Priorities for a New Strategy for a European Information Society

9 October 2009 – AER SUBMISSION TO THE PUBLIC CONSULTATION ON PRIORITIES FOR A NEW STRATEGY FOR A EUROPEAN INFORMATION SOCIETY
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,
B-1040 Brussels,
Belgium

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

AER’s main objective is to develop and improve the most suitable framework for private commercial radio activity. AER constantly follows EU actions in the fields of media, telecommunications and private radio transmission, in order to contribute, enrich and develop the radio sector.

AER therefore welcomes the opportunity to express its views on the priorities for a new strategy for the European information society. Commercially-funded radios constitute indeed 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. Indeed:
– 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
– their audiences are mostly local and regional, sometimes 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
Although radio might not evoke spontaneously the most modern medium, it has, for the past 50 years at least, been granted with all its attributes: ubiquitous, mobile, simple-to-use and free-to-air. This also makes radio the most intimate medium: the features mentioned above 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 .

Following the division of topics set by the European Commission for this public consultation, AER will focus on:
– Creating a 100% connected society and economy through a high-speed and open internet for all
– Consolidating the online Single Market and Promoting access to creativity at all levels

As a means of introduction to how commercially-funded radios in Europe live their current and future business environment, one should bear in mind that the latter can be dryly presented as being built on three pillars; if one of them is missing, commercially-funded radios cannot exist:
– Access to spectrum
– Access to copyrights
– Access to advertising revenues

The two first pillars can easily be integrated in the two parts of the consultation mentioned above. The third is spread all through the consultation and should be shortly presented in this introduction. There is indeed a current trend in regulation leading towards more advertising restrictions, or compulsory mentions in advertising. However, commercially-funded radios know only one viable business model: FM broadcasting of content, free-to-air. This model is being reproduced online and is slowly taking up. AER would like to recall that European radios can only broadcast programmes free of charge to millions of European citizens, thanks to the revenues they collect by means of advertising.

AER supports the overall idea of enabling consumers to make a well-informed purchase decision. But AER believes that there are more appropriate and efficient communication channels to deliver the consumer with detailed and extensive information: it is perceived to be much more useful at a later stage than when advertising, i.e., through websites, in information brochures or at the point of sale – when the decision is taken to perform the purchase .

When considering information requirements in advertising and their likely effects, AER furthermore believes that the specificities of each medium needs to be properly taken into account. Radio is a non-visual linear medium, which concretely means that, if detailed messages are to be communicated in an advertisement, these are to be broadcast in an added time-space to the latter. This increases the amount of time, hence the price, of the considered commercial message. In addition, needless to say, it lessens the commercial impact of the advertisement. These combined effects impact broadcast media, and radio in particular, even more than any other media and constitute factors that can deter advertisers away from using radio.

As a result, any constraint on radio advertising severely endangers AER members’ ability to pursue a viable economic activity. This is to the detriment of radio listeners across Europe, since advertising revenue is essential in making the programmes and content which listeners really enjoy . The latter should reach listeners (I) after being produced (II).

I. Creating a 100% connected society and economy through a high-speed and open internet for all

It should first be once again highlighted that, in Europe, the only viable business model for radio is based on analogue broadcasting free-to-air programmes, on the FM band: on-air or internet-based commercially-funded digital radio has not yet taken up. These two means of transmission will be part of the patchwork of transmission techniques for commercially-funded radios in the future, but it is hard to foresee when.

So, now and for a foreseeable future, commercially-funded radios need guaranteed access to spectrum.

Radio plays a fundamental role in today’s society: it is often quoted as the most trusted medium by citizens and is entrusted with many public interest obligations . It therefore needs exclusive access to spectrum, managed by EU Member States.

Spectrum is currently efficiently managed by EU Member States and this should remain the case: national radio frequency landscapes and national radio broadcasting markets are different, with divergent plans for digitization, diverse social, cultural and historical characteristics and with distinct market structures and needs. EU Member States already coordinate their views through existing international fora, such as the International Telecommunications Union (ITU) or the European Conference of Postal and Telecommunications Administrations (CEPT).

Investments into radio broadcasting have been and will be extremely high. Therefore, regulation must be tailored to local needs in order to allow the best possible development. In that sense, individual national licences with an adequate period of time (at least fifteen years), provide necessary certainty to engage in viable business models for free-to-air broadcasting. It should also be recalled that commercially-funded radios are SMEs, and are in no position to compete for access to spectrum with other market players. So, market-based approaches (such as service neutrality or secondary trading) should not be enforced in bands where commercially-funded radios broadcast or may broadcast.

As a reminder, radio is broadcast all through Europe on the FM band (87.5-108 MHz), Long waves (148.5-283.5 kHz) and Medium waves (520-1,610 kHz). Radio’s plans to broadcast digitally could use the Band III (174-230 MHz), the L-Band (1452-1492 MHz) and / or the FM Band, depending on the EU Member States. FM remains and will remain for the next years the main band used by radios.

Going on with securing access to spectrum in band III and L-band for digital radio is still paramount for its development on-air. This access was secured by EU Member States in international fora, such as ITU and CEPT, and should be respected. Although, for the European Commission, development of wireless broadband appears to be one of the essential elements to ensure an Information Society for All, on-air radio is still one of the most used means of social inclusion.

To sum up, AER would like to underline that it is crucial that EU Member States can allocate spectrum exclusively or with priority to broadcasting, and, especially to commercially-funded radio broadcasting; harmonized approaches, are not the appropriate answer: there is no one-size-fits-all solution. EU Member States should retain the freedom to assign frequencies to radio broadcasters through individual licences for an appropriate amount of time (at least fifteen years).

II. Consolidating the online Single Market and Promoting access to creativity at all levels

Commercially-funded radios constantly use pieces of music for all produced content. This raw material is almost always protected by copyrights: one of AER’s members’ primary expenses, with respect to both time and money, 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. Therefore, AER is constantly striving to ensure the best possible copyright regulatory framework for its members .

Commercially-funded radios are increasingly developing services online. It is at the same time an exciting opportunity and an obligation: radio only exists where listeners are, and the latter are increasingly spending most of their time on the internet. This evolution nevertheless does not change what radio is: the provision of free sound programmes in a scheduled manner.

AER would therefore like to stress certain important elements: first, radio’s business model is not based on the sale of music. It should be underlined, although this might seem redundant, that solutions found for music retail on the internet cannot be applied mutatis mutandis to radio broadcasting / transmission on the internet . In addition, AER calls for the application of similar rules for online and offline environments: for commercially-funded radios, transmission of programmes on the internet is still only a necessary complementary element to free-to-air broadcasting on FM. Multiplication of regulatory remedies for a single reality cannot be an appropriate solution: the creation of rules for the online world should be an opportunity to build a new all-encompassing framework for both online and offline copyrights users’ access.

From this perspective, the role of collecting societies is extremely important, and AER does 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: competition amongst collecting societies is necessary to reduce administration costs. AER supports 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.

AER thus warmly welcomes the European Commission’s statement in the “Post-i2010” public consultation acknowledging that “[t]he market for digital content is still fragmented and broadcasters and other content providers, together with end-users are prevented from benefiting from a true digital Single Market”. This statement is true for both on-air and online copyright access. Indeed, commercially-funded radios face all through Europe market fragmentation:
– fragmentation of payments per use
– fragmentation of territorial offers and
– fragmentation of the repertoire

A. Commercially-funded radios need access to blanket licences

One of the main problems faced by radios across Europe is the 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, analogue cable, digital cable, digital satellite, digital online, etc. This same programme can be simulcast, i.e. transmitted at the same time on all these platforms.

In addition, with the development of digital technology (be it online or on-air), a wide array of offers is possible: new programmes can be webcast, streamed or podcast. For each new concept, an additional layer of fee appears. This adds to the complexity of the copyright payments AER members dutifully abide by every year, and can possibly lead to different interpretation of the rights licenced. 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.

B. Commercially-funded radios need flexible multi-territorial licences

AER considers that multi-territorial licences should be seen as a very positive step towards a true EU internal market and fair competition amongst collecting societies. This will foster better conditions for both copyright holders and users. This should enable radios to choose the proper offer from any collecting society. Fair competition could indeed only take place if copyright users can get a licence for the use of copyright on the territory needed: commercially-funded radios are targeted at local audience, and would consequently make use only of flexible multi-territorial licences. The current situation should not lead to a market where collecting societies offer access to copyright only on a fixed multi-territorial basis: the choice between mono-territorial or pan-European licences would not ensure fair competition amongst collecting societies, and might even equate to additional unsustainable costs.

C. Commercially-funded radios need access to the global repertoire

As mentioned in the “Post-i2010” public consultation, the EU internal online market is an extremely complex environment for online music offers: AER members are confronted with this preoccupying situation although 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.

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 copyright 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 copyright offer is being divided per publishers. AER therefore recalls the primary and essential need to ensure that collecting societies are able to licence 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 licence access to the global repertoire. If only certain collecting societies are able to do so, the market is likely to soon become an oligopoly.

Finally, the idea mentioned in “Post-i2010” public consultation of a “rights clearance database to facilitate creation and distribution of content online” may be a first step towards more transparency of information on rights’ ownership but from the perspective of broadcasters it does not lead to a manageable system regarding the acquisition of rights. This would be even more useful if it is all-encompassing, including offline copyrights. Besides, this should not lead to a situation where radios should pay online copyright fees per track played: radios could simply not exist online.

To sum up, 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 organisation 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 (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 EU Member State in order to prevent abuse of a dominant position by any organisation providing access to music rights

To end up with, AER would like to recall that, in order take part actively in the shaping of a vigorous European information society, commercially-funded radios need and will need:
– Access to spectrum / sufficient net capacity
– Access to copyrights
– Access to advertising revenues

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

ENDS
09/10/2009

Contact details:
Frederik Stucki
AER Secretary General
76, av. d’Auderghem,
B-1040 Brussels,
Belgium
Tel: +32 2 736 9131
Fax : +32 2 732 8990
www.aereurope.org