The future of the European online content market is its past

maxresdefault

Despite hopes of many, the creation of a Single Digital Market for online content is going to remain unachieved, forever or for many years at least. European citizens have seen many borders recently disappearing (for roaming, electronic commerce, travels, studying abroad for instance), but getting access to movie or online content offered abroad will continue to be a problem. Let’s see why.

At beginning of its mandate in 2014, the European Commission planned to end geoblocking as well as other practices and mechanisms preventing European citizens to get access to any digital content offered outside their European country of residence (but still in the EU), despite the persisting practices of movies studios and content providers to distribute videos and movies on a strict territorial basis. The Commission’s aim was to sustain the creation of a truly integrated single market for digital content, the development of a paneuropean content industry, as well as the elimination of consumer frustration and grey markets which are the main causes for piracy behaviors.

Accordingly, the European Commission proposed to overcome such territorial restrictions in various areas of action within the Digital Single Market strategy, particularly in the matter of geoblocking, content portability and rights clearance for instance. While content portability ended up with a solution satisfactory for users, the most sensitive matter, that is to say geoblocking for online content, was a debacle, since the final regulation was watered down with the exclusion of content online from areas for which geoblocking is forbidden (technically: “unjustified”). A similar accident is now going to happen in the matter of rights clearance, since a proposal to facilitate the clearance of rights in the online sector (by making them cross-border), laid down with the reform of the SatCab Directive, has been dramatically weakened by the competent committee of the European Parliament. As a consequence, online copyright should continue to be cleared country by country, thus reinforcing the power of rights-holders to segment the market geographically. Soon the plenary session of the Parliament will be called to decide whether to approve or reverse such a decision.

Any time and anywhere territorial restrictions are challenged, the content industry is fiercely opposing this process basing on the argument that such territorial restrictions are inherent to the production model for movies and premium content in the EU. Fact is, European movies are financed via contracts remunerated via territorial exclusivities country by country. Therefore, changing this system would shake the production model for movies and content in the EU, triggering a spectacular process with some uncertainties. Therefore, the resistance of the concerned stakeholders is understandable.

One should consider, however, whether such concerns are overestimated and whether the defense of the  status quo may be serving also interests other than welfare of the European culture and movie industry.

Firstly, it is not clear why, on the basis of the above arguments, territorial restrictions should be granted for US content that is NOT generated and produced in the EU. If territorial restrictions are aimed to protect investment in EU content, than geoblocking and other measures should not be justified for non-EU works, such as – for instance – movies from US studios. Remarkably, despite the foregoing US content production is currently distributed in the EU on a strict territorial basis, thus enjoying profits which would no be imaginable in US where geoblocking is not tolerated.

Secondly, many European movies are financed via European funds (the Media Program for instance). Such funds are aimed are supporting the European creative industry and, as a matter of principle, should be designed in a way to spread European content everywhere in the EU. By contrast, even such EU-financed works may be (and are) currently geo-blocked country by country, which is absurd. It is curious that no-one in the European Commission has never thought that EU funding should be used more coherently with the scopes of the Digital Single Market.

Third, one should investigate whether the current territorial-based system is really helping the European content industry to really grow and become stronger. European content stakeholders normally claim that the European industry is weak, needs for subsidies and any change in the territoriality principle should just open the doors to US supremacy. However, US supremacy seems already to exist despite the pro-european geographical segmentation system.  This is the evidence that this model does not work and it allows the European industry just to survive, not to grow and become stronger. While the current territoriality-based system is granting formidable profits to the US industry, the EU content industry can only arrange to live some way. No one in the EU should be happy to continue like this.

Fourth, it is clear that a great effort is necessary to shake a status quo which is familiar to everyone, while fews are ready for the uncertainties of a change. However, this is a déjà vu in the EU: any time markets have been liberalized and opened to import and exports (goods, services ecc), stakeholders interested with the status quo have been always claiming that changes will destroy the market. This never happened, however: by contrast, markets have been adapting and growing, while resources have been allocated more efficiently, with consumers satisfaction. The current commitments (i.e.: overcoming territorial exclusivity) undertaken by Paramount with DG COMP, in the pay TV case, shows that changes are possible without catastrophes. If Paramount can, why others can’t?

Finally, “cui prodest” this debate? The Single Market is not a mantra per se, what really matters is the interest of the European citizens, who can be both artists and consumers. They should be at the centre of this reform.

Content stakeholders say that they protect the interest of artists, however the matter is more complex. Artists belong to a a system which is historically shaped with a top-down approach by big studios and, therefore, even if artists are part of such organizations, one could doubt whether they really have the possibility to have their say. The Weinstein case show how difficult could be the career for first mover artists. The problem is particularly serious for young, new and innovative artists, deprived of negotiating power, while the most famous do not have interest in big changes. A clear example is shown by the collective copyright management system, which is normally organized via monopolies (de facto or de iure) depriving artists of a concrete right of choice: thus, young artists are keen to escape as soon as they found a suitable alternative. One should therefore be skeptical when big studios or traditional organizations claim to represent the interests of all artists. Artists have different interests depending on the stage of their career, but collective organizations and studios only take care of the profitable ones. The undersigned is a non-professional pianist and I know something about that.

As regards consumers, content stakeholders normally say that the content liberalization would just favor few, privileged expats citizens living in Brussels and in big international cities, or wealthy travelers. This is not correct and, by the way, the same argument could be used to challenge the European reform deleting roaming surcharges. It is true that any time borders within the UE have been opened and liberalized, the initial beneficiaries where selected categories of people: in the case of cars importation, for instance, just people interested in buying a cheaper car abroad; in the case of roaming, the people traveling more or living in borderline regions; in case of diplomas, just students studying abroad for personal reasons profited of the new system; and so on. However, in the long term liberalizations have been providing beneficial effect to everyone, not just to the initial occasional beneficiaries. In other words, the short-term practical effects of a liberalization reform may be, at beginning, not so decisive for all European people, however the resources which can be liberated in the long term may be huge. This is the way the Single Market developed until now and there is no reason to believe that things should go differently for digital.

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s