Green Paper on “Unlocking the Potential of Cultural and Creative Industries”

28 July 2010 – GREEN PAPER ON “UNLOCKING THE POTENTIAL OF CULTURAL AND CREATIVE INDUSTRIES” – 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 April 27th, 2010, the European Commission published its Green paper on “Unlocking the potential of cultural and creative industries” (hereinafter the “Green Paper”). AER welcomes this publication: it indeed identifies key roadblocks for commercially-funded radios’ development in the digital economy. From this perspective, one should first 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 on-air) is radio’s future. Therefore, any framework for copyrights, related to radio, should encompass both online and offline rights, in order to tackle radios’ current and forthcoming needs. Moreover, it is essential to bear in mind two important, although evident points: radio is sound-only and its business model is not retail. So, radio broadcasters need a sectoral approach to tackle issues related to management of copyright-protected works for sound-only usage / non-retail.

As rightly mentioned in the Green Paper, radio is a constitutive element of the “cultural and creative industry”. From this perspective, a key element to recall is that radios are both copyright holders and important copyright users: one of AER’s members’ primary expenses remains that of copyright 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 copyright regulatory framework to enable its members creating the best “professionally produced content” for their listeners .

As rightly pointed out by the Green Paper, radios, like any CCI, “have to cover the costs of ‘going digital’ […] while also investing in and testing new business models which generate a ‘pay back’ only after some time” . For radios, ‘going digital’ has two different meanings: first, it relates to the possibility to migrate from a satisfying analogue broadcasting technology (FM) to a future-proof digital broadcasting technology. For AER, the latter will have to be chosen by the markets: a choice endorsed by consumers.

“Going digital” for radios also corresponds to the necessary complementary presence of radios both on-air and online. Indeed, 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 all copyright-protected works.

However, and as highlighted in the Green Paper: radios as the “vast majority of the CCIs consist of a myriad of micro-, 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 .

In the Green Paper, it is indicated that the “Commission particularly welcomes contributions on priorities for action at European level” . For AER, EU regulatory initiatives could prove to be the most useful in the field of copyrights: radios need streamlined access to copyright-protected works. This seems also to be one of the conclusions drawn by the Green Paper, as it stresses that the “Commission will be working on three major policy frameworks, which will have a significant impact on the framework conditions for CCIs in a digital environment” . Out of the three major policy frameworks, two appear to take into account the pressing need to address the shortcomings of the current regulations related to copyrights .

AER warmly welcomes this firm will shown by the European Commission. To address radios’ concerns in the field of copyrights, one should take into account the following points:

1. Radio is online as much as offline: any framework should be technologically neutral and ensure blanket licenses for all platforms – as mentioned, commercially-funded radios’ business-model is still mainly based on free-to-air FM radio broadcasting. However, with the development of digital technology (be it online or on-air), radio must increasingly integrate digital platforms and develop new offers to reach its traditional audience: programmes are being broadcast, streamed, webcast and offered on demand. For each new concept, an additional layer of fee tends to appear, with additional administrative cost even if dealt with by the same body. Furthermore, collecting societies for related 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 copyright payments radios dutifully abide by every year. To ensure clarity and fairness, online and offline fees should be carried out under a single blanket license fee, in a transparent manner.

2. Radio needs country-of-origin principle-based solutions for online distribution, and competition between collecting societies – For radios, easy-to-handle licensing is seen as a very positive step towards a true EU internal market, via fair competition amongst collecting societies and legal certainty for radios in their online activities. Even in an online-environment, commercially-funded radios are targeted at local, regional or national audience. They would consequently make use only of one license valid in all territories where their target audience can pick up the programmes (country-of-origin-principle ). This could be facilitated via a review of the Cable and Satellite Directive (Directive 93/38/EEC). Such a solution will foster better conditions for both copyright holders and users. 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.

3. Radio needs collective management of rights – An important element for radio’s development on the internet is the ability to provide listeners with time-shifted / on-demand programmes and programme extracts. The music contained in programmes made available on-demand entails obtainment and clearance of exclusive related rights. The multiple rightholders have to be identified, asked for permission, and remunerated. This 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 and online world for linear uses. Following the example of Switzerland, at least the licensing of such rights for on-demand programmes with only accessory parts of protected music (e.g. reports or interviews with some background music) should be enabled through mandatory collective management of rights.

4. Radio needs access to the global repertoire – For online uses, important parts of the global repertoire are being divided per publishers, and withdrawn from collecting societies’ offer across Europe, due to market movements. With this development, commercially-funded radios are bound to address different entities in order to provide their audiences with a full range of music styles. This entails higher costs, more complexity and, eventually, inability to play certain music. For radio, it is essential to ensure that all collecting societies are able to license access to the global repertoire, to ensure easy access for radios and fair competition amongst collecting societies.

5. Collecting societies’ management should be streamlined, more efficient and more transparent – Their tariffs should fulfill similar transparency requirements; any organisation providing access to music rights should publish their tariffs (including split costs of both, rights usage and administration fees), the licensing conditions, administrative requirements and the destination of the monies received. 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.

To sum up, AER defends competition amongst one-stop-shops, enabled via the following requirements: a copyright user should be able to purchase whatever rights he requires for whatever purpose wherever he wishes to exercise them from any collective rights’ management organisation in the EU against clear, published, comparable tariffs. For AER, this aim could be reached by:
– Carrying out online and offline fees under a single blanket licence fee, in a transparent manner (to ensure fairness and clarity)
– Extending “the scope of the Satellite and Cable Directive of 1993 to 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.
– Imposing licencing of accessory music in time-shifted / on-demand programmes through mandatory collective management of rights.
– One should not forget the primary and essential need to ensure that all collecting societies are able to licence access to the global repertoire
– Adopting a new EU regulatory instrument on collecting societies’ management

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

ENDS
28/07/2010

Contact details: Frederik Stucki
AER Secretary General
76, av. d’Auderghem,
B-1040 Brussels,
Tel: +32 2 736 9131
Fax: +32 2 732 8990
vincent.sneed(Replace this parenthesis with the @ sign)aereurope.org
www.aereurope.org

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