Revising the audiovisual rules – the final twist?

In Brussels, it doesn’t get any more exciting this: today, the European Commission, the Council and the European Parliament start the final part of the legislative process to hash out line by line and article by article how to revise the existing EU audiovisual rules. Think Django Unchained but with pen and paper.

At stake is the question of how Europe will adapt its existing framework to the emergence of new players – like video-sharing platforms – and industry trends, like the increasing converging consumer experience of watching TV and video-on-demand.

Jean-Claude Juncker, the President of the European Commission, said he wants to update the new rules so that European culture is in sync with new technology. But in our last blog (see here) we wondered whether the European Parliament has really listened to Jean-Claude.

EU Member States have in the meantime also come up with their negotiation position – general approach in Brussels speak.

Audiovisual rules reform – another case of messy family fights?

Similar to the Parliament, the Council has only achieved a common position after bruising infighting. In Council the Franco-German alliance pushed through a text where many had concerns ranging from new rules for video-sharing platforms to how to uphold the country-of-origin principle in layman’s terms means register in one, operate in all European markets – the very hallmark of the EU’s internal market. The Council’s position, however, isn’t unanimous: eight Member States did not support the final text and one abstained.

In Parliament, an equally crushing majority of the two biggest groups forced through a text against the will of the remaining political parties. A vote in plenary, a first after internal rules were changed early this year in the Parliament, confirmed the mandate of the two German co-rapporteurs, the social-democrat Petra Kammerevert and the conservative Sabine Verheyen, but also revealed the dissatisfaction: 314 MEPs voted in favour of the final text, 266 against and 41 abstained. In percentages, this means that 51% were in favour, and 49 % were not, if you combine votes against with the abstentions.

The controversy becomes all the more relevant since the texts of Council and Parliament pose significant problems for the audiovisual industry. For broadcasters, video-sharing platforms and video-on-demand (VOD) players, the negotiations were more a story of caution than of hope.

Broadcasters: one step forward, two back?

Broadcasters were promised by the Commission greater flexibility on advertising rules so that they can compete better with the new players on the markets. This is seems to be only partially the case.

The Commission proposed that after 20 minutes of their programme, not 30 minutes as currently is the case, broadcasters could show ads. However, the European Parliament and Council went back to the original 30 minutes.

Parliament and Council, however, would allow broadcasters to run greater amounts of advertisement during prime time, a key revenue stream for TV channels that are under pressure as advertisement is increasingly moving online.

In addition broadcasters might have to pay into national film funds to promote European content if they service audiences outside the Member State where they are established. The Council has extended the obligation of financial contribution to broadcasters beyond the video-on-demand players. Broadcasters fear that the change opens the flood-gates to new requests for financial contributions from authorities outside of where they are established.

Video-sharing platforms: if you give an inch, they’ll take a mile?

Video-sharing platforms are facing several new requirements.  The Commission proposed new rules that oblige video-sharing platforms to combat hate speech and dissemination of harmful content to minors through co-regulation that respects their limited liability status under the EU e-commerce directive. Platforms saw these requirements as reasonable, but Council and Parliament also want video-sharing platforms to abide by the same advertisement rules the broadcasters comply with.

MEPs also want video-sharing platforms to enforce copyright compliance, an issue that is currently discussed in the separate copyright proposal and where rightholders want platforms to enforce their licensing agreements.

Video-sharing platforms fear these additional requirements misunderstand the nature of their very business model: they would have to switch from facilitating the offer of content to owning content themselves. In practice, this would lead to platforms policing the web, raising questions on whether governments can and/or should outsource their enforcement obligations to private companies.

Video-on-demand players:  a tale of unrequited love in Brussels?

VOD players are likely to be required to have a 30 per cent quota of European films in their video-on-demand catalogue, after Council and Parliament increased the Commission’s original 20 per cent proposal. More importantly, however, is that both institutions upheld the Commission’s cross-border levies for VODs. If enacted, Member States can ask VODs to contribute financially to promote European works, for instance by paying into a national film fund, even though the company is not established within their jurisdiction.

Critics see the provision as an attempt to save European integration by disintegration.

And VODs wonder why European legislators feel they have to intervene at all as they are already investing heavily in European content. Why introduce new rules when the market seems to operate well – and no evidence suggests otherwise?

Upcoming negotiations – an easy ride towards an innovation-friendly Europe?

Yes, Council and Parliament seem closer than some expected on the revised audiovisual rules, but this impression belies high levels of discontent simmering underneath. In both institutions a large number of views were simply discarded and ignored. They will have until the end of this year – which is when Estonian presidency hopes to conclude the negotiations – to try to get their voices heard. The summer break that puts the negotiations on hold until September provides a cliff hanger of sorts. Whether the deeply held differences will break out in the open after the summer also depends on the penholders to rediscover the culture of compromise Brussels prides itself on.

If they do, Europe may stand a chance in the global race to make its cultural industry use the potential of technology.

But to find out how the story ends we will have to tune in after the summer.

Jan Hueckman is Senior Consultant in FTI Consulting’s TMT team in Brussels.

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