EPC VIEWS AND PROPOSALS FOR A EUROPEAN DIGITAL SINGLE MARKET STRATEGY
The European Publishers Council (EPC) brings together 26 Chairmen and CEOs of Europe’s leading media groups representing companies with newspapers, magazines, online publishing, journals, databases, books and broadcasting. A list of our members is here: www.epceurope.eu
The Digital Single Market Strategy is one of the key projects of the Juncker Commission over the next five years. This paper presents the EPC’s priorities and immediate proposals to ensure the best overall framework for a sustainable, independent media sector in Europe. The European Commission and MEPs are actively highlighting barriers for both consumers and businesses alike when making digital transactions across the European Union. Media businesses are well advanced in transitioning from traditional ways of doing business to being digital leaders. With high levels of investment leading to innovation in many aspects of our core businesses EPC members are at the forefront of reaping benefits from the digital market.
Nevertheless we face significant regulatory and practical challenges when it comes to competing in the Digital Single Market. We face asymmetric regulatory obligations by comparison to global players who do not play by the same rules. At the same time we face bottlenecks in specific areas of the market. Our aim is to provide the European Commission with specific proposals to support investment in quality content especially journalism; innovation in licensing; data strategies to maximise our relationships with our consumers and overall to enable fair competition.
There are issues we do not tackle here in detail such as the revision of the Audiovisual Media Services Directive which, although highly relevant to media companies in the EPC we understand falls outside the immediate focus of the DSM Strategy. As with adjacent issues such as the freedom to advertise, still a major source of financing content, we would ask the Commission to take a coherent policy approach to matters which touch upon the freedom of expression ensuring collateral damage is avoided through unintended consequences of regulations in other fields such as financial services, equality, health or security. The EPC believes that self and co regulation has a clear role to play in protecting values, and self-regulatory initiatives have proven to work well in areas such as advertising. The AVMSD provided incentives for self and co-regulation and thes could be expanded in the future, particularly if this comes hand-in-hand with deregulation of the primary regulatory framework.
- Building the Rights Data Network and Rights Repositories
The EPC founded the Linked Content Coalition, a multimedia, multinational project to develop a ubiquitous rights data infrastructure, interoperable and linked to well-structured interoperable databases which will lead to better discoverability of who owns content, efficiencies in licensing and overall growth in the digital media market.
At the heart of our vision is a sustainable licensing environment adapting to, and working with, the technology of the Internet. This will power the emergence of new business models, greater efficiency in licensing, of existing businesses and supply chains, aid remuneration of creators and support more effective enforcement of rights. The technical framework developed by the Linked Content Coalition has been adopted by the UK-initiated Copyright Hub project which is creating globally deployable open-source technology, and is being tested in an EU co-funded project called Rights Data Integration – the RDI project.
Our Proposal to the European Commission:
To develop an EU strategy for the implementation of a ubiquitous rights data network, supported by interoperable repositories of rights data to include:
- Recommendation to member states to establish a programme to set up a multimedia copyright hub and/or link to the UK hub. It is essential that a network of interoperable hubs emerges to aid discoverability of content owners and licensors.
- Ensure that Horizon 2020 provides EU funding for projects to apply identifiers, machine readable permissions and projects to incentivise cooperation between creative content owners and distribution networks.
- Horizon 2020 to provide funding for an EU wide rights data network for eLearning solutions to support discoverability of educational materials within and outside core curricula (for paid for and open educational resources).
- Linked interoperable databases will support federated searches at multimedia and multinational levels for the purposes of licensing but also in support of enforcement actions so we ask that
- OHIM should act as a guarantor of data integrity by operating “dark mirrors” of Hub indexes and other authoritative sources
- Article 7 of the copyright directive already confers full legal protection of rights data, whether identifiers or rights management information. This should be restated when the commission publishes its proposals for copyright reform as today these machine readable identifiers and permissions are ignored by many.
- It should be axiomatic that when identifiers and permissions are attached to (or linked from) content they form part of that content. It should become a legal obligation for networks and platforms to comply with them. If the Copyright Directive is the right instrument, a Recital to this effect should be drafted and a new sub-paragraph to Article 7 added. In addition, the scope of the safe harbours (in copyright and eCommerce legislation) should be narrowed to take account of the new automated machine-to-machine communications. (See section 2 (b) on reform of safe harbour provisions)
- Reforming the copyright framework: rights and enforcement
- The legal framework of EU-harmonised rights has worked well and been the basis of unprecedented growth of media and creative content across the European Union. Never have European consumers had so much choice of high quality, competitively priced or freely accessible independent media alongside extensive publicly funded media. We do nonetheless agree that some adaptations to the legal framework should be considered. We have set these out in detail in our 2014 Copyright Vision document. Our vision combines three digital elements: the technical infrastructure, specific parts of the legislative framework to be adapted in line with digital media developments, and innovative practical solutions, based on licensing and clear guidelines to promote transparency.
- However, there is no quantifiable justification or evidence to support new exceptions (TDM, UGC, education, libraries) and indeed we have serious concerns about how these could undermine the efforts of media companies to complete their transition to a sustainable future. There is on the other hand much evidence of market innovation, and constant adaptation to new user demands, including in areas where exceptions are under discussion.
In our view the Commission can play a very positive role to incentivise investment in the production of content rather than adjusting the legal framework to sanction, through exceptions and limitations to copyright, hitherto illegal and harmful behaviour. That is not to say that practical solutions to genuine user-demands or frustrations through co or self-regulatory means shouldn’t be found; for example for UGC, education, TDM, research or libraries.
- The story of how the emergence of dominant platforms (search, social media, eCommerce) not only disrupted the very sectors who are investing in content and services but also became the gateways to these services, is well known.
Publishers in particular (less so broadcasters, at least for now) have little or no bargaining power when it comes to dealing with monopolists. Efforts at national level to remedy this imbalance (in Germany and Spain) and provide legal tools for publishers has been problematic not least because Google has refused to take part in discussions to give effect to the new laws.
- Newspaper and Magazine Publishers face many difficulties in clearing the rights of a multitude of contributors, whether employed or freelance journalists and photographers, less for the first publication in print or online but in particular for subsequent exploitations such as archives, or when formerly published content needs to be re-used again in the prime news section.
In countries where work for hire provisions do not exist (i.e. most EU states), clearing these rights is a major challenge, and can in many instances render the online exploitation of the ‘collective work’ of news media too complex or prohibitively expensive. Archives have become an important asset in the online environment, allowing publishers to launch new services in this field.
To summarise, the ‘rights’ context for publishers in news media is increasingly challenging:
- unauthorised reuse of its content by other businesses;
- difficulties in clearing rights, sometimes even for the simultaneous first publication offline and online if contracts have not been adapted, even more for second publication, and for the archives, even though the publishers originally invested in the creation of that content;
- increasing requests/threats from libraries who request exceptions to make archives available, including content that is still under protection, in a context where a publisher may not be able to make its own archive available;
- the lobby from journalists and authors to forbid certain clauses in contracts, that in some cases would actually help with rights clearance, and help to make publishers more competitive online.
The developments outlined in the previous paragraphs demonstrate the cumulative adverse impact on Europe’s news media publishers in their current strategies of succeeding online while maintaining the same quality in print. Efforts to remain competitive, provide quality content, and offer a passionate work environment in an ever more difficult business environment, is the everyday reality of publishers. But if Europe wants a free press where publishers have a role to play in providing authoritative content, independent reporting for the future along with the ethical rules under which news media operate, the issues above need to be solved at EU level; whether this is through a presumption of transfer of rights with agreement on remuneration, a new publishers’ right to avoid parasitical use of news for B2B uses, better enforcement, and/or careful consideration of any harmonisation of exceptions & limitations as to avoid that news media publishers are not facing unfair competition from libraries.
Our proposal to the European Commission on exclusive rights:
We have no fixed idea how to achieve an EU solution and would welcome further discussion with Commission experts on the options we are discussing internally, in order to overcome the existing complexity facing publishers in terms of a) rights clearance b) licensing and remuneration.
- Option 1: a new legal instrument to provide for a presumption of transfer of authors rights
- Option 2: a legal instrument to provide for a publisher’s right
Our proposal to the Commission on exceptions
- The EPC supports focused discussions to find appropriate self or co-regulatory solutions to address user demands for more flexibility on the grounds that voluntary and market-led solutions for TDM, UGC, libraries, research and education will always get to the objective quicker than legislation.
- Regarding the existing exceptions contained in the 2001 Directive, we are not against harmonisation of some key exceptions to facilitate cross-border access and licensing but would ask that this was considered within the context of an overall strategic approach to a more business-friendly rights environment.
Regrettably, there is unequivocal evidence of rampant copyright theft and problems with enforcement. As set out above in section 1, powered by ubiquitous data standards, to identify works and those who have rights in those works, licensing will continue to innovate exponentially so that eventually the cost of serving a licence is close to zero. The role of technology is to make this process seamless and effective from the user’s perspective, whether that user is the end consumer or another party in the digital content supply chain.
The Safe Harbour provisions have produced perverse and increasingly harmful outcomes for content owners. No longer are they protecting start-ups or companies that have no editorial control over the content of their networks. Instead they are being exploited by businesses large and small who design their services so that their indiscriminate copying and exploitation of copyright works can become their principal source of revenue, while being fully protected from legal consequences or any requirement to seek permission, share revenue or be able to identify those to whom the liability for infringement should pass.
Furthermore the provisions create a requirement for every creator and rights owner to attempt continuously to monitor the entire internet in order to discover any infringing uses of their work, and then an obligation to take “notice and takedown” action to have it removed.
This has resulted in a substantial net transfer of value, through reduced opportunity and increased cost, from those who invest time, money and ideas in creative endeavours to those who can exploit their works without investing anything. This represents a substantial and growing loss of value in the creative sector.
Our proposal to the European Commission
- Building on the Commission’s work to date, we would support a new enforcement strategy at EU level.
- A new strategy must reform the safe harbour, and develop a new hierarchy of rights and responsibilities. The loopholes must be narrowed or eliminated altogether. Clearer responsibilities for ISPs and search engines are essential.
- The exemption from liability must be made subject to reasonable and responsible obligations to be able to identify the true infringer and to take reasonable steps to discover and comply with copyright conditions especially when they are discoverable through an automated process. The abuse of the “data protection” defence should be curtailed through these clearer responsibility obligations.
- Such qualifications will not increase the risk to ISPs which safe harbours were designed to address, but will greatly narrow and reduce the damage done in the creative sector as a result.
- We continue to support the self-regulatory initiatives to “follow the money" but when it comes to legal enforcement there are some key changes we would expect in support of a digital single market:
- National orders to block access to pirate sites should be actionable EU-wide;
- Orders to block should apply also to search and social media not just ISPs;
- Penalties for online infringements need to match those offline and
- Better education of citizens of the value of copyright and the harm from theft needs to be funded and promoted throughout the EU.
- Big Data Strategy to power the digital single market
The proliferation of data is unstoppable and Europe needs a strategy which supports the opportunities that data-driven innovation will bring to the Digital Single Market.
Citizens need trust and confidence that their data will be safe, their privacy respected and that they have access to smart tools to control where, how and by whom their data is processed. We ask that the European Commission anticipates the next evolution in the digital economy which will be driven not only by data-driven businesses but by consumers making choices about how to use their own data. Portability of data will be a competitive play and the regulatory framework (statutory and self-regulatory) needs to support these developments. The basic technology that we are creating for copyright hubs can be used for personal data too – connecting the data with the person and allowing them to set terms for its use.
Businesses need data and already process vast amounts of data. The data flows are increasingly complex and prone to the development of vast monopolistic data silos in the hands of very few, non-EU companies. The ability to process data will be a defining feature of competition, innovation and growth in the EU of media companies and we must ensure that European companies are at the heart of innovation and opportunity, not simply the customers of non-EU suppliers.
Our proposal to the European Commission
- Regulations must also differentiate between the processing of personally identifiable data (prior consent based) and anonymous / pseudonymous data (informed choices), and be flexible enough to foster a competitive European market in data.
- Ensure that new legislation confers a user-friendly right to discover easily what data is held about you and how it is being used, along with enough layman explanation to be able to interpret the output.
- A Hub approach to personal data could work well (noting that the technology already exists to be able to link data to individuals); this would hand more power back to consumers and at the same time would level the playing field for everyone wanting to process and exploit data in a more transparent way.
- Self-regulation must be supported so it plays a full part in providing smart solutions to citizens at the point of data collection (as shown by the OBA framework and www.youronlinechoices.eu). A blunt law requiring opt-in consent for data collection will only serve and favour monopolists who will easily gain one-off ill-informed consent for use across their integrated networks and stifle competitiveness and innovation in advertising and media markets.
- This is not just about “data protection”; market dominance in data processing needs urgent attention from a competition policy standpoint.
4. Innovation in payment provision
Today the most common payment providers for eCommerce services are bank-based credit and debit card providers, some intermediaries like PayPal who themselves rely on the same banks and credit card providers and telecoms who fulfil those micropayments through for example sms systems.
The cost of fulfilling payments, especially micro-payments is high and does not appear to reflect the true processing cost; in many cases the transaction cost is higher than the value of would-be micropayments. This has held back micropayments for content (and presumably also in other areas of ecommerce too) and hands an advantage to large scale international businesses who can combine payments on behalf of their users and thereby leverage better deals from providers.
We now see new monopolistic tendencies emerging where Apple, Google and Amazon are all offering or developing payment systems and in some instances making them the only accepted payment method for certain transactions. They are increasingly extending their payment offerings to transactions outside their own services including in-store payments.
Linked with vast silos of consumer data (see above) these global companies will be in preeminent positions to leverage their dominant positions in Europe but without being subject to the same rules. This now a major barrier to innovation and one of the reasons why low value transactions are now often forced through one of the big portals (iTunes, Google play etc). Apple Pay transactions not only create a new power base for Apple but also route the transactions through the USA where the EU cannot exercise control. Allowing the big global monopolies of the internet to become even more integrated is a huge threat to Europe and requires early intervention.
Our proposal to the European Commission
- An urgent EU Strategy is needed to create the right conditions for competitive payment systems to emerge, in particular for micro-payments. If not, the vast majority of provision and processing of transactions for European media products and eCommerce will take place outside the EU.
5. VAT and the media – in print and in digital
Current EU legislation does not allow member states to apply their print rates to online delivery of “press” products as they are considered services and taxed at full rates.
A Green Paper was presented in 2011, and followed by a further round of consultation in 2012 to “review existing legislation on VAT reduced rates” (ended on 4/1/2013). One of the priority actions was to review the current VAT rates structure, based on certain principles, one of them: similar goods and services should be subject to the same VAT rate. The Media was the heart of this second consultation which looked at rates of goods and services but no progress was made on the grounds that both VAT and media are considered the responsibility of the member states!
The European Parliament has consistently shared our view with many non-legislative resolutions in various Committees requesting “that the VAT rates for cultural goods should be the same, regardless of the method of selling them (online or offline)”.
Our proposal to the European Commission
To include in the Digital Single Market Strategy a proposal to put an end to the contradiction of the current situation where consumers must pay the full rate of VAT for online newspapers, magazines, books and journals whereas reduced or zero VAT rates apply to print. This is illogical when publishers are innovating with payment-based digital press offers in a difficult market where they must compete with 'free' content, which has not always been made available with the consent of, or after payment to the original publisher.
Consumers ought to be given the incentive to purchase legal services that will lead to growth in the digital economy over time. This would be an important step towards promoting the development of a thriving EU digital press market in Europe, which in turn will promote jobs and growth in the creative and media industries in EU Member States and does not necessarily contradict the need for budget consolidation in the current economic climate.
It is important that member states understand that an alignment of the VAT rates of digital newspapers, magazines and books to the rates of their printed versions would not necessarily affect their budget negatively, but it can contribute to the uptake of the digital newspaper, magazine and book markets, driving public revenues up and piracy down.
- Competition and Media Policy
- Media markets in Europe and implications for media and competition policy
As demonstrated throughout this paper, a new media ecology has emerged, characterised by disruptive trends which create real challenges but also many opportunities which members of the European Publishers Council have embraced.
However, it is axiomatic that many types of US companies, benefiting from a scale at national level allows them to reap a return on investment not only in their home market but in Europe too with a minimal financial or regulatory risk.
More often than not it is the global (non-European), companies that are taking over the central, gatekeeper platform roles in Europe. They have large resources and capabilities to innovate fast, test effectively and roll out new services globally which influences and then captures the business models.
The growing influence of these technology/ICT-driven companies can have a particularly devastating effect on some European media companies with harmful consequences for media pluralism and quality. Further consolidation of and cross-media mergers of existing media will probably be needed to enable the EU content industry to compete globally but this will require a fresh look at definitions of relevant markets in the context of the new media and platform eco-system.
Europe may overall be larger in population than the United States, but the EU is not a single market in terms of language, culture, tastes or consumption patterns. This poses a conundrum for the regulators of how to drive growth across EU28 without destroying the very essence of what makes our media special and popular, country by country and internationally. This very diversity has in the past always been viewed as a favourable feature of Europe's rich cultural heritage. Instead of comparing EU businesses and markets with success factors that apply to a market that is very different from the EU market, we suggest the EU could concentrate on strengthening the possibilities to develop European businesses, particularly when it comes to investing in content production.
Let us not lose sight of the fact that Europe has a strong and creative content sector, which plays a significant role in successfully selling content to their national audiences with new multi-media, multi-device consumer offers and services coming to the market all the time and contribute to build value, jobs and growth in the digital economy.
Nevertheless concern clearly exists that Europe will fail to capture global opportunities offered by the new media ecology. But we must be careful for what we wish for. A digital single market that favours distributors and platforms over content producers could lead to an even stronger position of the non-EU global players in Europe. Until now, EU legislation has nurtured European companies’ interests in the media sector, through quotas and financial support for European works and strict territorial copyright licensing arrangements to maximise potential for re-investment in content creation. This sustains diversity and national characteristics, including language. Global licensing may support cross border distribution but could lead to a dive to the lowest common denominator to the detriment of European creation and production, and thereby damaging cultural diversity.
We know that content aggregators, often USA-based, are pushing for an end to the territorial sale of TV, film and music so they can buy these more cheaply in order to build their pan European distribution chains. All we ask is that European Commission considers carefully whose interests fundamental changes to our long-standing regulatory model and copyright protections will serve in the long run and whether they risk creating new gate keeping chains in the EU where the originators of content lose control of their distribution channels, ceding control to others to extract value from our investment. That is not to say that adaptations cannot be found to meet genuine user-demand; for example to access their already legally acquired content services wherever they may be in the EU under certain conditions.
- Inquiry into Google’s abuse of a dominant position
Google’s practices and their unprecedented anti-competitive effects are well known to DG COMP. Numerous companies and stakeholders such as the EPC have provided the European Commission with evidence of such anti-competitive behaviour which is currently being updated.
One of the key findings is that, for an online content or service provider to be found by an internet user and to be commercially viable, nothing is more important than ranking on Google’s search engine results page.
The EPC believes that it is now time to resolve this situation and supports the Commission's decision to adopt the first Statement of Objections as part of their ongoing investigation.
Our proposals to the European Commission
- Since Google’s practices are closely linked to its structure, we believe that only a structural remedy can fully tackle all matters under investigation.
- In the context of the overall media and platform eco-system, we propose a review of relevant market definitions to ensure that European media companies are not disadvantaged when seeking to secure their multimedia futures.
- Market developments based on user demand, market led innovations in production and licensing are much faster and more efficient in meeting the objectives of a digital single market than regulatory intervention, e.g. to ban geo-blocking. Start with practical solutions to meet genuine user-demand; for example to access their already legally acquired content services wherever they may be in the EU under certain conditions.
First submitted to the European Commission February 2015
Updated April 30 2015