Light and shadow – About the Commission’s strategy for the Digital Single Market  13/05/2015 by Till Kreutzer

On May 6, 2015 the EU Commission presented its much-anticipated strategy for the Digital Single Market (DSM). The communication paper has some up- but especially many downsides.

 

Topics of the strategy

The strategy bases on three main pillars, each of which is divided in several subsections. The main pillars are:

1.      “Better access for consumers and businesses to online goods and services across Europe”

2.      “Creating the right conditions for digital networks and services to flourish“

3.      “Maximising the growth potential of our European Digital Economy”

Obviously, not all topics of the DSM strategy are of relevance in this context. Copyright and related aspects are addressed particularly in pillar 1 (Sec. 2 of the communication). Sec. 2.3 concerns “Preventing unjustified geo-blocking” and 2.4 “Better access to digital content - A modern, more European copyright framework”. Closely related to the copyright context are moreover parts of the second pillar, namely sec. 3.3.1 (“Role of online platforms”) and 3.3.2 (“Combatting illegal content on the Internet”).

 

Geo-Blocking and territoriality: A weak compromise between two conflicting perspectives

Geo-blocking is one of the major reasons for the actual absence of a Digital Single Market in Europe. One of the main foundations of the European Union is that the providers of services and sellers of goods must not segment the European Single Market into national silos. However, in the intangible digital online world, there is no such thing as a pan-European market. The underlying reason is that copyright is (still) a territorial right, even in the European Union. One out of many effects is, that a rights owner can freely decide to grant a license for one country only, making different or no agreements at all for another.

The result is that streaming or download services have to purchase separate licenses for each member state in the EU. That balloons the administrative costs for the rights clearing in a way that it is simply not feasible for content providers to cover the whole EU. Hence, content services like Netflix or Spotify are available only in some EU member states and their repertoire differs from territory to territory. Especially small markets like Estonia or Slovenia are often excluded. Their citizens have no access to many legal content services at all. Another effect is that those users who have subscriptions cannot log on to their services abroad. All in all a situation that seems absurd from the perspective of a European Single Market.

Neither the users nor the providers of content services have an interest in geo-blocking. Who claims an interest in this situation are mainly the movie producers and distributors. They lobby heavily for the preservation of the market segmentation and thereby for the cementation of their analogue business models and exploitation chains. It is known that Vice President Andrus Ansip, who is in charge for the DSM strategy (together with DG Connect Commissioner Günther Oettinger), opposes geo-blocking in general. Oettinger on the other side seems to be more interested in the concerns of the film industry than the interest of the public or fundamental European principles.

The Commission’s communication clearly reflects these two opposing views. That the topic is addressed at all – more than 20 years after the emergence of the World Wide Web – is appreciated. However, the compromise wording is extremely weak, leaving all options. Geo-blocking is not condemned wholesale but only “unjustified geo-blocking”. That means nothing but: “At the moment we are prepared to grant all kinds of exemptions to privilege particular interests.” (see also https://edri.org/digital-single-market-will-citizens-be-at-the-centre-of-the-commissions-plans/). Obviously it is a matter of opinion what is justified and what is not. Is geo-blocking justified as a means for film and music companies to maintain their exploitation chains? Or is geo-blocking only “justified” when it is mandatory because of diverging regulation in the member states? The commission will tell us soon most likely.

 

Further harmonization of the European copyright law

In the online world copyright related uses have, as a rule, a cross-border impact. However, so far copyright is not harmonized within Europe, i.e. every member state has its own specific copyright regime. That leads to massive legal uncertainties and transaction costs for users and rights owners alike. The abovementioned licensing problem for commercial users affects institutional and personal users in the same way. A public interest institution like Europeana has to acquire hundreds of thousands of rights to serve its public service task, i.e. digitally preserving and making the European cultural heritage available for all European citizens. An academic who uses quotes in an online publication can never be sure if they are – although perfectly legal under her national law – rightful in other member states. Harmonization is a key factor for a Digital Single Market for copyright protected cultural goods.

However, assessing the aspect of harmonization only from the economic and market perspective falls too short. It is also a central aspect for copyright limitations that concern cross-border uses, like the quotation right (see above). It would be a key factor for a potential new limitation for Text and Data Mining, which is named in the communication, because without a pan-European solution the results from these research techniques could not be published online. Another example: Should the commission decide to advocate for a – urgently needed – limitation for sharing User-generated content online it is self-evident that it could only be beneficial when it is harmonized across European member states.

The DSM strategy strongly supports the need for further harmonization only with reference to the phenomenon that one could call the Netflix portability, i.e. the problem that people cannot use their online subscriptions abroad. However, this is only one small issue resulting from the fragmented copyright system. Nonetheless, when it comes to the context of limitations the wording gets particularly weak, like the reference to harmonization for the sake of cross-border research. Here, the commission states (emphasis added):

“Innovation in research for both non-commercial and commercial purposes, based on the use of text and data mining (e.g. copying of text and datasets in search of significant correlations or occurrences) may be hampered because of an unclear legal framework and divergent approaches at national level.”

The chapter about the roadmap for a modern copyright system reveals clearly the one-sided cultural industry orientated view on the subject matter. Instead of further emphasizing the pressing deficits for institutional and private users, the Commission describes an “effective and balanced civil enforcement system against commercial scale infringements of copyright” as central for a “modern, more European copyright framework”. Instead of tackling the absence of a European copyright contract law, that would secure a fair remuneration for the authors in relation to their publishers, “the rules applicable to activities of online intermediaries in relation to copyright protected works require clarification…”.

In the subtext the Commission tells us that there is no need to safeguard fair compensation of the creators by their contractual partners, the music, press or film publishers. The Commission rather announces to assess ways to weaken the ISP liability rules in the ecommerce directive or even to construct a remuneration responsibility for platforms and service providers, potentially through an ancillary copyright for press publishers or accompanying approaches.

The Commission’s statements completely ignore the fact that the liability regime for ISPs is fundamental for the Internet architecture. So far, host providers (like platforms) are only liable to block or delete content after they are informed about rights infringements (“notice-and-take-down”). They are neither liable for copyright infringements nor subject to damage or remuneration claims. It is no coincidence that similar save harbour rules are applicable in most parts of the world, including Europe’s most important “competitor”, the USA. Without them neither the Internet architecture as we know it today nor the online economy could work. If ISPs or providers were made “users” in terms of copyright they had to clear rights or at least pay license fees for the content their users upload and share on their platforms. Imagine what this would mean for social networks or blog platforms and what the result would be. Providers would try to block any protected „suspicious“ content to prevent liability or remuneration claims. They would select, censor, delete whatever they deem risky in terms of liability. And if any ISPs were able to manage this overwhelming burden, guess who that would be: Google, Ebay, Facebook and other US giants. But what would happen to the competitiveness of the European online economy and the “European Internet” for that matter? How could the vast majority of Europe’s online economy, the hundreds of thousands of small platform, host or service providers remain in business? And what would be the effect on universities and schools that host learning and research platforms?

The bottom line

In the context of copyright and related aspects the Digital Single Market strategy needs a lot improvement before any further steps can be taken. It is more than disappointing that this document marks the new Commission’s first step into the debate. There was hope that the political opinion had – in line with the public and expert debate – changed over the many years of discussion about a modern copyright for the Digital Age. But if you ignore the programmatic political rhetoric the communication reads like a paper from at least 10 years ago. 

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