World Industry Reacts to Digital Single Market Proposals

PARIS — Seven months after hitting a wall of resistance from industryites across nearly every European Union member state, as well as from Hollywood, the European Commission is beginning to introduce a new reform proposal on copyright as part of plans to create a so-called digital single market.

Crucially, the reforms do not attempt to directly implement cross-border access, whereby European citizens would be able to access content across borders distributed by digital platforms in other countries. That could severely affect Hollywood and Europe’s ability to continue financing films and television through territory-by-territory pre-sales.

But the European Commission is pressing forward with the concept of cross-border portability, a narrower concept, to allow E.U. residents to access digital content they bought when they’re traveling within Europe.

“Under the proposed rules, the provision of the online content service will be considered to take place in the Member State in which the consumer resides. No separate license would be required to cover the temporary use of the service in other Member States,” states the reform proposal, which was unveiled today by Andrus Ansip, vice president of the E.C., in Brussels.

“This legal mechanism will allow service providers to offer cross-border portability without the need to re-negotiate the licenses existing between rights holders and service providers,” the document added.

The plan would let rights holders “discuss details concerning (portability) with service providers, such as ‘temporary presence’, but this could well be part of the periodic licence renewal process.”

Announced as a Regulation, a fast-track process which the Commission hopes could allow the portability regs to come into effect by 2017, initial feedback suggests there will likely be more back-and-forth until the E.C. manages to get changes approved by the E.U.’s 28 member states and the European Parliament.

Initially conceived as a way to facilitate the circulation of European films across every member states, the single digital market – if full cross-border access were ever approved — has been deemed potentially harmful to cultural diversity, creative freedom and local film companies in Europe.

A separate document, also revealed Wednesday, “Towards a modern, more European copyright framework” — where the Commission lays out a roadmap for enforcing copyright across Europe — suggests the Commission will consider legislative proposals by spring 2016 including “enhancing cross-border distribution of television and radio programs.”

The industry fears this could be a Trojan horse, reintroducing the idea that content available on one digital platform in one country should be made available in other countries — decimating the amount of money distributors in individual territories would be willing to put up in minimum guarantees or P&A for the release of films that might already be available online.

Today’s proposals sparked mixed reactions — and some common concerns — from the world’s film and TV industry orgs, many referring not so much to the portability proposal but to fear of slippage towards a renewed push for cross-border access.

“Given that digital distribution is still a nascent sector, FIAPF — the Brussels-based International Federation of Film Producer Associations whose members include the MPA and IFTA, plus European producers’ orgs — is calling for contractual and commercial freedom for the sector to develop with flexibility and a diversity of offer.

“We never believed that legislation on portability was the appropriate approach, the market should drive the solutions to meet portability demand,” said Benoit Ginisty, FIAPF managing director.

Moreover, the Commission should “make sure that portability stays portability and distinguish it from cross-border access.  Full cross-border access would mean that we will produce fewer films on lower budgets because we won’t be able to raise the necessary financing by selling licenses before production starts, which allows us to produce more quality films.”

“Any regulation to mandate “portability” should be clear that it extends availability of online content only to paying subscribers of a service who are temporarily away from their home country.  Unless the definitions are specific, there will be unintended damage on the ability to produce the very films and programs consumers want to see,” said Jean Prewitt, IFTA president-CEO.

Christine Eloy at Europa Distribution, an org which represents 160 distribs, said it supports portability for subscription-based VOD services but pointed out portability had to be framed by specific guidelines on duration to prevent cross border access to content for extended periods of time. “Portability could lead to all kind of abuses if we don’t set limits on time and it could be a slippery slope towards the scrapping of territorial copyright which ensure the livelihood of our film industries in Europe.”

The SACD, the French society of authors, composers and directors, concurred. “It’s unfortunate that this proposal isn’t more clear and precise.”

“The E.C. doesn’t directly threaten territorial copyright which is at the core of the financing and diversity of European films and audiovisual content. That said, it’s important to be careful about the vagueness of the E.C. regarding portability,” stated the SACD, adding that abuses on cross-border access would benefit only multi-territory platforms (such as Netflix or Amazon).

Meanwhile, Jean-David Blanc, the co-founder of Molotov.tv – a newly-launched streaming service distributing most French TV channels on a similar model as Spotify — said portability “would logically benefit national platforms and their subscribers, allowing them to keep using their local subscriptions while traveling.” Per Blanc, “Denying them access to their local platforms encourage people to sign up for global, multi services such as Netflix and Amazon, or find illegal alternatives.”

Blanc said eligibility for portability should be fairly simple to enforce: “In order to confirm the user’s primary residence, we’d need to look at where the person actuel resides, determine where the user made his/her first login, where he mainly connects from, and where the primary bank account is located, among other things,” he added.

In the U.K., reactions to the E.C.’s copyright plans have also ranged widely.

John McVay, chief exec of Pact, which regroups British producers, argued the “current proposal falls far short of that goal due to inadequate safeguards to prevent abuse and a lack of clarity in key concepts like the meaning of ‘temporary’. It is critical that portability is conditional on robust and effective authentication of consumers’ country of residence,” McVay said.

Amanda Nevill, CEO of the BFI, said the institute welcomed “European Commission’s draft proposals which allows subscribers of digital services in the UK such as Netflix, Sky Go and the BFI Player, to watch the films they are paying for when they temporarily travel abroad within the European Union.”

While Nevill praised the E.C. for taking measures that could curb piracy, she also noted, like other industry figures, the need for “stringent verification of the consumer’s identity” to implement portability.

“It remains crucial that the E.U. does not seek in any way to undermine the principle of territorial exclusivity that is fundamental to the financing model for independent films in the U.K. and across Europe, and allows audiences to see and enjoy films that reflect their own distinctive cultural identity.”

Another concern regarding portability is whether Europe’s 3,600 VOD platforms will be given sufficient transition time to adapt to the new portability regs. Their introduction in 2017 might allow them to be up and running at the same time as the E.C.’s nixing of cellphone international roaming charges for use outside country of purchase, a significant political double-whammy from the Commission.

John Hopewell contributed to this report.


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