(Adds reaction of publishing trade groups, paragraphs 16-17)
BRUSSELS, Feb 13 (Reuters) - The European Union is set to rewrite its two decades-old copyright rules to ensure a level playing field between its creative industries and tech giants such as Alphabet Inc's Google and Facebook Inc, after striking a deal on the issue on Wednesday.
While the revamp is likely to result in more compensation for publishers, broadcasters and artists from online platforms, it could burden small startups with additional costs as they will be required to install upload filters to stop copyright violations.
Negotiators from the EU countries, the European Parliament and the European Commission clinched a deal after negotiations that lasted all day.
"Agreement reached on #copyright! Europeans will finally have modern copyright rules fit for digital age with real benefits for everyone: guaranteed rights for users, fair remuneration for creators, clarity of rules for platforms," EU digital chief Andrus Ansip said in a tweet.
The EU executive kicked off the debate two years ago, saying the rules needed to be overhauled to protect the bloc's cultural heritage and make sure that publishers, broadcasters and artists are remunerated fairly.
The issue pitted Google, Facebook, Microsoft Corp, Mozilla, other tech companies and even Wikipedia against publishers, among them Germany's Axel Springer, and other creators of content, triggering intense lobbying on both sides.
Lobbying group CCIA, whose members include Google and Facebook, criticised Article 11 which would force Google and Microsoft to pay publishers for displaying news snippets, and Article 13, which requires online platforms such as YouTube and Instagram to install filters to prevent users from uploading copyrighted materials.
"We fear the law could harm online innovation, scaleups, and restrict online freedoms in Europe," its vice-president, Christian Borggreen, said.
Spain and Germany in recent years tried to force Google to pay publishers for taking snippets of their news articles but that backfired after Google News pulled out from Spain and Axel Springer's traffic plunged after it sought to block the search engine.
Lawmaker Julia Reda from the Pirate Party also voiced concerns, saying that algorithms in upload filters cannot tell the difference between copyright infringements and legal parodies.
"Requiring platforms to use upload filters would not just lead to more frequent blocking of legal uploads, it would also make life difficult for smaller platforms that cannot afford filtering software," she said.
Online platforms in existence for less than three years and with less than 10 million euros in revenue and fewer than 5 million monthly users are exempted from installing upload filters, a concession to German lobbying.
Nonprofit bodies, online encyclopaedias such as Wikipedia, and open source software platforms such as GitHub will be able to use potentially valuable data for research and educational purposes without being subjected to the copyright rules.
European consumer organisation BEUC expressed disappointment.
"It will become much harder for users to share their own, noncommercial music, video or photo creations online. This reform is not based on the reality of how people use the internet," its deputy director general, Ursula Pachl, said.
European Magazine Media Association, European Newspaper Publishers' Association, European Publishers Council and News Media Europe gave a thumbs-up to the revamp.
"If we want a future for professional journalism in the European Union, we must take action to support the press and to redress an unbalanced ecosystem," they said in a joint statement.
The agreement needs approval from the European Parliament and EU countries before it can become law. That is expected to be a formality. (Reporting by Foo Yun Chee in Brussels Editing by Tom Brown and Matthew Lewis)