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Inside the 'Digital Single Market'

The European Commission is working to build a more efficient system for sharing media content within the EU. What are the proposals, and how will they impact on broadcasters? 

Flickr/Andrew Gustar. Some rights reserved

Most of us feel frustrated when not being able to watch the newest television show or the most talked about film online. "Sorry, this content was blocked for your country" is a sentence that pops up on our screen far too often. It feels a bit awkward that the majority of people can travel across European borders without too many problems, but that content apparently cannot. But change is upon us. In Brussels, the European Commission plans to ensure a free flow - so, no barriers - for content on the Internet. The policy initiative to this end is called the 'Digital Single Market'.

The issue is controversial. Whereas most television viewers and film fanatics love the sound of this, most companies in the industry do not. They fear detrimental effects on their business model. Most likely the European Commission will roll out plans in an adapted and more moderate manner. Even if such a scenario were to take place, the impact of the United Kingdom, its citizens and its media industries remains to be seen. The possiblity of Brexit is looming and might result in UK citizens still seeing annoying pop up screens on their computer or tablet, preventing them watching content from other countries. 

Why are changes needed? 

Digitization has affected audiovisual distribution. For both film and television services, sequential and extremely structured time is over. Take video-on-demand (VOD). It is no longer an additional release window at the end of the value chain, but can manifest itself before the linear broadcast of television programs, immediately after or even during a film release in cinema (as was the case with Snowpiercer, released by the Weinstein company on VOD while still in cinema), or in the case of both television and film much later than the linear broadcast or release in cinema. VOD is valorized in many ways, from the known subscription based business model, to pay-per-view and advertising based models.

Needless to say this offers new opportunities for funding original content creation with platforms such as Netflix and Amazon Prime, among others, entering content markets by investing in series such as House of Cards and Transparent. Similarly, content players such as the BBC and television distributors such as Liberty Global have developed their own VOD platforms, which are in some markets still out-competing the abovementioned initiatives. Audiences seem to go along with these developments, not abandoning linear viewing altogether, but rather complementing it to a large extent with more flexible modes of viewing.

It is against this background and with an eye on seizing the opportunities of a rapidly changing media market that the European Commission has developed its ‘Digital Single Market’ initiative. To strengthen the competitiveness of the media and electronic communication sectors, there is, so the argument goes, need for more and not less internal market. Fragmentation, so common in a linguistically and culturally divided European Union with 28 Member States, should be overcome. 

This is not a new idea. It goes back to plans of the European Commission to create an internal market for broadcasting in the 1980s and the even bigger ambitions of the so-called 1994 Bangemann report on Europe and the global information society/economy. 

It has proven difficult to realize these ambitions, but now the European Commission, under the leadership of President Junker and Commissioner for Digital Economy and Society Günther Oettinger, are keen on trying another time. They presented the ambitions for the Digital Single Market, emphasizing among other things the importance of unity across Europe. This has in fact become one of the flagships of their plan - a much debated and extremely controversial issue.

Concretely, the Digital Single Market plan proposes to ensure a free flow of European works with copyright no longer bound to each and every separate national legal territory. At the moment copyright is largely a matter of national concern and companies need to clear rights for each territory. The European Commission finds this damaging for the economic growth of the media and communication sectors and favors a system of multi-territorial licensing. Many industry stakeholders disagree, fearing it would undermine the potential to valorize content in different countries and, hence, risk their economic longevity. 

So is the European Commission really leading the sector (and audiences) in a direction that would not be beneficial in the long run? 

Geoblocking and multi-territorial licensing 

Nowadays television and film content are licensed on a national basis. Often this happens before production and is a means of making sure content is funded or at least, in case of ex post deals, that it can be made profitable. Geo-blocking is a fundamental aspect of this system as it foresees that content is blocked in areas where rights have not been sold. This ensures exclusivity to companies that, for example, have acquired rights to broadcast in a linear manner or to offer on a VOD basis. This is basically the reason why European citizens when traveling around Europe may have difficulties watching their favorite television soap online. For example, a Belgian visiting London may be denied access reading “this video is not available in this country” on his or her computer screen. 

The ambition of the Digital Single Market Initiative is to overcome this situation, making sure that television content can be licensed once within Europe. This could affect the European media and communication industry in diverse ways. 

  1. Actors that rely on local licenses such as local European directors, producers, distributors, broadcasters, VOD platforms and cinemas. Their key focus is on offering an appealing portfolio of services to consumers without having to compete with other European and international players. Small public broadcasters are to be situated in this group.
  2. Actors that have a European strategy such as broadcasters active in various countries, small European studios. They do not want to abolish the current system alltogether, but favor some sort of flexible approach to it. One of the options is the ensure portability of services. This means that in the above example of a Belgian visiting London, that he or she should be able to watch the domestic soap abroad. Bigger public broadcasters, engaging in export, can be situated in this group of actors. The BBC is a good example. What is interesting about this group is their plea for investment obligations for actors distributing content, but not investing in it. European television channels with global strategies (not only the BBC but also ITV, ZDF, Arte, Sky), vertically integrated European producers (such as EuropaCorp, Canal+) and local and European VOD platforms (such as Universciné, Distrify, Curzon) experience unfair competition from global players that do not invest or invest very little in local EU content while they make significant investments.
  3. Actors with an international strategy seem to deviate from the above positions, asking for the abolition of the current copyright system. US cable companies, international over-the-top services such as HBO, Hollywood studios, etc. want to sell as much as possible on a global market and find the clearing of rights for each national territory rather burdensome. Netflix, for example, has made this position abundantly clear. 

Different views, opposing interests

When analyzing the multitude of documents on this issue, you can discern three fields of tension.

Firstly, there are clearly opposed interests at play. Simplifying to some extent, American companies favor the plans of the European Commission, whereas most European companies have major issues with it. That can partly be explained by the dominance of American companies in the distribution of content, whereas European companies have much more stakes in the financing of content. For players mainly active in distribution of content at a global scale, getting access to fairly wealthy consumers in the European market without the burdensome copyright system in place now is obviously the way to go.

Secondly, and related, EU content production is still dependent on government subsidies and other support measures. The bulk of that money is granted at the national or even subnational level. Against that background (and the context of domestic content requirements, i.e. quotas, in EU Member States) national licensing makes sense. For players that aim at recouping investments on a global scale this is much less the case. 

Thirdly, emerging players such as Netflix are obviously more on the offensive (which is not a bad thing!) whereas other companies such as cinemas try to make sure their methods of releasing and valorizing films can remain in place as long as possible. Even knowing change is coming and is in fact happening, these players traditionally take a more defensive position. 

Concluding that the European Commission might in fact please American companies more with these plans than its own industry stakeholders is a bridge too far. It would underestimate the integration of ownership structures and emergence of European multinationals in the sector. However, it is fair to say in the short term the adoption of certain plans might bring more immediate benefits to corporations targeting the European consumers, but not necessarily investing in creativity on European soil.

It seems that the European Commission is on its way to relaxing its position and might stick to the portability of services, which for most stakeholders involved is an issue of common sense and not so much a fundamental review of copyright dealings in the sector. Regardless, it might be wiser for the European Commission, together with the sector and based on scientific research and evidence, to engage in policy-making that is more holistic in its nature, approaching the challenges of the Digital Single Market from multiple angles instead of focussing on copyright as such. 

About the authors

Ilse Schooneknaep is a Ph.D. student at the Vrije Univeristeit Brussel. Her research focuses on European audiovisual policy and challenges due to digitization. She is part of the Mecetes project, a collaborative research project exploring the circulation of contemporary European film and television drama. The project, a collaboration between the Vrije Universiteit Brussel, the University of Kopenhagen and the University of York, is funded by the Humanities in the European Research Area (HERA).

Karen Donders is professor at the Vrije Universiteit Brussel where she lectures on media policy and European media markets. She is a senior researcher at the center for Studies on Media Information and Telecommunication (SMIT) where she heads the Policy Research Unit, consisting of about 15 researchers specializing in diverse aspects of media and communication policies at the Flemish, national, European and global level. 


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