The EU Digital Single Market: geo-blocking, copyright and a media framework for the 21st century

On 6 May 2015 the European Commission published its “Digital Single Market Strategy for Europe”. The Commission’s proposals are aimed at producing a true digital single market, one with – in President Juncker’s optimistic words – “pan-continental telecoms networks, digital services that cross borders and a wave of innovative European start-ups”.

Read more about the impact on geo-blocking, copyright and the media framework for the 21st century.

The EU Digital Single Market Strategy is an area we will continue to monitor closely. Click here to read our latest updates and keep up to date with the developments as they happen.

Geo-blocking

The Commission proposes to initiate action to put an end to “unjustified geo-blocking”.   Here, the term “geo-blocking” refers to practices used for commercial reasons by online service providers that result in the denial of access to websites based in other Member States or, where the consumer is able to access the website, in them not being able to purchase products or services from it. Geo-blocking practices may also include rerouting consumers to a local version of the website with different prices, or automatically applying different prices based on the consumer’s location.

The Commission acknowledges that geo-blocking may be justified in certain circumstances, citing compliance with local laws as an example but, tellingly, not rights restrictions. In a three-pronged approach, the Commission says that it will:

• put together proposals to tackle unfair commercial decisions resulting in discrimination against the consumer;
• review certain legislation such as the E-Commerce and the Services Directives; and
• launch a competition sector enquiry focusing on the application of competition law in this area.

John Davidson-Kelly, Partner, Osborne Clarke, London, says: “Key to the Commission’s approach will be what constitutes “unjustified” in this context and what, if any, leeway this definition will allow companies”.

Konstantin Ewald, Partner, Osborne Clarke, Cologne, comments: “The Commission wants to allow geo-blocking for the purpose of compliance with local laws. This exception is a lot less clear than it may seem at first glance. For instance, German law has very complicated youth protection standards, and it is not always immediately obvious whether and in what way certain content is restricted or not. Since they are risking legal exposure, companies should have the final say in this matter. On a similar note, compliance with local laws may require more onerous efforts in one jurisdiction than in another, and in many cases, the technology used in one Member State does not even enable companies to install the compliance systems required in another. In these events, geo-blocking is the only reasonable way to comply with all applicable laws. The Commission’s strategy must ultimately take this into account.”

Copyright

The Commission is determined to ensure that the copyright regime is fit for the digital age and before the end of 2015 it will propose “modernising” the copyright laws to achieve this goal. The Commission has its sights firmly set on eliminating restrictions – which are analogous to unjustified “geoblocking” – and will propose measures aimed at:

• allowing portability of legally acquired digital content i.e. preventing the practice where a consumer is prevented from accessing online media content outside the Member State in which they bought it; and
• facilitating a resident in one Member State to buy content which is only available in another Member State.

The Commission has committed to “propose solutions which maximise the offers available to users and open up new opportunities for content creators”. It will also undertake a review of the satellite and cable directive to assess the need to enlarge its scope to broadcasters’ online transmissions and to ensure enhanced cross-border access to broadcasters’ services in Europe.

The Commission’s Strategy paper does not tackle the million dollar question (or in Sky’s case the £4.2 billion question, being the amount they spent on exclusive Premier League rights in the UK in the most recent auction) as to how the Commission intends to deal with the fact that rights are often licensed on a territory-by-territory basis. Affected parts of the value chain may suffer increased costs, for example if licensees now have to buy a pan-European set of rights as opposed to rights in respect of only one territory. Licensors may also suffer a loss of revenue, for example because they are now compelled to make their content available across the EU on the same day and date, and cannot command a premium from certain territories.

John Davidson-Kelly says: “These proposals point towards a position where content is only licensed to one or two pan-European players, in order to maximise royalties. It is not clear how services which operate in only one or two territories will be able to compete or whether they will effectively be forced to become pan-European service providers themselves”.

In addition, the EU appears to want to follow the lead set by the UK last year in making it an exception to copyright infringement to carry out text and data mining of content, for specific purposes. Whilst the UK approach limited this to non-commercial research, the EU seems to be looking for a revised framework for “commercial and non-commercial research”, which may cause concern to publishers of academic, scientific and professional journals.

The Commission’s counter-balancing proposals for copyright owners, for a more “effective and balanced” civil enforcement system to counter cross-border infringement and for “measures to safeguard fair remuneration of creators” (what these might be is not stated), do not seem sufficient to make up any shortfall. The scope of exemption from liability of ISPs involved in distribution of infringing content is also set to be revisited.

Looking at the Commission’s Strategy paper, it is regrettable that some key current problems in EU copyright law which are highly relevant to the Digital Single Market Strategy – such as clarifying when linking is infringing and when digital exhaustion occurs, and improving the legal protection of databases – appear not be being addressed, as clarification on those issues would be useful for content owners across the EU.

Ben Goodger, Partner, Osborne Clarke, London, says: “Harmonising copyright across Europe is fraught with challenges, both legal, economic, and even cultural, as we have seen in many previous initiatives. However there seems to be a real drive and urgency from the Commission this time to remove impediments which it sees national copyright laws putting in the way of a true EU digital single market – irrespective of very entrenched existing structures. Expect a lively ride over the next few years!”

A media framework for the 21st century

In recognition of the changes in viewing habits as consumers increasingly access content via the internet and on mobile devices, the Commission will review the Audiovisual Media Services Directive with the following aims:

1. to examine whether the current system of rules applying to broadcast and to on-demand service should be adapted;
2. with a focus on the disparity between linear and on demand regulatory regimes and particularly on the rules relating to the protection of minors and advertising rules;
3. to determine whether it should be broadened to encompass new services and players currently outside the scope of that Directive or which fall outside the geographical scope; and
4. to work on measures to promote catalogues of European works on Video On Demand platforms.

John Davidson-Kelly says: “As on demand content is increasingly consumed on television screens via devices such as Smart TVs and media streamers the boundaries between linear and on demand content has become more blurred than ever. The disparity between linear and on demand regulation has needed to be addressed for some time, particularly as regards the protection of minors and the Commission’s intentions in this regard are welcome. It is also likely that the Commission will examine whether the rules relating to listing content on linear services (e.g. PSB prominence) should be applied to on demand services. Whether the legislative process can keep up with the advances in technology remains to be seen.”