The European Commission’s Digital Single Market (DSM) Strategy has failed to allay growing concerns within the European film and TV industries about the Brussels-based institution’s response to the digital revolution.

Europe

An alliance of 11 international organisations from the fields of production, distribution, exhibition, publishing and sports rights issued a statement in reaction to the EC’s strategy document which was unveiled by European Commissioners Andrus Ansip and Günther Oettinger in Brussels yesterday (May 6).

The signatories - ranging from the FIAPF producers’ association and the exhibitors’ organisation UNIC through the Independent Film & Television Alliance (IFTA) and the MPAA to the International Video Federation (IVF) and the Germany’s Bundesliga - indicated that they were ¨extremely concerned¨ that some of the Commission’s policy options could ¨negatively impact the sustainability of the film and audiovisual sector, and severely decrease the level of incentives for the production, distribution and dissemination of high quality films and audiovisual works across Europe.¨

¨Troubled¨

Moreover, the alliance - which included the producers’ association CEPI and Eurocinema and the Association of Commercial Television (ACT) - said that it was ¨troubled¨ by the lack of evidence provided by the Commission to demonstrate that the proposed changes will add quality jobs and growth in Europe.

¨To the contrary, we are concerned that these changes would have the opposite effect,¨ the organisations argued.

While appreciating that the Commission had ¨in part¨ acknowledged the concerns of the audiovisual sector by ¨stating that it intends to respect ‘the value of rights in the audiovisual sector’, they pointed out that ¨delivering on that promise will require significant changes in the Commission’s approach.¨

¨In particular, mandating any form of cross-border access by EU law in the audiovisual sector would not create or increase value, but more likely lead to its transfer to the benefit of a few big global Internet platforms, which will ultimately reduce consumer choice and cultural diversity,¨ the alliance said.

In a separate comment for Screen Daily, IFTA’s President and CEO Jean M. Prewitt said that her organisation was ¨encouraged that the Commission acknowledges that ‘copyright underpins creativity and the cultural industry in Europe.’”.

¨However, we are deeply concerned that the Commission persists in addressing online rights in isolation from the rest of the AV value chain including theatrical exhibition,¨ Prewitt continued.

¨This gap reveals a fundamental misunderstanding of the needs of creators and European distributors to create a financing and marketing strategy that integrates all types of distribution platforms within a territory in an effort to reach the widest audience.¨

¨Unworkable¨

In a joint response, Europa Distribution and the International Federation of Films Distributors’ Associations (FIAD) welcomed ¨many positive elements and goals that distributors share¨ in the DSM Strategy.

However, they are concerned that the Commission’s plans for copyright and geo-blocking would mean that ¨in practice both the value of film rights and the choices available to European audiences would decrease.¨

According to FIAD’s Secretary General Jelmer Hofkamp, ¨it still begs the question of what they will do in the copyright reform to increase cross-border access to European films. The reality is that the options left on the table could be very harmful,” while Europa Distribution’s General Manager Christine Eloy, General Manager of Europa Distribution, pointed out that the distribution sector was ¨very concerned¨ by the possible tools the Commission has in mind.

¨It would be unworkable if a film is available on VOD in one European country, that all Europeans citizens outside this country could also have access to it. This would affect the media chronology and it could lead to a huge disruption of the market; less creation and smaller audiences for European films”, she said.

“If you were to assess the winners and losers you have to say the ones who benefit from this would most likely be the existing big global platforms,¨ Hofkamp observed.  ¨The Commission’s rhetoric and expressed intentions are all well and good but what we care about is how their policy instruments will affect the independent film sector and European audiences in practice. At the moment the prospects do not look good.”

EFADs remain vigilant

The directors of national film agencies from 31 European countries, represented by the Brussels-based EFADs Association, mentioned in their initial reaction to the EC strategy document that ¨many of the messages from the representatives of the audiovisual and cinema sector as well as Member States seem to have been heard.¨

¨The EFADs are pleased to see that, on the whole, the Commission takes a more moderate and balanced approach on copyright reform, recognising the need to ensure that the financing of films, authors’ rights and cultural diversity are not undermined,¨ the association’s communiqué declared..

While the film agencies’ association ¨fully¨ supported the EC’s objective to improve the online distribution and access of EU works, both within the EU and beyond, ¨this should not come at the expense of the sustainability of the film industry,¨ EFADs President Peter Dinges, CEO of the German Federal Film Board (FFA), warned.

¨The industry remains concerned that any plans to prevent geoblocking will undermine territorial licensing with damaging consequences for the industry, for audiences and cultural diversity,¨ he said.

Territoriality

In an initial reaction to the DSM Strategy document, the UK’s Film Distributors’ Association (FDA)  expressed its support for the principle of the Digital Single Market and welcomed the EC’s continuing commitment to the principle of territoriality.

The trade body reiterated the argument that ¨there is nothing in existing copyright law to prevent the simultaneous release of a film on a pan-European or even global basis, where that is appropriate for a particular property. The market itself is, and will remain, best placed to fulfil this.¨

At the same time, the FDA suggested that ¨much further consultation¨ is needed by the Commission on such issues as ¨enabling sales of films from an on-demand service in an EU Member State to consumers from outside that Member State (so-called ‘passive sales’).¨

¨Today’s proposals omit references to the various local content classification regimes and creation of local subtitles and audio description files, which are funded by local distributors across Europe,¨ the FDA observed.

It added that consideration should also be given to the fact ¨that the market value of a film license may be diminished in a given territory if the film is already available online in another territory. Left unchecked, this may reduce the acquisition and distribution of more specialised films around Europe.¨

Remuneration

Meanwhile, the association of European collective management organisations, the Society of Audiovisual Authors (SAA), was pleased to see that the Strategy document mentioned the remuneration of creators being part of any European work on authors’ rights and copyright.

The SAA, whose members manage the rights for over 120,000 screenwriters and directors throghout Europe, said that it welcomed ¨a number of other aspects of the Commission’s strategy, notably its proposal to support the promotion of European productions online.¨

¨This pro-active action seems much more appropriate to really help European works travel across borders.  Enforcement of copyright and intermediary responsibility are also important areas for Europe’s screenwriters and directors but should not be seen in isolation from the need for authors to secure a fair return for the exploitation of their works.¨

¨The issue of geoblocking and facilitating cross-border access is an area where SAA will remain vigilant to ensure that any initiative does not have a negative impact on the financing of Europe’s diverse range of audiovisual productions,¨ the Society concluded.

¨Problematic¨

Concerns about the mixed signals coming from the Commissioners Ansip and Oettinger’s plans for copyright reform and the abolishment of ¨unjustified geoblocking¨ were also shared by Libby Savill, Entertainment, Sports & Media partner at the UK legal practice Latham & Watkins.

“Proposals to break down digital borders and allow consumers legal access to audio-visual content across the EU is, for the rights holders, problematic to say the least,¨ Savill said.

¨While the Commission is proposing to change the EU copyright regime to allow full portability of legally acquired content across the EU, it has left a door open to rights holders by announcing it respects territoriality. It proposes to safeguard the value of audio-visual rights, particularly in connection with financing EU content,¨ she observed.

However, the question is how this is to be achieved without geo-blocking and other contractual border controls.

¨Whatever the solution – no doubt involving access through paywalls – it is going to lead to wholesale change in the way rights holders and platforms do business in Europe as well as renegotiation of current licensing arrangements,¨ Savill suggested.

United front

Speaking exclusively to ScreenDaily, David Johnson, CEO of the world’s leading independent rights collection agency Compact Media Group, said that ¨one aspect for optimism is that so many different organisations - filmmakers, sports rights agencies and TV makers etc. - have the same end point¨ as far as their reactions to the Commission’s plans.

¨The core problem for our client base is how to get content funded and to maintain the level of local programming,¨ he explained, noting that as the consolidation of channel and media ownership grows globally, the amount of rights being asked for from rights-holders constantly increases, but this does not translate into a corresponding increase in remuneration.

Johnson agreed that there were some ¨noble sentiments in the proposals¨, but suggested that the ¨smaller and less developed territories in Europe will suffer¨ if geo-blocking is abolished.

Compact Media looks after more than 270,000 television and film titles internationally for such companies as BBC Worldwide, ITV Global Entertainment, Fremantle Media, All3Media, Discovery Communications, National Geographic, A&E, PBS, Arte, Shine and Zodiak Rights.

Harmony

Ansip and Oettinger indicated yesterday during the unveiling of the strategy document that legislative proposals would follow before the end of 2015 to reduce the differences between national copyright regimes and allow for wider online access to works across the EU.

The DSM Strategy document, which also addressed such issues as consumer rights in online retail, data protection and network expansion, was described by Ansip as ¨the starting point, not the finsihing line.¨

¨All of these initiatives must be implemented in a coordinated way for the DSM to become reality, to bring tangible benefits, create jobs and growth.¨

While there had been speculation about a rift between Oettinger and Ansip in the run-up to the Strategy’s unveiling over the issue of geo-blocking, the German Commissioner referred on Wednesday to the ¨outstandingly internally structured¨ and ¨largely friction-free¨ cooperation within the Commission during the preparations of the strategy document.

DSM roadshow

In a blog following the Strategy’s announcement , Ansip explained that the Commission had aimed incorporate many of the experiences and views posted on its Digital4EU website into the DSM thinking.

He said that it was ¨not a surprise¨ that copyright was ¨probably the most controversial area.¨

¨On the one hand, film trade associations and some telecom companies support exclusive territoriality as a way to preserve existing business models and avoid commercial and other risks,¨ Ansip noted.

¨On the other hand, voices that included NGOs, startups and service providers - as well as the majority of everyday online users - supported the idea of consumers being able to view what they have bought in one EU country while they are in another.¨

Ansip added that experts from many Commission departments involved in the DSM will now begin ¨a process of listening, explaining and discussing in all 28 countries¨. He will personally be visiting his home country of Estonia and Poland in the coming days, and fellow Commissioners are planning to travel to Denmark, Finland, the UK, Austria and Slovenia, among others, to present the DSM strategy.