Green Paper on Online Distribution of Audiovisual Works in the EU

18 November 2011 – GREEN PAPER ON “ONLINE DISTRIBUTION OF AUDIOVISUAL WORKS IN THE EU: OPPORTUNITIES AND CHALLENGES TOWARDS A DIGITAL SINGLE MARKET” – AER COMMENTS
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.

AER is located at:

Association Européenne des Radios
76, av. d’Auderghem,
1040 Brussels,
Belgium

AER’s Interest Representative Register ID Number is 6822083232-32.

On July 13th, 2011, the European Commission published its Green paper on “the online distribution of audiovisual works in the European Union: opportunities and challenges towards a digital single market” (hereinafter the “Green Paper”). AER welcomes this publication. However, AER needs to first highlight that, although this document is intended to identify and address issues related to the audiovisual world, the comments provided in this position paper are all meant to tackle issues related to the audio / sound-only world. Some of the situations presented in the Green Paper and the questions related could indeed easily be transposed to the radio environment: an environment where sound-only usage / non-retail prevails. Radios across Europe do need a sectoral approach to tackle their concerns regarding authors’ and neighbouring rights. From this perspective, one should recall that radio’s business model in Europe is based, now and for the foreseeable future, mainly on FM broadcasting of free-to-air programmes. Digital technology (be it online or broadcast / on-air) is radio’s future. Therefore, any framework for authors’ and neighbouring rights related to radio should encompass both online and offline rights, in order to tackle radios’ current and forthcoming needs: this framework should be technologically neutral. This could be provided via the forthcoming collective rights management regulatory instrument to be published by the European Commission. AER would welcome the inclusion in this regulatory instrument of principles inspired from the Cable and Satellite Directive (Directive 93/83/EEC), as described further in this position paper.

A key element to recall is that radios are both right holders and important right users: one of AER’s members’ primary expenses remains that of rights’ clearance. Radio broadcasters across Europe pay over €2.6 billion per year for content, mostly music rights , and payment for these rights is negotiated on a regular basis. As such, it should be highlighted that radios provide a substantial part of the stable revenues delivered to the music industry. Furthermore, AER is constantly striving to ensure the best possible authors’ and neighbouring rights regulatory framework to enable its members creating the best professionally produced content for their listeners. With changing consumption models, radios have to develop their presence on all possible platforms: in order to maintain audience, radios should be accessible on-air, online, via cable or satellite transmission in a linear and non-linear manner. This entails multiplication of costs for the mere technical presence and maintenance of the presence on a new platform, and to clear access to all protected works.

AER therefore once again warmly welcomes the firm will shown by the European Commission to address issues related to the management of authors’ and neighbouring rights. As mentioned, and in the light of potential forthcoming regulatory instruments to be published by the European Commission, AER will only address some questions contained in the Green Paper in order to tackle essential issues for radios, and only from an audio / sound-only perspective:

1. What are the main legal and other obstacles – copyright and otherwise – that impede the development of the digital single market for the cross-border distribution of audiovisual works? Which framework conditions should be adapted or be put in place to stimulate a dynamic single market for audiovisual content and to facilitate multi-territorial licensing? What should be the key priorities?

European commercial radio is mostly targeted at local, regional or national audiences; language barriers mean that demand is primarily limited to national, and often regional, boundaries. Moreover, in most cases, due to the traditional radio business model, 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 be heard on a global scale. It follows that there is little imperative to incur the costs and time involved in securing rights for international simulcasting .

However, those radio 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 rights used, and due to time and financial constraints, this is simply not possible. As a result, those stations concerned with incurring unwanted international right 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. These conditions are prohibitive for those AER members wanting to expand across borders . AER members need legal certainty. However, compulsory multi-territorial licenses do not reflect radio business models and would lead to additional unsustainable costs. Furthermore, radios should be able to choose the proper offer from any collecting society, via fair competition on administrative fees. These principles could be enabled via the forthcoming collective rights management regulatory instrument to be published by the European Commission – this instrument should include principles inspired from the Cable and Satellite Directive of 1993 for online delivery of sound content. In other words, clearing rights in the EU Member State of origin should enable use in all, at least online.

Key priorities for radios development online and offline are:
– Adopting a new regulatory instrument on collective rights management including principles of the Cable and Satellite Directive of 1993 for online delivery of sound content. In other words, clearing rights in the EU Member State of origin should enable use in all, at least online (see also answer under question 5)
– Imposing licensing of accessory music in time-shifted / on-demand programmes through mandatory collective management of rights (see answer under question 2)
– Carrying out online and offline fees under a single blanket licence fee, through one-stop shops, and in a transparent manner – to ensure fairness and clarity (see answer under question 2 and 6)
– One should not forget the primary and essential need to ensure that all collecting societies are able to license access to the global repertoire (see answer under question 2)
– Streamlining the governance and transparency of collecting societies (see answer under question 3)

2. What practical problems arise for audiovisual media services providers in the context of clearing rights in audiovisual works (a) in a single territory; and (b) across multiple territories? What rights are affected? For which uses?

Although radio is a national, regional and local medium, similar problems arise for radios’ clearance of authors’ and neighbouring rights in single territory and across multiple territories. Some of the main problems currently identified for radios’ clearance of online and offline rights are the following:

– Inability (or difficulty) to place time-shifted / on-demand radio services online:
One important element for radio’s development on the internet is the ability to provide listeners with time-shifted / on-demand programmes. However, many among these programmes feature accessory music: e.g., background music in a café where an interview is being run. This accessory music is protected by authors’ and neighbouring rights and thus entails clearance of rights. The multiple rightholders have to be identified and remunerated. In the case rightholders aren’t identified and remunerated, the programmes produced have to be abridged from any accessory music before being set online. This is detrimental to the atmosphere of the radio show thus produced. Furthermore, and most importantly, identification and remuneration of the multiple rightholders in accessory music is a task that cannot practically be undertaken by radios. Collecting societies have the expertise to fulfill this task. They already do so in the offline world for other uses. But for the time being the clearance of accessory music in time-shifted / on-demand programmes is not managed collectively. Hence, AER’s proposal to impose licensing of accessory music in time-shifted / on-demand programmes through mandatory collective management of rights.

– Fragmentation of payments per use of the same content:
First, one should consider that a single programme could be transmitted through analogue terrestrial, digital terrestrial, cable, satellite, online, etc. This same programme can be simulcast, i.e. transmitted at the same time on all these platforms. As mentioned, this phenomenon follows citizens’ changing listening consuming patterns, while audience remains the same. Online radio is just the most recent of these vectors. It is also the most favoured by youth. In order to maintain its unique tie with all its listeners, radios should simulcast on the internet. This does not generate a new share of listeners, it merely prevents from losing existing ones.

Having said that, it is important to recall that there is only one effective universal business-model for commercially funded radio: Free-To-Air / Free-To-Access. This is only possible thanks to advertising funding, which represents 100% of AER members’ revenues. However, these revenues are currently shifting towards advertising on the internet. This reinforces the need for commercially funded radios to diversify their offer.

In addition, with the development of digital technology (be it online or on-air / broadcast), a wide array of offers is possible: new programmes can be webcast, listened on-demand or podcast. For each new concept, an additional layer of fee appears, with additional administrative cost even if dealt with by the same body. Furthermore, collecting societies for neighbouring rights do not seem to be in a position to provide radios with legal certainty for their online activities. This adds to the complexity of the rights payments AER members dutifully abide by every year, and can possibly lead to different interpretation of the rights licensed. Finally, additional administrative costs seem to be added for each new additional layer of fee even if dealt with by the same body. To ensure clarity and fairness, online and offline fees should be carried out under a single blanket licence fee, through one-stop shops, and in a transparent manner. This can be considered as an extension of the right clearance system for cross-border retransmission of radio services by cable on a technology-neutral basis as mentioned in question 6.

– Fragmentation of the repertoire:
Traditionally, national or local broadcasters would only have to refer to their domestic collecting society to access the global repertoire . This is increasingly less the case, as important parts of the global repertoire are being withdrawn from collecting societies’ offer across Europe. Initiatives such as CELAS are leading to dangerous fragmentation of the rights market: to provide its audience with a full range of music styles, commercially funded radios should now address many different entities, even for their own local position. This entails higher costs, more complexity and, possibly, inability to play certain music. Thus, with the creation of CELAS, and other similar entities, the right offer is being divided per publishers. Therefore, AER recalls the primary and essential need to ensure that collecting societies are able to license access to the global repertoire. Furthermore, and equally important, one should not forget that, in order to ensure fair competition amongst collecting societies, the latter should all be given the ability to license access to the global repertoire. If only certain collecting societies are able to do so, the market is likely to soon become an oligopoly.

3. Can copyright clearance problems be solved by improving the licensing framework? Is a copyright system based on territoriality in the EU appropriate in the online environment?

AER firmly believes that the EU could greatly help in solving right clearance problems by improving the licensing framework applying to rights in EU countries as described under questions 1 and 2.

Besides the licensing framework, it is essential to streamline the governance and transparency of collecting societies: their tariffs should fulfill similar transparency requirements; any organisation providing access to music rights should publish
– their tariffs in a clear and comparable manner (including split costs of both, rights usage and administration fees)
– the licensing conditions (including the repertoire they represent in an open database)
– administrative requirements
– the destination of the monies received: these organisations must be subject to a clear and strict accounting framework in order to provide full transparency in their bookkeeping, including their cost structure (the costs should always be clearly identified including those for social and cultural funds; cross-subsidy of activities should also be indicated), and on financial transfers between collecting societies as regards the redistribution of fees amongst themselves

Any organisation providing access to music rights should also be submitted to external and independent authorisation and control procedures, especially regarding their published accounts, the respect of their aims and tasks.

Radios should be able to choose the proper offer from any collecting society, via fair competition on administrative fees. 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. These points could be made compulsory by means of an EU Directive or Regulation, as repeated institutional (via soft law and / or cases) calls for collecting societies’ management improvement have remained (at least partially) unheard.

The territoriality of authors’ and neighbouring rights isn’t seen as an obstacle or a hindrance to the development of online radio offers, as long as solutions based on the “country of origin” principle are provided (see also questions 1 and 5).

5. What would be the feasibility, and what would be the advantages and disadvantages of, extending the “country of origin” principle, as applied to satellite broadcasting, to online audiovisual media services? What would be the most appropriate way to determine the “country of origin” in respect to online transmissions?

As mentioned under question 1, European commercial radios are local, regional, or national actors. As listeners expect to access radio via a multitude of platforms, radio services have to be present online. At the same time, internet’s natural setting entails transmission of these local, regional or national services across borders. Extending the “country of origin” principle, as applied to satellite broadcasting, to online radio would have the advantage of providing a simple legal solution to obtain certainty on the provision of their services abroad, and to avoid using counter commercial solutions such as geo-blocking of services to foreign IP-addresses. Further explanation is provided under question 1.

For radios, the country of origin should be the country where the on-air broadcast services are based: clearance of rights in this country should enable at least marginal provision of services across border for the entire EU (and the entire world).

6. What would the costs and benefits of extending the copyright clearance system for cross-border retransmission of audiovisual media services by cable on a technology-neutral basis?

Retransmission of analogue radio services on other platforms can take the form of simulcasting: the simultaneous (or near to simultaneous) retransmission of the same service over a variety of platforms, such as cable, digital terrestrial broadcasting, satellite, and online. Access to rights for simulcasting of radio services on all these platforms should be enabled on a technology-neutral basis. As mentioned in the introduction and under question 5, radio listeners’ consumption patterns evolve and radios have to be available on this variety of platform: simulcasting does not generate a new share of listeners, it merely prevents from losing existing ones. So extending the right clearance system for cross-border simultaneous retransmission of radio services by cable on a technology-neutral basis cannot be presented as a question of costs or benefits: it should be considered as a fact.

In addition, with the development of digital technology (be it online or on-air / broadcast), a wide array of offers is possible: new programmes can be webcast, listened on-demand or podcast. For each new concept, an additional layer of fee appears, with additional administrative cost even if dealt with by the same body. Furthermore, collecting societies for neighbouring rights do not seem to be in a position to provide radios with legal certainty for their online activities. This adds to the complexity of the right payments AER members dutifully abide by every year, and can possibly lead to different interpretation of the rights licensed. Finally, additional administrative costs seem to be added for each new additional layer of fee even if dealt with by the same body. To ensure clarity and fairness, online and offline fees should be carried out under a single blanket licence fee, through one-stop shops, and in a transparent manner.

AER therefore firmly believes that extending the right clearance system for cross-border retransmission of radio services by cable on a technology-neutral basis would be highly beneficial to radio, without creating a significant audience increase.

9. How could technology facilitate the clearing of rights? Would the development of identification systems for audiovisual works and rights ownership databases facilitate the clearance of rights for online distribution of audiovisual works? What role, if any, is there for the European Union?

Databases gathering information on rights ownership and the bodies in charge of their management is seen as a valuable tool to address part of the problems related to the fragmentation of the repertoire. This could help e.g. for dispute resolutions. Moreover, AER supports any move towards more transparency of collective rights’ management organisations, and certainly the publication of their repertoire; this should be accompanied, at least on an individual basis, by the publication of their tariffs (including split costs of both rights usage and administration fees), the licensing conditions, administrative requirements and the destination of the monies received. Nonetheless, this should not lead to a situation where radios should pay online right fees per track played: radios could simply not exist online.

13. What are your views on the possible advantages and disadvantages of harmonising copyright in the EU via a comprehensive Copyright Code?
14. What are your views on the introduction of an optional unitary EU Copyright Title? What should be the characteristics of a unitary Title, including in relation to national rights?

Harmonisation of authors’ and neighbouring rights or an optional unitary EU Copyright Title could be seen as interesting long-term objectives. However, AER recommends first to promptly solve issues related to licensing and governance of collective rights’ management organisations. This can be done by extending some existing rules (such as the Cable and Satellite rules as mentioned above, and the mandatory collective management of accessory music to online), and correctly implementing offline and online existing rules, enhancing thereby transparency and competition in rights’ management.

Radios consist of a myriad of small and medium sized enterprises. Moreover, on-air broadcasting radios reach massive audience on a daily basis in all EU Member States: between 60 and 85% of the EU population on average listens to radio for at least 2 or 3 hours per day, as shown by national audience measurement. Commercially-funded radios indeed constitute a unique network of small and medium-sized enterprises (SMEs), contributing to cultural diversity, media pluralism, access to creativity, social inclusion. They also offer free-to-air services of general interest:
– they evolve in highly competitive environments
– their programmes encompass, broadly speaking, all possible formats, from debates to music-only
– As for the music broadcast, within one market, as soon as there is demand expressed, it has to be fulfilled; so, most of the musical expressions are represented
– most of them are non-politically affiliated, and certainly keep the freedom to express their opinion or to participate to the public expression of the opinions of their listeners
– their audiences are local, regional, or national
– they strive to develop on all possible platforms
– during natural, major or minor disasters, radio is one of the first tool to inform the public
Radio is the most intimate medium, and has been so for the past 50 years at least: it is indeed 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. Our listeners thereby access programming they enjoy, and useful information.

AER remains available to explain this position in further details, should this be helpful to the European Commission.

ENDS
18/11/2011

Contact details: Julia Maier-Hauff
AER Secretary General
76, av. d’Auderghem,
B-1040 Brussels,
Tel: +32 2 736 9131+32 2 736 9131
Fax: +32 2 732 8990
vincent.sneed @ aereurope.org
www.aereurope.org

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