Recently the European Commission’s draft Digital Single Market strategy and evidence file were leaked and obtained by Politico. The document has been prepared under the aegis of Commissioner Ansip, Commissioner Vice President with responsibility for the Digital Single Market, one of the key areas identified in the Commission President’s Political Guidelines. Ahead of the official launch date of 6 May, Professor Lorna Woods of Essex University looks at some of the implications for intellectual property and audio visual media services. 

The Digital Single Market (DSM) is a broad initiative.  While media companies, content producers, and telcos retain a central role in the ‘Information Society’, the Commission’s paper is based on the idea that ‘[t]he global economy is rapidly becoming a digital one, in which Information and Communication Technology (ICT) is no longer a specific sector, but the foundation of the modern innovative economic system’, and it looks forward also to the Internet of Things.  While this makes sense, there remains the rumbling question of how this policy initiative fits with others, despite the Commission’s ‘new way’ of working.  Notably, Commissioner Oettinger  (the Commissioner responsible for the Digital Economy and Society) has already started looking at copyright reform – perhaps as a continuation of work from previous Commissions.  The DSM also covers initiatives already in progress, such as data protection reform and reconsideration of the Audiovisual Media Services Directive (AVMSD).

In this paper we see the characterisation of a range of policies as being about the internal market project, thus giving the Commission competence to act, where otherwise there might be questions (e.g. cultural policy; criminal law).  This is, of course, a common tactic. While the policy has an internal free movement dimension, it also has an external industrial policy objective: that of ‘restor[ing] Europe as a world leader in information and communications technology’. All this requires ‘ambitious steps’, though as noted, quite a few of these steps were already flagged as issues to tackle by the Barroso II Commission.

The strategy is divided into three pillars:

  1. making the single market fit for the digital world – that is, removing barriers between on-line and off-line;
  2. supporting the development of high-speed, secure and trustworthy infrastructure;
  3. supporting the increased digitalisation of the EU economy.

Here we consider just a few of the 20 actions listed in the strategy document.

Geo-blocking and Copyright Reform

The issue of better access for consumers has a number of aspects relevant to content companies. One of the key issues is geo-blocking. While clearly linked to copyright, the matter is broader than that.  The ability to impose territorial limitations and apply different prices – including those based on copyright — has been under discussion for some time and some national competition authorities have already declared such practices to be contrary to competition law. The Commission here states that unjustified geoblocking is incompatible with the internal market, a view foreshadowed by the European Court of Justice’s ruling in Murphy. The draft strategy proposes looking at the Unfair Commercial Practices Directive, Article 20 Services Directive and the e-Commerce Directive, though there is then a neat segue into a proposal for reform of copyright – an issue which has been on the agenda for a while.   Back in 2011 the Commission identified this as one of its 12 levers in the Single Market Act and work has been rumbling along since.

Copyright is an area in which various interest groups have different concerns.  Content producers are concerned about free-riding, both from Internet intermediaries (which rarely pay royalties, and which may prioritise other homogenised content), and end-users who want better (and/or cheaper) access to a range of content (see Pirate Party MEP Julia Reda’s own initiative report).  The current document does not indicate the intention to extend the exceptions in Article 5 of the 2001 InfoSoc Directive significantly, as proposed by the Pirate Bay MEP’s report. While it seems hard to argue against citizens’ access to a range of content from a variety of sources if they are willing to pay, discussions at a Motion Picture Association hosted event at the 65th Berlin International Film Festival suggest that territorial rights play an important role in securing the level of finance needed to fund films. This could have knock on consequences for the range of content available, arguably posing a threat to a culturally diverse environment, and ironically adversely affecting the smaller regional platforms in particular.  Changes here would not affect just players in the individual Member States but also those in third countries which have benefitted from the fragmented market.  Vice-President Ansip takes the view that such practices are discriminatory; this view may be informed by his coming from a small Member State where the low profitability of the domestic markets limits individuals’ access to cultural content, but is this approach counter-productive as the film industry suggests?

It has been suggested that the big content players may be willing to trade some loosening of geo-blocking for more active enforcement. Certainly, the strategy document not only mentions portability of legally acquired content and cross border access to services but also the modernisation of cross border IP enforcement.

“From the creators’ perspective, there is concern that inappropriate changes to the copyright framework may affect the overall value of the rights sold to distributors/platforms/broadcasters, which could also have a negative impact on the financing of EU media content, which is currently territorially based. There is need therefore for a balanced copyright reform including measures that would benefit rights holders, such as matching reforms to end the fragmented regulatory framework within the Digital Single Market. Likewise, the need for a more effective and balanced cross-border civil enforcement system against commercial scale infringements of intellectual property rights will be addressed …”

It is within the context of enforcement that the safe harbour framework in the e-commerce Directive is discussed.  The Commission argues that take-down of illegal content (including but not limited to copyright infringing material) must be effective and at the moment, the procedure is slow, lacking in transparency and there are variations between the Member States’ implementation of the directive. The document noted the recent

“Public debate on whether to enhance the overall level of protection from harmful material by requiring more rigorous, harmonised procedures for removing illegal content or whether to require intermediaries to exercise greater responsibility and due diligence in the way they manage their networks and systems”.

What this means is not entirely certain, though the linking of copyright with harmful illegal content in this section is striking. The strategy document suggests:

“proposals to tackle illegal content on the Internet and a common approach to the issue of duty of care. Alternatives include legislative proposals to harmonise the procedures for removing illegal content across the EU or establishing additional responsibilities on online companies and verify the resilience of their systems against illegal content.”

This sounds familiar; the Commission has previously considered action regarding the harmonisation of ‘notice and action’, though no formal proposal was forthcoming.  Commissioner Oettinger has set up a working group with the European Parliament looking at copyright reform, following on from 2014’s consultation on copyright reform, which is due to report later this year (also see a previous leaked document on copyright reform, which seemed to stall last autumn).  All this takes place against a backdrop of the concerns expressed in response to proposals for international agreements, such as TTIP, which foundered inter alia on concerns about privacy/data protection. As part of the proposals to support the infrastructure, revision of the e-Privacy Directive is indicated. This, of course, will be dependent on progress on the overarching data protection regime.

Audiovisual Media Services and Telcos

As noted, the review of the AVMSD is expected for 2015 (Work Programme for 2015 adopted on 16 December 2014) in no doubt a context of much lobbying from all sides (except that of the viewer, who does not seem to get much of a look in).  The proposal here is open-ended: comprising proposals for ‘a regulatory environment for audio-visual media and services fit for the digital age’. Within this debate the importance of European culture and a European cultural space has been emphasised. Whether this militates towards a free market supposedly producing diversity, as Commissioner Ansip seems to imply, or more protective measures in the grand tradition of broadcasting policy, is another matter.  A key issue as far as this paper is concerned is the need to ensure a level playing field between all players. A secondary theme is that of findability. Both of these concerns implicate the (tele)communications regime as well as ISPs.  The Commission notes that relatively little full infrastructure competition has emerged in fixed line networks – we are still living with the legacy of dominance by former state monopolies. Against this background, the Commission questions whether simplification is needed, and conversely for proportionate regulation.  ‘Conversely,’ because the Commission notes the need for OTT services – which are not subject to the same regulatory burden – to be similarly regulated. So the language of rolling back regulation might be used to justify an extension of regulation, at least in so far as its subjects are concerned, and may tie in with the review of AVMSD.

While a review of the e-Commerce Directive is connected to IP enforcement, the Commission notes that the new business models have a disruptive effect on established business models. It argues that it needs:

“to understand better the role and systemic nature of platforms as key innovators in the digital economy and the concerns or opportunities this may entail’.

After noting the market power of some of these players, it states that it

“will carry out a comprehensive investigation and consultation on the role of platforms [including] a lack of transparency in search results… the way Platforms use the information they acquire, possible issues relating to fair remuneration of rights-holders and limits on the ability of individuals and businesses to move from one platform to another”.

It remains to be seen the extent to which the document will be left unaltered by internal discussions within the Commission before the release of the Communication. Certainly a number of these measures are likely to give rise to significant lobbying and controversy.

This post gives the views of the author and does not represent the position of the LSE Media Policy Project blog, nor of the London School of Economics and Political Science.

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