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SWD IA on EU copyright modernisation – Impacts of option 2 on availability of EU AV on VOD

Stakeholders’ dialogue (Option 1) + Obligation for Member States to establish a negotiation mechanism to overcome obstacles to the availability of audiovisual works on VoD

The negotiation mechanism would exclusively address copyright-related issues and would complement measures provided for in the AVMS Directive review for the promotion of European works. The negotiation mechanism would address individual cases of lack of availability and complements the general approach pursued by the stakeholder dialogue.

Due to the specific nature of the European AV market (mainly composed of small and medium film producers and a number of small VoD platforms operating at national level), Option 2 would particularly benefit European stakeholders, as the difficulties in the acquisition of the necessary rights are more acute in their case. The intervention of an impartial instance is likely to facilitate negotiations in general and, as regards negotiations with major producers and VoD platforms, contribute to equilibrate their bargaining power.

Under Option 2, the rightholders’ business model based on exclusivity deals and release windows would not be affected. However, online exploitation of a work could be discussed in the framework of the negotiation mechanism. Since the negotiation mechanism would work on a voluntary basis, this would prevent possible abusive demands from VoD platforms and aggregators. This negotiation body could also benefit rightholders.

The intervention of an impartial instance/moderator could facilitate discussions and help finding solutions. The moderator could help unblocking the situation by providing objective and professional input. He could also submit proposals. More generally, the moderator would help rationalise discussions. The obligation of negotiation in good faith would also play a role. In view of the voluntary basis and the necessity to negotiate in good faith, parties would refrain from entering into negotiations unless there is a strong will to reach an agreement. This also means that the negotiation mechanism would not provide a solution to all cases and obviously will not lead to more availability of all films.

The participation in the negotiation mechanism may entail some limited costs for rightholders and distributors (depending on how MS decide to finance operational costs). These costs may however be offset by the efficiency gains deriving from the negotiation mechanism (it is expected to speed up the negotiation process and therefore reduce transaction costs) and by the possible additional licensing revenues linked to the exploitation of online rights. The negotiation mechanism could also contribute to develop more efficient licensing practices in the long term.

This option is likely to have a positive impact on the possibility for VoD platforms and aggregators to overcome obstacles linked to exclusivity rights and exploitation rights, release windows and clearance of rights. The obligation to negotiate in good faith would prevent any obstruction from rightholders (or other stakeholders). The experience gained from the negotiation mechanism could be reused in other negotiations.

Since the negotiation mechanism would entail some costs (i.e. costs linked to the involvement of parties negotiating), it would mainly be used in cases where there is a common will to make the works available online but where negotiations are difficult. This negotiation mechanism is likely to be used to unblock the rights to a catalogue of works or to facilitate contractual collaboration between parties. In view of the voluntary basis of the mechanism, the positive impact on VoD platforms and aggregators would materialise where rightholders are willing to negotiate.

The operating costs linked to the functioning of the negotiation mechanism would vary depending on the structure of the negotiation body, on the choices made by each MS on whether these costs should be born – partially or totally – by the parties resorting to the negotiation mechanism and on the number of cases submitted. The limited scope of the negotiation mechanism (aimed at addressing individual blockages), the voluntary nature of the process and the necessity to negotiate in good faith would limit the number of cases and make sure that the mechanism is used by stakeholders only where there is a strong will to reach an agreement.

Option 2 scenario would not have any impact on the property right or on the freedom to conduct a business since the participation in the negotiation mechanism would be on a voluntary basis.

Option 2 is the preferred option, as it would allow reaching the objective of improving the availability of EU audiovisual works on VoD platforms. Under this option, solutions to both collective and individual cases are envisaged. The stakeholders’ dialogue, if successful, could lead to the adoption of some contractual standards that could benefit all stakeholders in the AV sector. This would have a positive impact on the licensing process. In contrast, Option 1 would not address these individual situations and would therefore be less effective. Option 2 allows reaching the policy objective in a proportionate manner, focusing on facilitating contacts and negotiations between stakeholders without interfering with their contractual freedom.