SWD IA on EU copyright modernisation – impacts of first option for digital retransmission

Option 1 – Mandatory collective management of rights to retransmission of TV / radio broadcasts by means of IPTV and other retransmission services provided over “closed” electronic communications networks

Option 1 would enhance the level of legal certainty for the benefit of a specific category of retransmission services – those provided over “closed” electronic communications networks – and can be expected to contribute to a better offer of such services, depending on market situations in particular MS.

It could also be an incentive for the retransmission service providers concerned to expand the range of TV / radio channels offered to their subscribers. The actual impact of Option 1 in the different MS would depend on whether collective management regime already applies to IPTV and other similar services as a result of national law or practical arrangements by the market players.

This option is expected to reduce the transaction costs linked to the clearance of rights for the retransmission services provided over “closed” electronic communications networks, in particular in MS where the collective management of right does not apply to this type of retransmission services. Providers of the services concerned would only need to deal with two licensing “sources” – broadcasters and CMOs.

The extent of reduction would depend on the market practices prevailing currently in the different MS, in particular: (i) whether different categories of individual rightholders usually transfer retransmission rights to producers and/or broadcasters and whether broadcasters grant the service providers concerned the “all-rights-included” licences; (ii) the set up and practices of collective management organisations (e.g. even without a mandatory collective management regime applying to them, IPTV providers are usually licensed by the music sector CMOs; it is not excluded that, upon the introduction of mandatory collective management, they might need to obtain licences from additional CMOs, e.g. those representing film producers, notably in the scenario where film producers’ retransmission rights cannot be cleared with broadcasters as part of the “all-rights-included” licences).

It could be argued that Option 1 would benefit a specific category of retransmission services – those provided over “closed” electronic communications networks – and that other retransmission services (OTT) would be subject to a less favourable licensing regime, resulting potentially in a competitive disadvantage for them. However, due to the experimental / niche nature of OTT retransmission services, it is questionable whether they are equivalent to retransmissions over “closed” electronic communications networks.

Option 1 would imply a shift from individual licensing to collective management of rights for retransmissions over IPTV and closed networks. Considering that mandatory collective management already applies to cable retransmissions, Option 1 would mainly constitute an incremental change for rightholders. In some MS, the shift to mandatory collective management may limit the rightholders’ ability to determine licensing conditions and fees. The compliance costs would be marginal as the same network of CMOs which is used to license rights to cable retransmissions could be used (and actually is already used in some MS) to license rights to retransmissions by means other than cable.

As regards individual rightholders, Option 1 would have no direct impact on the licensing revenues of those individual rightholders whose retransmission rights are already managed by CMOs as a result of national law or practical arrangements by the market players (voluntary collective licensing). In particular, when collective management is a standard practice in the music sector (for authors’ rights and, often, producers’ rights), Option 1 is not expected to lead to a change in licence fees and, consequently, licensing revenues.

Option 1 may have an impact on the licensing revenues of the individual rightholders (e.g. AV producers) whose retransmission rights are not currently managed by CMOs and this impact may differ depending on the relative size of the right holder and his capacity to manage a network of licensing deals with numerous foreign retransmission service providers.

On the one hand, a relatively big right holder (e.g. a major US film studio, a large record label) with resources to manage numerous licensing deals might be able to earn more from direct licensing of retransmission rights to retransmission service providers compared to the revenues stemming from the mandatory collective management. Such rightholders may prefer to retain control over licence fees and other licence terms.

Due to the confidentiality of information concerning specific licence fees it is not possible to draw concrete conclusions regarding the extent of a change between individual licensing and collective management in licensing revenues. On the other hand, a relatively small right holder (e.g. AV script writer) might not be getting revenue from the retransmission rights at all and, therefore, would benefit from the introduction of mandatory collective management. Despite these benefits, especially for smaller rightholders, most of rightholders who responded to the public consultation indicate that they are against this option due to the potential disruptive effect on the markets.

As regards CMOs, Option 1 would have a positive impact on them (e.g. on CMOs representing AV producers for the purpose of cable retransmission), as it would allow them to grant retransmission licences to and obtain licensing revenue from additional types of retransmission service providers – IPTV, mobile, satellite and DTT. The extent of the impact would depend on the number of licences granted to such providers and the licence fees paid by them, but a positive factor in this respect is that CMOs could extend their licensing activities at a low cost by applying the existing cable licensing arrangements. One-off compliance costs linked to extending these licensing agreements to new retransmission service providers could occur but they are expected to be limited.

Easier copyright clearing mechanism could also result in consumers being able to watch / listen to a greater variety of TV / radio channels from other MS, e.g. those tailored to specific preferences of particular groups of consumers. This, in turn, could lead to more intense competition between different retransmission services and, potentially, lower prices for consumers. Since Option 1 would expand the scope of the mandatory collective management and, therefore, limit the licensing choices of the rightholders, it would have an impact (a limited one, due to its scope of application) on copyright as a property right (Article 17 of the Charter) and on the freedom to conduct a business (Article 16).