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Progress towards a digital single market for content – a critique

With only a few months left to go before the deadline set by the European Council to agree all pending Digital Single Market proposals, now is a good time to assess what progress has been made and what is left to achieve in relation to creative content.

August 2018

In December 2015, the European Commission set out an ambitious vision for how it wanted to move "towards a modern, more European copyright framework" in the context of its Digital Single Market (DSM) agenda. It aimed, among other things, "to achieve a wide availability of creative content across the EU [and] to make sure that EU copyright rules continue to provide a high level of protection for right holders." In an ideal world, perhaps the Commission sees there being a single EU copyright title and a market in which one piece of digital content (say a film) is available on the market in one Member State and can be freely accessed and acquired at the same time, at the same price, with the same level of service, in all other Member States. That ideal is, however, a long way off.

For present purposes, there are four pieces to this jigsaw but they are not all in place and, even where they are, they do not form the image which the Commission originally envisaged.

The Portability Regulation

The Commission wanted to avoid the situation in which consumers could not access online content services they had legally bought in their home country when travelling across the EU. In a relatively early success for the DSM, the Portability Regulation became effective on 1 April 2018, enabling Europeans "to watch films or sporting events, listen to music, download e-books or play games – when visiting or staying temporarily in other EU countries." It applies to all types of content service, whether delivered on a subscription or transactional basis or on a paid-for or free basis, but for free services it is optional. Content licensors and service providers have been preparing for the practical consequences of this Regulation for a couple of years, but the debates are still being played out about how long a "temporary" visit is and how the service providers can verify where a subscriber has their "actual and stable residence". While the benefits of the reform are very tangible (and have certainly been enjoyed by the writer when travelling in Europe), it deals with a relatively discrete issue and does so in a way that causes numerous headaches for licensors and licensees. Ironically, it makes content licensing more complicated than previously.  

The Copyright package

The single item in the copyright package which is likely to have most material impact on the day-to-day of digital licensing (being Article 13 of the Copyright Directive) is also probably the most controversial. Article 13 of the Copyright Directive would introduce, in crude terms, an obligation on a narrow but commercially important set of online services (those which, for a commercial purpose, store and give access to and optimise user-uploaded works) to enter into agreements which license their and their users' otherwise infringing use of content. If the service providers do not wish to do this, they must instead, with the co-operation of the rightsholders, implement appropriate and proportionate technical measures to prevent the availability of infringing content on those services. Certain elements of the tech and internet communities criticise this measure as being unworkable and leading to censorship, whereas the intention behind the proposals is rather to make it easier for the rightsholders to license these services (including their users' activities) and secure appropriate payment for the use of their content. The proposal was not approved in the European Parliament's first plenary vote on 5 July and returns to the plenary on 12 September. If approved then, trilogue negotiations with the Commission and Council will commence.

The Regulation on online transmissions of broadcasts

The Commission wanted to make it easier for online broadcasters to operate services cross-border, which was, in its view, of particular concern to expats wanting to access audiovisual content from their home countries while in other EU Member States. It therefore proposed extending the country of origin licensing regime introduced in 1993 for satellite broadcasting, to "ancillary online content services of broadcasters". Those services being, essentially, online simulcasts of "traditional" linear broadcasts and catch-up services. The effect of the proposal would be that such services would only need licensing in one country (the country of the broadcaster's principal establishment), rather than on a country of reception basis, so one licence could enable pan-EU availability. There was a real concern, however, that country of origin licensing for digital services could lead to a 'race to the bottom' in which pan-EU licences could be obtained from low-cost jurisdictions, thereby making it more difficult for rightsholders to obtain an appropriate price for their content. There was also a concern that it would cut across the traditional territory-by-territory exploitation of audiovisual content in Europe. The scope of the Parliament's latest draft of the Regulation has, therefore, been limited to news and current affairs programming, and includes provisions which prevent forum shopping. Unlike with Article 13, the proposal was passed by the Parliament's plenary so now the outcome of the trilogue is awaited. This draft, however, hardly delivers on the Commission's initial vision.

The Geoblocking Regulation

The Commission wished to prevent "direct and indirect discrimination by traders artificially segmenting the market based on customers' residence" and proposed a Geoblocking Regulation to do so. That discrimination could happen equally to the provision of digital content given the territorial restrictions typically imposed by content owners which prevent, for example, content available on UK services being available to potential customers in Germany. Such practices prevent the "achieve[ment] of a wide availability of creative content across the EU". However, they are fundamental to the way some creative industries exploit and monetise their content. So, while the Regulation prevents online services from blocking or limiting access to their websites for reasons based on users' nationalities or locations and prevents traders from applying different terms (including prices) to the provision of electronically supplied services based on users' nationalities or locations, it does not apply at all to audiovisual services. Further, the prohibition on applying different terms does not apply to services the main feature of which is the provision of access to and use of copyright protected works. However, these restrictions on the scope of the Regulation will be reviewed by 23 March 2020. If the scope can be widened it would make a digital single market for content more likely, but doing so could come at considerable cost to the industries which provide that content so the review will, no doubt, be hotly contested.

What has been achieved?

This all goes to show that the digital single market for content is a long way from coming to fruition and that the reforms which have been or are likely to be introduced are tinkering around the edges rather than delivering a truly single market. There are, however, good reasons for that – the current market structures exist in large part because they are considered to provide the best conditions for supporting the creation of the types of content people want to consume.

It is noteworthy that the two most controversial aspects of the copyright package (namely Article 13 discussed above and a further proposal to give press publishers additional rights over their online publications) are those that seek to give extra rights or powers to content owners. That, perhaps, reflects a shift in the perceived balance of power between the content and tech communities, one that arguably started with the introduction of the E-commerce Directive's safe harbour in 2000. While the Commission has proposed measures to alter that balance in favour of the content industries, it is revealing that the measures which have seen greater support are those that require rights holders to alter how they operate to enable the greater availability of content online, rather than those which would support the creation, value-generation and dissemination of that content.

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Colourful computer screen
Adam Rendle

Adam analyses whether the European Commission is moving successfully to a digital single market for creative content.

"It is revealing that the measures which have seen greater support are those that require rights holders to alter how they operate to enable the greater availability of content online, rather than those which would support the creation, value-generation and dissemination of that content."