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Content liberalisation: more rights for users, challenges for industry

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Mabel Klimt analyses European legislation liberalising access to subscriptions to audiovisual platforms

This month saw the entry into force of European legislation liberalising access to subscriptions to audio-visual platforms (HBO, Amazon or Netflix), music (Spotify) and video games within the EU countries.

This is a further step, amongst many others, such as the elimination of 'roaming' for telephone communications, within the so-called Digital Single Market Strategy (DSM) adopted already in May 2015 and based on three pillars: improving access to online goods for consumers and businesses, facilitating an environment in which digital networks and services can thrive and, thirdly, ensuring that the European economy, industry and employment benefit fully from digitisation as one of the main drivers of economic growth.

With regard to the consumer and the state of technological developments in general, the measure could not be timelier or more positive. The need to incorporate such measures is undeniable.

However, for the content production industry, the decision is a great revolution. A paradigm shift and an additional share of uncertainty in a market that is already terribly competitive and subject to permanent crises and pressures in the face of repeated and persistent changes in the production model.

We cite cinema as an example, where the magnitude of change is seen with a clear clarity. From its beginnings, at the beginning of the 20th century and until now, the business model of cinema has been based on the splitting of rights and the granting of exclusivity.

Thus, the owner of the rights could obtain income from the granting of a licence for the exploitation of a film in cinemas, in one territory, in a specific period, and then other income from the exploitation of the same film also in cinemas in the same period but in another territory, or in the same territory but in another period. The maximisation of this scheme (the so-called 'operating windows') was the key to success and profitability of production, if not to the recovery of the same production costs, which is often achieved by early discounts on future sales.

If the regulation now requires free availability of access so that consumers can access their content from any country of the Union, it is an inexcusable requirement that, previously, the content platform has acquired the necessary rights for the exploitation of this content in all these territories.

To this end, the regulations articulate mechanisms that allow operating permits to be understood as being granted for the entire European territory (otherwise, it would not be possible to comply with the premise of liberalisation), but this implies that the business model must change. A pan-European licence cannot be an economic substitute for a set of territorial licences, and, moreover, it should not. Precisely because as part of the democratization of access to content, the price must necessarily rise and fall.

That is why we are talking about a paradigm shift. The 'a posteriori' cost recovery scheme for productions (which, as we say, in cinema, is practically the rule) may not be sustainable in the short term with this new scheme.

It is true that the regulatory package provides for certain measures with the industry in mind, such as the creation of rules to simplify and speed up the procurement of certain online services provided by broadcasters and broadcasting services, a new negotiating mechanism to facilitate the conclusion of licensing agreements for the broadcasting of audio-visual works through video-on-demand (VoD) platforms, or measures to address lack of visibility and language barriers, two of which hinder users' access to European works.

The question is whether these measures will be sufficient and effective. Whether the industry will be able to convert its business model quickly enough and emerge unscathed. In a golden moment for the generation of content, we hope that this will be the case, and that the long-awaited balance between creator-industry-consumer will be found that will guarantee the viability of the model in the long term.


For further information, please contact:

Mabel Klimt

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