1. VITORINO REPORT ON COPYRIGHT LEVIES: WILL EUROPE GO FOR A DIGITAL SINGLE MARKET? EP Hearing Irena Bednarich, Chair, Copyright Working Group, DIGITALEUROPE Brussels, September 17 2013 Confidential

2. 2 I.Today’s Creativity Ecosystem II.Copyright Levies: what is the issue? III.Vitorino recommendations: what needs to be reformed to make fair compensation fit with the digital age?

3. I. Today’s Creativity Ecosystem 3 The European Commission’s flagship initiative “A Digital Agenda for Europe” put forward an analysis of the virtuous cycle of the digital economy. Confidential

4. 4 A rough justice system from the analogue times Lack of coherent methodology Lack of efficient collection systems Lack of efficient distribution systems II. Copyright Levies: what is the problem?

5. 5 « Une large partie de ces perceptions ont été absorbés par un système cumulant jusqu'à 6 sociétés intermédiaires. » (France's 2010 report of the Cour des Comptes) Confidential European Commission Impact Assessment on CRM Directive:“This means that substantial amounts of money are kept by societies pending distribution. Thus, e.g. in 2010 major societies had accumulated € 3.6 billions worth of liabilities to rightholders […].” Lack of efficient distribution systems

6. 6 DIGITALEUROPE CALLS UPON THE EUROPEAN COMMISSION AND THE EUROPEAN PARLIAMENT TO IMPLEMENT THE VITORINO RECOMMENDATIONS

7. III. Vitorino recommendations: what needs to be reformed to make fair compensation fit with the digital age? Acknowledgement that levies are an internal market issue. Existing and new online services should be based on exclusive right (licensing) rather than on the exception (levies). Major developments in content consumption patterns should be taken into account. Licensed copies should not trigger a levy (no double dipping). Levies should be paid in the country where the final customer resides (country of destination principle). Non-application of levies on professional users: The liability for paying levies should be shifted from the manufacturer/importer to the retailer's level while simplifying the levy tariff system. Alternatively, clear and predictable ex-ante exemption schemes should be established. In the field of reprography, more emphasis should be placed on operator levies than on hardware based levies. Defining 'harm' uniformly across the EU, as the value consumers attach to the additional copies in question (lost profit). 7

8. CJEU putting an end to indiscriminate application of levies Padawan ruling: - Business users should not be paying the levy. Amazon case: -Requires a priori exonerations for commercial uses. If not possible, right to reimbursement (effective and not excessively difficult). -Presumption of private use limited to natural persons. Rebuttable and cannot result on payment for use outside the exception. 8

9. Thank you 9 Confidential