AVMSD – Take two please

In some ways, Europe’s policy making industry is not far removed from Hollywood’s film studios: the long gestation period; the power play between the big cheeses; and for all the talk of block-busters, the conveyor belt often churns out a lower common denominator product which people wished had never seen the light of day.

Many have similar reactions to the latest attempt by the European Union to shape up Europe’s cultural and media industry for the future, through the proposed changes to the Audiovisual Media Services Directive (AVMSD). It’s a classic of the genre.

The European Commission’s ‘director in chief’ – Jean-Claude Juncker – has rightly placed a high priority on the development of Europe’s digital industry, with a raft of proposed changes to the EU’s rules and regulations. Europe is vying to become a global tech hub.

But with the European Parliament due to give its verdict on the rules today, the risk is that it becomes a Brussels tragic-comedy.

Unfortunately, many in the content industry will ask themselves whether Europe is serious about embracing this new digital order. For them, today’s vote in the Parliament is evidence of their intent on creating new obstacles, not opportunities for Europe’s digital players to become globally competitive.

The AVMSD creates a common European market for broadcasters, video-on-demand players and now – controversially – video-sharing platforms. For these players to operate in the EU, they already have to comply with a wide range of rules, covering advertisement, protection of children and promotion of European works. In other words, the AVMSD is where culture, politics and business meet.

There are massive challenges facing both regulators in the EU and market players – such as the increasing convergence between linear and non-linear providers, new video-sharing platforms entering the market and an increase in (young) consumers flocking online to watch content. In response, the European Commission sought to update the EU’s audiovisual regime – making advertisement rules more flexible, requiring video-sharing platforms to comply with a minimum set of rules and ensuring that European culture continues to be supported.

Little wonder, then, that today’s vote is viewed as a Litmus test of whether the European Parliament has truly understood the challenges and the need to adapt old ways of thinking.

On many points, the Parliament sought simply to extend old rules to new realities – rather than adapt, streamline and innovate to meet these challenges. To the frustration of the content industry:

  • MEPs want to increase the quota of European works in the catalogues of video-on-demand players from the 20% proposed initially by the Commission to 30%, even though industry argues that quotas would be ineffective as consumers would just watch those shows they like.
  • MEPs also want video-on-demand players to pay into national film funds in the countries they operate in, if those EU government so desire – a significant turning on its head of the internal market logic underpinning the AVMSD whereby businesses can offer their services anywhere in the EU as long as they comply to the rules of the Member State in which they are based.
  • MEPs opposed moves to make advertisement rules for broadcasters more flexible: TV channels will only be able to air ads after 30 minutes of the programme as is current law, not after 20 minutes as the Commission proposed. They also removed the added flexibility for when broadcasters can show ads and allowed Member States to limit ads within prime time to 20%. While viewers may breathe a sigh of relief at the prospect of their favourite TV show not being interrupted, broadcasters claim that without more flexibility they will not be able to raise the revenues needed to help them compete with new players.
  • MEPs want video-sharing platforms not only to comply with hate speech and protection rules for children, but also with copyright protection provisions, an issue currently discussed in the proposed copyright directive. Online platforms argue extending copyright provisions to them misunderstands the role they play, while content owners don’t see another way of enforcing the rights they hold.

The vote is likely to be carried by a large majority. Co-rapporteurs Petra Kammerevert, a German social-democrat, and Sabine Verheyen, a German conservative, were able to convince the Greens – led by another German, Green MEP Helga Trüpel – to support them. This makes it difficult for the other parties – and, it has been suggested, other national approaches – to get traction in the debate.

For the industries concerned – broadcasters, video-on-demand and video-sharing platforms – the vote is a step back from creating that Digital Single Market everyone in Europe and beyond is waiting for.

The ball lies now in the court of the Member States. The Maltese presidency aims to have its first negotiating position at next month’s meeting of culture ministers, but some Member States seem to want more time to consider the consequences this complex set of rules.

Once Member States have agreed a common position, they will have to negotiate with the Parliament on the direction of the new European audiovisual rules. Together they will decide whether Europe goes forwards or backwards.

How this epic will end is still up in the air; audiences will have to stay tuned for the next episode….

Jan Hückmann is a Senior Consultant in the TMT team at FTI Consulting Brussels.

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