1. British Literary and Artistic Copyright Association
Meeting, Thursday 10 March 2016
The European Commission proposal for a European Digital Single Market – The proposed "portability" regulation and the audio-visual sector
Dr Helen Weeds
Director, Multimedia Economics Ltd., CRA and University of Essex

2. Background 24 February 2015 6 May 2015 8 December 2015
ANDRUS ANSIP: “…you can only download or stream BBC iPlayer TV programmes while you are inside the UK. In the off-line world this would be called discrimination. In the online world it happens every day. I want to pay, but I am not allowed to. I lose out, they lose out. How can this be a good thing?”
6 May 2015
EC’s Digital Single Market (DSM) Strategy
8 December 2015
1. Quote attributed to Andrus Ansip at stakeholder forum, as reported in Politico, 25 Feb 2015.
2. Quote by Andrus Ansip, Commission Vice-President for the DSM, from EC Press release, “Commission takes first steps to broaden access to online content and outlines its vision to modernise EU copyright rules”, Brussels, 8 Dec 2015.
PROPOSED PORTABILITY REGULATION: “Roaming” for content
“People who legally buy content – films, books, football matches, TV series – must be able to carry it with them anywhere they go in Europe.”
On-going review of the Satellite and Cable Directive
Proposed reforms to copyright rules

3. Main points (Further details in Spring 2016; implementation 2017)
“Temporary presence”
Seems to be interpreted broadly:
Present in a EU country other than the Member State of residence
Holidays, business trips,… anything short of permanent residency
But not available to residents of another Member State
Duration of portability
No set time limit on use of portability
Service providers should inform their subscribers of the exact conditions of their portability offers
Protections for rights holders
Relevant acts deemed to occur in Member State of residence: no copyright infringement and no need for a separate licence
To avoid abuses, rights holders can require service providers to authenticate the subscriber’s Member State of residence

4. What about non-subscription TV services?
Commercial FTA TV
Viewers “pay” by watching and responding to adverting
Many channels have online catch-up services
Similar consumer annoyance: may be pressure to extend portability
But without subscription, what mechanism to check Member State of residency?
Public broadcasters
Funding is national: licence fee, household levy, general taxation
Geo-blocking is imperfect: may move to licence-based mechanism
What about other EC nationals?
should they be charged the same licence fee?
what about sales to their national broadcasters?

5. Impact on rights holders
IF LIMITED TO PORTABILITY
Expands the subscriber’s ability to access paid-for content
Should increase willingness to pay (only slightly for occasional travellers, a lot for frequent flyers)
Should raise demand & profits
So why don’t rights holders already promote portability?
IF EXTENDS TO CROSS-BORDER TRADE
Expands sales in one Member State, likely at expense of another
Widespread trade will make price differences between Member States harder to sustain
Taken to extreme, eliminates the rights holder’s ability to engage in geographic price discrimination
May reduce rights holders’ profits
DSM Strategy aims to facilitate cross-border access to online content…

6. Reducing price discrimination is likely to have mixed effects
Territorial markets (no trade)
“High value” country
High retail prices
“Low value” country
Low retail prices
Single EU market (widespread trade)
If both markets continue to be served directly:
Retail prices fall in high value country
Retail prices rise in low value country
If the low value market is no longer supplied:
Retail prices may fall in high value country (if there are many cross-border buyers)
Low value country consumers who are unwilling/ unable to buy across borders are not served
Rights seller almost certainly worse off (could have sold at equal prices anyway)
Question: How much demand is there for cross-border content?

7. Price differentials between Member States are significant …
Greece: €15/mo
UK: c.€50/mo
Italy: €19.90 then €34.90/mo
France: €24.90 then €39.90/mo
Germany: €19.99 then €35.99/mo

8. … But very few consumers try to access content across EU borders
Source: Flash Eurobarometer 411, “Cross-border Access To Online Content,” August 2015
Base: Internet users (N=21,692, 82% of all respondents)

9. … And mostly for reasons other than price
Source: Flash Eurobarometer 411
Base: respondents who tried to use an online service generally meant for users in another EU Member State (N=1,842, 7% of all respondents)

10. Why not? Might DSM affect this?
Source: Flash Eurobarometer 411
Base: respondents who have not tried to use an online service generally meant for users in another EU Member State (N=19,303, 73% of all respondents)
DSM
DSM

11. Some non-users say they “would be interested”
Interested in accessing cross-border AV content:
UK 29%
France 34%
Germany 16%
Italy 27%
Greece 29%
Highest: Latvia 44%; Croatia, Finland 40%
Lowest: Germany, Austria, Slovenia 16%
Source: Flash Eurobarometer 411
Base: respondents who have not tried to use an online service generally meant for users in another EU Member State (N=19,303, 73% of all respondents)

12. How might rights holders respond?
Manage national licensing
Move away from national licensing
Increase content differentiation to reinforce national segregation and maintain territorial pricing
Language: restrict language options, require dubbing not subtitles
Quality: offer only low quality service in low value country (e.g. SD not HD)
Increase “national” character of content (opposite of fears expressed)
Change contracting approach to limit price competition between national operators
Use per-subscriber fees to soften retail competition (cf. PPV rights)
Pan-European licensing E.g. license to Netflix, or to an operator covering several countries (Sky)
May choose to retail nationally with differential prices (if sustainable) and not market across borders
Or may choose to establish a single European portal (cost saving, but total demand may be lower)
Integrate into distribution
E.g. a Hollywood studio could set up its own online portal in each national territory or linguistic area