| Response to Online Commerce Roundtable Issue Paper |
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15 October 2008 – RESPONSE TO ONLINE COMMERCE ROUNDTABLE ISSUE PAPER: OPPORTUNITIES IN ONLINE GOODS AND SERVICES European Commission Directorate-General for Competition For the attention of the Antitrust Registry B-1049 Brussels
Brussels, October 15th, 2008
Dear Madam Kroes, The Association of European Radios (AER) is a Europe-wide trade body representing the interests of over 4,500 commercially-funded radio stations across the EU27 and in Switzerland. On September 17th, 2008, you have published a media release concerning the Online Commerce Roundtable. On the same day, an “issues paper” was published; you invited all interested parties to submit their own comments on the issues paper by October 15th, 2008. AER welcomes the opportunity to express the position of commercially-funded radio broadcasters on this topic. One of AER’s members’ primary expenses, with respect to both time and money, remains that of copyright clearance. Commercially-funded radio broadcasters across Europe pay over €325 million per year for music rights, and payment for these rights is negotiated on a regular basis. Therefore, AER is constantly striving to ensure the best possible copyright regulatory framework for its members. The initiative run by the European Commission Directorate General for Competition appears to be sound for sales’ purposes: AER supports the European Union’s goal to “create a competitive single market, where consumers throughout the Union can choose freely among products and services, regardless of national borders”. AER would nevertheless like to call the European Commission’s attention to certain commercially-funded radio broadcasting’s specificities, which could be impacted by the abovementioned initiative, and especially by points raised in part II of the issues paper (for specific answers to the questions of part II, please see as from page 2 of the AER submission). Radio is the most intimate medium: it is ubiquitous, mobile, simple-to-use and free-to-air. All these features enable our audience to cultivate a personal relationship with our programmes, our DJs, our hosts, and our brands. To maintain this unique tie, our members have to be available on all transmission platforms. The internet has become an important platform for listeners to access our programmes. Therefore, it is both business and consumer critical for AER’s members to have a full presence in the online world. European commercial radio is mostly targeted at local, regional or national audiences; language barriers often mean that demand is primarily limited to national, and often regional, boundaries. Moreover, in most cases, due to the traditional radio business model which still very much exists today, the majority of AER members’ audiences are most likely limited to town and city boundaries. At the same time, by its nature, the internet gives worldwide access. As explained, the current business model for ‘traditional’ radio stations, especially commercially-funded stations, does not support worldwide audiences: our programmes – be it news or music, would have little, if any, interest for listeners (or indeed advertisers) located outside a certain territorial range. Therefore, there is currently no significant financial benefit to being heard on a global scale. It follows, therefore that there is little imperative to incur the costs and time involved in securing rights for international simulcasting. However, those stations that do wish to operate outside their national boundaries, or that perhaps unintentionally have listeners (e.g. ex-patriots, foreign fans) accessing their online broadcasts from outside their territory, are faced with significant territorial difficulties associated with the different rules and tariffs applying to other Member States. A radio station transmitting its programmes on the internet potentially has to contact 27 different bodies to clear the copyrights used, and due to time and financial constraints, this is simply not possible. As a result, those stations concerned with incurring unwanted international copyright liabilities must install systems that block the transmission of their programmes outside of their home territory. These territorial restrictions and the subsequent blocking of programmes cannot be an appropriate market solution. Firstly, these conditions are prohibitive for those AER members wanting to expand across borders. But even more worryingly, the current framework prevents competition among collecting societies. Consequently, it artificially sustains the monopoly situations in each of the EU Member States. In each Member State, collecting societies are in incredibly strong positions when it comes to the offering of rights that are critical to our member stations’ day to day operation. The internet is a new platform, to which old rules are being applied. We support those models which acknowledge that the same content is made available through analogue and digital platforms and therefore dual payments or rights clearance is not viable. We do not want different rules for online and offline, but we need new rules which are effective for both environments. The role of collecting societies is extremely important, and we do not debate this. They facilitate the collection and distribution of music royalties in a way that would be extremely difficult if left to individuals. However, their organization can and should be challenged. We support a one-stop-shop model where radio broadcasters can clear rights through single bodies which deliver access to European or worldwide repertoire, for online and offline use. A rights user should be allowed to purchase whatever rights he requires for whatever purpose wherever he wishes to exercise them from any collective rights’ management organisations in the EU against clear, published, comparable tariffs. The latter should fulfill similar transparency requirements; i.e., any organisation providing access to music rights should publish its tariffs (broken down into rights costs and administration charges), the licensing conditions, administrative requirements and the destination of the monies received. Finally, dispute resolution mechanisms should be enabled as appropriate in every Member State in order to prevent abuse of a dominant position by any organisation providing access to music rights. Responding more specifically to the most important points, for commercially-funded radio broadcasters, you have raised in part II of the issues paper: “The group is invited to consider this issue, and any others that they wish. In particular, the group could consider the impact of the following: - The role of collecting societies, and of direct licensing, and whether the absence of a multi-repertoire pan-European licensing system is impeding the development of online markets;” As mentioned above, collecting societies are important partners for our industry. AER nevertheless believes that improvements are needed to achieve effectiveness in the online environment. The current rights system does and will continue to hinder the development of our member radio stations online. It remains characterized by territorial restrictions, lack of transparency and efficiency, monopoly power and, in some markets, lack of appropriate arbitration and/or conflict resolution systems. Competition among collecting societies appears to be one of the most efficient levers to improve operational efficiency through market forces. This competition should be based on the efficiency of their services and on their transactional costs. Competition between societies would be to the benefit of all parties – rights owners, users and consumers – but this can only come about if users have an effective and efficient licensing structure, and a choice of who to go to for the grant of rights. Pan-European licensing could be a useful way forward in this sense. This will enable cultural diversity to flourish and ensure that all European music gets equal playtime and remuneration on European airwaves and networks. Furthermore, access to worldwide repertoire is paramount to our industry. Therefore, AER believes that all collecting societies, independently of their “size”, should be able to license the worldwide repertoire to any user and for any use: AER would like to indeed reiterate the need of commercially-funded radio broadcasters for a worldwide repertoire pan-European licensing system, be it online or offline. “- The need for territorial licensing of copyrighted content, and whether that need varies depending on the type of content and / or the revenue model being used;” Commercially-funded radio broadcasters favor pan-European worldwide repertoire licensing for broadcasting (offline and online), in order to allow competition among collecting societies. AER members still broadcast entirely free-to-air / free-online programmes, with the same content broadcast across all platforms. There is no distinction between the online and the offline offer from this perspective, although it is possible that the simulcast of a programme online has to be stopped as a result of licensing issues. Wherever possible, these two offline and online transmit the same content at the same time (although there can be a few seconds of delay from one platform to the other). AER therefore believes that unless a licensing solution is found that acknowledges that we are dealing with the same content across all platforms, and removes dual payments or rights clearance, the framework for licensing in the creative economy will remain flawed. “o Do you believe that the need for territorial restrictions varies depending on whether a copyrighted product is provided in physical format, as an electronic download, as a streaming service, or as a broadcast?” AER members only provide online streaming and broadcast services. In these two cases, there should be no territorial restrictions, in order to enable collecting societies to compete and improve the services offered. This should apply only if all collecting societies compete on the same grounds; i.e., they should all be able to provide one-stop-shop access to the worldwide repertoire [Recent market developments are from this perspective worrying: the creation of bodies such as CELAS (Central European Licensing and Administration Services) seems to increase prices for online music rights, and lead towards fragmentation of the worldwide repertoire.]. “o Do you believe that the same regulatory environment should apply to copyrighted content distributed in a physical format, as that distributed via electronic download?” AER represents the interests of commercially-funded radio broadcasters, and therefore this question is not specifically relevant. However, we would like to reiterate that we believe that that the same copyright rules should apply to both online and offline transmission of our programmes “o Do you think that the 2001 Copyright Directive should be interpreted as applying a different regulatory environment to copyrighted content distributed in a physical format as compared to content distributed via electronic download?” We believe that all content (offline and online) should be subject to the same rules to ensure a level playing field. “o Is there a justification for licensing for certain countries and not for others, even where rights-holders hold the rights for the entire European Economic Area (EEA)?” AER believes that there should be several competing one-stop-shops with access to the worldwide repertoire. This framework would enable competition, increase efficiency and stimulate the creation of flexible licences to reflect the use; i.e., if a user does not need access to the worldwide repertoire, it should also be offered a licence that covers that part which is required. “o What, if anything, should be done to overcome or facilitate the need for commercial users to clear the rights with collecting societies in each country in which they operate?” As mentioned above, AER members need actions to facilitate the clearance of rights from a single source as the current structure of multi-payments and multi-clearance is unviable. Commercially-funded radio broadcasters should be able to clear the usage of rights through one-stop-shops, delivering access to worldwide repertoire, for online and offline use: a user should be allowed to purchase whatever rights he requires for whatever purpose wherever he wishes to exercise them from any collective rights’ management organisations in the EU against clear, published, comparable tariffs. The latter should fulfill similar transparency requirements; i.e., any organization providing access to music rights should publish its tariffs (including split costs of both rights usage and administration fees), the licensing conditions, administrative requirements and the destination of the monies received. Finally, dispute resolution mechanisms should be enabled as appropriate in every Member State in order to prevent abuse of a dominant position by any organisation providing access to music rights. We hope this written submission will be helpful. Should you need more information, please do not hesitate to contact our Brussels’ office. In the meantime, I remain Yours Sincerely,
Frederik Stucki
AER Secretary General |
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