Europe Expected to Ban Geo-Blocking of Content, Keep Windowing

The film industry may have dodged a bullet on the EU's plans to create a single digital market.

On Wednesday, May 6, the European Commission will unveil its proposals for a so-called single digital market — an attempt to harmonize laws across all 28 member states of the European Union to create a common market for digital goods and services.

This will involve changing aspects of Europe's copyright laws in ways that, the film industry has argued, could do serious damage.

The industry will have to wait until next week for the final version of the Commission's plans, but it appears the final proposals could be better than many in the industry had feared.

Speaking before members of the European Parliament this week, the EU's digital commissioner, Andrus Ansip, said the bloc has no plans to abolish practices that form the foundation of European film financing.

These include territorial licensing — selling the rights to a film in various territories on an exclusive basis — and windowing — the system whereby a movie is released in stages on different platforms, first in cinemas, then DVD, VOD and finally on television. Ansip said the proposals for a digital single market would still allow film producers to use territorial licensing to pre-finance movies and that the current windowing system would not be affected.

Territorial licensing is the cornerstone of film financing in Europe and forms the basis for the financing of many U.S. indie films as well. A European digital single market that got rid of this system would, according to Stan McCoy, the Motion Picture Association’s president and managing director for Europe, the Middle East and Africa, be a "threat to millions of jobs and billions in revenue."

Commissioner Ansip, however, reiterated that he still wants to end geo-blocking — the technical restriction by which online content purchased in one country cannot be viewed in another. Ansip also repeated his insistence that a film or other digital product legally purchased in one EU member country should, in principle, also be available to those in other EU countries. Ansip argues that under the current geo-blocked system, European creators lose out because their content can often not be legally accessed outside their home country. Commission data shows that, of all the video on demand content in the EU, less than 4 percent is available outside its country of origin. Only 15 percent of European consumers bought goods and services online from another EU country last year, compared to 44 percent who did so domestically.

"I would like to ask for cross-border access to the content and portability of the content, but it does not mean that we are wanting to destroy this principle of territoriality," Ansip told Parliament. "It does not mean that after this reform there will only be pan-European licenses. If, for example, in a smaller member state, film producers are expecting that the interest to buy those rights of the films is only in the neighboring member states, this will be acceptable. There is no need to sell pan-European licenses, no need to buy pan-European licenses."

That may assuage the fears of independent producers, who have warned that a move to pan-European licenses would undermine their business and only benefit larger global players, such as Netflix and Google.

In fact the stated goal of the new legislation is to strengthen European companies so they can take on the Silicon Valley giants that increasingly dominate the digital space. Aside from changes to copyright law and geo-blocking, the proposals will include plans to harmonize taxes, contract law and consumer protection for cross-border online activity.

This will include cross-border enforcement of online piracy, at least in the case of commercial scale piracy operations, something film producers will welcome.

Google & Co. will also have their eye on proposals for corporate taxation on online activity in the EU, which would tax profits where they are generated.

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