The EU Copyright Consultation: The Nightmare before Christmas

The public consultation on the European copyright framework which was launched by the EU right before Christmas has alarmed authors, producers, distributors, exhibitors all over Europe. The efforts regarding the revision and modernization of the copyright affect the territorial rules in the single market, the harmonization, restrictions and exceptions of the copyright in the digital age as well as the fragmentation of the copyright market in the EU.


So far, the flexible European copyright framework ensures that the film industry can offer compelling, competitive and culturally diverse films and services to its consumers. This is going to change when on behalf of the European Commission exclusive rights will be weakened and the film and cinema sector is pressured to establish pan-Europan services.


„All European cinema and audio-visual professionals know that the mere fact that a work is available does not guarantee it an audience“, emphasizes Cécile Despringere, Director of the  Society of Audiovisual Authors (SAA) in France. „Many of them fight on a daily basis to ensure the promotion, visibility, and access to the works to which they have contributed.“


„The European film and cinema sector remains fragmented along cultural and linguistic lines“, underlines the International Union of Cinemas (UNIC)  – which represents 33,000 screens in 29 European countries – in a common statement on the EU copyright consultation. „The film industry, including cinemas, has in the past thrived because it has adapted its business practices and services to the different tastes of European citizens and consumers“, emphasizes the exhibitors association whose members have an annual turnover of around €7,5 billion and more than one billion admissions per year. „The European Copyright Acquis is working and there is no sufficient evidence that reform is required. The current framework in Europe is flexible and constantly evolving. It strikes the right balance between the promotion of property rights, cultural diversity, access to culture and internal market objectives.“


„To change this classical business model could completely undermine the pre-financing of a film which could mean many films are never even made“, warns Jelmer Hofkamp, Secretary General of the International Federation of Film Distributors’ Associations (FIAD) whose members cover the entire range of companies: small and medium-sized companies specialised in art house films, as well as larger companies focused on mainstream films. „We believe that right holders’ contractual freedom and their exclusive right to choose the terms of distribution, meaning also including the territorial scope, are crucial for the industry“, says Jelmer Hofkamp. „Territorial release does not only maximise revenues, it also ensures financing prior to the shooting of the film and it furthermore maximises exposure by keeping in mind local demand, sensitivities and culture.“


FIAD‘s Secretary General finds it hard to imagine how release structures would look like when territorial restrictions are dismissed. „In a heterogeneous market like Europe each territory or locality requires an entirely different approach based on different consumer preferences and complex cultural, historical and linguistic factors. Territoriality is not something which is created by the territorial nature of copyright or licensing systems, it is a reality in the European market which will probably never really disappear.“


The industry and policymakers have to ask themselves what are the benefits for the market. „Will consumers really benefit, or will it just be other big companies reaping the benefits?“ points out Jelmer Hofkamp. „In reality we still see little consumer and commercial demand for such services, which makes you wonder about the real benefits.“ According to him it is not just the ‘market’ which is at stake. „The cultural diversity of Europe is another asset which should be kept in mind when thinking about the advantages and disadvantages.“


Tom Abell, Managing Director of the British distribution company Peccadillo Pictures, describes how this „Nightmare before Christmas“ scenario might turn out: „If there are no longer any territorial restrictions around film distribution then only the major film companies will be able to survive. So theatrical distribution will be left to the studios, and the very largest independent distributors and TV companies who are able to distribute across territories.“ The British art house distributor sees only the slight possibility that some small distributors could try and group together, but then they would not have the power to “force” a trans-European release.


„I think this would be disastrous for the independent sector. Both distribution and production and would severely diminish the diversity of cinematic material available across the member states. The studios and large independents will only distribute films that play to a majority audience, this means that the smaller titles and those that appeal to specific interest groups will cease to be seen in European cinemas“, states Abell. „Specialist cinema will be restricted to festivals only and the general European public will be deprived of virtually everything other than Hollywood material and the biggest UK, French and German films.“


The current situation is that smaller films rely upon making sales to many individual territories, if one distributor is paying for all of Europe then very few of these films will be able to recoup their financing. And even fewer will be seen by audiences. „We like to celebrate the cultural differences that exist within Europe within the films that we distribute, should the territorial restrictions be removed then all of this diversity will be lost“, stresses the distributor. „This will eventually kill the independent distribution sector. Distributors need to be able to control when a film is made available within their territory. How the timing of a release works for one country may not work for another, there are so many variables within a territory that can affect when an independent film is released.“


The independent distributors already suffer substantially from DVD and Blu-ray versions of independent films crossing borders, if individuals are importing and selling on DVD versions of a film that is being distributed theatrically. „The only people who will really benefit are the Studios and large broadcasters like the BBC, ARTE or Canal+, those that really have the resources to release a film across all of Europe“, sums up Abell. „The big disadvantage is that the smaller films will disappear, first they disappear from exhibition and in turn production will be brought to an end. Cinema will become the sole domain of Hollywood and cinematic cultural diversity of Europe will be lost.“


„Each film has its own business model in terms of financing, production, marketing and distribution to audiences“, explains Europa Distribution‘s Co-President Annemie Degryse, General Manager of the Belgian distributor Lumière and CEO of the production outfit Lunanime. „Given the level of financial investment required in film and audiovisual production, marketing and distribution, most European audiovisual entities seek to share, or outsource, the financial risk involved in film production and distribution. This is often done by pre-selling distribution rights by platform, language and/or territory to entities specialised in marketing and distributing audiovisual content in the various exploitation channels and countries. Indeed, in many cases this process takes place even before the actual production/shooting of the film.“


European films often find it difficult to find an audience beyond their national market and therefore require local, specialized marketing and distribution efforts tailored to the specific distribution channel and targeted foreign audience to attract attention. „The current copyright system provides no legal barriers to offering services covering several territories“, accentuates Annemie Degryse. „But many elements other than copyright play a role in the degree of development of online audiovisual services and their availability in different Member States: the territorial and cultural particularities of the present distribution platforms, relevant hardware penetration, broadband infrastructure and speed, taxation, micro-payment facilities, rules on protection of consumers and minors. The degree of availability of illegal content and services also plays an important role in the development of a strong, sustainable audiovisual online offer.“


The existing legal and contractual infrastructure generally allows for authors and performers to be remunerated upfront for their contribution (unlike the producer) and to receive further income streams from forms of secondary or tertiary exploitation. „The establishment of a single remuneration model for authors and performers for future online distribution would fail to acknowledge the need for a broader return on investment necessary to make the audiovisual production, financing and exploitation sector sustainable and to support the very high costs attached to the development, production, marketing and distribution of new audiovisual content“, points out the producer.


„Moreover, the establishment of an EU-level ‚national‘ remuneration right – if subjected to mandatory collective licensing – would create yet a further layer of collective management and administration fees“, analyses Annemie Degryse. „Such a system would serve further to undermine the value of copyright online by fuelling the current misconception that copyright is a mere right to remuneration, leaving the weight of the film production pre-financing responsibilities on the ‚classic‘ distribution channels.“


“Above all, the belief that copyright is the obstacle to consumers accessing works online is a major misunderstanding of the role of copyright compared to the financing and distribution aspects in the audiovisual sector”, concludes Cécile Despringere.


“If the competitive driven approach for multi-territorial licensing in Europe will be followed through without considering the language areas and the territorial specifics of film distribution, either the value of a film licence would decrease, or the licences would have to cover the whole-European market with the result that the prize of the licenses would clearly increase”,  summarizes Johannes Kreile,  Entertainment Laywer and Deputy Managing Director of German Producers Alliance. “This would come along with a concentration on few media players in Europe which is not in the interest of the cultural diversity.”


by Birgit Heidsiek


The copyright consultation process is still open until March 5, 2014