12 days ago, the Brazilian Ministry of Culture launched its online public consultation on the new rules regarding the collection and distribution of royalties for copyrighted works in the digital environment. After the participatory process, the government shall edit a “Regulatory Instruction” to enforce those new rules.

InternetLab is following the process producing weekly bulletins about the discussions. Last week, we published our first bulletin, explaining: (i) the background regarding the issue at hand;  (ii) a summary of the problem of the collection and distribution of royalties in the digital environment; (iii) the Brazilian Ministry of Culture’s intentions with the process; (iv) whether the new rules would mean that streaming services would be taxed; (v) how to participate; (vi) the InternetLab Reports process. To know more, click here.

The current numbers

The consultation works the following way: (a) participants can send comments on specific articles of the possible future Regulatory Instruction and (b) they can propose new text. Until February 26, 245 contributions were submitted, 46% out of which concerning specific articles and 54% on the space reserved for proposing new text. The platform divided the Regulatory Instruction into 5 axes: 1) general provisions; 2) the collecting activity; 3) registration of associations; 4) transparency and 5) users’ obligations. The first of them, “general provisions” (that also includes new text propositions) was by far the busiest – it gathered 172, or 68% of the total contributions. Registration (6% of all submissions), transparency (1%)  and users’ duties (4%) barely received attention.

What are the participants arguing about?

Generally speaking, participants are rejecting the Regulatory Instruction as a whole, for a series of reasons. At times, one submission articulates different motives. We produced a brief analysis and categorization of the most popular axis, that of “general provisions”.

170 out of those 172 submissions are critical to the initiative of the Brazilian Ministry of Culture. The same tendency can be observed on the other axes, and the space reserved for the proposition of new text was used for the submission of general views (almost entirely negative) about the purpose of the public consultation.

One of the reasons for such rejection is a general negative evaluation that Dilma Rousseff’s administration has been facing in Brazil. The public indignation/wrath towards the government seems to have been directed towards this consultation too: 24% of the contributions in the “general provisions” part reject the proposition entirely or present an attack to the current government.

Other negative comments are more closely related to the subject of the consultation: out of the total submissions to the “general provisions”, 38% show rejection due to the idea that the intention here is to create new taxes. In 27% out of the 172 submissions, participants argue undue state interference in private matters (what is sometimes associated to a general rejection to any sort of state regulation, including that of copyright).

22% of the submissions show an understanding that the Ministry of Culture is trying to make streaming platforms pay twice for the use of musical works (“double taxation” appears repeatedly). 13% point that the initiative would lead to increasing consumer prices; 9% refer to perceived problems in the operation of ECAD (Central Bureau of Collection and Distribution), rejecting therefore that it plays a role in the digital environment.

In some cases, the arguments reveal a lack of understanding of the workings of copyright or of the way digital platforms operate. One exemple is the argument that the Minsitry of Culture would be trying to create new taxes. As we discussed last week, “ECAD is being mistakenly understood as a government body that would now be trying to begin taxing Internet music services”.

“In other words, to establish who collects from Internet music services – whether ECAD or another association or even the labels – changes the rules of the game significantly, but in no way means creating a new tax. Also, the Regulatory Instruction is not aimed at regulating consumption, although one or the other model can have different impacts on the end user in terms of prices, what deserves a deeper analysis.”

What is really at stake, and that seems to have been directly discussed only in 9% of the submissions we analyzed, is which organ(s) will be responsible for collecting royalties in the digital environment, and the appropriate model for collection and distribution. If participation keeps evolving in the same pattern, we shall, in the next weeks, discuss in detail the context of rejection to the public consultation, digging into the perceptions and assumptions of the arguments presented.

By Francisco Brito Cruz, Juliana Pacetta Ruiz and Mariana Giorgetti Valente