SWD Impact assessment on the modernisation of EU copyright rules – impacts of second option

This option would simplify the clearance of rights needed for cross-border online transmissions: broadcasters would only need to clear the rights for the country of origin while they would be able to offer their services in the entire EU. However, Option 2 entails a limited risk of disaggregation of repertoire currently managed by CMOs, which would have a negative effect on transaction costs (broadcasters would have to negotiate with individual rightholders instead of CMOs).

Option 2 does not entail any obligation on broadcasters to provide services across borders (broadcasters could still decide to restrict the provision of the service to a particular MS), but it would open new opportunities for them to do so, in particular as concerns content which does not rely on territorial exclusivity. As concerns premium AV content, it is not expected that Option 2 would change its cross-border distribution by broadcasters in a short or medium term. Rightholders and broadcasters are likely to continue relying on territorially based exploitation of this content. Also, broadcasters may continue to geo-block premium AV content across borders. However, such agreements between rightholders and broadcasters would be subject to the application of EU and national law.

Licence fees are expected to be an important element in broadcasters’ decisions to make their programmes available across borders and in rightholders’ decisions to grant licences. In accordance with this option licence fees should be set taking into account all aspects of the broadcast, including the actual audience, the potential audience and the language version.

Option 2 would not significantly affect the on-demand services market because it would not apply to broadcasters’ on-demand services, which are not ancillary to the initial broadcast. Yet, there may be a partial overlap between on-demand services (such as VoD) and broadcasters’ online catch-up services, which in fact are on-demand services for a limited duration. However, catch-up services do not constitute a complete substitute to VoD services as they are limited in time and are linked to the initial broadcast transmitted according to a schedule.

Other service providers than broadcasters, which transmit linear TV or radio-like channels only online (operators of webcasting services) would not benefit from Option 2. However neither would a broadcaster offering an online-only channel (webcast) and therefore such broadcasters would compete with such service providers on an equal basis.

The introduction of the country of origin would constitute a new constraint for rightholders when licensing their content to broadcasters for online transmissions. Rightholders would remain free to determine whether granting a licence to broadcasters for online services such as simulcasting and catch-up services and could adapt the conditions of the licence in view of the application of the country of origin (e.g. for instance by defining the time in which the content may be available through catch-up services) as well as the licence fees. Furthermore, the introduction of the country of origin principle would on its own not affect the possibility for rightholders to agree with broadcasters on territorial limitations concerning the exploitation of their rights.

Option 2 is not expected to impact the licensing of premium AV content (rightholders would be able to continue licensing their rights on a territorial basis, subject to the requirements of EU and national law). However, it could be beneficial to those AV rightholders whose productions attract smaller audiences and who do not rely on territorial exclusivity: the CoO rule would facilitate the possibility for broadcasters to make such content available across borders and could result in additional revenues for rightholders. However, where the tariffs are already calculated on the basis of usage or the volume of audience, for example a percentage of broadcaster’s revenues, no change to the contractual arrangements may be necessary.

As regards the rights managed by CMOs, there is a risk that rightholders would like to exercise more control over the licensing of rights under the CoO rule and would decide to withdraw rights from CMOs. This could cause disaggregation of repertoires currently managed by CMOs.

The impact on prices would depend on broadcasters’ business models and on their decision to make their online transmissions accessible on a cross-border basis for free (or on ad-financed basis) or for payment. The increased cross-border availability of broadcasters’ online services could have an impact on consumers’ decisions related to their consumption of TV programmes, e.g. on whether to take a package service (retransmission services) or not. As consumers would have more choice in terms of available programmes across borders, they may better structure their consumption depending on their needs.

By establishing the licensing regime applicable to certain types of cross-border online transmissions, Option 2 would have a slightly negative impact on copyright as property right, limited by the targeted scope of the proposed intervention (broadcasters’ online ancillary services). It would have a positive impact on the freedom of information, to the extent that this option would facilitate access to information.