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A Perfect Storm

A Perfect Storm

RM blog post

Richard Mollet, 26th March 2015

A perfect storm is brewing in Brussels.   On 6th May the European Commission will publish its long awaited White Paper on the Digital Single Market.  This, we must hope, will provide much needed insight into the Commission’s thinking on the scale and scope of copyright reform which it believes is needed to complete the digital single market – although we are told we will have to wait until Autumn for the detail on this.

On the same day, the Legal Affairs (JURI) Committee of European Parliament will vote on the now notorious (at least in rightsholder circles) report on copyright by Pirate Party/Green MEP Julia Reda - if you haven’t read it you can guess what it says.  Ostensibly a review of the implementation of the Information Society Directive, its anti-copyright recommendations have seen it become a rallying point for those wishing to tear up our well-established copyright framework and destroy the ability of authors, writers, musicians to be paid for their creativity or to have a say over how their works are used. 

Despite it being subject to some 500 amendments, even having such a report at large containing such a range of misperceptions and potentially influencing the Commission’s thinking is highly worrying. 

This has prompted The PA to give consideration to how the Digital Single Market is working for publishing.  Our conclusion, which can be read here, is that it is already a reality.  Furthermore, not only is copyright not a restriction on the digital single market, but it is in fact playing a crucial role facilitating it.  It works to the equal benefit of start-ups and existing companies, be they SMEs or international corporations.  It is equally advantageous for consumers, in ensuring they have access to a continuing supply of a wide-range of quality content, and for creators by ensuring they, and the companies which invest in and support them, are appropriately rewarded.

That is why we have this week written to all MEPs calling on them to ensure Europe has a copyright framework which continues to support cultural diversity and the long-term interests of Europe’s consumers.  The myth, being promulgated by the likes of Julia Reda, that any deficiencies in the digital single market can be fixed by copyright reform, needs to be busted once and for all. 

Adding to this tempest on copyright exceptions there is a strong wind blowing on the question of territoriality and so-called geo-blocking.  This is not so much of an issue for publishing (or music) where rights tend to be licensed on a pan-EU basis.  But it matters deeply to our colleagues in audio-visual sectors and there is an important matter of principle at stake which means it should command our attention too.

The Commission believes that content creators should be compelled to license content in all member countries simultaneously and not, as at present, on a territory by territory basis.  Creators should also be barred from using technical measures to prevent content in one nation being accessed from another.  The officials’ argument is that this will make the EU a truly seamless digital market.

The rejoinder to this is two-fold.  First – the principle point – creators should not be compelled to exploit their works in a way which is not beneficial to them.  Secondly – the economic point – not all EU countries have the same demand for the same content (anyone with a passing knowledge of the rich cultural diversity of Europe and a smattering of economics knowledge can work out why this is the case). 

Forcing works to be sprayed indiscriminately across the EU rather than them being carefully guided into differing and discerning audiences will generate three sets of losers: (i) the creators, who lose their ability to manage their works; (ii) consumers, who in many cases will find the price of the content rises to that in the highest demand territory;  (iii) or conversely local content providers who may find themselves undercut where content prices instead fall to the level of the lowest demand territory.   Thus the cultural diversity of Europe gets blanketed over by those players and platforms large enough to have the capacity to supply 28 markets simultaneously.  Oh, and guess which side of the Atlantic those types of companies come from.

Different content and works would be affected in different ways by this drive to homogeneity so it’s impossible to say definitively which way the shift will be, but it is a brave (in the Sir Humphrey sense of the term) legislator who loudly proclaims the need to end geo-blocking without first having done the thorough homework as to what its effects will be.

The Commission is trying to make out there is a market failure at play because not all EU consumers can get the same content as others.  This is fanciful.  It is a mundane economic fact that for many products a market cannot be supplied because the costs of doing so exceed the price that could be charged for it.  It is like why it is impossible to get a pint of lager at the top of a mountain in Wales: even when you really would pay anything for a drink there are good reasons why the market can’t get one to you. The Commission would apparently rather see a mass cross-subsidisation and to heck with the consequences on locally produced content.

It also tries to claim that if the minority markets were really economically important then rightsholders wouldn’t spend so much time and effort tackling piracy in them.  This is nonsensical.  Infringement needs to be tackled so as creators’ rights are not harmed in their primary market; and so that their ability to manage exploitation in any market is upheld.  It is worrying that there are people in the Commission who seem to think that European law should be broken if the economic implications aren’t too bad.

The Commission also seems to need persuading that the biggest barrier to the Digital Single Market is really infrastructure.  It is all very well waxing lyrical about wonderful web-based content services, but if you are standing in one of the vast swathes of Europe which does not have a robust 3G or superfast broadband connection, then no amount of Netflix subscriptions is going to make your life appreciably more fun.  But apparently there is no analysis being undertaken into this factor. 

It is going to be an interesting number of months seeing how this storm blows out.

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