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A Copyright Monopoly: Live Streaming eSports

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About The Author

Matt Bogdan (Former EU & International Law Editor)

Matt graduated with an LLB (2:1) from Durham University in July 2014. Most recently, he has been assisting with research on comparative company law at the Durham Law School. Matt is primarily interested in the TMT sector, but has also been involved in matters of public international law through Durham United Nations Society.

Taking eSports Seriously

The proliferation of mass-market computer technology has drawn us away from our favourite tabletop games and towards the exciting and rapidly developing world of video gaming. The Internet made video games social, allowing users to join interactive multiplayer networks and compete against each other. Inevitably, players with superior skill have emerged, and some made the decision to pursue a professional career at what is generally known as ‘eSports’ – competitive gaming. Needless to say, those who made the leap have struck a gold mine.

The commercial potential of eSports is best illustrated by ‘League of Legends’ (LoL), a multiplayer online battle arena game developed by Riot Games. Riot has heavily invested in developing the game’s competitive scene, which is an excellent advertising channel for both the game itself and the in-game purchases offered. The LAN tournaments organised by Riot are huge, as you may deduce from this picture, last year’s LoL World Championships:


These tournaments have high production-value and viewership numbers that grow exponentially each year. Evidently, eSports have formed a new and lucrative sector of the entertainment industry, which is only looking to expand and attract more corporate sponsors.

Streaming – A Viable Revenue Stream For Players?

The distribution of revenue streams in eSports is different from that in regular professional sports.  Normally, players have access not only to their basic salaries, but also to lucrative endorsement deals (David Beckham’s salary-to-endorsement ratio illustrates this point well). Meanwhile, teams earn their share from, amongst other things, ticket sales, merchandising and broadcasting deals.

In LoL, things are more complex. Riot Games essentially owns this particular eSport and coordinates every aspect of the competitive scene (imagine FIFA owning football as a sport). It broadcasts the games, owns/rents venues and sells tickets and merchandise (both in and out of the game). Meanwhile, teams are supported primarily through endorsement deals and funding from Riot.

Players are therefore left with their basic salaries, funding from Riot (minimum of $12,500 per season) and any share in their team’s profits that they can bargain out. All of these revenue streams are heavily dependent on players’ current performance and position on the roster during the relatively short, three month-long seasons. With the competitive scene being still relatively underdeveloped, roster changes and benching happen frequently, which makes the players’ financial standing tenuous at best. For more information, see this in-depth legal analysis of LoL players’ situation.

Fortunately, there exists one additional source of income available to players – online streaming. Amazon’s live video streaming website ‘twitch.tv’ pays money to users who broadcast advertisements on their streams and also shares the profit from subscriptions to a particular streamer’s channel. Further, following Google’s failure to acquire Twitch, YouTube (a Google product) is currently revamping its live streaming service with focus on eSports and should soon provide a viable alternative to Twitch.

LoL players are in prime position to benefit from these services. They have already attained ‘sports celebrity’ status if you use the number of Twitter followers as an indicator. To people interested in gaming, watching leading LoL players stream their games live is like watching a live broadcast of Lionel Messi’s training. And to make this analogy complete, the stream would also have to feature Messi’s continuous commentary on his performance and interaction with the audience, all done with fancy music playing in the background. Imagining this, one should not be taken aback by the popularity of Twitch streams and the revenue popular players accrue from them.

Streaming and Copyright Law – An Unlikely Marriage?

While eSports and live streaming have popularised and commercialised video gaming on an unprecedented scale, they have also generated some novel issues in copyright law. For purposes of IP law, a standard video gaming stream can be dissected into: the video game itself, player’s oral commentary, background music, player’s name and his image streamed through a webcam. The commentary, name and image either cannot be protected by copyright or are automatically assigned to the player, which leaves us only with the issue of the game itself and the background music.

For our purposes we will assume that twitch.tv is governed by UK/EU copyright law, although references to US copyright system will also be made. The notions of ‘streaming’ and ‘broadcasting’ are used interchangeably throughout the article.

Element I: Streaming a Video Game

Game developers own a variety of intellectual property (IP) rights in their products. Copyright subsists in the code underlying the game (protected as a literary work – courtesy of Copyright, Designs and Patents Act 1988 (CDPA)) as well as in the artwork and sound created for the game (protected as audio-visual work). That said, developers of popular games generally allow streamers to use their IP on platforms like twitch.tv because of the advertising benefit this brings. For example, LoL Terms & Conditions state that ‘you can use League of Legends IP as the basis for a fan project that you’re giving away for free or that’s only generating ad revenue’, which covers streaming games. It is therefore interesting to see how this policy was recently challenged in a three-way copyright standoff between Riot Games, Twitch and Azubu – another eSports-focused global broadcasting platform.

The situation involved a twitch.tv channel called ‘SpectateFaker’, which used a publicly available spectator mode to broadcast games of a highly popular professional player Lee ‘Faker’ Sang-hyeok. The stream has attracted substantial viewership and drew the attention of Azubu, who have secured an agreement with Sang-hyeok to act as his exclusive streaming platform. Azubu, falsely believing that the ‘SpectateFaker’ channel was infringing on IP rights assigned to them, decided to file a complaint under the US Digital Millenium Copyright Act (DMCA) – akin to our EC Directive on Electronic Commerce – to take down the stream. Both the US and EU copyright law frameworks include provisions on the protection of Internet Service Providers such as Twitch (commonly dubbed as the ‘safe harbour provisions’). In both jurisdictions, the company afforded protection under these provisions has a duty, among others, to ‘act expeditiously to remove or disable access to the [infringing] information’ when such is brought to its attention. Accordingly, Twitch has promptly removed ‘SpectateFaker’s’ content, even though the IP rights in question – the IP rights vested in the game played by Sang-hyeok – were clearly owned by Riot Games. Finally, after Sang-hyeok himself issued a statement condemning the channel, Riot decided to file their own, legally valid, complaint against ‘SpectateFaker’, thereby shutting the channel down.

There are three notable criticisms of the way the ‘SpectateFaker’ situation was dealt with.

First, it is apparent that Azubu, knowingly or unknowingly, used an invalid claim to Riot’s IP rights in order to secure their commercial interests, as threatened by the ‘SpectateFaker’ channel. In their official announcement, Riot has, however, not gone further than claiming to have given ‘direct feedback’ to Azubu on their invalid DMCA claim. ‘SpectateFaker’ could obviously litigate against Azubu in relation to their false claim, but this would most likely prove too costly and time-consuming for an individual private claimant. These restraints, however, would not be equally onerous on Riot, had they been willing to support not only Sang-hyeok, but also the owner of ‘SpectateFaker’, who after all is also a member of the LoL community and has been acting in accordance with Riot’s very own T&Cs

Second, Riot’s refusal to implement a general, overreaching policy on situations like the one discussed is problematic because their case-by-case approach has a number of workarounds. The most obvious one would involve broadcasting games of players who happened to be in the same game as Sang-hyeok (community-dubbed “SpectateFaker’sVictims”). This would, at least theoretically, weaken Riot’s argument that their actions against ‘SpectateFaker’ are motivated by their desire to protect Sang-hyeok from targeted e-stalking. A stream featuring games of a number of top professional players could have the same effect. This shows that Riot’s ad-hoc approach is easily exploitable and could prove problematic in the future.

Third and perhaps most fundamentally, the situation at hand has exposed the seemingly absurd reality of Riot having a complete monopoly on the professional scene and the eSport/game itself. Admittedly, Riot has so far been relatively competent in resolving a number of legal emergencies, so it seems that the future of LoL as a fair and transparent eSport depends solely on Riot’s continued willingness to play the good cop. Since nobody can reasonably expect Riot to divest itself of the IP rights in its own product, it is perhaps most reasonable to push for more transparent principles governing situations such as the one concerning ‘SpectateFaker’. A case-by-case approach may well be preferred by Riot, but it may make the community wary of Riot siding with its corporate partners where commercial interests are at stake, particularly given that currently, Riot is invariably functioning as police, prosecutor and judge in all LoL-related disputes.

Element II: Background Music in Streams

The owner of copyright in a musical work is automatically granted a number of exclusive rights, which are set out in sections 16-21 of the CDPA. Infringing a copyright, therefore, requires that the defendant has carried out at least one of the activities that fall under the copyright owner’s control by virtue of his rights. There also needs to be a causal link between the work used by the defendant and the copyrighted work. Finally, the defendant’s act must have also been carried out in relation to the copyrighted work, or at least a substantial part thereof.

From a legal standpoint, music used on live streams represents a relatively straightforward case. Streamers often use complete sound recordings as their background music, which satisfies the requirements above, unless the music has been properly licensed out or was cleared of copyright beforehand. An apparently common practice is to play music from services like Spotify (EU) or Pandora (US), which by default license out their music for personal use only. In their effort to contain copyright infringements, however, Twitch draws a bizarre distinction, addressed below.

Twitch essentially offers two types of content – live video streams and video-on-demand (VODs), which are essentially videos of previous live broadcasts, or their highlights. To promote compliance with copyright regulations, Twitch has recently implemented copyright detection software that mutes out copyright-infringing sections of VODs. Curiously, the new detection system applies only to VODs, with Twitch CEO Emmett Shear confirming that ‘[they] have no intention whatsoever of bringing audio-recognition to live streams on Twitch’. While this position may be motivated purely by technological considerations (running audio-recognition software on live streams would be very resource-intensive), it nonetheless telegraphs an assertion that playing copyrighted music on live streams is not infringing that copyright, while a VOD of the same broadcast somehow does. To see whether such approach is legally tenable, we must consider some possible rationales.   

The first explanation is based on the fact that while a VOD may be downloaded, the same cannot be said of a live stream. By making the stream (and by extension, the music used in it) available in a downloadable VOD file, the streamer is essentially reproducing the copyrighted musical work and making it publicly accessible. One could argue, however, that the same process occurs when a live stream is recorded with external devices (e.g. smartphone). But even if this distinction is accepted, it does not render live streams lawful. Under section 19(3) CDPA, ‘performing, showing or playing the work in public’ can infringe copyright. ‘Performing’ involves ‘any mode of visual or acoustic presentation of a work, such as by means of a sound recording, film or broadcast’ and thus includes playing music on live streams. The notion of ‘in public’ is more problematic, with legal tests focusing on the character of the audience, the profitability of the infringing act (for-profit performances are more likely to be ‘in public’) and the ‘copyright owner’s monopoly’ (performance to the ‘public of the copyright owner’ is more likely to be ‘in public’). Twitch audiences (often reaching 10,000 concurrent viewers), however, clearly satisfy any tests thrown at them. Thus, whether distinguishing live streams from VODs is accurate or not, playing copyrighted music in live streams will nonetheless be illegal.

The distinction may, however, be relevant to US streamers. Under US law, using copyrighted work falls under civil law and therefore, worst-case scenario, a streamer may have his channel closed and be ordered to pay damages. Conversely, reproducing copyrighted work may attract criminal liability, which significantly raises the stakes for streamers. This could explain Twitch’s preoccupation with policing VODs, but does not apply to UK, where sections 107-10 CDPA make criminal liability possible for nearly all types of infringing acts.

The second explanation concerns defences to copyright infringement. Under UK copyright law, none of the defences seem to fit. Neither the ‘fair dealing’ approach (section 29-30 CDPA), nor the ‘incidental use’ pathway (section 31 CDPA) seem relevant. A gaming stream, after all, is made for commercial purposes, and music is added deliberately to enhance audience’s experience.

Nonetheless, a streamer-defendant could potentially argue fair use under section 107 of the US Copyright Act. The defence would hinge on the concept of ‘transformative use’, which was used as a primary indicator of fair use in the 1994 US case Campbell v Acuff-Rose Music. It requires that the copyrighted work is used in a such a manner so as to add new expression and meaning to it. Accordingly, one would have to show that putting copyrighted music as audio background on a live stream has somehow transformed that music, which clearly is not the case. If it were, then finding activities that do not trigger the ‘transformative use’ would be rather difficult.

Searching For Solutions

Using musical works as background in live streams clearly violates copyright law. With Twitch being protected by the ‘safe harbour provisions’ under both US and EU laws (above), streamers themselves are in the legal crosshairs. To make it even worse, the music industry, starved off by the fall of CDs and the rise of music streaming platforms, is well known for its determination in pursuing copyright infringers. Thus, the rather convincing argument that having your music played (and properly referenced) on a stream can be a particularly effective, free advertising channel for your work, is unlikely to appeal to artists whose profits have been stomped by widespread piracy.

The easiest solution for avoiding copyright problems when streaming video games is to simply stop using the copyrighted work. There are a number of copyright-free tracks available online and Twitch themselves have made available a music repository for broadcasters that has been pre-cleared of copyright. Another possible solution, mentioned by Bryce Blum and Michael Shwartz in their excellent piece on streaming and copyright law, involves encouraging streamers to use commercial music licenses from services like Spotify or Pandora, which in principle should protect them from legal action. The obvious downside is that such licenses are significantly more expensive than the regular ‘personal-use-only’ ones and therefore only the most successful streamers can afford them. Nonetheless, with Twitch streaming growing at an astonishing rate and becoming more lucrative each year, a consensus between the streamers and the music industry, perhaps involving special licenses that account for the advertising benefits, is essential.

The gaming industry relies heavily on live streaming. It is not only the key to popularising eSports, but it also represents a viable and much needed revenue stream for all parties involved in competitive gaming. The uneasy relationship between live video game streaming and copyright law should therefore be an issue of serious concern to the industry leaders and should be addressed by both the game developers and the video streaming platforms.

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Tagged: Commercial Law, Intellectual Property, Sport Law

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