Proposed bill on remuneration for online snippets in Switzerland

1. Background and legislative objective

The shift to online media consumption seems inevitable, with search engines and social media channels increasingly serving as primary sources of information. Much of the content displayed on these platforms originates from traditional media outlets. However, due to their brevity, text, images, or audio snippets, often accompanied by links to the original source, are not always protected under existing copyright laws. Consequently, online service providers can currently use and distribute such snippets without payment.

The Federal Council (Swiss government) is concerned that the journalistic efforts of media companies are being exploited without adequate compensation. To address this issue, the bill to amend the Swiss Copyright Act (“Bill”) introduces a special remuneration claim against major online service providers who make snippets available online. If the Bill is enacted, media companies could assert this claim exclusively through copyright levies managed by licensed collecting societies.

This amendment is aimed at ensuring the continued operation of online services and maintaining freedom of information, limiting the media companies’ claim to monetary compensation rather than a right to an injunction.

2. Key provisions of the Bill

Affected online service providers

The Bill mandates remuneration obligations for for-profit online service providers with an average annual user base of at least 10% of the Swiss population (Article 37a(2) Draft SCA). Based on current figures, this would include providers such as Google, LinkedIn, TikTok, X (formerly Twitter), Xing, and YouTube.

The new rules are intended to apply only to providers who commercially make available excerpts from journalistic publications of media companies in the following ways:

• Excerpts that lack individual character and can be accessed by users anytime and anywhere (Article 37a(2)(a) Draft SCA).
• Excerpts that lack individual character and are the result of search queries (Article 37a(2)(b) Draft SCA).
• Short excerpts for the purpose of providing information on current issues, in accordance with Article 28(2) SCA (Article 37a(2)(c), Draft SCA).

Unlike the corresponding EU rules, the Bill does not specify a minimum length for snippets, thereby preventing providers from circumventing the remuneration obligation by truncating content to a bare minimum.

Entitlement of media companies

Media companies must have a registered office in Switzerland and adhere to recognized journalistic practices to qualify for remuneration (Article 37a(1) Draft SCA). This requirement aims to ensure that only entities with a high standard of journalistic quality and a commitment to safeguarding freedom of information and truth-finding are eligible for compensation.

While the term “media companies” should not be overly restrictive, the Federal Council has clarified that platforms like Wikipedia and Wikinews, which do not function as news portals and do not follow established journalistic practices, would not be included.

Right of authors to participate in remuneration

Individual journalists, as authors of the works, are entitled to a fair share of the media companies’ remuneration (Article 37b(1) Draft SCA). This applies regardless of the author’s place of residence or nationality. The Federal Council anticipates that at least half of the media companies’ remuneration will be distributed to the authors.

The journalists’ claim is non-transferable and cannot be waived. This provision is designed to prevent authors from relinquishing these rights in employment contracts (Article 37b(2) Draft SCA).

Enforcement of the remuneration claim

Remuneration claims can only be pursued through licensed collecting societies (Article 37a (3) Draft SCA). Collective management is deemed necessary because individual enforcement would be impractical and challenging due to the vast number of users. This approach also prevents large online service providers from negotiating directly with a few major media companies, potentially leaving smaller and regional media companies uncompensated.

3. What’s next?

The Swiss Parliament will now consider these proposed amendments to the SCA and decide whether to adopt the Bill. The parliamentary process is expected to take at least a year or longer.

4. Practical implications

• Compliance requirements for online service providers: If the Bill is enacted, major online service providers will need to implement systems to track and compensate media companies for the use of snippets. This may involve negotiating licensing agreements, setting up payment mechanisms, and ensuring compliance with the new regulations.
• Impact on media companies: Swiss media companies that meet the qualification criteria will have a new revenue stream from online platforms. However, they will need to ensure that they adhere to recognized journalistic standards to maintain eligibility, a criterion that is potentially difficult to delineate.
• Rights of Journalists: Individual journalists will benefit from a share of the compensation, which cannot be waived or transferred. This will create a new revenue stream for Journalists.
• Potential changes in content distribution: Online platforms may reassess their content distribution strategies to minimize costs or avoid non-compliance. This could lead to changes in how news and media content are presented and shared online. It remains to be seen whether, as a result of the new rules, online platforms will reduce the use of snippets altogether or conclude agreements with individual news outlets to prioritize their content (for a fee).

Please do not hesitate to contact us in case of any questions.

Legal Note: The information contained in this Smart Insight newsletter is of general nature and does not constitute legal advice.