Modernising rules to deepen the Digital Single Market is always a good piece of news. This comes as the recent legislative initiatives from the European Parliament empower its citizens to improve their digital experience and benefit from online content services across borders regardless whether they live and from where the content is accessed by them. This is aligned with what they commited in 2015: "the Commission will propose solutions which maximise the offers available to users and open up new opportunities for content creators, while preserving the financing of EU media and innovative content” they said.
However, we urge to take into account some principles such as territoriality, exclusivity and contractual freedom to avoid the negative effect that this initiative could eventually have over the culture industry and the European citizens.
The Commission has put forward several legislative proposals with a final clear goal: to ensure cross border access to content to European citizens regardless whether they live and from where the content is accessed by them.
There are some aspects of the current proposals that should be reconsidered. The most problematic proposal is the Regulation laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of both television and radio programmes. This initiative foresees the application to online services of the principles enshrined in the Satellite and Cable Directive, especially its “country of origin principle” (CoO), which is where an action or service is performed in one country but received in another
The discussions in the European Parliament have already began. Julia Reda’s, member of the European Parliament (MEP), made some far reaching proposals openly asking to extend the principle of the country of origin to the clearance of copyright for all on-line services supplied by broadcasters (i.e webcasting services) and to all VOD standalone platforms (i.e Netflix, HBO platforms).
In other words, Reda’s report tries to extend the “country of origin principle” (CoO) to all online services supplied by broadcasters (and not only “ancillary” to their broadcast, such as catch-up and simulcasting).
If this suggestion were to be retained in the final text of the Regulation, it may inevitably erode Europe’s cultural and linguistic diversity. It would lead, at the end, to a loss of value and choice for European consumers, having a very negative impact.
It should be highlighted that the prior impact assessment made by the European Commission clearly recognises that the application of the CoO to online transmissions was limited to broadcaster online services which are ancillary to the initial broadcast and not to on line transmissions which are not linked to a broadcast such as webcasting services. That is to say, on-demand video services of broadcasters should fall outside from its scope (i.e, BBC IPlayer). The Commission even states that extending this benefits to webcasters would generate legal uncertainty for right holders and could lead to a lowering of the level of protection.
If Reda’s opinion succeeds, it would force rightholders to get into pan European licencing models which undermine both the functioning of the market for production and distribution of Audiovisual films, TV, sports content in the EU and, at the end, harm consumers. It would also undermine the commercial freedom on which success of the film and television sector depends today.
If the CoO is extended to all on line services, broadcasters would be able to make available their content everywhere in the EU by only paying rights in their home country. This would imply that the license of the CoO automatically would apply to the other 27 member states. Therefore, it would jeopardise the principle of licensing on an exclusive and territorial basis, which we consider essential for sustaining the financing model of European audiovisual production as set out above.
Telefónica asks EU legislators to careful consider the negative consequences of the current proposal, not only for the European industry but to European citizens as well, if the principles of territoriality, exclusivity and contractual freedom are not retained in the future EU copyright framework.
In the same line, antitrust investigations currently open with regards the distribution model of the biggest Hollywood studios are also pointing at the elimination of those principles when questioning the absolute territorial exclusivity of distribution contracts.
However, filmmakers’ claims about the need for exclusive rights and territorial restrictions seem to be gaining traction with Competition Commissioner. In fact, Commissioner Vestager recently acknowledged before the European Parliament –in her speech on the 24 January- that those principles could be necessary in this industry: “our rules recognize that barriers between national markets may be justified under certain conditions” and “we understand that selling exclusive rights can be important to raise money that filmmakers need”.
In conclusion, as regards the legislative proposals aiming at achieving cross-border access to content, EU Co-Legislators need to take into account the existence of those EU players that have a small or national footprint compared to those of global dimension.
Restructuring these markets along pan-European lines would lead to dominance by those few players already positioned in several national markets. This would undermine competition, narrow the range of content on offer to EU consumers and ultimately destroy much of the investment in original European content.