Striking the right balance for creators and culture
Creativity Works! supports the objective of building a digital single market in Europe. However, the means to achieve this is not by extending the application of the Country of Origin (COO) principle contained in the 1993 Satellite and Cable Directive to today’s flexible and fast-moving online environment. Assertions that this extension will benefit consumers are rooted in a deep misunderstanding of the audiovisual market ecosystem.
Content creation is heavily dependent on funding for development and production which is obtained through a number of sources, including territorial licensing of future distribution rights. This in turn is crucial for future recoupment of investment and the best marketing and distribution to consumers. In Europe, distributors and publishers of film and audiovisual content work hard to create markets at home and abroad with the required adaptation to the various markets, tastes and cultural specificities
The draft European Commission proposal and discussions in the Legal Affairs committee (JURI) would effectively remove the territorial nature of copyright in this context by creating an automatic pan-European license where as a result the geographical scope of the license extends beyond the Member State of establishment of the broadcaster (buy 1, get 28). It completely ignores the economic realities of raising funds for development, production, marketing and distribution and the need to share the financial risks and ensure recoupment of the often high costs involved.
European film and drama will be particularly at risk as they rely on co-production schemes which require partners from across Europe to pull together resources by agreeing to focus their activities on specific markets.
The Commission argues that its proposal would have a very limited market impact because it only applies to broadcasters’ online ancillary services. However, if a “country-of-origin rule” is applied to broadcasters’ online services, the first market to offer the content online in the European Union will undermine the exclusivity, the marketing and all subsequent exploitation efforts as well as investment recoupment opportunities in all other markets.
This will diminish the value of exclusive licenses in those other markets, with a direct negative impact on investment in production, marketing and distribution.
Local European news and television programme will suffer: the production of such content depends directly on European broadcasters’ capacity to finance them. If broadcasters’ revenues decrease, their ability to support such local production will be severely impaired.
Non-English speaking audiences most impacted: pan-European licences will come at a higher financial cost which most small domestic broadcasters throughout Europe will be unable to afford. The price increase will be especially true for more ambitious co-productions. Consequently, audiences would be increasingly serviced by international aggregators, mostly English language focused, as the latter will be among the very few players able to serve on a pan-European basis.