European digital market and creative industries: has the right strategy been chosen?

The European Commission has made the creation of a digital market one of its highest priorities. Given that Europe seems to be lagging so far behind the US and probably irretrievably so, this strategy is justified. However, Hervé Rony, Director of SCAM, a civil society organisation of French multimedia authors, examines whether it is the most appropriate strategy.

Not a single internet giant is European. Europe, which has no shortage of assets in terms of research and equipment in the field of digital technology, seems to be incapable of bringing together actors able to compete with companies from across the Atlantic. It has become commonplace for people to denounce the omnipotence of the big American players and their circumvention of European taxation and regulations. But if Europe had succeeded as it did in the past with Airbus, we would not be where we are today.

In any case, the European Commission has decided that regulatory barriers must be removed and that a digital single market, according to EU Commissioner Andrus Ansip, could generate €415 billion and hundreds of thousands of jobs.

In the so-called ‘creative industries’ sector, this is leading to discussion about a legislative ‘package’ comprising both a revision of the Copyright Directive, regulation of on demand media services on the Netflix standard and even regulation to remove ‘geo-blocking’, the geographic blocking of content.

It is not certain that the single market will multiply jobs and wealth creation.

This policy is coming up against resistance from cultural and audiovisual circles. Why? Because the sector relies heavily on protective regulations and proprietary rights-based systems based on national regimes. This is particularly true in France with the existence of powerful support for cinema and books and quotas for the production and distribution of works, etc. and because our belief is that a unified European market will necessarily weaken the regulations and play into the hands of the US multinational corporations.

We are also told that hundreds of thousands of jobs will be created. That is all the better but is there now a realisation that the so-called ‘creative’ sector is one of the very top sectors in terms of employment and growth within the EU? A study commissioned by the European Association of Societies of Authors and Composers (Gesac) from EY (Ernst and Young) at the end of 2016 produced some impressive figures: a turnover of €535.9 million and 7.1 million jobs. And, very importantly, these are jobs that cannot easily be moved. This is even more the case than with cars or telecommunications.

It soon realised that copyright was a barrier to the dissemination of works.

It is not certain that the single market will multiply jobs and wealth creation. Nor is it certain that forced harmonisation makes much sense in a ‘mosaic’’ Europe of 24 national languages, not to mention regional languages. For each language there is a cultural and creative reality …

Does this mean that building a digital single market is pointless? Certainly not. If only because European companies in the sector could benefit from some deregulation and because there are real disparities between member states, particularly in the field of copyright. The Commission’s position is paradoxical. It soon realised that copyright was a barrier to the dissemination of works, even though it is not a particularly serious one. It is the system of commercial exploitation rights linked to territorial exclusivities which really limits the simultaneous and uniform dissemination of works in the member states. Hence the temptation to impose exceptions to copyright. However, the Commission is not supporting harmonisation, necessary as it is, in order to ensure that audiovisual authors (directors, screenwriters of fiction or documentaries) benefit from a right to equitable and non-transferable remuneration for the online exploitation of films on digital platforms.

The creation of a digital market is not illegitimate in itself, but the strategy adopted shows that it is rather a case of deregulating without setting protective rules.

The creation of a digital market is not illegitimate in itself, but the strategy adopted shows that it is rather a case of deregulating without setting protective rules. Is it acceptable for the Commission to propose a quota of only 20% of European works on Netflix platforms? (Of course, the Council has raised it to 30%, but it is far from the 50% of the directive on television without borders dating from 1989!). Is it acceptable that the Commission is not seeking to harmonise copyright mechanisms? And even if, thanks to the willingness of EU Commissioner Margrethe Vestager, the Brussels body seems to be resolving to deal with the tax issue at the right level, it is hard to see in the Commission’s plan anything other than ruthless liberalisation in a sector which needs strong regulation.