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

Mandatory collective management of rights to retransmission of TV / radio broadcasts by means of any retransmission services, irrespective of the retransmission technology or network used, as long as they are provided to a defined number of users (subscribers, registered users)

Option 2 would enhance the level of legal certainty for the benefit of a wide range of retransmission services – IPTV, OTT, satellite, DTT, mobile – and can be expected to both (i) contribute to a greater variety of such services and (ii) provide an incentive to the retransmission service providers to expand the range of TV / radio channels offered to their subscribers.

This option is expected to reduce the transaction costs linked to the clearance of retransmission rights in the same way as Option 1. Option 2 would benefit different types of retransmission services but could be seen as creating a competitive distortion between OTT services, depending on their business models (OTT retransmission services which do not have subscribers or registered users and rely on advertising would not benefit from the facilitation of rights clearance).

The effects of the wider scope of Option 2 compared to Option 1 (OTT retransmission services covered) are difficult to assess due to the experimental / niche nature of those retransmission services. However, Option 2 may negatively affect rightholders that rely on individual or voluntary collective management of their rights and for which it is important to control the online retransmission of their content (notably, but not only, the AV industry). As explained in Option 1, big rightholders may prefer to retain control over licence fees and other licence terms. Given the importance, the experimental/niche nature of the OTT market and its potential large scale, the preference for control over the licensing of rights to OTT retransmission is stronger than in the case of retransmissions over “closed” networks.

The OTT retransmission services are by their very nature not firmly linked to a particular territory, and their ability to ensure a controlled environment is limited if compared e.g. to cable or IPTV (which are normally limited to national or regional territories). Also, content delivered over the open internet can be more easily intercepted than content delivered over “closed” networks such as IPTV. Finally, as such services are not linked to any particular infrastructure, their number can potentially be very high.

As Option 2 would extend to a wide variety of retransmission services (notably OTT) it could pose a risk that rightholders would not always be able to choose the optimum business strategies in order to obtain the return on investment made. This risk is especially relevant for retransmissions via OTT services. In particular, the same content could be made available in a territory at the same time through different services, as a result of right holder’s exclusive distribution deals as well as retransmission of foreign TV channels (for example, a premium TV series being available at the same time through a Subscription VoD (SVoD) service and through an online service retransmitting foreign channels).

This in principle is not different from Option 1 but the impact of such cases could be much greater given the cross-border nature of OTT services, their potential big scale (as they are not linked to any particular infrastructure), the fact that they have a more limited ability to ensure that consumers from other territories will not be able to access the service and the fact that OTT services are more prone to illegal interception.

This could reduce the value of exclusive distribution deals based on different windows of exploitation and undermine the territory-by-territory distribution strategies. Due to the possible overlap between different windows (pay TV, VoD, SVoD and free TV) rightholders may become reluctant to license their content for the free window, since such content could be retransmitted online in other MS through mandatory collective management.

As regards CMOs, Option 2 is likely to 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 a wider range and greater number of retransmission service providers (at a low cost – by applying the cable licensing arrangements).

Just as Option 1, this option is expected to contribute to more intense competition between different retransmission services and a greater choice of TV / radio channels from other MS and hence, potentially, to lower prices for consumers. However, the risk of overlap between different windows of exploitation mentioned above may result in less premium content being available through free-to-air TV.

Since Option 2 would expand the scope of the mandatory collective management and, therefore, limit the licensing choices of the rightholders, it would have a significant impact on copyright as a property right (Article 17 of the Charter) and on the freedom to conduct a business (Article 16). However, Option 2 could have a positive impact on the freedom of information (Article 11 of the Charter) depending on the willingness of rightholders to license their content for the free window.

Option 1 is the preferred option, as it would enhance the availability of different retransmission services and TV / radio broadcasts from other MS, while limiting the impacts on rightholders. By contrast, the baseline option would not allow reaching the objectives identified in this IA and Option 2 entails risks for rightholders in terms of distribution strategies and licensing revenues, which may affect the availability of content for consumers.