Cross-border content complications

Copyright rules can be frustrating for consumers, but, as the Commission is discovering, bringing in reforms is a tricky business.

Why is it that someone who is resident in Spain cannot buy an e-book destined for the French market or that a German subscriber to an internet television service finds he cannot watch his programmes when holidaying in Croatia?

Such cross-border problems arise largely because of national control of copyright. How to address them is a question troubling several departments of the European Commission at present. Similar copyright issues have also been preoccupying the European Parliament and the European Court of Justice.

Digital content – such as music, films and e-books – can be sent across borders more easily than such goods as shampoo, wine or hi-tech machinery. But paradoxically, the restrictions on the sale of such content are much greater than those that apply to bottles of shampoo. Content-owners, from authors to film studios, license their content out on a country-by-country basis. Frequently, distributors in one EU country do not hold a licence to distribute that same content in another EU country.

This problem will, in theory, be reduced following the approval in the European Parliament in early February of new rules for collecting societies, proposed by the Commission and already negotiated with the Council of Ministers. The collecting societies represent authors and performers and license out their rights to TV channels, radio stations, online music-providers and other commercial users. The law, which will take effect in 2016, aims to make their activities more transparent and will make cross-border licensing easier.

But it will not solve all problems. The European Commission has raised the possibility of further legislation in a controversial, 80-question consultation on copyright, which closed yesterday (5 March). More than 8,000 responses have been submitted – much more than the usual response rate. The consultation period, initially set at two months (including Christmas and New Year), was extended by a month, amid complaints about its brevity and about how the questions had been phrased. Arlene McCarthy, a UK centre-left MEP who used to chair the Parliament’s committee on the internal market and consumer protection, said the credibility of the consultation had been called into question.

One of the biggest issues for the consultation is the creative industries’ practice of “territorial”, or country- by-country, licensing. The practice dates from the pre-internet era. Technological developments make it look outdated. As the Commission observes in the text of its consultation, EU citizens “now expect to be able to access content […] regardless of geographical borders”. Europe-wide licensing would suit commercial internet platforms such as iTunes, Google Play, Spotify, Netflix or Amazon. They sell music, films or e-books online and would benefit from being able to offer a pan-European service.

By contrast, the possibility of wide-reaching reform of EU copyright rules has alarmed many content-owners. They fear that the Commission could rush into a reform that reduces the value of their rights or makes these rights harder to enforce.

These owners of content maintain that country-by-country licensing is justified because each country has its own language and culture, affecting not only how the content is presented but also how it is marketed. Only local licensors can cater to specific national tastes, says a lobbyist for the creative industries. He fears a “typical EU fixation” with cross-border issues, to the detriment of national interests. “The danger is that if you take away this licensing model, you risk undermining the whole model.”

The creative industries argue that the Commission should instead concentrate its efforts on ensuring that existing copyright rules are enforceable. “By and large, Europe has a regime that works where implemented,” says Chris Marcich, the Motion Picture Association’s president and managing director for Europe. He says that rights-owners still find it difficult to enforce their rights in some countries, notably Spain, whereas French and UK judges are more robust in granting rights-holders injunctions under EU law.

Holding back innovation?

The Computer and Communications Industry Association – its members include Google, Microsoft, Facebook and eBay – argues that EU rules on copyright must be adapted to how the internet has developed. The existing rules are too strict when applied to newer online phenomena such as user-generated content or search engines, they argue. The net effect is to hamper innovation.

Michel Barnier, the European commissioner for internal market and services, is not expected to publish any legislative proposals before the end of the mandate of the current Commission late in 2014. At most, he would publish a white paper sketching out options for reforms that could be implemented by the next Commission.

That does not mean that companies that license content on a territorial basis can relax. Joaquín Almunia, the European commissioner for competition, is also scrutinising this particular facet of their business. In January, he opened an investigation into whether Hollywood studios’ practices of licensing their content on a country-by-country basis breaches EU competition rules. Such licence restrictions prevent a satellite broadcaster, such as Sky in the UK and Ireland, from selling subscriptions to people located in other member states.

If Almunia concludes that these licensing agreements do breach EU law, it would have far-reaching consequences for other content-owners that use similar contractual arrangements.

An EU court has already held that the Football Premier League could not prevent the owner of a British pub from subscribing to Greek satellite television so that she could show matches from the English Premier League.

The initiatives undertaken by Barnier and Almunia on the issue of copyright use different legislative tools. Neelie Kroes, the European commissioner for the digital agenda, has long argued in favour of the Commission presenting a legislative proposal to overhaul the existing 2001 copyright law. But Barnier has proved more cautious. His critics say that he is in thrall to French preoccupations with protecting l’exception culturelle. But he will also be aware of how problematic previous attempts to reform copyright rules have proved. His predecessor, Charlie McCreevy, had to back down from an attempt to reform rules on copyright levies. Almunia’s administrative investigation is a markedly less political route to dismantling cross-border barriers and may yet prove effective.