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Summary

On September 14, 2016, the European Commission (EC) announced a comprehensive set of reforms, including an overhaul of the current rules on copyright. The proposals have been expected for some time because the EC's intention to adapt the rules for the digital age has been long standing. Even though there is room for amendments, players in the industry will have to adapt to a very different scenario compared to the current one.

The proposed reforms are only a reflection of the changes brought about by the digital age

The EC's proposals on copyright do not come as a surprise. The proposal had been on the cards for at least a year, and it complements the proposal put out by the EC in December 2015 to remove cross-border barriers and facilitate "content portability."

In line with the promise to address the issue "within six months," the EC has announced a comprehensive set of proposals to increase the availability of content online across borders. The EC claims that such a move will, on the one hand, create more opportunities for content providers, and, on the other hand, mean more choice for consumers. Other provisions aim to facilitate text and data mining for researchers, to reflect the recent evolution of online research tools. There will also be a clearer framework for copyright holders to monetize their content when it is published on online platforms (e.g. when their music works are hosted by YouTube or similar services).

The EC's proposals will now have to undergo the usual lengthy and complex negotiation process, which will involve the EU Parliament and the Council of Europe, which represents member states' governments. This means that there is plenty of room for amendments and it is difficult to predict the impact of these reforms. Nonetheless, the direction taken by the EC is now clear, and it reflects changes brought about by the digital age, which players in the industry can no longer ignore.

Although the concerns of content providers over the removal of cross-country boundaries are understandable, it is increasingly difficult to think of a scenario in which geographical boundaries hinder a user's ability to access content that they have lawfully purchased. The evolution of connectivity has modified customers' habits, and they now expect to be able to retain their online habits regardless of where they are. Inevitably, customers will struggle to find a compelling reason why they could not watch a movie on their own Netflix subscription or stream music from their Spotify account, just because they are in a different country.

Similarly, artists have complained for some time about not being able to sufficiently monetize from the presence of their content on online platforms such as YouTube or other sharing services. Also, the conflict between news providers and aggregators such as Google News, or even Facebook, has heated up in recent times over the issue of who should pay whom. This is the result of the disruptive effect that digital services have had on the business models of content providers and copyright holders.

If passed in its initial form, the Directive would give the providers a stronger legal instrument to obtain better compensation; however, we expect the likes of Google, Facebook, and other online services to push for amendments.

Appendix

Further reading

"EC takes aim at content portability in Europe as part of the new copyright framework," ME0001-000301 (December 2015)

"The EC plans to overhaul regulatory framework with a new Electronic Communications Code," TE0007-001062 (September 2016)

Author

Luca Schiavoni, Senior Analyst, Regulation

luca.schiavoni@ovum.com

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