Clock Ticking Down for European Digital Single Market

Filmmakers, in Europe and Hollywood, fear legislation set to pass this year could destroy the foundations of independent film financing.

With the chaos resulting from this week's British election, the ongoing uncertainty over Brexit and the daily eruptions out of the Trump White House, news from the European Union on its plans for a digital single market (DSM) has slipped out of the headlines.

But proposals to create a pan-European market for digital goods — everything from online shopping and car rentals to the digital distribution of films and TV series — could have a greater, and if critics are to be believed, a much more damaging impact on Europe's film industry than the hardest of hard Brexits.

Plans by the European Commission to create a true single market for digital goods in Europe have been bubbling under the surface for two years now, but they're quickly gaining momentum. This week, the European Parliament's Internal Market Committee voted on its final amendments to the Commission's DSM proposals, which will overhaul online copyright law and could dismantle the foundations of independent film financing in Europe. Further committees will make their last tweaks to the legislation this summer before the EU's legal affairs committee has the final say in September. After that, the proposals could become law across Europe within six months, though many aspects of the broad-ranging legislation will take longer to implement.

The European film industry has displayed a common front against the DSM plans, saying the legislation will undermine the very business models indie film relies on.

In Cannes this year, a joint group of industry heavyweights, including Hollywood’s MPAA, global producers body the FIAPF and the Independent Film and Television Association (IFTA) issued a joint statement opposing the DSM.

Of particular concern is the principle of territoriality, the idea that producers and rights holders can sign agreements with companies in different European countries to give them exclusive local rights to a film or TV series.

Territoriality is currently the basis of indie film financing — both for European productions and many U.S. indies who bankroll their features by preselling European rights on a country-by-country basis. But the DSM could scrap that by making it harder to enforce local exclusive agreements.

One of the key proposals, which the European Parliament approved last month, would ban geo-blocking, the procedure by which an online service is restricted to one European country alone and cannot be accessed outside it. In practice, this will mean online catch-up services like the BBC's iPlayer, as well as pay offerings like Sky, will be available across Europe. In a speech to European distributors at last year's CineEurope conference, MPAA head Chris Dodd warned such a move “means less investment and, in turn, far fewer productions” out of Europe.

Indeed, a report last year from U.K. consultants Oxera and Oliver & Ohlbaum, backed by industry players including 21st Century Fox, Sky and British broadcaster ITV, found that the DSM could cost EU producers up to €8.2 billion ($9.1 billion) a year and could lead to a slump in investment, with up to 48 percent less content produced, for both film and TV.

“We have already established the importance of territoriality, which is the cornerstone of our business,” said Johannes Rexin, a German producer whose credits include the 2010 Berlin Festival winner Bal, Lars von Trier's Antichrist and Margarethe von Trotta's biopic Hannah Arendt. Together with filmmakers across the continent, Rexin is pushing for creative works to be excluded from the European Commission's proposals and that “the principle of territoriality” be maintained.

It's a call that's been echoed across the industry. On Thursday, the Society of Audiovisual Authors (SAA), which represents screenwriters across Europe, called the DSM proposals “a massive disappointment for European screenwriters and directors. ...The supporters of European creators in the European Parliament now need to make sure that they work together to ensure that copyright in the digital single market doesn’t leave audiovisual authors behind.”

So far, however, this opposition has not led to major changes in the European Commission's proposals. It remains to be seen whether the growing cry from the continent's creative industries will turn the tide. Time, even at the glacial pace the European Union operates, is running out.

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