If and when these works go viral, the decision as to whether the work should be monetized through ads or page views depends on the intermediary, instead of the creator of the derivative work. In addition to this lack of control over IP commercialization, it is just another blow to content creators that they may not benefit from revenue created from their work.

    Of course, like you mention, this may be a positive business model that benefits all parties, but to remove the ability of UGC producers to benefit commercially from their work if they choose to do so continues to be unsettling. It certainly makes clear that where copyright interest in layered, the original interest owner, and more relevantly, the intermediary, continue to have their interests privileged over the content creator.

  4. I agree with Ken both on this being an “excellent post Eliot and comment Joseph”…as well as in thinking that it was not “a ‘slip’ of Parliament that Google and the original owners can generate revenue from UGC”.

    As Eliot rightly describes, there is a complex symbiotic relationship at play here between copyright owners, ISP intermediaries, and end-users. Thus, I think a way of thinking about this more clearly is to first remove the ISP intermediary variable, and look at 2 extreme examples that either did or did not lead to an “adverse effect, financial or otherwise, on the exploitation or possible exploitation of the existing work” (s.29.21(d)).

    To do this, I will shift from the record industry discussion above to the video game industry. Without further ado:

    –> (1) *Counter-Strike*: In 1999, Total-conversion UGC mod built on Valve Software’s underlying game engine of *Half-Life 2*. New work deleted all of Valve’s game content, and used the game engine to change the format from Valve’s single-player game to a multi-player game. In 2000, Valve contacted the UGC-creators, bought the rights from them, hired them as game developers…and the *Counter-Strike* series has spawned many commercially successful sequels and spin-off titles. Indeed, the UGC mod has been hailed as the “best tactical shooter game of all time” and eclipsed its source work in popularity.

    –> (2) *Hot Coffee Mod* for GTA: San Andreas. In 2005, this restorative patch mod was released about 1 year after the original game. It did not create any new game content like *Counter-Strike*. Much the opposite, it allowed gamers to access a mini-game scenario where the main character had fully-clothed sex with a girlfriend. The company – Rockstar – initially tried to blame the modding community for the controversy, but then admitted authorship and consequences ensued. The ESRB rating was changed from “Mature” to “Adults Only”, many retailers took the game off their shelves, parents became angry…and there was “adverse effect, financial or otherwise”. In more recent cases, end-users have authored the overly violent or sex-themed mods (such as mini-game rape scenarios or naked female characters) that were not in any way first created by the original company, but that remain worrisome. For example:

    These 2 examples show the extremes of commercial effects that remix-like UGC can have on the interests of copyright owners, and the grave potential for abuse that exists here. The video game industry has generally sought license-based solutions to these problems (called EULAs = end-user license agreements). As Eliot has observed, this is also a “licence-based economic model contractually formulated to support the dissemination of UGC derivative works which may otherwise be taken down, and thus is arguably still a better alternative”.

    However, what I argued in my copyright paper on “remix culture” also written for Prof. Craig’s class…is that moral rights should also be considered when examining these EULAs and other licensing agreements. In answer to Joseph’s question, however, I do not think that the UGC creator would necessarily be able to exercise moral rights with respect to the new work. In trying to reconcile these rights, T. Scassa has proposed a distinction as mentioned at pg. 444 of the above-quoted article:

    “The applicability of moral rights would supplement the limitation in paragraph 29.21(1)(d). While that paragraph limits uses that have an adverse effect on the source work, moral rights would constrain those uses having an adverse effect on the author’s reputation”.

    Thus, I do not think the UGC creator would gain a moral right with respect to the new work, but would instead not infringe the author’s moral right of the original work as long as it was not “distorted, mutilated, or modified” or “used in association with a product, service, cause or institution” to the prejudice of the first author’s honour or reputation. I hope I explained that distinction clearly enough so it makes sense!

    Then, everything gets more complicated once we add the ISP intermediaries back into the mix. On the one hand, they have increased administrative burden in relation to the notice-and-notice system in Canada (in the U.S., they have notice-and-takedown). So, if they have to spend more money policing UGC, perhaps it is entirely fair that they should get a cut of advertising revenue to offset this admin burden. In a way, isn’t their policing meant to stop or diminish “negative societal effects”?

    However, I admit that I do have a bit more of a problem with “[t]he record companies, instead of trying to have the videos taken down, appear to be licensing the video and then making “ad dollars” from the number of views.” In contrast to ISP-policing efforts and increased admin burden, what is the record company really doing such that they deserve compensation? Maybe I’m missing something, but it doesn’t quite add up to me.

    That’s my thoughts on the issue for today. As Joseph eloquently concluded his comment, I agree that “[w]hile a UGC test case is probably far off, I am nonetheless interested in finding answers”.

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