Industry Report: Financing
Territoriality and its Impact on the Financing of Audiovisual Works
by European Audiovisual Observatory
- European Audiovisual Observatory publishes new IRIS Plus legal report (click here to download). This new report by the Strasbourg-based Observatory (part of the Council of Europe) focuses on territoriality and its effects on financing the production and distribution of films and TV programmes in Europe. Undoubtedly one of the hottest legal topics at the moment, territoriality of copyright is creating a major media buzz in Europe as the EU’s disputed Digital Single Market initiative aims at freeing up barriers to the consumption of content. In the same report, the Observatory examines the territoriality issues surrounding the revision of the Audiovisual Media Services Directive. The current EU legal structure which allows international majors to set up where they wish, respecting the national legislation of the country of establishment due to the country of origin principle, while distributing content on a pan-European basis, is being challenged. So this brand new report is clearly an essential “back to school” read…
Authored by Observatory Experts and Analysts, Maja Cappello, Francisco Cabrera-Blázquez, Sophie Valais and Christian Grece, the report starts with an extremely useful round-up of the main trends in the audiovisual sector over the last few years. From the newest kids on the block, to the use of big data, to shifts in content production strategy; the authors map out very succinctly the major and most recent changes in the European audiovisual landscape in order to set the scene.
This chapter also highlights the role played by territorial licensing and exclusivity in the financing of films through the pre-sales of rights, illustrated by case studies. This background information is vital to the understanding of the current Digital Single Market debate which calls into question the profile of a Europe fragmented into different audiovisual markets.
The second chapter then zooms in to look at the notion of territoriality in international and EU copyright legislation, and investigates to which extent EU competition law may limit the territorial application of copyright. As a recent example of this, the European Commission has started an investigation against six major U.S. film studios and U.K. pay-TV broadcaster Sky U.K. Ltd. It would seem that contracts agreed by the companies might restrict access to Sky’s services outside Britain, in violation of EU competition rules prohibiting anti-competitive agreements. This chapter moves on to territoriality rules for audiovisual services at EU level. This chapter recalls that the AVMSD stipulates that a content provider established in any European country must simply respect the audiovisual legislation of that particular country, while being free to broadcast over boarders to other countries. It is this very configuration which is currently being challenged by European services who consider that it offers too much freedom to international providers such as Netflix or ITunes. This chapter also focuses on the role of collective management organisations which play a fundamental role in national and European copyright management for right holders.
Zooming further in to examine the various national legal frameworks, chapter three explores national examples of how rights clearance takes place. The various national legal systems for obliging content providers (broadcasters, cable and satellite, on demand video platforms etc.) to contribute to domestic film funds are also compared on a country by country basis.
The report then examines initiatives set up by the various industries themselves to enable cross border access to audiovisual works and increase portability of services. The European Commission’s 2013 document, “Ten pledges to bring more content online”, and the industries’ “Joint Statement” reply represent a significant move towards improvements in this field. The network of independent Video on Demand platforms EuroVoD also expressed its interest in developing and implementing solutions for cross-border access of Subscription VoD offers, as well as availability of several language versions, in accordance with rights granted.
Recent European and national case law pertaining to territoriality features in chapter five includes an analysis of the famous case of the British pub landlady who dared to take on the system by using a foreign decoder card to broadcast premier league football in her pub. This judgment was initially considered by some as “groundbreaking”, but what did the law really say?
Chapter six gives a back to the future round-up of the current overall revision process of EU copyright rules. The European Commission estimates that less than 4% of all legally acquired Video-on-Demand content in the EU is accessible cross-border. The Commission has therefore called for a “modern, more European copyright framework” and announced legislative proposals before the end of 2015 aimed at reducing the differences between national copyright regimes and allowing for wider online access to works by users across the EU, including through further harmonisation measures. The also Commission plans to make legislative proposals in the first half of 2016 to stop “unjustified” geo-blocking. To that end, it could amend the applicable EU legislation (in particular the e-Commerce Directive and the Services Directive).
In parallel, the Commission also plans a revision of the Audiovisual Media Services Directive through the REFIT exercise aimed at identifying burdens, gaps and inefficient or ineffective measures, including possibilities for simplification or for the repeal of existing regulation. One key issue as mentioned above is the establishment of international service providers in countries with “easy” business legislation and operating according to their national legislation according to the current country of origin principle as enshrined in the current AVMSD.
Given the two parallel revision processes of copyright legislation in Europe and the AVMSD, the authors conclude that “this could be a unique opportunity to have a look into both regulatory frameworks, keeping in mind how the principle of territoriality is currently treated by each regulatory family, the difficulties that have possibly arisen during their years of application and how to possibly bundle them in order to address in the same spirit the issues that concern the online world.”