Euroopa Komisjonipoolt 14.09.2016 avaldatud autoriõiguse reformipakett

Council of the European Union Brussels, 16 September 2016 (OR. en) 12281/16 PI 102 COMPET 492 TELECOM 172 ESPACE 40 AUDIO 100 CULT 81 COVER NOTE From: Secretary-General of the European Commission, signed by Mr Jordi AYET PUIGARNAU, Director date of receipt: 14 September 2016 To: Mr Jeppe TRANHOLM-MIKKELSEN, Secretary-General of the Council of the European Union No. Cion doc.: SWD(2016) 308 final Subject: COMMISSION STAFF WORKING DOCUMENT EVALUATION of the Council Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission. Delegations will find attached document SWD(2016) 308 final. Encl.: SWD(2016) 308 final 12281/16 LK/np DGG 3B EN  EUROPEAN COMMISSION Brussels, 14.9.2016 SWD(2016) 308 final COMMISSION STAFF WORKING DOCUMENT EVALUATION of the Council Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission. {SWD(2016) 309} EN EN SECTION 1 – INTRODUCTION 1.1. Purpose of the evaluation This Staff Working Document (SWD) provides the results of the retrospective evaluation of the Satellite and Cable Directive (Directive 93/83/EC, hereinafter "the Directive"). The retrospective evaluation was carried out in preparation of the EU copyright modernisation initiative set out in the Digital Single Market Strategy for Europe 1 (Commission Communication of 6 May 2015, COM(2015) 192) and the Commission Communication "Towards a modern, more European copyright framework" 2 (9 December 2015, COM(2015) 626). In particular, the evaluation contributes to the evidence-base for a decision whether and to what extent the legal mechanisms similar to the ones established by the Directive could be used in the envisaged EU copyright modernisation measures. The evaluation does not arise from an obligation of the Directive but is an initiative under REFIT, the Commission's Regulatory Fitness and Performance programme. REFIT provides an evidence-based critical analysis of whether EU actions are proportionate to their objectives and delivering as expected. 1.2. Scope of the evaluation The evaluation covered all the core provisions of the Directive establishing, respectively, the "country of origin" principle for satellite broadcasting and the two-stop-shop copyright clearing mechanism for cable retransmission (individual licensing by broadcasters combined with mandatory collective management of all other - "underlying" - rights). In accordance with the better regulation guidelines, the evaluation covered the provisions mentioned above from the point of view of effectiveness, efficiency, relevance, coherence and EU added value. The effectiveness and efficiency of the negotiation and mediation mechanisms - linked to the cable retransmission in the Directive - were evaluated separately, in line with the different function envisaged for such mechanisms in the plans for the EU copyright modernisation initiative. In particular, the assessment was made whether the EU action is still relevant in this area, whether it is coherent with other EU actions, whether the Directive provided clear added value as compared to an action taken at the Member States level as well as whether the application of the Directive mechanisms resulted in any specific costs. As regards effectiveness, the evaluation considered both whether / to what extent the Directive has facilitated clearing copyright for the service providers concerned (satellite broadcasters, cable 1 "[…] ensuring cross-border access to legally purchased online services while respecting the value of rights in the audiovisual sector" 2 "[…] enhancing cross-border distribution of television and radio programmes online in the light of the results of the review of the Satellite and Cable Directive Supporting right holders and distributors to reach agreement on licences that allow for cross-border access to content, including catering for cross-border requests from other Member States, for the benefit of both European citizens and stakeholders in the audiovisual chain. In this context, the role of mediation, or similar alternative dispute resolution mechanisms, to help the granting of such licences, will be considered" 1 operators) and whether / to what extent it has facilitated consumer cross-border access to broadcasting services in the EU / the cross-border distribution of such services. The evaluation focused on the period after 2002 (the year of the latest Commission's implementation report) and considered, in particular, the way technological developments in that period (especially Internet and digital distribution of TV and radio broadcasts) has affected the functioning of the Directive. The evaluation covered the whole EU, although some information / data gathering actions covered a more limited sample of the Member States. SECTION 2 – THE SATELLITE AND CABLE DIRECTIVE 2.1. Description of the initiative and its objectives The intervention logic, setting out the rationale and approach for the operation of the Directive is given in Figure 1. This includes its general and specific objectives, the activities and inputs required to achieve these objectives, and the outputs, results and impacts that should be achieved through their implementation. By first understanding how the legislation is intended to work, the evaluation can more clearly assess what has happened in practice. 2  Figure 1 – the intervention logic Needs General objectives Activities - overcome - eliminate copyright-related - establishing licensing copyright-related barriers to the provision of facilitation mechanisms at obstacles to free broadcasting services across the EU level movement of Europe - Member States services (broadcasts) - a harmonised legislation transposing the mechanisms - end fragmentation ensuring the same high level into national laws of rules/unequal level of protection of rightholders - Member States of protection in the across the EU putting in place mediation Member States Specific objectives arrangements concerning cross- For satellite broadcasting: - market players border distribution of - end the legal uncertainty familiarising themselves TV and radio regarding the rights to be with the new regulatory programmes acquired situation and taking it into - resolve if right - improve access to TV and account when entering into holders' consent is radio programmes from other new licensing deals required in the Member States (including in some cases by country of broadcast For cable retransmission: amending existing or in each of the - help cable operators to clear agreements) countries of reception the retransmission rights - enable cable from every rightholder operators to clear involved in a TV or radio multiple TV or radio programme Outputs retransmission rights - improve access to TV and For satellite broadcasting: for broadcasts from radio broadcasts from other - the country of origin other Member States Member States principle - an exclusive satellite broadcasting right for authors For cable retransmission: - mandatory collective management system for cross-border cable Impacts Results retransmission rights For satellite broadcasting: For satellite - mediation mechanism - increased access to TV broadcasting: and radio programmes - increased legal from other Member States certainty For cable retransmission: - easier clearance of - increased access to TV rights for satellite External factors and radio broadcasts from transmission - market and technological other Member States For cable developments retransmission: - consumer demand - increased legal - licensing practices in the certainty audiovisual sector / - improved system for territoriality the clearance of all - encryption mechanisms to necessary rights avoid access to programmes from non-targeted countries - other EU policies: media, e- commerce, competition 3 In summary, the intervention has involved: (i) the EU establishing, in the Directive, licensing facilitation mechanisms for, respectively, satellite broadcasting and cable retransmission; (ii) the Member States transposing the provisions of the Directive into national laws; (iii) the Member States putting in place mediation arrangements for the potential disputes concerning cable retransmission; (iv) the market players familiarising themselves with the new regulatory situation and taking it into account when entering into new licensing deals (including, in some cases, by amending existing agreements. Problems / needs Concerning satellite broadcasting, the legal uncertainty regarding the rights to be acquired was the main issue at the time discussions on facilitating licensing for satellite broadcasting started: "due to its technical characteristics, a satellite broadcast covers the territories of several states (its “footprint”). It was controversial whether the right holders’ consent was required in the state of broadcast or in each of the states of reception.[…]" 3 Indeed, "in some Member States courts had determined that a satellite broadcast is a restricted act in all States within the footprint of the satellite, meaning that right holders in one Member State would be able to block a satellite broadcast intended for the whole of Europe." 4 Concerning cable retransmission, the difficulty to clear numerous rights in a very short time frame - "structural problem of rights management" 5 - was the main issue: "[…] the primary broadcasters determine the timing and the content of the programmes and it was derived from this circumstance that they had sufficient time to acquire the right holders’ consent on an individual basis.[…] By contrast, it was impossible for a cable operator to acquire the rights in the same way, on an individual basis." 6 Taking into account that each retransmitted channel delivers numerous programmes composed of a multitude of copyright-protected works, that a typical cable TV service offers multiple channels, that the cable operator has no control over the use of works in particular channels and no time to obtain licences for those works, the potential copyright clearing burden for cable operators was important. This structural problem did not concern the rights held by broadcasters themselves, since it was not too complicated for the cable operators to deal with a relatively limited number of easily identifiable broadcasting organisations (only those the channels of which the cable operator was planning to retransmit). In addition, the Directive aimed at solving the “outsider problem”: "in many Member States, collective agreements were concluded to deal with the cable retransmissions of broadcast programmes (even before the adoption of the directive). However, the cable operators still faced the uncertainty of “outsiders”, i.e. right holders who are not affiliated to and therefore not represented by the contracting collecting societies and who therefore still have the 3 Study on the application of Directive 2001/29/EC on copyright and related rights in the information society (the "Infosoc Directive"), De Wolf & Partners, p. 59 http://ec.europa.eu/internal_market/copyright/docs/studies/131216_study_en.pdf 4 T. Dreier, P.B. Hugenholtz, "Concise European Copyright Law", p. 263 5 P. Bernt Hugenholtz "SatCab Revisited: The Past, Present and Future of the Satellite and Cable Directive", IRIS plus 2009-8, p. 13 6 Study on the application of Directive 2001/29/EC on copyright and related rights in the information society (the "Infosoc Directive"), De Wolf & Partners, p. 206-207 4 possibility of claiming remuneration or blocking the exploitation by an action for injunction.[…]" 7 Finally, it was considered that the conclusion of contracts regarding the authorisation of cable retransmissions (negotiation, renegotiation) could pose a problem. Those problems were especially affecting the cable operators retransmitting TV / radio broadcasts from other Member States, since clearing rights with "domestic" right holders is generally considered to be easier than with "foreign" ones. The objectives pursued, activities and outputs As regards the objectives of the intervention, the main purpose of the Directive was to tackle copyright-related obstacles to cross-border transmission and retransmission of TV and radio broadcasts by, respectively, satellite and cable. "The Directive is based on two core principles: • In order to prevent the European satellite market from being fragmented 8, it established at Union level a right for communication to the public by satellite 9 and defined that the act of communication to the public by satellite occurs only in the country of origin of a satellite transmission. According to the “country of origin principle”, rights only need to be cleared for the country of origin of the broadcast and not for the countries where the signals are received. Thus in order to broadcast in other Member States only a licence in the country of origin of the satellite broadcast is needed; • The second principle introduced by the Directive is a system of mandatory collective management of cross-border cable retransmission rights. Under the Directive's rules, rights-holders, such as film producers and screen-writers, cannot exercise their cable retransmission rights individually vis-à-vis cable operators. Cable rights may be exercised only by collecting societies that represent individual rights-holders, except for the rights held by broadcasting organisations. The system aims to facilitate licensing of cable retransmissions and to avoid 'black-outs' (or 'black holes') in retransmitted broadcasts". 10 As regards the activities and outputs of the satellite broadcasting part of the intervention, the Directive (i) defined the communication to the public by satellite as “the act of introducing, under the control and responsibility of the broadcasting organization, the programme- carrying signals intended for reception by the public into an uninterrupted chain of communication leading to the satellite and down towards the earth” 11; and (ii) determined the location where such protected act takes place. It occurs “solely in the Member State where, under the control and responsibility of the broadcasting organization, the programme- carrying signals are introduced into an uninterrupted chain of communication leading to the 7 Idem, p. 207 8 And to avoid the cumulative application of several national laws to one single act of broadcasting (Recital 14 of the Directive) 9 A legal novelty at the time, see Prof. P. Bernt Hugenholtz "SatCab Revisited: The Past, Present and Future of the Satellite and Cable Directive", IRIS plus 2009-8, p. 9 10 The survey and data gathering to support the evaluation of the Satellite and Cable Directive and assessment of its possible extension (the "SatCab Study"), Section 4.2.2 11 Article 1(2)(a) of the Directive 5 satellite and down towards the earth” 12. If, however, it takes place outside the EU, alternative criteria are provided to attach it to a Member State (i.e. the uplink station in a Member State or the establishment of the broadcaster in a Member State). 13 According to the Directive, "the footprint of the broadcast is taken into account for the calculation of the remuneration, but the broadcaster is not required to secure the right holders’ authorisation in each Member State of the footprint. […] The effects of “territoriality” are thus mitigated: the satellite broadcasting takes place in one country of origin, although it has effects beyond the Member State of origin. The Member States cannot define other “relevant acts” and consider these act part of the satellite broadcasting right, thus giving the author the possibility to exercise her right (in addition to the country of origin)." 14 As regards the activities and outputs of the cable retransmission part of the intervention, "the Directive was meant to address the problem of the clearing of rights for cable retransmissions (as described above), in a uniform way (at least for retransmissions coming from another Member State), i.e. by means of a mandatory collective management of this right. By consequence, the central exercise of these rights by one or more collecting society was proposed, “in order to prevent rights in individual programme components from standing in the way of the cable retransmission operation as a whole”. 15 The Directive has also aimed at solving the problem of outsiders, i.e. right holders who have not transferred the management of their rights to a collecting society: according to Article 9(2) of the Directive, the collecting society which manages rights of the same category is in such a situation deemed to be mandated by such a right holder. The Directive addressed the different situation of the broadcasting organisations by obliging the Member States to ensure that "Article 9 [mandatory collective management of rights] does not apply to the rights exercised by a broadcasting organisation in respect of its own transmission, irrespective of whether the rights concerned are its own or have been transferred to it by other copyright owners and/or holders of related rights." 16 The solution adopted in the Directive introducing negotiation and mediation mechanisms "aims at facilitating contracts […] by shaping a system of impartial mediators." 17 Below is a short overview of the provisions of the Directive concerning satellite broadcasting and cable retransmission: • Right of communication to the public by satellite: Article 2 requires Member States to establish an exclusive right for the author to authorise the communication to the public by satellite of copyright-protected works. • Country-of-origin principle: Article 1(2) establishes that the copyright relevant act (communication to the public by satellite) takes place "solely in the Member State 12 Article 1(2)(b) of the Directive 13 Article 1(2)(d) of the Directive 14 Study on the application of Directive 2001/29/EC on copyright and related rights in the information society (the "Infosoc Directive"), De Wolf & Partners, p. 59-61 15 Study on the application of Directive 2001/29/EC on copyright and related rights in the information society (the "Infosoc Directive"), De Wolf & Partners, p. 207 16 Article 10 of the Directive 17 Study on the application of Directive 2001/29/EC on copyright and related rights in the information society (the "Infosoc Directive"), De Wolf & Partners, p. 207 6  where, under the control and responsibility of the broadcasting organisation, the programme-carrying signals are introduced into an uninterrupted chain of communication leading to the satellite and down towards the earth". • The Directive indicates that the country of origin principle does not affect contractual freedom (Recital 16) and makes it possible "to continue limiting the exploitation of these rights, especially as far as certain technical means of transmission or certain language versions are concerned". • The Directive points to the necessity to ensure that creators and producers of programmes obtain a fair remuneration and indicates (Recital 17) that in determining the licence fee for the right of communication to the public "the parties should take account of all aspects of the broadcast such as the actual audience, the potential audience and the language version". • Definition of “cable retransmission”: Article 1 defines “cable retransmission” as “the simultaneous, unaltered and unabridged retransmission by a cable or microwave system for reception by the public of an initial transmission from another Member State, by wire or over the air, including that by satellite, of television or radio programmes intended for reception by the public”. • Cable retransmission right: Article 8 requires Member States to ensure that when programmes from other Member States are retransmitted by cable in their territory, such retransmissions take place on the basis of individual or collective contractual agreements between copyright owners, holders of related rights and cable operators. • Mandatory collective management of rights: Article 9 requires Member States to ensure that cable retransmission rights may be exercised only through a collecting society. • Management of the rights of non-members: Article 9 establishes the principle that collecting societies shall be deemed to be mandated to manage the rights of right holders who have not transferred the management of their rights to the collecting society, as long as the society manages the rights of the same category. • Exercise of the rights of broadcasting organisations: Article 10 exempts broadcasting organisations from the provisions of Article 9 in respect of their own transmissions, irrespective of whether the rights concerned are their own or have been transferred to them by other right holders. 2.2. Baseline Situation prior to the Directive Prior to the adoption of the Directive, "broadcasting" was typically understood as transmission of TV / radio channels over terrestrial networks using dedicated parts of radio spectrum, and "retransmission of broadcasts" referred to cable retransmission: "When the broadcasting right was first adopted, radio and television programmes were transmitted by Hertzian waves. Cable operators could distribute these programmes by capturing this broadcast Hertzian signal by means of an antenna and introducing these signals in their cable networks in order to bring the radio or television programmes to the connected radio or television sets. At that time it was clear that a “broadcast” was a wireless 7 transmission to a public and that other communications to the public (by cable) were not “broadcasts”." 18 Broadcasts were already subject to certain international rules 19. When broadcasting by satellite transmission became widespread, the question of the qualification of such act under copyright law was raised. A distinction was usually made between direct satellites and communication satellites. • Direct satellites. The market players were facing legal uncertainty: whether copyright was affected only in the country of origin of broadcast or also in all countries of reception of the satellite signal. While clearing rights for satellite transmissions broadcasters were trying to reduce the extent of such legal uncertainty by obtaining the required rights also for those countries of reception where cable retransmission was envisaged. However, the legal uncertainty still persisted: given wide satellite footprints, there would inevitably be countries for which copyright has not been cleared, and right holders in such countries of reception could take legal action to stop satellite broadcasting in its entirety. • Communication satellites. In general, broadcasting of programs via communication satellites was not considered relevant from the copyright point of view, since content was not usually made accessible to the public. The acquisition of rights was only relevant in the Member States where it was considered a copyright-relevant act 20: in France and Spain, where a 'droit d'injection' (a right concerning the beaming of protected works to a communication satellite) was provided for in national law, clearance of copyright was facilitated by a legal presumption (it was presumed that a broadcaster having the rights to broadcast a work territorially had also acquired the rights for satellite broadcasting). In the United Kingdom, it was necessary to acquire the rights for broadcasting via a communication satellite. As regards cable retransmission, a distinction was usually made between (i) terrestrially broadcast programs and (ii) programs broadcast by satellite. • Terrestrially broadcast programs. Contracts with the main right holders were concluded to ensure clearance of rights. There were two problems with this system: (i) the negotiations might not achieve the result in time and (ii) the 'outsider problem' (i.e. the fact that cable operators had no guarantee that a (smaller) right holder who is not party to the contract will not claim individually the right to authorise the retransmission). To address them, in particular the 'outsider problem', some Member States (e.g. Denmark and Austria) introduced statutory licences. Some other countries (e.g. Norway, Sweden and Finland) had excluded individual claims by extending the application of contracts to outsiders. 18 Study on the application of Directive 2001/29/EC on copyright and related rights in the information society (the "Infosoc Directive"), De Wolf & Partners, p. 200. 19 Article 11bis(1)(i) of the Berne Convention already provided for that authors shall benefit from the exclusive right to authorise "the broadcasting of their works or the communication thereof to the public by any other means of wireless diffusion of signs, sounds or images". It was generally considered that this principle applied to satellite broadcasting. 20 In practice, where a broadcaster was acquiring the rights for the subsequent retransmission by cable the contracts often also included provisions entitling the broadcaster to transmit the works via a communication satellite. 8  • Programs broadcast by satellite. Cable retransmission rights were usually acquired (aggregated) by satellite broadcasters from other right holders. Even though this mechanism benefited cable operators, it did not protect them against claims from individual outsiders (operators were still liable under copyright law for their retransmission acts). Some countries developed solutions: Denmark had introduced a statutory licence for cable retransmission of direct satellite broadcasts. In the UK, cable operators were exempted from copyright claims filed by holders of retransmission rights, except for broadcasters. 21 SECTION 3 – EVALUATION QUESTIONS The questions that will be further examined in Section 6 are the following: • Effectiveness: o To what extent has the SatCab Directive (COO principle) facilitated the clearance of copyright and related rights for cross-border satellite broadcasts, contributed to ensuring the legal certainty for satellite broadcasters and improved access to TV and radio programmes from other Member States? o To what extent has the SatCab Directive (notably, mandatory collective management) facilitated the clearance of copyright and related rights for the simultaneous retransmissions by cable of broadcasts from other Member States while ensuring a high level of protection for right holders and to what extent it has improved access to TV and radio broadcasts from other Member States? o Have the negotiation and mediation mechanisms established under the SatCab Directive contributed to promoting the acquisition of rights? • Efficiency: Has the application of i) the country of origin principle, ii) the mandatory collective management and iii) the mediation and negotiation mechanisms resulted in any specific costs and benefits? • Relevance: How well do the original objectives still correspond to the needs (including of EU citizens) within the EU? • Coherence: Is this action coherent with other EU actions? • EU added value: Did EU action provide added value as compared to an action taken at the Member State level? SECTION 4 – METHOD The evaluation process was assisted by a Steering Group chaired by the Secretariat-General and composed of the representatives of selected Directorates General (DGs) including COMP, TRADE, GROW, JUST, EAC, RTD, JRC, ECFIN, SANTE, ENV, EMPL, EPSC, ESTAT and the Legal Service. The Group steered and monitored the progress of the exercise, ensuring the necessary quality, impartiality and usefulness of the evaluation. The evaluation took place between August 2015 and June 2016 and drew from the data sources and methods described below. The following information / data gathering actions were undertaken during the evaluation period: 21 For more information on the situation prior to the Directive please see the November 1990 discussion paper "Broadcasting and Copyright in the Internal Market", http://aei.pitt.edu/1331/1/copyright_broadcast_work_paper_1990.pdf 9 1. The survey and data gathering to support the evaluation of the Satellite and Cable Directive and assessment of its possible extension was commissioned by the Commission to EFECTIV consortium in November 2015 (referred to in this SWD as the "SatCab Study"). The terms of reference ("ToR") of this SatCab Study were designed to avoid duplication with the previous De Wolf & Partners Study on the application of Directive 2001/29/EC on copyright and related rights in the information society (the "Infosoc Directive") and defined the purpose of the Study as follows: i. to assess the relevance of the provisions contained in the Satellite and Cable Directive aimed at facilitating cross-border access to broadcasting services in the current environment (thus feeding in the ongoing Commission's evaluation of the Directive) and the need for review/extension of these provisions to new technological means; ii. to assess the appropriateness of extending the scope of some or all provisions of the Directive to broadcasters’ online transmissions and to online services other than broadcasters’ online transmissions; and iii. to gather facts and figures to help the above assessment. The SatCab Study focussed on the sample of 11 EU Member States: Denmark, Germany, Ireland, Spain, France, Italy, Hungary, Netherlands, Poland, Sweden and United Kingdom. It relied on a combination of sources and methods, including desk research, collection of relevant market data, advice from industry experts, interviews with and structured questionnaires addressed to market players and competent authorities of the Member States. 2. A questionnaire was sent to all Member States to gather details about the transposition and application of the Directive in national law / legal orders. The Commission asked for the indication of the particular provisions that transposed the satellite and cable regimes as well as the mediation and negotiation mechanisms. The Commission also enquired about national case law concerning the Directive and, specifically, about provisions / case law applying to retransmission services other than cable as well as new transmission practices (such as direct injection, internet etc.). The results of this information gathering exercise are presented in Annexes 1 and 2. 3. Finally, in accordance with the Better Regulation Guidelines, a 12 week on-line public consultation was undertaken on the EU Survey website from 24 August 2015 until 16 November 2015 using a questionnaire based on the five criteria and questions of the mandate. The questionnaire was available in 3 EU languages and attracted 256 responses. An initial summary report of the findings was published in December 2015, and the full report of the public consultation was published in May 2016 22. The other (pre-existing) information / data sources that supported the evaluation include: • The previous (2002) Report on the application of the Satellite and Cable Directive (the "2002 Report") 23. 22 https://ec.europa.eu/digital-single-market/en/news/full-report-public-consultation-review-eu-satellite-and- cable-directive 23 Report from the European Commission on the application of Council Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite 10 Its objective was to analyse the transposition into national law and to examine the practical application of the Directive. In particular, the Report indicated that both the provisions relating to satellite broadcasting and the provisions relating to cable retransmission had been correctly transposed in all Member States. It also noted that "generally speaking, it appears that the mechanisms put in place by the Directive contribute to the cross-border broadcasting of television programmes", while recognising that "a trend is […] emerging whereby producers sell their programmes to broadcasting organisations on condition that satellite transmissions are encrypted so as to ensure that they cannot be received beyond national borders". In addition, the Report analysed the evolution of television services, but concluded that a review of the Directive was pre-mature at that stage: "ongoing technological developments (including digital television and the Internet) will generate a manifold increase in the possibilities and arrangements for the cross-border provision of audiovisual services. The audiovisual services that will be offered in the near future will lead to changes in viewers' habits through providing them with more individualised and personalised access to these services. It is too early, however, to gauge the content and impact of these changes and, hence, to determine at this stage whether it is necessary to extend the scope of Directive 93/83/EEC". • The Commission's Green Paper of July 2011 on the online distribution of audiovisual works 24. It included questions on the extension of the right clearance regimes laid down in the Directive to the online distribution of audiovisual works 25. • The broad public consultation on the review of the EU copyright rules of December 2013 26. It included questions on the territorial scope of the rights involved in digital transmissions and the segmentation of the market through licensing agreements. Some questions specifically addressed the problems related to the provision of and access to online services across borders. • The 2013 Study on the application of Directive 2001/29/EC on copyright and related rights in the information society prepared by De Wolf & Partners 27. This study addressed, among other things, the content and elements of the Directive. Concerning the satellite regime, the study included a section on the "making available right" and its links to the Directive, in particular the implementation of the country of origin principle together with the territoriality of copyright. The study also contained a detailed section on the cable retransmission regime, describing the provisions of the Directive, broadcasting and cable retransmission, COM/2002/0430 final http://ec.europa.eu/internal_market/copyright/satellite-cable/index_en.htm 24 COM(2011)427final http://ec.europa.eu/internal_market/consultations/docs/2011/audiovisual/green_paper_COM2011_427_en.p df 25 The Satellite and Cable Directive concerns not only audiovisual works but all works protected by copyright and all related subject matter protected by neighbouring rights. It also applies to satellite radio broadcasting. 26 Consultation document: http://ec.europa.eu/internal_market/consultations/2013/copyright- rules/docs/consultation-document_en.pdf; Report on the responses to this public consultation: http://ec.europa.eu/internal_market/consultations/2013/copyright-rules/docs/contributions/consultation- report_en.pdf 27 http://ec.europa.eu/internal_market/copyright/docs/studies/131216_study_en.pdf 11 analysing the definition of the cable retransmission right / its constitutive elements and verifying how the cable retransmission regime had been applied by the national courts. • The publications and data from the European Audiovisual Observatory, notably the MAVISE database 28 and IRIS plus 2009-8 "Convergence, Copyrights and Transfrontier Television" 29. Limitations – robustness of findings The intervention provided by the Directive has a particular character: it puts in place tools for easier clearing of copyright, but does not oblige the market players to achieve any particular result in terms of cross-border transmission / retransmission of TV and radio broadcasts. Moreover, the tools provided build on and/or continue to leave the scope for the market practices that pre-dated the Directive (contractual limitations regarding the exploitation of rights in the case of satellite broadcasting, and licensing by broadcasters of their own rights as well as the underlying rights aggregated from other right holders in the case of cable retransmission). This character, combined with important technological and market developments that have taken place since the adoption of the Directive but independently from it, make it difficult to detect clear causal links between the intervention and the evolving reality. Significant differences between the Member States, both in legal and economic terms, have further complicated drawing clear conclusions. Moreover, despite the extensive information / data gathering exercise, it was difficult to obtain quantitative data. Specifically, the contractors in charge of the SatCab Study obtained limited quantitative data regarding licensing practices and very limited data regarding revenues obtained from different licensing practices. It was also not possible to obtain quantitative data concerning the potential costs and benefits generated by the application of the Directive. This is mainly due to these factors: (i) the confidentiality of such data; (ii) the difficulty to extract data concerning the Directive from wider data sets; (iii) the fact that the Directive has been in place for a long time. Due to the budgetary and timing constraints, certain information / data gathering actions, notably the SatCab Study, covered only a sample of Member States. There are inherent limitations in the findings of the public consultation. Firstly, as in all surveys, the answers received reflect the views of a sample of relevant stakeholders and not those of the entire population who has a stake in this domain. Secondly, stakeholders' views convey an individual rather than a holistic perspective. Finally, since the Directive does not provide for monitoring arrangements (other than a report by the Commission), the evaluation lacked evidence covering in a systematic and comprehensive manner the whole period of its application. Based on the elements above, this evaluation has been carried out on the basis of the best available data. Whenever reliable quantitative data is lacking, this is indicated as appropriate and counter balanced with qualitative analysis and considerations. 28 http://mavise.obs.coe.int/ 29 IRIS plus 2009-8, Convergence, Copyrights and Transfrontier Television (Susanne Nikoltchev (Ed.), European Audiovisual Observatory, Strasbourg 2009): http://merlin.obs.coe.int/iris/2009/8/article1000.en.html 12 SECTION 5 – IMPLEMENTATION STATE OF PLAY (RESULTS) According to Article 14(2) of the Directive, Member States were required to transpose the Directive at national level before 1 January 1995 30. In 2002, in accordance with Article 14(3) of the Directive, the Commission carried out a review to assess whether the objectives of the Directive had been achieved (the "2002 Report"). 31 The 2002 Report "revealed that the rules of the Directive were generally satisfactory implemented in the then 15 Member States. The provisions relating to satellite broadcasting in the transfer of copyright and related rights were correctly transposed into all national legislations (i.e. Articles 2 and 3 of the Directive). The opportunity to extend the collective agreement to rights-holders of the same category not included in the membership of collective management organisations was only incorporated in the national law of those Member States where this procedure was already established. Similarly, the provisions related to cable retransmissions (Articles 8, 9 and 10) concerning payments in respect of cable retransmissions rights were correctly transposed in all the Member States except Germany, where the part related to alternative negotiations between collecting societies and cable operators was defined as considerably weak. Finally, the provisions relating to the principles of mediation and good faith were correctly transposed at national level." 32 Since then, 13 countries have joined the EU. All 28 Member States have introduced rules having as their objective the transposition of the Directive. A table detailing the national transposition laws, together with the relevant national case law from different Member States, is presented in Annex 1 33. As regards infringements, the Commission received a number of complaints regarding in particular the mandatory collective management mechanism set out in the Directive for the cable retransmission of broadcasts. One infringement procedure was launched against Denmark, based on the additional conditions imposed by the Danish law on the collective management organisations as regards exercising the cable retransmissions rights of the right holders. The law in question required these organisations to represent a significant number of national right holders. Denmark removed this condition from the law, and the case was closed in 2001. An on-going infringement procedure against Poland concerns potential non- compliance of Polish law with Article 10 of the Directive: contrary to the provisions of that Article, no exemption from mandatory collective management seems to be provided for rights held by broadcasting organisations. The Directive appears to have been properly transposed in all the EU Member States subject to the ongoing infringement and is generating relatively few legal disputes. 30 11 Member States were late to transpose the Directive into national law and communicate their transposition measures. 31 Report from the European Commission on the application of Council Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, COM/2002/0430 final. 32 SatCab Study, Section 4.2.3 33 This Annex is based on the questionnaire sent to all Member States to gather details about the transposition and application of the Directive in national law / legal orders. 13 SECTION 6 – EX-POST EVALUATION OF THE SATELLITE AND CABLE DIRECTIVE 6.1. Effectiveness 6.1.1. To what extent has the SatCab Directive (COO principle) facilitated the clearance of copyright and related rights for cross-border satellite broadcasts, contributed to ensuring the legal certainty for satellite broadcasters and improved access to TV and radio programmes from other Member States? As explained above, in order to avoid the cumulative application of several national laws to one single act of broadcasting, the Directive: (a) introduced a harmonised exclusive right to authorise satellite transmissions of broadcasts (this right was later subsumed by Article 3 of Directive 2001/29/EC on copyright and related rights in the information society - the "Infosoc Directive"); (b) introduced a principle according to which the copyright and related rights relevant act of communication to the public by satellite occurs solely in the Member State from which the programme-carrying signals originate (and the right holders’ consent should be acquired for this Member State). Once transposed into national laws (and following the expiry of the transitional period that lasted until 1 January 2000 for agreements remaining in force beyond the transposition deadline - 1 January 1995), these provisions started to apply without the need for any additional action on the part of Member States or the relevant stakeholders (right holders, satellite broadcasters). They, therefore, almost immediately delivered on the Directive's objectives to facilitate the clearance of copyright and enhance the legal certainty for satellite broadcasters. The research undertaken in the context of the SatCab Study confirmed that the Directive has largely achieved the objective of eliminating copyright-related barriers to cross-border satellite broadcasts. The stakeholders interviewed in the context of the study agreed that there were no particular barriers to clearing such rights. This has been achieved through the mechanism provided by the Directive by which broadcasters can acquire any underlying rights that have not been assigned to them by producers or by other rights-holders during the process of creating an audio-visual product. The Directive has also provided legal certainty for those rights that broadcasters acquire from producers and other underlying rights-holders. Finally, the Directive has confirmed that broadcasters and rights-holders have the freedom, subject to the application of Union law, to determine the territories that are covered by satellite communications. Results of the public consultation The results of the public consultation tend to indicate that the Directive has achieved its objective of facilitating the clearance of rights for satellite broadcasting. Overall, about half of the respondents considered that the existing provisions facilitated the clearance of rights at least to some extent. Very limited evidence of problems in application of the Directive – e.g. regarding the establishment of the place of transmission or calculation of the remuneration on the basis of the footprint of the satellite broadcast – was provided. A number of stakeholders also believed that it contributed to increased access by consumers to satellite services. 14 The synopsis report on the results of the public consultation provides an overview of the positions expressed by the different types of stakeholders: - A significant part of consumers and their representatives raised that the current provisions of the Directive do not sufficiently ensure access to content available in other Member States. Some consumers underlined that these problems concern not only premium content (such as sports and films) but also other content, for instance cultural programmes. - The majority of Member States' public authorities considered that the country of origin principle facilitated the clearance of rights. Some of them, however, underlined that the practical application of this principle is limited for audiovisual 34. - The majority of right holders did not consider that the application of the country of origin principle facilitates the clearance of rights. Right holders indicated that multi- territorial licences were available and that therefore there are no problems with acquiring them. In their view, cross-border offerings of content are limited because of insufficient consumer demand, language barriers as well as commercial choices of service providers. Certain right holders, in particular film/AV producers, argued that the application of the country of origin principle diminishes the scope of their rights because it limits their freedom to license the rights as they see fit. - A significant proportion of collective management organisations (CMOs) considered that the application of the principle of country of origin has not facilitated copyright clearance. - The vast majority of broadcasters considered that the country of origin principle has facilitated the clearance of rights at least to some extent. Also, they generally considered that this principle increased consumers' cross-border access to satellite broadcasting services. A number of commercial broadcasters submitted that there are obstacles to cross-border access which are not related to copyright. Similarly to right holders, they mentioned insufficient consumers' demand and language barriers. - Other service providers (internet service providers (ISPs), internet protocol television (IPTV) operators, digital terrestrial television (DTT) providers, cable operators, telecommunication network operators and video on demand (VOD) operators) did not have much experience with the practical application of the country of origin principle. Yet, the majority of them considered that it has facilitated the right clearance and cross- border access by consumers. Moreover, the feedback collected during the public consultation shows that setting licence fees for satellite transmissions available under the country of origin principle across borders has not caused any substantial practical problems (only some respondents pointed to 34 As broadcasters use geo-blocking techniques to reinforce territorial distribution of broadcasts by satellite, especially for audiovisual productions and sports content 15 difficulties with measuring the audience). In addition, the results of the public consultation confirmed the absence of concrete substantial risk that broadcasters would relocate their place of establishment due to the ease of clearing copyright (broadcasters are generally established in the country where their main audience is located and rely on infrastructures which cannot be easily relocated). Concerning the Directive's objective to improve access to TV and radio programmes from other Member States, as explained above, the Directive has not affected the freedom to agree on limitations regarding the exploitation of rights to satellite broadcasting 35. In the 2002 Report the Commission stated that “[c]omplete application of the principle of the Directive, which involves moving beyond a purely national territorial approach, should […] be encouraged in order to allow the internal market to be a genuine market without internal frontiers for rightholders, operators and viewers alike.” Indeed, "Broadcasters […] perceive that most value is in the distribution on a territorial basis and acquire rights only for the specific territories that they wish to target. Encryption is then widely used to prevent the reception of satellite services outside the target market. In addition, technological advances are improving the ability to target satellite signals on a specific territory, meaning that the extent of spill-over is reducing." 36 "While satellite services could potentially all be offered on a multinational basis, the analysis suggests that in practice there are relatively few pan-European services. With the exception of services such as some news and sports channels, the majority of satellite services are aimed at specific geographic markets." 37 Nevertheless, satellite channels relying on the country of origin principle for the purpose of licensing, notably non-encrypted channels, continue to be provided to European consumers: 35 It should be noted that in its 4 October 2011 judgement in Joined Cases C403/08 and C429/08, Football Association Premier League Ltd v QC Leisure (C-403/08); Karen Murphy v Media Protection Services Ltd (C-429/08) the Court of Justice of the EU considered, among other things, that the obligations on the broadcasters not to supply decoding devices for use outside the territories covered by the licence agreements (absolute territorial exclusivity clauses) constituted prohibited restrictions on competition under Article 101(1) TFEU which cannot be justified by Article 101(3) TFEU. 36 SatCab Study, Section 6.1 37 SatCab Study, Section 2.1.3 16 Free to view satellite channels available in 11 sample EU countries 2015 38 Viewing TV Channels Public or mixed Originating from other country ownership Member States Denmark 3 2 2 Germany 124 39 7 Ireland 2 2 2 Spain 22 15 3 France 7 2 3 Italy 110 14 3 Hungary 8 5 2 Netherlands 16 13 2 Poland 22 6 3 Sweden 5 2 2 United Kingdom 144 36 2 TOTAL 463 136 34 Source: European Audiovisual Observatory MAVISE database informitv analysis Despite a limited amount of evidence, there are indications that overall the Directive (COO principle) has facilitated the clearance of copyright and related rights for cross-border satellite broadcasts and contributed to ensuring the legal certainty for satellite broadcasters, notably those operating in a particular satellite broadcasting market segment – free to view satellite TV / radio (that does not include encrypted and territorially limited satellite pay-TV / radio services). For all these free to view transmissions broadcasters need to obtain rights only for the Member State of origin. As such, it can be considered that the Directive contributed to improved access to TV and radio programmes from other Member States to a limited but tangible extent. 6.1.2. To what extent has the SatCab Directive (notably, mandatory collective management) facilitated the clearance of copyright and related rights for the simultaneous retransmissions by cable of broadcasts from other Member States while ensuring a high level of protection for right holders and to what extent it has improved access to TV and radio broadcasts from other Member States? As explained above, the Directive provided for the two-stop-shop copyright clearing mechanism for cable retransmission: individual licensing by broadcasters combined with mandatory collective management of all other - "underlying" - rights. As regards the Directive's objective to facilitate the clearance of copyright for cable retransmission while ensuring a high level of protection for right holders, the SatCab Study explains that the Directive has largely achieved its aim of eliminating copyright-related barriers to cross-border retransmissions via cable. According to the stakeholders interviewed in the context of the study, the combined application of individual licensing by broadcasters and mandatory collective management resulted in a well-functioning system for the clearance of rights: “Some broadcasters acquire most rights from producers and/or other rights-holders and then make use of Article 10 to assign rights for retransmission to cable operators in other countries. Broadcasters welcome the contractual freedom that they are allowed under Article 38 SatCab Study, Section 2.3.2 17 10, as well as the right to retain control over their channels and thus determine where and by whom those channels are retransmitted. For those rights that are not directly cleared by the broadcaster, mostly music rights but also rights of audio-visual authors and producers, cable operators are able to make use of mandatory collective management under Article 9. Cable operators welcome the opportunity to clear rights collectively and in their own country, rather than on an individual basis with rights-holders in other countries." 39 For certain collective management organisations licensing cable retransmission rights is a primary activity. In particular, this is the case for organisations belonging to AGICOA (the Association for the International Collective Management of Audiovisual Works), an international, not-for-profit organisation representing, collecting and distributing royalties to independent producers of audiovisual works. For certain other organisations it is an important activity. For instance, as reported by SAA (Society of Audiovisual Authors), "in many European countries, cable retransmission royalties represent more than 40% of the collections of audiovisual authors’ CMOs (Austria, Croatia, Czech Republic, Estonia, Finland, Hungary, Portugal, Romania, Slovakia, Slovenia, the Netherlands and the UK). In these countries, cable retransmission royalties are the authors’ main revenue generated from the use of their works, in particular from foreign countries." 40 In contrast, retransmission revenue represents a small proportion of annual income of collective management organisations representing music producers (it appears that, at least in some Member States, cable retransmission revenue is slightly higher than e.g. IPTV retransmission revenue): 41 Member State Cable IPTV OTT (Mandatory (Voluntary (Voluntary Collective Collective Collective Licensing) Licensing) Licensing) ES 3.6% 5.6% (Mandatory and N/A voluntary licensing) HU 3.2% N/A N/A IE 2.1% 0.15% N/A IT N/A 0.03% 0.22% NL 5.4% (This includes N/A cable and IPTV) PL 3.2% N/A N/A UK 0.009% N/A N/A The SatCab Study examined the possible impacts of mandatory collective management on right holders, in terms of management of rights and licensing revenues, explaining that this impact strongly depends on the capacity of a right holder to conclude licensing deals with cable operators: " an individual rights-holder that is well-established in the market place and supported by appropriate legal expertise could independently reach an agreement with users that may surpass the revenue potential of the collective approach and take into account broader strategic considerations to generating revenues from transferring certain rights to specific users. However, stakeholder feedback suggests that many authors and performers are 39 SatCab Study, Section 6.3 40 SAA contribution to the public consultation 41 SatCab Study, Section 5.3 18 not in this position and this was suggested to cover a large segment of this business population in terms of the number of operators." 42 As regards the Directive's objective to improve access to TV and radio broadcasts from other Member States, the available market data points to a significant number of TV channels retransmitted by cable in different EU Member States 43: Comparison of international, national or regional channels available on cable services versus channels established in 11 sample EU countries 2015 Channels established in country Viewing country DK DE IE ES FR IT HU NL PL SE UK Denmark 44 17 2 11 3 11 2 46 96 Germany 316 3 32 10 1 7 6 51 Ireland 26 13 5 436 Spain 1 201 28 1 1 1 33 France 34 10 352 14 24 6 2 90 Italy 7 2 23 348 2 2 44 Hungary 14 2 35 2 44 10 1 139 Netherlands 65 2 45 2 165 2 94 Poland 11 34 12 16 122 114 Sweden 3 3 1 18 3 2 11 2 127 134 United Kingdom 5 1 14 1 10 617 Source: European Audiovisual Observatory MAVISE database extract informitv analysis Results of the public consultation The results of the public consultation confirm that the Directive has largely achieved its objectives as far as cable retransmission is concerned. The majority of respondents considered that the Directive has facilitated the clearance of rights for the simultaneous retransmission by cable of programmes broadcast from other Member States and has helped consumers to have more access to broadcasting services across borders. The synopsis report on the results of the public consultation provides an overview of the positions expressed by the different types of stakeholders: - The few consumers who replied to the questions related to cable retransmission expressed a rather negative view on the effectiveness of the current provisions and the degree to which they increased consumers' access to broadcasting services. Some of them stressed the existence of gaps in the offer of channels on cable networks. - Member States / public authorities considered that the Directive has facilitated the clearance of rights for cable retransmission and has helped increasing consumers' access to broadcasting services across the EU. Some, however, underlined that sometimes it is not clear which rights are managed by collective management organisations and which are managed by broadcasters. 42 SatCab Study, Section 5.2.7 43 SatCab Study, Section 2.3.7 19 - The majority of right holders did not think that the current cable retransmission rules have either facilitated the clearance of rights or have resulted in greater consumers' access to broadcasting services across the EU. Phonogram producers, music publishers and audiovisual producers considered that they are adversely affected by these rules, because they cannot issue licences on fair market terms. Some right holders highlighted the limited consumer demand for cross-border access to audiovisual content services or the limited business demand for foreign TV channels or multi-territorial licences. Respondents representing authors and performers had a much more positive view. - The vast majority of collective management organisations (CMOs) considered that the Directive has facilitated the clearance of rights and has helped increasing consumers' access to broadcasting services across the EU. - Similarly, a clear majority of broadcasters evaluated positively the current provisions and their role in ensuring consumers' access to broadcasting services across the EU. This is especially the case for public service broadcasters. However, some commercial broadcasters pointed to the scope for double payments in case CMOs assert their rights to license all rights irrespective whether they have been transferred to broadcasters or not. - Finally, the majority of other service providers (including cable operators) also considered that the Directive has facilitated the clearance of rights and has helped increasing consumers' access to broadcasting services across the EU. Still, according to some of them, it is not always clear which rights are managed by CMOs and which by broadcasters. Despite a limited amount of evidence, the Directive (notably, mandatory collective management) can be considered to have largely facilitated the clearance of copyright and related rights for the simultaneous retransmissions by cable of broadcasts from other Member States. While some stakeholders prefer individual licensing over collective management, the Directive has, overall, ensured a high level of protection for right holders. It has also improved access to TV and radio broadcasts from other Member States for consumers. 6.1.3. Have the negotiation and mediation mechanisms established under the SatCab Directive contributed to promoting the acquisition of rights? The Member States have put in place different negotiation facilitation / mediation mechanisms (Member States typically rely on generic mechanisms - not dedicated to the Directive only - or "light" approaches, such as drawing a list of potential mediators), and they have been used to a varying, but overall limited, degree in practice. A table detailing arrangements for / experience with those mechanisms in different Member States is presented in Annex 2 44. Results of the public consultation According to the results of the public consultation, the Directive has partially achieved its objectives as far as negotiation and mediation mechanisms are concerned. 44 This Annex is based on the questionnaire sent to all Member States to gather details about the transposition and application of the Directive in national law / legal orders. 20 Right holders and most of collective management organisations (CMOs), broadcasters and other service providers such as ISPs, IPTVs, DTTs and telecom operators indicated that the mechanism has not been used or has been used only occasionally. These respondents listed as the main reasons for this situation the fact that the negotiations usually bring expected results and hence there is no need to resort to mediation, the non-existence of the appropriate mediation mechanism or alternatively the inefficiency of the existing system. On the latter, the respondents pointed to time-consuming procedures, deficiencies as to the confidentiality of the process, high costs involved and the fact that the results of mediation are not binding for the parties. On the other hand, occasional use of the mechanism and the overall positive role played by the mechanism was reported by cable operators and a limited number of CMOs. Despite a very limited practical relevance of the mechanism, some CMOs, broadcasters and IPTV operators support its application but complemented and reinforced e.g. by a firm timeframe to ensure efficient process. The negotiation and mediation mechanisms established under the Directive have been used to a varying, but overall limited, degree. Nevertheless, they are perceived to have played a positive role in the few cases where they have been used. 6.2. Efficiency Has the application of i) the country of origin principle, ii) the mandatory collective management and iii) the mediation and negotiation mechanisms resulted in any specific costs and benefits? 6.2.1 Direct costs The Directive has not imposed any charges on the market players. As regards administrative costs, the Directive does not provide for any market monitoring arrangements or reporting obligations to be fulfilled by the Member States (except for communicating to the Commission national transposition measures) or the market players. Nevertheless, since the application of the country of origin principle involves calculating the licence fee on the basis of the actual and potential audience, both in the Member State of broadcast and in any Member State of reception, satellite broadcasters have to collect such audience information when they make their broadcasts available in multiple Member States. The data collected in the context of this evaluation does not allow to determine the administrative costs resulting from such information collection. As regards substantive compliance costs, in the business-as-usual scenario the licensing relationships (the subject matter targeted by the Directive) typically involve transaction costs (costs required to reach a deal) for both the licensor (right holder) and the licensee (satellite broadcaster, cable operator), licence fees paid by the licensee to the licensor as well as fees charged to individual right holders by collective management organisations. As explained above, once transposed into national laws (and following the expiry of the transitional period that lasted until 1 January 2000 for agreements remaining in force beyond the transposition deadline - 1 January 1995), the provisions of the Directive establishing the country of origin principle started to apply without the need for any additional action on the part of Member States or the relevant stakeholders (right holders, satellite broadcasters). They 21 could have involved limited one-off costs stemming from the need for the market players to familiarise themselves with the new regulatory situation, but have not led to any other (recurrent) substantive compliance costs. The results 45 of the public consultation showed that a majority of stakeholders consider that the application of these provisions of the Directive has not resulted in specific costs. In particular, Member States and public authorities, public and commercial broadcasters, and phonogram producers agree that the application of the country of origin principle to the satellite broadcasting has ensured legal certainty and therefore has reduced costs. Some CMOs signalled costs (from legal and political perspective, but not administrative), and some AV producers referred to an increase in administrative costs. Finally some CMOs and cable operators consider that the uncertainty in the application of the principle led to an increase in legal costs and management time. The substantive compliance costs stemming from the provisions of the Directive establishing mandatory collective management consisted (potentially) of (i) costs associated with setting up collective management organisations to license cable retransmission rights and (ii) fees paid by individual right holders to CMOs for their collection/distribution services. As regards the first category, a network of CMOs (and cable licensing arrangements) was largely already in place by the time the Directive has started to apply. As regards the second category, such fees usually represent a small part of the licensing revenue collected (e.g. AGICOA network of CMOs - one of the main licensing entities as far as cable retransmission is concerned - charged 5% in 2015 46). Most of stakeholders (Member States and public authorities, public and commercial broadcasters, CMOs) that replied to the public consultation considered that the mandatory collective management has not resulted in specific costs. No substantive compliance costs are generated by the provisions of the Directive on the mediation and negotiation mechanisms, since the parties to the cable retransmission licensing relationship have a possibility (but are not obliged) to call upon the assistance of mediators. Most of stakeholders (Member States and public authorities, public and commercial broadcasters, CMOs) that replied to the public consultation considered that these mechanisms (as part of the mandatory collective management regime) have not resulted in specific costs. However a few reported that the costs (fees paid for the mediation) were one of the reasons why the mechanisms were not used. As regards the implementation and enforcement costs, a Member State setting up a mediation mechanism dedicated to the disputes arising in the field of application of the Directive might incur both one-off (CAPEX) costs and recurrent (OPEX) costs. These potential costs depend on the precise nature of the mechanism. For instance, the operating costs of the French cinema mediator (le Mediateur du cinema 47) amounted to €217.526 euros in 2014. 48 CMOs that 45 Stakeholders were asked specific questions on whether in their view the country of origin principle and the application of the system of management of cable retransmissions had resulted in any specific costs. They were asked to further explain their (positive) replies. Despite this fact, we were not able to obtain quantitative data concerning costs. 46 http://www.agicoa.org/english/about/factsandfigures.html 47 http://www.lemediateurducinema.fr 48 Source: 2014 Activity Report, February 2015. http://www.lemediateurducinema.fr/Mediateur/Includes/Pdf/rapport_2014.pdf 22 operate alternative dispute resolution mechanisms report that the costs of setting them up would be in the range of €35.000, and the operating costs - in the range of €11.000 per year. However, as explained above, Member States typically rely on generic mechanisms (not dedicated to the Directive only) or "light" approaches (such as drawing a list of potential mediators). Therefore, in reality these costs are likely to be limited. 6.2.2 Indirect costs In the public consultation some stakeholders referred to possible negative impacts on the market functioning of both the country of origin principle (claiming that it could undermine the territory-by-territory content distribution strategies) and mandatory collective management (claiming that it does not allow for the licensing of cable retransmission rights on fair market terms). However no evidence or data were provided to support those claims. The data collected in the context of this evaluation does not allow drawing firm conclusions in this regard. Nevertheless, concerning the country of origin principle, the Directive left open the possibility for contractual limitations regarding the exploitation of rights to satellite broadcasting, thereby preserving right holders' freedom to choose audiovisual production- distribution strategies. Concerning mandatory collective management, the EU has recently taken action to improve the functioning of CMOs, notably by adopting Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market 49 which, among other, introduces rules on governance and transparency of CMOs. 6.2.3 Benefits The main (recurrent) direct regulatory benefit of the Directive has been cost savings for the licensors and the licensees: where different entities are managing the same (e.g. music) rights in different territories, the effect of the Directive was to require a single licence in the country of origin instead of (potentially) multiple licences for the country of origin and the countries of reception falling within the satellite's footprint. Licence fees were not to be affected, as they have to be calculated taking into account the actual and potential audience, both in the Member State of broadcast and in any Member State of reception. Illustration of the benefits of the country of origin principle for TV broadcasters 50 Two of the six pay TV service providers with the most subscribers are cross-border operators (albeit with the majority of their subscribers in the country of origin), namely Sky UK and Sky Deutschland (see Table 2.29). Another example, Modern Times Group serves its audiences almost entirely via cross-border broadcasts: whilst its signal is uploaded in the UK, this signal is only available to audiences in other countries, i.e. in the Baltics and Scandinavia. Illustration of the benefits of the country of origin principle for radio broadcasters 51 The “country of origin” principle is key to enable remuneration by radios of rightholders in an appropriate manner. Radios are SMEs and therefore need as simple as possible licensing means to be able to clear all the required rights. Ideally, radio needs to obtain blanket licensing covering all of radios’ activities online and offline from one-stop-shops. This seems only feasible if a “country-of-origin” principle is applied. 49 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014L0026 50 SatCab Study, Section 6.1 51 AER contribution to the public consultation 23 Similarly, the impact of the provisions on mandatory collective management of cable retransmission rights is that individual right holders (e.g. audiovisual producers) need only to join a CMO instead of managing multiple contracts with cable operators from different Member States, and cable operators only need one licence for a category of right holders from a CMO in their country of operation instead of multiple licences from individual right holders based in different Member States. Change from individual licensing to collective management of rights can have an effect on licence fees and licensing revenue (rather positive for small right holders 52, rather negative for big right holders), but the evidence collected in the context of this evaluation is scarce and inconclusive 53. Illustration of the benefits of the cable licensing regime 54 Virgin Media (previously UPC Ireland) is retransmitting by cable the TV channels of UK broadcaster ITV in Ireland. Virgin Media receives the feed of an ITV channel from an English region. This feed includes the underlying rights for Ireland. Those rights are negotiated in a collective agreement between ITV, Virgin and the respective collective management organisations. As the licensee, Virgin Media pays all these parties, including ITV. Despite a limited amount of evidence, the Directive can be considered to have been a cost- efficient and beneficial intervention. It has not created administrative burden or significant compliance / implementation costs for either stakeholders or Member States. The Directive has helped to reduce the transaction costs for the licensors and the licensees. Certain identified specific costs resulting from the application of the Directive (CMO fees charged for managing cable retransmission rights) can be regarded to be outweighed by benefits - savings in transaction costs. Some right holders referred to the Directive's possible negative impacts on the market functioning. However, they are not estimated to be significant in the case of the country of origin principle, since the Directive has left open the possibility for contractual limitations regarding the exploitation of rights to satellite broadcasting; and, in the case of mandatory management of cable retransmission rights, since individuals or SMEs, the category to which most right holders belong, due to their limited capacity to carry out multiple individual negotiations, are generally considered to be the main beneficiaries of this copyright clearing approach. 6.3. Relevance How well do the original objectives still correspond to the needs (including of EU citizens) within the EU? Satellite broadcasting As far as direct satellite broadcasting is concerned (i.e. when a broadcasting organisation introduces signal into the uninterrupted chain of communication), without the country of origin principle there would be uncertainty as to whether a satellite broadcast is a restricted act in all Member States within the footprint of the satellite (in the sense that an authorisation from right holders in each Member State could be required for cross-border satellite 52 According to Eurostat Structural Business Statistics, in the sector of programming and broadcasting activities, 98.9% of companies are SMEs (85% micro-companies) generating 17.9% of the value added. In the sector of film and music production, 99.9% of companies are SMEs (96% micro-companies) generating 85% of the value added (32% by micro-companies). 53 SatCab Study, Sections 5.2.7 and 5.3 54 SatCab Study, Section 5.2.4 24 transmissions). This issue remains relevant for those broadcasting organisations which engage in 'cross-border' broadcasting, i.e. direct broadcasting from one Member State to another as otherwise the same uncertainty as to the need to clear rights in the Member State of transmission or the Member State of reception would continue. It is not relevant for those organisations that offer satellite packages as these are essentially national. As indicated in the SatCab Study: "the majority of all satellite channels that are available in Europe are encrypted pay-television channels. 64% of the television channels available on the main SES and Eutelsat satellites are pay channels […] available through service providers. In most cases these encrypted pay channels are offered as part of package of channels, some of which may also be available free-to-air. Some encrypted channels may be free to view, as part of a package of channels." 55 In 2009 the European Audiovisual Observatory analysed 56 channels broadcast outside packages on the 37 active satellites centred on Europe and concluded that among 5,500 or so channels broadcast by the same satellites in Europe 1,500 channels 57 were broadcast outside packages. Out of these 1,500 channels, 710 channels were designated as 'European channels' in the sense that either the channel is licensed or the broadcaster is established in Europe. Similarly, the SatCab Study identifies the number of non-encrypted satellite TV channels available in 11 Member States: Free to view satellite channels available in 11 sample EU countries 2015 58 Free to view satellite channels available Viewing TV Channels Public or mixed Originating from other country ownership Member States Denmark 3 2 2 Germany 124 39 7 Ireland 2 2 2 Spain 22 15 3 France 7 2 3 Italy 110 14 3 Hungary 8 5 2 Netherlands 16 13 2 Poland 22 6 3 Sweden 5 2 2 United Kingdom 144 36 2 TOTAL 463 136 34 Source: European Audiovisual Observatory MAVISE database informitv analysis This shows that the provisions of the Directive are relevant for a significant number of channels in Europe. As regards the second specific objective with regard to the satellite broadcasting, i.e. improving access to TV and radio programmes from other Member States, in general, as 55 SatCab Study, Section 2.4.2 56 IRIS plus 2009-8, Convergence, Copyrights and Transfrontier Television (Susanne Nikoltchev (Ed.), European Audiovisual Observatory, Strasbourg 2009). 57 The various language versions of a channel were considered as being different channels 58 SatCab Study, Section 2.3.2 25 already raised in the 2002 Report, the territorial exploitation of satellite broadcasts, a process which had already been present prior to the Directive's adoption, has continued. 59 This is not caused by the territoriality of copyright (as pursuant to the country of origin principle the rights need to be cleared for one country only) but is a consequence of licensing contracts that limit the exploitation of works to the territory of a given Member State. Audiovisual (AV) content is mainly licensed and distributed on a territorial basis. AV producers of premium content 60 typically grant an exclusive licence to a single distributor/broadcaster/service provider in each Member State. This form of licensing is considered by right holders to be important for the financing of European AV works, with rights being often pre-sold at the pre- production stage. In exchange for an upfront payment to the film producers, distributors and/or broadcasters often obtain exclusive exploitation rights in a specific territory for a defined period of time. As a result, TV broadcasters often make their channels available only in the territory of one Member State. As indicated in the below table 61, satellite broadcasting remains an important source of TV and radio programmes for EU citizens: 62 Television homes in thousands by platform in 11 sample EU countries 2015 000s Terrestrial Satellite Cable Telco Country Free Pay Free Pay All Digital Denmark 194 307 45 193 1671 999 460 Germany 1777 14034 2020 17300 6158 2562 Ireland 189 237 707 404 363 57 Spain 11735 231 515 1553 1208 1112 1993 France 9020 1038 4861 6816 3136 1095 11907 Italy 15085 2805 1994 4734 231 Hungary 428 117 119 926 1847 734 512 Netherlands 15 441 15 636 4721 3577 1772 Poland 2764 133 727 6334 4350 2411 326 Sweden 26 560 261 628 2347 794 822 United Kingdom 8333 1860 10227 3770 3770 2422 TOTAL 49566 5632 24668 34774 40754 21013 23064 EU-28 57832 6282 28762 41174 56415 30736 28321 Source: Digital TV Research Digital TV World Databook for free-to-air; European Audiovisual Observatory Yearbook 2015informitv analysis Therefore, the main objectives of the Directive for satellite broadcasting, i.e. (1) end the legal uncertainty regarding the rights to be acquired and (2) improving access to TV and radio programmes from other Member States, have not lost relevance since its adoption. Cable retransmission 59 See Joined Cases C403/08 and C429/08, Football Association Premier League Ltd, v QC Leisure, (C- 403/08); Karen Murphy v Media Protection Services Ltd (C-429/08) and the Commission's Statement of Objections on cross-border provision of pay-TV services available in UK and Ireland at http://europa.eu/rapid/press-release_IP-15-5432_en.htm 60 Audiovisual content (such as films, series) which is considered as a vital input for broadcasting services because it attracts substantial audiences and thus generate substantial revenues for right holders. 61 SatCab Study, Section 2.2.9 62 The adoption of satellite subscriptions is forecast by Digital TV Research to remain relatively flat through to 2020, at around 18% of television homes in the current 28 European Union countries, Section 2.4.1 26 The rationale behind the copyright clearing system provided by the Directive is to ensure that cable operators are in a position to acquire all rights necessary for retransmission of TV and radio channels and that there are no black-outs in the retransmitted channels or programmes. At the time of adoption of the Directive it was considered that individual licensing was impractical in the case of retransmission, while voluntary collective management would not guarantee the absence of black-outs. 63 This rationale continues to be relevant for cable retransmissions today (no alternatives to facilitate licensing for cable operators have emerged in the meantime). Moreover, the objective of improving access to TV and radio broadcasts from other Member States remains relevant, whatever the technique, and therefore also for the retransmissions carried by cable, which remains an important source of TV and radio programmes for EU citizens (see the table above), including for "foreign" TV channels: 177 such channels are available to cable subscribers in Germany, 150 in France, 158 in the Netherlands, 143 in Portugal, 163 in Denmark, 159 in Poland, 168 in Ireland and 232 in Hungary 64. Therefore, the two objectives - (1) to help cable operators to clear the retransmission rights from every right holder involved in a TV or radio programme and (2) to improve access to TV and radio broadcasts from other Member States - remain relevant for retransmissions carried out by cable. How well adapted is the intervention to subsequent technological advances? The main principles of the Directive, i.e. the country of origin for satellite transmissions and the mandatory collective management for cable retransmission are technology-specific. The principle of the country of origin does not apply when a broadcaster clears rights for its online services. For online services offered across borders this potentially implies clearing rights in multiple jurisdictions. The difficulties related to such clearance of rights may reduce broadcaster's incentives to provide cross-border services. The mandatory collective management system is limited to retransmissions by cable and therefore does not extend to retransmissions by other means such as IPTV 65 or OTT 66. This means that, depending on the Member State (as national solutions may exist), providers of retransmission services by means other than cable cannot benefit from the system facilitating the clearance of relevant rights. Such providers therefore face a heavy rights clearing burden in order to be able to provide their services. Since the adoption of the Directive TV and radio, but especially TV, have undergone a digital revolution thanks to the development of broadband internet access that allows the provision of high-quality online video and audio services over the internet. TV is still watched in the traditional manner but the new modes of viewing are increasingly important: 96% of Europeans watch television every day or almost every day, predominantly on a TV set but increasingly online (in 2014, 20% of Europeans – but 40% of those aged 15-24 – watched TV online at least once a week, representing a 3% increase compared to 2012). Analogue TV is 63 The system of mandatory collective management of rights to retransmission of broadcasts is compatible with Article 11bis(2) of the Berne Convention which allows compulsory licences for any communication to the public by wire when this communication is made by an organization other than the original one. 64 Data from the European Audiovisual Observatory 65 Internet protocol television 66 Over-the-top or open Internet television 27 switching to digital 67 and broadcasters are now commonly providing online offerings in addition to their 'traditional' broadcasting services. These offerings include: simulcasting services (TV/radio channels which are transmitted online alongside traditional broadcasting by satellite, cable, terrestrial), webcasting services (online only linear channels 68), TV catch- up services 69 and podcasts, i.e. radio programmes that can be streamed or downloaded as well as other on-demand services (e.g. VOD). Nowadays TV and radio channels reach viewers and listeners through several types of retransmission service providers: cable TV/radio providers, satellite TV/radio (package) providers, IPTV (TV/radio over closed circuit IP-based networks) providers, digital terrestrial TV (DTT) providers and also the emerging over-the-top (OTT) TV/radio service providers. The core business activity of retransmission service providers is to aggregate TV and radio channels into packages (basic, premium, thematic, etc.) and to provide them to consumers simultaneously to their initial transmission, unaltered and unabridged, typically against payment. IPTV and OTT have been developing at a fast pace recently, which is explained by several technological and business factors: (i) IPTV and OTT have superior retransmission capacity; (ii) they are more attractive to consumers due to built-in interactivity of services and can be enjoyed (in the case of OTT) without the need for a dedicated hardware (such as a set-top-box and/or a satellite antenna); (iii) they are well promoted by numerous operators and major Internet platforms. Finally, in some jurisdictions, 70 broadcasters inject program-carrying signals directly into cable networks (without any prior broadcast). This way of transmission is known as 'direct injection' as signals are directly injected by a broadcaster into the media gateway. It is argued that in such cases no retransmission of signals initially broadcast by another organisation occurs anymore and that therefore the provisions of the Directive on mandatory collective management do not apply. In Case C-325/14, SBS Belgium NV v Belgische Vereniging van Auteurs, Componisten en Uitgevers (SABAM), 71 the CJEU ruled that: "Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, must be interpreted as meaning that a broadcasting organisation does not carry out an act of communication to the public, within the meaning of that provision, when it transmits its programme-carrying signals exclusively to signal distributors without those signals being accessible to the public during, and as a result of that transmission, those distributors then sending those signals to their respective subscribers so that they may watch those programmes, unless the intervention of the distributors in question is just a technical means, which it is for the national court to ascertain." 67 The gradual switchover from analogue to digital terrestrial television was completed in 2012. The remaining analogue cable services in Europe are expected to complete the migration to digital networks by 2020. 68 As of February 2016, BBC Three channel is available only online. On 31 May 2016, RTL II (Germany) launched its online channel RTL II You, which combines linear services with video-on-demand. 69 The concept of ‘catch-up’ television, enabling consumers to view programmes at the own choice of timing, is generally based on clearance of the rights for programming within a limited window, typically 7 to 30 days after transmission. 70 E.g. the Netherlands and Belgium, see IRIS plus 2014-4 "Copyright, technology and the exploitation of audiovisual works in the EU", L. Guibault and J.P. Quintais, p. 20-21 71 http://curia.europa.eu/juris/document/document.jsf?docid=171788&doclang=en 28 Depending on the development of the direct injection mode of transmission, retransmission by cable may become less significant. Results of the public consultation The public consultation asked stakeholders if, in their view, the current EU action was still relevant in the satellite and cable markets. A large majority of respondents from all sectors confirmed that EU action was still relevant in both areas. The Directive remains relevant, both as regards facilitating licensing of satellite broadcasts / cable retransmissions and as regards improving consumers' access to TV and radio broadcasts from other Member States. Within the scope of application of the Directive (satellite broadcasting and cable retransmission) its relevance has been limited by two factors: the proliferation of territorially-limited satellite pay-TV offerings and the practice to inject programme-carrying signals directly into cable networks (without any prior broadcast). Otherwise the Directive - due to the technology-specific nature of its provisions - does not cover various TV and radio broadcast transmission and retransmission means that have emerged in recent years. 6.4. Coherence Is this intervention coherent with other EU actions? Internal coherence: The country of origin provisions of the Directive facilitate licensing for satellite broadcasting services thereby stimulating the offer of such services. Similarly, the cable retransmission regime and the associated mediation and negotiation mechanisms stimulate the development of cable TV services. Together the two sets of provisions (i) make it easier to communicate TV and radio broadcasts to audiences in other Member States; (ii) enable such audiences to have a choice of the technological means to access foreign TV / radio broadcasts – satellite or cable. The internal coherence is confirmed by the market data: as explained in other sections of this SWD, both types of services have been successfully deployed in different Member States, and foreign TV / radio broadcasts are available on both satellite and cable. Coherence with other interventions which have similar objectives: The Directive is coherent with other EU instruments harmonising copyright and its management. Notably, the exclusive right to authorise satellite transmissions of broadcasts provided by the Directive was subsumed by Article 3 of the 2001 "Infosoc Directive". Moreover, while the Directive provides for mandatory collective management of cable retransmission rights, the recent Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market aims at improving the functioning of CMOs and, at the same time, the efficiency of management of cable retransmission rights. The Directive is also coherent with other EU harmonisation instruments in the audiovisual sector. In particular, the Audiovisual Media Services Directive (AVMSD) is aimed at creating a single market in audiovisual media services (including TV broadcasting services) through the country-of-origin based regulation. It therefore makes sure that there are no regulatory obstacles (related to advertising, protection of minors, etc.) to show TV broadcasts to viewers in other Member States. The Directive considered that "the legal framework for the creation of a single audiovisual area laid down in Directive 89/552/EEC [the "Television without 29 frontiers directive", the precursor of AVMSD] must […] be supplemented with reference to copyright" 72, since its achievement "in respect of cross-border satellite broadcasting and the cable retransmission of programmes from other Member States is currently still obstructed by a series of differences between national rules of copyright and some degree of legal uncertainty" 73. Indeed, the AVMSD and the Directive share common history and purpose 74 and provide a legal framework for the free movement of services in the audiovisual sector. Finally, the Directive is coherent with the EU non-legislative instruments in the audiovisual sector. Specifically, the Creative Europe's MEDIA Sub-programme provides financial support for the development, promotion and distribution of European films and other audiovisual works. Often such works are acquired by TV broadcasters 75. In other words, the sub- programme helps enriching TV broadcasts which ultimately reach Europeans through satellite and cable services. Coherence with wider EU policy: The Directive is coherent with the EU Digital Single Market (DSM) policy. In particular, the Digital Single Market Strategy 76, adopted on 6 May 2015, aims at ensuring better access for consumers and businesses to digital goods and services across Europe. The Directive contributes to this objective by making it easier to access TV / radio broadcasts from other Member States. Results of the public consultation Respondents to the public consultation had the opportunity to express their views concerning the coherence of this action with other EU actions. Most of them consider the Directive to be coherent with other EU policies. The Directive is coherent both internally and with other EU interventions pursuing similar objectives, notably those in the audiovisual and media sectors. Moreover, the Directive's objectives remain valid in view of the new Commission priorities, including the completion of the digital single market. 6.5. EU Added Value Did EU action provide added value as compared to an action taken at the Member State level? As the country of origin principle has the objective of localising the copyright relevant act of satellite transmission in a single Member State, it could have only been introduced at EU level. In other words: even if a Member State adopted a law stipulating that copyright needs to be cleared only for that Member State in the scenario where, under the control and responsibility of the broadcasting organisation, the programme-carrying signals are introduced in the territory of the Member State into an uninterrupted chain of communication leading to the satellite and down towards the earth, such law would not bind other Member 72 Recital 12 of the Directive 73 Recital 5 of the Directive 74 See Prof. P. Bernt Hugenholtz "SatCab Revisited: The Past, Present and Future of the Satellite and Cable Directive", IRIS plus 2009-8, p. 7 75 E.g. the proportion of programme schedule time devoted to European fiction broadcast by the public service general-interest channels was 57.6% in 2013. See André Lange (ed.), "Fiction on European TV channels (2006-2013)", European Audiovisual Observatory (Council of Europe), December 2014. 76 COM(2015)192 30 States the authorities (e.g. courts) of which could continue to consider that the act of satellite transmission takes places in the territories of such other Member States too, if their residents can access the transmission. It continues to be so and the potential withdrawal of this intervention would result in a situation in which satellite broadcasters would be faced with legal uncertainty as to the clearance of rights for cross-border transmissions. As regards cable retransmission, national solutions are possible (and, as explained above, were put in place in some Member States before the adoption of the Directive) but would not guarantee a uniform application of the rules across the EU and could lead to a fragmentation of the internal market as far as cable retransmission services are concerned. As regards satellite broadcasting, the Directive has provided significant added value, since no action with a comparable result could have been taken at the Member State level. As regards cable retransmission, action at the Member State level is possible, but the Directive has provided added value by establishing harmonised rules across the internal market. SECTION 7 – CONCLUSIONS Clear-cut conclusions on the performance of this Directive are difficult to draw, as its evaluation can only rely on very limited evidence. Obtaining data on licensing practices and licensing costs was especially challenging. It can, however, be observed that all Member States have introduced rules having as their objective the transposition of the Directive and that the transposed rules have generated over the years relatively few legal disputes. The Directive can also be considered to have contributed to fostering thriving TV / radio broadcasting and distribution markets: 28.7 million EU households receive free-to-air satellite broadcasting services and 56.4 million – cable retransmission services. As regards the effectiveness, there are indications that overall the specific mechanisms introduced by the Directive have facilitated the clearance of copyright and related rights for (free-to-view) cross-border satellite broadcasts and for the simultaneous retransmissions by cable of broadcasts from other Member States. Similarly these mechanisms can be considered to have contributed to ensuring a high level of protection for right holders and have improved, to different extents, access to TV and radio programmes from other Member States. The negotiation and mediation mechanisms established under the Directive have been used to a varying, but overall limited, degree; they were found helpful in the cases where they have been used. The Directive can be considered to have been a cost-efficient and beneficial intervention. It has not created administrative burden or significant compliance / implementation costs for either stakeholders or Member States. The Directive has helped to reduce the transaction costs for the licensors and the licensees. Certain identified specific costs resulting from the application of the Directive (CMO fees charged for managing cable retransmission rights) can be regarded to be outweighed by benefits - savings in transaction costs. Some right holders referred to the Directive's possible negative impacts on the market functioning claiming that the country of origin principle could have undermined the territory-by-territory content distribution strategies and that mandatory collective management does not allow for the licensing of cable retransmission rights on fair market terms. However, these concerns are not estimated to be significant either in the case of the country of origin principle (since the 31 Directive has left open the possibility for contractual limitations regarding the exploitation of rights to satellite broadcasting) or in the case of mandatory management of cable retransmission rights (since individuals and SMEs, the category to which most right holders belong, are generally considered, due to their limited capacity to carry out multiple individual negotiations, to be the main beneficiaries of this approach). The Directive remains relevant, as a tool facilitating licensing of (free-to-view) cross-border satellite broadcasts and cable retransmissions of TV and radio broadcasts from other Member States as well as, more generally, for improving consumers' access to TV and radio broadcasts from other Member States. Within the scope of application of the Directive (satellite broadcasting and cable retransmission) its relevance has been limited by two factors: the proliferation of territorially-limited satellite pay-TV offerings and the practice to inject program-carrying signals directly into cable networks (without any prior broadcast). Otherwise the Directive - due to the technology-specific nature of its provisions - does not cover various broadcast transmission and retransmission means that have emerged in recent years. The Directive is coherent both internally and with other EU interventions pursuing similar objectives, notably those in the audiovisual and media sectors. Moreover, the Directive's objectives remain valid in view of the new Commission priorities, including the completion of the digital single market. As regards satellite broadcasting, the Directive has provided significant EU added value, since no action with a comparable result could have been taken at the Member State level. As regards cable retransmission, action at the Member State level is possible, but the Directive has provided added value by establishing harmonised rules across the internal market. In terms of REFIT, since the Directive has not created administrative burden or significant compliance / implementation costs for either stakeholders or Member States and since its provisions are, generally, setting out principles rather than procedures, the available simplification potential is estimated as limited. 32 Annex 1 Transposition of the Satellite and Cable Directive 93/83/EEC by the Member States Member National legislation transposing the Directive National case-law (if reported by the Member States / in the State SatCab Study 77) Belgium Title V of book XI of the Code of economic law (originally - Cour d'appel Bruxelles 9 juin 2015 (Agicoa) transposed in the former Copyright law of the 30th of June 1994) - Cour Constitutionnelle 12 février 2015 (Telenet) - Cour d'appel Bruxelles 17 juin 2014 (SBS Belgium C/ SABAM) - Cour d'appel d'Anvers 4 février 2013 (SABAM c/ Telenet) Bulgaria The 1993 Copyright and related rights act (SG. 56/29 Jun 1993), as - amended Czech Copyright Act No. 121/2000 Coll., as amended by No. 216/2006 Decision of the Regional Court in Brno (OSA v. DIGI Czech Republic, Republic Coll s.r.o., 23 C 176/2013-129) regarding the interpretation of the terms “cable retransmission” and “retransmission by microwave system” Denmark Danish Copyright Code (Consolidated Act No. 1144 of October 23 - 2014) Germany § 20 a, 20 b, 87(5) of the German Copyright Act (Gesetz über Regional Court of Hamburg judgment of 8 April 2009 in the case Urheberrecht und verwandte Schutzrechte) Warner and Universal vs Zattoo.DE (nr.308 O 660/08) regarding the concept of cable retransmission § 14d of the German Copyright Administration Act (Urheberrechtswahrnehmungsgesetz) Estonia The 1992 Copyright Act RT I 1992, 49, 615, as amended 2013 Estonian Supreme Court decision (Riigikohus) in civil case No 3- 2-1-50-13 (Estonian Authors Society vs VIASAT AS) regarding the licensing of a satellite service 77 The survey and data gathering to support the evaluation of the Satellite and Cable Directive and assessment of its possible extension (the "SatCab Study") 33 Ireland Copyright and related rights act, 2000 (No 28), as amended - Greece Law 2557/1997 (Official Journal FEK A’ 271/24.12.1997) - Spain Law on Intellectual Property, approved by Royal Legislative - Decree No. 1/1996 of April 12, 1996 repealing Law No. 28/1995 of October 11, 1995, on the Incorporation in Spanish Law of Council Directive (EEC) No. 93/83 of September 27, 1993 France Loi n° 97-283 du 27 mars 1997 portant transposition dans le code de la propriété intellectuelle des directives du Conseil des Communautés européennes n° 93/83 du 27 septembre 1993 et n° 93/98 du 29 octobre 1993 Croatia The Copyright and Related Rights Act (“Official Gazette” No. - 167/03, 79/07, 80/11, 125/11, 141/13 and 127/14) Italy Decreto Legislativo 23 ottobre 1996, n. 581 "Attuazione della Sentenza Corte di Cassazione, 13 ottobre 2011, clarifying the direttiva 93/83/CEE per il coordinamento di alcune norme in application of Article 2 of the Directive materia di diritto d'autore e diritti connessi, applicabili alla radiodiffusione e alla ritrasmissione via cavo" pubblicato nella Gazzetta Ufficiale n. 270 del 18 novembre 1996 (Rettifica G.U. n. 286 del 6 dicembre 1996) Legge n. 633/1941 Cyprus Copyright and Related Rights Law 59/1976, as amended - Latvia The 2000 Copyright Law ("Latvijas Vēstnesis", 148/150), as - amended Lithuania The 1999 Copyright and Related Rights Law No. VIII-1185, as - amended Luxembourg Loi du 18 avril 2001 sur les droits d’auteur, les droits voisins et les - 34  bases de données (Mémorial A n° 50 du 30.04.2001) Hungary Act LXXVI of 1999 on Copyright, as amended - Malta The 2000 Copyright Act XIII (Cap 415), as amended - Netherlands Wet van 20 juni 1996, houdende wijziging van de Auteurswet 1912 HR 28 March 2014 Norma - NL Kabel regarding the concept of cable en de Wet op de naburige rechten in verband met richtlijn nr. retransmission 93/83/EEG van de Raad van de Europese Gemeenschappen van 27 september 1993 tot coördinatie van bepaalde voorschriften betreffende het auteursrecht en naburige rechten op het gebied van satellietomroep en de doorgifte via de kabel (PbEG L248) The directive was implemented by amending the Copyright Act and the Neighboring rights Act. Publication (Stb 1996, 364) Act on Copyright Contract Law (Wet auteurscontractenrecht, Stb 2015,257), which entered into force on 1 July 2015 (proportional remuneration for a communication to the public of a film) Austria Urheberrechtsgesetz (= UrhG)- Novelle 1996 (BGBl I Nr Austrian Supreme Court Judgment of 21 February 2008, 4Ob89/08d 151/1996) regarding the concept of cable retransmission Section 36 Collective Management Act Poland Act No. 83 of 4 February 1994 on copyright and related rights, as - amended Portugal Decreto-Lei n.o 333/97, 27 November 1997 - Ruling of the Constitutional Court No. 102/2016 Romania Law no. 8/1996 on copyright and related rights, as amended - Slovenia Copyright and Related Rights Act of 30 March 1995 (Official - Gazette of the RS No 21/1995), as amended 35 Slovakia Copyright Act (Act No. 185/2015 Coll. on Copyright) - Act No. 220/2007 Coll. on the Digital Broadcasting of Programme Services and on the Provision of Other Content through Digital Transmission, which also amends and supplements certain other acts (Digital Broadcasting Act) Act No. 420/2004 Coll. on Mediation, as amended and Act No. 244/2002 Coll. on Arbitration Proceeding, as amended Finland Copyright Act (Tekijänoikeuslaki 404/1961) - Arbitration Act 967/1992 Sweden Copyright Act (1960:729) [lag (1960:729) om upphovsrätt till - litterära och konstnärliga verk] Act on Mediation in Certain Copyright Disputes (Swedish Statute book, SFS, 1980:612, with later amendments) United The Copyright and Related Rights Regulations 1996 (SI - TV Catchup First Judgment [2011] EWHC 1874 (Pat) Kingdom 1996/2967), which amended the Copyright, Designs and Patents Act 1988 - TV Catchup Second Judgment [2015] EWCA Civ 204 36 Annex 2 Overview of the application of SatCab negotiation and mediation mechanisms in the Member States Member Reported arrangements for / experience with the SatCab negotiation and State mediation mechanisms AT No practical experience. The “Schlichtungsausschuss” [Arbitration Committee] is an arbitral tribunal. The Arbitration Committee consists of three members. One member is appointed by each party; both members elect the chairman. In case that one party refuses to appoint a member or members appointed by the parties do not elect the Chairman the Chairman of the Copyright Senate may be requested to appoint them CY The Copyright Authority decides on differences regarding the amount of fees payable by the user to the beneficiary/collecting Rights Management Societies. This Authority is appointed by the Minister of Energy, Commerce, Industry and Tourism and its decisions are binding on the parties CZ There is limited experience with the provisions on mediation. There are 5 mediators on the List of mediators managed by the Ministry of Culture. Since 2001 only 7 cases have occurred where mediators were involved in a mediation, in 8 cases they were only contacted but not eventually used. The scope of their competence has been broadened as it actually covers any form of exploitation DK The Copyright License Tribunal is the national out-of-court body handling most disputes in relation to e.g. remuneration to the rights holders in several different areas such as cable retransmission (latest ruling is from 2002) and use of music in radios (latest ruling is from 2013). The Copyright License Tribunal passes on average 1-2 rulings a year. The tribunal consists of three members – one of them a judge of the Supreme Court – and it is appointed for five years at a time EE In practice, the mediation process has not been used in cases related to the Directive. Copyright Committee is formed by the Ministry of Justice and serves as a mediation body that also resolves, at the request of the parties, disputes related to copyright and related rights by way of conciliation. If, in order to resolve the corresponding rights, a party has applied to the Copyright Committee, the parties are required to enter into negotiations through the committee and conduct the negotiations in good faith. The Copyright Committee is not used often by persons having legal debates on copyright issues (1-2 applications per year) EL No practical experience. According to the law, either party may call upon the assistance of one or more mediators selected from the list of mediators drafted by the Copyright Organization every two years. The Copyright Organization may consult the collecting societies and cable operators for the drafting of the said list. Mediators may submit proposals to the parties. It shall be assumed that all parties accept a proposal if none of them expresses its opposition within a period of three (3) months from the notification of the proposal ES The use of the mediation is voluntary for the negotiating parties, and not many substantial cases have been raised for mediation so far. The competent body - the First Section of the Intellectual Property Commission is composed of four members, named by Government at the proposal of the Ministries of Culture, Economy, Justice and Industry, among recognised experts in the field of intellectual property. Its resources are funded by the budget of the Ministry of Education, Culture and Sport 37 FI It is not public knowledge whether mediation has been used after the implementation of the Directive. The parties may elect the mediator and the parties pay the mediator’s fees and other costs HR Mediation is provided by the Council of Experts, consisting of a president and four members appointed by the Minister. Until this date there were no cases regarding the contracts on cable retransmission between the broadcasting organizations and cable operators. Costs are envisaged to be covered by the parties that initiate the proceedings HU According to the law, the members of the Mediation Board shall be appointed from among the members of the Council of Copyright Experts. If no agreement is reached between the parties, the Mediation Board shall draft a proposal concerning the content of the agreement which it communicates to the parties in writing. The parties may accept the agreement expressly or tacitly. It shall be regarded as a tacit acceptance if no objection is made by the parties to the Mediation Board with regard to the proposal for agreement within three months from the date of its delivery LV No practical experience. According to the law, the parties may agree regarding the candidature of a mediator or regarding the procedures by which a mediator shall be invited or appointed. If the parties cannot agree, the mediator may be appointed by the Minister for Culture. The mediator may express proposals to the parties to resolve the dispute and specify a time period within which the parties approve or reject his or her proposal. If none of the parties objects to the proposal of the mediator within a period of three months after receipt of the proposal, it shall be deemed that they have accepted such proposals LT Mediation is carried out by a committee (composed of 3 members) appointed by the Minister of Culture. The Ministry covers organisational and technical costs. In 2011 the mechanism was successfully applied to help finalise the negotiations over a framework licencing agreement between collective management organisations and Lithuanian cable operators' associations. It was again applied to facilitate re- negotiation of the agreement in 2015 NL No practical experience. According to the law, each party can refer the issue to an independent mediator. The mediator is allowed to make proposals. The proposal is binding on the parties involved unless objections are made within three months upon receiving the proposal PL No practical experience. According to the law, disputes regarding the finally and bindingly approved tables of remuneration and disputes connected with the conclusion of the contract for cable retransmission may be settled by means of mediatory proceedings before the Copyright Commission, an independent arbitrary body appointed by the Minister of Culture and National Heritage RO According to the law, the Romanian Copyright Office shall convene, within 5 days as from the requesting of the arbitration, the parties for drawing lots for the appointment of 5 standing arbitrators that shall form the arbitration panel and of the 3 reserve arbitrators. The Romanian Copyright Office convenes, at its headquarters, the appointed arbitrators and the parties, for the establishing of the mediation panel. The mediation panel shall establish the fee, within the limit of the professional usages for the activities of arbitration, the first date and the place of mediation and informs the parties. The two parties in mediation, collective management organizations and, respectively, the users, contribute equally to the payment of the fee established by the arbitrators. Arbitrators, within 30 days as from the first date of arbitration, must file 38  with the Romanian Copyright Office the award comprising the final form of the methodologies subject to arbitration, for the communication to the parties SE Limited practical experience. According to the law, any of the parties may file a request for mediation to the Government which then appoints a mediator who shall try to find a solution on the basis of proposals from the parties. If a final proposal for solution by the mediator is rejected or the mediator considers himself/herself unable to find a solution due to lack of cooperation from any of the parties, he or she shall inform the Government. A proposal by the mediator for solution of the dispute shall be considered as approved by the parties if none of them opposes the proposal within three months from the date when the party was informed about the proposal. The mediator has a right to reasonable remuneration for his/her work and for costs SK Mediation is not used very often. The parties usually go straight to the court, if any dispute arises 39 Tere, Eelmisel aastal Euroopa Komisjoni poolt avaldatud „Digitaalse ühtse turu strateegias“ (COM(2015) 192) on kirjeldatud mitmeid algatusi, mille eesmärk on luua digitaalse infosisu ja digitaalsete teenuste siseturg. Strateegiale tuginedes avaldas komisjon 14.09.2016 mitmest dokumendist koosneva mahuka ettepanekute kogumi, mida saab kokkuvõtvalt nimetada „autoriõiguse reformipaketiks“. Pakett koosneb järgmistest dokumentidest (kättesaadav ka: https://ec.europa.eu/digital-single- market/en/modernisation-eu-copyright-rules): 1) Komisjoni teatis Euroopa Parlamendile, nõukogule, Euroopa majandus- ja sotsiaalkomiteele ning regioonide komiteele autoriõigustel põhineva õiglase, tulemusliku ja konkurentsivõimelise Euroopa majanduse edendamine digitaalsel ühtsel turul (COM(2016) 592 final). 2) Euroopa Parlamendi ja nõukogu direktiivi ettepanek, mis käsitleb autoriõigust digitaalsel ühtsel turul (COM(2016) 593 final); 3) Euroopa Parlamendi ja nõukogu määruse ettepanek, milles sätestatakse eeskirjad, mis käsitlevad selliste autoriõiguste ja nendega kaasnevate õiguste teostamist, mis kuuluvad kohaldamisele teatavate ringhäälinguorganisatsioonide veebiülekannete ning televisiooni- ja raadiosaadete taasedastamise suhtes (COM(2016) 594 final); 4) Euroopa Parlamendi ja nõukogu direktiivi ettepanek, mis käsitleb autoriõiguse ja sellega seotud õigustega kaitstud teoste ja muu materjali kasutamise lubamist nägemispuudega või muu trükikirja lugemise puudega isikutele ja millega muudetakse direktiivi 2001/29/EÜ autoriõiguse ja sellega kaasnevate õiguste teatavate aspektide ühtlustamise kohta infoühiskonnas (COM(2016)596 final); 5) Euroopa Parlamendi ja nõukogu määruse ettepanek, mis käsitleb teatavate autoriõiguse ja sellega seotud õigustega kaitstud kättesaadaval kujul teoste ja muu materjali piiriülest vahetamist liidu ja kolmandate riikide vahel nägemispuudega või muu trükikirja lugemise puudega isikute huvides (COM(2016) 595 final); 6) Commission Staff Working Document „Impact assessment on the modernisation of EU copyright rules accompanying the Document Proposal for a Directive of the European Parliament and of the Council on copyright in the Digital Single Market and Proposal for a Regulation of the European Parliament and of the Council laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes“ (SWD(2016) 301 final), osad 1-3 ning mõjuanalüüsi lühikokkuvõte; 7) Commission Staff Working Document „Evaluation of the Council Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission“ (COM(2016) 308 final); 8) Commission Staff Working Document „Executive summary of the evaluation of the Council Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission“ (COM(2016) 309 final). Nimetatud paketi eesmärgid saab üldistatult jagada kolme gruppi: 1) digitaalse sisu suurem valiku võimaldamine ning selle kättesaadavuse parandamine internetipõhiselt ja piiriüleselt (vastavad muudatused on tehtud Euroopa Parlamendi ja nõukogu määruse ettepanekus, milles sätestatakse eeskirjad, mis käsitlevad selliste autoriõiguste ja nendega kaasnevate õiguste teostamist, mis kuuluvad kohaldamisele teatavate ringhäälinguorganisatsioonide veebiülekannete ning televisiooni- ja raadiosaadete taasedastamise suhtes (COM(2016) 594 final) ning Euroopa Parlamendi ja nõukogu direktiivi ettepanekus, mis käsitleb autoriõigust digitaalsel ühtsel turul (COM(2016) 593 final));  2) vaba kasutuse reeglite täpsustamine ehk täiustatud autoriõiguse eeskirjad teadus-, haridus- ja kultuuripärandi valdkonna asutuste tarbeks ning puudega inimeste kaasamiseks (vastavad muudatused on tehtud Euroopa Parlamendi ja nõukogu direktiivi ettepanekus, mis käsitleb autoriõigust digitaalsel ühtsel turul (COM(2016) 593 final) ning WIPO Marrakeśi lepingust tulenevate nõuete täitmiseks vajalikes ettepanekutes COM(2016) 595 final ning COM(2016) 596 final); 3) õiglase ja jätkusuutliku turu võimaldamine loovisikutele, loometööstusele ja ajakirjandusele (vastavad muudatused on tehtud Euroopa Parlamendi ja nõukogu direktiivi ettepanekus, mis käsitleb autoriõigust digitaalsel ühtsel turul (COM(2016) 593 final)). Kuna pakett on äärmiselt mahukas ning selle läbitöötamine võtab aega, siis saadan Teile info e-kirja teel välja juba praegu enne Justiitsministeeriumi vastava ametliku kirja valmimist (see jõuab ka esimesel võimalusel Teieni). Saate hakata nimetatud paketiga tutvuma, kuigi enamus dokumente ei ole paraku veel eesti keelde tõlgitud. Soovi korral palume Teil oma sihtgrupi huve puudutavad arvamused ja hinnangud Justiitsministeeriumisse saata võimalusel 19. oktoobriks 2016. a. Teie sisendite põhjal omakorda saame ette valmistada Eesti seisukohad nimetatud reformipaketile. Kõikidele täpsustavatele küsimustele vastan hea meelega. Lugupidamisega, Kärt Nemvalts Nõunik Eraõiguse talitus Justiitsministeerium [email protected] 620 8283 Käesolev kiri on konfidentsiaalne ning mõeldud kasutamiseks kirja päises nimetatud isikule. Igasugune käesoleva kirja mistahes viisil kasutamine või kopeerimine isiku poolt, kes ei ole märgitud selle adressaadiks, on keelatud. Kui te olete saanud käesoleva kirja eksimuse tõttu, palun teavitage sellest koheselt kirja saatjat ning kustutage saadud kiri koos kõikide lisadega. EUROPEAN COMMISSION Brussels, 14.9.2016 SWD(2016) 302 final COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT on the modernisation of EU copyright rules Accompanying the document Proposal for a Directive of the European Parliament and of the Council on copyright in the Digital Single Market and Proposal for a Regulation of the European Parliament and of the Council laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes {COM(2016) 593} {COM(2016) 594} {SWD(2016) 301} EN EN  Executive Summary Sheet Impact assessment on the modernisation of EU copyright rules A. Need for action What is the problem and why is it a problem at EU level? This IA examines a number of issues linked to the functioning of EU copyright rules in the Digital Single Market. It considers adjusting existing rules or introducing new rules in three distinct areas: (i) access to content online; (ii) the functioning of key exceptions in the digital and cross-border environment; and (iii) the functioning of the copyright marketplace. In the first area, the problems addressed in the IA are directly related to difficulties encountered with the clearance of online rights, by broadcasters, retransmission services, Video-on-Demand (VoD) platforms or cultural heritage institutions (CHIs). Broadcasters face difficulties in particular when clearing rights for making TV and radio programmes available online across borders; similarly, the clearance of rights can be complex for retransmission services other than cable operators when they offer channels from other Member States (MS). The main findings of the evaluation of the functioning of the Satellite and Cable Directive (Directive 93/83/EEC) have been taken into account when assessing the extent of these problems and the possible solutions. Also, difficulties in acquiring online rights contribute to the limited availability of European audiovisual works on VoD platforms. Finally, CHIs face important difficulties when clearing rights for digitising out-of-commerce (OOC) works of their collections and disseminating them to the public. In the second area, the legal uncertainty as to the acts allowed under the existing copyright exceptions, in particular the digital environment, has been identified as a major issue for the functioning of the Digital Single Market. Teachers and students are affected by legal uncertainty when using content in digitally-supported and cross-border teaching activities. Researchers face legal uncertainty with regard to the possibility to carry out text and data mining (TDM) on content they have lawful access to. Preservation of works by CHIs, in particular in digital forms, may also be hampered by legal uncertainty and disproportionate transaction costs. In the third area, the IA concentrates on issues related to the distribution of value in the online environment, with a distinction between the problems faced 'upstream' by right holders when trying to license their content to certain types of online services and those faced 'downstream' by creators when negotiating contracts for the exploitation of their works. Right holders face difficulties when seeking to control and monetize the use of their content by online services storing and giving access to content uploaded by end-users. It has also become difficult for press publishers to license their publications and prevent unauthorized uses by online services. Also, all publishers face legal uncertainty as regards the possibility for them to receive a share in the compensation for uses of works under an exception. Finally, authors and performers (creators) may not always have sufficient information on the exploitation of their works allowing them to negotiate an appropriate remuneration in exchange for the exploitation of their rights. What should be achieved? Three general objectives have been identified: (i) allow for wider online access to protected content across the EU, focusing on TV and radio programmes, European audiovisual works and cultural heritage; (ii) facilitate digital uses of protected content for education, research and preservation in the single market; and (iii) ensure that the online copyright marketplace works efficiently for all players and gives the right incentives for investment in and dissemination of creative content. What is the value added of action at the EU level (subsidiarity)? By concentrating on the functioning of EU copyright rules in the digital and online environment, this IA addresses problems which have an important cross-border dimension. As regards the first area, national solutions for the above mentioned problems related to online access to content, including cross-border, may generate further fragmentation in the Digital Single Market. Therefore, in order to produce clear benefits, a common approach and action should be provided at EU level. As regards the second area, the existing level of harmonisation limits the possibility for MS to act in the area of copyright, as they cannot unilaterally alter the scope of the harmonised rights and exceptions. Moreover, EU intervention is indispensable to guarantee legal certainty in cross border situations. As regards the third area, the 1 rationale for EU action stems both from the harmonisation already in place (notably in terms of rights) and the cross-border nature of the distribution of content online. Intervention at national level would not be sufficiently efficient to address the identified problems (notably because it would lack scale) and could create new obstacles and market fragmentation. Action at EU level is necessary in order to ensure legal certainty for creators and those investing in content, for distributors and for users. It will also allow right holders to better exercise their rights in the online environment and guarantee a level playing field in the Digital Single Market. B. Solutions What are the various options to achieve the objectives? Is there a preferred option or not? If not, why? The options examined for each topic include the baseline option, in most cases a non-legislative option (in the form of Commission's guidance or recommendation and/or stakeholders’ dialogue) and one or several legislative options. A preferred option has been identified for each topic. In the area of access to content online, different licensing regimes, considered as enabling mechanisms to facilitate the clearance of rights, are examined in the legislative options. • The preferred option in relation to online transmissions of broadcasting organisations is the application of the country of origin principle to the clearing of rights for their online services which are ancillary to their initial broadcast. • As for the digital retransmissions of TV/radio programmes, the preferred option is the application of the mandatory collective management of rights to retransmission services provided over "closed" electronic communication networks. • For the licensing of VoD rights, the preferred option includes a European stakeholders' dialogue and a negotiation mechanism that would facilitate the conclusion of licences for the online exploitation of audiovisual works by removing contractual blockages. • Finally, for OOC works, the preferred option is a legislative intervention at EU level enabling MS to put in place specific legal mechanisms for the conclusion of collective licensing agreements for the use of OOC works by cultural heritage institutions (CHIs) and on the introduction of a cross-border effect for such agreements. In relation to exceptions, the legislative options are designed in a way to complement the existing exceptions (in the case of preservation and teaching) or introduce a new exception for specific uses (e.g. text and data mining). Different options are envisaged, with variations on the scope of the exception, the beneficiaries and/or the relationship with the licensing market. • The preferred option for teaching activities is a mandatory exception covering digital uses undertaken in the context of illustration for teaching with the option for MS to make it subject to the availability of adequate licences covering the same uses (digital and cross border). • For TDM, the preferred option is a mandatory exception applicable to research organisations acting in the public interest such as universities or research institutes. The exception would allow them to carry out TDM on content they have lawful access to, for the purposes of scientific research. • For preservation of cultural heritage, the preferred option is a mandatory exception for preservation purposes by cultural heritage institutions (CHIs). Concerning the functioning of the copyright marketplace, the legislative options considered aim at ensuring a fair sharing of the value in the online environment, notably through the introduction of specific obligations on certain types of online services or on those contracting with authors and performers. • In relation to the use of content by user uploaded content services, the preferred solution is an obligation on online services storing and giving access to large amount of content uploaded by their users to put in place appropriate and proportionate technologies, and to increase transparency vis à vis right holders. • Concerning the rights in publications, the preferred solution is the introduction in EU law of a related right for publishers covering the digital uses of their press publications and of a provision enabling MS to allow all publishers (news, books, scientific, etc) to receive a share in the compensation for uses under an exception. • In relation to the lack of transparency on the remuneration of creators, the preferred option consists in the introduction in EU legislation of transparency obligations on the creators' contractual counterparties (notably producers and publishers), supported by a contract adjustment and dispute resolution mechanism. 2 What are different stakeholders' views? Who supports which option? The options considered in this IA would affect a wide range of stakeholders, notably: authors and performers, collective management organisations, producers, publishers, broadcasters, providers of retransmission services, distributors, online services, institutional users, researchers, consumers. Stakeholders’ views are very specific to each topic and are therefore presented in relation to each option in the IA. The results of the public consultations held in 2013-2016 which support the analysis in this IA are presented in Annex 2. C. Impacts of the preferred option What are the benefits of the preferred option (if any, otherwise of main ones)? The preferred options identified in relation to online transmissions and retransmissions of TV and radio programmes would reduce the transaction costs linked to the clearance of rights faced by broadcasters for their cross-border online transmissions and by retransmission services provided over "closed" electronic communications networks (e.g. IPTV). They are also expected to enhance the cross-border distribution of and access to broadcasters' TV and radio programmes. Concerning the licensing of VoD rights, the preferred option would help removing contractual blockages and could therefore improve the availability of European audiovisual works on VoD platforms. For OOC works, the preferred option would favour a reduction of transaction costs and make possible the specific licences required for the digitisation and dissemination of OOC works by cultural heritage institutions, for all types of works and in all MS, including across borders The new exception for digital uses of protected content in the context of illustration for teaching would bring full legal certainty to educational establishments and teachers, which is expected to increase the uptake and quality of digital technologies and innovative methods in education and provide an enriched learning environment and improved outcomes for students. The possibility for MS to make the exception subject to the availability of licences covering the same uses would bring the necessary flexibility without reducing the legal certainty for users or hampering cross-border uses. The new TDM exception would increase legal certainty and reduce rights clearance costs for research organisations, including when research projects are carried with a possible commercial outcome, eg. in the context of PPPs. The preferred option for preservation would provide full legal certainty to CHI carrying out preservation reproductions of works in their permanent collections, including with digital technologies. In the third area covered by this IA, the preferred options are expected to allow right holders to better exploit and control the distribution of their content online. The obligation for user uploaded content services to deploy technical means would allow right holder to better decide on the availability of their content on these services. It is likely to encourage the conclusion of agreements for the use of content and to generate additional revenues for right holders. As for press publishers, the preferred option would increase their legal certainty, strengthen their bargaining position and have a positive impact on their ability to license content and enforce the rights on their press publications. The preferred option would also increase legal certainty for all publishers as regards the possibility for them to receive a share in the compensation for uses under an exception. The transparency obligations imposed on their contractual counterparties would provide creators with the information necessary to assess whether their remuneration is appropriate and with the legal means to request, where necessary, adjustment of the remuneration (contract adjustment mechanism). What are the costs of the preferred option (if any, otherwise main ones)? The application of the country of origin to the right clearance for broadcasters' ancillary services online would be a new situation for right holders when licensing their content to broadcasters for online transmissions. However, it is a targeted intervention (limited to broadcasters' ancillary online services and not affecting the contractual freedom of broadcasters and right holders) which is expected to facilitate the development of the market without disruption of the existing business models and distribution strategies. The application of mandatory collective management for certain types of digital retransmission services would affect the right holders' licensing choices in a limited manner. The compliance costs would be marginal as the same network of collective management organisations (CMOs) which is used to license rights to cable retransmissions could be used to license rights to retransmissions by means other than cable. As regards the negotiation mechanism aimed at facilitating the licensing of VoD rights, the implementation costs would be limited, as MS could rely on existing structures with the necessary expertise. Stakeholders (right holders, distributors, VoD platforms) may incur some costs for participating in the negotiation mechanism. These costs 3 would however be offset by the efficiency gains deriving from successful negotiation. The preferred option for OOC works would not imply any direct costs as such. In case the legal mechanisms are used, CMOs would incur some costs related to transparency requirements, handling of opt-outs and administration of the licence. In the area of exceptions, the preferred options are not expected to affect right holders' licensing revenues to any significant extent. Very limited compliance costs may arise from the need to adapt the scope of existing licences to take account of the new exceptions. For teaching, the new exception is not expected to have an impact on the right holders' primary market, notably because of the purpose and conditions attached to the exception (illustration for teaching, digital uses under secure electronic networks). It may imply some compliance costs for MS deciding to make the application of the exception subject to the availability of licences covering the same uses, because of the requirement to ensure availability and visibility of such licences. However, these costs would allow to significantly reduce the educational establishments' administrative burden. In the case of TDM, the lawful access condition foreseen for the use of the exception would ensure that the preferred option does not affect the right holders' subscription market. The preferred option for preservation of cultural heritage would not generate particular compliance costs; impact on revenues for rights holders would be minimum and even negligible, as this exception would only apply to works that CHIs already have in their permanent collections and have no bearing on the acquisition of permanent copies into a collection. For online services distributing content uploaded by end-users, there would be compliance costs deriving from the technologies to be put in place. These costs would depend on the quantity and the type of content to be identified. They are expected to be limited by the fact that the technologies to be put in place need to be proportionate, and that a majority of the services covered already deploy some content identification technologies. The introduction of a related right covering digital uses of press publications is not expected to generate higher licence fees for online service providers which already conclude licences covering specifically the use of digital news content. It would only imply costs for those online services providers which are not concluding licences for the reuse of publishers' content today when they should in principle do so, pursuant to copyright law. The possibility for MS to allow all publishers to receive a share in the compensation for uses under an exception is not expected to generate costs as collecting societies, in charge of collecting compensation for publishers, are already in place in a majority of MS. For remuneration of creators, the transparency obligations would generate compliance costs for the creators' contractual counterparties, which are however expected to be reasonable. The very limited availability of data did not allow for an overall quantification of these costs; however estimates are included in the IA on the basis of the few examples reported by stakeholders. The contract adjustment mechanism is expected to generate limited costs (e.g. renegotiation costs) since it is likely to be used mainly as a leverage in negotiation. MS could use existing structures in order to reduce the possible costs related to setting up the dispute resolution mechanism. What are the impacts on SMEs and competitiveness? The high share of SMEs in the creative industries has been taken into account in the assessment of the policy options. The preferred options in the area of access to content are expected to benefit SMEs (as TV/radio broadcasters, service providers or right holders), by reducing the administrative burden linked to the clearance or licensing of rights. In the case of exceptions, the preferred options constitute solutions which are not expected to have any significant impact on the licensing market or revenues of SMEs (right holders). An exclusion of micro- companies has not been considered appropriate as it would create major legal uncertainty for users. In the third area of this IA, the preferred options would support SMEs (right holders) in concluding agreements with online content services. Where they would generate obligations for SMEs, exemptions or mitigating measures have not been deemed appropriate as they may create possibilities for businesses to circumvent the obligations and would not allow reaching the desired objectives. Will there be significant impacts on national budgets and administrations? The preferred options will not generate any significant impacts on national budgets or administrations. Nevertheless, certain options include specific obligations for MS, e.g. identification or creation of an impartial instance to facilitate negotiation between the relevant parties for the licensing of VoD rights; measures to ensure the visibility of licences for educational uses; organisation of stakeholders' dialogues on the reporting to authors and performers and setting up of a dispute resolution mechanism between authors/performers and their contractual counterparties. Indications of costs, where available, are mentioned in the relevant sections of the IA. 4 Will there be other significant impacts? N.a. Proportionality? The preferred options have been elaborated in a way to effectively address the original problems without going beyond what is needed to achieve the objectives. Other options, sometimes with a wider scope, have been excluded as they would not allow a balanced and proportionate response to the problems presented in this IA. D. Follow up When will the policy be reviewed? Specific indicators have been defined to monitor progress in the achievement of the objectives, with data collection foreseen to take place every 2 or 3 years. A comprehensive evaluation could take place at the latest 10 years after the adoption of the legislative measures, in order to measure their impacts and added value. 5 EUROPEAN COMMISSION Brussels, 14.9.2016 SWD(2016) 301 final PART 1/3 COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT on the modernisation of EU copyright rules Accompanying the document Proposal for a Directive of the European Parliament and of the Council on copyright in the Digital Single Market and Proposal for a Regulation of the European Parliament and of the Council laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes {COM(2016) 593} {COM(2016) 594} {SWD(2016) 302} EN EN 1. INTRODUCTION ...................................................................................................... 6 1.1. EU COPYRIGHT RULES ................................................................................................... 6 1.2. POLICY CONTEXT .......................................................................................................... 7 2. OBJECTIVES AND SCOPE OF THE INITIATIVE............................................. 9 2.1. OBJECTIVES .................................................................................................................. 9 2.2. SCOPE ........................................................................................................................... 9 3. ENSURING WIDER ACCESS TO CONTENT ................................................... 10 3.1. INTRODUCTION............................................................................................................ 10 3.1.1. Background ................................................................................................................ 10 3.1.2. Why should the EU act? ............................................................................................. 12 3.1.3. What should be achieved? .......................................................................................... 13 3.1.4. Methodology .............................................................................................................. 14 3.2. ONLINE TRANSMISSIONS AND RETRANSMISSIONS OF TV/RADIO PROGRAMMES ........... 18 3.2.1. Background data on the TV and radio sector ............................................................. 18 3.2.2. Online transmissions of broadcasting organisations .................................................. 20 3.2.3. Digital retransmissions of TV and radio programmes ............................................... 39 3.3. ACCESS TO AND AVAILABILITY OF EU AUDIOVISUAL WORKS ON VOD PLATFORMS .... 52 3.3.1. What is the problem and why is it a problem? ........................................................... 52 3.3.2. What are the various options to achieve the objectives?............................................ 55 3.3.3. What are the impacts of the different policy options and who will be affected? ....... 57 3.3.4. How do the options compare? .................................................................................... 64 3.4. OUT-OF-COMMERCE WORKS IN THE COLLECTIONS OF CULTURAL HERITAGE INSTITUTIONS .............................................................................................................. 65 3.4.1. What is the problem and why is it a problem? ........................................................... 65 3.4.2. What are the various options to achieve the objectives?............................................ 69 3.4.3. What are the impacts of the different policy options and who will be affected? ....... 72 3.4.4. How do the options compare? .................................................................................... 78 4. ADAPTING EXCEPTIONS TO DIGITAL AND CROSS-BORDER ENVIRONMENT ..................................................................................................... 80 4.1. INTRODUCTION............................................................................................................ 80 4.1.1. Background ................................................................................................................ 80 4.1.2. Why should the EU act? ............................................................................................. 81 4.1.3. What should be achieved? .......................................................................................... 82 4.1.4. Methodology .............................................................................................................. 82 4.2. USE OF PROTECTED CONTENT IN DIGITAL AND CROSS-BORDER TEACHING ACTIVITIES 87 4.2.1. What is the problem and why is it a problem? ........................................................... 87 2 4.2.2. What are the various options to achieve the objectives?............................................ 90 4.2.3. What are the impacts of the different policy options and who will be affected? ....... 93 4.2.4. How do the options compare? .................................................................................. 102 4.3. TEXT AND DATA MINING ........................................................................................... 104 4.3.1. What is the problem and why is it a problem? ......................................................... 104 4.3.2. What are the various options to achieve the objectives?.......................................... 107 4.3.3. What are the impacts of the different policy options and who will be affected? ..... 110 4.3.1. How do the options compare? .................................................................................. 118 4.4. PRESERVATION OF CULTURAL HERITAGE .................................................................. 120 4.4.1. What is the problem and why is it a problem? ......................................................... 120 4.4.2. What are the various options to achieve the objectives?.......................................... 123 4.4.3. What are the impacts of the different policy options and who will be affected? ..... 125 4.4.4. How do the options compare? .................................................................................. 129 5. ACHIEVING A WELL-FUNCTIONING MARKET PLACE FOR COPYRIGHT ......................................................................................................... 132 5.1. INTRODUCTION.......................................................................................................... 132 5.1.1. Background .............................................................................................................. 132 5.1.2. Why should the EU act? ........................................................................................... 132 5.1.3. What should be achieved? ........................................................................................ 134 5.1.4. Methodology ............................................................................................................ 134 5.2. USE OF PROTECTED CONTENT BY ONLINE SERVICES STORING AND GIVING ACCESS TO USER UPLOADED CONTENT ........................................................................................ 137 5.2.1. What is the problem and why is it a problem? ......................................................... 137 5.2.2. What are the various options to achieve the objectives?.......................................... 144 5.2.3. What are the impacts of the different policy options and who will be affected? ..... 147 5.2.4. How do the options compare? .................................................................................. 154 5.3. RIGHTS IN PUBLICATIONS .......................................................................................... 155 5.3.1. What is the problem and why is it a problem? ......................................................... 155 5.3.2. What are the various options to achieve the objectives?.......................................... 161 5.3.3. What are the impacts of the different policy options and who will be affected? ..... 163 5.3.4. How do the options compare? .................................................................................. 172 5.4. FAIR REMUNERATION IN CONTRACTS OF AUTHORS AND PERFORMERS....................... 173 5.4.1. What is the problem and why is it a problem? ......................................................... 173 5.4.2. What are the various options to achieve the objectives?.......................................... 177 5.4.3. What are the impacts of the different policy options and who will be affected? ..... 181 5.4.4. How do the options compare? .................................................................................. 189 3 6. OVERALL CONCLUSIONS................................................................................ 192 6.1. SUMMARY OF PREFERRED OPTIONS ........................................................................... 192 6.2. ANALYSIS OF THE COMBINED APPLICATION OF THE PREFERRED OPTIONS .................. 193 6.2.1. Impact on stakeholders ............................................................................................. 193 6.2.2. Subsidiarity and proportionality............................................................................... 194 6.2.3. Choice of instrument ................................................................................................ 195 6.3. MONITORING AND EVALUATION................................................................................ 195 6.3.1. Monitoring and evaluation plan ............................................................................... 195 6.3.2. Operational objectives and monitoring indicators ................................................... 197 4  Acronym list AV Audiovisual CHI Cultural Heritage Institution CMO Collective Management Organisation CoO Country of Origin DSM Digital Single Market ECJ / CJEU European Court of Justice / Court of Justice of the European Union ECL Extended Collective Licensing EP European Parliament IA Impact Assessment IPTV TV/radio over closed circuit IP-based networks MOOCs Massive Open Online Courses MS Member State OER Open Educational Resources OoC Out-of-commerce (works) OTT Over The Top PPPS Public-Private Partnerships SME Small and Medium-sized Enterprise STM Scientific, Technical and Medical (Publishers) SVoD Subscription Video on Demand TDM Text and Data Mining TV Traditional Television TVoD Transactional Video on Demand VoD Video on Demand WIPO World Intellectual Property Organisation 5 1. INTRODUCTION 1.1. EU COPYRIGHT RULES Copyright and related rights are rights granted to authors (copyright) and to performers, producers and broadcasters (related or neighbouring rights1). They include so-called "economic rights" which enable rightholders to control (license) the use of their works (e.g. a novel) and other protected material (such as a record or a broadcast), and be remunerated for their use. These rights are limited in time (in Europe, between 50 and 70 years). Economic rights (and their term of protection) are, to a large extent, harmonised at EU level. Authors are also granted so-called "moral rights" (notably the right to claim authorship and the right to object to any derogatory action in relation to the work). Moral rights are not harmonised at EU level. Copyright systems balance the recognition of rights with exceptions in order to facilitate the use of protected content in specific circumstances, notably to facilitate the achievement of specific public policy objectives such as education or access to information. Exceptions provide a “legal authorisation” to beneficiaries to use protected material without needing to seek authorisation from the rightholders. The EU copyright rules set out an exhaustive list of exceptions to rights across various copyright directives. The harmonisation achieved is however limited: most of the exceptions are optional (Member States may decide to implement them or not), and broadly formulated, leaving Member States (MS) a relatively wide margin of manoeuvre when implementing them. Copyright systems also provide for procedures and remedies against infringements of copyright (enforcement). These have been partly harmonised at EU level (e.g. evidence- gathering powers for judicial authorities, powers to force parties commercially involved in an infringement to provide information on the origin of the infringing goods, provisions on the payment of damages). Directive 2001/29/EC2 (the "InfoSoc Directive") was designed to update copyright rules to the (then nascent) digital networks and to implement the two 1996 WIPO3 Internet Treaties - the WIPO Copyright Treaty4 and the WIPO Performances and Phonograms Treaty5. It harmonises several exclusive rights that are essential to the online dissemination of works and other protected subject-matter, notably the right of reproduction, i.e. the right to prevent the unauthorised copying of protected content and the right of making available, i.e. the right to prevent unauthorised dissemination of protected content online, as well as exceptions to exclusive rights. Licensing is the main mechanism for the exercise of copyright and related rights. Depending on the relevant right, the type of use and the sector, licences are most often granted directly by the right holder (e.g. film producer, software producer) or via collective management 1 Related rights (also referred to as neighbouring rights) are rights similar to copyright but do not reward an author's original creation (a work). They reward either the performance of a work (e.g. by a musician, a singer, an actor) or an organisational or financial effort (e.g. by phonogram or film producers and broadcasters), which may also include a participation in the creative process. 2 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ L 167, 22.6.2001, p. 10–19) 3 World Intellectual Property Organization, http://www.wipo.int 4 http://www.wipo.int/treaties/en/ip/wct/ 5 http://www.wipo.int/treaties/en/ip/wppt/ 6 organisations (CMOs), representing normally a category of rightholders (e.g. authors) and of rights (e.g. rights in musical works). Collective management of exclusive rights (these are typically the most important rights for economic exploitation, e.g. distribution in the physical world and making available in the online world) is voluntary, except in certain specific cases allowed by law and copyright international treaties. For example, Directive 93/83/EC6 (the "Satellite and Cable Directive") imposes mandatory collective management of cable retransmission rights in order to facilitate the clearance of rights by cable operators.7 The EU has recently adopted legislation to improve the functioning of CMOs, including in order to facilitate the provision of multi-territorial licences (Directive 2014/26/EU8- the "CRM Directive"). Copyright is territorial (referring to national territories) in the sense that the rights granted under copyright are provided for in national law, and not in the form of unitary rights at EU level. For example, the author of a book has not a single EU-wide right of reproduction but 28 different national rights of reproduction. The geographical scope of these 28 rights is limited to the territory of the MS that grants the right in question. 1.2. POLICY CONTEXT Digital technologies are changing the ways creative content is produced, distributed and accessed. They create opportunities as well as new challenges for the creative industries9, authors and artists, the education and research communities, online service providers including search engines and content distributors, telecommunication operators, cultural heritage institutions, individual users and other players in the digital economy. These new uses and opportunities, together with the cross-border nature of digital networks, have brought to the fore questions related to the degree of harmonisation achieved by the EU copyright rules. The Digital Single Market (DSM) Strategy10 adopted in May 2015 called for addressing in the EU copyright framework a set of key obstacles to the functioning of the DSM and announced legislation "to reduce the differences between national copyright regimes and allow for wider online access to works by users across the EU", notably as regards portability and cross-border access to copyright-protected content services; exceptions, in particular in the area of education and research; and the role of intermediaries in the distribution of copyright protected content. It also indicated that the Commission would review the Satellite and Cable Directive to assess whether it has facilitated consumers' access to satellite broadcasting services across borders, as well as the possible extension of some of the Directive principles/mechanisms to the licensing of rights required for certain broadcasters' online service. 6 Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (OJ L 248, 6.10.93, p.15-21) 7 See section 3.2.3. 8 Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market (OJ L 84, 20.3.2014, p. 72–98). 9 See Annex 5 for background information on creative industries in the EU economy. 10 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions "A digital single market strategy for Europe", (COM(2015) 192 final) of 6 May 2015. http://ec.europa.eu/priorities/digital-single- market/docs/dsm-communication_en.pdf 7 As a first step to implement the DSM strategy in the area of copyright, the Commission adopted a proposal for a regulation on the cross-border portability of online content services11 in December 2015, in order to in order to allow EU residents to travel with the digital content they have purchased or subscribed to at home. At the same time, it adopted a Communication "Towards a modern, more European copyright framework"12 in which it presented a plan including targeted actions and a long- term vision to modernise EU copyright rules. The Communication highlighted the need to inject more single market into the current EU copyright rules and to adapt them to new technological realities. This Impact Assessment (IA) on the modernisation of EU copyright rules supports the targeted initiatives presented in this Communication, as a second step in the implementation of the DSM strategy on copyright. EU action in the area of copyright complements other EU initiatives recently adopted in the context of the Digital Single Market Strategy, notably on the revision13 of the Audiovisual Media Services Directive (" the AVMS Directive")14, on measures addressing unjustified geo-blocking15 and on online platforms.16 The analysis presented in this IA strongly relies on the preliminary work conducted by the Commission on the review of EU copyright rules between 2013 and 2016.17 The review process covered a broader set of matters than those presented in this IA. Such a broad exercise was necessary for the Commission to gain an understanding of the full range of questions being discussed in the context of copyright policy and digital networks. However, not all those questions relate to matters requiring legislative intervention or, most importantly, requiring legislative intervention at this stage. There are issues where the Court of Justice of the European Union (CJEU) may have provided sufficient clarity to the existing rules or where cases are pending. There are also issues where the necessity to intervene has not been established or where there is not the required degree of maturity in terms of evidence 11 Proposal for a regulation of the European Parliament and of the Council on ensuring the cross-border portability of online content services in the internal market (COM(2015) 627 final) of , 9 December 2015. 12 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions "Towards a modern, more European copyright framework" (COM(2015) 626 final) of 9 December 2015 13 Proposal for an updated Audiovisual Media Services Directive: https://ec.europa.eu/digital-single- market/en/news/proposal-updated-audiovisual-media-services-directive. The revised AVMS Directive updates the rules applicable to all types of audiovisual media, notably in terms of promotion of European works, protection of minors, showing of advertisements; it however does not cover the rules applicable to the licensing of copyright-protected content. 14 Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services (OJ L 95, 15.4.2010, p. 1–24). 15 Proposal for a Regulation on addressing geo-blocking and other forms of discrimination based on customers' nationality, place of residence or place of establishment within the internal market: http://ec.europa.eu/DocsRoom/documents/16742. The proposal does not cover audiovisual services. 16 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions "Online Platforms and the Digital Single Market Opportunities and Challenges for Europe", (COM(2016) 288/2) https://ec.europa.eu/digital-single-market/en/news/communication-online-platforms-and-digital-single- market-opportunities-and-challenges-europe. The Communication outlines the key issues identified in relation to online platforms and presents the Commission’s position on both the innovation opportunities and the regulatory challenges presented by them. 17 See Annex 4. 8 of a problem and/or of the effects of intervention. This is notably the case for the issue of remote consultation of works held in libraries and other relevant institutions and for the issue of "freedom of panorama", which were both mentioned in the Communication of December 2015. The consultation exception (authorising libraries and other institutions to allow on- screen consultation of works for research and private study on their premises) has not been addressed in the context of the IA as the issue needs to be reconsidered in light of the outcome of a pending case before the CJEU on electronic lending.18On the panorama exception, the first results of the public consultation do not indicate a need to address problems at EU level, notably because most MS have incorporated such exception in their national legislation. Concerning private copying, the Commission will continue assessing the need for action to ensure that the different levies' systems in place in MS do not raise obstacles in the single market, as announced in the Communication of December 2015. This assessment needs to take into account recent and pending cases before the CJEU. The IA also takes into account the conclusions of the ex-post evaluation of the Satellite and Cable Directive.19 2. OBJECTIVES AND SCOPE OF THE INITIATIVE 2.1. OBJECTIVES The key policy objective of this initiative is to ensure a smooth functioning of EU copyright rules in the Digital Single Market (DSM). This IA covers a number of different areas within the EU copyright framework that are all relevant for the completion of the DSM. Three general objectives have been identified: (i) allow for wider online access to protected content across the EU, focusing on TV and radio programmes, European audiovisual (AV) works and cultural heritage; (ii) facilitate digital uses of protected content for education, research and preservation in the single market and (iii) achieving a well-functioning market place for copyright where rightholders can set licensing terms and negotiate on a fair basis with those distributing their content (notably as regards new forms of content distribution). The initiative aims at addressing copyright-related obstacles to meet those general objectives. The specific objectives of the initiative are described within each section of the IA. 2.2. SCOPE This IA considers adjusting existing rules or introducing new rules in three distinct areas: (i) access to content online; (ii) the functioning of key exceptions in the digital and cross-border environment; and (iii) the functioning of the copyright marketplace. These three areas have been identified in the Communication of December 2015, together with actions on the enforcement of IP rights, which are not part of the initiatives considered on this IA but for which specific initiatives are being considered separately. This IA focuses on the targeted actions identified in the Communication within these three areas:  On access to content, the Commission proposed in the above mentioned Communication "a gradual approach to removing obstacles to cross-border access to content and to the circulation of works". The proposal for a regulation on portability constituted a first 18 Case C-174/15, Vereniging Openbare Bibliotheken v Stichting Leenrecht 19 See "Ex-post (REFIT) Evaluation of the Satellite and Cable Directive (93/83/EEC)". 9  important step in this direction. This IA concentrates on further actions in relation to the cross-border distribution of TV (Traditional Television) and radio programmes online, the licensing of European AV works and the digitisation and making available of out-of- commerce works. As indicated in the Communication of December 2015, accompanying measures aimed at ensuring a wider access to creative content online will be proposed in the context of the 'Creative Europe' programme and are therefore not covered by this IA.  In relation to exceptions, this IA looks into the exceptions which are relevant for access to knowledge, education and research, which have been substantially affected by technological developments and have a cross-border dimension. It examines whether new exceptions are required in EU rules to cover digital uses in teaching activities, text and data mining and preservation activities by cultural heritage institutions (i.e. publicly accessible libraries, educational establishments and museums, as well as archives and film or audio heritage institutions). Legislative measures are also being considered to introduce a new exception allowing people with print disabilities to access books and other print material in formats that are accessible to them. They are not considered in this IA as they relate to the implementation of EU international obligations (Marrakesh Treaty20).  On the functioning copyright market place, the IA concentrates on issues related to the distribution of value in the online copyright value chain, thus responding to the objective stated in section 4 "achieving a well-functioning market place for copyright" of the Communication of December 2015. The IA addresses problems faced "upstream" by rightholders when trying to license their content to online service providers (use of protected content by online service providers storing and giving access to user uploaded content and rights in publications) and those faced "downstream" by creators when negotiating contracts for the exploitation of their works (fair remuneration in contracts of authors and performers). 3. ENSURING WIDER ACCESS TO CONTENT 3.1. INTRODUCTION 3.1.1. Background Digital technologies have facilitated the distribution of and access to copyright-protected content, with 49 % of EU citizens accessing music or AV content online.21 The Internet has favoured the entry of new market players and the development of new services (e.g. music streaming services, Video on Demand – VoD - platforms, etc.) providing access to a large quantity and variety of content online. It has also provided a growth opportunity for traditional players. TV still remains the most important channel to access AV content,22 but both broadcasters and retransmission23 service providers (e.g. cable operators) are 20 The Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired, or otherwise Print Disabled, signed on behalf of the EU on 30 April 2014. 21 Source: Flash Eurobarometer 411. 82 % of respondents indicated using the Internet and 60 % of Internet users indicated having accessed or downloaded music and 59 % AV content at least once in the last twelve months. 22 In terms of consumers' viewing time. Source: IHS Technology, "Current market and Technology Trends in the Broadcasting Sector", May 2015. 23 "Retransmission" is used in the meaning of Directive 93/83/EEC to denote simultaneous, unaltered and unabridged retransmission for reception by the public of an initial transmission from another Member 10 increasingly investing in the development of digital and online services in order to improve consumers' experience and offer more flexibility. Digital technologies also offer new opportunities to cultural heritage institutions (CHIs) willing to digitise and disseminate parts of their collections that would otherwise remain confined to their premises with limited access to the public. Despite the rapidly growing variety of online services available to citizens, cross-border access to and availability of digital content (both in terms of content provided by online services in other MS and of content produced in other MS) vary. While broadcasters play an important role in informing, entertaining and educating the general public, their programmes often remain unavailable online to European citizens living in other MS. In addition, the variety of TV / radio channels from other MS provided by retransmission services differs across the EU.24 Also, European films, documentaries and series are often under-represented in the catalogues of VoD platforms. Finally, only a limited part of the collections of CHIs are available online and across borders. The existence of barriers to the portability and cross-border access to content was highlighted in the Digital Single Market (DSM) Strategy.25 The Commission presented a legislative proposal on portability in December 201526 and proposed a "gradual approach to removing obstacles to cross-border access to content and to the circulation of works" in the Communication "Towards a modern, more European copyright framework" adopted at the same time.27 In this context, three fields of possible EU legislative intervention were identified: improving cross-border distribution of TV and radio programmes online; facilitation of licensing agreements for the online availability of European AV works and digitisation and making available of out-of-commerce (OoC) works across the EU.28 The present section of the IA refers to these fields. The Commission has carried out an evaluation of the Satellite and Cable Directive29 and in particular of the effectiveness and relevance of the principle of "country of origin" applicable to satellite transmissions and of the mandatory collective management applicable to cable retransmissions. Even though this evaluation, being limited to particular technologies of transmission (satellite an cable), is not directly relevant for the measures considered in this IA (online transmissions),30 its main findings have been taken into acccount where meaningful parallels could be drawn. In the online environment, players engaged in the distribution and dissemination of content (notably broadcasters, retransmission service providers, VoD platforms, but also CHIs as far as the access to the heritage is concerned) may face significant difficulties when trying to State, by wire or over the air, including that by satellite, of television or radio programmes intended for reception by the public. 24 See Annex 6B. 25 COM(2015) 192 final. 26 COM(2015) 627 final. 27 COM(2015) 626 final. 28 The present section of the IA focuses on issues related to the making available of out-of-commerce works in the collections of CHIs. Specific issues linked to the preservation (including digital preservation) of cultural heritage are presented in section 4.4 of this IA. 29 Directive 93/83/EEC, see "Ex-post (REFIT) Evaluation of the Satellite and Cable Directive (93/83/EEC)". 30 The EU harmonised rules facilitating the acquisition of rights for satellite broadcasting and cable retransmissions of TV and radio programmes from other MS do not apply to online distribution activities of broadcasters and to retransmissions by means other than cable. 11 clear the rights for the online exploitation of protected works across the EU.31 Also, VoD platforms willing to enrich their catalogue with European AV works often face problems to acquire online rights. Finally, OoC works held in the collections of CHIs often remain unavailable online, due, in part, to significant difficulties in the clearance of rights. This section of the IA examines how the clearance of rights can be facilitated to improve the online availability of content across the EU. 3.1.2. Why should the EU act? Legal basis The EU's right to act follows from Article 114 of the Treaty on the Functioning of the European Union (TFEU), which confers on the EU the power to adopt measures for the establishment and functioning of the internal market and has provided a legal basis for a wide range of EU instruments in the area of copyright. The rights relevant for online dissemination of content (notably the reproduction and making available rights) have been harmonised in the InfoSoc Directive.32 The definition of harmonised rules simplifying, where appropriate, the licensing of rights for online transmissions and retransmissions of TV and radio programmes, and for the dissemination of OoC works by CHIs, would contribute to improving the functioning of the Digital Single Market, and in particular the distribution of and access to digital content. The same applies as regards the facilitation of negotiations to acquire online rights for AV content notably as regards rights for the exploitation in different territories. Furthermore, Article 167(4) TFEU provides that the EU shall take cultural aspects into account in its action under other provisions of the Treaties, in particular in order to respect and to promote the diversity of its cultures. All proposed options take into account the implications of EU action for cultural diversity. Subsidiarity and added value The problems identified in this section of the IA have an important cross-border dimension: broadcasters face difficulties in particular when clearing rights for making their content available online across borders; similarly, the acquisition of rights can be complex for retransmission services other than cable operators when they offer channels from other MS. MS cannot intervene by legislation in order to establish a uniform regime applicable to the licensing of rights (which have been harmonised at EU level) for cross-border transmissions of TV and radio programmes. Concerning the exercise of retransmission rights, national solutions may generate further fragmentation in the Digital Single Market. Only intervention at EU level can ensure legal certainty for all retransmission operators and rightholders. As regards the online availability of European AV works, MS' action may not be sufficient to improve the online availability of European (including non-national) AV works. The dialogue between the relevant stakeholders and negotiations for the licensing of online rights need to be encouraged at EU level in order to have an impact on the diversity of the content offered 31 "Works" is used in this IA to encompass works protected under EU copyright acquis and other protected subject matter. 32 Directive 2001/29/EC. 12 by online services, and in particular on the presence of European works in catalogues of these services.33 Regarding OoC works, EU action responds to the need to facilitate the making available to the public of the heritage held in CHIs, including across borders. Without EU intervention, such actions would be limited by national borders (and would happen only in some MS, or at a varying pace). CHIs pointed to the importance to solve the cross-border aspect of this problem, as also did right holder signatories to the Memorandum of Understanding on Key Principles on the Digitisation and Making Available of Out-of-Commerce Works, signed on 20 September 2011. 3.1.3. What should be achieved? The general objective of EU intervention is to allow for wider online access to protected content by users across the EU, in particular in the following areas: transmissions and retransmissions of TV and radio programmes; European AV works and cultural heritage. EU action aims at removing the copyright-related obstacles and at creating the conditions allowing broadcasters, service providers and CHIs to offer wider online access to content across the EU. The specific objectives are therefore defined in terms of facilitating clearance of rights (and negotiation) between the relevant parties. 33 In the framework of the current reform of the Audiovisual Media Services Directive (Directive 2010/13/EU), an obligation for on-demand audiovisual media services to include in their catalogue at least 20% of European works has been introduced (see Article 13.1 of the proposal). The present initiative aims at solving copyright-related contractual blockages preventing a larger availability of EU audiovisual works on VoD platforms. The present initiative could help on-demand players to achieve the 20% threshold provided for in the AVMS Directive reform, but remains independent from the AVMS Directive reform. 13  3.1.4. Methodology Problem definition As illustrated in the problem tree presented below, the problems reported in this section of the IA are all directly related to difficulties encountered with the clearance of rights: broadcasters when acquiring the rights for their online services available across borders; retransmissions services (different from but functioning like cable operators) for the clearance of rights for retransmissions of TV and radio programmes from other MS; VoD platforms in obtaining online rights of European AV works; CHIs clearing the rights for digitisation and dissemination of OoC works in their collections. The specific drivers and consequences are explained in the following sub-sections. However certain overarching elements are presented here as they apply to different contexts. The territoriality of copyright34 and the specific licensing practices existing for certain types of works are one of the drivers contributing to the complexity of rights clearance in cross- border contexts. A service provider that is making the content available online in more than one MS must have the relevant rights to use such content for the relevant territories. Where the relevant rights for all the relevant territories are held by one single right holder/distributor, the service provider can obtain a multi-territorial licence covering all territories. As regards the online rights in musical works, some CMOs license rights on a territorial basis,35 while a 34 Territoriality of copyright means that rights under copyright are granted by national laws and not as a unitary title at EU level. The geographical scope of each right is limited to the territory of the MS which has granted it. 35 Rightholders usually transfer their rights for all EU territories to a single CMO and/or a publisher, who in turn enters into agreements with other CMOs and sub-publishers for representation in separate MS. See Charles Rivers Associates Study Economic Analysis of the Territoriality of the Making Available Right in the EU, March 2014 pages 41-42. 14 number of music publishers and CMOs grant multi-territorial licences.36 The multi-territorial licensing of these rights is facilitated by the CRM Directive.37 Multi-territorial licensing is widely used for the rights held by record producers. AV content is mainly licensed and distributed on a territorial basis. AV producers of premium content38 often grant an exclusive licence to a single distributor/broadcaster/service provider in each MS. This form of licensing is considered important by the AV industry for the financing of AV works, with rights being often pre-sold at the pre-production stage. In exchange for an upfront payment to the film producers, distributors and/or broadcasters often obtain exclusive exploitation rights in a specific territory for a defined period of time. As regards OoC works in heritage collections, existing solutions,39 where available, are also territorially confined. Beyond licensing issues, the limited availability of content online across borders is also the result of decisions taken by service providers (which may be related to commercial strategies, regulatory requirements, technological or financial constraints, etc.). As a result, there are instances where even if multi-territorial licences are granted by rightholders or even if agreements between rightholders and service providers do not include limitations on territorial exploitation, cross-border access remains a problem. This is however not a problem that can be addressed by copyright specific legislation.40 This section of the IA does not directly address these issues. Difficulties in clearing rights for online exploitation, including across borders, often result in less varied content being available online and in consumers facing restrictions when trying to access content online. There is however consumer interest for content from other MS:  In the Eurobarometer survey carried out in 2011 on cross-border demand for content services,41 19 % of Europeans indicated they were interested in receiving content from another EU country, with 15 % interested in TV programmes, 3 % in on-demand services and 2 % in other types of content;  In the Eurobarometer survey carried out in 2015 on "Cross-border access to online content",42 almost one in ten Internet users (8 %) indicated they have tried to access content from an online service meant for users in another MS, while 50% of respondents who have not tried indicated they would be interested to do so (the most popular type of content being AV - 29 % of respondents); 36 In June 2015, the CMOs PRS (UK), GEMA (Germany) and STIM (Sweden) received the clearance of their deal by the Commission with a view to establishing a multi-territorial licensing hub in Europe. EC press release: http://europa.eu/rapid/press-release_IP-15-5204_en.htm 37 Directive 2014/26/EU 38 AV content which is considered as a vital input because it attracts substantial audiences and thus generate substantial revenues for rightholders. 39 For example based on extended collective licensing or presumptions of representation by CMOs. See Annex 9E for more information on these mechanisms and national examples. 40 Some of these issues are addressed by accompanying measures announced in the Commission Communication (COM(2015) 626 final) of 9 December 2015. 41 Special Eurobarometer 366 : Building the Digital Single Market - Cross Border Demand for Content Services 42 Flash Eurobarometer 411; http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/instruments/F LASH/surveyKy/2059 15  In the 2014 public consultation on the review of the EU copyright rules and in the 2015 public consultation on the review of the Satellite and Cable Directive, the vast majority of consumers argued in favour of cross-border access to online content;43  In the public consultation on the AVMS Directive, 82 % of the respondents who expressed an opinion on the issue of "Promotion of European works" indicated being interested in watching more content produced in another MS. Identification of policy options The policy options have been developed in relation to the specific issues at stake in each area. Different licensing regimes, considered as enabling mechanisms to facilitate the clearance of rights, are examined in the legislative options. Views from stakeholders, European Parliament and Member States The views from the different stakeholders are reported after the description of each policy option. In its resolution of 9 July 201544, the European Parliament (EP) urged the Commission “to propose adequate solutions for better cross-border accessibility of services and copyright content for consumers” while acknowledging the importance of territoriality. A number of MS45 support the objective of enabling more cross-border access to online transmissions of TV and radio programmes but call for caution, as in their view a possible intervention should not undermine contractual freedom, a high level of protection of intellectual property and the exclusivity of rights. Concerning retransmissions of TV and radio programmes, a number of MS are in favour of simplifying rights clearance for services comparable to cable, though some have concerns and in particular underline the necessity to ensure fair competition. On out-of-commerce works, only a few MS provided views on the need of EU action in this area,46 generally to explain national systems and favouring contractual mechanisms. In recent Council Conclusions,47 they have simply taken note of the Commission’s intention48 to assess options and consider legislative initiatives in this area. 43 "Report on the responses to the Public Consultation on the Review of the EU Copyright Rules": http://ec.europa.eu/internal_market/consultations/2013/copyright-rules/docs/contributions/consultation- report_en.pdf. See relevant extracts in Annex 2B. "Full report on the public consultation on the review of the EU Satellite and Cable Directive": https://ec.europa.eu/digital-single-market/en/news/full-report-public-consultation-review-eu-satellite- and-cable-directive. See Annex 2C. 44 European Parliament resolution of 9 July 2015 on the implementation of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society. 45 The views of MS are based on the results of the public consultation on the review of the EU Satellite and Cable Directive, to which 11 MS replied (DE, EE, ES, FI, FR, HU, IE, NL, PL, SK, UK). See Annex 2C. 46 Notably during the 2014 public consultation on the review of the EU copyright rules. See Annex 2B. 47 Council Conclusions on the role of Europeana for the digital access, visibility and use of European cultural heritage, 31 May 2016. 48 As outlined in the Commission Communication (COM(2015) 626 final) of 9 December 2015. 16 Impacts of policy options Stakeholders affected The policy options related to online transmissions and retransmissions of TV and radio programmes would affect, on the one hand, broadcasters (TV and radio), retransmission service providers and other online service providers, and on the other hand, all rightholders whose works are used in TV and radio programmes (mainly in the AV, music and visual art sectors). Regarding the availability of works in VoD platforms, the policy options examined in the IA would affect all types of stakeholders in the AV sector (authors, producers, distributors, broadcasters, VoD platforms, etc.). The policy options considered in relation to OoC works would have an impact on CHIs such as libraries, archives, museums and film heritage institutions, and on rightholders in all sectors (the collections of CHIs contain OoC which can be books, phonograms, AV works, photographs, etc.). Impacts on consumers/users are assessed for each policy options, mostly in terms of access to and availability of online content. Obligations and costs for MS resulting from the preferred policy options are presented in Annex 3. Type of impacts and availability of data Only the most significant and likely impacts are reported in this IA. The impacts are assessed by group of stakeholders (e.g. broadcasters, service providers, rightholders), focusing mainly on economic impacts, notably transaction costs and licensing revenues. In addition, broad social impacts (e.g. impacts on cultural diversity) and impacts on fundamental rights are assessed separately. All policy options considered in this section of the IA may have an impact on copyright as a property right (Article 17(2) of the Charter of Fundamental Rights of the European Union – "The Charter")49 and on the freedom to conduct a business (Article 16). In addition, impacts on freedom of information (Article 11), freedom of the arts and sciences (Article 13), and right to education (Article 14) are examined where appropriate. Impacts on third countries or on the environment are not elaborated upon as the policy options presented in this section of the IA are considered not to have any substantial impact on them. No significant impacts on employment have been identified. Whereas general market data is widely available on the different sectors and distribution channels examined in this section of the IA (TV market, VoD market50), specific data related to transaction costs and licensing revenues is not publicly available. Other than in a few cases, this data could not be obtained from stakeholders despite repeated attempts (through direct requests to stakeholders or dedicated studies51). 49 Charter of Fundamental Rights of the European Union, OJ C 326, 26.10.2012, p. 391–407. 50 See Annex 8. 51 The "Survey and data gathering to support the evaluation of the Satellite and Cable Directive 93/83/EEC and assessment of its possible extension" ("SatCab Study") specifically analysed differences in obtaining remuneration by CMOs and individual licensors for retransmission of TV and radio programmes over various platforms. However, the findings are rather limited due to limited information which was made available to the contractor. 17 Impacts on SMEs The policy options considered in this IA do not target SMEs but may have an impact on them, as the large majority of companies that may be affected are SMEs. In the sector of programming and broadcasting activities, 98.9 % of companies are SMEs (85 % micro- companies) generating 17.9 % of the value added.52 In the sector of film and music production, 99.9 % of companies are SMEs (96 % micro-companies) generating 85 % of the value added (32 % by micro-companies).53 The policy options examined in this section of the IA are expected to reduce the administrative burden faced by TV and radio broadcasters as well as service providers willing to obtain rights for the online and/or cross-border exploitation of works and would therefore be positive for SMEs active in this area. Most rightholders may also benefit from the licensing or negotiation mechanisms examined in the different policy options, in particular individual rightholders or micro-companies that do not have the capacity to manage individual licensing deals with a high number of service providers and have a limited market power. Furthermore, the policy options examined in the different areas covered by this section of the IA could generate new licensing opportunities for rightholders and possibly additional licensing revenues. Therefore, mitigating measures in favour of SMEs have not been deemed necessary. Comparison of policy options The policy options are compared against the criteria of effectiveness (i.e. to what extent they fulfil the specific objective), efficiency (i.e. at what cost they do so), impact on the different groups of stakeholders and coherence with regard to cultural diversity, fundamental rights and/or other EU policies. Each option is rated between "--" (very negative), "-" (negative), 0 (neutral), "+" (positive) and "++" (very positive). 3.2. ONLINE TRANSMISSIONS AND RETRANSMISSIONS OF TV/RADIO PROGRAMMES 3.2.1. Background data on the TV and radio sector54 Despite the way TV has been transformed by the emergence of digital technologies and the internet,55 traditional TV remains relevant both economically and as the source of information and entertainment for viewers. In 2014, the EU-28 TV market was worth around €86 billion.56 In the same year, TV content (linear and time-shifted viewing) equated to 96 % of all video consumption in six countries (FR, ES, DE, IT, UK and US).57 52 Source: Eurostat Structural Business Statistics, 2012 data for radio broadcasting, television programming and broadcasting activities. 53 Source: Eurostat, Structural Business Statistics, 2013 data for motion picture, video and television programme production, sound recording and music publishing activities. 54 See Annex 6 for further details. 55 Annex 6A. 56 This comprises direct revenues from three main sources: pay-television subscriptions (37 %), followed by advertisement (34 %) and public funding (29 %). Source: European Audiovisual Observatory Yearbook, 2015. Television maintains the highest share of advertising revenue across all media: global total TV advertising revenue’s share of global total advertising revenue was 31.5% in 2014, see PWC the Global entertainment and media outlook 2015 –2019, http://www.pwc.com/gx/en/industries/entertainment-media/outlook/segment-insights/tv- advertising.html. 57 According to IHS which tracks the total viewing of France, Spain, Germany, Italy, the United Kingdom and the United States by combining viewing time data from linear televisions, PVR (personal video recorder), time-shifting, pay TV video-on-demand services and over-the-top (OTT) content- Source: 18 96 % of Europeans watch television at least once a week, predominantly on a TV set but increasingly online (in 2014, 20 % of Europeans – but 40 % of those aged 15-24- watched TV online at least once a week, representing a 3 % increase compared to 2012).58 The average TV viewing time for the whole EU population in 2013 was 223 minutes per day.59 While viewing patterns are changing, particularly among younger viewers, TV programming still represents an important part of their video viewing.60 TV and radio remain the main source of news for a large majority of Europeans, compared to other sources (notably print and online). For example, 72 % of consumers in FR, 69 % in DE, 63 % in DK and 59 % in the UK indicated TV or radio as their main source of news.61 80 % of the EU population listens to radio for at least 2 to 3 hours a day – and mostly to local or regional programmes. On average, 6 to 8 % of total listening of radio is done online in Europe.62 A broadcaster may make a TV or radio channel available directly through a traditional terrestrial transmission,63 or via a satellite,64 cable65 or other telecommunications network.66 TV and radio channels can also be offered online over the open internet. Many satellite, cable and IPTV operators offer such services to their subscribers. There are also some online services of this type provided by entities that do not offer satellite, cable or IPTV transmissions.67 The following diagram illustrates the functioning of direct, including online, transmissions of TV and radio programmes (section 3.2.2) and of retransmissions of TV and IHS Technology, "Current market and Technology Trends in the Broadcasting Sector", May 2015, p. 27. 58 Standard Eurobarometer 82, Media Use in the EU, Autumn 2014: http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/yearFrom/19 73/yearTo/2014/surveyKy/2041 59 The figure includes linear TV as well as short term catch-up. Source: "The development of the European market for on-demand audiovisual services", European Audiovisual Observatory, March 2015. 60 In the UK, TV programming accounts for 65 % of video viewing among individuals aged 16 to 24. http://informitv.com/2015/06/18/young-people-still-watch-television/ Truth About Youth, Thinkbox, June 2015 61 FR: TV 61 % radio 11 %; DE: TV 56 % radio 13 %; DK: TV 54 % radio 9 %; UK: TV 51 % radio 8 %. See Hermes study on the future of European audiovisual regulation 2015, based on Reuters Digital News Survey 2014 / Hans-Bredow-Institute. 62 Source: AER reply to the public consultation on the SatCab review, 2015. 63 Terrestrial radio and TV services are broadcast from transmission towers and received through an antenna. Terrestrial channels are generally free to view, although some are available as part of subscription services (normally as part of a package of channels linked to the basic level of subscription). 64 Direct to home satellite television and radio channels are uplinked from an earth station or teleport either directly by a broadcaster, by a third-party facility or by a satellite operator. Some satellite services are free to air. However, many satellite services are encrypted and therefore users are also required to pay for a subscription in order to access the content. In most cases these encrypted pay channels are offered as part of package of channels offered by satellite package providers. 65 Cable television and radio services are generally carried over a co-axial cable. Signals are received at a cable head end, either via terrestrial or satellite transmissions, and retransmitted via cable to customer homes. Some channels may be provided free of charge, or as part of a basic cable service tier. Other channels may be encrypted and are offered on a subscription basis, typically in various bundled packages. 66 It is now possible for telecommunications companies (which may be either incumbent telephone companies or competing providers of communications services) to distribute radio and television channels and other AV services over fixed or wireless broadband data networks using internet protocols. Such services are sometimes referred to as internet protocol television, or IPTV. 67 For example, YouTube live channels. 19 radio programmes (section 3.2.3). The problems addressed by this IA concern the transmissions and retransmissions marked by dotted lines below. 3.2.2. Online transmissions of broadcasting organisations 3.2.2.1. What is the problem and why is it a problem? Problem: Broadcasting organisations face practical difficulties with the acquisition of rights for their online services when they are offered across borders Description of the problem: As viewing habits of consumers are changing and demand for access to TV and radio online grows, broadcasters have responded by expanding their services online and allowing consumers' access through screens such as tablets and smartphones. The online offerings of broadcasters include simulcasting services (TV/radio channels which are transmitted online alongside traditional broadcasting by satellite, cable, terrestrial), webcasting services (online only linear channels68), TV catch-up services69 and podcasts, i.e. radio programmes that can be streamed or downloaded as well as other on- demand services (e.g. VoD). Simulcasting and catch-up services are often monetised through advertising (although some broadcasters charge for access to these services). In order to make their online services available across borders, broadcasters need to have the required rights for the relevant territories. This may require engaging in a complex process for 68 For example, YouTube live channels which cover live streams such as gaming, music, sports, news, technology, nature; iTunes "Beats" radio which offers linear music streaming. Traditional broadcasters have also started to offer online-only linear TV-like channels: as of February 2016, BBC 3 channel is available only online; on 31 May 2016, RTL II (DE) launched its online channel RTL II You, which combines linear services with video-on-demand. 69 The concept of ‘catch-up’ television, enabling consumers to view programmes at the own choice of timing, is generally based on clearance of the rights for programming within a limited window, typically 7 to 30 days after transmission. 20 obtaining online rights, generating high transaction costs, and may reduce broadcaster's incentives to provide cross-border services. Despite requests to the relevant stakeholders, no data could be obtained on transaction costs related to clearing online rights on a cross-border basis.70 For satellite broadcasting the clearance of rights has been facilitated by the application of the country of origin principle enshrined in the Satellite and Cable Directive71 according to which the act of communication to the public by satellite takes place solely in the MS where, under the control and responsibility of the broadcaster, the programme-carrying signal is introduced into an uninterrupted chain of communication leading to the satellite and down towards the earth. Therefore the rights for such satellite transmission must only be cleared for one MS. This same principle does not apply when a broadcaster clears rights for its online services. The need to facilitate the clearance of rights for broadcast-related online services has been recognised by stakeholders in the music sector72 and in the acquis. Article 32 of the CRM Directive introduces a derogation from the rules on the multi-territorial licensing of rights in musical works for the clearance of rights required by broadcasters for simulcasting and other online transmissions which are ancillary to the initial broadcast of radio or television programmes. The rationale behind this derogation, as explained in recital 48 of the CRM Directive, was to leave the required flexibility for the licensing of online rights in musical works for such transmissions to be licensed via local CMOs (rather than by other EU CMOs or "hubs" aggregating rights which may not necessarily be in the same MS as the broadcaster seeking the licence). 70 European Broadcasting Union (EBU) members' experience with archives rights clearance for online transmissions shows that administrative costs can be €15,000-20,000 in a standard case, while a difficult case could amount to €60,000-80,000 (EBU reply to the SatCab public consultation). (Note: this example concerns transaction costs to clear online rights for archive content nationally, to which the broadcaster previously acquired a licence for broadcasting). EBU explained that these examples of the clearance costs figures come from the BBC in 2005, adapted to the inflation. In general, “standard” cases are typically documentaries, current affairs and non-fiction programmes, as they involve less different rightholders, whereas "difficult" cases are typically dramas, comedy series and other fiction programmes. The standard/difficult borderline is also determined by the age of the programme (the older it is, the more difficult it is to clear the rights). See for further information http://webarchive.nationalarchives.gov.uk/20140603093549/http://www.ipo.gov.uk/ipreview-c4e-sub- bbc.pdf. However, despite requests, neither EBU nor the Association of Commercial Television in Europe (ACT) provided data on cross-border transaction costs for clearing online rights, as compared to transaction costs in one jurisdiction. 71 See section 6.1 of the ex-post (REFIT) Evaluation of the Satellite and Cable Directive (93/83/EEC). 72 The EBU, the European Composers and Songwriters Alliance (ECSA), the International Confederation of Music Publishers (ICMP) and the European Grouping of Societies of Authors and Composers (GESAC) have signed on 4 April 2014 a Recommendation for the licensing of broadcast-related online activities (http://www.ebu.ch/files/live/sites/ebu/files/News/2014/04/Recommendation%20for%20the%20Licensi ng%20of%20Broadcast-related%20online%20activities.pdf). This Recommendation sets the principles which encourage the aggregation of rights for the licensing on a cross-border basis of broadcast-related online services provided by and under the control and responsibility of a broadcaster which services have a clear relationship with the broadcaster’s linear offline broadcast services, in particular material with a thematic relationship with the offline broadcast content. In 2002, the Commission cleared an agreement between CMOs of record producers concerning one-stop licensing of rights for simulcasting services of TV and radio broadcasters. Under this agreement, broadcasters can get a multi-territorial licence from a CMO of their choice for simulcasting services in the EEA rather than secure a licence from each national CMO (Case No COMP/C2/38.014 — IFPI ‘Simulcasting’). Subsequently further agreements have been concluded to cover other online related services such as some forms of webcasting (2005) and catch-up services (2015). 21 Drivers: [High number of works and short timeframe] In addition to content such as films, TV series or music produced by other parties (for which rights have to be cleared with the relevant rightholders), broadcasters on a daily basis transmit a very high number of hours of original TV and radio programmes73 such as news, cultural, political, documentary or entertainment programmes that they produce themselves, which use variety of content protected by copyright74 the rights to which have to be cleared. This results in a complex clearance of rights with a variety of rightholders, including authors (of music, of scripts, of images, of texts), directors, film producers, performers, record producers. The overall number of transactions is much higher than for an online content service offering a catalogue of films or music on demand. Major public service broadcasters conclude more than 70,000 contracts with rightholders per year.75 For example, one episode of series produced by a broadcaster may include up to 100 underlying rights.76 Often the rights need to be cleared in a short time- frame, in particular when preparing programmes such as news or current affairs which represent an important part of broadcasters' transmissions.77 The relevant rights may be held by CMOs (e.g. rights in musical works) or by individual rightholders such as producers (e.g. rights in AV works). With regard to some other works, e.g. pictures and photographs the situation is mixed as some rights are represented by CMOs and some by individual rightholders. There can be also situations where one work is embedded in another e.g. music in an AV work or a picture in a text which further complicates the rights clearance. This means that in their daily operations TV broadcasters face significant transaction costs related to the clearance of underlying rights for their programmes. The transaction costs for radio broadcasters are less significant, since (i) radio broadcasts contain fewer types of works protected by copyright (notably, no images or AV works) and (ii) there are well-established collective management structures for the main type of copyright-protected work used in radio broadcasts, i.e. music, which makes it easier for radio broadcasts to clear rights.78 [Need to clear rights on a territorial basis] These costs and the complexity of the task increase significantly if broadcasters want to make their online services available across borders. As described in section 3.1.4, in some cases multi-territorial licences are available but often broadcasters must clear rights for certain works territory by territory. As regards radio broadcasting, according to the information provided in meetings with the stakeholders, agreements between radio broadcasters and local CMOs may allow cross-border 73 For example, EBU members in the EU aggregate up to 10 million broadcast hours per day (Source: EBU). 74 Such programmes include news, current events, political debates; own documentary/entertainment productions; culture, science, arts programmes; lifestyle programmes, etc. See examples provided in Annex 6A. 75 Source: EBU. In Germany, ARD and ZDF conclude at least 150 000 contracts each year. 76 Source: EBU. An example of BBC TV series Doctor Who shows that more than 80 contributions per episode needed to be cleared, see http://webarchive.nationalarchives.gov.uk/20140603093549/http://www.ipo.gov.uk/ipreview-c4e-sub- bbc.pdf; for ZDF (Germany), a single 30 minutes episode of a TV series can generally involve up to 100 contributions and rightholders (actors, musicians, composer, phonogram industry etc.); for the documentary “Künstlerportait”, ORF (Austria) needed to clear 32 rights (13 clips) and, in addition, music rights are cleared with CMOs. (Source: EBU). See for further details Annex 6A. 77 On average, news and current affairs programmes represent 25.9 % of EBU members' programmes (source: EBU/MIS – on the basis of aggregated data from 2014 concerning 35 broadcasters in 27 EU countries). 58% of programming of German broadcaster ZDF is dedicated to information. 78 Despite requests addressed to the relevant stakeholders we were not able to obtain more specific information on potential problems in licensing rights for cross-border online transmissions of radio broadcasters. 22 transmissions up to certain % of audience (e.g. 5 or 7.5 %) which could explain why there is a broad offer of online radio services. Beyond the complexity of rights clearance other factors influence to a different extent the cross-border accessibility of TV and radio programmes. They are presented below but this IA is not addressing these particular issues, as they are mostly linked to business models and commercial strategies. [Territorial exclusivity] Another factor strongly influencing the access to TV and radio programmes across borders is the fact that the rights in premium content (e.g. films and TV series of particular interest for the audience), as explained in section 3.1.4, are generally licensed on the basis of territorial exclusivity. The important role this licensing plays for the AV industry is also explained in section 3.1.4. Broadcasters willing to serve audiences across borders may not be able to acquire the relevant rights if the rights in other territories are granted, on an exclusive basis, to another service provider(s). At the same time, they may enter into contracts under which they agree to limit or block cross-border access to premium content to which they have acquired the rights for territories in which they operate. This is confirmed by initial findings of the Commission’s e-commerce sector inquiry.79 [Remit of public service broadcasters] Some public service broadcasters may be limited in their possibility of offering certain content in their online services by their national public service remit. For example in Germany public service broadcasters are not allowed to place TV-feature films and series purchased from third parties online.80 By contrast, the remit of other public broadcasters may allow them to serve audiences outside the MS.81 [Commercial decisions of broadcasters] Finally, in some cases, broadcaster’s themselves may take decision to focus on a specific territory and to tailor their offerings to the specific audience due to a variety of factors. For example, broadcasters may decide to geo-block access to their own programming where they see possibilities of licensing it in other territories. According to the feedback received from stakeholders, other considerations such as the demand for the services, language spoken by consumers, the complexity of the legal framework as well as the viability of revenues may result in broadcasters deciding not to enter certain markets at all.82 Consequences: In consequence of the combination of the drivers described above, TV broadcasters often make their online services available only in a territory of one MS and put in place measures which prevent cross-border access to these services such as geo-blocking of IP addresses from other territories.83 According to the initial findings of the Commission’s e- 79 Respondents have stated that some rightholders make the licensing of their content conditional upon the fact that the service provider undertakes to apply geo-blocking, or that the cost of making some content available without geo-blocking would be higher/too high. Licensing agreements for TV drama and TV series, and films and sports events, appear to include requirements to geo-block more often than licensing agreements for other digital content categories. 59 % of respondents state that they are contractually required by rightholders to geo-block. 66 % of all agreements with suppliers of film content that were referred to by respondents require digital content service providers to geo-block. 80 Capello M. (ed.), "Online activities of public service media: remit and financing", IRIS Special 2105-1, European Audiovisual Observatory, Strasbourg, 2015, p. 61. 81 For example, according to Article 5(13) of Law No I-1571 of 8 October 1996, the Lithuanian public broadcaster LRT can broadcast abroad. The Charter of the Irish public broadcaster RTÉ states that "RTÉ recognises the importance of news and information about Ireland for the Irish abroad in maintaining contact with Ireland and preserving an Irish dimension to their identity". 82 See Synopsis Report in Annex 2C and also "Survey and data gathering to support the evaluation of the Satellite and Cable Directive 93/83/EEC and assessment of its possible extension" (the "SatCab Study"), sections 3 and 4. 83 See Annex 6B and SatCab Study, section 3. 23 commerce sector inquiry published on 18 March 2016,84 82 % of the public service TV broadcasters and 62 % of commercial TV broadcasters who responded to the inquiry implemented at least one type of geo-blocking to their online services. As illustrated in Annex 6B, data provided by the European Broadcasting Union (EBU) as well as data collected in the SatCab study85 on cross-border availability of online services of TV broadcasters indicates that international content such as sports, fiction, documentaries and entertainment, as well as content based on foreign formats is in principle geo-blocked. The situation with the original content produced by TV broadcasters is mixed but often broadcasters also block access to their own content.86 In the case of radio broadcasting both online live streaming and podcasts are usually not geo-blocked. How the problem would evolve: Without intervention at EU level addressing the particular complexity of the clearance of rights this problem would persist as broadcasters would face the same practical difficulties in clearing rights for cross-border transmissions. EU consumers would remain limited in their cross-border access to TV programmes such as news, cultural or political programmes, documentaries or entertainment programmes which due to their national specificities often cannot be easily replaced by programmes offered in other MS. 3.2.2.2. What are the various options to achieve the objectives? This IA assesses the baseline scenario, one non-legislative and two legislative options to facilitate licensing in order to enhance cross-border transmissions of TV and radio programmes online. The options considered in this IA are enabling options aiming to facilitate licensing of rights, in order to allow the market to respond gradually to legal and policy changes. Baseline No policy intervention. This option would consist in relying on market players to progressively offer cross-border access to TV and radio programmes distributed online as well as on the courts, and notably the CJEU, to clarify the application of the Treaty and of provisions of EU secondary law relevant to the free movement of services. It would also mean continuing to rely on the application of competition law to agreements including limitations on territorial exploitation of content. . Stakeholders' views87 All public service broadcasters, commercial radios and certain other service providers consider that the baseline option cannot solve the identified problems. They consider that a heavy administrative task and transaction costs 84 The initial findings from the Commission's e-commerce sector inquiry published on 18 March 2016. 85 EBU data covers public broadcasters from 14 EEA countries; the SatCab Study covers data from 11 MS (three commercial/public broadcasters' channels from each covered MS). 86 A few examples concerning public broadcasters: LTV (LT) in principle does not geo-block own produced content while CT1 (CZ), a general channel is fully geo-blocked and CT24, a news and current affairs channel, geo-blocks sports news; the livestream channel of ZDF (DE), Mediathek, is geo- blocked and cross-border access is allowed only to selected programmes. A few examples concerning commercial broadcasters: TV4 Play (SE), geo-blocks all online TV simulcasting services except news, TV3 (LT) makes available across borders news and own production while international entertainment programmes are geo-blocked; RTL TV Now (DE) makes simulcasting services available only locally while live TV News are available internationally (paid services). See also Annex 6B. 87 In this section, the summaries of stakeholders' views are based on the results of the public consultation on the review of the EU Satellite and Cable Directive, see Annex 2C. 24 linked to licensing rights across borders would remain. Rightholders, CMOs and the majority of commercial broadcasters88 support this option, arguing that the current framework already offers possibilities to license rights on a multi-territorial basis and that the limited cross-border supply is driven by a limited consumer demand and language barriers. Consumers' representatives consider that the current regulatory framework does not sufficiently ensure access to TV/radio programmes available online in other MS and that market-driven solutions would not be sufficient to solve this problem. Option 1 – Voluntary agreements to facilitate the clearing of rights for broadcasters' online services ancillary to their broadcasts  This option would promote maximising a voluntary aggregation of the rights necessary to provide multi-territorial licences for broadcasters' online services. It would build on the voluntary agreements between rightholders and broadcasters which already exist in the music sector89 and would aim to introduce them in other content sectors important for broadcasting (such as AV and visual arts) and also with regard to commercial broadcasters who are not party to the arrangements with authors' CMOs. Based on such arrangements, broadcasters would be able to acquire from CMOs multi-territorial licences to aggregated repertoires.  It would focus on online services of broadcasting organisations which are ancillary to the initial broadcast, i.e. simulcasting (linear simultaneous transmission of a broadcast by the broadcaster), catch-up TV/radio services (on-demand transmission of a broadcast available for a limited period of time after it has been broadcast in a linear manner) and material related to the broadcast (e.g. previews).90  In order to facilitate the clearing of the rights for cross-border transmissions of broadcasters' online services ancillary to their broadcast, the Commission would assess the functioning of the existing voluntary agreements in the music sector and foster a dialogue between the parties (rightholders, CMOs and broadcasters) if there is a need to improve their functioning. It would also promote similar agreements at EU level for the AV sector and other content sectors important for broadcasting services (such as visual arts). Stakeholders' views Public service broadcasters are likely to consider that this option is not sufficient to achieve the identified objective. Commercial broadcasters and some other service providers may favour this option as it would rely on industry-based solutions. Rightholders and CMOs are likely to support such option. However, in the case of AV stakeholders, the usual practice for licensing is individual agreements thus it is less likely that they would support voluntary aggregation of repertoires by CMOs, especially for the premium AV content. Consumers' representatives consider that market-driven solutions would not be sufficient to solve the identified issues. Option 2 - Application of country of origin to the clearing of rights for broadcasters' online services ancillary to their initial broadcast  Introduce a rule providing that as concerns the licensing of rights for certain online transmissions by broadcasting organisations, the copyright relevant act takes place solely in the MS where the broadcasting organisation is established. As a result, in order to provide certain services in the Union, rights would only need to be cleared for the 88 The difference in the opinion between commercial and public service broadcasters may stem from the fact that the former typically produce more content which is licensed to third parties. 89 See section 3.2.2.1 above. 90 Access to and availability of European audiovisual works on VoD platforms are addressed in section 3.3 of this IA. 25  "country of origin" (CoO) of the broadcasting organisation (and not for the countries of reception).91  This option would cover the same online services of broadcasting organisations as under Option 1.92  The CoO rule would enable broadcasters to provide services across borders but it would not oblige them to do so (Option 2 would not entail any rules limiting the contractual freedom of broadcasters and rightholders). The application of the CoO rule and the contractual freedom of broadcasters and rightholders would be subject to the application of the Treaty as well as to the applicable secondary law (notably, as regards the freedom to provide services).  The licence fee payable to rightholders would have to take into account all aspects of the online transmission of the broadcast, including the audience, unless agreed otherwise with rightholders.93  The Commission would put in place a monitoring mechanism to assess the cross-border availability of broadcasters' online services covered under this option. Stakeholders' views All public service broadcasters and commercial radios support this option. Commercial TV broadcasters are generally against this option due to the fear that, considered together with the application of the free movement of services principle and competition law, it may lead to the weakening of territorial licensing or even to mandatory pan-European licences. They argue that this, in turn, would limit possibilities for smaller broadcasters/ broadcasters operating in smaller markets to obtain licences in premium AV content, as rightholders, without exclusivity guarantees, would focus on the largest/most lucrative markets. Other service providers than broadcasters call for a cautious and well-measured approach, ensuring a level playing field. Rightholders and CMOs are against such option for similar reasons as commercial TV broadcasters, underlining that this may undermine incentives to invest in AV production. They also raise a possible risk of establishment shopping and of disaggregation of repertoire. Consumers' representatives support the application of the CoO rule to broadcasters' online transmissions. Option 3 – Application of country of origin to the clearing of rights for the services covered by Option 2 and for TV and radio-like linear online transmissions (and services ancillary to such transmissions)  This option would cover, in addition to the services covered under Option 2, TV and radio-like linear online transmissions which are not linked to a broadcast but are online only transmissions (webcasting) and services ancillary to the webcast (such as catch-up and previews of the webcasts). The "country of origin" (CoO) rule would apply to such services. 91 The CoO rule discussed in this IA should be distinguished from the country of origin principle (CoO) applicable under the AVMS Directive. The CoO under the AVMS Directive establishes the jurisdiction in terms of the regulatory framework harmonised under the AVMS Directive: providers only need to abide by the rules of a Member State which is their 'country of origin' as defined in that Directive. Also, if any Member State adopts national rules that are stricter than the AVMS Directive, these can only be applied to providers falling under that jurisdiction. The CoO rule discussed in this IA covers licencing of copyright and related rights and does not concern the matters harmonised under the AVMS Directive. 92 This approach is aligned with Article 32 of the CRM Directive, see above. Access to and availability of European audiovisual works on VoD platforms are addressed in section 3.3 of this IA. 93 An equivalent principle is established in recital 17 of the Satellite and Cable Directive for communication to the public by satellite. 26  TV and radio-like linear online transmissions would be defined as (i) linear services; (ii) which are provided on the basis of a schedule; (iii) and under the editorial responsibility of the service provider.  The other main elements of this option would be the same as under Option 2. Stakeholders' views Public service broadcasters support the CoO rule for broadcasters' transmissions however do not ask for the application of the CoO rule beyond that, underlying a special situation of broadcasters. Commercial TV broadcasters do not support this option for the same reasons as Option 2. Majority of service providers other than broadcasters underline the importance of a level playing field and some of them call for a technology-neutral approach. Rightholders and CMOs would oppose this option for similar reasons as commercial TV broadcasters and underline that, as a result, this option may decrease incentives to invest into AV content. Also, they are concerned that extending the CoO rule to webcasting services would entail an even higher risk of establishment shopping by online service providers and encourage "race to the bottom": search of the lowest copyright fees. This, in turn, may lead to disaggregation of repertoires licensed by CMOs. Consumer representatives support the application of the CoO rule to all online transmissions. Discarded options Overarching CoO rule: The identified objectives could be achieved also by applying the "country of origin" rule to all communication to the public and making available acts online in which case the rule would apply also to services such as VoD services,94 on demand music streaming services, etc. However, such option is not considered in this IA as its scope is broader than the targeted objective raised in the DSM Strategy: "to tackle […] measures to ensure enhanced cross-border access to broadcasters' services in Europe". The Copyright Communication acknowledges the necessity of a gradual approach, in order to allow the market to adapt to policy and legal changes. As a first step, the initiative will focus on TV and radio programmes which are a main way to access content in the EU, in particular as regards news and cultural programmes. Linear transmissions offer to consumers the ability to consume content as it happens which is extremely important for event driven programming.95 The Commission will continue monitoring the situation in the market, following its long-term vision.96 Restrictions to contractual freedom: Options which, in addition to establishing the CoO rule, would prohibit contractual arrangements concerning territorial exploitation of content were discarded. Such options could de facto result in pan-European licences. Many operators, including SMEs, may not have financial means to acquire pan-European licences. If the market does not have a possibility to adapt to changes gradually such options could push smaller operators out of this segment of the market. Also, such options may impact the way how the creative, especially AV, content is financed and distributed.97 3.2.2.3. What are the impacts of the different policy options and who will be affected? Approach The above options would affect broadcasters, webcasters and other online service providers as well as rightholders whose works are used in TV and radio programmes. They would also affect consumers. The impacts affecting these groups of stakeholders are presented separately. 94 VoD services have different characteristics than broadcasting services, described in Annex 8. Access to and availability of EU audiovisual works on VoD platforms is covered under section 3.3 of this IA. 95 See p. 29 of the IHS Technology report Current Market and Technology Trends in the Broadcasting Sector, 2015. 96 See the Commission Communication (COM(2015) 626 final) of 9 December 2015. 97 See section 3.1. 27  For broadcasters, the following economic impacts have been considered: impacts on transaction costs linked to clearing rights, on possibilities to offer services across borders and, where relevant, impacts on licensing costs (licence fees paid by broadcasters to rightholders directly or through CMOs).  The same types of impacts have been examined for webcasters in Option 2.  In addition, the impacts on the competitive situation with other service providers (not covered by the options) were considered.  For rightholders, the main economic impacts are on licensing models (in particular, a possibility to exploit rights on an exclusive territorial basis) and on licensing revenues. The impacts would vary depending on the sector: the AV works are more often distributed on the basis of territorial exclusivity as compared to other works used in TV and radio programmes (such as music, literary works, artistic works, e.g. photographs). Therefore, impacts are assessed separately for AV, music and visual arts sectors.  For consumers, the impacts on access to online transmission services across borders have been considered, as well as impacts on prices (where relevant). The majority of commercial broadcasters as well as Rightholders and CMOs are concerned that the intervention may oblige broadcasters to provide consumers with cross-border access to their online services.98 As explained above, the options considered in this IA would not oblige broadcasters to provide services across borders and would not entail any rules limiting the contractual freedom of broadcasters and Rightholders. The same stakeholders also underline a risk that introducing the CoO rule for online transmissions will weaken territorial licensing of rights (or even lead to mandatory pan-European licensing). They argue that the establishment of the CoO rule in combination with the application of the free movement of services principle and competition law would have a detrimental effect on territorial licensing. As it is not possible to predict the future effects that the application of the free movement of services principle and competition law may have on the territorial licensing of rights, this IA does not attempt to assess impacts that the proposed intervention may have in combination with these rules. The assessment below is mainly qualitative, as the publicly available data or data that could be obtained from stakeholders on licensing revenues and transaction costs is limited. Baseline IMPACTS ON STAKEHOLDERS Broadcasters Impacts on transaction costs: Under the baseline scenario, broadcasters would continue facing high transaction costs linked to licensing of rights for cross-border online transmissions, including for their own programmes. Existing voluntary initiatives aimed at promoting the aggregation of rights and the granting of multi-territorial licences, as mentioned in section 3.2.2.1, could nevertheless contribute to facilitating the clearance of rights for musical works and phonograms used in in radio and TV broadcasts. Impacts on possibilities to offer services across borders: Due to persisting difficulties in acquiring underlying rights for online cross-border transmissions, broadcasters are likely to continue geo-blocking access to their own programmes. AV premium content is likely to continue being licensed on a territorial basis and with either the entire programme being geo-blocked or certain parts of the programme being blacked-out. These agreements based on territorial exclusivity would be subject to the application of EU law, notably as regards the application of the free movement of services principle and competition law.99 However, it is not possible to predict the future effects that developments 98 See for example "The Impact of cross-border access to audiovisual content on EU consumers" (May 2016), a report by Oxera and O&O, prepared for a group of international audiovisual industry members, analysing the effects of the full cross-border access. 99 In the Premier League ruling (Judgment of 4 October 2011, C-403/08 and C-429/08, EU:C:2011:631) concerning satellite broadcasting services, the CJEU concluded that, in view of the specific facts in the case, licensing agreements between rightholders and service providers may include provisions on territorial exclusivity, but cannot establish absolute territorial exclusivity; that would be in breach of competition law and the freedom to provide services in the Internal Market. Following this judgment; 28 in these areas of law may have on the licensing of rights and the cross-border access to online TV and radio programmes. As concerns music, availability of multi-territorial licences is expected to increase due to the implementation of the CRM Directive. As for visual arts, no significant changes to the current licensing practices are expected. Other service providers The baseline option would not have any impacts on the competitive situation between broadcasters and service providers other than broadcasters. Rightholders Impacts on licensing models and revenues: The baseline option would not have any impact on licensing models applied by rightholders or on the licensing revenues received from broadcasters or webcasters. In particular, the AV sector would continue to be able to collect revenues based on the territorial licensing of rights (subject to EU rules). However, other rightholders whose content is distributed in limited geographic areas by broadcasters may lose opportunities to have their content reaching audiences across borders. The potential of the Digital Single Market for some creative content may remain underexploited, especially for content which does not rely on exclusive territorial licensing. Consumers Impacts on access to online transmission services: Consumers are likely to continue facing restrictions to cross-border online access to TV and radio programmes. This is in contrast with consumers' demand for cultural, information and entertainment content from other MS.100 SOCIAL IMPACTS The baseline scenario would not affect the production of new cultural content. However, access to cultural diversity may remain limited under this option, as consumers would continue facing restrictions to access TV and radio programmes online from other MS (including as regards access to content such as news, current events or other non-fiction TV, which represent a significant proportion of broadcaster's programming101). This situation would affect the role of broadcasters as key players for linear transmissions of current events and of cultural programmes. IMPACTS ON FUNDAMENTAL RIGHTS The baseline scenario would not have any impact on copyright as property right or on the freedom to conduct a business, as recognised in the Charter (Articles 16 and 17). It may have on 13 January 2014, the Commission initiated formal proceedings on territorial licensing restrictions for pay-TV content, see http://ec.europa.eu/competition/antitrust/cases/dec_docs/40023/40023_842_3.pdf. 100 See indications of consumer interest for content from other MS in section 3.1.4 According to a study carried out in 2012 (The economic potential of cross-border pay-to-view and listen audiovisual media services), the number of hours of non-national EU fiction as a proportion of total fiction hours in the schedules of a sample of broadcasters varies from 2 % to 35 % in the countries for which data is available. 101 News and current affairs represent 25.9 % of public broadcasters' programming while programmes on arts, culture, education and science account for 14 % of their programming. (Source: EBU – on the basis of aggregated data from 2014 concerning 35 broadcasters in 27 EU countries). According to the initial findings from the Commission's e-commerce sector inquiry, 23 % of agreements require providers to geo-block news (including current events) and 50 % to geo-block other non-fiction TV. See also Annex 6B (Availability of broadcasters' online services across borders). 29 an indirect impact on the freedom of information enshrined in the Charter (Article 11), to the extent that this option would not facilitate further development of access to information. Option 1 – Voluntary agreements to facilitate the clearing of rights for broadcasters' online services ancillary to their broadcasts IMPACTS ON STAKEHOLDERS Broadcasters Impacts on transaction costs: Option 1 could facilitate the clearance of rights and reduce transaction costs for cross-border online transmissions only on the basis of voluntary agreements concluded between rightholders, CMOs and broadcasters. The effectiveness of such agreements would depend on the sectors' willingness to license rights collectively (which may be limited in the case of AV works). As mentioned above, voluntary initiatives have already been developed in the music sector to facilitate licensing of broadcasters' online services. A recommendation, signed by music composers and songwriters, music publishers, authors' CMOs and public broadcasters, provides guidelines for the aggregation of rights in CMOs.102 The CMOs representing major and independent record producers have set up a network of reciprocal representation agreements that allows for the granting of multi-territorial licences for broadcasters online related activities by a single CMO. The first of such agreements covered only simulcasting and was cleared by the Commission in 2002.103 Subsequently further agreements have been concluded to cover other online related services such as some forms of webcasting and catch- up services.104 Option 1 would allow to assess the functioning of these practical tools developed by the industry, resolve possible blockages and identify ways in which they could be further used. An increased use of such voluntary agreements could reduce transaction costs for the clearance of underlying rights in radio and TV programmes (e.g. broadcasters could clear online music rights with one single CMO instead of negotiating with CMOs and rightholders in each territory). This would be particularly relevant for broadcasters' original productions but in some cases could be also important for third-party content. The dialogue foreseen under Option 1 could allow exploring the need for and feasibility of similar agreements for other types of works, notably AV content and visual art works and, as regards authors' rights in musical works, also for commercial broadcasters. However, this would mainly depend on the willingness of rightholders to enter such dialogue. As explained below, rightholders in the AV sector are likely to be reluctant to engage into such agreements. Impacts on possibilities to offer services across borders: By facilitating the clearance of underlying rights, the voluntary agreements fostered under Option 1 could help broadcasters to make part of their own programmes available online and across borders. The type of programmes and the availability of different services (simulcasting, previews, catch-up) would depend on the feasibility and functioning of such voluntary agreements as well as the conditions foreseen in them. The cross-border availability of programmes, in particular 102 Recommendation for the licensing of broadcast-related online activities of 4 April 2014. The Recommendation's objective is to ensure, by way of voluntary aggregation of rights and reciprocal representation agreements among CMOs, that CMOs can license the broadcaster not only the rights relevant for broadcasts but also all the rights it needs for its online broadcast-related activities including across borders. 103 Case No COMP/C2/38.014 — IFPI ‘Simulcasting’. 104 The reciprocal agreements have currently 21 EU based signatory CMOs. 17 CMOs have reported they have licensed broadcasters' Catch-up' services either for multi-territory or for mono-territory reception. 30 through catch-up services, is likely to remain limited. Option 1 is not expected to have any impact on the possibility to offer premium content across borders. Impacts on licensing costs: Option 1 is not expected to have any direct impact on licensing costs for broadcasters. To the extent that voluntary agreements could lead to multi-territorial licences, licence fees would be adjusted taking account of the audience in different territories. Other service providers Impacts on the competitive situation: Option 1 would encourage and facilitate discussions between broadcasters, rightholders and CMOs for the licensing of certain online rights, but it would not grant a special licensing regime to broadcasters. Therefore, it would not have any impact on the competitive situation between broadcasters and other service providers (who would be in a position to negotiate similar licensing schemes with CMOs and rightholders). Rightholders Impacts on licensing models and revenues: Option 1 would encourage rightholders to aggregate their rights with CMOs for the purpose of licensing broadcasters' online ancillary services; however it would not impose any licensing regime (e.g. mandatory collective management) and would not affect their contractual freedom.  Rightholders in the music sector are expected to support a further development of voluntary agreements with CMOs and broadcasters. It is not excluded, however, that rightholders may be reluctant to aggregate at CMOs certain rights (e.g. for catch-up services or music channels) in order to protect their revenues in the on-demand market.  Producers of AV works which are not distributed on the basis of exclusivity may see an interest in such agreements, as it could increase the exposure of their works and generate additional revenues. They could for example decide to transfer their online rights, for the purpose of licensing broadcasters' online ancillary services, to CMOs which currently manage their cable retransmission rights. Such arrangements based on collective management of rights are more likely to be developed for simulcasting than for catch-up services (rightholders may be more reluctant to license rights for catch-up through CMOs in order to optimise licensing of their on-demand rights).  Rightholders in the AV sector who rely on territorially based licensing models are likely to be very reluctant to engage in licensing practices based on aggregation of rights or multi-territorial licensing.  This option could encourage visual arts industry to enter into agreements with broadcasters based on the aggregation of their rights with CMOs, in particular those who already rely on the collective management of rights. Consumers Impacts on access to online transmission services: Depending on the feasibility and effective implementation of the voluntary agreements signed between rightholders and broadcasters, Option 1 could result in consumers having access across borders to more content through broadcasters' online ancillary services (in particular broadcasters' own productions ). Access to premium content through simulcasting or catch-up services would most likely remain geo- blocked. 31 SOCIAL IMPACTS Option 1 would not affect the production of new cultural content. It may have a limited positive impact on access to cultural diversity, if more TV and radio programmes from other MS are made available online. IMPACTS ON FUNDAMENTAL RIGHTS Option 1 would not have any impact on copyright as property right. It may have a slight positive impact on the freedom of information, to the extent that it could facilitate cross- border access to information. Option 2 – Application of country of origin to the clearing of rights for broadcasters' online services ancillary to their initial broadcast IMPACTS ON STAKEHOLDERS Broadcasters Impacts on transaction costs: This option would simplify the clearance of rights needed for cross-border online transmissions: broadcasters would only need to clear the rights for the country of origin while they would be able to offer their services in the entire EU. It would lead to important savings in transaction costs105 and would also enable broadcasters to clear rights more swiftly, which is in particular important for time-sensitive programming. Such savings in transaction costs would be beneficial to both large broadcasters with large number of licensing contracts and to smaller broadcasters whose resources to carry out the administrative task associated with obtaining licences covering multiple territories are limited. However, Option 2 entails a limited risk of disaggregation of repertoire currently managed by CMOs (see below under 'impacts on rightholders'), which would have a negative effect on transaction costs (broadcasters would have to negotiate with individual rightholders instead of CMOs). Impacts on possibilities to offer services across borders: While this option would facilitate clearance of rights, the ultimate outcome in terms of offering programmes across borders would depend on the business decisions by broadcasters and rightholders. Option 2 does not entail any obligation on broadcasters to provide services across borders (broadcasters could still decide to restrict the provision of the service to a particular MS), but it would open new opportunities for them to do so, in particular as concerns content which does not rely on territorial exclusivity. This in particular covers original productions of broadcasters for which they clear underlying rights.106 Thanks to reduced transaction costs, broadcasters would be enabled to target new markets and enlarge their audiences. Such opportunities would in particular apply to broadcasters who transmit TV and radio programmes in languages which are widely understood in other MS. 37 % of Europeans say that they regularly use foreign languages when watching films/television or listening to the radio.107 Also other broadcasters 105 It is not possible, however, in this IA to quantify such savings in transaction costs. As explained above, despite requests, neither EBU nor ACT provided data on cross-border transaction costs for clearing online rights, as compared to transaction costs in one jurisdiction. 106 Such programmes in particular include news, current events, political debates; own documentary/entertainment productions; culture, science, arts programmes; lifestyle programmes, etc. Out of 5720 EU TV channels listed in MAVISE database, 243 channels are listed as "general", 226 channels as "documentary", 188 as "lifestyle/specific leisure", 156 channels as "news", see SatCab study, table 2.17. 107 Most widely spoken foreign EU languages are English (38 %), French (12 %), German (11 %), and Spanish (7%). See Special Eurobarometer 386 (2012) http://ec.europa.eu/public_opinion/archives/ebs/ebs_386_en.pdf 32 could expand their audiences, for example, by serving linguistic minorities in other MS or offering services to Europeans who live in other EU MS than their MS of origin. About 4 million EU citizens are members of linguistic minorities.108 13.6 million EU citizens live in an EU MS other than their country of citizenship.109 These people may have an interest to keep up with the developments in their linguistic/home country as well as maintain cultural links with that country and therefore would constitute a potential audience for broadcasters. By enlarging their audience across borders broadcasters would be able to collect additional revenues.110 As concerns premium AV content, it is not expected that Option 2 would change its cross- border distribution by broadcasters in a short or medium term. Rightholders and broadcasters are likely to continue relying on territorially based exploitation of this content (see below). Also, broadcasters may continue to geo-block premium AV content across borders. However, such agreements between rightholders and broadcasters would be subject to the application of EU and national law. Impacts on licensing costs: Licence fees are expected to be an important element in broadcasters' decisions to make their programmes available across borders and in rightholders' decisions to grant licences.111 If broadcaster's audience would grow due to cross-border transmission facilitated by the CoO rule, licence fees are expected to be adjusted (to reflect the larger audience). In accordance with this option licence fees should be set taking into account all aspects of the broadcast, including the actual audience, the potential audience and the language version. The feedback collected during the public consultation shows that setting licence fees for satellite transmissions under the CoO rule available across borders has not caused any substantial practical problems. Some respondents to the consultation pointed to difficulties with measuring the audience, a task which is significantly easier for online services. Other service providers Impacts on the competitive situation: Option 2 would not significantly affect the on-demand services market because it would not apply to broadcasters' on-demand services, which are not ancillary to the initial broadcast. For example, if a broadcaster creates a VoD library, it would need to acquire rights according to the same rules as VoD service providers. Therefore, on-demand service providers would continue competing on an equal footing with broadcasters offering such services. 108 For example, in SK 8.8 % of the population has Hungarian as the mother longue; in LT - 5.3 % Polish; in FI - 5.1 % Swedish. Source: study on The economic potential of cross-border pay-to-view and listen audiovisual media services (2012). 109 Eurostat data from April 2013, http://ec.europa.eu/eurostat/statistics- explained/index.php/EU_citizenship_-_statistics_on_cross-border_activities 110 In the study The economic potential of cross-border pay-to-view and listen audiovisual media services, it was estimated that in 2009 potential willingness to pay for subscription based cross-border AVMS among intra-EU migrants was between €760 million and €1,610 million annually in the EU based on the proportion of online survey respondents who were “very likely” and “fairly likely” to pay respectively (the total EU pay-TV market size was €28.6 billion). NB: this survey concerned all subscription-based cross-border AV media services. 111 For example, according to the initial findings from the Commission's e-commerce sector inquiry published on 18 March 2016, 68.9 % of digital content providers replied that costs of purchasing content for territories other than those in which the provider operates is the most important factor for not making the service available across borders. In addition, broadcasters may need to take into account other possible costs: with online distribution, there are variable costs for the service provider that increase with usage, see further the SatCab study. 33 Yet, there may be a partial overlap between on-demand services (such as VoD) and broadcasters' online catch-up services, which in fact are on-demand services for a limited duration.112 However, catch-up services do not constitute a complete substitute to VoD services as they are limited in time and are linked to the initial broadcast transmitted according to a schedule. Moreover, rightholders would be able to address this issue by negotiating with broadcasters limitations to catch-up services. Other service providers than broadcasters, which transmit linear TV or radio-like channels only online (operators of webcasting services) would not benefit from Option 2. However neither would a broadcaster offering an online-only channel (webcast) and therefore such broadcasters would compete with such service providers on an equal basis. Rightholders Impacts on licensing models and revenues: The introduction of the country of origin would constitute a new constraint for rightholders when licensing their content to broadcasters for online transmissions. However, considering its scope of application (limited to online services by broadcasting organisations which are ancillary to the broadcast) and the fact that it does not restrict the contractual freedom of the parties, Option 2 is not expected to fundamentally disrupt the existing licensing models and the distribution of revenues between rightholders and broadcasters. Rightholders would remain free to determine whether granting a licence to broadcasters for online services such as simulcasting and catch-up services and could adapt the conditions of the licence in view of the application of the country of origin (e.g. for instance by defining the time in which the content may be available through catch-up services) as well as the licence fees. Furthermore, the introduction of the country of origin principle would on its own not affect the possibility for rightholders to agree with broadcasters on territorial limitations concerning the exploitation of their rights. The impacts would vary by type of content, depending on the existing licensing practices:  Option 2 is not expected to impact the licensing of premium AV content (rightholders would be able to continue licensing their rights on a territorial basis, subject to the requirements of EU and national law). However, it could be beneficial to those AV rightholders whose productions attract smaller audiences and who do not rely on territorial exclusivity: the CoO rule would facilitate the possibility for broadcasters to make such content available across borders and could result in additional revenues for rightholders.  Option 2 is likely to have a concrete effect on how rights are licensed by rightholders who do not rely on a geographic distribution of their content, such as music and visual arts. This option may have a positive impact on their revenues thanks to a larger audience facilitated by the CoO rule. Rightholders are likely to adapt the licensing mechanisms to ensure that the revenues match the exploitation of their content (if this leads to a measureable increase in audience/revenues of that broadcaster). However, where the tariffs are already calculated on the basis of usage or the volume of audience, for example a percentage of broadcaster's revenues, no change to the contractual arrangements may be necessary. Moreover, in contrast with the "traditional" broadcasting, online distribution can offer accurate measurement of actual usage. As regards the rights managed by CMOs, there is a risk that rightholders would like to exercise more control over the licensing of rights under the CoO rule and would decide to 112 Currently, the standard duration of broadcaster's catch-up services varies between 7 and 30 days. 34 withdraw rights from CMOs. This could cause disaggregation of repertoires currently managed by CMOs. However, this risk is limited under Option 2, as the online services covered only concern ancillary services to the initial broadcast. Furthermore, the feedback received during the public consultation have not identified any concrete substantial risk that broadcasters would relocate their place of establishment due to the reasons linked to licensing of copyright and related rights. This is mainly due to the fact that broadcasters are generally established in the country where their main audience is located and rely on infrastructures which cannot be easily relocated. Therefore, this option would not create any substantial risks that the revenues of rightholders would suffer due to "establishment shopping" by broadcasters. Consumers Impacts on access to online transmission services: Option 2 is expected to result in consumers having access to more broadcasters' programmes across borders, especially to content which is distributed without territorial exclusivity. However, as this option would not oblige broadcasters to transmit TV and radio programmes across borders, the availability of their programmes to consumers would depend on a number of factors including agreements between broadcasters and rightholders (subject to applicable laws) and broadcasters' commercial decisions. As concerns premium AV content, restrictions to cross-border access may continue to apply, as explained above. Impacts on consumer prices: The impact on prices would depend on broadcasters' business models and on their decision to make their online transmissions accessible on a cross-border basis for free (or on ad-financed basis) or for payment. The increased cross-border availability of broadcasters' online services could have an impact on consumers' decisions related to their consumption of TV programmes, e.g. on whether to take a package service (retransmission services) or not. As consumers would have more choice in terms of available programmes across borders, they may better structure their consumption depending on their needs. SOCIAL IMPACTS Benefits may be expected in terms of enhanced access to information and cultural content, in particular news, current events and cultural programmes. As a result, consumers would be able to better satisfy their diversified interests for programmes originating from other MS, including cultural, educational (e.g. learning languages) and entertainment. This is in particular relevant for non-fiction content, which is less available to consumers through means other than broadcasters' programmes. IMPACTS ON FUNDAMENTAL RIGHTS By establishing the licensing regime applicable to certain types of cross-border online transmissions, Option 2 would have a slightly negative impact on copyright as property right, limited by the targeted scope of the proposed intervention (broadcasters' online ancillary services). It would have a positive impact on the freedom of information, to the extent that this option would facilitate access to information. 35 Option 3 – Application of country of origin to the clearing of rights for the services covered by Option 2 and for TV and radio-like linear online transmissions (and services ancillary to such transmissions) The core difference between Options 2 and 3 is that Option 3 also covers online linear TV and radio-like transmissions (webcasting services)113 and online services ancillary to webcasting. The impacts discussed below are linked to these additional services. One general challenge in assessing impacts of this option is the fact that webcasting market (in the sense of online-only, linear TV or radio-like services) is at a development stage and not yet fully formed. As opposed to settled rules pertaining to broadcasting organisations, the acquis and national regulatory frameworks regarding webcasting services are only developing, including the very definition of these services. IMPACTS ON STAKEHOLDERS Broadcasters The impacts of Option 3 on broadcasters could in principle be comparable to the ones described under Option 2. In addition, broadcasters would be able to rely on the CoO rule for their webcasts. However, the higher risk of content disaggregation identified under Option 3 (see 'impacts on rightholders' below) is likely to have a negative impact on transaction costs (even if licensing would be required only for one territory, the number of individual transactions may increase) and undermine the effectiveness of Option 3 in terms of facilitation of licensing. Webcasters Option 3 would align webcasters' licensing regime to that of broadcasters. Webcasters could in principle save transaction costs for their online transmissions and have better possibilities to offer their services across borders in the same way as in the case of broadcasters described under Option 2. However, they may also be negatively affected by the risk of disaggregation of repertoire brought about by this option (see 'impacts on rightholders' below). Other service providers Impacts on the competitive situation: Option 3 could substantially impact the competitive situation between service providers offering on-demand services (VoD, music on demand, which would not be covered under this option) and service providers offering webcasting services. Increasingly, webcasting services can directly compete with on-demand services. Especially over time, the boundary between on-demand services and online linear transmissions may be even more blurred. Services offered to consumers by new entrants have evolved: service providers such as Spotify and Deezer do not only offer on-demand services on the basis of catalogues but also online radio-like services, offering to consumers special programming (e.g. 'artist radio' or 'channels') which are often partly interactive (e.g. the subscriber may influence the transmission by indicating his or her preferences and dislikes). Similar services are being developed by platforms such as YouTube. With these new models emerging, it becomes more difficult to distinguish what constitutes an online linear transmission and an on-demand service. Therefore, Option 3 could create a grey area, where it would not be clear whether certain online services would be covered by the legal intervention or not. As a result, it would not provide to the market players the necessary legal certainty nor would it ensure an even competitive situation. 113 For example, webcasting services include YouTube live channels or iTunes "Beats" radio-like linear services. 36 Furthermore, online service providers can relocate their services more easily than traditional broadcasters and therefore they can gain a competitive advantage over broadcasters by relocating their establishment to a jurisdiction with lower copyright fees. Rightholders Impacts on licensing models and revenues: Under Option 3, the application of the CoO rule to webcasters could lead to new forms of content exploitation (e.g. similar to near on-demand services) which would be fundamentally different from broadcasters' online ancillary services. For example, it is possible to imagine linear streaming services providing access to a limited range of content (one or several films, one or several recordings) in a near on-demand manner over certain period of time - such services would be competing with on-demand services (where the latter would not be able to rely on the CoO rule). Option 3 would generate market uncertainty for rightholders and significantly increase the risk of content disaggregation of rights currently held by CMOs. As mentioned above, it is easy for online operators to relocate their establishment in the EU, for instance in order to lower fees paid to rightholders or for reasons not related to copyright (e.g. taxes or the regulatory regime). The risk of "establishment shopping" would in particular apply when rights are managed by CMOs (especially music). As rightholders cannot directly control the tariffs fixed by CMOs for the licensing of rights, there is a risk that service providers, who heavily rely on music content, would establish in territories with lower tariffs.114 Thus it could encourage "race to the bottom" in terms of copyright fees. This would be detrimental to rightholders and could trigger withdrawal of their rights from local CMOs in order to protect their revenues. Also, as the application of the CoO principle to a market which is not yet fully formed and where boundaries with on-demand (such as VoD) services are not clearly delineated would be likely to drive rightholders to withdraw rights from CMOs in order to exercise more control over the licensing.115 As a result, this could lead to disaggregation of repertoires managed by CMOs, contrary to the objective of the CRM Directive. Consumers Impacts on access to online transmission services: Impacts on consumers would depend on the effects that this option would have in the effective facilitation of licensing. In addition to the positive impacts mentioned under Option 2, consumers could benefit from cross-border access to webcasting services, notably with regard to content distributed without territorial exclusivity. However, due to a risk of negative impact on broadcasters' transaction costs explained above, there is a risk that the impact on consumers may be negative. Impacts on consumer prices: would be similar to the impacts described under Option 2, as long as this option leads to more availability of cross-border services. SOCIAL IMPACTS The risks associated with Option 3 may result in this option, as explained above, having a neutral or even negative impact on the distribution of and access to cultural content. 114 E.g., according to the available examples, for commercial radios copyright fees in various MS may vary between 9 % of broadcaster's revenues in NL to 2.2 % in EL; for related rights: from 7 % in FI to 1 % in IT. Note: this information represents an average in each country and was updated last in 2012/2014 (Source: AER). 115 Such risk was raised by certain CMOs in response to the SatCab public consultation. E.g. GESAC submitted that an extension of the CoO rule to VoD services could discourage the re-aggregation of repertoires promoted by the CRM Directive and even cause further fragmentation of repertoires in the market. 37 IMPACTS ON FUNDAMENTAL RIGHTS Because it would impose a licensing regime for cross-border transmissions to a wider range of services (compared to Option 2), Option 3 would negatively affect copyright as property right. Its impact on the freedom of information would depend on the extent to which this option would facilitate access to information. 3.2.2.4. How do the options compare? Option Effectiveness Efficiency Impact on stakeholders Social impacts and fundamental rights Baseline (0) Limited (0) No direct costs (0) Impacts on (0) No direct impact availability of TV associated with the stakeholders would on cultural diversity and radio baseline option depend on developments (0) No direct impact programmes across in the licensing market on fundamental borders would rights persist Option 1 – (0/+) Would (0/-) Possible one- (0/+) Limited reduction (0/+) Limited Voluntary enhance access to off costs linked to of transaction costs for positive impact on agreements to broadcasters negotiation of broadcasters due to the cultural diversity facilitate the online voluntary possibilities of (0) Neutral impact on clearing of transmissions agreements but aggregation of rights; the right of property rights for across borders to expected to be better opportunities to (0/+) Limited broadcasters' a limited extent limited offer their online services positive impact on online services across borders the freedom to ancillary to (0) Neutral impact on information their other service providers broadcasts (0/+) Impacts on revenues of rightholders expected to be neutral or adjusted according to the usage (0/+) Limited improvement to cross- border availability of content for consumers Option 2 – (+) Would (0/-) Possible one- (+) Reduced transaction (+) Positive impact Application of enhance access to off costs linked to costs for broadcasters on access to country of broadcasters renegotiation of due to simplified information and origin to the online contracts clearance of rights; wider cultural content clearing of transmissions opportunities to offer (-/0) Limited rights for across borders their online services negative impact on broadcasters' across borders the right of property online services (0/-) Neutral or marginal (+) Positive impact ancillary to negative impact on other on the freedom of their initial service providers information broadcast (0/+) Impacts on revenues of rightholders expected to be neutral or adjusted according to the usage (+) Improved cross- border availability of content for consumers Option 3 – (-) Market (-) Possible high (+/-) Simplified (0/-) Risk of negative Application of uncertainty and compliance costs clearance of rights impact on access to country of risk of linked to the risk of applying to webcasts but cultural content origin to the disaggregation of disaggregation of risk of negative impact (-) Negative impact clearing of repertoire may repertoire on transaction costs on the right of 38 rights for the hamper the (-) Legal uncertainty on property services effectiveness of the application of the (0/-) Risk of negative covered by the Option CoO rule to certain impact on the Option 2 and online services freedom of for TV and (-) Impacts on protection information radio-like of rightholders interests linear online expected to be negative transmissions due to the risks of (and services "establishment shopping" ancillary to (0/-) Risk of no effect (or such negative effect) on transmissions) cross-border availability of content for consumers Option 2 is the preferred option, as it facilitates cross-border transmission of broadcasters' TV and radio programmes online, while preserving a balanced landscape taking into account the interests of rightholders. The baseline option would not allow reaching the objectives identified in this IA. Option 1 could enhance online and cross-border access to some of the broadcasters' programmes but its outcome would be more uncertain than the one of Option 2. While Option 3 seems more 'technologically neutral' than Option 2, it is likely to create legal uncertainty as it would be very difficult to draw the boundary between services covered by the intervention and not (i.e. on-demand services), in particular in a future-proof manner. It also entails risks of establishment shopping and may lead to a fragmentation of rights (notably those managed by CMOs). Proportionality of the preferred option and impacts on MS: Option 2 is based on an enabling mechanism (introduction of the country of origin) which is expected to significantly reduce the broadcasters' transaction costs associated to the clearance of rights for online transmissions. It constitutes a targeted intervention (limited to broadcasters' ancillary online services and not affecting the contractual freedom of broadcasters and rightholders) which is not expected to have disruptive effects on rightholders. It is therefore a proportionate approach to facilitating online access to TV and radio programmes across borders. The limited impacts of Option 2 on copyright as a property right would be justified in view of the Treaty fundamental freedom to provide and receive services across borders.116 Option 2 will not impose any administrative burden on MS; it will require the application in the MS copyright system of specific rules for the licensing of rights for the services covered by this option. 3.2.3. Digital retransmissions of TV and radio programmes 3.2.3.1. What is the problem and why is it a problem? Problem: Providers of retransmission services face practical difficulties with the acquisition of rights for retransmission of TV and radio channels from other Member States by means other than cable 116 Article 52(1) of the Charter allows for restrictions interfering with the exercise of the freedoms of the Charter: those restrictions (i) must be provided for by law and (ii) respect the essence of those rights and freedoms. In addition, the limitations are (iii) “subject to the principle of proportionality” and “may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others”. 39 Description of the problem: Nowadays TV and radio channels reach viewers and listeners through several types of retransmission service providers: cable TV/radio providers, satellite TV/radio (package) providers, IPTV (TV/radio over closed circuit IP-based networks) providers, digital terrestrial TV (DTT) providers and also the emerging over-the-top (OTT) TV/radio service providers.117 The core business activity of retransmission service providers is to aggregate TV and radio channels into packages (basic, premium, thematic, etc.) and to provide them to consumers simultaneously to their initial transmission, unaltered and unabridged, typically against payment. Retransmission of TV and radio channels has proved to be a highly successful means to enable Europeans to access broadcasts from other MS: e.g. 177 "foreign" TV channels are available to cable subscribers in DE, 150 in FR, 158 in NL, 143 in PT, 163 in DK, 159 in PL, 168 in IE and 232 in HU.118 IPTV and OTT have been developing at a fast pace recently, which is explained by several technological and business factors: (i) IPTV and OTT have superior retransmission capacity; (ii) they are more attractive to consumers due to built-in interactivity of services and can be enjoyed (in the case of OTT) without the need for a dedicated hardware (such as a set-top-box and/or a satellite antenna); (iii) they are well promoted by numerous operators and major Internet platforms. When distributing TV and radio channels and programmes running on them, retransmission service providers routinely engage in a copyright-relevant act of communication to the public. The Satellite and Cable Directive provides for a system of mandatory collective management for retransmissions by cable of TV and radio broadcasts from another MS. This means that the right of cable retransmission with regard to TV / radio broadcasts from other MS cannot be exercised by rightholders individually but may only be exercised by a collective CMO119. The only exception is made for the rights exercised by broadcasting organisations in respect of their own transmissions. The rationale behind this system is to ensure that cable operators are in a position to acquire all rights necessary for retransmission of TV and radio channels and that there are no black- outs in the retransmitted channels or programmes. At the time of adoption of the Directive it was considered that individual licensing was impractical in the case of retransmission, while voluntary collective management would not guarantee the absence of black-outs.120 The system provided for in the Satellite and Cable Directive is limited to retransmissions by cable 117 Such OTT retransmission services are a relatively recent phenomenon. "Zattoo", based in the US and Switzerland, is the pioneer of this type of retransmission services – was launched in 2006 and is now available in six countries: DE, CH, ES, DK, LU and the UK. Swedish provider "Magine" launched its service in 2013 and is currently available in Sweden, Germany and the UK. Telecom operators are exploring this market too: Dutch KPN launched an OTT service called "Play" in November 2015, and Telekom Austria launched an OTT service "A1 Now" in March 2016. 118 Data from the European Audiovisual Observatory. 119 Under collective management, authors and other rights owners mandate an entity (e.g. a CMO) to act on their behalf to grant authorisations, to collect and distribute remuneration, to prevent and detect infringement of rights, and to seek remedies for infringement. The collective management of rights allows commercial users to clear rights for a large number of works, in circumstances where individual negotiations with individual creators would be impractical. As far as exclusive rights are concerned, collective management is normally voluntary (i.e. based on the mandate voluntarily granted by rightholders). In limited cases, legislation allows for mandatory collective management. 120 The system of mandatory collective management of rights to retransmission of broadcasts is compatible with Article 11bis(2) of the Berne Convention which allows compulsory licences for such retransmissions. 40 and therefore does not extend to retransmissions by other means such as IPTV or OTT. This means that, depending on the MS (see below), providers of retransmission services by means other than cable cannot benefit from the system facilitating the clearance of relevant rights. 121 Such providers therefore face a heavy rights clearing burden in order to be able to provide their services. Drivers: [Complex clearance of rights] Taking into account that each channel delivers numerous programmes composed of a multitude of copyright-protected works, that a typical retransmission service provider offers multiple channels, that the retransmission service provider has no control over the use of works in particular channels and no time to obtain licences for those works, the potential copyright clearing burden for retransmission service providers is important. Example: Belgian IPTV provider Proximus offers around 100 TV channels in its basic package, among them a channel of ZDF, German broadcaster. ZDF handles approximately 70,000 contracts with rightholders each year.122 Since ZDF has 9 generalist and thematic channels in total,123 each channel can be said to represent (approximately) the "copyright clearing burden" of 7,700 contracts. Extrapolating this "copyright clearing burden" to 100 TV channels offered by Proximus and considering that 15 of these channels are retransmitted in both standard and high-definition quality, the potential copyright clearing burden for Proximus can be estimated at approximately 650,000 contracts per year ((100-15)x7,700). In other words, providers of retransmission services offered on satellite, IPTV, mobile, DTT or OTT platforms face the same problems the cable operators once faced, in particular when they retransmit TV and radio broadcasts from other MS. The problems are mitigated (but not solved) by the practice of some broadcasters whereby they aggregate retransmission rights from other rights holders (e.g. AV producers) and grant the "all-rights-included" licences124 to retransmission service providers. The licensing problems described above mainly concern TV. They affect radio retransmission to a much lesser extent, since (i) radio broadcasts contain fewer types of works protected by copyright (notably, no images or AV works) and (ii) there are well established collective management structures for the main type of copyright-protected work used in radio broadcasts, i.e. music, which makes it easier for the retransmission services other than cable to obtain the required retransmission licences. [Legal or practical solutions available only in certain MS] Legislation in some MS have considered retransmissions over "closed"125 electronic communications networks (e.g. Slovakia, Austria) or over a particular network (e.g. DTT in IE) as equivalent to cable (and hence under the mandatory collective management system). In some MS, in addition to the mandatory collective management implemented for cable retransmission, voluntary collective licensing schemes are in place to license other 121 As indicated in the Ex-post Evaluation of the Satellite and Cable Directive (93/83/EEC), the system provided by the Satellite and Cable Directive for cable retransmissions has proven to be generally effective. At the same time, it was observed that other technological means of retransmission have emerged for which the Satellite and Cable Directive is not relevant due to its technology-specific provisions. 122 EBU contribution to the public consultation. 123 Data from the European Audiovisual Observatory. 124 Such licences protect retransmission service providers against potential claims by 3rd party rightholders concerning the use of works included in the broadcast. 125 Meaning that a retransmission service can only be accessed by a consumer through an electronic communications network, dedicated fully or partially to the retransmission service (as opposed to access through "open" Internet / any electronic communications network giving access to the Internet). 41 retransmission services: e.g. IPTV in IE, NL, FR, PL, BE, DE and ES or satellite in FR and PL. Certain MS (DK, FI, SE) have in place extended collective licensing systems for retransmissions by all technical means (cable, satellite, DTT, IPTV, mobile or OTT). Annex 7A provides a full overview of the licensing facilitation regimes available in MS for retransmissions by means other than cable. Finally, in some MS (e.g. EL, EE, HR, LV, LU, RO) there are neither legal nor practical solutions facilitating licensing of retransmission of TV and radio broadcasts by means other than cable. In these MS the providers of such other retransmission services have to rely on multiple licensing tools: the "all-rights-included" licences from broadcasters, collective licensing (only in the content sectors where it is available, mainly music) and individual licensing (notably by rightholders of AV works). [Commercial decisions] Apart from the licensing difficulties, the choices of digital retransmission service providers when it comes to including or not TV / radio channels into the packages provided to consumers are driven by these two factors: (i) the perceived demand by a typical audience in a particular territory (in practice IPTV services often follow the patterns established by cable TV) and (ii) the fees charged by the respective broadcasters. Consequence: The lack of mechanisms facilitating the licensing of rights for retransmission services using means other than cable leads to a limited access to TV and radio channels from other MS (as the offer of such channels is limited). A comparison of the total number of TV channels (from other MS) available through cable retransmission with the total number of TV channels (from other MS) available through IPTV retransmission in 10 EU MS (DE, HU, IE, PL, NL, DK, SE, UK, ES and FR)126 has shown that there are more TV channels (from other MS) on cable TV than IPTV in all but 1 MS (FR). How the problem would evolve: The fragmentation of rules applying to the clearance of rights for retransmissions by means other than cable is likely to become more problematic with the uptake of IPTV retransmission services in the coming years, expected to account for 16% of EU 28 TV households in 2020 (up from 13 % in 2015).127 The extent of use of cable retransmission services and satellite transmission / retransmission services is forecast to decline or remain stable. 126 See Annex 7B. 127 The projections for the Western European markets show very similar trends (e.g. the growth of IPTV from 15% of TV households in 2015 to almost 19% in 2021): http://www.broadbandtvnews.com/2016/04/12/iptv-overtakes-pay-satellite-tv-in-western-europe/ 42 Pay TV subscriptions for EU28 to 2020 EU 28 Countries* % Television Homes 60% 50% 40% 30% 20% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Satellite Digital Cable Analogue Cable IPTV Source: Digital TV Research, Global Pay TV Operator Forecasts 2015, October 2015 *Data not available for Cyprus and Luxembourg 3.2.3.2. What are the various options to achieve the objectives? Non-regulatory options are not considered because they would not be sufficient to achieve the objectives. Their effectiveness would be similar to the baseline scenario, and they would not provide the necessary degree of legal certainty. Baseline No policy intervention. This option would mean relying on the market players - rightholders, including CMOs, and retransmission service providers - to work out and agree on the appropriate licensing arrangements and/or relying on the MS to establish the appropriate licensing facilitation mechanisms. Stakeholders' views128 While most of individual rightholders and commercial broadcasters support this option, consumer representatives, CMOs, public service broadcasters,129 cable and telecoms operators consider that it cannot solve the identified problems as only legislative intervention can ensure that retransmission service providers are in a position to acquire all necessary rights. Option 1 - Mandatory collective management of rights to retransmission of TV / radio broadcasts by means of IPTV and other retransmission services provided over "closed" electronic communications networks  Option 1 would introduce mandatory collective management for simultaneous, unaltered and unabridged retransmission of TV / radio broadcasts by IPTV retransmission services and other retransmission services provided over "closed" electronic communications networks.130 128 In this section, the summaries of stakeholders' views are based on the results of the public consultation on the review of the EU Satellite and Cable Directive published online attached hereto as Annex 2C. 129 The difference in the opinion between commercial and public service broadcasters may stem from the fact that the former typically produce more content which is licensed to third parties. 130 Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (the Framework Directive) (OJ L 108, 24.4.2002, p. 33–50) : 'electronic communications network' means transmission systems and, where applicable, switching or routing equipment and other resources, including network elements which are not active, which permit the conveyance of signals by wire, radio, optical or other 43  As a result, Option 1 would concern IPTV131 and other retransmission services (satellite, mobile, DTT) that can only be accessed by a consumer through an electronic communications network, dedicated fully or partially to the retransmission service (as opposed to access through "open" Internet / any electronic communications network giving access to the Internet).  Option 1 would concern retransmission of TV / radio broadcasts originating in other MS.  Just as in the case of the cable retransmission regime, broadcasters would be able to directly license to the retransmission service providers concerned the rights exercised by them in respect of their own broadcasts, irrespective of whether the rights concerned are broadcasters' own or have been transferred to them by other copyright owners and/or holders of related rights.  As a result, the retransmission service providers concerned would have to obtain licences only from two categories of rightholders - broadcasters and CMOs. Stakeholders' views Most rightholders - phonogram producers, music publishers and many AV producers – as well as commercial broadcasters are against this option due to the potential disruptive effect on the markets, which, according to them, function well. Cable and telecoms operators, consumer representatives, CMOs and public service broadcasters tend to be in favour of the possible application of the mandatory collective management regime to IPTV / other retransmission services provided over "closed" electronic communications networks and consider that it could improve the availability of TV / radio broadcasts across Europe. Option 2 – Mandatory collective management of rights to retransmission of TV / radio broadcasts by means of any retransmission services, irrespective of the retransmission technology or network used, as long as they are provided to a defined number of users (subscribers, registered users)  The main elements of Option 2 are the same as those of Option 1 except that Option 2 would introduce mandatory collective management for a wider range of retransmission services.  In particular, Option 2 would also apply to OTT retransmission services, as long as they are provided to a defined number of users (subscribers, registered users). It would not cover the OTT retransmission services which do not require subscription or registration (and typically rely on business models, e.g. advertising-based, that are different from most other retransmission services). Stakeholders' views They are the same as on Option 1, though many supporters of the application of the mandatory collective management regime to the retransmission services other than cable (most of CMOs and public service broadcasters, some cable / telecoms operators) emphasise that such application should be limited to the retransmission services provided over closed networks / in closed environments and/or functioning in a territorially-limited way. electromagnetic means, including satellite networks, fixed (circuit- and packet-switched, including Internet) and mobile terrestrial networks, electricity cable systems, to the extent that they are used for the purpose of transmitting signals, networks used for radio and television broadcasting, and cable television networks, irrespective of the type of information conveyed. 131 ITU’s definition of IPTV refers to “multimedia services such as television/video/audio/text/graphics/data delivered over IP based networks managed to provide the required level of quality of service and experience, security, interactivity and reliability”. 44 3.2.3.3 What are the impacts of the different policy options and who will be affected? Approach The options described above would affect retransmission service providers, consumers and rightholders - individual rightholders whose works are used in TV and radio broadcasts, CMOs and broadcasters. The impacts affecting these groups of stakeholders are presented separately.  For retransmission service providers, the following economic impacts have been considered: impacts on the variety and quality of TV / radio retransmission services, on costs (transaction costs linked to clearing of rights and licensing costs linked to fees paid to rightholders) and on competitiveness.  For rightholders, the main economic impacts considered are on the management of rights and on licensing revenues (with a particular focus on the impacts in the AV industry, given the specificity of this industry - its reliance on the business / distribution models based on territorial exclusivity).  For consumers, the main impact areas considered are the choice of retransmission services and prices of services. The assessment below is mainly qualitative, as the publicly available data or data that could be obtained from stakeholders on the licensing practices and transaction / licensing costs is limited. Baseline IMPACTS ON STAKEHOLDERS Retransmission service providers Impacts on the variety and quality of TV / radio retransmission services: The legal uncertainty as to whether all rights relevant for the retransmission have been cleared faced by the retransmission service providers other than cable is expected to persist under the baseline option. As a result, those service providers can be expected to continue limiting their retransmission offers. Moreover, in view of the legal uncertainty, some market players might hesitate to launch innovative retransmission services or delay the launch in order to deal with licensing. Impacts on costs of retransmission service providers: The baseline option would not have any direct impacts on costs. But neither would it alleviate the additional transaction cost burden for the retransmission service providers other than cable, resulting from the fact that they have to obtain licences not only from broadcasters and CMOs (like cable operators), but also from all the rightholders who have chosen to exercise their rights individually rather than transferring them to a broadcaster or mandating a CMO. The impacts described above could be eliminated or mitigated in some MS, notably those in which the collective management regime already applies, as a result of national law (mandatory / extended collective management) or practical arrangements by the market players (voluntary collective management), to retransmission services other than cable or might become applicable to them in the future.132 However, these solutions have led and are likely to continue leading to (i) lack of legal certainty in the market; (ii) fragmentation across the EU (different retransmission services falling within the scope of different licensing facilitation solutions in different MS) and (iii) significant time gaps between the emergence of an innovative retransmission service and the application of licensing facilitation mechanisms to it, if at all. Rightholders Impacts on licensing revenues: Under the baseline option, the ability of rightholders to generate revenues from the retransmission services other than cable would continue to vary 132 See Annex 7A for the overview of the current state of play. 45 depending on several factors: (i) whether a particular type of retransmission service falls within the scope of (mandatory or voluntary) collective management arrangements in a particular MS; (ii) the relative size of the right holder and his capacity to manage a network of licensing deals with numerous foreign retransmission service providers as well as the extent to which the right holder transfers his retransmission rights to broadcasters; (iii) the extent to which the providers of retransmission services other than cable actually enter into licensing deals with those rightholders who choose to exercise their rights individually or, on the contrary, rely on the "all-rights-included" licences granted by broadcasters. Consumers Impacts on the choice and prices of retransmission services: In the scenario of no policy intervention, consumers could continue facing a sub-optimal market offer of TV / radio retransmission services. In particular, as explained above, the choice of channels is expected to be more limited than it could be if a clear legal framework facilitating licensing was in place for the different retransmission services. Consumers could be paying a higher subscription price due to a lesser choice of retransmission services than the one resulting from the situation of effective competition between a variety of existing market players and new entrants. However, as there are more elements that affect prices (e.g. whether premium or non-premium content is included, whether the service is bundled with other services), the concrete impact on the prices is difficult to predict. SOCIAL IMPACTS The access to a wide range of TV / radio channels is an important element to promote cultural diversity, media pluralism and to respond to social and cultural needs of EU citizens. The baseline option is not expected to contribute to these objectives. IMPACTS ON FUNDAMENTAL RIGHTS This option would not have any impact on copyright as a property right (Article 17 of the Charter) or the freedom to conduct a business (Article 16), as it would not expand the scope of the mandatory collective management. Option 1 – Mandatory collective management of rights to retransmission of TV / radio broadcasts by means of IPTV and other retransmission services provided over "closed" electronic communications networks IMPACTS ON STAKEHOLDERS Retransmission service providers Impacts on the variety and quality of TV / radio retransmission services: Option 1 would enhance the level of legal certainty for the benefit of a specific category of retransmission services - those provided over "closed" electronic communications networks - and can be expected to contribute to a better offer of such services, depending on market situations in particular MS. It could also be an incentive for the retransmission service providers concerned to expand the range of TV / radio channels offered to their subscribers. The actual impact of Option 1 in the different MS would depend on whether collective management regime already applies to IPTV and other similar services as a result of national law or practical arrangements by the market players. Impacts on costs of retransmission service providers: Transaction costs: this option is expected to reduce the transaction costs linked to the clearance of rights for the retransmission services provided over "closed" electronic communications networks, in particular in MS where the collective management of right does 46 not apply to this type of retransmission services. Providers of the services concerned would only need to deal with two licensing "sources" - broadcasters and CMOs. The extent of reduction would depend on the market practices prevailing currently in the different MS, in particular: (i) whether different categories of individual rightholders usually transfer retransmission rights to producers and/or broadcasters and whether broadcasters grant the service providers concerned the "all-rights-included" licences; (ii) the set up and practices of collective management organisations (e.g. even without a mandatory collective management regime applying to them, IPTV providers are usually licensed by the music sector CMOs; it is not excluded that, upon the introduction of mandatory collective management, they might need to obtain licences from additional CMOs, e.g. those representing film producers, notably in the scenario where film producers' retransmission rights cannot be cleared with broadcasters as part of the "all-rights-included" licences). Licensing costs: due to the confidentiality of information concerning specific licence fees it is not possible to draw conclusions regarding the impacts of Option 1 in this regard. Impacts on competitiveness: It could be argued that Option 1 would benefit a specific category of retransmission services - those provided over "closed" electronic communications networks - and that other retransmission services (OTT) would be subject to a less favourable licensing regime, resulting potentially in a competitive disadvantage for them. However, due to the experimental / niche nature of OTT retransmission services, it is questionable whether they are equivalent to retransmissions over "closed" electronic communications networks. Rightholders Impacts on the management of rights: Option 1 would imply a shift from individual licensing to collective management of rights for retransmissions over IPTV and closed networks. Considering that mandatory collective management already applies to cable retransmissions, Option 1 would mainly constitute an incremental change for rightholders. Furthermore, as explained above, the collective management of rights for these types of retransmissions is already in place in a number of MS (on the basis of legal mechanisms or market practices). In other MS, the shift to mandatory collective management may limit the rightholders' ability to determine licensing conditions and fees (see below). The compliance costs would be marginal as the same network of CMOs which is used to license rights to cable retransmissions could be used (and actually is already used in some MS) to license rights to retransmissions by means other than cable. Impacts on licensing revenues: Overall, since Option 1 is expected to help increase the number of the retransmission services provided over "closed" electronic communications networks as well as the number of TV / radio channels they offer, it is likely to generate additional licensing opportunities for the rightholders and have a positive impact on their licensing revenues. As regards individual rightholders, Option 1 would have no direct impact on the licensing revenues of those individual rightholders whose retransmission rights are already managed by CMOs as a result of national law or practical arrangements by the market players (voluntary collective licensing). In particular, when collective management is a standard practice in the music sector (for authors' rights and, often, producers' rights), Option 1 is not expected to lead to a change in licence fees and, consequently, licensing revenues. Option 1 may have an impact on the licensing revenues of the individual rightholders (e.g. AV producers) whose retransmission rights are not currently managed by CMOs and this impact may differ depending on the relative size of the right holder and his capacity to 47 manage a network of licensing deals with numerous foreign retransmission service providers. On the one hand, a relatively big right holder (e.g. a major US film studio, a large record label) with resources to manage numerous licensing deals might be able to earn more from direct licensing of retransmission rights to retransmission service providers compared to the revenues stemming from the mandatory collective management. Such rightholders may prefer to retain control over licence fees and other licence terms. Due to the confidentiality of information concerning specific licence fees it is not possible to draw concrete conclusions regarding the extent of a change between individual licensing and collective management in licensing revenues. On the other hand, a relatively small right holder (e.g. AV script writer) might not be getting revenue from the retransmission rights at all and, therefore, would benefit from the introduction of mandatory collective management. Despite these benefits, especially for smaller rightholders, most of rightholders who responded to the public consultation indicate that they are against this option due to the potential disruptive effect on the markets. Option 1 is also expected to have a positive impact on the licensing revenues of broadcasters: even if their rights would be excluded from the mandatory collective management regime, just as in the case of cable retransmission, it would be easier for broadcasters to have their programmes exploited abroad without having to clear themselves the underlying rights of other rightholders for the countries concerned. Option 1 is not expected to affect the territory-by-territory content financing and distribution models of AV rightholders, notably because most of the retransmission services provided over "closed" electronic communications networks rely on the infrastructures located in the territory of a particular MS. As regards CMOs, Option 1 would have a positive impact on them (e.g. on CMOs representing AV producers for the purpose of cable retransmission), as it would allow them to grant retransmission licences to and obtain licensing revenue from additional types of retransmission service providers – IPTV, mobile, satellite and DTT. The extent of the impact would depend on the number of licences granted to such providers and the licence fees paid by them, but a positive factor in this respect is that CMOs could extend their licensing activities at a low cost by applying the existing cable licensing arrangements. One-off compliance costs linked to extending these licensing agreements to new retransmission service providers could occur but they are expected to be limited. Consumers Impacts on the choice and prices of retransmission services: Option 1 is expected to play an important role in facilitating the launch of new services, and thus enabling consumers to have a better choice of different retransmission services (these include IPTV which is predicted to grow, but also e.g. satellite retransmission services). Easier copyright clearing mechanism could also result in consumers being able to watch / listen to a greater variety of TV / radio channels from other MS, e.g. those tailored to specific preferences of particular groups of consumers. This, in turn, could lead to more intense competition between different retransmission services and, potentially, lower prices for consumers. However, as there are more elements that affect the decision by operators to launch new services and their prices (e.g. whether premium or non-premium content is included, whether the service is bundled with other services), the concrete impact on the prices is difficult to predict. 48 SOCIAL IMPACTS Option 1 is expected to contribute to promoting cultural diversity, media pluralism and to respond to social and cultural needs of EU citizens by putting in place a legal framework enabling access to a wider range of TV / radio channels. IMPACTS ON FUNDAMENTAL RIGHTS Since Option 1 would expand the scope of the mandatory collective management and, therefore, limit the licensing choices of the rightholders, it would have an impact (a limited one, due to its scope of application) on copyright as a property right (Article 17 of the Charter) and on the freedom to conduct a business (Article 16). However, Option 1 would have a positive impact on the freedom of information (Article 11 of the Charter). Option 2 – Mandatory collective management of rights to retransmission of TV / radio broadcasts by means of any retransmission services, irrespective of the retransmission technology or network used, as long as they are provided to a defined number of users (subscribers, registered users) IMPACTS ON STAKEHOLDERS Retransmission service providers Impacts on the variety and quality of TV / radio retransmission services: Option 2 would enhance the level of legal certainty for the benefit of a wide range of retransmission services - IPTV, OTT, satellite, DTT, mobile - and can be expected to both (i) contribute to a greater variety of such services and (ii) provide an incentive to the retransmission service providers to expand the range of TV / radio channels offered to their subscribers. Impacts on costs of retransmission service providers: Transaction costs: this option is expected to reduce the transaction costs linked to the clearance of retransmission rights in the same way as Option 1. Licensing costs: As in Option 1. Impacts on competitiveness: Option 2 would benefit different types of retransmission services but could be seen as creating a competitive distortion between OTT services, depending on their business models (OTT retransmission services which do not have subscribers or registered users and rely on advertising would not benefit from the facilitation of rights clearance). Rightholders Impacts on the management of rights: The effects of the wider scope of Option 2 compared to Option 1 (OTT retransmission services covered) are difficult to assess due to the experimental / niche nature of those retransmission services. However, Option 2 may negatively affect rightholders that rely on individual or voluntary collective management of their rights and for which it is important to control the online retransmission of their content (notably, but not only, the AV industry). As explained in Option 1, big rightholders may prefer to retain control over licence fees and other licence terms. Given the importance, the experimental/niche nature of the OTT market and its potential large scale, the preference for control over the licensing of rights to OTT retransmission is stronger than in the case of retransmissions over "closed" networks. The OTT retransmission services are by their very nature not firmly linked to a particular territory, and their ability to ensure a controlled environment is limited if compared e.g. to cable or IPTV (which are normally limited to national or regional territories). Also, content 49 delivered over the open internet can be more easily intercepted than content delivered over "closed" networks such as IPTV.133 Finally, as such services are not linked to any particular infrastructure, their number can potentially be very high. Impacts on licensing revenues: As Option 2 would extend to a wide variety of retransmission services (notably OTT) it could pose a risk that rightholders would not always be able to choose the optimum business strategies in order to obtain the return on investment made. This risk is especially relevant for retransmissions via OTT services. In particular, the same content could be made available in a territory at the same time through different services, as a result of right holder's exclusive distribution deals as well as retransmission of foreign TV channels (for example, a premium TV series being available at the same time through a Subscription VoD (SVoD) service and through an online service retransmitting foreign channels). This in principle is not different from Option 1 but the impact of such cases could be much greater given the cross-border nature of OTT services, their potential big scale (as they are not linked to any particular infrastructure), the fact that they have a more limited ability to ensure that consumers from other territories will not be able to access the service and the fact that OTT services are more prone to illegal interception. This could reduce the value of exclusive distribution deals based on different windows of exploitation and undermine the territory-by- territory distribution strategies. Due to the possible overlap between different windows (pay TV, VoD, SVoD and free TV) rightholders may become reluctant to license their content for the free window, since such content could be retransmitted online in other MS through mandatory collective management. As regards CMOs, Option 2 is likely to have a positive impact on them (e.g. on CMOs representing AV producers for the purpose of cable retransmission), as it would allow them to grant retransmission licences to and obtain licensing revenue from a wider range and greater number of retransmission service providers (at a low cost - by applying the cable licensing arrangements). Consumers Impacts on the choice and prices of retransmission services: Just as Option 1, this option is expected to contribute to more intense competition between different retransmission services and a greater choice of TV / radio channels from other MS and hence, potentially, to lower prices for consumers. However, the risk of overlap between different windows of exploitation mentioned above may result in less premium content being available through free-to-air TV. SOCIAL IMPACTS Option 2 is expected to promote cultural diversity, media pluralism and to respond to social and cultural needs of EU citizens by putting in place a legal framework enabling access to a wider range of TV / radio channels. The possible impact in terms of licensing of premium content to free-to-air broadcasters may nevertheless negatively affect the access to cultural diversity and in turn have a negative effect regarding addressing social and cultural needs of EU citizens. IMPACTS ON FUNDAMENTAL RIGHTS Since Option 2 would expand the scope of the mandatory collective management and, therefore, limit the licensing choices of the rightholders, it would have a significant impact on copyright as a property right (Article 17 of the Charter) and on the freedom to conduct a 133 Source: IHS Technology, "Current market and Technology Trends in the Broadcasting Sector", May 2015, p.19. 50 business (Article 16). However, Option 2 could have a positive impact on the freedom of information (Article 11 of the Charter) depending on the willingness of rightholders to license their content for the free window. 3.2.3.4. How do the options compare? Option Effectiveness Efficiency Impact on stakeholders Social impacts and fundamental rights Baseline (0/-) Sub-optimal (0) No direct costs (0) Impacts on (0) No direct impact availability of TV stakeholders would on cultural diversity and radio depend on market (0) No direct impact broadcasts from developments on fundamental other MS on rights different retransmission services Option 1 – (+) Would (0/-) Possible one- (+) Reduced transaction (+) Positive impact Mandatory enhance the off costs linked to costs for retransmission on cultural diversity collective availability of concluding service providers (0/-) Limited management of different licensing (0/+) More licensing negative impact on rights to retransmission agreements revenue for those the property right retransmission services and TV / between individual rightholders (+) Positive impact of TV / radio radio broadcasts retransmission that do not have the on the freedom of broadcasts by from other MS service providers possibility to license information means of IPTV and CMOs, but rights individually and other expected to be (especially small) and retransmission limited CMOs services (+) Better choice of provided over different retransmission "closed" services and TV / radio electronic broadcasts from other communications MS for consumers networks Option 2 – (+) Would (0/-) Possible one- (+) Reduced transaction (+/-) Positive impact Mandatory enhance the off costs linked to costs for retransmission in terms of access to collective availability of concluding service providers, a variety of channels management of different licensing including certain types of may be undermined rights to retransmission agreements OTT by the reduced retransmission services and TV / between (-) Risk of undermining availability of of TV / radio radio broadcasts retransmission rightholders' exclusive premium content on broadcasts by from other MS service providers online rights and free-to-air TV means of any and CMOs, but distribution strategies, (-) Negative impact retransmission expected to be leading to a reduction of on the property right services, limited licensing revenue (0/+)Moderately irrespective of (+/-) Better choice of positive impact on the different retransmission the freedom of retransmission services and TV / radio information technology or broadcasts from other network used, as MS for consumers, but long as they are risk of limited provided to a availability of premium defined number content through free-to- of users air TV (subscribers, registered users Option 1 is the preferred option, as it would enhance the availability of different retransmission services and TV / radio broadcasts from other MS, while limiting the impacts on rightholders. By contrast, the baseline option would not allow reaching the 51 objectives identified in this IA and Option 2 entails risks for rightholders in terms of distribution strategies and licensing revenues, which may affect the availability of content for consumers. Proportionality of the preferred option and impacts in MS: Option 1 is a proportionate intervention to the objective of enhancing access to retransmission services and to TV and radio programmes from other MS. It affects the licensing choices of rightholders in a limited manner, by extending the mandatory collective management of rights only to certain types of retransmission services provided over closed networks. The impacts of Option 1 on copyright as a property right would be justified in view of the Treaty fundamental freedom to provide and receive services. Option 1 would require limited changes in a number of MS, where legal or practical solutions are already in place to facilitate licensing of retransmission of TV and radio broadcasts by means other than cable. The impact of Option 1 would be stronger in other MS, where such solutions do not yet exist. 3.3. ACCESS TO AND AVAILABILITY OF EU AUDIOVISUAL WORKS ON VOD PLATFORMS 3.3.1. What is the problem and why is it a problem? Problem: Access to and availability of EU audiovisual works on VoD platforms is still limited. Description of the problem: The on-demand market of audiovisual works134 is becoming increasingly important. Consumers' spending on digital video increased by 42.8 % in 2013 and reached a total of €1.97 billion.135 The SvoD market evolves more rapidly than other VoD markets. The revenues of the SVoD market have grown from €40.7 million to 844 million between 2011 and 2014.136 The number of VoD services in Europe is also increasing, with around 2,000 services in Europe.137 It is expected that the VoD market will continue to increase significantly in the 5-10 next years.138 However, access and availability of EU AV works on VoD platforms remain limited. At EU level, only 47 % of EU films released in cinemas between 2005 and 2014 are available on at least one VoD service.139 All works are not equally affected by the limited online availability: small productions are more affected than big productions that benefited a theatrical release and promotion efforts. Apart from classical works, old works are less available than new ones.140 The type of VoD also has an influence on the availability of works: works are more often and quickly available on TVoD (in particular EST), than on SVoD. This is generally due to the release windows system, in which SVoD comes last.141 Finally, the offer on VoD platforms greatly varies from one MS to 134 The on-demand market of audiovisual works (or Video-on-Demand ('VoD') market) as understood here includes (i) Subscription VoD ('SVoD') and (ii) Transactional VoD ('TVoD') which itself includes buy services (EST- Electronic self-through) and rental services (DTR – Download to rent). It also includes AVoD (Advertising-supported Video-on-Demand) and FVoD (Free Video-on-Demand). 135 European video: the industry overview – International video federation, 2014. 136 EU Observatory- Study on-demand markets in the European Union – 2014 and 2015 developments. 137 Data for February 2014. European Audiovisual Observatory, Study on on-demand audiovisual markets in the European Union, 2014. 138 EU Observatory – On-demand markets in the European Union – 2014 and 2015 developments. 139 In comparison, 87 % of US films are available on VoD. See C. Grece, "How do films travel on VoD and in cinemas in the European Union – A comparative analysis", May 2016. 140 As it has been highlighted in recent reports, see Annex 8A. 141 Traditionally, first comes the theatrical release, then DVD and TVoD, then pay TV and free TV and coming last, SVoD. See Annex 8B for an overview of the main actors in the audiovisual industry. 52 another and European AV works are not often available on platforms outside their home country. For instance, a recent study shows that EU films are in average available on VoD in only 2.8 countries.142 VoD platforms are likely to become essential in terms of access to AV works.143 Therefore it is necessary that EU AV works benefit from this new channel of distribution. Moreover, this also constitutes an opportunity to develop legal offer that could help fighting piracy.144 Several reasons related to the licensing of online rights contribute to limit availability of European AV works on VoD platforms. Drivers: [Difficulties in the acquisition of rights] A first important difficulty derives from, contractual blockages generally linked to licensing practices145 based on exclusivity of exploitation rights and on the release windows system. They limit the online availability of AV works on VoD platforms. A typical situation is where all the rights (including VoD rights) to a specific work have been granted on an exclusive basis to an entity who is not interested in the online exploitation of the work (e.g. a broadcaster to whom exclusivity was granted as a counterpart for the financing of the work). Another situation is when a right holder decides to hold back online rights as long as the rights for a theatrical release have not been licensed, in order to keep open its chances to get the highest revenues. Some rightholders want indeed to keep maximum flexibility as regards exploitation rights, even if this leads to no exploitation on VoD platforms. In those cases, the online exploitation of the work remains blocked for an indefinite time. When digital exploitation occurs, rightholders often decide to enter the VoD exploitation only when revenues from other windows have been secured.146 For instance, broadcasters often insist upon full or partial holdbacks against either TVoD or SVoD exploitation during the period covered by their licence.147 In those cases, the online exploitation of a work occurs at the very end of the release windows.148 This may negatively impact the attractiveness of VoD offers. [Complex clearance of rights] Secondly, clearance of rights for VoD exploitation can be complex. It is not always easy to determine who owns the digital rights (e.g. lack of any licence from the initial author149 or succession issues) or whether all the rights for the VoD 142 In comparison, US films are available in 6.8 countries. See C. Grece, "How do films travel on VoD and in cinemas in the European Union – A comparative analysis", May 2016. 143 59 % of Internet users (respondents) have accessed or downloaded audio-visual content (films, series, video clips, TV content, excluding sports) in the last 12 months. Eurobarometer 411 (August 2015). 30% of respondents have paid for that access or downloading. 144 See Annex 8A – VoD as a means to fight piracy. 145 For an overview of the value chain and digital distribution, see Annex 8C. 146 Study "Multi-territory licensing of audiovisual works in the European Union", October 2010. 147 Study on the fragmentation of the single market for on-line video-on-demand services: point of view of content providers, study commissioned by the European Commission (DG CONNECT) and prepared by iMinds (SMIT), p. 36: "(…) some sector stakeholders, in particular pay TV channels, use release windows as a means to hamper the VoD market's development. By imposing 'unreasonable' holdback periods, these pay TV players negatively impact the attractiveness of legal VoD offers". 148 This is particularly true for SVoD (contrary to EST). 149 In France, this situation has been addressed by the conclusion of an agreement ('protocole d'accord') between the SACD and organisations of producers. This agreement was extended to the whole sector in 2007 (see 'Arrêté du 15 février 2007'). This agreement provides for a standard clause to be included in the contracts to allow VoD exploitation. This agreement also includes a presumption of licence for previous contracts. This aims at lifting obstacles at the very beginning of the chain of exploitation (initial authors) and at providing remuneration to initial authors. 53 exploitation have been cleared. For instance, it has been reported that the rights to music included in a film had not been cleared for SVoD exploitation, leading to the impossibility for a VoD platform to include this work in its SVoD catalogue. [Lack of efficient licensing model] A third and more significant obstacle is the lack of efficient licensing model for online exploitation rights. This mainly derives from the poor return on investment linked to making the works available on VoD platforms. As regards the rightholders and distributors, the exploitation on VoD platforms is still an emerging market150 and, at least for SVoD, it comes at the end of the release windows. Therefore the remuneration that is collected for this mode of exploitation remains limited.151 The revenues will depend on the sales models and the VoD type. For instance, SVoD is generally remunerated via a flat fee (around 3,000-10,000 for 18 months) when TVoD will be remunerated by a percentage of the sale price.152 A study153 shows that a right holder received approximately €1.5 from each VoD rental, but a sale of the same film on DVD or Blu-ray came with at least three times higher revenues.154 Currently, revenues from theatrical exploitation largely outweigh VoD revenues.155 This low remuneration could by itself prevent rightholders and distributors from exploiting VoD rights, in particular if there is a risk that the availability of works on VoD platforms undermines revenues from more profitable distribution channels (e.g. DVD, Blu-ray). In view of the low revenues, transaction and technical costs156 can be too heavy, in particular for small productions, old works or in the absence of traditional commercial distribution of a work in a given territory.157 Rightholders therefore need a highly efficient licensing model (i.e. easy contact, negotiations kept to a minimum and standard contracts) to limit the costs. In this respect, big studios (mainly American studios) are better equipped than small or even medium producers. This could explain why only 27 % of films available on VoD and 30 % on SVoD in the EU are European.158 As regards VoD platforms and aggregators, several costs affect their ability to include more works in their catalogue. Firstly, the price of the works can prevent them from including these works in their catalogue. With limited budgets, VoD platforms have to make choices and would only pay high licence fees for highly valuable works.159 Secondly, transaction costs can be important, in particular when contracting with small or medium producers. Except for highly valuable works, VoD platforms generally prefer to conduct negotiations with big studios covering a whole catalogue than individual negotiations with small or medium 150 See Annex 8A. 151 On the revenue streams in the VoD sector, see Annex 8D. 152 See the study commissioned by uniFrance films, "New French and European film markeys – Digital: a new growth driver for intra-community circulation and export?", Ernst& Young, March 2015. 153 Study carried out for the European Commission "Analysis of the legal rules for exploitation windows and commercial practices in EU Member States and of the importance of exploitation windows for business practices", p. 36 (2014). 154 Mission sur le développement des services de vidéo à la demande et leur impact sur la création: centre national du cinéma et de l'image animée, Hubac, S. (2010). 155 See Annex 8A. 156 Technical costs are briefly described in Annex 8A. 157 Many European works are not released in all EU Member States. VoD exploitation could compensate this absence. However, in the absence of any previous distribution scheme in a given territory, transaction costs would be particularly high as they would only concern VoD exploitation. 158 Compared to 59 % of US films on VoD and 60 % on SVoD (based on the number of cumulative film titles). Sample of 75 VoD and 16 SVoD catalogues. "Origin of films in VoD catalogues in the EU". European Audiovisual Observatory. November 2015. 159 For which exclusivity plays a role, see Annex 8A. 54 producers covering only few titles. With multiple individual negotiations come diverse and multiple demands from rightholders. Aggregators, acting as intermediaries, facilitate contacts and agreements between rightholders, their representatives and VoD platforms.160 However, aggregators face similar issues: a burdensome licensing process and title-by-title negotiation.161 To some extent, technical costs162 can also affect VoD platforms and aggregators negatively. Consequences: All above-mentioned obstacles, either by themselves (e.g. a contractual blockage) or as a combination (contractual blockage reinforced by a poor return on investment) can explain why some European AV works, in particular small productions, are not available on VoD platforms. Only half of European AV works released in cinemas are indeed available on VoD platforms and VoD platforms' catalogue do generally not include more than 30 % of European works. How the problem would evolve: In conclusion, despite the growing number of online content services, many AV works (and among them, many European works) would not find their way to online exploitation. Evolution of the market could improve the availability of these works on VoD platforms, however obstacles, including related to the licensing of rights, are likely to persist. 3.3.2. What are the various options to achieve the objectives? The options below focus specifically on the licensing problems and the difficulties of acquisition of rights limiting the availability of European AV works on VoD platforms, described above. The rest of the issues will be addressed in parallel by the accompanying measures as described in the Communication "Towards a modern, more European copyright framework"163 and in the framework of the 'Creative Europe' programme. Baseline No policy intervention. This option would rely on the natural evolution of the VoD market. As VoD will become an increasingly important way to access AV works in the coming years, it is likely to gain in financial attractiveness for rightholders. Stakeholders' views Following discussions and meetings with stakeholders' representatives, it appears that producers and distributors (and to a certain extent, aggregators) would in general support this option since most of them consider that the VoD market is still emerging and can regulate itself. Nevertheless, as it appears from meetings with some stakeholders' representatives, authors, some producers and VoD platforms generally consider that this option would not be sufficient to solve the obstacles leading to the limited availability of AV works on VoD platforms. This view is likely to be shared by consumers since they will continue to face limited availability of EU AV works on VoD platforms. 160 Since 2015, the MEDIA programme supports "ready-to-offer" catalogues of European films – see Annex 8E. On the role of aggregators, see also Annex 8D. 161 Some of these issues will be addressed by accompanying measures announced in the Commission Communication (COM(2015) 626 final) of 9 December 2015. 162 Which are to a large extent similar to the ones for rightholder. See Annex 8A. 163 Commission Communication (COM(2015) 626 final) of 9 December 2015. See also Annex 8E. 55 Option 1 – Stakeholders' dialogue focusing on licensing issues and aiming at improving the proportion of EU audiovisual works available on VoD platforms Under this option, a stakeholders' dialogue would be put in place with the following elements:  A multi-party stakeholders dialogue aimed at exploring ways to improve the availability of EU AV works on VoD platforms.  The dialogue would take place at European level.  This stakeholder dialogue would focus only on licensing issues and related legal and contractual difficulties (e.g. unblocking of VoD rights). The main participants will therefore be authors, producers, sales agents, distributors, broadcasters, aggregators, VoD platforms (including telecom operators offering VoD services), with the underlying idea to gather together parties that do not enter directly into commercial agreements with each other.  This dialogue would be part of the accompanying measures announced in the Communication "Towards a modern, more European copyright framework" to ensure a wider access to content across the EU and, more particularly, to intensify the dialogue with the AV industry to find ways for a more sustained exploitation of existing European films. These measures will address consumers' expectations, including by encouraging MS to promote legal offer and to develop search tools to make EU AV works more findable and prominent.  The result could be the adoption of self-regulatory measures for improving the availability (for a more sustained exploitation) of EU AV works, including on VoD platforms. Stakeholders' views It is likely that stakeholders would support this option, as some individual initiatives from different stakeholders are already trying to address ways to improve availability of AV works (specifically European). This option would bring all stakeholders, at European level, around the table with that same objective. If successful, the stakeholder dialogue would help streamlining licensing practices as regards digital exploitation. Following meetings with stakeholders' representatives, it appears that authors and VoD platforms in particular would support this measure but could consider it insufficient as it does not give a tool to solve individual difficulties (including contractual blockages). Consumers would support an option aiming at enlarging the catalogue of EU AV works on VoD platforms. Option 2 – Stakeholders' dialogue (Option 1) + Obligation for Member States to establish a negotiation mechanism to overcome obstacles to the availability of audiovisual works on VoD This option would maintain the European-level dialogue from Option 1 and will add the obligation for MS to introduce in their legislation a mechanism/process to facilitate negotiations aimed at facilitating the exploitation of EU AV works on VoD platforms, with the following elements:  The negotiation mechanism put in place by MS will help addressing individual cases. The stakeholders' dialogue will address problems of availability in a general framework and try to find solutions agreed by a multiplicity of parties.  The negotiation mechanism will aim at helping solving specific cases where licensing obstacles limit and/or block the availability and exploitation of an (or several) AV work(s) on VoD platforms (e.g. a producer whose work is not exploited on VoD platforms; a VoD platform that wants to make available a particular AV work). 56  The parties who can resort to negotiation will be those wishing to exploit VoD rights and those holding the rights.  MS will have to create a negotiation mechanism with the following essential elements: MS will identify an impartial instance that will facilitate negotiations between parties (without prejudice of the possibility to go to Court). The negotiation mechanism (i) will be determined by each MS after having consulted with the relevant stakeholders (practical issues such as the bearing of costs and timeline will therefore be left to MS); (ii) will be on a voluntary basis; and (iii) will require the parties' commitment to negotiate in good faith. The selected impartial party will (i) actively work towards reaching an agreement and facilitate negotiations; (ii) bring professional experience that can contribute to the conclusion of more commercial agreements.  The expected outcome would be commercial agreements leading to an increase of EU AV works being available on VoD platforms. There is no obligation for the parties to reach an agreement. Stakeholders' views Authors, aggregators and platforms would support this mechanism, as they generally favour measures addressed to unblock contractual blockages and/or solve disputes leading to the unavailability of works. Following meetings and discussions with stakeholders' representatives, it appears that producers, distributors, sales agents would support this option as well because it respects their contractual freedom while providing a framework to help solving individual cases. Consumers would support an option aiming at enlarging the catalogue of EU AV works on VoD platforms. Discarded options Restrictions to contractual freedom: Options imposing obligations that would restrict the stakeholders' contractual freedom were discarded. Such options would be more constraining on the parties since parties would have no choice but to start negotiations or to allow the exploitation of the works. However, their practical implementation and real impact on the market remain unclear. It is for instance unclear whether forced negotiations (even in good faith) could reach more agreements than negotiations on a voluntary basis. As regards any obligation to exploit, it would have been very difficult to determine the conditions under which such obligation could take place without expropriating the concerned person's rights. These options would heavily hinder the contractual freedom of the parties, which now freely negotiate and agree on the different types of exploitation that rightholders want to license, e.g. theatres, pay and free broadcasting, DVD, VoD. 3.3.3. What are the impacts of the different policy options and who will be affected? Approach The options presented above would affect all stakeholders in the VoD exploitation chain of EU AV works. Theses stakeholders include: Rightholders and distributors: This category includes rightholders (director of a movie, screenwriter, producers - to whom the rights to a work are generally assigned- and other possible rightholders), and broadcasters. This category also includes distributors and sales agents. For them, the following impacts have been considered: (i) impacts on the incentives for the exploitation of online rights (ii) impacts on costs. VoD platforms and aggregators: The following impacts have been considered: (i) impacts on availability of works in their catalogue; (ii) impacts on costs. Consumers: The impact on the availability of EU AV works on VoD platforms has been considered. Only the most significant and likely impacts are reported in this IA. The assessment is mainly qualitative, as the data available is very limited because of confidentiality issues. The assessment of Option 2 also includes an analysis of the impacts on Member States, in terms of implementation costs. 57 Baseline IMPACTS ON STAKEHOLDERS The limited availability of EU AV works on VoD platforms is expected to persist under the baseline option.164 The maturity of the VoD market in terms of revenues has not been reached yet. In the absence of any intervention at EU level, contractual blockages are likely to persist. In many cases, the licensing process for EU AV works would remain burdensome. Rightholders and distributors Impacts on the incentives for the exploitation of online rights: Most successful/mainstream works would find their way to VoD platforms. For other AV works (including numerous European works), low revenues and high costs would in many cases continue to prevent any online exploitation. The rightholders' business model based on exclusivity deals and release windows would not be affected under this option. Rightholders would only have limited incentive to intensify the online exploitation of their works. Apart from increased revenues, a possible incentive could be if the VoD market grows to the point that it becomes essential from the rightholders' point of view (e.g. as a marketing tool or as the main distribution channel). However, this is not likely to happen in the short term. Impacts on costs: The development of intermediaries (such as aggregators) in the VoD market could have a positive outcome on transactions costs for rightholders. Aggregators could help rightholders concluding agreements on the digital exploitation of their works. This would particularly be true for small producers and distributors who do not always have the resources to start direct negotiations with VoD platforms. However, this positive impact would be limited as intermediaries would continue to face high transaction costs, which could prevent their development. VoD platforms and aggregators Impacts on the availability of works in their catalogues: VoD platforms and aggregators would have no leverage under this option to unblock contractual blockages except for the growing importance of the VoD market (and revenues linked to it). Upstream, VoD platforms and aggregators are likely to face less clearance of rights issues. To facilitate clearance of rights, initiatives as the ones already launched in some countries could be launched in other countries. However, this would rely on individual initiatives, at national level. Downstream, even if reduced, costs would continue to be important (see infra). It would therefore still be difficult and expensive for VoD platforms and aggregators to conclude agreements with small and medium producers (and by consequence include their works in their catalogue). Impacts on costs: With the development of the VoD market, VoD platforms and aggregators could gain in bargaining power and bring forward in the negotiation standard contractual practices (such as "block-agreements"165). This could lead to some reduction of transaction costs. For some categories of works, VoD platforms and aggregators would also be able to better bargain the licence cost as VoD market gains in importance. Development of the VoD market could also lead to an increase of the licences prices but in proportion with an increase of the revenues. Under this option, VoD platforms would still face technical costs (when not borne by rightholders). 164 Only 32 % of respondents are able to find the audiovisual content they are looking for. Eurobarometer 411, August 2015. 165 Meaning that VoD platforms and aggregators could engage in negotiations with several rightholders at a time for a catalogue of works. 58 Consumers Impact on the availability of EU AV works on VoD platforms: As the VoD market evolves, consumers would be offered a larger choice of AV works. However, this choice would be limited to some extent as access to some categories of works would remain limited: (i) works whose rights are blocked by rightholders; (ii) works (mainly small productions) for which transaction costs would be too high) and (iii) works that VoD platforms are not willing to include in their catalogue. Costs for consumers to access catalogues of VoD platforms would remain unchanged. SOCIAL IMPACTS The baseline option will not sufficiently contribute to increase the availability of European AV works on VoD platforms, which participate in the cultural diversity. As a consequence, the visibility and circulation of European AV culture across the European Union would remain limited. This would constitute a lost opportunity for European AV works to reach a larger public. IMPACTS ON FUNDAMENTAL RIGHTS The baseline scenario would not have any impact on copyright as property right (Article 17(2) Charter) or on the freedom to conduct a business (Article 16), as it would not alter the current licensing system. Option 1 – Stakeholders' dialogue focusing on licensing issues and aiming at improving the proportion of EU audiovisual works available on VoD platforms IMPACTS ON STAKEHOLDERS Having a platform to meet and discuss licensing issues preventing availability of EU AV works on VoD platforms (e.g. exclusivity issues; release windows), at European level, could contribute to reach agreements (self-regulatory measures) for a more sustained exploitation of EU works, which would benefit all stakeholders involved. In particular, by setting the dialogue at European level, participation of representative European organisations will be secured and will produce a European effect of the potential self-regulatory measures that they will adopt. However, chances of reaching concrete agreements would depend on the willingness of the stakeholders to engage in constructive discussions and to take commitments. Rightholders and distributors Impacts on the incentives for the exploitation of online rights: The rightholders' business model based e.g. on exclusivity deals and release windows would not be affected under this option. The stakeholders' dialogue could lead to some agreement as regards the streamlining of licensing practices (for instance, development of standard clauses that could easily be included in contracts). This could encourage rightholders intensifying digital exploitation of their works. The stakeholder dialogue could also raise awareness as to the importance of clearing the rights for the producers. This could have a positive impact on distributors and other intermediaries down the contractual chain, and ultimately, on the availability of works on VoD platforms. Impacts on costs: The stakeholder dialogue could contribute to reduce costs linked to VoD exploitation (e.g. if the stakeholder dialogue help defining contractual standards that would streamline the licensing process and reduce transaction costs). 59 VoD platforms and aggregators Impacts on the availability of works in their catalogues: As mentioned above ('rightholders and distributors'), the stakeholder dialogue could have a positive impact on the streamlining of the licensing process and the clearance of rights.166 This could help increasing the number of works available in the VoD catalogues, in particular European works. However, by its nature, the stakeholder dialogue would only concern collective solutions and could not solve individual issues. Therefore, the impact of this option on works blocked in exclusivity deals are expected to be limited. It would indeed be necessary to start individual negotiations to obtain from a right holder that it renounces to its exclusivity. As regards release windows, this option could have a positive impact by bringing more flexibility. For instance, stakeholders could discuss under what conditions an earlier availability on SVoD platforms would be possible (for instance, stakeholders could discuss the possibility for rightholders to stop – even temporarily – the exploitation on SVoD in case of another, more valuable, distribution opportunity). Finally, the stakeholder dialogue could facilitate contacts between small and medium rightholders (or their representatives) and aggregators/VoD platforms. They could work together on ways to improve the inclusion of their works in an aggregator's or VoD platform's catalogue. Impacts on costs: The stakeholder dialogue could help reducing transaction costs. If successful, the stakeholder dialogue could lead to an agreement on new contractual standards. This could facilitate licences negotiation. Consumers Impact on the availability of EU audiovisual works on VoD platforms: Under this option, if the stakeholder dialogue helps reducing transactions costs and facilitating contacts between on the one hand, VoD platforms and aggregators, and on the other hand, rightholders (in particular producers), consumers would be able to enjoy a larger choice of works, including small productions (which are typically European works, as described in Section 3.3.1). They could also benefit from earlier access to some works on VoD platforms. It is likely that costs for consumers to access VoD services would remain unchanged or would only slightly increase in cases where SVoD platforms offer a substantially larger catalogue. SOCIAL IMPACTS Option 1 is expected to contribute to the objective by enabling a dialogue that could facilitate access to a wider range of European AV works. This would in the medium/long term increase the number of works available on VoD platforms. This would positively affect the visibility and circulation of European AV works across the European Union. IMPACTS ON FUNDAMENTAL RIGHTS The Option 1 scenario would not have any impact on the property right or on the freedom to conduct a business. Option 2 – Stakeholders' dialogue (Option 1) + Obligation for Member States to establish a negotiation mechanism to overcome obstacles to the availability of audiovisual works on VoD Impacts of the stakeholder dialogue, which is also part of Option 2, have been assessed under 166 As regards clearance of rights, initiative as the one launched by the SACD in France (see supra) could be discussed in the framework of the stakeholders' dialogue. This would allow a discussion and possible similar solution at European level. 60 Option 1. The impacts assessed below concern only the negotiation mechanism. 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.167 Successful negotiations unblocking licensing difficulties would contribute to reach or to go beyond the 20% minimum share of European works in catalogues of VoD platforms.168 Moreover, the negotiation mechanism would also have a beneficial effect on the type and variety of works making their way to VoD platforms. IMPACTS ON STAKEHOLDERS 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.169The 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. The nature of the negotiation process could lead to flexible solutions. Any potential guidelines or standards decided following the stakeholder dialogue could also be helpful to reach solutions. Rightholders and distributors Impacts on the incentives for the exploitation of online rights: 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. For instance, a producer having assigned rights to a broadcaster not willing to exploit the work on VoD could rely on the negotiation mechanism to try unblocking the situation. Rightholders could also use the negotiation mechanism to try unblocking situations of systematic refusals from VoD platforms or aggregators to include their works in the VoD catalogues. 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. In some cases, VoD platforms may be reluctant to start negotiations. Indeed, VoD platforms are not willing to include all and any AV work in their catalogue. They carefully select the works that will be part of their catalogue and find the right balance between costs and benefits. Even when costs are not particularly high, they would still need to be recovered by means of a minimum amount of viewers. Some works would never achieve this threshold and VoD platforms would therefore not include them in 167 In the framework of the current reform of the Audiovisual Media Services Directive (Directive 2010/13/EU), an obligation for on-demand audiovisual media services to include in their catalogue at least 20 % of European works has been introduced (see Article 13.1 of the proposal). 168 The number of European AV works available on VoD/SVoD is one of the indicators that will monitor the achievement of the objectives. 169 See Section 3.3.1 for description of the problem. 61 their catalogue. Even for works that could achieve this threshold, some platforms, in particular those investing in original content such as Netflix, generally wish to limit the size of their catalogue to avoid any 'cannibalisation risk'.170 Impacts on costs: 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. VoD platforms and aggregators Impacts on the availability of works in their catalogues: 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 flexibility of the negotiation mechanism, the participation of different parties and the intervention of a moderator could help parties finding suitable solutions (see supra 'Rightholders and distributors'). 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. VoD platforms would for instance be able to conclude other agreements with stakeholders, based on the previous agreements obtained via the negotiation mechanism. 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. Impacts on costs: As this is the case for rightholders and distributors, VoD platforms and aggregators may have to bear some limited costs linked to the participation in the negotiation mechanism. However, they would also benefit from easier and quicker negotiation with rightholders or distributors, which could allow them to enrich their catalogue and attract more viewers. Since the negotiation mechanism would be used to address individual licensing blockages cases, it would not have an impact on technical costs. Consumers Impact on the availability of EU audiovisual works on VoD platforms: If the negotiation mechanism achieves unblocking some situations and facilitating collaboration between some parties, consumers could benefit from a larger catalogue of works, in particular European, on VoD platforms. Impact on the costs for consumers would be similar as the one under Option 1. 170 For instance, as regards EST or TVoD, it is important to keep the number of 'cheap' movies limited, to avoid any cannibalisation of the 'expensive' movies (to avoid that viewers opt for the cheaper films on a regular basis). This is also applicable for SVoD services (e.g. Netflix considers that "instead of trying to have everything, we should strive to have the best in each category"- see Netflix long term view document, p. 5, available on http://files.shareholder.com/downloads/NFLX/2441659654x0x656145/e4410bd8-e5d4-4d31-ad79- 84c36c49f77c/IROverviewHomePageLetter_4.24.13_pdf.pdf). SVoD services with original content also do not want to see their own productions cannibalised by cheaper works. 62 IMPACTS ON MEMBER STATES Impacts on implementation costs: MS would need to set up the negotiation mechanism, which would entail some one-off costs. However, MS already have different bodies171 with expertise and experience in the AV sector, on which they could rely to implement the negotiation mechanism. The costs would therefore vary according to the scope of existing structures, but are expected to be relatively low. For example, when the implementation of dispute resolution mechanisms aimed at solving disputes arising between CMOs and their members was assessed, it was reported that the costs of establishing such mechanisms would be in the range of €35,000.172 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. Examples of existing arbitration or mediation mechanisms help to estimate the range of operating costs involved. On a low end estimate, CMOs that operate alternative dispute resolutions report that the operating costs would be in the range of €11,000 per year. At the other end of the scale, the operating costs of the French cinema mediator (le Mediateur du cinema) amounted to €217,526 euros in 2014.173 However, the scope of activity this body is different from the negotiation mechanism envisaged here. SOCIAL IMPACTS Option 2 would have a positive impact on cultural diversity, as resolution of individual cases would contribute to enriching the catalogues of European works available to consumers (including the ones for which the rights were blocked). This would in the medium/long term increase the visibility and circulation of European AV works across the European Union. IMPACTS ON FUNDAMENTAL RIGHTS 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. 171 For instance, Member States have national film agencies (e.g. the Austrian Film Institute or 'Österreichisches Filminstitut'; the Lithuanian Film Centre, the Irish Film Board, in France, the Centre National du Cinéma et de l'image, the Estonian Film Institute, etc.). Each Member State also has an audiovisual regulator, which are part of the European Regulators Group for Audiovisual Media Services ('ERGA'). ERGA advises and assists the Commission in the implementation of the AVMS Directive, facilitate collaboration between regulatory bodies and facilitate exchange of good practices in the sector. A list of the national regulatory bodies can be found on the following link: https://ec.europa.eu/digital-single-market/en/list-eu-audiovisual-regulators 172 See the impact assessment accompanying the document Proposal for a Directive of the European Parliament and of the Council on collective management of copyright and related rights and multi- territorial licensing of rights in musical works for online uses in the internal market (p 119, 176) 173 Source: 2014 Activity Report, February 2015. http://www.lemediateurducinema.fr/Mediateur/Includes/Pdf/rapport_2014.pdf These costs concerned year 2014 during which 74 cases were dealt with by the Médiateur. 63  3.3.4. How do the options compare? Option Effectiveness Efficiency Impact on stakeholders Social impacts and fundamental rights Baseline (0) Contractual (0) No direct costs (0) Impacts on (0) No direct impact blockages, clearance associated with the stakeholders would on fundamental issues, issues linked baseline option. depend on the evolution rights. to strict release of the VoD market. (0)No direct impact windows and on cultural diversity burdensome licensing and the visibility and processes would circulation of EU AV persist. works. Option 1 – (0/+) Could result in (0/-) Limited costs (0/+) Main impacts on (0) No direct impact Stakeholde some improvements linked to the stakeholders would on fundamental rs' dialogue as regards the organisation of the depend on the possible rights. clearance of rights, stakeholders' changes introduced by (0/+) Positive impact and the streamlining dialogue. the stakeholders' on cultural diversity of the licensing dialogue. If the and the visibility and process. To some stakeholders' dialogue circulation of EU AV extent, it could leads to the adoption of works provided that provide some some standards and the stakeholder flexibility as regards practices (e.g. dialogue leads to release windows. contractual clauses) and more works available Contractual more flexibility, there on VoD platforms. blockages linked to would be a possible exclusivity deals reduction of licensing would persist. and clearance costs. Option 2 – (+) In addition to (0/-)Limited costs (0/+) Possible reduction (0) No direct impact Stakeholde collective solutions linked to the of licensing and on fundamental rs' dialogue that could be brought organisation of the clearance costs (cf. rights. and by the stakeholders' stakeholders' supra). (+) Positive impact negotiation dialogue, individual dialogue and (+) Possibility to use the on cultural diversity mechanism cases could also be possible negotiation mechanism and the visibility and addressed. This participation in the to unblock individual circulation of EU AV would provide a negotiation cases (e.g. contractual works thanks to the framework for mechanism. blockages) and to greater availability of stakeholders to solve (0/+) Possible facilitate contractual EU AV works on contractual blockages reduction of collaboration between VoD platforms and other licensing transaction costs by stakeholders. (which would also individual issues. speeding up the include AV works negotiation process. for which the rights were blocked). 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. The stakeholders' dialogue could also increase flexibility in licensing VoD rights and facilitate to some extent contacts between small and medium rightholders (or their representatives) and aggregators/VoD platforms. As regards individual cases, the negotiation mechanism could help parties finding suitable solutions to allow the licensing of VoD rights. In contrast, Option 1 would not address these individual situations and would therefore be less effective. Since the negotiation mechanism would be on a voluntary basis, this solution would heavily rely on the will of parties to reach agreement. All blockages could therefore not be solved under this solution. The compliance costs related to Option 2 are expected to be compensated by the benefits it would generate for the parties, e.g. by speeding up the negotiation process. This is 64 all the more the case since the participation in the negotiation mechanism would be on a voluntary basis, stakeholders would be protected against abusive demands from other stakeholders. Finally, Option 2 has no impact on the rightholders' business model based on exclusivity deals and release windows. The impact on the right to property is therefore neutral. Proportionality and impacts on MS: 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. Depending on the approach adopted, MS may have to introduce the negotiation mechanism in their legislation and set up the related body, which would entail some limited costs, as explained above. 3.4. OUT-OF-COMMERCE WORKS IN THE COLLECTIONS OF CULTURAL HERITAGE INSTITUTIONS 3.4.1. What is the problem and why is it a problem? Problem: Digitisation and dissemination of out-of-commerce works held by cultural heritage institutions, including across borders, in 'mass digitisation' projects, is adversely affected by difficulties in clearing rights Description of the problem: As part of their dissemination missions, cultural heritage institutions (CHIs) are willing to digitise works held in their collections and disseminate them to the public, notably online, including across borders.174 This activity is particularly relevant when collections are out-of-commerce (OoC),175 as OoC works are not available via any other channel but can still hold great cultural, scientific, educational, historical and entertainment value.176 The digitisation and dissemination of in-copyright OoC works as part of 'mass digitisation'177 efforts is however faced by distinct difficulties and high transaction costs for clearing the relevant rights.178 This problem contrasts with the inherently low current commercial value of the works at stake. CHIs have generally reported problems with mass digitisation projects despite the large demand for online access to all types of works in their collection.179 174 The cultural importance of digital heritage collections is reflected in the well-established EU policy on the digitisation and online accessibility of cultural material, notably as outlined in the Recommendation of the European Parliament and of the Council of 16 November 2005 on film heritage and the competitiveness of related industrial activities (2005/865/CE), the Commission Recommendation on the digitisation and online accessibility of cultural material and digital preservation (2011/711/EU), the Council conclusions on the digitisation and online accessibility of cultural material and digital preservation (10-12 May 2012), the Commission Communication "Towards an integrated approach to cultural heritage for Europe" (COM(2014) 477 final), and the creation of the Europeana project. 175 OoC works are works still under copyright protection, copies of which are not commercially available to the public through the customary channels of access and are not expected to become available in the future. See more specific definition of OoC works under Options 1 and 2 below. 176 Numerous institutional respondents to the 2013-2014 public consultation pointed to a large demand from citizens, teachers, students and researchers for the digital availability of works in heritage collections, particularly from the 20th century (which are likely to be still protected by copyright in most cases). 177 'Mass digitisation' refers here to large-scale projects for the digitisation and making available online of collections or parts of collections of a given CHI. 178 These are the reproduction and making available rights for online dissemination, but might also include the broader communication to the public right and the distribution right. 179 Including in the 2013-2014 public consultation. 65 The collections of European CHIs are very large: for example, a 2010 study estimated that archives held 26.98 billion pages of archival records and that there were 10.81 million hours of audio materials in European CHIs.180 It is very difficult to give an estimation of the number of works that remain locked within the walls of CHIs as a direct consequence of copyright- related issues, as the feasibility of mass digitisation projects depends on a variety of factors.181 In a recent survey of cultural institutions carried out in the context of the Europana project, respondents estimated that only 55 % of their digital collections182 are available on their institutional website, 28 % in a national online aggregator183 and 22 % on Europeana.184 These data do not distinguish between in-copyright and public domain works and among the different possible causes. It is however reasonable to expect that if only copyright-protected works were considered, the level of works available online would be lower. Furthermore, practitioners in this field say that the relative underrepresentation of works from the 20th century (known as the '20th century black hole'), particularly its second half, and, generally speaking, of sound recordings and AV works185 in online collections is an illustration of the correlation between the copyright status of works in CHIs collections and their availability online. For example, only 10.93 % of works in a recent sampling made by the Europeana Foundation of works showing up in the Europeana portal belong to the second half of the 20th century.186 Drivers: [Size of OoC collections, age and type of works] Difficulties in rights clearance and transaction costs affecting mass digitisation are mainly related to the nature of the works involved:  The size of OoC collections that CHIs wish to digitise and further disseminate is often large,187 multiplying the resources that are required for rights clearance.188 For example, 180 See Annex 9A for estimations and data on the magnitude of CHIs collections at aggregate and institutional level. 181 Copyright-related issues are only part of the factors influencing the feasibility of digitisation projects by CHIs. Among other aspects is a significant funding challenge. In 2010, it was estimated that digitising the collections of Europe's museums, archives and libraries would cost €100 billion (N. Poole, "The Cost of Digitising Europe's Cultural Heritage. A Report for the Comité des Sages of the European Commission", November 2010). The cost of digitising the whole European film heritage would range between €500 million and 2 billion (T. Baujard et al.,"Challenges of the Digital Era for Film Heritage Institutions", December 2011). Other organisational, legal (notably data protection) and skill-related questions also play a crucial role in determining the feasibility of digitisation projects. On copyright and digitisation, see also Annex 9B. 182 Intended as comprising both digital reproductions of analogue works and born-digital works, and the related metadata. 183 See Annex 9A for more information on aggregators. 184 G.J. Nauta – W. van den Heuvel, DEN Foundation on behalf of Europeana/ENUMERATE, "Survey Report on Digitisation in European Cultural Heritage Institutions 2015", June 2015. 185 The latter are considered the most expensive to digitise in the first place, but also likely to be in- copyright in larger numbers than other types of work given the much more recent development of these modes of production. 186 The sample covered works from 1800 to today. See Annex 9C for more on this specific figure and illustrations of the '20th century black hole' and the presence of sound and audiovisual works in online digital collections. 187 See Annex 9A for data and examples on the extent of cultural heritage collections in Europe (data do not distinguish between in-copyright and public domain works, or between OoC and non-OoC works, but give a clear indication of the scale of digitisation efforts). 188 The cost of clearing rights can be reduced by the effect of innovative tools and projects like ARROW and FORWARD, and the database foreseen by the Directive 2012/28/EU of the European Parliament and of the Council of 25 October 2012 on certain permitted uses of orphan works (OJ L 299, 27.10.2012, p. 5–12), "the Orphan Work Directive". Except for orphan works, these tools are however 66  in a project on the history of genetics carried out in the UK on a collection of books from the 20th century, 5,459 individual authors were identified for 1,620 works, with 5 % of the works having more than 10 authors.189  Works are often old190 and have been, by definition, out of circulation. This means rightholders (or those who can clear the rights on their behalf) may be difficult to find and that the chain of title can be considerably long, complex and subject to uncertainty.191  The type of many of the works that are important from a heritage perspective – for example newsreels, photos, unpublished materials, or works that have never been intended for commercial circulation, such as political leaflets or trench journals192 – means that rights may have never been managed in any way. Time-demanding rights clearance means high transaction costs for CHIs: attempts to quantify such costs in a general way are difficult as each collection and process is different. Quantifications can however be based on individual case studies; available ones, mainly provided by CHIs, suggest figures varying between approximately €50 and €100 for a single book, between €5.70 and €50 for a single poster, between €0.70 and €1.70 for a single photograph, around €27 for a short amateur film, and €10 for mixed collections.193 [Suitable licensing mechanisms only available in some MS and for some types of works] Collective licensing, whereby single contracts are concluded with a CMO for entire collections of works, can be an evident answer to the transaction costs problem mentioned above. Yet, collective management of rights is not available for all types of works194 and CMOs may only grant licences for the rights mandated to them by the rightholders that they only of assistance in the identification of the copyright status, of the rightholders and the available licensors of the rights, and of determining whether they are in or out of commerce), but not in obtaining authorisations to use works and in the negotiation of licences as such. Their scope extends to certain types of works only (see Annex 9I for more information). 189 For more information on this project, see Annex 9D and R. Kiley, "Clearing rights to digitise books published in the 20th century: a case study prepared by the Wellcome Library, the Authors' Licensing and Collecting Society and the Publishers Licensing Society", June 2013. 190 As regards for example, their date of publication. 191 This can be a typical problem in Central and Eastern European MS that underwent transitions into and out of socialist economic systems. 192 Trench journals are works authored by and distributed among military personnel engaged in conflict, notably during WW1. Other types of relevant works that the Commission services came across in preparation of this IA include maps, postcards, posters, calendars, advertisement material, menus, school yearbooks, letters, annual reports, broadcasts, documentaries, screenplays, correspondence, cartoons, plans, drawings, herbaria, experimental and amateur films, sound recordings (including old formats like shellac records and wax cylinders), pamphlets, leaflets, government publications, ancillary and publicity materials related to other works, in addition to films, phonograms, books, newspapers and magazines, sheet music, paintings, sculptures, and other artistic objects. 193 Further data is presented in Annex 9D. Data in this area was only available in the form of case-studies using different methods and assumptions and they were mainly provided by CHIs. Available data specific to the transaction costs related to copyright clearance in the context of mass digitisation activities are scarce and differences among cultural sectors and individual situations make them unsuitable for comparisons or aggregation. The figures provided above and in Annex 9D should therefore not be compared, or considered and quoted as having general validity. 194 In the print sector, for instance, collective management plays an important role in licensing, as does for musical compositions. It is less widespread for visual works. In the audiovisual sector, on the other hand, licensing mostly takes place on an individual basis, which is the preferred licensing mechanism, including for the use in question, according to a large number of film producers who responded to the 2013-2014 public consultation. See Annex 9F for an overview of collective management practices per sector. 67 represent. Given the nature of the works at stake, however, it is quite common that part of their rightholders are not represented in the relevant CMOs. This makes it impossible for the latter to issue a licence that also comprises the rights of such 'outsider' rightholders. This situation undermines the usefulness of collective licensing in many of the cases at hand, leaving, again, individual rights clearance as the only solution for many works. Some MS have addressed the latter problem by establishing in national law, for example through extended collective licensing (ECL) or presumptions of representation, that licences issued by a CMO can apply to works of outsiders, under certain conditions, including the possibility for individual rightholders to 'opt out' their works from these licences.195 Under such legislation, CMOs can issue licences that cover entire collections, including works of outsiders, in full legal certainty. This means, for example, that if a CHI wishes to digitise and make available a collection of OoC books and part of the rightholders in the collection is not represented in the relevant CMO, that CMO will be allowed by the law, under certain conditions, to grant a licence to the CHI covering the full collection, except for rightholders that express their opposition to their works to be used. These mechanisms are however not available in all MS for the uses in questions and for all kinds of works.196 [Lack of cross-border effect of national solutions] Where licensing mechanisms exist, they only apply within the MS that has enacted them, in practice limiting access to works licensed under this type of mechanisms to one national territory. Some of such national developments follow a 2011 Memorandum of Understanding197 (hereafter: 'the 2011 MoU') agreed between right holder and library representatives under the auspices of the European Commission to facilitate the clearance of rights in OoC books and learned journals.198 The 2011 MoU however only applies to some categories of works.199 Successful national legislative and contractual solutions have also been preceded by stakeholder consultation processes, sometimes reflected in model contracts.200 Such experiences point to the important role played by stakeholder cooperation and engagement 195 See Annex 9E for more information on these mechanisms and actual examples. 196 See also European Commission, "Report on the Implementation of Commission Recommendation 2011/711/EU – 2013-2015", 2016. 197 Memorandum of Understanding on Key Principles on the Digitisation and Making Available of Out-of- Commerce Works, signed on 20 September 2011 (http://ec.europa.eu/internal_market/copyright/docs/copyright-infso/20110920-mou_en.pdf). 198 The MoU acknowledges the need that MS adopt legislative measures backing collective management schemes for rights clearance, foreseeing safeguards for non-represented rightholders, and calls for the European Commission to intervene to ensure legal certainty in a cross-border context as follows: "Calling on the European Commission, to the extent required to ensure legal certainty in a cross-border context, to consider the type of legislation to be enacted to ensure that publicly accessible cultural institutions and collective management organisations which enter into a licence in good faith applying these key principles are legally protected with regard to licensed uses of works of rightholders who have been presumed to be within the scope of the licence". 199 The potential of the 2011 MoU to act as a model for other types of works was recognised by the Commission Recommendation of 11 October 2011 on the digitisation and online accessibility of cultural material and digital preservation (2011/711/EU), which invited MS to create "the legal framework conditions to underpin licensing mechanisms identified and agreed by stakeholders for the large-scale digitisation and cross-border accessibility of works that are out-of-commerce". 200 For example, model contract terms based on extended collective licensing (ECL) for the digitisation and making available of images contained in CHI collections were finalised in October 2015 in SE. This was the outcome of stakeholder working groups set up in 2013 with the involvement of the national secretariat for national coordination of digitisation, digital preservation and digital access to cultural heritage (Digisam) and visual CMO Bildupphovsrätt (BUS). The model contract terms are not specific to OoC works only. 68 with public authorities on the field in the achievement of practical solutions, but this has occurred in some specific areas and MS only.201 Consequences: CHIs regularly report that difficulties in clearing rights can be, and often are, a defining barrier for proceeding with a project at all, or in selecting the works that will be included in one. This causes projects to be skewed toward public domain and pre-20th century works, or newer collections) or OoC collections remaining simply unavailable beyond CHI's premises, and not accessible across borders.202 More broadly, this situation means that the societal and economic benefits of the digitisation and dissemination of digitised cultural heritage are missed,203 including for certain rightholders in terms of better discoverability of 'dormant' works that can lead to further exploitation and therefore revenue possibilities. How the problem would evolve: The difficulties and costs of clearing rights in this area are influenced by various factors, but they are likely to persist for the foreseeable future. Although in the wake of the 2011 MoU and of EU recommendations204 the number of MS has increased that have national provisions allowing for collective licences also covering the right of 'outsiders', these solutions are not expected to develop across the EU in a uniform way. The main observed trend is for them to cover literary works only. Furthermore, cross-border barriers will remain as those solutions only have national application. 3.4.2. What are the various options to achieve the objectives? Baseline No policy intervention. CHIs would continue to rely mainly on individual licensing, or collective licensing where possible. Collective licensing would be supported by national legal mechanisms to cover the rights of outsiders only in a limited number of MS.205 Licences resulting from these mechanisms would be limited to one national territory. The 2011 MoU would continue to call on MS to adopt such mechanisms for books and learned journals, and to provide a basis for further collective licences for this category of works. Stakeholder views CHIs consider the status quo insufficient and would not support lack of policy action, as wouldn't individual end users/consumers. Within the cultural industries, views would be more mixed with some players, for example among film producers and commercial broadcasters, supporting no intervention at EU level, while others, such as authors and CMOs, favourable to EU intervention to varying degrees (at least to address uncertainty in cross- border contexts).206 201 See also Annex 9G for more information on the role of stakeholder cooperation in this area. 202 See R.Peters – L.Kalshoven, "What rights clearance looks like for Cultural Heritage Organisations – 10 case studies", Europeana Factsheet, 23 June 2016, for concrete examples provided by CHIs. 203 See Annex 9J for more information on the social and economic impact of digitisation. 204 Notably the Commission Recommendation on the digitisation and online accessibility of cultural material and digital preservation (2011/711/EU), which encouraged MS to create "the legal framework conditions to underpin licensing mechanisms identified and agreed by stakeholders for the large-scale digitisation and cross-border accessibility of works that are out-of-commerce", and a similar call in the Council Conclusions on the digitisation and online preservation of cultural material and digital preservation of 10-11 May 2012. 205 For examples of MS where this is already possible, via ECL, presumptions of representations or similar mechanisms, see Annex 9E. See also European Commission, "Report on the Implementation of Commission Recommendation 2011/711/EU – 2013-2015", 2016. 206 These stakeholder views are also evidenced by the 2013-2014 public consultation. 69 Option 1 – EU legislative intervention (i) requiring MS to put in place legal mechanisms to facilitate collective licensing agreements for OoC books and learned journals207 and to foster national stakeholder frameworks, and (ii) giving cross-border effect to such legal mechanisms.  Type of mechanisms: MS would be required to provide for adequate mechanisms in their legal system ensuring that voluntary collective licensing agreements between CHIs (i.e. publicly accessible libraries and museums, as well as archives and film or audio heritage institutions) and CMOs for the digitisation and dissemination of OoC books and learned journals (including embedded images) in their collections can also apply to the works of outsiders.  Scope of the mechanisms: (i) OoC books and learned journals first published in the MS where the licence is sought, (ii) the rights of reproduction, communication to the public (including making available) and distribution, and (iii) non-commercial uses.208 Books and learned journals would be considered OoC as defined in the 2011 MoU.209 MS would have the possibility to establish further national-specific criteria for works to be eligible for the mechanisms in question,210 which will have to be done in consultation with concerned rightholders and users.  Safeguards for rightholders: these mechanisms would have to reflect a set of features established at EU level to provide for adequate safeguards for rightholders, notably outsiders, as regards: (i) sufficient representativeness of the licensor CMO of rightholders in the relevant category of works, rights and uses in the MS where the licence is sought, (ii) the possibility for outsiders to opt out of licences prior and during licence terms, (iii) equal treatment of CMO members and outsiders, and (iv) transparency/publicity obligations. MS would otherwise remain free to choose the suitable mechanism according to their legal traditions, practices or circumstances.211  Cross-border effect: the legal possibility for the part of the licences that relates to outsiders to apply across borders in the EU would be established by EU law. Such cross- border effect would kick in after adequate information on the collections of works covered by the licence has appeared on a publicly accessible European transparency web portal for a sufficient period of time, except for works of authors that might have opted out during that period.  Stakeholder frameworks: MS would also be required to foster national stakeholder frameworks and dialogue at national level with a view to facilitate the practical implementation of the licensing mechanisms deriving from the obligation defined above, beyond purely legal aspects, and to achieve similar outcomes as the 2011 MoU in other sectors. 207 In line with the scope of the 2011 MoU. 208 With the possibility for CHIs to generate revenues but only to cover and recoup their costs. 209 Under this definition, a work is considered out-of-commerce when the whole work, is, in all its versions and manifestations, no longer commercially available in customary channels of commerce, regardless of the existence of tangible copies of the work in libraries and among the public, including through second hand bookshops or antiquarian bookshops. 210 For example a cut-off date, i.e. books published before a certain date (as it is the case in DE), or an original language criterion, like in PL legislation where the OoC rules are not applicable to works written in a foreign language and translated into Polish. 211 See Annex 9E for a description and examples of possible mechanisms, which include for example presumptions of representation or ECLs. 70 Stakeholder views Most CHIs would consider this option not satisfactory because it covers books and learned journals only (as would individual users/consumers),212 even if they would welcome legal certainty as regards the cross-border effect.213 Views within the right holder constituencies would vary. Some, like certain authors and CMOs, would welcome the option as it ensures cross-border effect to the licensing mechanisms foreseen by the 2011 MoU. Others, especially outside of the books and journals sector, would consider it irrelevant or oppose this approach. Some right holder sectors might be willing to engage in stakeholder dialogues with a view to voluntary solutions.214 Option 2 – EU legislative intervention (i) requiring MS to put in place legal mechanisms to facilitate collective licensing agreements for all types of OoC works and to foster national stakeholder frameworks, and (ii) giving cross-border effect to such legal mechanisms. Same as Option 1, but:  Covering all types of OoC works, with a similar attachment to a single MS as in Option 1. Licences would have to be sought in the MS of first publication or, in the absence of publication, first broadcast, or – in the case of cinematographic or AV works – the MS where the headquarters or habitual residence of the producer is located.215 In cases where attachment to a MS (or to a third country, in which case the mechanism could not be used) cannot be established with certainty after reasonable efforts, the licence would have to be sought in the MS where the CHI is established.  A work would be considered OoC when the whole work is, in all its translations, versions and manifestations, not being communicated, made available or distributed to the public through customary channels of access, and cannot be reasonably expected to become so. MS would have the same possibility as in Option 1 to establish further national-specific criteria. Stakeholder views A number of CHIs and CHI professionals, notably national librarians, would be positive about this option as the intervention covers all categories of works and is in line with certain national experiences that they consider successful. Others would still not find it satisfactory, given their preference for an exception.216 Some rightholders, for instance among authors and CMOs would also find the large scope of the option satisfactory, and engage in the stakeholder processes that the option foresees. Other segments of the industry, for example newspaper publishers, commercial broadcasters and film and record producers, would not support this option, also in view of its reliance on collective management.217 212 As resulting from those individual users/consumers and consumer organisation who responded on this specific matter in the 2013-2014 public consultation. 213 This view was very frequent among CHI responses to the 2013-2014 public consultation. 214 An overall strong preference for voluntary and licence-based solutions is clear from right holder submissions to the 2013-2014 public consultation. 215 Similarly to the rules determining the MS where a diligent search must be undertaken before a work can be established as being an orphan work for the purposes of the Orphan Works Directive. 216 CHIs in the 2013-2014 public consultation stressed the importance of solutions covering all types of works and many of them indicated their preference for an exception, as generally did individual end users/consumers and consumer organisations. CHI respondents also referred to collective management solutions, notably ECL, as an alternative. 217 These various views are present in right holder responses to the 2013-2014 public consultation. 71  3.4.3. What are the impacts of the different policy options and who will be affected? Approach The options presented above would mainly affect institutional users (CHIs) (and by extension people with an interest in accessing digitised cultural heritage through them, i.e. end-users), as well as rightholders in OoC works held by CHIs (and, by extension, CMOs). The impacts affecting these two groups are presented separately.  For CHIs, the impact on lower transaction costs and the possibility to carry out-cross-border uses was assessed, with reference to the possibility for CHIs to obtain collective licences with that effect. These effects are both economic and social in nature, as they influence the availability of digitised cultural heritage in the EU.  For rightholders, the following impacts, economic in nature, were assessed: impacts (i) on revenues, (ii) on the exercise of rights (in other words, on their freedom not to have their works exploited or to exploit them directly and in ways other than by CHIs), and (iii) on possible administrative burden. The policy options are also assessed in relation to their general social impacts (cultural diversity, the possibility for end users to have access to digitised cultural heritage, and influence on the general societal impacts of digitisation)218 and as to the impacts on fundamental rights (property right, freedom of the arts and sciences, and right to education). The assessment below is mainly qualitative, as suitable data was not available to produce quantitative assessments. Quantitative examples of the transaction costs that the considered options aim to reduce are included in Annex 9D. Practical impacts are also illustrated in a dedicated case study under each of the three options, which can be found in Annex 9H. Baseline IMPACTS ON STAKEHOLDERS CHIs Transaction costs and cross-border uses: This option would not have any direct impact on rights clearance and transaction costs and would entirely depend on the solutions available at national level. CHIs in MS whose legal frameworks already allow for licences also covering the rights of outsiders for the digitisation and dissemination of OoC works219 would already benefit from the possibility of substantially lower transaction costs. The issues described in the description of the problem above would persist in the majority of MS, as that possibility is present in only a few MS, and mainly for books and other literary works (there are legal frameworks which could also be used for other types of OoC works in an even smaller group of MS).220 In the absence of EU intervention, licences concluded via these mechanisms covering outsiders, be them specific to certain types of works or not, would be valid for a single MS territory (at least as regards the rights of outsiders). Opportunities would be larger for literary works than in other sectors also because suitable licensing structures are widespread in this area and much less in others, like for film and audio-visual works.221 Irrespective of the broader category of works, possibilities to obtain suitable collective licences could be limited for works that CMOs do not traditionally license, for example 218 Given the difficulty in identifying and quantifying precise impacts on the latter aspect, reference is made to Annex 9J, which elaborates on the general social and economic impacts of the digitisation of cultural heritage. 219 See Annex 9E for a description and examples of possible mechanisms (ECLs, presumptions of representation or similar). 220 Notably in MS that have general extended collective management systems, i.e. whose scope in terms of uses and types of works is not limited a priori by law. 221 Both in terms of the existence of CMOs and of the mandates they have or can expect to have from rightholders to proceed with licensing that go beyond the specific functions that are traditionally assigned to them (e.g. management of cable retransmission rights). 72 because they have never been intended for commercial use,222 due for example to lack of familiarity of CMOs with them and their rightholders. Other MS might decide in the future to adapt their legal frameworks. Such evolution is however entirely dependent on the will of individual MS, and would probably not take place in a systematic manner, particularly beyond books and learned journals (where the 2011 MoU has generated momentum). Resulting licences would still be limited territorially. Rightholders Revenues: Possibilities for rightholders, including outsiders, to receive new or extra revenue from collective licences for OoC works which already exist in MS can take the form of payments generated by the initial licences with CHIs, and from subsequent licensing opportunities stemming from the exposure of works that are otherwise not easily visible. Under the baseline scenario, these opportunities would not increase and be subject to the same limitations as regards MS territories and categories of works as discussed under "CHIs". Impact on the exercise of rights: There would be no change for rightholders. In those MS and for those categories of works for which mechanisms exist through which licences between CMOs and CHIs can also cover the rights of outsiders and suitable licensing structures are in place, rightholders should still retain the freedom to decide on the exploitation of their works through the opt-out possibilities that such schemes normally foresee.223 Possible administrative burden: Existing licensing mechanisms in some MS for the digitisation and dissemination of OoC works may result in costs for rightholders in relation to the exercise of their opt-out possibility. Licensor CMOs can also incur specific costs related to the use of the existing mechanisms, for example related to publicity/transparency, the handling of opt-outs and the distribution of remuneration to outsiders.224 The baseline scenario would have no impact as such in this area either, as these costs are only relevant where the mechanisms referred to in the previous paragraph already exist today. SOCIAL IMPACTS No impact on cultural diversity in terms of access by people to a larger and more diverse set of works held in CHIs and of incentives for creators to keep creating works. Additional opportunities for end-users to access their cultural heritage would be limited, as regards MS and types of works, as outlined under "CHIs" above. The same limitations would more broadly apply to the social and economic impacts associated to digitisation.225 No specific contribution to the EU's policy on digitisation and online accessibility of cultural heritage. IMPACTS ON FUNDAMENTAL RIGHTS No impact on copyright as a property right, as recognised by Article 17(2) of the Charter, nor any substantial impact on the arts and scientific research, relevant for the freedom of the arts and sciences (Article 13), and on education, protected under Article 14. 222 For example political leaflets, sketches, non-commercial sound recording or amateur footage. 223 See Annex 9E for more on opt-outs as part of this type of licensing. 224 These costs can vary depending on the design of each mechanism and the associated administrative procedures (notably to opt works out). Costs for CMOs only apply if the CMO decides to use those mechanisms, which remain voluntary. See Annex 9H for an illustrative case study and a table illustrating impacts on the different stakeholder categories. 225 For more on the possible social and economic impacts of the digitisation of cultural heritage see Annex 9J. 73 Option 1 – EU legislative intervention (i) requiring MS to put in place legal mechanisms to facilitate collective licensing agreements for OoC books and learned journals226 and to foster national stakeholder frameworks for these and other works, and (ii) giving cross-border effect to such legal mechanisms. IMPACTS ON STAKEHOLDERS CHIs Transaction costs and cross-border uses: Option 1 would deliver solutions in all MS for books and learned journals. These could take the form of ECLs, presumptions of representations or similar systems, depending on national circumstances. Combined with the large availability of collective licensing practices and CMOs in this sector, this would mean that the possibility for CHIs to benefit from lower transaction costs to obtain comprehensive licences for OoC books and learned journals would exist largely across Europe for this category of works. For example, the transaction costs emerged in the digitisation project on the history of genetics mentioned in section 3.4.1, estimated at approximately GBP 45,000 for 987 works made available, could be reduced to the costs of negotiating one licence with the relevant CMO,227 and this would be legally possible everywhere in the EU. The possibility to actually use those legal frameworks would be accelerated by the stakeholder frameworks that MS would have to put in place, helping to address practical issues, like for example the absence of suitable licensing structures in certain MS, CMOs' lack of familiarity with types of works that they do not traditionally license, the need for literary and visual works CMOs to work jointly (for embedded visual works), and other licensing aspects. Given the current estimations concerning individual rights clearance for books,228 savings in transaction costs that this option would entail for CHIs across the EU are expected to be meaningful. The above impacts would however only materialise in a substantial way for books and learned journals. For other works, the situation would be similar to the baseline scenario in the short term.229 In the long term, the stakeholder frameworks that the MS would have to foster could improve the situation to some extent, through processes similar to the 2011 MoU. These developments, which are difficult to predict precisely, could in turn, but only in the even longer term, induce MS to adapt their legal frameworks at national level. The resulting licences would however still be limited territorially as this option would only give cross- border applicability to licences for books and learned journals. Rightholders Revenues: New revenue opportunities for rightholders as described under the baseline scenario would potentially emerge in all MS for books and learned journals. Such opportunities would however not increase for rightholders in other types of works, or only in the long term as a consequence of the stakeholder frameworks which MS would have to foster. 226 In line with the scope of the 2011 MoU. 227 No data could be found to assess such cost, however it is expected to be lower than GBP 45,000. 228 See Annex 9D for available examples and estimations as regards books. 229 CHIs will be in the position to ask for collective licences covering the rights of outsiders only in the limited number of MS and, within that group, with more opportunities for music and, to a lesser degree, for visual arts than for film audiovisual works, and scarce or inexistent opportunities for works that CMOs are not used to licensing, like works in CHI collections that have never been intended for commercial use. 74 Impact on the exercise of rights: Option 1 would increase the scope for collective licensing, as opposed to individual licensing, for the digitisation and dissemination of OoC books and learned journals by CHIs. However, the mechanism introduced by this option would remain of voluntary use and rightholders in books and learned journals would retain the possibility to prevent the dissemination of their works by a CHI. While members of licensor CMOs would do so by the normal management of their mandates to the CMO, outsiders would rely on the opt-out possibilities that licensing mechanisms foreseen by this option would have to ensure. These would be compounded by adequate transparency/publicity measures on relevant licences and opt-out possibilities, which MS would also be obliged to ensure. Foreign rightholders would not be at a substantial disadvantage as only rights in books and learned journals first published in the country where the licence is sought could be licensed under such mechanisms. Apart from strengthening the representativeness of the respective CMO, this requirement serves as a safeguard to ensure that the mechanisms are not applied to works from third countries. The obligation to publish adequate information on the collections of works to be used in a publicly accessible European transparency web portal for an appropriate period of time would mitigate the risk of licensing works against the will of individual rightholders, including foreign ones, or of works that are OoC in a MS but still in commerce in another MS. Possible administrative burden: Given the widespread use of collective management for the type of works covered by this option (books and learned journals), costs for rightholders and CMOs related to the development of collective licensing schemes for the digitisation and dissemination of OoC books and learned journals by CHIs (such as costs related to opt-out and transparency mechanisms and the administration of the licence, including the distribution of remuneration to outsiders) would be limited. The transparency/publicity obligations foreseen by this option would however help keeping burden to a reasonable level for rightholders. The number of opt-outs that is reported from current experiences with extended collective licences, presumptions of representations or similar mechanisms at national level suggests that costs would overall be limited. For example, the German CMO that licences OoC books as part of the DE system based on a presumption of representation has not received any objection to the licensing from any right holder,230 and only about 1.8% of the total book titles digitised and made available by the National Library of Norway as a result of an ECL licence (in a project that also covers books in commerce) were opted out.231 The effects described above for books and learned journals would extend to other types of works at the same pace and to the same extent as described under "CHIs" and not be present as regards the cross-border effect of licences.232 The European transparency web portal of OoC works would be built on the existing Orphan Works Database infrastructure, which is run by the European Union Intellectual Property Office (hereafter: 'EUIPO'). Thanks to the use of existing infrastructure and resources, it is estimated that the building cost of the portal infrastructure could range between €500,000 and 700,000, with its annual maintenance amounting to approximately 15 % of the building cost (i.e. in the range of €75,000-105,000).233 This cost would be covered by the budget of 230 Data as of July 2016, provided to European Commission services by DE CMO VG WORT. 231 Data as of July 2016, provided to European Commission services by Norwegian CMO Kopinor. See Annex 9E for more on opt-outs in this case and other figures. 232 See Annex 9H for an illustrative case study and a table illustrating impacts on the different stakeholder categories. 233 These costs correspond to a first estimation based on existing experience with the Orphan Works Database. 75 EUIPO.234 SOCIAL IMPACTS Positive impact on cultural diversity, as a larger set of books and learned journals that would otherwise remain confined to the premises of CHIs is expected to become available to the public, while incentives for authors to create new works would not be substantially affected. Opportunities for end-users to have access to cultural heritage would increase, but mainly as regards OoC books and learned journals and not for other types of works. The same limitation would apply to the broader social and economic impacts of digitisation.235 Positive contribution of this option to the objectives of EU's policy on digitisation and online accessibility of cultural heritage, as it increases the possibilities for OoC works to become available for end-users. These benefits will mainly concern literary works in the short term, with a possible positive impact for other works but only in the longer term. IMPACTS ON FUNDAMENTAL RIGHTS There would be a limited impact on copyright as a property right, as recognised by Article 17(2) of the Charter. Possible positive impact on the arts and scientific research, relevant for the freedom of the arts and sciences (Article 13) and on education (right to education protected by Article 14), as more creative and learned material will be accessible. Option 2 – EU legislative intervention (i) requiring MS to put in place legal mechanisms to facilitate collective licensing agreements for all types of OoC works and to foster national stakeholder frameworks, and (ii) giving cross-border effect to such legal mechanisms. IMPACTS ON STAKEHOLDERS CHIs Transaction costs and cross-border uses: Under Option 2, the presence of legal frameworks everywhere in the EU that allow for licences issued by CMOs to also cover the rights of outsiders would give CHIs the possibility to see their related transaction costs diminish considerably everywhere in the EU for the digitisation and dissemination of works. This would apply to all types of works, like photographs, for which, for example, an available case study236 calculated individual rights clearing costs to be incurred for a collection of about 27,800 items by a CHI at approximately €15,000. Under this option, it would be possible for the CHI to reduce that cost to the one of negotiating a single licence with a CMO. Licences concluded on the basis of such legal frameworks could have cross-border effect for all works too. The stakeholder processes that MS would have to put in place would have the same purpose as in Option 1, i.e. lay the ground for a conducive environment, in practical and organisational terms, for such legal mechanisms to be used in practice. These would be particularly relevant in those MS and for those sectors where licensing structures are not widely available and collective management not widespread. In some sectors (e.g. audio-visual), without proper stakeholder engagement convened by public authorities, the practical effects of this option would not easily materialise, at least in the short term. It is expected that the presence in all MS and for all types of works of adapted legal frameworks would provide momentum for 234 The creation of and budget allocation to the possible portal would be subject to decisions taken on the basis of the governance rules of EUIPO. 235 See Annex 9J on these aspects. 236 See Annex 9D. In this case, the clearance process did not take place. 76 such stakeholder frameworks to produce results, especially when combined with the consultation with rightholders and uses that MS would have to organise if they decide to introduce national-specific criteria for works to be eligible for the envisaged schemes. Rightholders Impacts on rightholders would be the same in nature as in Option 1, but would extend to a higher number of rightholders because all types of works would be covered in all MS. Revenues: Opportunities are expected to arise concretely at different paces for different categories of works depending on the availability of suitable licensing structures as explained under "CHIs". Impact on the exercise of rights: The adaptations in rights management systems that this Option might entail will depend on the extent to which collective management is already a widespread practice in different sector.237 The use of the mechanisms introduced by this Option would in any event remain voluntary. The safeguards for rightholders, including from other MS and from outside of the EU, foreseen in Option 1 would also, mutatis mutandis, be present under this option, for works other than books and learned journals. The freedom to decide on the type of exploitation of works that may be held by CHIs is for example important in the cinema sector, where old films considered part of cultural heritage can attract renewed commercial interest and new commercial exploitation.238 The systems envisaged under this option would not affect those possibilities because of the opt-out and the fact that works re- entering commercial channels would not be eligible anymore (as not OoC anymore). Possible administrative burden: The use of the mechanisms introduced by Option 2 would require to rely on collective licensing structures, which would need to be developed or consolidated in certain sectors, e.g. the AV sector (see Annex 9F on collective management in different sectors). This would entail some one-off costs for rights holders and CMOs, but could result in the long term in more efficiency in the management of rights for the purpose of licensing OoC works. The impact for individual rightholders and CMOs would be the same in nature as in Option 1, but apply to all types of works. The costs described under Option 1 for the setting up and management of the European transparency web portal of OoC by the EUIPO would apply under this option too. The use of the portal for all types of works could also lead to efficiency gains in the long term. SOCIAL IMPACTS Positive impact on cultural diversity as it would facilitate access to all types of OoC works, while not substantially affecting incentives for authors to create new works. Opportunities for access to digitised cultural heritage by end-users would increase and extend to all types of works. This would, accordingly, have a broader influence on the social and economic benefits associated to the digitisation of cultural heritage.239 237 See Annex 9F on collective management of rights in different sectors. 238 Using a definition of heritage films as films that were produced at least 10 years ago, a study by the European Audiovisual Observatory indicates that 20 % of total films on release are heritage films (they however have a very small share of total admissions and are significantly released only in one or two markets), as are 47 % of film broadcast on a sample of TV channels (G.Fontaine – P.Simone, "The Exploitation of Film Heritage Works in the Digital Era", European Audiovisual Observatory, June 2016). A commercial distribution sector specialised in heritage films (films de patrimoine) has for example developed in FR in the last few years. 239 See Annex 9J on these aspects. 77 Very positive contribution to the objectives of the EU's policy on digitisation and online accessibility of cultural heritage. IMPACTS ON FUNDAMENTAL RIGHTS The limited impact on copyright as a property right mentioned in Option 1 would affect more rightholders. Impact on the arts and scientific research, as well as education could be even more positive as all types of OoC works could become available. 3.4.4. How do the options compare? Option Effectiveness Efficiency Impact on Social impacts stakeholders and fundamental rights Baseline (0) relevant licensing (0) No direct costs. (0) Impacts on (0) No impact on opportunities only stakeholders would cultural diversity. present in some MS depend on No substantial and for books and developments at impact on the literary works national level but not possibility to principally, with no address territoriality access cultural multi-territorial issues. heritage by end- applicability. users. No contribution to EU policy objectives on digitisation and online accessibility of cultural heritage. No impact on fundamental rights. Option 1 – (+) Relevant (-) Costs related to (+) Opportunities for (+) Positive impact Mechanisms to licensing the set-up and reduced transaction on cultural facilitate mechanisms, with management of the costs for CHIs and diversity and on collective multi-territorial European more OoC books and the possibility for licensing application, in place transparency web learned journals people to access agreements for everywhere in the portal. becoming available cultural heritage as OoC books and EU for books and to the public. more OoC books learned journals; learned journals (not (0/+) Potential and learned cross-border for other works). revenue journals can effect of such opportunities for become available. mechanisms; rightholders while Positive stakeholder retaining their contribution to EU frameworks. freedom to exploit policy objectives their works on digitisation and otherwise. online accessibility (0/-) Some costs of cultural related to the heritage. management of opt- (-) Limited out costs, expected to negative impact on be limited. fundamental rights. Option 2 – (++) Relevant (-) Costs related to (++) Opportunities (++) Positive Mechanisms to licensing the set-up and for reduced impact on cultural facilitate mechanisms, with management of the transaction costs for diversity as more collective multi-territorial European CHIs and more works are likely to licensing application, in place transparency web works becoming be made accessible agreements for all everywhere in the portal. available to the and therefore on OoC works; EU for all types of public. the possibility for cross-border works. (0/+) potential people to access effect of such revenue cultural heritage. mechanisms; opportunities for (++) Very positive 78 stakeholder rightholders while contribution to the frameworks. retaining their EU policy freedom to exploit objectives on their works digitisation and otherwise. online accessibility (0/-) Some costs of cultural related to the heritage. management of opt- (-) Limited out costs, expected to negative impact on be limited. fundamental rights. Option 2 is the preferred option is as it would, on the one hand, put in place legal frameworks conducive to a reduction of transaction costs and make possible the specific licences required for the digitisation and dissemination of OoC works, for all types of works and in all MS, including across borders. On the other hand, it would not affect the interests of rightholders to any tangible extent, or imply additional costs for them, for example in terms of missed revenues or licensing opportunities (it creates on the contrary potential opportunities for new revenue and exposure). The baseline option would not be effective and Option 1 would be effective only for certain types of works. As applying to all types of works, Option 2 is the most effective and efficient. Proportionality and impacts on MS: Option 2 is proportionate, including its impacts on fundamental rights, in that it addresses the underlying problem without generating particular compliance costs (the mechanisms introduced would be an enabling element which remains subject to voluntary use) or putting disproportionate obligations on stakeholders. Option 2 would require some adjustments in the MS that already have national legislation in place allowing for licences issued by CMOs to also apply to the rights of unrepresented rightholders (a list of examples is available in Annex 9E), notably as regards the scope of their legislation (for example, when it only covers certain types of OoC works). Where national legislation already covers a broader scope than what is foreseen by Option 2 (for example in the cases of general ECL), the need for adjusting national legislation will be more limited. MS that do not already have national law supporting mechanisms like those foreseen by the preferred option will be required to introduce them. In all cases, however, MS will retain flexibility in the way they comply with the EU obligation introduced by Option 2 in the choice of the kind of mechanism (for example ECL or presumption of representation) and by establishing additional national criteria for different categories of works to be considered OoC for the purposes of the mechanisms. 79 4. ADAPTING EXCEPTIONS TO DIGITAL AND CROSS-BORDER ENVIRONMENT 4.1. INTRODUCTION 4.1.1. BackgroundThe EU copyright legal framework harmonises rights of authors and neighbouring rightholders and seeks to harmonise “exceptions and limitations” 240 to these rights, although most of them are optional for the MS to implement. An “exception”241 to an exclusive right means that a right holder is no longer in a position to authorise or prohibit the use of a work or other protected subject matter242: the beneficiary of the exception is already authorised by law to do so. Exceptions are provided for in order to facilitate the use of protected content in specific circumstances (for example where the transaction costs involved in acquiring authorisation outweigh the economic benefits of doing so) and/or to facilitate the achievement of specific public policy objectives such as education and research. Beneficiaries of the exceptions may be individuals or institutions. This section of the IA focuses on exceptions that play a central role to achieve important public policy objectives at EU level but that at the same time are not fully adapted to the current digital and cross-border environment. While no formal evaluation of the EU legal framework for copyright exceptions has been conducted, the review process carried out between 2013 and 2016 allowed to gather information and evidence on the implementation of exceptions in MS and their functioning in the digital environment.243 The need to facilitate use of copyright-protected material for specific purposes in this context has been acknowledged in the Digital Single Market Strategy.244 Further to the review process and the Communication "Towards a modern, more European copyright framework" of December 2015245, three possible areas of intervention have been identified: education, research and preservation of cultural heritage. Specific copyright exceptions, optional for MS, exist in EU law for "specific acts of reproduction"246 (often used for preservation) and "illustration for teaching or scientific research".247 In these areas, digital technologies have allowed to explore new types of uses (e.g. digital preservation, digital and online educational activities, text and data mining (TDM)) which are not always clearly allowed under the current copyright rules. This legal uncertainty negatively affects the functioning of these exceptions in the digital environment and the way in which users can benefit from the 240 Exceptions are set out in the InfoSoc Directive (Directive 2001/29/EC, Article 5), the Software Directive (Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (OJ L 111, 5.5.2009, p. 16–22)., Articles 5 and 6), the Database Directive (Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ L 077, 27.03.1996, p. 20-28), Articles 6 and 9), the Directive on Rental Right and Lending Right (Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ L 376, 27.12.2006, p. 28–35), Articles 6 and 10) and the Orphan Works Directive (Directive 2012/28/EU of the European Parliament and of the Council of 25 October 2012 on certain permitted uses of orphan works (OJ L 299, 27.10.2012, p. 5–12), Article 6). 241 "Exceptions" is used in this IA to encompass “exceptions and limitations” to copyright. 242 "Works" is used in this IA to encompass works protected under EU copyright acquis and other protected subject matter 243 The results of the review process are presented in Annex 4 (The copyright review process: summary of the main relevant findings). 244 Commission Communication (COM(2015) 192 final) of 6 May 2015. 245 Commission Communication (COM(2015) 626 final) of 9 December 2015. 246 Article 5(2)c of the InfoSoc Directive. 247 Article 5(3)a of the InfoSoc Directive and Article 6(2)b of the Database Directive. 80 potential of these technologies. Furthermore, while cross-border activities are increasingly important for the activities of libraries, education establishments and research institutions, the current EU legal framework does not allow users to benefit from the exceptions on a cross- border basis. In the Communication of December 2015, the Commission also highlighted the exception authorising libraries and other institutions to allow on-screen consultation of works for research and private study on their premises and the need to assess its functioning in the digital environment. This assessment would need to take into account the outcome of a CJEU case on the closely inter-twined issue of electronic lending by libraries which is currently pending;248 it is therefore not part of this IA. 4.1.2. Why should the EU act? Legal basis The EU's right to act follows from Article 114 of the TFEU, which confers on the EU the power to adopt measures for the establishment and functioning of the internal market and has provided legal basis for a wide range of EU instruments in the area of copyright. In the InfoSoc Directive, the EU exercised its competence as regards the rights which are relevant for online dissemination (notably the reproduction and making available rights) and the exceptions applicable to such rights. Article 5 provided for an exhaustive list of exceptions, including the exception for preservation, teaching and research mentioned above. Any change in the harmonised framework concerning the scope of exceptions or the introduction of their cross-border effect would need to rely on the same legal bases. Finally, Article 167(4) TFEU provides that the EU shall take cultural aspects into account in its action under other provisions of the Treaties, in particular in order to respect and to promote the diversity of its cultures. All proposed options take into account the implications of EU action for cultural diversity. Subsidiarity and added value The existing level of harmonisation limits the possibility for MS to act in the area of copyright as they cannot unilaterally alter the scope of the harmonised rights and exceptions. Therefore, the need to update some of the existing exceptions or to introduce new exceptions, in particular to reflect new digital uses, makes the amendment of EU legislation inevitable. Moreover, EU intervention is indispensable to achieve one key objective of the copyright modernisation, which is to guarantee legal certainty in cross-border situations. This can only be achieved by making the relevant exceptions mandatory for MS to implement, increasing their level of harmonisation, and, when relevant, recognising their cross-border effect. None of this can be achieved by MS legislation. Without intervention in EU law, beneficiaries of the exception would face legal uncertainty and may not be able to rely on the exception in cross-border situations (for example teachers in distance learning programmes making content available under the teaching exception in one MS would need to verify whether the same acts are allowed under the exceptions in MS where the students are located, and if not, may have to obtain authorisation from rightholders). Therefore, MS acting alone could not sufficiently address these problems and the objectives can be only achieved by EU action. 248 Case C-174/15, Vereniging Openbare Bibliotheken v Stichting Leenrecht. 81  4.1.3. What should be achieved? The general objective of EU intervention is to facilitate digital uses of protected content for education, research and preservation in the Single Market. Through this objective, EU intervention should contribute to promote digital innovation in education and research, foster the international competitiveness of European research and encourage the preservation of cultural heritage. Achieving this general objective requires adapting the relevant copyright exceptions to enable digital and cross-border uses, while maintaining a high level of protection of rights. Changes to existing rules should aim at providing legal certainty for the use of protected content in digitally-supported teaching activities, for text and data mining in the context of scientific research and for digital preservation by cultural heritage institutions. 4.1.4. Methodology Problem definition The problems described in this section of the IA are closely linked to the specificities of the EU legal framework for exceptions described above. As illustrated in the problem tree below, legal uncertainty on the acts allowed under the existing copyright exceptions, in particular in relation to digital and cross-border uses, has been identified as a major issue in several areas. 82 This legal uncertainty is often the result of a restrictive implementation of copyright exceptions for "specific acts of reproduction" and "illustration for teaching and research" in certain MS and/or of the fragmentation of copyright rules and licensing conditions. It can result in a suboptimal use of protected content in the digital environment. The table below illustrates the main differences in the implementation of the exceptions in MS.249 Exception Implementation in Main differences in the implementation in Member States Member States Teaching  Exception implemented in all MS  Application of the exception to digital uses  Implemented through extended  Categories of beneficiaries (public or collective licensing in DK, FI, SE private education bodies, teachers and  Exception subject to the availability students, etc.) of licences in UK, IE  Exclusion of certain types of works (e.g. sheet music or cinematographic works)  Exclusion of textbooks or other works made explicitly for educational purposes  Extent of works that can be used under the exception (fragments, extracts, specific limitation, etc.)  Payment of a compensation or remuneration under ECL/licence (required – at least partially – in 16 MS) TDM  A specific TDM exception only in the  The national implementations of the UK (FR has a legislative draft at research exceptions across MS do not advance stage) specifically take into account/mention  Research exception implemented in TDM. most but not all MS (notably not in ES, NL). Specific acts of  Exception implemented in all MS  Purpose of the exception (preservation, reproduction conservation, archiving, other non- 249 For further details, see the tables provided in Annex 4. 83 by libraries preservation related etc.) and similar  Exclusion of certain beneficiary institutions institutions (e.g. archives only) (preservation)  Exclusion of certain types of works (e.g. print works, videograms or phonograms etc.)  Limits to the number of copies allowed  Exclusion or unclear status of certain types of acts (e.g. format shifting, digital copies)  Conditions (e.g. restoration or repairing damage only). Identification of policy options The policy options examined in each of the three areas include the baseline option, a non- legislative option (in the form of Commission's guidance, peer review mechanism and/or stakeholders’ dialogue) and one or several legislative options. Non-legislative options have been developed taking into account the specificities of each exception (implementation in MS, relation with licences, stakeholders concerned). Legislative options are designed to complement the existing exceptions (in the case of preservation and teaching), or to introduce a new exception (in the case of TDM, supplementing the existing research exception). Views from stakeholders, European Parliament and Member States The views from the different stakeholders are reported after the description of each policy option. In its resolution of 9 July 2015,250 the EP called on the Commission "to examine the possibility of reviewing a number of the existing exceptions and limitations in order to better adapt them to the digital environment”. In particular, the EP favours an exception for research and education purposes, covering online and cross-border activities, provided that a fair balance between the different categories of rightholders and users of protected content is maintained The recommendation also stressed the need to "assess the enablement of (…) text and data mining techniques for research purposes, provided that permission to read the work has been acquired". Finally, it asked the Commission to "assess the adoption of an exception allowing libraries to digitalise content for the purposes of consultation, cataloguing and archiving" and indicated that the exceptions for the benefit of libraries, museums and archives should be strengthened in order to facilitate access to cultural heritage. MS are generally in favour of adapting exceptions in order to facilitate digital and cross- border uses of protected content for the purposes of education, research and preservation. They would support further harmonisation of existing exceptions where the uses have a clear cross-border dimension, but are likely to require some flexibility for implementation at national level. Their support to the different policy options will also depend on the balance ensured between the interests of users and rightholders.251 250 European Parliament resolution of 9 July 2015 on the implementation of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society 251 MS discussed ongoing Commission's work towards the modernisation of copyright exceptions in a Council Working Party (23/02/2016) 84 In the 2014 public consultation on the review of EU copyright rules,252 several MS suggested to clarify the scope of the teaching exception, in particular in relation to online uses, and some other MS favoured a greater harmonisation which would require making the teaching exception mandatory across the EU. Certain MS however indicated that there is no need to further harmonise or extend the scope of the existing teaching exception. On TDM, MS are expected to be overall supportive of an intervention at EU level, as some of them have tried to address this issue at national level but can only do it within the boundaries of the current research exception. In relation to preservation, some MS explained in the 2014 public consultation that there is no need to alter the current legal framework, while others did not express themselves against changing the status quo, with some emphasising the need to consider technological neutrality as regards the exception. Impacts of policy options The revision of existing exceptions or the introduction of new exceptions need to be assessed in relation to, one the one hand, how they facilitate the access to and use of protected works by certain specific categories of users (educational establishments, research institutions, cultural heritage institutions); on the other hand, how they affect rightholders' revenues and incentives to create or to invest in the creation of new works. More generally, it is important to highlight that exceptions need to comply with the 'three-step test', enshrined in the main international treaties on copyright,253 which provides that exceptions may only be applied (i) in certain special cases, (ii) which do not conflict with a normal exploitation of a work or other subject matter, and (iii) do not unreasonably prejudice the legitimate interests of the right holder. The three-step test is also established in Article 5(5) of the InfoSoc Directive. Preferred options would be those bringing social gains without reducing incentives to create. A thorough understanding of the licensing market and a precise definition of the scope and conditions of application of the exceptions is necessary to achieve this balance. Stakeholders affected The main stakeholders affected by the different policy options are certain users and institutional users (teachers, researchers, educational establishments, research institutions, cultural heritage institutions) and rightholders. The analysis presented in this IA focuses mainly on the impact on rightholders in the print sector (authors and publishers), as text documents (books, newspapers, scientific journals) and images are the type of documents mostly used in education and research and are an essential part of the collections of cultural heritage institutions. Impacts on rightholders in other sectors (music, AV) are mentioned where relevant. Impacts on MS, notably in terms of obligations deriving from the preferred policy options and related costs, are presented in Annex 3. Type of impacts and availability of data Only the most significant and likely impacts are reported in this IA. The impacts are assessed by group of stakeholders (users and rightholders). In addition, broad social impacts (impacts 252 The views of MS reported here are based on the results of the 2014 public consultation on the review of EU copyright rules, to which 11 MS replied (DE, DK, EE, FR, IE, IT, LV, NL, PL, SK, UK). See Annex 2B. 253 WTO TRIPS Agreement Article 13; WCT Article 10; WPPT Article 16; Beijing Treaty Article 13 and Marrakesh Treaty Article 11. 85 on education, research, preservation of cultural heritage and cultural diversity; no significant impacts on employment have been identified) and impacts on fundamental rights are assessed separately. Economic impacts are examined for each group of stakeholders, including impacts on transaction costs, in particular costs related to the clearance of rights where a given use requires the authorisation of rightholders; as well as impacts on licences' costs (for users) and on licensing revenues or licensing opportunities (for rightholders). In this regard, it is important to note that the policy options developed in the area of exceptions should not have a direct impact on rightholders' primary market (e.g. acquisition of books by educational establishments or libraries, subscriptions to scientific journals), but on the licensing of further uses of their content for specific purposes (e.g. digital copying for preservation, scanning, text and data mining). Therefore, the analysis focuses mainly on assessing the impacts on this type of licensing. Possible indirect impacts on rightholders' primary market are mentioned where relevant. The data available on transaction costs linked to right clearance is limited, since education, research and cultural heritage institutions generally do not engage in a systematic evaluation of these costs in relation to their uses of copyright protected content. In addition, these costs are highly variable depending on the type and number of works and the MS concerned. Data on licences' costs and licensing revenues are provided where available. This type of data is generally not publicly available but has been provided by stakeholders (notably rightholders) for the purpose of this IA, sometimes on a confidential basis. The available data does not always exactly correspond to the uses contemplated in this IA. For instance, digital uses for illustrating teaching or text and data mining are generally part of wider licences acquired by education or research institutions. It can therefore be very difficult to assess the costs related to these specific uses and the corresponding revenues for the rightholders. The social and economic impacts of the different policy options strongly depend on the scope and conditions of application of the exceptions. In this context, one important element is the relation between exceptions and licences. In certain cases, it may be necessary to prevent contractual override of the exception in order to achieve the desired social objectives. In other cases, making an exception subject to the availability of licences may be required to mitigate the economic impact of an exception or to avoid eroding well-functioning national systems. All policy options considered in the area of exceptions may have an impact on fundamental rights, in particular on copyright as a property right (Article 17(2) of the Charter). In addition, impacts on scientific research and academic freedom (Article 13) and on the right to education (Article 14) are considered where appropriate. Impacts on other fundamental rights are not mentioned as there is either no or insignificant impact on them. Impacts on third countries or on the environment are not elaborated upon as the policy options presented in this section of the IA are considered not to have any substantial impact on them. Impacts on SMEs SMEs are the backbone of Europe's economy. They represent 99 % of all business in the EU. In the past five years they have created around 85 % of new jobs and provided two-third of the total private sector employment in the EU. The exceptions analysed in this section of the IA are exceptions to the rights hold by natural persons or legal entities, including SMEs and micro-enterprises. The policy options considered in this IA do not target these entities but may have an impact on them, notably as the large majority of rightholders affected by the exceptions are SMEs. 86 99.4% of European companies active in the book publishing sector (books, newspapers, journals) are SMEs, of which 90 % are micro-companies (0-9 employees). SMEs generate 49% of the value added of the sector (including 10% from micro-companies).254 In the sector of film and music production, 99.9 % of companies are SMEs (96 % micro-companies) generating 85% of the value added of the sector (32 % by micro-companies).255 Therefore, the impacts of the different policy options on rightholders are assessed taking account of the high number of SMEs. The impacts on the licensing market and on licensing revenues are for example key criteria when comparing the options. Micro, small and medium- sized companies may be proportionately more strongly affected by a reduction of licensing revenue than large companies with a more varied range of products. Excluding micro-companies would not be appropriate, considering the purpose of the initiative. By defining the scope of copyright exceptions, the legislative options in this initiative would contribute to define the scope of copyright as a property right, which cannot vary according to the size of the entity holding this right. None of the existing exceptions in the EU legal framework differentiates its scope of application according to this criterion. In addition, excluding micro-companies would make it impossible to achieve the objectives defined in section 4.1.3, since the exceptions considered in this IA would not apply to all relevant content but only to the fraction which is not held by micro-enterprises. This would create major legal uncertainty for users and would not allow ensuring a consistent implementation of rights and exceptions, regardless of the type of works and/or rightholders. Since none of the policy options would result in administrative obligations for SME, mitigating measures for SMEs have not been proposed. Certain options may generate one-off compliance costs related to the need to adapt existing licences, however these costs are expected to be marginal. Comparison of policy options The policy options are compared against the criteria of effectiveness (i.e. to what extent they fulfil the specific objective), efficiency (i.e. at what cost they do so), impact on the different groups of stakeholders (users and rightholders) and coherence with regard to cultural diversity, fundamental rights and/or other EU policies. Each option is rated between "--" (very negative), "-" (negative), 0 (neutral), "+" (positive) and "++" (very positive). 4.2. USE OF PROTECTED CONTENT IN DIGITAL AND CROSS-BORDER TEACHING ACTIVITIES 4.2.1. What is the problem and why is it a problem? Problem: Teachers and students face legal uncertainty when using content in digitally- supported teaching practices, in particular across borders Description of the problem: A huge variety of content (text, images, music, video), often protected by copyright, is used in teaching activities. While reference textbooks or academic books are usually bought by educational establishments or directly by students, other materials used to illustrate or complement teaching are generally shown in the classroom by 254 Source: Eurostat, Structural Business Statistics, 2013 data for publishing of books, periodicals and other publishing activities. 255 Source; Eurostat, Structural Business Statistics, 2013 data for motion picture, video and television programme production, sound recording and music publishing activities. 87 teachers, copied or distributed to students. Digital technologies are offering new opportunities to use a wide range of media and content in order to enrich teaching activities. However, many users in the education field consider that the conditions for using protected content in digital or online teaching activities are unclear. According to a recent survey, only 34 % of educators and 26 % of learners declared that the conditions under which copyrighted works can be used for learning/teaching purposes are very clear to them. Furthermore, 24 % of educators indicated they come across copyright-related restrictions in their digital teaching activities at least once a week.256 Teachers and students facing legal uncertainty or specific restrictions frequently refrain from using protected content, in particular when this content has to be accessed by students through online means and from different MS.257 In some cases legal uncertainty may result in unauthorised uses. Many respondents to the 2013-2014 public consultation brought forward difficulties in cross-border uses.258 Drivers: [Restrictive implementation of the exception] The use of protected works for the purpose of illustration for teaching is covered by exceptions in the InfoSoc Directive259 and the Directive 96/9/EC260 (the "Database Directive"). The notion of "illustration for teaching" can be understood as allowing a teacher to use a work to give examples, to explain or support his/her course.261 The illustration for teaching exception ("the teaching exception") has been implemented in all MS, with significant differences as to the type of works covered and the type of educational uses allowed.262 The legal uncertainty faced by teachers in the digital environment may arise from the restrictive implementation of the teaching exception in certain MS, where the exception does not clearly allow digital uses (e.g. by allowing only reproduction on paper or distribution of physical copies263) or where strict conditions apply to these uses (e.g. imposing a low resolution for the making available of images264).265 Feedback 256 Survey carried out in the context of the study on 'Assessment of the impact of the European copyright framework on digitally-supported education and training practices' – http://bookshop.europa.eu/en/assessment-of-the-impact-of-the-european-copyright-framework-on- digitally-supported-education-and-training-practices-pbNC0115883/. Survey sample composed of about 2000 respondents in 9 MS. 257 This is confirmed by the survey carried out in the context of the above-mentioned study: when faced with copyright restrictions on the use of certain works, 62 % of educators and 60 % of learners chose not to use protected works in order to avoid any possible problems. 41 % of educators and 60 % of learners looked for alternatives whereas uses without authorisation were reported by 21 % of learners and 14 % of educators. See Annex 10B for additional data on the perception of copyright-related obstacles in education. 258 Respondents mentioned for instance problems faced by universities with campuses abroad, by universities located close to a national border and attracting students from several MS, or by education bodies involved in Erasmus+ programmes with a cross-border audience. See Annex 2B. 259 Article 5(3)a of Directive 2001/29/EC. 260 Article 6(2)b of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ L 077, 27.03.1996, p. 20-28) 261 The condition of illustration has often been interpreted to define the extent of a work that can be used under the exception, which may vary depending on the types of works (e.g. part of a novel but an entire work if it is a poem or a photograph). For further explanations, see J-P. Triaille et all., "Study on the application of Directive 2001/29/EC on copyright and related rights in the information society", De Wolf & Partners, December 2013,,p. 359-362. 262 Certain types of works are out of the scope of the exception (e.g. textbooks in FR, ES, DE, AT) or their use is allowed under specific conditions (e.g. audiovisual works can be used after two years upon release in DE). The types of uses allowed under the exception (e.g. anthologies, exams, public performances) also vary from a MS to another. See J-P. Triaille et all., "Study on the application of Directive 2001/29/EC on copyright and related rights in the information society", De Wolf & Partners, December 2013, p. 368 et s. 263 HR and EL 264 IT 88 from educational users also highlights the concrete obstacles faced in certain MS in digital education practices.266 [Heterogeneous implementation and lack of cross-border effect] The uncertainty is reinforced in a cross-border context by the diversity of the conditions established in national laws combined with the lack of cross-border effect of the exception. Teachers who use protected materials for the purpose of illustration under the terms of an exception in one MS may run the risk of infringing copyright in another MS when they make material available to students across borders. When asked about the type of copyright-related problems encountered in cross-border education, educators point out the lack of information on copyright rules in other MS, the differences in the application of the exception and the national scope of the licences.267 The practical implementation of the teaching exception differs from a country to another.268 In certain MS (notably FR, DE, ES, NL), collective agreements are in place to organise the compensation of rightholders that may be required in national laws for uses under the teaching exception. In other MS (UK, IE), licensing schemes for uses of protected content in teaching activities prevail over the exception. Finally, educational uses are allowed under extended collective licensing (ECL) in DK, FI and SE.269 [Insufficient licensing mechanisms] These different types of licensing schemes are very common in the print sector270 and usually define authorised uses precisely; however, the type of digital uses covered may vary271 and cross-border uses are not always allowed.272 Collective licensing schemes for educational uses are less widespread in other sectors (e.g. AV) or for certain types of works (e.g. digital educational resources). In such cases, educational establishments need to negotiate and obtain a licence directly with the rightholders, generating significant transaction costs. Consequences: The legal uncertainty on digital uses of protected content in teaching activities 265 Further examples of restrictive implementation of the exception are presented in the study 'Assessment of the impact of the European copyright framework on digitally-supported education and training practices'. 266 "5 outrageous things educators can’t do because of copyright", by COMMUNIA: https://medium.com/copyright-untangled/5-outrageous-things-educators-can-t-do-because-of-copyright- ac447dcc6e09#.lbbqxa2ki 267 See Annex 10B for additional data on the perception of copyright-related obstacles in education. 268 See Annex 4 for further details on the implementation of the teaching exception in MS. 269 See Annex 10C for a description of compensation and licensing schemes for educational uses. 270 Text documents and images are the type of material most widely used in education. The survey carried out in the context of the study 'Assessment of the impact of the European copyright framework on digitally-supported education and training practices' (p.58) showed that images and text documents are used at least once a week by about 70 % of educators whereas other types of works including audio and video media are used by about 45 % of educators. 271 Digital uses include notably scanning (digitisation from an analogue copy), digital copying (copying from an original in electronic format or from Internet downloads), inclusions in presentations or in course packs, projections to electronic whiteboards, posting to internal networks and Virtual Learning Environments, storing in internal databases. The types of digital uses allowed depend on the scope of the licensing scheme. For instance, the collective licensing schemes based on a legal licence in CZ, HU, PT, SK, SI and PL include copies from Internet downloads and other digital copies as long as they are presented on print but other digital uses are subject to voluntary collective licensing agreement (source: IFRRO). 272 Certain licensing schemes in the print sector allow cross-border uses under certain conditions for the purpose of distance learning, while others don't allow such uses. See Annex 10C for further details. Licences granted for the use of audiovisual works in the context of education generally do not cover cross-border uses. 89 may, on the one hand, negatively impact the further development of digitally-supported educational practices in primary and secondary education, where digital resources are mainly used to complement face-to-face teaching.273 On the other hand, it is likely to affect higher education institutions more strongly, due to a more pervasive use of digital resources in this context274 (e.g. use of digital course packs, access to resources through the university's intranet, etc.) and to the rapid development of cross-border and online education. An increasing number of universities are proposing distance learning modules online or delivering Joint Degrees, while many others collaborate on developing shared curricula using online content. The number of individuals taking online courses has doubled between 2007 and 2013, reaching more than 10 % in certain MS.275 The ability for teachers and students to use and access material online from any MS – through the university's intranet or virtual learning environment – is essential in this context. How the problem would evolve: Without intervention at EU level, educational establishments and teachers in a number of MS would continue to face legal uncertainty when using protected content to support digital teaching and learning activities, unless these MS unilaterally decide to amend their legislation to allow such uses. The scope of existing collective licences may be widened in order to cover digital uses. However, obstacles to cross-border uses of content are likely to remain, and distance and online students would continue to be disadvantaged as regards the access to teaching materials. 4.2.2. What are the various options to achieve the objectives? The general and specific objectives are described in section 4.1.3. Baseline No policy intervention. In MS where digital uses are not clearly allowed under the national teaching exception, this option would consist in relying on market developments (e.g. further development of collective licensing schemes, publishers' digital offers) to offer solutions that allow teachers and students to use protected content in teaching activities supported by digital tools or taking place online. At the same time, certain MS could decide to amend their national exceptions – based on the optional teaching exception in Article 5(3)a of the InfoSoc Directive, which allows digital uses– to clarify the extent to which certain digital uses are covered in their MS. Stakeholders' views Rightholders are likely to support the baseline option. Institutional users in the education area (educational establishments, teachers) would consider that this option cannot solve the identified problems. 273 The survey on the use of ICT in schools carried out in 2011/2012 shows that 1 in 4 primary schools students is in a school with a virtual learning environment (VLE), whereas this number rises to almost two-thirds in vocational schools. Also, 30 % of secondary school students use digital textbooks and multimedia tools once a week or almost every day. Source 'Survey of Schools: ICT in Education: benchmarking access, use and attitudes to technology in Europe’s schools, Final study report, February 2013'. See Annex 10A for background data on the development of digital and online education. 274 In a 2013 survey by the European Universities Association on e-learning, 80 % of responding institutions indicated that they use digital courseware such as digital textbooks, curricula and reference materials. 82 % of institutions also indicated that they offer online courses. In 40 % of the institutions at least half of the students are engaged in e-learning; http://www.eua.be/Libraries/Publication/e- learning_survey.sflb.ashx. See Annex 10A for background data on the development of digital and online education. 275 Source: Eurostat (Internet use and activities). In 2015, 6 % of individuals (and 9 % of individuals aged 16 to 29) in EU 28 had used the Internet for an online course of any subject in the last 3 months before the survey (13 % in FI, 11 % in ES and UK, 10 % in LU). This covers all types of online courses. 90 Option 1 – Guidance to MS and stakeholders' dialogue on raising awareness in the education community on the use of protected works for teaching purposes  Under this option, the Commission would issue guidance to MS as to the extent to which protected content can be used in the digital environment under the existing teaching exception, in line with the three-step test. Such guidance would encourage MS to make sure, when required, that their national exception applies to digital resources used for teaching purposes and to online activities undertaken by educational establishments or teachers.  In addition, the Commission would encourage discussions between rightholders and educational establishments to explore ways to raise awareness in the education community on the uses allowed under the exception or under specific licences. Stakeholders' views Rightholders are expected to be rather supportive of this option, as it would not imply any further harmonisation of the existing teaching exception; would leave sufficient space for licensing mechanisms and could contribute to a better understanding of copyright rules among teachers and students.276 While certain institutional users may support Option 1 as an intermediate solution,277 most of them would consider that it does not sufficiently address the practical problems encountered when using protected works in distance or cross-border education. Option 2 – Mandatory exception with a cross-border effect covering digital uses in the context of illustration for teaching This option would make mandatory for MS the implementation of an exception to the rights of reproduction and making available to the public, with the following elements:  Beneficiaries: educational establishments.  Subject-matter covered: all types of works or other protected subject-matter, including resources produced specifically for education (e.g. textbooks, academic books, educational documentaries).  Permitted uses: teachers and students affiliated to educational establishments would be allowed to use protected works for non-commercial purpose to illustrate teaching through digital means in the classroom (e.g. whiteboards) or online under the educational establishment's secure electronic network (e.g. virtual learning environment, intranet). Digital uses which would result in making protected content available on the open internet (e.g. uses beyond quotation of protected content in Open Educational Resources - OERs278 or in Massive Open Online Courses - MOOCs279) would not be covered under this option.280 276 In the public consultation on the review of EU copyright rules carried out in 2013/2014 (referred to as the "2013/2014 public consultation"), the large majority of respondents representing authors and publishers considered that there was no need to modify the teaching exception in the EU legal framework and that individual and collective licensing solutions should be encouraged. Several CMOs, and in particular reproduction rights organisations, asked for a clarification of the exception at EU and national level, notably as regards the notion of illustration for teaching. See Annex 2B. 277 In the 2013/2014 public consultation, certain institutional users considered that in the short term the Commission should clarify the scope of the teaching exception to encourage MS to use the flexibility offered by the current rules. 278 Open Educational Resources are any type of educational materials that are in the public domain or released under an open licence. The nature of these open materials means that anyone can legally and freely copy, use, adapt and re-share them. OERs range from textbooks to curricula, syllabi, lecture notes, assignments, tests, projects, audio, video and animation (UNESCO definition). 91  Relationship with the licensing market: the uses allowed under the exception would not be subject to the availability of licences.  Compensation: MS would remain free to determine whether they require compensation for the uses under the exception. In MS opting for compensation, it would be applied to the uses undertaken by educational institutions (and their affiliated teachers and students) established in that MS, irrespective of where such uses actually would take place.  Interaction with the current exception: outside the scope of this mandatory exception, the existing (optional) teaching and research exception under Article 5(3)a of the InfoSoc Directive would continue to apply. For teaching, this would be relevant mainly for analogue uses.  Cross-border uses: The cross-border effect of the exception would be ensured through a legal fiction which would provide that the uses made under the conditions of the exception are deemed to take place only in the MS where the educational body is established. Such provision would make sure that the content made available under the exception by beneficiary institutions can be lawfully accessible to affiliated teachers and students located in other MS. Stakeholders' views This option is expected to be supported by institutional users in the education area, which are generally in favour of a broad mandatory teaching exception for digital uses.281 It would be strongly opposed by rightholders whose works are used in the teaching context (in particular educational publishers, considering the impact that this exception would have on their primary market) and by certain MS using licences-based systems, including ECL, for authorising educational uses. Option 3 – Mandatory exception with a cross-border effect covering digital uses in the context of illustration for teaching, with the option for MS to make it (partially or totally) subject to the availability of licences  This option would be similar to Option 2 but would leave MS the possibility to decide that the exception would come into play only if licences covering the same uses are not available in the market.  In order to reduce the administrative burden for educational establishments related to the need to check the availability of licences, MS opting for this approach would have to take measures to ensure that licences covering relevant uses are available, sufficiently visible and easy to use for educational establishments.282 They would be required to notify to the Commission the measures taken in this respect. 279 MOOCs are online courses aimed at unlimited participation and open access via the internet. In many cases, participants need to register in order to have access to the online courses; however they don't need to be affiliated to any educational body or to comply with any admission requirements. 280 The option of introducing a mandatory exception covering all types of digital educational uses carried out for non-commercial purpose (including in OERs and MOOCs) has been discarded, as it would make it difficult to control the dissemination of protected content online (users would be allowed to copy protected content and make it widely available online through education blogs or websites). 281 This was reflected in the results of the 2013/2014 public consultation. See Annex 2B. 282 Such measures could differ from MS to MS as long as the result is achieved in terms of availability, visibility and user friendliness. They could consist, for example, in promoting specific educational licensing schemes to which rightholders could adhere on a voluntary basis and/or in developing online tools allowing educational establishments to easily check the availability of licences allowing to use different types of works to illustrate teaching activities. 92  Cross-border uses: the legal mechanism described under Option 2 would also apply to equivalent licences (the uses carried out under these licences would be deemed to occur only in the MS where the educational body is established). Stakeholders' views Rightholders and CMOs are expected to favour this option, as it would allow MS to keep or to introduce the possibility of licences for educational uses. On the other hand, the education community may find it insufficient to create full legal certainty for teachers and students.283 4.2.3. What are the impacts of the different policy options and who will be affected? Approach The options presented above would affect institutional users (educational establishments) and users in the education area (teachers, students) as well as rightholders whose works are used as illustration in teaching activities. The impacts affecting these two groups are presented separately.  For users, the following social impacts have been considered: impacts on legal certainty for digital and cross-border teaching activities. Economic impacts are examined in terms of transaction costs (related to the negotiation and management of licences) and licensing costs (licence fees paid to rightholders or CMOs) for educational establishments.  For rightholders, the most relevant impacts are economic impacts related to licensing revenues. Since educational publishers play a particular role in the production of educational content (including content developed and distributed in a digital form), specific impacts on the educational publishing market are considered where relevant.284 The policy options are also assessed in relation to their social impacts on cultural diversity, digital education and digital skills, as well as to their impacts on fundamental rights (property right and right to education). The assessment below is mainly qualitative, as the data publicly available or that could be obtained from stakeholders on compensation or licensing of educational uses is limited. Quantitative estimates are elaborated where possible, on the basis of available data. Baseline IMPACTS ON STAKEHOLDERS Institutional users and other related users (educational establishments, teachers, students) Impacts on legal certainty for digital and cross-border education: The legal uncertainty faced by educational establishments and teachers in certain MS for digital uses is expected to persist under the baseline option. Only reforms at national level or developments in the licensing market could contribute to reduce it. A certain number of MS (e.g. ES, UK) have recently amended their legislation to clarify that the teaching exception applies to content used in secure electronic environments. Other MS may follow, however it is unlikely that all MS would engage in similar reforms and in any event such reforms would not result in an exception applicable across borders. In MS where specific educational licensing schemes are in place, CMOs may propose to review the scope of the licences to better respond to the needs of educational establishments, for example as regards digital and online uses. However they may not always be able to licence cross-border uses (if they don't have the rightholders' 283 Certain stakeholders in the education community consider that licensing cannot be an adequate solution to provide access to protected content. See "COMMUNIA policy paper on exceptions and limitations for education": http://www.communia-association.org/policy-papers/leveraging-copyright-in-support- of-education/ 284 Educational publishing is a very important component of the publishing sector, the largest cultural industry in Europe with a retail market value of about €40 billion, representing between 18 and 20 % of the market at EU level. It reaches higher figures in some countries: 25 to 30% in ES, close to 30% in Flanders, more than 60 % in IE, 22 to 25 % in IT, 25 to 30 % in PL (source: Federation of European Publishers - FEP). 93 mandate for all EU territories). Furthermore, solutions based on collective licensing may not be fit for all types of works (e.g. AV works). In the MS where the uncertainty would persist, teachers would be deterred from using protected content in digital teaching activities, beyond what is allowed for under existing licences. They may instead increasingly use OERs available under open licences, which however may not fully cover their needs, in terms of quality and variety of educational materials.285 Under this option, cross-border uses of protected content would remain subject to legal uncertainty. This aspect would constitute a significant obstacle for higher education institutions proposing distance learning programmes followed by students located in other MS.286 Enrolled students may be disadvantaged by having a limited access to teaching materials. Impacts on costs for educational establishments: The baseline option would not have any direct impacts on costs. Where digital and cross-border uses are not allowed under the teaching exception or under specific licensing schemes, educational establishments would continue facing transaction costs to obtain the necessary authorisations. Rightholders Impacts on licensing revenues: Under the baseline option, the ability of rightholders to generate revenues from educational uses would continue to vary from a MS to another, depending on the scope of the teaching exception, the mechanisms foreseen for the compensation of rightholders for uses under the exception, and the licences covering additional uses. SOCIAL IMPACTS The legal uncertainty on the use of protected content could contribute to slow down the development of digital and cross-border education and indirectly the acquisition of digital skills, which are essential in the information society; however many other factors may more strongly influence such development (e.g. availability of broadband connections in schools, IT equipment, teachers' digital skills, etc.). The access to a wide range of cultural materials to illustrate or complement teaching is an important element to promote cultural diversity. The baseline option may, to a minor extent, negatively affect cultural diversity as it could limit the ability of teachers to use such illustrative content in digital teaching practices. IMPACTS ON FUNDAMENTAL RIGHTS This option would not have any impact on copyright as a property right (Article 17 of the Charter), as it would not expand the scope of the existing teaching exception. It may have an impact on the right to education, as enshrined in Article 14 of the Charter, only to the extent that the legal uncertainty faced by educational establishments would constitute an obstacle to the further development of distance learning. Distance learning plays a role in facilitating 285 Only 27.4 % of users or their representatives agree that open licence materials can fully cover their educational needs. Stakeholders' survey carried out in the context of the 'Assessment of the impact of the European copyright framework on digitally-supported education and training practices'. See Annex 10B on the perception of copyright-related obstacles in education. 286 When developing such programmes, educational establishments would have to ascertain whether the use of copyrighted works is authorised or not in the different countries where the enrolled students are located, and if not, they would have to seek licences for such uses or could decide to limit cross-border access. 94 access to education, for example for people with disabilities that cannot be present on the premises of educational establishments or people pursuing further education while working.287 Option 1 – Guidance to MS and stakeholders' dialogue on raising awareness in the education community on the use of protected works for teaching purposes IMPACTS ON STAKEHOLDERS Institutional users and other related users (educational establishments, teachers, students) Impacts on legal certainty for digital and cross-border education: Option 1 would allow reducing, to a certain extent, the current legal uncertainty faced by educational establishments and teachers in the digital environment. The actual impact would depend on actions taken by MS following the guidance provided by the Commission. In the best-case scenario, Option 1 could result in digital uses being allowed under the national implementations of the teaching exception; however this would not be sufficient to provide cross-border effect for the use of protected content under the exception. Efforts to raise awareness among teachers and students on the scope of the exception and the uses allowed under licences could bring positive results and are likely to be well accepted. In fact, teachers are often not aware of the licences purchased by their educational establishment.288 Measures aimed at raising awareness on copyright rules were the type of solutions that gathered strongest support both from users and copy rightholders in a recent survey.289 Impacts on costs for educational establishments: the transaction costs described in the baseline option could only be reduced if MS clarify the application of the exception to digital uses on the basis of the Commission's guidance. Rightholders Impacts on licensing revenues: The impacts of this option on rightholders are expected to be rather limited and would mainly depend on the possible changes introduced in MS legislation. On the one hand, this option may limit the rightholders' ability to license certain types of educational uses (e.g. digital copying, scanning, posting on the school's intranet - if digital uses become covered by national exceptions). On the other hand, the dialogue with users in the education community may bring positive results in the medium to long term by reducing the cases of unauthorised uses. SOCIAL IMPACTS Option 1 could have a positive impact on the further development of digitally-supported education practices and indirectly on the acquisition of digital skills. The obstacles to cross- border education would nevertheless persist. There may be some positive impacts in terms of 287 For example, the Open University in the UK, has more than 250,000 students, 12,000 of whom have a disability, health condition, mental health difficulty or specific learning difficulty (such as dyslexia). 288 Just more than a half (53.2 %) of educators report that they know their education institution is covered by licensing agreements allowing digital uses of protected content. Survey carried out in the context of the study on 'Assessment of the impact of the European copyright framework on digitally-supported education and training practices' (p.120). Concerning licences allowing the use of films in school, only 21 % of teachers of primary and secondary education report that their school have licence agreements whereas the majority report that their school has no agreement or was unable to say. Source: "Showing films and other audio-visual content in European Schools - Obstacles and best practices" – May 2015. 289 Survey carried out in the context of the study on 'Assessment of the impact of the European copyright framework on digitally-supported education and training practices' (p.35). 95 wider access to cultural works as a result of teachers' extended ability to use protected content in digital teaching practices (depending on the extent to which MS follow the guidance and/or the success of stakeholders' discussions). IMPACTS ON FUNDAMENTAL RIGHTS Option 1 would have no direct impact on the right of property, as it would not expand the scope of the existing teaching exception but provide guidance on the conditions of use of protected content under the existing exception. The impact on the right to education would be similar to the baseline option. Option 2 – Mandatory exception for digital uses for the purpose of illustration for teaching, including across borders IMPACTS ON STAKEHOLDERS Institutional users and other related users (educational establishments, teachers, students) Impacts on legal certainty for digital and cross-border education: Option 2 would bring a high degree of legal certainty to educational establishments and teachers across all MS. This could lead in the short term to an increased use of illustrative resources and an enriched learning environment for students. The actual impacts on education institutions would vary between MS, depending on how the optional teaching exception has been implemented so far and on the licensing mechanisms in place. The impact of Option 2 would be stronger in MS where the scope of the existing teaching exception is currently limited or unclear (e.g. where the teaching exception does not clearly apply to digital uses or where it applies only to certain types of works and media). Importantly, Option 2 would allow in particular higher education institutions to gain legal certainty for cross-border uses. Distance and online students, including those located in other MS, would be able to access the materials used and made available by teachers under the same conditions as on-site students. However, the legal certainty offered by Option 2 to educational establishments and teachers may be undermined in the long term by a reduced quality and variety of educational resources, which could result from the application of the exception to textbooks and other resources produced specifically for education (see 'impact on rightholders' below). In a recent survey, a majority (54.6 %) of educational users reported that they used licensed works more because they offer better quality and/or variety than open licence alternatives.290 Impacts on costs for educational establishments: Transaction costs: Option 2 would significantly reduce the transaction costs supported by educational establishments when digital and cross-border uses are not allowed under the national teaching exception or under a collective licensing agreement. These transaction costs include staff costs for providing guidance to teachers on the use of specific resources, identifying rightholders and obtaining the necessary authorisations; they may be particularly high when authorisation need to be obtained on a work-by-work basis (which may often be the case for using AV works). No evidence could be found to quantify these costs. 290 Stakeholders' survey carried out in the context of the 'Assessment of the impact of the European copyright framework on digitally-supported education and training practices'. See Annex 10B on the perception of copyright-related obstacles in education. 96 Licensing costs (licence fees paid by educational establishments): Option 2 could result in a reduction of licensing costs in MS where secondary uses291 of protected content in education are currently allowed under collective licensing schemes (including ECL). Part of the uses (digital uses for illustrating teaching) would become covered by the new EU exception. Educational establishments would therefore be in a position to renegotiate their agreements with CMOs which may be constrained to review the scope of their licences and reduce licence fees.292 Data collected for a few MS on the cost of licensing for educational establishments (where educational uses are allowed under a licence or an ECL) tend to show that these costs are relatively low: in the UK, according to a report prepared for Copyright Licensing Agency, copyright licensing payments (covering analogue and digital uses) make up less than 0.1 % of an educational establishment’s expenditure;293 in Denmark they amount to less than 1 %.294 The reduction of licensing costs under this Option would therefore be limited, in particular if MS introduce an obligation to compensate rightholders for the uses under the new exception. Option 2 would also significantly reduce opportunity costs associated to materials not being used due to legal uncertainty or budgetary constraints on educational establishments. Rightholders Impacts on licensing revenues: the impact of Option 2 would vary between MS, depending on how the optional teaching exception has been implemented so far and on MS decision to require compensation for the uses under the new EU exception or not. In MS where the current teaching exception already encompasses digital uses for all types of works (e.g. BE and NL),295 no impact is expected on rightholders' revenues. The authorisation of cross-border uses, in the conditions foreseen under Option 2, is not expected to prejudice the rightholders' interests, as it would not result in the uncontrolled dissemination of content online (cross-border uses under the exception would be limited to distance students enrolled with a specific educational establishment and accessing through a secure network). Therefore, it is not expected to affect the amount of the compensation required in certain MS. In MS where the current teaching exception is limited to analogue uses or does not clearly allow digital uses (notably HR, IT, PL), rightholders may be negatively affected only to the extent their current revenues rely on the licensing of digital educational uses. This may be the cases in certain countries, where digital uses are subject to voluntary collective licensing 291 "Secondary uses" designate uses to illustrate and complement teaching, such as copying and making available extracts of protected works to students. 292 Licensing schemes could remain an attractive option for educational establishments if they allow more flexible uses compared to the exception. 293 Source: Higher Education Statistics Agency (UK), Learning and Skills Council, Department for Education, PwC analysis in 'An economic analysis of education exceptions', March 2012, PWC, report commissioned by the Copyright Licensing Agency (CLA), a UK non-profit organisation established by the Authors' Licensing and Collecting Society and the Publishers' Licensing Society to perform collective licensing on their behalf. Available at: https://www.pwc.co.uk/assets/pdf/an-economic- analysis-of-education-exceptions-in-copyright.pdf 294 Source: FEP. Additional data provided by IFRRO illustrate the standard per page rate for copying in education: €0.0142 (LV), €0.011-0.045(NL), €0.0256-0.0512 (BE), €0.033-0.036 (EL), to €0.04 (FR, DK). These costs do not include the transaction costs mentioned above (mainly staff costs, e.g. for negotiating and managing licences). 295 In many other MS, digital uses are allowed under the national teaching exception but certain types of works are excluded from the scope of the exception e.g. resources specifically intended for education are excluded from the exception in AT, DE, ES, FR; sheet music in FR, IT, ES; recently released cinematographic works in DE. 97 agreements.296 However, it seems that in the past the restrictive implementation of the exception did not favour the development of licences.297 Therefore, in this case the impact of Option 2 is expected to be limited. It could nevertheless reduce licensing opportunities in the medium term. Significant impact is expected in MS where digital secondary uses of content for teaching activities currently require a licence., i.e. MS using ECL (DK, FI, SE) and MS where the exception is subject to the availability of licences (UK, IE). In these cases, rightholders would not be able anymore to exercise their exclusive rights to authorise or prohibit digital uses of their works for illustrating teaching. They would be able to continue offering licences only for print copies and digital uses which would go beyond the scope of the new exception (e.g. in terms of extent of copying). This would imply a significant loss of secondary licensing income.298 One can reasonably assume than Option 2 would affect at least half of the secondary licensing revenue currently stemming from digital uses.299 Estimates established on this basis and considering the relative importance of digital uses in several MS300 show that Option 2 would lead to a reduction of 14 % to 25 % of the total revenues currently collected by CMOs (in the print sector) from educational establishments.301 This proportion is likely to increase over the next years, with the uptake of digital teaching practices at all education levels. In those MS, rightholders would be differently affected depending on how much their works are used in the teaching context. Considering that text documents and images are the types of content currently most widely used in education, rightholders in the print sector (writers, visual artists, publishers) are likely to be more affected than others. The strongest impacts would be felt by educational and academic authors and publishers, whose works are intensively used by educational establishments. A large part of the volume of copies made in the context of teaching (analogue and digital copies) is based on copies from textbooks or other educational resources: 90 % in IE, 80 % in FR, 67 % in DE.302 Such impact would also be felt by educational publishers in MS where textbooks and other educational resources are excluded from the scope of the national teaching exception (notably FR, DE, AT, ES).303 Data collected for FR, DE, UK and SE indicates that secondary uses of textbooks account for 1 to 4 % of the educational publishers' turnover in those countries.304 A reduction of 14 to 25 % of 296 For example in CZ, HU, PT, SK, SI and PL. Source: IFRRO. 297 For example, the narrow implementation and interpretation of the exception in Italy did not lead to a large recourse to licensing mechanisms or contractual agreements but created a situation of uncertainty for educational establishments and rightholders. See: "Copyright and educational uses: the unbearable case of Italian law from a European and comparative perspective", Giuseppe Mazziotti. Available at: http://cadmus.eui.eu/bitstream/handle/1814/19697/LAW_2011_17_Mazziotti.pdf?sequence=1 298 "Secondary licensing income" refers to the revenue generated by licences authorising the secondary uses of protected content in teaching activities. 299 The exact share of the revenues that would be affected would depend on the current scope of the licensing schemes in terms of extent of digital and online uses allowed. 300 See Annex 10D for data on the share of digital uses in the revenues collected by CMOs. 301 This includes revenues from all types of education establishments. The revenues from licensing to higher education institutions are expected to be more strongly affected. 302 Source: data collected by FEP from ICLA (IE – the figure mentioned above relate to post-primary education only), CFC (FR - the figure mentioned above relate to secondary education only), VG Wort (DE) on the basis of reporting/surveys of users. In ES, 26 % of the copies made are from textbooks and 39 % from academic books. IFRRO also indicated that non-fiction works, including textbooks and academic books, are the works mostly used by educational establishments. 303 The rationale for excluding this type of works from the teaching exception is linked to the fact that educational users constitute their primary market. 304 See Annex 10D for data on the share of secondary uses in the revenues of educational publishers. 98 this source of revenue would therefore have a non-negligible impact on the industry. Academic and Scientific, Technical and Medical Publishers ("STM publishers") would also be strongly impacted by the reduction of licensing income from higher education institutions.305 Furthermore, the negative impact would extend to educational authors for whom this source of income constitutes a constant revenue stream compared to more variable revenues from primary sales. A study carried out in the UK in 2011 reported that for UK educational authors a 20 % reduction of the secondary licensing income would result in a 29 % decline in output (which would mean 2,870 less new works being created annually).306 The possible compensation that may be imposed at national level would not ensure the level of revenues that rightholders can obtain when exercising their exclusive rights on the market.307 Impacts on competitiveness and innovation in the educational publishing industry: The reduction of secondary licensing revenue is expected to have a direct impact on educational publishers' incentive to invest in new content.308 It is likely to hit first digital educational resources, whose market is not profitable yet, notably because of the high fixed costs associated to the development of digital products and educational resources platforms.309 Evidence collected in the UK from a sample of educational publishers indicated that revenues from secondary licensing equate to 19 % of their investment in content development.310 In the long term, the lack of sufficient investment in digital products could affect the competitiveness of the European educational publishing industry, including at international level. International sales of textbooks and academic books are important notably for the UK and French educational publishing industries (sales in English/French-language markets). SOCIAL IMPACTS The legal certainty provided by Option 2 would result in a positive impact on the further development of digital and cross-border education and indirectly on the acquisition of digital skills. Option 2 would allow a wider and more flexible use of protected content in education, which may contribute to promote cultural diversity among students. However, the impact of this option on rightholders in certain MS could affect the incentive to invest in the production of new content, in particular resources produced specifically for the educational market. If 305 In 2015, STM and academic publishers in the UK received about 22 % of CLA licensing revenue distributed to publishers. Source: CLA/ALCS/PLS. 306 'An economic analysis of education exceptions in copyright', PWC, March 2012, http://www.pwc.co.uk/en_UK/uk/assets/pdf/an-economic-analysis-of-education-exceptions-in- copyright.pdf 307 Indications on the amount of compensation required in certain MS for uses under the existing teaching exception and on the remuneration stemming from educational licensing schemes existing in other MS are provided in Annex 10C. For example, the compensation required at national level on annual basis for uses of print works is €1,7 million in FR (covering only digital uses, by all types of educational institutions). By contrast, the remuneration collected for digital uses of print works in education institutions the UK amounted to about €9,3 million in 2014/15. 308 Most are developing digital solutions alongside traditional textbooks, in order to accompany the transition towards digital education while meeting the continuing demand for print works. 309 For example, in IT, digital textbooks represent the 34.4 % of the offer but just the 0.8 % of textbooks actually adopted by schools. In FR, educational publishers have invested 25 million euros in digital textbooks over the last 3 years, despite a very small market (less than 1 % of the print market). Currently, producing digital textbooks costs 20 to 50 % more than print books, considering the costs of additional digital rights and digital maintenance. Source: data collected by FEP. 310 'An economic analysis of education exceptions in copyright', PWC, March 2012, http://www.pwc.co.uk/en_UK/uk/assets/pdf/an-economic-analysis-of-education-exceptions-in- copyright.pdf: "In 2011, a sample of seven major educational publishers received £3.6 million in PLS revenue (19% of their annual investment in new materials)." 99 investment in new content decreases, the quality and variety of educational resources used to illustrate and complement teaching may decline. IMPACTS ON FUNDAMENTAL RIGHTS Option 2 would affect the right of property, with some uses which currently require the authorisation of rightholders in certain MS being covered by a mandatory exception. On the other hand, it would have some positive impacts on the right to education as it will support the further development of distance education. Option 3 – Mandatory exception with a cross-border effect covering digital uses in the context of illustration for teaching, with the option for MS to make it (partially or totally) subject to the availability of licences IMPACTS ON STAKEHOLDERS Institutional users and other related users (educational establishments, teachers, students) Impacts on digital and cross-border education: Option 3 would have the same positive effects as Option 2 in terms of possibility of use of protected content digitally and online for illustrating teaching, including across borders. Legal certainty for such uses would be ensured either via the mandatory exception, or via licences providing for at least equivalent conditions of use (in practice, licences would probably cover uses tailored to the needs of different types of educational establishments, including uses which would go beyond the exception). For most teachers it is irrelevant to know whether the uses are allowed under an exception or under a licence, as long as the conditions for use are equivalent.311 Impacts on costs for educational establishments: Licensing costs: In MS deciding to use the possibility offered under this Option to make the application of the exception subject to the availability of licences,312 educational establishments would have to pay licence fees for digital uses of protected content (where such licences are available). However, as illustrated under Option 2, data collected from certain MS where educational uses are allowed under a licence or an ECL show that these costs are rather limited if compared to establishments' overall costs. Furthermore, licences covering cross-border uses are not expected to be more costly, as they would not extend the number of users (licence fees are generally defined according to the number of students). In MS opting for implementing the new exception with an obligation of compensation, educational establishments may incur some costs related to compensation. Considering the current level of compensation in certain MS, these costs are expected to be marginal. For example, the compensation required in FR for digital uses of print works is €1.7 million by year, for 14.7 million pupils/students. The recently negotiated compensation in ES amounts to €3.2 million for digital uses of print works in higher education (covering about 1.2 million students).313 Transaction costs: The possible transaction costs for educational establishments related to the need to check the availability of licences are expected to be reduced by the measures MS would have to take to ensure the availability, visibility and user-friendliness of licences 311 This argument was developed in the study "Showing films and other audio-visual content in European Schools – Obstacles and best practices"– May 2015. 312 This possibility is likely to be used by MS to maintain the mechanisms in place (e.g. ECL in DK, FI, SE and exception subject to licences in UK and IE) and could be used by other MS as well. 313 http://cultura.elpais.com/cultura/2016/03/15/actualidad/1458066248_393225.html 100 covering secondary uses of protected content in education. The development of specific educational licensing schemes314 could for example contribute to significantly reduce transaction costs, even if different schemes may coexist for different types of works. Since these schemes may not fully remove the need for educational establishments to take up individual licences,315 it may also be necessary for MS to develop online tools allowing to check the licences available for a given work. Option 3 may also generate administration costs for educational establishments, linked to the negotiation and management of licences. Such costs could be reduced if MS decide to centralise, at national or regional level, the acquisition of licences for educational establishments.316 Rightholders Impacts on licensing revenues: Option 3 would have the same effects on rightholders as Option 2 if all MS decide to implement the EU exception as such. However, the possibility to make the exception subject to the availability of licences is very likely to be used by MS to maintain the mechanisms in place (e.g. ECL in DK, FI, SE and exception subject to licences in UK and IE). It could also be introduced in other MS for certain types of works (e.g. textbooks and educational resources), notably in countries where they are currently excluded from the teaching exception (AT, DE, FR, ES). Such mechanism would allow to favour licensing for resources which are primarily intended for the educational market, but would nevertheless offer the necessary legal certainty where licences are not available. Under this scenario, the negative impacts described under Option 2 would not materialise under Option 3. In MS using ECL or making the exception subject to the availability of licences, rightholders would need to give sufficient visibility to their licensing offers317 if they want to be remunerated for the uses of their works in the teaching context. This may generate some costs, in particular for SMEs, which are however expected to be compensated by licensing revenues. The need to make licensing solutions widely available and adapted to the needs of educational establishments could encourage rightholders to sign up into specific educational licensing schemes that may be developed by MS. Other rightholders may prefer developing their own licensing solutions online, in particular for digital resources.318 The legal mechanism allowing cross-border uses is not expected to have any impact on rightholders' licensing revenues (as explained under Option 2, licence fees are generally defined according to the number of students, which will remain unchanged) nor to reduce their possibility to licence their works to educational establishments in other MS. 314 Such schemes would be based on voluntary collective management: interested rightholders would give a mandate to a CMO to license their works for uses in the context of illustration for teaching. 315 Certain rightholders may decide not to participate in educational licensing schemes based on collective management; or such schemes may not be developed for certain types of works, for which individual licensing would apply (e.g. AV works, digital textbooks). Licensing bodies increasingly tend to propose online tools allowing to check permitted uses. See Annex 10C. 316 This has been done recently for state funded schools in England. See: https://www.gov.uk/guidance/copyright-licences-information-for-schools 317 Rightholders would have to propose specific licensing solutions for secondary uses of their content in teaching activities. 318 Many educational publishers are licensing their digital products via online platforms, for example in France through a single entry portal called "Wizwiz", which offers a catalogue of all digital educational resources from over 60 French publishers, or in DE, through the online platform "digitale- schulbuecher" which gathers a variety of digital textbooks from different publishers. 101 Impacts on competitiveness and innovation in the educational publishing industry: this option is likely to have a limited impact on the competitiveness of the publishing industry, as it leaves to MS the possibility to favour the use of licences over the exception for digital uses in education. MS where the current exception does not apply to textbooks and other educational resources are expected to use the flexibility of Option 3 to make this type of works subject to the availability of licences. This would allow educational publishers to continue investing in the development of digital resources. SOCIAL IMPACTS Option 3 would have a positive impact on the further development of digital and cross-border education and indirectly on the acquisition of digital skills. It would allow to promote cultural diversity through wider and more flexible uses of protected content in education. In addition, to the extent MS use the flexibility foreseen under this Option to make the resources developed specifically for education subject to the availability of licences, the impact of this option on rightholders is not expected to affect the production of new content. IMPACTS ON FUNDAMENTAL RIGHTS The impact of Option 3 on the right of property would be mitigated by the possibility for MS to decide that licences prevail over the application of the exception. Option 3 will have positive impacts on the right to education as it will support the further development of distance education. 4.2.4. How do the options compare? Option Effectiveness Efficiency Impact on stakeholders Social impacts and fundamental rights Baseline (0) Legal (0) No direct costs (0) Impacts on (0) No direct impact uncertainty for associated with the stakeholders would on cultural diversity digital/online and baseline option depend on reforms at and on the cross-border uses national level or development of digital would persist developments in the and cross-border licensing market education (0) No direct impact on fundamental rights Option 1 – (0/+) Could result (0/-) Limited costs (0/+) Main impacts on (0/+) Possible positive Guidance in some linked to the stakeholders would impact on cultural and improvements in organisation of the depend on the possible diversity and the stakeholder certain MS but stakeholders' changes introduced in development of digital s' dialogue would not allow to dialogue MS legislation and cross-border ensure legal education, depending certainty across the on MS action EU (0) No direct impact on fundamental rights Option 2 – (++) Would ensure (-) High compliance (+) Full legal certainty (+/-) Positive impact Mandatory legal certainty for costs in MS using and possible reduction of on cultural diversity in exception digital uses, licence-based licensing costs for the short term; in the for digital including across mechanisms for educational medium/long term, for the borders educational uses establishments could negatively affect purpose of (need to review the (-) Possible reduction of the production of illustration functioning and the quality and variety educational resources for scope of these of educational resources (+/-) Positive impact teaching, mechanisms in in the medium/long term on digital and cross- including view of the (--) Significant loss of border education may across introduction of a licensing income for be undermined by borders mandatory rightholders in certain lower quality and exception) MS variety of educational resources in the 102  medium/long term (-) Negative impact on the right of property (+) Positive impact on the right to education Option 3 – (++) Would ensure (0/-) Compliance (+) Full legal certainty (+) Positive impact on Mandatory legal certainty for costs for certain MS for educational cultural diversity exception digital uses, related to the need establishments if MS (+) Positive impact on with option including across to take measures to take the appropriate the development of for MS to borders ensure the measures to ensure the digital and cross- make it availability and availability and visibility border education subject to visibility of of licences (-/0) Limited negative licences licences. (-/0) Depending on the impact on the right of choice made by MS, property, depending on possible licensing and the choice made by transaction costs for MS educational (+) Positive impact on establishments, but the right to education expected to be limited (0) Impacts on rightholders expected to be neutral Option 3 is the preferred option, as it would allow reaching the objective of full legal certainty for digital and cross-border uses in education for the benefit of educational establishments, teachers and students, while limiting negative impacts on rightholders. In contrast, Option 1 would not be sufficiently effective and Option 2 would entail significant foregone costs for rightholders in several MS, with a possible negative impact on the quality and variety of educational resources in the long term. Option 3 could imply some compliance costs for MS deciding to make the exception subject to the availability of licences, because of the requirement to ensure availability and visibility of such licences. However, these costs are expected to be lower than the compliance costs associated with Option 2 (need for certain MS to thoroughly review the way in which educational establishments make use of protected content in order to implement the exception). Also, such compliance costs from MS would allow to significantly reduce administrative burdens and related transaction costs for educational establishments. Finally, the impacts on cultural diversity and fundamental rights are more balanced under Option 3 compared to Option 2. Proportionality and impacts on MS: Option 3 responds to the policy objective in a proportionate manner, by focusing on uses which have a cross-border dimension (digital uses) and leaving sufficient flexibility for MS to choose the most suitable mechanism (exception or licensing). The implementation of Option 3 will require certain MS to adapt their national legislation in order to clarify that the exception covers digital uses carried out in the context of illustration for teaching. Other MS, where such uses are already allowed under their national teaching exception, will only need to make more limited amendments to reflect the specific conditions defined under Option 3 (e.g. uses under secure electronic networks, all types of works covered). All MS would need to amend their national laws in order to allow for cross-border uses. The flexibility foreseen for the implementation of the exception will allow MS to maintain to a large extent the existing arrangements (e.g. ECL or exception subject to the availability of licences). 103 4.3. TEXT AND DATA MINING 4.3.1. What is the problem and why is it a problem? Description of the problem: Text and Data Mining (TDM) is a term commonly used to describe the automated processing ("machine reading") of large volumes of text and data to uncover new knowledge or insights.319 TDM can be a powerful scientific research tool to analyse big corpuses of text and data such as scientific publications or research datasets.320 The current level of TDM in the EU is difficult to quantify.321 Attempts have been made by some studies on the basis of proxies,322in particular the number of journals publications on TDM which suggest a slow but constant increase over the years (around 10 % per annum worldwide in 2010-2014 and similar trends in EU MS)323 with the EU MS covering 28,2 % of worldwide publications on TDM, Asia 32,4 % and Northern America 20,9 %.324 All stakeholders generally agree that TDM is still a nascent tool, in particular in the non-business sector, i.e. for research carried out by organisations such as universities or research institutes (generally referred in this IA as "public interest research organisations"). Researchers are generally convinced of the potential of TDM but they put forward legal uncertainty, caused by the current copyright rules, as one of the reasons for the slow development of TDM in the EU (in addition to aspects unrelated to copyright, such as lack of awareness and skills, infrastructural challenges, etc.). A recent survey reported that less than 20 % of researchers had used TDM techniques to analyse journal literature in a sample of EU MS (24 % worldwide).325 Rightholders – notably scientific publishers - report from their side a relatively limited number of TDM requests from universities and other public interest research organisations (around 15 % of publishers in the UK had received TDM requests in 2014 to mid-2015 according to one survey).326 Drivers: [Current research exceptions in EU law not fully adapted to TDM] Together with the above mentioned non-copyright related drivers, which are not addressed in this IA, copyright issues contribute to the slow development of TDM in EU research. Copyright is relevant in this context as TDM may often involve copying (e.g. downloading) of the content to be 319 See Annex 11B for a description of the technical processes of TDM. 320 In addition to researchers in public interest organisations such as universities, TDM is increasingly used by companies, notably life-science and technology companies, in the context of their “in house” research. TDM or similar data analysis tools, such as web-scraping, are also used by businesses at a wider scale, as part of or basis for their commercial activities going beyond scientific research (marketing, mining of customers' data, etc). 321 See the UK impact assessment no. BIS0312 (2012), "Exception for copying of works for use by text and data analytics", https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/308738/ia-exception- dataanalytics.pdf 322 See in particular two studies carried out by the Lisbon Council in 2014 and 2016: S. Filippov, "Mapping Text and Data Mining in Academic and Research Communities in Europe" 2014, and S. Filippov, P.Hofheinz "Text and Data Mining for Research and Innovation", 2016 that use as indicators the number of publications containing "data mining" in the title or anywhere in the text as well as patents granted in data mining. The publications indicator has also been used in the 2016 PRC survey, "Text Mining of Journal Literature" – May 2016, www.publishingresearchconsortium.com. See Annex 11E. 323 PRC survey, 2016 based on Scopus journals data. 324 Filippov, Hofheinz, 2014, page 10. 325 PRC, "Text Mining of Journal Literature" – May 2016, www.publishingresearchconsortium.com. Two third of respondents to the survey indicated that they would be interested to learn more about TDM. 326 The survey covered the period immediately before and after the adoption of the UK exception, it is therefore difficult to draw conclusions on this basis. 104 analysed, which can be protected by the "right of reproduction" under copyright law.327 The current EU copyright rules lay down exceptions permitting the use of content for the purposes of non-commercial scientific research.328 However, a considerable level of legal uncertainty exists in practice. Research organisations do not always know whether TDM is copyright- relevant at all, whether it may be covered by an exception or whether a specific rightholders' authorisation is required. [Diversity of licensing practices generating transaction costs]: Researchers consider this situation to be particularly problematic as regards protected content to which they already have lawful access to on the basis of a subscription purchased by their library or institution. Subscriptions to scientific publications may currently include or not the authorisation to perform TDM, prohibit it altogether, or leave it unclear. As a result of the commitments taken in the 2013 "Licences for Europe" dialogue329 STM publishers have gradually started to include TDM for non-commercial purposes in their subscription licences for academic institutions and to develop common infrastructures to facilitate access to the content to be mined (notably in the framework of the "Cross Ref" mining service – See Annex 11B).330 However, researchers have generally not received favourably these developments (their representatives left "Licences for Europe" considering that only legislative changes, as opposed to a voluntary approach, would allow to fully address their problems) and generally point out that making TDM subject to specific authorisation in addition to the subscription risk to always make them subject, at least potentially, to different conditions and policies of different publishers, something which they see as particularly problematic in view of the large scale of material which has to be mined in the context of scientific research.331 These different conditions may give rise to transaction costs for research organisations having to clarify to what extent they are allowed to perform TDM on the basis of their subscriptions and possibly to renegotiate them to make sure they can do so in full legal certainty. In some cases, individual researchers may need to take up licences for TDM if their organisation's 327 See Annex 11C. The Commission commissioned a "Study on the legal framework of text and data mining" – J.P. Triaille, March 2014. See also "Standardisation in the area of innovation and technological development, notably in the field of text and data mining" – Report to Commission, 2014. 328 Article 5(3)(a)of the Infosoc Directive and Articles 6(2)(b) and 9(b) of the Database Directive. The "transient copies" exception in Article 5(1) of Infosoc Directive may also be relevant for some TDM techniques which do not involve permanent copying. 329 See: http://www.stm-assoc.org/2013_11_11_Text_and_Data_Mining_Declaration.pdf. On that occasion a group of 13 STM publishers issued a declaration ("A statement of commitment by STM publishers to a roadmap to enable text and data mining (TDM) for non-commercial scientific research in the European Union") where they committed in particular to include TDM clauses in subscription contracts for no additional cost to users and to develop further technological solutions to facilitate TDM licences. See also the Commission document “Licences for Europe: ten pledges to bring more content online” http://ec.europa.eu/internal_market/copyright/docs/licences-for-europe/131113_ten-pledges_en.pdf. On Cross Ref, see http://tdmsupport.crossref.org/. See Annex 11D 330 This is for example the case of Elsevier (https://www.elsevier.com/about/company- information/policies/text-and-data-mining) Springer (https://www.springer.com/gp/rights- permissions/springer-s-text-and-data-mining-policy/29056?token=prtst0416p) and Wiley (http://olabout.wiley.com/WileyCDA/Section/id-826542.html). Usually TDM is gradually included in subscription licences when they are renewed (for example one major publisher indicated that in 2014 around 25% of their non-commercial licences included TDM – the proportion is probably higher in 2016). http://rue89.nouvelobs.com/sites/news/files/assets/document/2014/11/marche_elsevier.pdf. 331 In the UK, before the 2014 TDM exception, of the 15 publishers in the NESLi2 scheme (scheme for central journal negotiations on behalf of the UK academic community), 11 had clauses permitting TDM, and the 4 other publishers were silent as to whether TDM was permitted or not under the subscription licence. 105 subscriptions do not cover it.332 Before the adoption of a TDM exception in the UK, a large research university indicated that the costs for them to check the compliance of their TDM activities with the different applicable licences could amount to up to GBP 500,000 per year.333 [Fragmentation of rules in the single market]: Fragmentation in the single market is also an emerging problem as MS have started to adopt national TDM exceptions referring to the research exceptions in the current EU rules. The UK adopted a specific TDM exception in 2014334 and some other MS are currently discussing possible national solutions.335 Consequences: The above factors together have led to a situation where in practice, whether a prior authorisation for TDM in addition to the authorisation to access the content is required or not depends on the factual circumstances of each case and on the copyright legal framework in the MS where the research activity takes place. Together with other non- copyright related issues such as skills, technology and infrastructure which also play a significant role, lack of certainty in the current copyright framework contributes to the current situation of slow development of TDM in European research. How the problem would evolve: TDM is likely to become an increasingly important research tool over time, as technology improves and becomes more widespread, researchers acquire new skills and digital research sources increase. Almost all scientific journals are already available online, and a total of around 2.5 million scientific articles are published every year.336 It has been calculated that the overall amount of scientific papers published worldwide may be increasing by 8 to 9 % every year and doubling every 9 years.337 In some instances, more than 90 % of research libraries' collections in the EU are composed of digital content.338 While this trend is bound to continue, without intervention at EU level, the legal uncertainty and fragmentation surrounding the use of TDM, notably by research organisations, will persist. Market developments, in particular the fact that publishers may increasingly include TDM in subscription licences as a result of the commitments taken in the above mentioned 2013 Licences for Europe dialogue to may partly mitigate the problem. However, fragmentation of the Single Market is likely to increase over time as a result of MS adopting TDM exceptions at national level which could be based on different conditions, which is likely to happen in the absence of intervention at EU level. 332 The JISC 2012 report "Value and Benefits of Text Mining to UK Further and Higher Education" highlights the significant time cost for an individual researcher wishing to mine numerous publications which relates to identifying the rightholders and seeking permissions to mine, see https://www.jisc.ac.uk/reports/value-and-benefits-of-text-mining 333 Source: UCL (University College London). The UCL has 9000 researchers and produces more than 11,000 articles per year. For more examples, see section 4.3.3, Option 2. 334 The Copyright and Rights in Performances (Research, Education, Libraries and Archives) Regulations 2014: http://www.legislation.gov.uk/uksi/2014/1372/contents/made 335 Eg. DE, EE, FR, IE. 336 STM report, March 2015. 337 L. Bornmann, R. Mütz, "Growth rate of modern science" http://arxiv.org/ftp/arxiv/papers/1402/1402.4578.pdf 338 For instance, 94 % of journals and 24 % of books held by the University College London are digital. 79% of the Stockholm University's budget goes into digital content (source: LIBER). 106  4.3.2. What are the various options to achieve the objectives? The general and specific objectives are described in section 4.1.3. Baseline  Without EU intervention, TDM will continue to be based on rightholders' prior authorisation and its development would depend on the development of market-based initiatives to facilitate TDM licensing, including following the already mentioned commitment of STM publishers in the 2013 "Licences for Europe" process. At the same time an increasing number of MS could decide to adopt national TDM exceptions in the context of the current research exceptions (Article 5(3)(a) of the InfoSoc Directive and Articles 6(2)(b) and 9(b) of the Database Directive). Stakeholders' views Rightholders would support the baseline option as they are generally opposed to an intervention in this area. Researchers consider that legislative intervention is needed and would therefore strongly criticise a lack of EU action (See the report on the results of the 2013/14 public consultation on the review of the EU copyright rules in Annex 2B) Option 1 – Fostering industry self-regulation initiatives without changes to the EU legal framework  Non-legislative option. The Commission would encourage stakeholders, notably publishers and researchers, to identify collaborative solutions to facilitate TDM, in particular for content subscribed to by research organisations.  Structured dialogues between researchers and publishers would be organised to allow both sides to express their views, notably with regard to researchers' needs and the technical safeguards publishers could use to ensure the protection of their content without creating unnecessary or disproportionate burden for researchers. Building on existing initiatives such as "Cross Ref" (see above: problem definition), this option could also support and promote further technical solutions, such as platforms facilitating TDM in practice to allow researchers to access publishers' data at one go, promoting common standards for data formats or the creation of trusted intermediaries ensuring a safe environment for the mining of content.  The Commission would monitor the implementation of the commitments made by publishers to allow TDM for scientific purposes and to amend their licences respectively. If no substantial improvements are achieved in the mid-term, the Commission would consider proposing legislative changes as described in Options 2 to 4. Stakeholders' views Rightholders would support this non-legislative option. STM publishers in particular have asked the Commission to pursue a self or co-regulatory approach on TDM following up on the Licences for Europe dialogue. They consider that collaborative solutions identified together with non-commercial researchers would be a balanced way forward and could yield concrete results more quickly. On the other hand, researchers are not in favour of additional stakeholder dialogues if not accompanied by legislative changes (researchers' representatives left the dialogue considering that licences-based solutions were not an appropriate way to fully solve the problems and foster the development of TDM). 339 339 Idem. 107 Option 2 – Mandatory exception covering text and data mining for non-commercial scientific research purposes. This option would make mandatory for MS the implementation of an exception to the rights of reproduction and of database extraction,340 with the following elements:  Beneficiaries: any user who has lawful access to content protected by copyright or by the sui generis database right (e.g. a subscription to a scientific journal). Lawful access would cover access to content through authorisation by content owners (e.g. subscriptions to scientific journals) as well as access to publicly available content (e.g. open access content).  Permitted uses: lawful users would be permitted to carry out the reproductions which are necessary for the TDM process, as long as the TDM is carried out for non-commercial scientific research purposes (within the meaning of the current research exceptions in the EU copyright rules which are subject to the "non-commercial purposes" condition).341 The exception would not permit any communication to the public of the content being mined.  Relationship with the licensing market: given that lawful access will often be granted through contracts,342 legislative intervention would also make clear that contractual terms that prevent or restrict uses permitted under the exception are null and void. At the same time, rightholders would be allowed to apply proportionate measures which are necessary to guarantee the security of the content as long as this does not unduly hamper uses covered by the exception. Additionally, the legislative instrument would encourage stakeholder dialogues aiming at setting up best practices and mutually agreed technical solutions with regard to security aspects.  Compensation: the exception would not be subject to the payment of fair compensation to rightholders as its specific features, notably the lawful access condition, allow rightholders to keep generating revenues from the access to their content, notably through subscription licences.  Interaction with the current exceptions: the current research exceptions in the InfoSoc and Database directives would remain untouched and continue to apply outside the scope of the new TDM exception. The exception under this option would also be without prejudice to the transient copies exception under Article 5(1) of the InfoSoc Directive. Stakeholders' views Rightholders, publishers in particular, are strongly opposed to a legislative intervention introducing a TDM exception at EU level. Their main concern is an exception would facilitate the misuse and piracy of their content and make them lose business opportunities in future. This option would be the least opposed by rightholders among the legislative options as it is clearly limited to TDM carried out for non-commercial research purposes. While it would go some way in addressing the problem (and to pursue their the "right to mine is the right to read" objective) researchers are likely to consider it insufficient to provide full legal certainty for TDM because of the "non-commercial" condition, in particular when research projects are carried out by public interest research organisations in partnerships with commercial operators.343 340 Article 2 of the Infosoc Directive and Articles 5(a) and 7(1) of the Database Directive. 341 Also to be noted that, consistently with current EU rules (e.g. recital 36 of the Database Directive), the term scientific research covers both the natural sciences and the human sciences. 342 This is the case of lawful access through subscription contracts. The situation is different notably for open access content and publicly available websites. 343 To be noted that similar discussions arose in the context of the 2014 TDM exception adopted in the UK, which is very similar to the EU exception considered under Option 3. 108 Option 3 – Mandatory exception applicable to public interest research organisations covering text and data mining for the purposes of both non-commercial and commercial scientific research As Option 2 for all the points344 except for the beneficiaries of the exception and the purpose of the scientific research which would be as follows:  The exception would only apply to research organisations carrying out research in the public interest as opposed to commercial companies that would not be beneficiaries of the exception under this option. The concept of research organisations would be defined in the legal instrument to encompass different organisations across MS which have as their primary goal to conduct scientific research either on a non-for profit basis or pursuant to a public interest mission. This will cover for example universities, research institutes and similar research organisations.  At the same time, the exception would go beyond Option 2 in the sense that it would permit research organisations as defined above to carry out TDM on content they have lawful access to irrespective from the non-commercial or commercial purpose of their scientific research. This would cover notably research projects carried out in the framework of Public-Private Partnerships (PPPs, which may have an ultimate commercial outcome). Stakeholders' views Researchers generally consider this option favourably as it would increase legal certainty for their organisations to perform TDM, including in the context of PPPs. At the same time part of the research community has expressed the concern that the concept of public interest organisation could be difficult to define and, more generally that a TDM exception should be extended to anybody who has lawful access and covering both non- commercial and commercial research. Rightholders are against any legal intervention, but they may favour this option as compared to a broader exception as the intervention would be limited to public interest research organisations. Option 4 – Mandatory exception applicable to anybody who has lawful access (including both public interest research organisations and businesses) covering text and data mining for any scientific research purposes. Main elements:  As Option 2 but under this option the exception would permit any user who has lawful access to carry out TDM for the purposes of both non-commercial and commercial scientific research. Differently from the other legislative options, the exception would not be limited to non-commercial use (Option 2) nor to specific beneficiaries (Option 3). In practice this intervention would cover TDM for scientific research beyond public research area, notably when carried out by commercial operators such as life science companies. Stakeholders' views The research community supports this option as it would fully pursue their objective that anybody who has lawful access should be entitled to mine the content without additional authorisation or conditions. This option would be strongly opposed by rightholders. Publishers in particular take the view that such a large exception would significantly interfere with the TDM licensing market in the commercial sector, mainly in the area of life science. Commercial companies carrying out scientific research have generally not raised problems with commercial TDM licences, nor have generally requested the Commission to take action in this area. 344 In particular, the reasons explained under Option 2 which justify the fact that the exception should not be subject to compensation are also valid under this option. 109  4.3.3. What are the impacts of the different policy options and who will be affected? Approach The assessment below is mainly qualitative. Quantitative market data have been provided by stakeholders with regard in particular to costs for researchers arising from legal uncertainty and current licensing practices of rightholders (in particular scientific and press publishers). The options are assessed both as regards their economic and social impacts. They are expected to mainly affect two majors groups of stakeholders - researchers seeking to carry out TDM and rightholders whose content is analysed through TDM. The impacts affecting these two groups are presented separately and focusing on most significant and likely impacts for each category. The impacts on technology companies (data analytics service providers) are not specifically described below as these services are deemed not to be directly affected by the options proposed. Indirectly, intervention on TDM is expected to have a positive impact on technology service providers, including SMEs and start-ups, notably as the proposed intervention aims at creating a better legal framework for TDM in the EU which in turns should increase the market opportunities for these players as technology partners or service providers of research organisations performing TDM. SMEs performing research activities will also indirectly benefit from the intervention as private partners in PPPs with "public interest" research organisations. For researchers, the impacts assessed relate to the legal uncertainty around the use of TDM for scientific research purposes and the related transaction costs, notably finding out what is permissible under existing licences or under national law, including the laws of different MS for cross-border projects. The assessment mainly covers researchers in "public interest" research organisations which have been identified as those for whom there is the strongest evidence of a problem.345 The impacts on the usage of TDM for in-house scientific research by commercial companies such as life science or technology ones are described only for the option that affects them indirectly (Option 3) or directly (Option 4). For rightholders, the impacts assessed are mainly on their licensing revenues and on the security and protection of their content. The impacts on the licensing revenues comprise TDM licences, both for commercial and non- commercial use, as well as impact on revenues from the subscriptions market. Impacts are mainly assessed as regards rightholders in the publishing sector, since this is currently by far the main area for TDM carried out for scientific research purposes. This includes in particular scientific publishers, who largely generate revenues from access to their content via subscriptions agreements which may allow or not TDM346. Other relevant rightholders include news publishers who possess important databases, notably archives, which may be of importance for certain areas of research (notably languages and humanities). However, the commercial value of the press archives and other news content is expected to remain untouched due to the "lawful access" condition and the fact that none of the options considered in the IA allows the communication to the public of the mined content. TDM-based research may in some cases be carried out also on copyright protected content other than text-based publications (i.e. AV and music347) However, we have not yet found evidence of significant impact in these areas, which are therefore not specifically analysed in the IA. Open access publications are an increasingly important channel of scholarly publications. Since open access licences generally do not limit TDM, the impact on "pure" open access publishers is not discussed in detail either (see below on the coherence of the options with EU open access policy). Finally, TDM could be used by researchers on copyright protected content publicly accessible on the internet. The impact on rightholders in content freely available online is not discussed as it is considered to be marginal since all the options relate to content to which the user has lawful access. Social impacts are examined in relation to the benefits of European research for society and to the EU attractiveness as a research area. The policy options presented are coherent with and support another important area of EU policy, i.e. open access policy that aims at greater sharing of public-funded research results and thereby improve scientific research, as well as the European Open Science Cloud and Innovation Union.348 The 345 See problem definition. 346 Scientific publishers, including those who traditionally published only under a subscription model, are increasingly publishing part of their content under open access licences. However, subscriptions remain at the moment an essential part of the business model and revenues sources of many scientific publishers. See Annex 11A. 347 For example, the British National Library reported some projects using mining of music recordings; in the audio-visual sector, the French National Audiovisual Institute (INA) has developed mining tools for audio and video content (see e.g. http://www.otmedia.fr). 348 See Annex 11A. The impact on open access is increasingly positive going from Option 1 to 4 and is therefore not specifically mentioned in the assessment of the various options below. 110 options all concern scientific research and are not expected to affect cultural diversity. Impact on fundamental rights is explained for relevant options and with regard to fundamental freedoms which would be impacted.349 Baseline IMPACTS ON STAKEHOLDERS Researchers Impact on legal certainty and transaction costs: problems faced by public interest research organisations are likely to remain largely unsolved under this option. Publishers' market driven initiatives aiming at facilitating mining for non-commercial purposes on the basis of licences will continue to be developed.350 Over time more publishers are likely to include TDM clauses in their subscriptions or provide open access solutions.351 This would improve legal certainty for researchers to some extent. However different licensing terms and conditions would stay at least in part.352 Researchers' resistance to TDM offers based on licences is likely to continue for the reasons mentioned above (see problem definition): Fragmentation in the single market as a result of different TDM laws across MS would also remain unsolved and is likely to worsen as more MS are likely to adopting national TDM exceptions in the absence of EU intervention. Overall, the objective of ensuring full legal certainty for researchers seeking to mine the copyright-protected content they have lawful access to would not be achieved. Rightholders Impact on TDM licensing market and the revenues thereof: TDM may increasingly be included in subscription licences that scientific publishers conclude with public interest organisations such as universities and licensing-based tools may be developed further (see above). However, these developments are not likely to result in substantial increase in revenues for publishers, given on the one hand the resistance of researchers to these offers and on the other hand the unlikely increase of licensing fees due to the inclusion of TDM in subscription licences.353 The adoption of national TDM exceptions by an increasing number of MS could progressively erode publishers' ability to licence TDM across the EU. However national exceptions would have to be limited by the "non-commercial" condition set out in the current EU rules and, if drafted along the lines of the 2014 UK precedent ("lawful access" condition, exception limited to the reproduction right) they would not directly affect the publishers' subscription market. Under the baseline scenario, scientific publishers are likely to continue to expand the TDM licensing offers for the commercial market (e.g. pharmaceutical and life-science companies) – often in the context of added value packages including not only TDM as such but also providing additional facilities (e.g. pre-formatting of data, direct injections into existing databases etc.). Revenues from commercial licences are likely to increase substantially over time (see Option 4). 349 Notably copyright as a property right, freedom of art and science. Privacy (Articles 7 and 8 of the Charter of fundamental rights of the European Union) is not impacted as none of the options concern access to or further communication of content, and privacy and personal data protection rules continue to apply. 350 See Annex 11D. STM indicated that end 2015 around 50 % of STM journal content was minable through Cross-Ref (by licensed users). 351 See problem definition. 352 Including different TDM policies as regards for example content that can be mined in a given amount of time, download speed, etc. 353 STM publishers committed in Licences for Europe to include TDM in their subscriptions licences with universities "at no additional costs". We have not found evidence of a substantial increase of price of subscription licences with non-commercial users that include TDM. 111 Impact on the protection of content: publishers would continue to be able to use licences as a mean to impose technical and contractual means to protect their content (ensure that only authorised users can access and carry out TDM and protect their databases from massive downloads). SOCIAL IMPACTS The persisting copyright related problem slowing down the development of TDM in European research would, at least in part, remain unsolved. This could contribute to Europe losing attractiveness as a research area on a worldwide scale, for example as regards EU universities' ability to attract and retain top quality scientists. IMPACTS ON FUNDAMENTAL RIGHTS The baseline would have no impact resulting from EU action on copyright as a fundamental right and on research, protected under the fundamental right of freedom of art and science under Article 13 of the Charter. Option 1 – Fostering industry self-regulation initiatives without changes to EU legal framework IMPACTS ON STAKEHOLDERS Researchers Impact on legal certainty and transaction costs: Public interest research organisations could potentially benefit from more legal certainty as a result of a convergent industry approach to TDM fostered by the Commission through structured stakeholder dialogues. This could also limit to some extent the right-clearance costs. However, the effectiveness of this option is largely dependent on the willingness of the different parties to reach mutually satisfactory solutions. A voluntary approach to TDM was already tried at the time of "Licences for Europe" without achieving satisfactory results for researchers as explained in the problem definition. Despite market-related progresses following the commitments taken by STM publishers as a result of Licences for Europe there is no indication that a voluntary approach would be more successful now, given the substantial reluctance of researchers' representatives to engage in discussions based on a licences-based approach to TDM for the reasons explained above (potential persistence of different TDM conditions required by different publishers in the face of the large scale of content which has to be mined in the context of research)In addition, problems related to the risk of increasing fragmentation in the single market as a consequence of MS adoption TDM exceptions, under different conditions, at national level cannot be solved by a voluntary approach and require, by definition, legislative intervention at EU level. Rightholders Impact on TDM licensing market and the revenues thereof: this option is likely to result in some increase in costs for rightholders (notably publishers) because of the additional efforts they would have to undertake under a structured self-regulatory approach to develop mining infrastructures (notably "Cross Ref") and licensing offers. However, since public interest research organisations are not likely to react favourably to these efforts (see above), this option is not likely to bring about additional licensing opportunities for publishers. The commercial market would not be addressed by stakeholder dialogues and therefore the impact on publishers as regards commercial revenues would remain the same as for the baseline. Impact on the protection of content: Cooperation with researchers in the context of structured stakeholder dialogues may improve to some extent the convergence and users' acceptance of 112 technical safeguards applied by publishers in the context of licences. As above, publishers may incur additional costs arising from the technical safeguards acceptable to the researchers. However, given the fact that the voluntary approach is not likely to result in commonly agreed solutions as explained above, the overall impact of this option on the protection of content is likely to be similar to the baseline. SOCIAL IMPACTS Similar to the baseline as measures under this option have a voluntary character and are therefore not expected to fully solve the legal uncertainty faced by researchers as regards TDM. IMPACTS ON FUNDAMENTAL RIGHTS Impact on copyright is the same as for the baseline. The impact on the right of freedom of art and science would be only slightly positive. Option 2 – Mandatory exception covering text and data mining for non-commercial scientific research purposes IMPACTS ON STAKEHOLDERS Researchers Impact on legal certainty and transaction costs: positive impact on researchers as legislative intervention introducing a harmonised exception would increase legal certainty and reduce rights clearance costs. Researchers would be able to mine scientific publications subscribed to by their institution in full legal certainty as long as this is done for non-commercial scientific research. In addition, transaction costs for public interest research organisations could be considerably reduced. Comprehensive quantitative data on the transaction costs incurred by research organisations seeking authorisation for TDM are not available. However, some quantitative estimation of the costs saving can be generated on the basis of case-studies provided by researchers' representatives.354 These examples point to costs ranging between 3,399 and 18,630 GBP for a research project based on mining 3,000 articles published in 187 journals by 75 different publishers.355 On a yearly basis, these transaction costs (and the related savings) have been estimated to go up to 500,000 GBP for a large research university.356 There is also some first indication of a positive impact on scientific research projects based on TDM of the exception for non-commercial TDM introduced in the UK in 2014,357 which has comparable features to the exception considered under this option. Quantitative data on the impact of the UK law are not available yet. 354 The case studies all refer to the UK before the adoption of the 2014 exception and also predate the developments following the Licences for Europe dialogue. 355 Wellcome Trust, 2012, Box 2 p.10, cited in the study Assessing the economic impacts of adapting certain limitations and exceptions to copy-right and related rights in the EU, http://ec.europa.eu/internal_market/copyright/docs/studies/140623-limitations-economic-impacts- study_en.pdf, pp. 68-69. In other cases researchers have given examples of mining projects requiring authorisation from 120 different publishers: Ross Mounce: presentation in Licences for Europe (2013): http://www.slideshare.net/rossmounce/content-mining 356 Source: ECL. Data calculated on the basis of a team of 10 extra staff plus academic time needed to ensure that researchers are compliant. 357 New projects have been reported by researchers representatives in the UK to the UK IPO after the UK TDM exception was introduced in 2014, notably in the field of medicine and biology. These include Mining academic literature for molecular pathways found in Alzheimer’s and Parkinson’s disears to identify new targets for drug development; National Centre for Text Mining (NaCTeM) collaboration with US Defense Advanced Research Projects Agency (DARPA) to mine biomedical tests to look for 113 In spite of the positive impact of this option for public interest research organisations, some legal uncertainty could remain because of the "non-commercial scientific research purposes" condition. Researchers have raised the concern that a significant grey area would remain as regards research projects carried out by public interest research organisations which may eventually have a commercial outcome (as a result of a transfer of technology agreement or other). This grey area may cast doubts in particular on research organisations' partnerships with private operators (PPPs) which represent a large part of publicly funded (at EU or national level) research projects.358 This option may in theory lead to an increase in subscription fees for public interest research organisations if publishers raise the subscription fees to compensate for possible losses caused by the exception (i.e. publishers may try to absorb the value of TDM in the subscription fee). However, there is no evidence of any significant rise in the fees of subscription licences which have included TDM over the last few years.359 Rightholders Impact on TDM licensing market and the revenues thereof: Under this option rightholders, notably scientific publishers would no longer be able to authorise or prohibit TDM of the content they give researchers access to (as long as this is done for non-commercial scientific purposes). However, this impact would largely be reduced by the "lawful access" condition,360 i.e. by the fact that the exception would not affect publishers' ability to continue to authorise or prohibit access to their content and to generate revenues from selling subscriptions to universities and other research organisations.361 As a consequence this option is not likely to result in substantial changes to the publishers' business model, in particular as regards their subscriptions market. Publishers would in principle lose the ability to licence TDM as a self- standing use; however there is currently no evidence of a specific TDM market separate from the subscription market in the academic/non-commercial context.362 The trend over the last few years has been for STM publishers to gradually include TDM in the subscription licences without significant increase of licences fees (as mentioned above). This seems to confirm the absence of a significant extra value of TDM in the context of current subscription licences. Similarly to STM publishers, the "lawful access" condition would substantially mitigate the impact on other rightholders whose content could be relevant for mining purposes. Press publishers have brought forward some examples of licences with research organisations new cancer pathways; and Biotechnology and Biological Sciences Research Counsil (BBSRC) funded project to mine images to extract phylogenetic relationships (relating to evolutionary history and biology) from journal figures/illustrations to draw new conclusions in the field. The positive impact on TDM activities of UK TDM exception has also been reported by LIBER at their intervention at the European Commission Roundtable on TDM, February 2015: http://libereurope.eu/blog/2015/02/23/liber-argues-for-pan-european-tdm-exception/ 358 In the context of the 7th Research Framework Programme, about 34 % of all consortia included at least one private for profit entity together with non-commercial players (e.g. universities or research organisations). Roughly 67 % of the EC contribution was spent for these mixed consortia. It is likely that these projects will be excluded from the scope of the exception. 359 See also baseline. Data on the impact on the subscription fees of the legislative reform in the UK which has introduced a TDM exception are not yet available. 360 CRA study "Assessing the economic impacts of adapting certain limitations and exceptions", May 2014, p.73. 361 Subscription licences with public interest research organisations represent around 70 % of STM publishers global revenues. The main revenues linked to journal publishing are generated by academic library subscriptions (68-75 %), see STM 2015 report. 362 CRA study, p. 77. 114 permitting TDM in addition to access to their content.363 In some fields, such as linguistic research, newspapers may be an important source for analysis, and TDM may be the main feature of licences (i.e. users primarily want to mine the content rather than to read it). In these cases newspaper publishers (and other rightholders that may be in a comparable situation) would in any case be able to factor in the value of TDM in the licence fee, given that they would remain in control of the decision whether authorise or prohibit access to the content. Impact on the protection of content: Today rightholders may impose on users, through TDM licences clauses, technical conditions which they consider important, among other things, to prevent unauthorised uses of the content being mined and protect the technical stability of their databases. As described in Annex 11B, these measures are, for example, APIs for automated downloading, access limited to a determined range of IP addresses or other user authentication measures, limits on the speed or number of downloads, etc. In view of the current limited self-standing economic value of TDM in licences with universities/public research organisations (see above), the possibility for STM publishers to impose such conditions is often invoked as a key reason for them to retain the ability to licence TDM. These rightholders' concerns would be mitigated by the introduction in legislation of a provision allowing content owners to apply proportionate measures necessary to guarantee the security of their systems without unduly hampering TDM. Additionally, stakeholder dialogues would encourage the identification of mutually agreed technical solutions and best practices (see the description of the option above). SOCIAL IMPACTS Positive impact as the harmonisation of the EU legal framework for researchers carrying out TDM is expected to contribute to improving Europe's potential as a research area on the worldwide scale, including its ability to retain and attract top quality researchers, with the ensuing positive consequences in terms of scientific and societal progress. The research productivity gains which could be triggered by a clarification of the EU rules applicable to TDM have been estimated by some at 2 % and the impact on GDP growth at 0.26 %.364 IMPACTS ON FUNDAMENTAL RIGHTS There would be an impact on copyright as a fundamental right but the current balance between rights and exceptions will not be substantially altered by this option, as EU law already contains exceptions allowing uses of IP protected content for the purposes of non- commercial scientific research. The impact on freedom of art and science would be positive. 363 Comprehensive data and information on the size and value of the TDM licensing market for press publisher is not available. However, the Commission has received information from specific press publishers indicating that at least in their cases TDM licences constitute a relevant business opportunity. These revenues would remain unaffected under this option due to the lawful access condition. 364 See Chapter 3 in the Expert Group Report (2014) on "Standardisation in the field of Text and Data Mining, http://ec.europa.eu/research/innovation-union/pdf/TDM-report_from_the_expert_group- 042014.pdf 115 Option 3 – Mandatory exception applicable to public interest research organisations covering text and data mining for the purposes of both non-commercial and commercial scientific research IMPACTS ON STAKEHOLDERS Researchers Impact on legal certainty and transaction costs: Similar positive impact as under Option 2 as regards both legal certainty and reduction of transaction costs, as a result of the introduction of an exception harmonised at EU level. Additional positive impact as this option would remove the legal uncertainty and the grey area as regards the research projects carried out by public organisations with a possible commercial outcome, including in cooperation of these organisations with private partners (PPPs). Corporate research users Commercial companies are not among the beneficiaries of the exception under this option. They have generally not asked EU intervention in this area as a B2B licensing market exists (see Option 4). This option is not expected to have a significant indirect impact on these players as their needs in relation to TDM are generally different than those of universities and other public interest research organisations (see Option 4). Rightholders Impact on TDM licensing market and the revenues thereof: The legal technique to define the scope of the exception is different, however this option is not expected to have a substantially different impact on rightholders than Option 2. In particular, the fact that the exception would not be subject to the "non-commercial purposes" condition is compensated by the application of the exception only to research organisations. The mitigating effect of "lawful access" condition would apply also under this option (see above) and as a result the intervention is not expected to result in significant changes to the publishers' business models, in particular as regards their subscription market. Like Option 2, this option would leave untouched the purely commercial TDM market which constitutes an important source of licensing revenues for STM publishers (e.g. licences with life science companies- see Option 4). Impact on the protection of their content: Similar to Option 2. SOCIAL IMPACTS Similar or larger positive impacts than under Option 2 because of increased legal certainty for researchers under this option. IMPACTS ON FUNDAMENTAL RIGHTS Increased impact on copyright since the present option is not limited to non-commercial purposes. However, the impact is mitigated by the “lawful access” condition and the fact that the beneficiaries would not include commercial operators. In all the current balance between rights and exceptions in the area of research is only going to be altered in the margins by this option. On the other hand this option would have an incremental positive impact on the freedom of art and science. 116 Option 4 – Mandatory exception covering applicable to anybody who has lawful access (including both public interest research organisations and businesses) covering text and data mining for non-commercial and commercial scientific research purposes. IMPACTS ON STAKEHOLDERS Researchers Impact on legal certainty and transaction costs: The impact of Option 4 on research organisations is similar to Option 3. Corporate research users Differently from the other options, because of the broader scope of application of the exception, Option 4 would specifically benefit researchers in commercial companies as they would no longer need a specific licence to mine content to which they have lawful access to. However, corporate users, notably life-science companies, benefit today from a functioning licensing market for TDM of scientific publications and they have not requested any intervention at EU level. TDM is often licensed to these users as part of a wider licensing agreement with rightholders including several uses and services that go well beyond what the exception would allow them to get for TDM purposes (notably in terms of formats, structured data, getting direct feeds into their own databases etc.). Therefore corporate users are likely to continue to purchase value added services from content owners. This option also entails a risk that publishers may increase the subscription fees for commercial users to compensate for the loss of TDM related revenues (this is more likely to happen with corporate users than with universities because of the different purchasing power, at least as regards larger commercial operators).365 Rightholders Impact on TDM licensing market and the revenues thereof: This option would have a more significant negative impact on rightholders. As a consequence of the broad scope of the exception, STM publishers would no longer be able to licence TDM for scientific research purposes to commercial players, which represent an essential market for them, notably in areas such as life science and pharmaceutical.366 Industry estimates the value of the commercial TDM market (in Europe) to be worth more than 56 million euros by 2019.367 Two major STM publishers alone currently have 302 existing TDM licences with life science companies, which is a significant figure given the characteristics of the market.368Publishers indicate that the use of TDM is also increasing outside the life science and pharmaceutical industry, including in sectors such as financial services and chemical manufacturing.369 Similarly to the other legislative options, this option would in principle not remove rightholders' ability to generate revenues from selling access to their content. However, deals between STM publishers and corporate users usually include TDM as part of comprehensive agreements covering a whole series of usage rights and added value services mentioned 365 In that sense, it is noteworthy to mention (at least as an indication) that some open access publishers already charge more for a CC-BY licence (allowing commercial use) than for a CC-BY-NC licence (not allowing commercial use), in order to compensate the loss of revenue linked to commercial reuse (See STM report (2015), p. 21). 366 According to the 2015 STM report "TDM is most common in life sciences research, in particular within pharmaceutical companies, but relatively little used elsewhere" (2015 STM report, p. 146). Increase though is reported in the chemical manufacturing sector (See Annex 11A). 367 Source: STM. 368 Publishing industry sources. 369 For more information, see Annex 11A. 117 above. The introduction of an exception would lower the value of these agreements, since TDM rights as such can no longer be subject to licence. Rightholders may try to compensate the value lost as a consequence of the legislative intervention by raising licences fees for access and other uses/value added services. However, it is not clear whether and to what extent they would manage to do so. Therefore this option is likely to bring about compliance costs and more significant changes to rightholders' business models than under the previous legislative options. The impact is likely to be all the more significant given the TDM commercial market's growth potential. Impact on the protection of their content: Similar as Option 2 but the level of the impact would be higher due to a wider range of users potentially covered by this option. SOCIAL IMPACTS Similar to Option 3. IMPACTS ON FUNDAMENTAL RIGHTS There would be a more negative impact on copyright as a fundamental right as the current balance between rights and exceptions in the area of research set by the current EU legal framework would be altered more substantially. The impact on freedom of research would be positive. 4.3.1. How do the options compare? Option Effectiveness Efficiency Impact on Social stakeholders Impact/Impact on Fundamental Rights Baseline (0) Legal (0) No direct costs (0) Impacts on (0) No direct social uncertainty for associated with the stakeholders would impact or or impacts digital/online and baseline option depend on reforms at on fundamental cross-border uses national level or rights as a would persist developments in the consequence of EU licensing market action. Option 1 – (0/+) Not likely to (0/-) Limited costs (0/+) Main impacts (0/+) Problems Fostering be effective due to for rightholders on stakeholders which contribute to industry self- unwillingness of the who take would depend on slow down Europe regulation parties to find commitments (need commitments taken as a research area initiatives mutually to change existing by industry. likely to remain without changes satisfactory licensing to allow largely unsolved to the EU legal solutions on the TDM for scientific (0) No impact on framework basis of the current research purposes). copyright. legal framework. (0/+) Slightly positive impact on the right of freedom of art and science. Option 2 – (+) Would ensure (-) Limited (+) Increase in legal (+) Positive social Mandatory increased legal compliance costs certainty and impact on Europe's exception certainty for for rightholders reduction of attractiveness as a covering text researchers carrying because of the need transaction costs for research area. and data mining out TDM for non- to adapt licences researchers carrying (-) Limited negative for non- commercial with public interest out TDM for non- impact on the right commercial purposes research commercial purpose. of property scientific organisations Some legal (+) Positive impact research following the uncertainty persists on the right of introduction of the for PPP research freedom of art and exception. projects. science. (-) Limited negative 118  effect on publishers' TDM licensing market Option 3 – (++) Would ensure (-)Limited (++) Increase in legal (+) Positive social Mandatory legal certainty for compliance costs certainty and impact on Europe's exception public interest for rightholders reduction of attractiveness as a applicable to research because of the need transaction costs for research area public interest organisations to adapt licences researchers, including (-) Limited negative research carrying out TDM with public interest for research carried impact on the right organisations both for research out via PPPs of property covering text commercial and organisations (-) Limited negative (+) Positive impact and data mining non-commercial following the effect on publishers' on the right of for the purposes purposes introduction of the TDM licensing freedom of art and of both non- exception market. science. commercial and commercial scientific research Option 4 – (++) Would ensure (--) High (++) Increase in legal (+) Positive social Mandatory legal certainty for compliance costs certainty and impact on Europe's exception researchers, for publishers who reduction of attractiveness as a applicable to including may need to transaction costs for research area anybody who researches in renegotiate a researchers carrying (--) Negative impact has lawful access commercial entities, significant number out TDM both for on the right of (both public carrying out TDM of business commercial and non- property interest both for agreements with commercial purposes (+) Positive impact organisations commercial and their commercial (--) As the exception on the right of and businesses) non-commercial customers would cover all freedom of art and covering text purposes researchers, including science. and data mining commercial for any scientific customers, this option research would have a purposes of both considerable negative non-commercial effect on publisher's and commercial TDM licensing scientific market research. Option 3 is the preferred option. This option would create a high level of legal certainty and reduce transaction costs for researchers with a limited impact on rightholders' licensing market and limited compliance costs. In comparison, Option 1 would be significantly less effective and Option 2 would not achieve sufficient legal certainty for researchers, in particular as regards PPPs. Proportionality and impact on MS: Option 3 allows reaching the policy objectives in a more proportionate manner than Option 4, which would entail significant foregone costs for rightholders, notably as regards licences with corporate researchers. In particular, Option 3 would intervene where there is a specific evidence of a problem (legal uncertainty for public interest organisations) without affecting the purely commercial market for TDM where intervention does not seem to be justified. In all, Option 3 has the best costs-benefits trade off as it would bring higher benefits (including in terms of reducing transaction costs) to researchers without additional foregone costs for rightholders. The preferred option is also coherent with the EU open access policy and would achieve a good balance between copyright as a property right and the freedom of art and science. 119 All MS would need to adopt legislation to implement the new exception on TDM in their legal orders. Those MS who have adopted specific TDM exceptions at national level may have to adapt them in order to take into account the scope of the EU exception. 4.4. PRESERVATION OF CULTURAL HERITAGE 4.4.1. What is the problem and why is it a problem? Problem: Preservation by cultural heritage institutions (CHIs) faces legal uncertainty in the new technological environment Description of the problem: An important function of libraries, archives, museums and other institutions is to preserve cultural heritage: 90 % of cultural heritage institutions (CHIs) responding to a recent survey carried out on behalf of Europeana declared that they have collections that need to be preserved for future generations.370 As in many cases preserving works requires copying them, the societal importance of preservation371 is reflected in national exceptions to the reproduction right for preservation purposes, which implement an optional EU exception for "specific acts of reproduction" by certain institutional users.372 The space allowed for preservation activities under national exceptions is however sometimes narrow, unclear, not adapted or explicit enough to cover preservation in digital environments and of works in digital form. It varies from MS to MS. This creates legal uncertainty for CHIs and can lead to desirable preservation activities not taking place. CHIs have generally reported problems with this situation.373 Preservation copying addresses for example the degradation of the original material and the disappearance of the technologies and devices underpinning its readability. The British Library, for instance, estimates that many of the 6,500 items that make up its sound collection, which come in 42 different physical formats, will become unreadable within 15 years in the absence of action.374 Technology allows for 'digitisation', i.e. the creation of digital equivalents or so-called 'surrogates' of works originally on analogue supports (for example paper), which is also done for preservation purposes.375 Furthermore, 'digital preservation', i.e. the preservation of works in digital form, both resulting from digitisation and 'born-digital' 370 G.J. Nauta – W. van den Heuvel, DEN Foundation on behalf of Europeana/ENUMERATE, "Survey Report on Digitisation in European Cultural Heritage Institutions 2015", June 2015. See Annex 9A for an overview and examples of CHIs in Europe and their holdings. 371 The importance of cultural heritage preservation is reflected in EU policy on digital cultural heritage, notably as outlined in the Recommendation of the European Parliament and of the Council of 16 November 2005 on film heritage and the competitiveness of related industrial activities (2005/865/CE), the Commission Recommendation on the digitisation and online accessibility of cultural material and digital preservation (2011/711/EU), the Council conclusions on the digitisation and online accessibility of cultural material and digital preservation (10-12 May 2012), and the Commission Communication "Towards an integrated approach to cultural heritage for Europe" (COM(2014) 477 final). 372 The exception applies to publicly accessible libraries, educational establishments and museums, as well as archives (Article 5(2)c of the InfoSoc Directive). Its implementation in MS covers preservation or similar notions (like 'conservation'), but can also apply to other or less defined library activities, like 'internal purposes of the institution' or 'administration and organisation' of the collections. 373 Notably in the 2013-2014 public consultation. 374 British Library, "Living Knowledge: the British Library 2015-2023", September 2015. 375 On the concept and purposes of 'digitisation', as applied to preservation and to the digitisation and dissemination of out-of-commerce works in the collections of CHIs (section 3.4), see Annex 9B. 120 works,376 raises specific issues. Those works can be subject to quicker degradation than content in analogue form, often with no notice to the human eye, and to quick technological obsolescence.377 Digital content can then require media migration and 'format-shifting', i.e. copying content onto more adequate media or formats.378 It can also warrant proactive preservation from the day works are acquired into a collection. Digital preservation is also seen as a continual process, rather than a series of discrete and occasional interventions. More generally, digitisation and digital preservation confront CHIs with complex, open technical questions and can imply considerable costs.379 CHIs indicate that a number of these challenges cannot be addressed by individual institutions, many of which will not have the resources to undertake digital preservation on their own. This is reflected in ongoing collaborative R&D and standardisation efforts, and an increasing interest in sharing infrastructure and work in networks, including across MS.380 The holdings of CHIs in the EU are vast: it was estimated that, for example, European libraries hold between 59 and 95 million individual book titles and museums almost 75,43 million works of art.381 Data on the copyright-protected portion of these is difficult to obtain, especially at aggregate level, but it is expected to be substantial, particularly for certain types of works: a study382 estimated the amount of public domain works, (i.e. those that are not protected by copyright) in CHI collections at only 12 % for books (in general in the EU), at 18 % for the British Library Sound Archive and at 30 % for musical compositions in the Cambridge University Library. It can therefore be expected that the problems described above potentially concern a large number of works in Europe. Drivers: [Variable, unclear and narrow implementation of the preservation exception in MS] The implementation in national laws of the current, optional EU exception applicable to preservation varies and can be limited and/or unclear in scope.383 This can be the case for the 376 'Born-digital works' are works that were created directly in digital form, as opposed to a conversion from an analogue source. 377 The British Library's "Digital Preservation Strategy 2013-2016" (March 2013) describes these characteristics as the "inherent instability and transient nature" of digital content. 378 These practices are for example acknowledged as "essential" for preservation purposes in the 2012 "Statement on the Implementation of (Statutory and Voluntary) Deposit Schemes for Non-Print Publications" by the Conference of European National Librarians (CENL) and the Federation of European Publishers (FEP). The choice of the best media or formats for preservation purposes depends on a variety of factors like for example the level of their adoption, any dependencies on other formats and systems, size and complexity aspects etc. 379 A recent study estimated in €500 million the cost of preserving the DE film heritage alone ("DE 2015- 2013 national report on the implementation of the Commission Recommendation on Digitisation and Online Accessibility of Cultural Material and Digital Preservation"). A cultural heritage expert described digital preservation to Commission services as "a new science". 380 This aspect, along with issues related to the national implementation of the current exception for 'specific acts of reproduction' emerged frequently in institutional user responses to the 2013-2014 public consultation. 381 See Annex 9A for estimations and data on the magnitude of CHIs collections at aggregate and institutional level. 382 R. Pollock – P. Stepan, "The size of the EU public domain", 2009. The study only aimed at providing a gross estimation of the public domain in Europe and is based on a number of approximations. See also J. Boulanger et al., "Assessing the economic impacts of adapting certain limitations and exceptions to copyright and related rights. Analysis of specific policy options", Charles River Associates, May 2014. 383 See J-P. Triaille et all., "Study on the application of Directive 2001/29/EC on copyright and related rights in the information society", De Wolf & Partners, December 2013, European Commission, "Report on the Implementation of Commission Recommendation 2011/711/EU – 2013-2015", 2016, and European Commission, "Report on the Implementation of the European Parliament and Council Recommendation on Film Heritage 2012-2013", 2014. 121 categories of beneficiary institutions: for example the exception only refers to archives in DE. Certain categories of works can also be excluded from the scope of the national exception, like in IT where record and film archives can only reproduce phonograms and videograms. The specific purposes and uses allowed and other applicable conditions also change: the possibility of making digital copies, like in EE, or format shifting, like in NL, is rarely explicitly covered in other MS. This can for example prevent a library from creating a digital equivalent of a sound recording from an analogue support. The number of copies that may be made can be limited to one, like in IT, contrasting with the need of multiple copies that is often inherent to digital preservation. [Disproportionate transaction costs] Where an exception is not applicable, the potential transaction costs implied by the need for CHIs to obtain authorisation from rightholders can be disproportionate: if on the one hand the time and resources required to establish the copyright status of works, find and contact rightholders and obtain their authorisation can be considerable,384 on the other hand the likelihood that rightholders refuse authorisations or seek remuneration is low as suggested by relevant case studies.385 The economic value of a possible licence only covering this use is likely to be insignificant, considering the limited economic interest for rightholders of copies that are made for no other purpose than preservation of works that CHIs already have. The authorisation of rightholders for preservation copying is in some particular cases explicitly foreseen. However, this normally occurs as part of broader licences or agreements that are first and foremost concerned with access to works by CHIs (and its final users) and/or their acquisition of permanent copies (which they can then permanently host, e.g. on their servers, for subsequent preservation). These licences do not have as their primary focus the conditions of preservation (the problem addressed here), and exist in some specific contexts only, notably in instruments on voluntary deposit of works386 concluded between certain categories of rightholders and CHIs, and in scientific publishing licences. The latter can alternatively also refer preservation to well-established third-party specialised 384 These transaction costs can be reduced by the effect of innovative tools and projects like ARROW and FORWARD (see more in Annex 9I), and the database foreseen by the Orphan Works Directive. Except for the Orphan Works database, these tools are however only relevant for a part of the relevant transaction costs and are only available for certain types of works. 385 For example, in a project carried out by ANLux, the national archives of Luxembourg, related to photographs from the 1950-1970s, most authorisations sought from 22 photographers (or their heirs) were provided for free. In a separate example, only one out of the 17 rightholders that gave authorisation to digitise their work asked for a fee (see: B. Stratton, "Seeking new landscapes. A rights clearance study in the context of mass digitisation of 140 books published between 1870 and 2010", 2011). As being about digitisation and making available of works (rather than preservation), these examples belong to the uses treated under section 3.4, and are used here by analogy on the reasonable assumption that the value for rightholders of making available of a work online is higher than that of simple preservation copying. They are illustrated more in detail in Annex 9D. 386 For example the 2012 "Statement on the Implementation of (Statutory and Voluntary) Deposit Schemes for Non-Print Publications" by the Conference of European National Librarians (CENL) and the Federation of European Publishers (FEP), and the 2010 Framework Agreement to Establish Procedures for Voluntary Deposits of Film with Preservation Archives concluded between the Association of European Film Libraries (ACE) and the International Federation of Film Producers Associations (FIAPF) and the associated template for bilateral agreements. The acquisition of copies by CHIs does not require agreements with rightholders where deposit is a legal obligation. This type of agreements can however still be relevant in that context for other aspects, like for example cooperation between parties on delivery methods or formats, and conditions for access of works by end-users. 122 organisations.387 Rightholders often referred to these solutions as responding well to the current preservation needs.388 Consequences: The lack of timely preservation of works is first and foremost a cultural and social concern, and the extent of the problem is difficult to quantify. Variations in the scope of national preservation exceptions are also an obstacle to cooperation possibilities and efficiency gains that can be achieved in the single market. For example, a frequent practice in digital preservation is to store different digital copies of the same work in a minimum number of separate locations, each requiring dedicated infrastructure. Divergent legal frameworks can be a barrier to the possibility to share such infrastructure among CHIs located in different MS, and therefore have an impact on the broader problem of high technical costs associated to digital preservation. How the problem would evolve: The future evolution of the problem is difficult to predict, but its general magnitude is likely to increase over time, given the gradual shift to digital in the production, dissemination and preservation of works, as shown by the fact that already today on average 60 % of CHIs collect born-digital material.389 This trend is clear in the individual institution examples like the British Library, which estimated the digital content stored in its long-term digital library system to amount to 280 terabytes and 11,500,000 items in 2013, with an expected increase to approximately 5 petabytes by 2020.390 Some MS have recently modified their national exceptions, for example the UK, but such evolution cannot be expected to take place spontaneously in a coordinated manner across the EU. 4.4.2. What are the various options to achieve the objectives? The general and specific objectives are described in section 4.1.3. Baseline No policy intervention. Reproduction of works for preservation purposes by CHIs would continue to take place only as permitted under the different conditions and the varying space provided by the national implementation of the existing EU exception for 'specific acts of reproduction', or after the reproduction right has been cleared with rightholders if CHIs consider that the transaction costs involved is for them worth and possible to incur. In voluntary legal deposit contexts and for parts of scientific publications that libraries have 387 In scientific publishing, subscription licences to electronic resources that are made available remotely to library users by a publisher can also foresee the delivery of a permanent archival copy to the contracting library and preservation copies as part of authorised uses. According to a survey by the International Association of Scientific, Technical and Medical Publishers (STM) among a part of its members, 87% of subscription licences allowed for preservation copies by the licensee or foresaw other preservation arrangements. The latter include systems, based on cooperation between publishers and research libraries, which usually entrust preservation to third-party entities, based on prior authorisation by publishers. Well-known examples are the e-Depot (managed by the Dutch National Library), LOCKSS, CLOCKSS, and Portico. These mechanisms are however also concerned with the subsequent making available of works under certain conditions (notably 'trigger events', for example the publisher being no longer in business). An overview of these 'keeper' initiatives is available from the Keepers' Registry (http://thekeepers.org). 388 Including in the 2013-2014 public consultation. 389 G.J. Nauta – W. van den Heuvel, DEN Foundation on behalf of Europeana/ENUMERATE, "Survey Report on Digitisation in European Cultural Heritage Institutions 2015", June 2015. See also Annex 9A for examples of the extent of digital collections. 390 British Library, "Digital Preservation Strategy 2013-2016", March 2013. 123 access to remotely, preservation could continue to take place within broader agreement-based systems.391 Stakeholders' views CHIs consider that the identified problems would not be solved in the absence of policy action. Rightholders, on the contrary, overall maintain that the current legal framework for preservation by CHIs is adequate and would be in favour of no intervention.392 Option 1 - Guidance to MS and peer review mechanism on the implementation of the EU exception on 'specific acts of reproduction' for preservation purposes  The Commission would provide guidance on the maximum scope of the current exception on 'specific acts of reproduction' as applicable to preservation purposes (categories of works, including those born-digital, beneficiaries and uses), while ensuring compliance with the three-step test.  In addition, it would also initiate a 'peer review' among MS aimed to the comparison of national implementations of the EU exception and mutual learning as to the maximum space that it allows. Stakeholders' views Some CHIs would see some value in this option as possibly leading to a more shared understanding of the challenges of preservation in the digital age and to legislative change in individual MS. They would however consider it also insufficient, notably with regard to collaboration in cross-border contexts. Rightholders would consider this option unnecessary for the same reasons as outlined under the baseline scenario. Option 2 - Mandatory harmonised exception for preservation purposes by cultural heritage institutions This option would require MS to implement a mandatory exception to the reproduction right with the following elements:  Beneficiaries: CHIs engaged in preservation activities, i.e. publicly accessible libraries, museums, as well as archives and film or audio heritage institutions. Beneficiaries would be allowed to outsource activities covered by the exception, for example to technical service suppliers.  Subject-matter covered: all types of works and other protected subject matter in the permanent collection of the beneficiaries, intended as works on carriers (e.g. books, minidisc, tapes) that they own or are permanently deposited with them, or embodied in files that they already own or host on a permanent basis (for example as a result of a contractual agreement allowing for the downloading or transfer of archival copies for permanent hosting, or of legal deposit legislation).  Permitted uses: beneficiary institutions would be able to perform all acts of reproduction and make as many copies as necessary for preservation purposes, into any format and media, irrespective of the technique used and of the state of a given work (for example, even before degradation has started). The exception would only cover the reproduction right (and the database extraction right in the case of the protection of non-original datasets). It would as such not permit further distribution or uses of the content, for example its making available. 391 See section 4.4.1. 392 This position was very broadly shared among right holder respondents in the 2013-2014 public consultation, which emphasised preference for licensing solutions and voluntary cooperation. 124  Relationship with the licensing market: as applicable to permanent collections as described above, the exception would per se have no bearing on the ability of rightholders to authorise or prohibit the acquisition of permanent copies by CHIs, and more generally on the licensing market, and their ability to take measures to preserve the stability and security of their systems through which access to electronic resources is provided.  Compensation: for the reasons explained in the previous point, MS may not subject the exception to fair compensation.  Interaction with the current exception: outside of the scope of this mandatory exception, the existing (optional) exception for 'specific acts of reproduction' under Article 5(2)c of the InfoSoc Directive would continue to apply, as relevant in uses other than preservation. Stakeholders' views CHIs would favour this option as the one that best addresses the problems they raise with the current situation.393 Rightholders would, on the contrary, consider it unnecessary and/or excessive. 4.4.3. What are the impacts of the different policy options and who will be affected? Approach The options presented above would mainly affect institutional users (CHIs) and rightholders whose works are copied to be preserved. The impacts affecting these two groups are presented separately.  For CHIs, the social impact in terms of legal certainty in the preservation of copyright-protected cultural heritage has been considered. Economic impacts in terms of potential transaction costs are also referred to in this context as relevant.  For rightholders, the main impacts are economic and related to revenues and to the licensing market for access to electronic resources. These impacts are relevant for all types of rightholders, with the latter being of particular concern for those primarily engaged in licensing for access to electronic resources with CHIs (notably publishers and producers). The policy options are also assessed in relation to their general social impacts (on cultural diversity and the preservation of cultural heritage more broadly) and impacts on fundamental rights (property right, freedom of the arts and sciences, and right to education). The assessment below is mainly qualitative, as the relevant data that are publicly available or that could be obtained from stakeholders is limited. Baseline IMPACTS ON STAKEHOLDERS CHIs Impacts on legal certainty for preservation of cultural heritage: In the short term, the situation would not substantially change for CHIs. They would enjoy a narrow or larger space for preservation depending on the MS in which they carry out their preservation activities. Except in cases where MS may update their implementation of the current EU exception for 'specific acts of reproduction' to exploit its full space for preservation purposes, legal uncertainty and barriers to preservation will persist to varying degrees in the long term too. Furthermore, due to different national laws, legal uncertainty for CHIs wishing to perform preservation of works abroad, for example through shared infrastructure, will remain, therefore hampering the ability to take advantage of economies of scale. Preservation of certain types of electronic content, mainly a number of scientific publications that CHIs access remotely from publisher or other platforms' servers, or those that they 393 Institutional respondents in the 2013-2014 public consultation largely favoured legislative interventions. 125 receive on the basis of voluntary deposit agreements, will continue to take place on the basis of authorisations that are included in agreements with a broader scope.394 Rightholders Impact on revenues: Rightholders could in theory obtain extra revenues in those cases where CHIs, in order to make preservation copies that are not covered by a national exception or the agreements mentioned above, decide to ask for a specific authorisation. Given the negligible economic significance of preservation copying of works that have already been permanently acquired by a CHI, it is unlikely that rightholders would ask, and that CHIs would be ready to pay, significant fees. Impacts on licensing market for electronic resources: There would be no specific impact on the licensing market for access to electronic resources. Rightholders would still be in the position to negotiate the transfer of permanent copies to CHIs as part of licences.395 SOCIAL IMPACTS Incentives for creators to produce more and diverse content would not change, but some of this content could go lost for lack of preservation in the long term, with a possible negative impact on cultural diversity. Persisting legal uncertainty and national variations might limit or reduce the rates of works in CHIs that are preserved, with possible negative effects on the ability of society at large to see their heritage preserved as a public good in the long term, and therefore on the development of the arts, science, education and social development more broadly. This option also has no specific contribution to the objectives of EU's policy on digital cultural heritage preservation. IMPACTS ON FUNDAMENTAL RIGHTS No impact on copyright as a property right, as recognised by Article 17(2) of the Charter of. No tangible impact on the arts and scientific research, relevant for the freedom of the arts and sciences (Article 13), nor on education, protected under Article 14. Option 1 – Guidance to MS and peer review mechanism on the implementation of the EU exception on 'specific acts of reproduction' for preservation purposes IMPACTS ON STAKEHOLDERS CHIs Impacts on legal certainty for the preservation of cultural heritage: Individual MS may decide to update their national legislation. This would result in a variably improved environment for CHIs to make preservation copies at national level. On the one hand, this effect could be felt earlier than a legislative option. Given the non-binding nature of this option, it is unlikely that the scope of national exceptions is brought up to speed with the needs of digital preservation in all MS and that discrepancies disappear. As a result, the option would not substantially facilitate preservation acts carried out in MS other than the one in which a given CHI is established. The impact on the environment for preservation, notably in terms of legal certainty would be limited, depending on the decisions of individual MS. 394 Including through systems like the e-Depot of the Dutch National Library, LOCKSS, CLOCKSS, and Portico. 395 Except if other areas of law limit this possibility, notably possible legal deposit obligations. 126 A Recommendation of the European Parliament and Council, a Commission Recommendation, and EU Council Conclusions already made a number of recommendations to MS for a more conducive legal environment regarding reproductions for preservation purposes.396 Relevant implementation reporting397 indicates however that, despite a slight increase in time in the number of MS reporting explicit provisions for multiple copying and format-shifting, national variations continue to exist in this area, as regards the scope of exceptions. As in the baseline scenario, under this option the preservation of certain works, mainly in the area of scientific publishing or voluntary legal deposit practices, could continue to take place based on authorisations from rightholders as part of broader agreements. A possible larger scope of national preservation exceptions is unlikely to affect such arrangements, as they are also required for the acquisition/delivery of permanent copies to the CHIs in the first place and can also cover access to works (not only their preservation). Rightholders Impacts on revenues: Missed revenue opportunities for rightholders due to the possible expansion of the scope of national exceptions under this option are expected to be minimal, given that they would still regard reproductions for preservation purposes only. The possible increase in preservation copies, as a result of a larger space under national exceptions, can have a slight downward impact on the number of copies that CHIs might have purchased on the market with preservation purposes in mind, in those cases where the national exception previously did not allow them to make copies. Impacts on licensing market for electronic resources: The impact would be similar as in the baseline scenario. SOCIAL IMPACTS Similar impact to the baseline scenario on cultural diversity in the short term, with some possible positive impact in the long term deriving from higher preservation rates. Positive impact also on society at large in the long term, in terms of heritage, as a public good, being preserved in the long term. Such impact, as well as the contribution to the objectives of the EU's policy on digital cultural heritage preservation, would be subject to the same limitations described under "Impacts on legal certainty for the preservation of cultural heritage" above, as they are dependent on the will of the MS to expand the scope of their relevant exceptions. 396 Under "Preservation", the Recommendation of the European Parliament and of the Council of 16 November 2005 on film heritage and the competitiveness of related industrial activities (2005/865/CE) recommended MS to adopt measures to include "the reproduction of films on new storage media". The Commission Recommendation on the digitisation and online accessibility of cultural material and digital preservation (2011/711/EU) recommended MS to "make explicit and clear provision in their legislation so as to allow multiple copying and migration of digital cultural material by public institutions for preservation purposes, in full respect of European Union and international legislation on intellectual property rights". A similar objective for 2012-2015 was included in the Council Conclusions on the digitisation and online preservation of cultural material and digital preservation of 10-11 May 2012 which invited MS to "ensure long-term digital preservation". 397 European Commission, "Report on the Implementation of Commission Recommendation 2011/711/EU – 2013-2015", 2016, and European Commission, "Report on the Implementation of the European Parliament and Council Recommendation on Film Heritage 2012-2013", 2014. 127 IMPACTS ON FUNDAMENTAL RIGHTS See baseline scenario. Option 2 – Mandatory harmonised exception for preservation purposes by cultural heritage institutions IMPACTS ON STAKEHOLDERS CHIs Impacts on legal certainty for preservation of cultural heritage: This option would be effective for CHIs as all of them (including for example museums and film heritage institutions in all EU MS) would be in the position to carry out preservation reproductions of works in their permanent collections with legal certainty and with digital technologies. This option would in practice cover preservation in digital environments, extend the range of beneficiaries in those MS where the current national exception excludes certain types of CHIs, and the range of works in those national cases where some categories are not currently contemplated. This would reflect the current reality of a wide variety of different types of works present in the collections of most individual institutions: for example, estimates suggest that 80 % of museums also have text-based materials in their collections, while 74 % and 54 % of libraries also hold visual and audio/video materials respectively.398 The same scope of the national exception across the EU would also lift uncertainty regarding preservation reproductions done in MS other than the one where CHIs are established. This would benefit economies of scale and collaboration. The option would also eliminate the potential transaction costs related to clearing rights for preservation copies, as clearly illustrated by an estimation by the UK government that put at GBP 25.9 million per year (of which 15.5 for institutional users and 10.4 million for rightholders) the savings in reduced administrative costs at national level deriving from extending the national preservation exception to extra categories of users and to all works.399 Whereas a solid estimation of the increase of the preservation rates of works held by CHIs is not possible, the effect of this option can be expected to be substantial as it removes the key copyright obstacle to preservation activities. As in the previous options, preservation copying of certain works (part of scientific publishing, works covered by voluntary deposit arrangements) could still be contemplated as part of agreements with rightholders. The same exception across the EU is not likely to affect these practices for the same reasons explained under Option 1. Rightholders Impacts on revenues: While this option implies the introduction of a new harmonised exception, the impact in terms of missed revenue is likely to be minimal for the same reasons as per Option 1, as this exception would only apply to works that CHIs already have in their permanent collections and have no bearing on the acquisition of permanent copies into a collection. Rightholders could lose some revenue from replacement copies that could have been bought on the market in the absence of an exception, but that effect is expected to be negligible. Works enjoying a longer life thanks to preservation has a potential positive effect 398 G.J. Nauta – W. van den Heuvel, DEN Foundation on behalf of Europeana/ENUMERATE, "Survey Report on Digitisation in European Cultural Heritage Institutions 2015", June 2015. For further data on the diversity of works within individual CHI collections see Annex 9A. 399 UK Government, "Impact assessment on copyright exception for archiving and preservation", 2014 (http://www.legislation.gov.uk/ukia/2014/157/pdfs/ukia_20140157_en.pdf). 128 on the revenues of rightholders in terms of possible future uses of the works and therefore licensing revenue. Impacts on licensing market for electronic resources: As the exception only applies to works that are already in the permanent collection of a CHI, the option would have a similar impact as in the baseline scenario and Option 1, including as regards the ability of rightholders to take measures to preserve the stability and security of the systems through which they deliver electronic content. SOCIAL IMPACTS Positive effect on cultural diversity as this option is liable to increase preservation rates to a significant extent while not substantially affecting incentives to create for rightholders. This would have a positive effect on society at large in the long term, with positive spill-over effects on the arts, science, education and social development. This option would not only benefit citizens of MS where a preservation exception is currently missing, or restricted or unclear in scope, but also those of MS where it is already present. This is because European cultural heritage is often dispersed across different MS:400 parts of the cultural heritage of a MS that currently has a broad preservation exception might be held by CHIs in MS where there is currently a narrower exception. The contribution of this option to the objectives of the EU's policy on digital cultural heritage preservation would be substantial, as it would take away key obstacles (copyright clearance and uncertainty) that CHIs are faced with today when they want to make preservation copies in their collections. IMPACTS ON FUNDAMENTAL RIGHTS The introduction of an EU-level compulsory exception to the reproduction right for preservation purposes would have a marginal impact on copyright as property right, as recognised by Article 17(2) of the Charter, as it would only apply to authorisations for preservation copies by CHIs. By supporting more preservation of works and their longer term availability, it can also have a positive impact on the arts and scientific research, relevant for the freedom of the arts and sciences (Article 13), and on education, protected under Article 14. 4.4.4. How do the options compare? Option Effectiveness Efficiency Impact on Social impacts stakeholders and fundamental rights Baseline (0) Legal framework (0) No costs (0) No impact on (0) No positive and space for associated to the stakeholders. impact on cultural preservation (esp. baseline option. diversity and the digital) will still be preservation of unclear or restrictive, cultural heritage as and fragmented. a public good. No contribution to EU policy objectives on cultural heritage preservation. No 400 There are various reasons for such dispersion, for example historical changes in territorial boundaries. Different versions of a work can exist in different MS. There are for example cases of cinematographic works that underwent cuts due to censorship in the country they originate from, which did not affect copies that were held abroad. 129  sensible impact on fundamental rights. Option 1 – (0/+) Could result in (0/-) Limited costs (0/+) Main impacts (0/+) Some Guidance and some improvements linked to the on stakeholders possible positive 'peer review' in certain MS but organisation of the would depend on impact on cultural would not bring 'peer review'. actions taken at diversity and the about legal certainty national level. preservation of and a better space for cultural heritage as preservation across a public good, the EU and in cross- depending on border settings. action taken at national level. Contribution to EU policy objectives on cultural heritage preservation would also depend on actions taken at national level. No sensible impact on fundamental rights. Option 2 – (++) Would provide (0) No particular (++) Legal certainty (+) Positive impact Mandatory legal certainty and a compliance costs. and increased space on cultural harmonised clear and updated to preserve for CHIs. diversity and the exception for space for (-/+) possible preservation of preservation preservation across minimal loss of cultural heritage as purposes by the EU, including in revenue for a public good, as cultural heritage cross-border settings. rightholders from more works are institutions replacement copies likely to be bought on the market preserved. but more works (+) Positive preserved. No impact contribution to the on licensing of EU policy electronic resources objectives on and security and cultural heritage stability of systems. preservation. (0) No tangible impact on fundamental rights. Option 2 is the preferred option is as it would provide the best environment and the largest space for preservation, including in digital environments, for CHIs while not generating particular compliance costs, or affecting the interests of rightholders to any meaningful extent. This option would reduce costs for CHIs related to legal uncertainty, and for both CHIs and rightholders in terms of potential transaction costs related to requests for authorisations and their handling, to a larger extent than Option 1. At the same time, given the use at stake and the conditions attached to the exception foreseen by Option 2, it would not imply foregone costs for rightholders (related to missed revenues or licensing opportunities) to any meaningful degree. Furthermore, Option 1 might imply some compliance costs for MS that are not present in Option 2. Positive impacts on cultural diversity and, ultimately, the ability of people to engage with cultural heritage would be higher in Option 2 than in Option 1, with similar impacts on fundamental rights. As such Option 2 is the most effective and efficient. Proportionality and impacts on MS: Option 2 is also proportionate in that it addresses the underlying problem without generating particular costs or putting special obligations on stakeholders. 130 Option 2 will require an adaptation of national legal frameworks to different degrees, depending on the level of clarity and the scope of the current national exceptions applicable to preservation by CHIs (a table with a list of examples of the way it is currently implemented in MS is available in Annex 4). National preservation exceptions will have to be clear about the possibility for CHIs to make copies in any format and support (i.e. allow for format and media-shifting) and be adapted if and when restrictions to the use of digital methods to conduct preservation can be hampered by their current formulation. 131 5. ACHIEVING A WELL-FUNCTIONING MARKET PLACE FOR COPYRIGHT 5.1. INTRODUCTION 5.1.1. Background In the recent years, the internet has become the main marketplace for the distribution of and access to copyright protected content, involving a high number of market players and a diversity of business models. While online content services have become essential for the generation of revenues, rightholders face difficulties when seeking to monetise and control the distribution of their content online. There is a growing concern about the sharing of the value generated by some of the new forms of online content distribution. This section of the IA examines issues related to the distribution of value in the online environment, taking into account the initial investments in creative content and the new business models and licensing practices. It concentrates on difficulties faced by rightholders in negotiating with online services involved in the commercial reuse of copyright-protected content, in particular online services distributing content uploaded by end-users and news aggregators, social media and other online services providing access to publications. Problems related to the contractual relationships between authors and performers on the one hand and those to which they assign the rights for the exploitation of their works and performances, including online, on the other, are also considered in this section of the IA. The need to address issues related to the sharing of value in the online environment and the remuneration of creators was highlighted in the Copyright Communication of December 2015, which reminded the "digital single market’s ambition to deliver opportunities for all and to recognise the value of content and of the investment that goes into it." The Commission's intention to take measures in this area was confirmed in the Communication on online platforms of May 2016.401 5.1.2. Why should the EU act? Legal basis As indicated in the previous sections of the IA, the EU's right to act follows from Article 114 of the TFEU, which confers on the EU the power to adopt measures for the establishment and functioning of the internal market. It is also strongly linked to the harmonisation of the rights relevant for online dissemination achieved in the InfoSoc Directive. The measures envisaged in this section of the IA would allow rightholders to better exercise their rights in the online environment and would therefore contribute to improve the functioning of the Digital Single Market, as the main marketplace for the distribution of and access to copyright-protected content. Article 167(4) TFEU related to cultural diversity has been taken into account in the design and analysis of policy options presented in this section of the IA. 401 Commission Communication on Online Platforms and the Digital Single Market Opportunities and Challenges for Europe, (COM(2016) 288/2), http://europa.eu/rapid/press-release_IP-16-1873_en.htm 132 Subsidiarity and added value In the areas covered by this section of the IA, the rationale for EU action stems both from the harmonisation already in place (notably in terms of rights) and the cross-border nature of the distribution of content online. Intervention at national level would not be sufficiently efficient to ensure a well-functioning digital single market for the distribution of copyright protected content and could create new obstacles. The issues faced by Rightholders with regard to services that store and give access to large amounts of protected content uploaded by their users need to be addressed at EU level given the general cross-border nature of those services which are used by the public to consume content online. EU level action is needed in order to avoid possible fragmentation that could be generated by initiatives from MS establishing obligations on such services, and to ensure more level playing field for services involved in content distribution. The problems faced today by news publishers have been identified by several EU MS. Some of them, notably DE and ES, have adopted different legislative solutions at national level to address them. However, national solutions lack scale and may give rise to market fragmentation in the news publishing sector. Intervention at the EU level is therefore needed to address effectively the problems faced by the publishing industry. Moreover, recent case- law has sparked off uncertainty in some MS concerning the possibility to keep long-existing national systems allowing publishers to have a share of the compensation stemming from exceptions and limitations to copyright and MS whose national compensation schemes are more directly impacted have started considering passing national legislation but it is not clear to what extent they can do so under the current EU rules. The necessary certainty in this regard can only be achieved by legislative intervention at EU level.  Although national rules may govern the contractual relationships between creators and those exploiting their works, the lack of transparency in this area constitutes an obstacle to the correct functioning of the single market for creators. EU action is therefore necessary to determine the required level of transparency. Specific elements may nevertheless be left at the discretion of MS, in order to take account of the existing national rules and the specificities of each sector. It should be noted that European legislation has already intervened in the contractual relationships between authors and performers on the one hand and those commercially exploiting their works and performances on the other, notably in Directive 2006/115/EC402 (presumptions of transfers of rights, unviable right of equitable remuneration - the "Rental and Lending right Directive") and in Directive 2011/77/EU403 amending Directive 2006/116/EC (establishing a supplementary remuneration for certain performers linked to the extension of the term of protection for phonograms – "The term of protection Directive"). 402 Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ L 376, 27.12.2006, p. 28–35) 403 Directive 2011/77/EU of the European Parliament and of the Council of 27 September 2011 amending Directive 2006/116/EC on the term protection of copyright and certain related rights (OJ L265, 11.10.2011, p.1-5) 133  5.1.3. What should be achieved? The general objective is to achieve a copyright marketplace and value chain that works efficiently for all players and gives the right incentives for investment in and dissemination of creative content. Specific objectives have been identified in each of the area covered: (i) ensure that rightholders benefit from a legal framework allowing them to negotiate and be remunerated for the online exploitation of their content by online services storing and giving access to large amounts of content uploaded by their users; and that there is a fair environment for all types of online content services; (ii) ensure a fair share of revenues stemming from the use of publications among the different players of the publishing value chain and (iii) increase legal certainty, transparency and balance in the system that governs the remuneration of creators. 5.1.4. Methodology Problem definition Two types of problems are described in this section of the IA, reflecting two aspects of the value chain: those faced 'upstream' by rightholders when trying to license their content to certain online content services (difficulties to negotiate on a fair basis and to obtain remuneration) and those faced 'downstream' by creators when negotiating contracts for the exploitation of their works (lack of transparency on the exploitation of the works). The latter are not specific to the online environment but have been exacerbated by the multiple forms of exploitation existing online. The specific drivers and consequences are illustrated in the problem tree below and further explained in the following sub-sections. 134 Identification of policy options The policy options examined in each of the three areas include the baseline option, a non- legislative option, and one or several legislative options. The legislative options have been designed taking account of the existing legal framework and the different forms of distribution of content online. In view of the differences between the upstream and downstream problems and the diverse situation of stakeholders, no common solution could be envisaged to address in a general manner the concern about the sharing of value in the online environment. Views from stakeholders, European Parliament and Member States The views from the different stakeholders are reported after the description of each policy option. In its resolution of July 2015, the EP highlighted the need to "consider solutions for the displacement of value from content to services". The resolution also "recognises the role of producers and publishers in bringing works to the market, and the need for fair and appropriate remuneration for all categories of rightholders". Finally, the EP would strongly support solutions aimed at strengthening the contractual position of authors and performers. The recommendation stresses "that authors and performers must receive fair remuneration in the digital environment and in the analogue world alike". While acknowledging the growing importance of online services in content distribution, MS have in general been cautious on issues related to the sharing of value in the online environment, waiting for the exact policy option that the Commission would bring forward. MS have equally been cautious as regards the possible introduction of a related right for news publishers, although most of them generally recognise the seriousness of the problems faced 135 by this industry in the digital environment404 and are likely to support a targeted intervention in this area, including as regard publishers' claim for compensation. MS are expected to support the objective of increasing transparency in the system governing the remuneration of authors and creators, but are likely to favour non-legislative options at EU level. In the 2014 public consultation, several MS highlighted the importance of appropriate and fair remuneration for authors and performers but considered that it was for MS to decide whether or not to intervene in this matter by legislative means. Impacts of policy options Stakeholders affected The policy options considered in this section of the IA would directly affect certain types of online content services (in particular, those storing and giving access to content uploaded by users and those giving access to news content) and would also have an impact of the competitive situation of other types of online content services. The options envisaged to address the difficulties faced with online services distributing content uploaded by end-users would affect all types of rightholders whose content is used by these services (in the music, AV and print sectors). For the use of publications online, the options envisaged would have an impact on publishers (press and book publishers), as well as on authors and other creators of the individual contributions which compose a publication. The options envisaged in the area of remuneration would affect more strongly authors and performers and all types of parties they contract with (which could be producers, publishers, broadcasters but also online content services in some cases). The impacts on consumers are examined in the three areas covered by this section, notably in terms of access to content. Type of impacts and availability of data Only the most significant and likely impacts are reported in this IA. The impacts are assessed by group of stakeholders (e.g. online services, rightholders, consumers), focusing mainly on economic impacts, for example in terms of exploitation of content, revenues, business models, competitive situation, compliance costs. These economic impacts are mostly assessed from a qualitative point of view, considering how the different policy options would affect the negotiations between those creating or investing in the creation of content and those distributing such content online. The limited availability of data in this area (beyond market data or specific examples provided by stakeholders which are presented in the problem definition where available) did not allow to elaborate a quantitative analysis of the impacts of the different policy options. In addition to the impacts on the different groups of stakeholders, broad social impacts (e.g. impacts on cultural diversity) and impacts on fundamental rights are assessed separately. All policy options considered in this section of the IA may have an impact on copyright as a property right (Article 17(2) of the Charter), on the freedom to conduct a business (Article 16) 404 This is based on the views expressed by MS in the public consultation on the role of publishers in the copyright value chain. 136 and on freedom of information (Article 11). Impacts on third countries or on the environment are not elaborated upon as the policy options presented in this section of the IA are considered not to have any substantial impact on them. Impacts on SMEs The large majority of companies that would be affected (as rightholders, publishers, authors/performers or their contractual counterparties, but also certain types of online services) by the options considered in this section of the IA are SMEs, and more particularly micro-companies (90 % of companies in the publishing of books, newspapers and journals and 96 % of companies in the film and music production and 95 % of companies involved in data processing, hosting and related activities or web portals)405. The policy options examined in relation to the use of content uploaded by users or the use of publications through online services would contribute to support SMEs and micro-companies in their negotiation with online content services. Certain options would however generate obligations for SMEs active as online services. Also, some of the policy options considered in the area of remuneration of authors and performers would create compliance costs for SMEs and micro-companies (notably producers or publishers) contracting with authors and performers. These costs are analysed in section 5.3.3 and in Annex 14. Considering the high number of SMEs and micro-companies in the creative industries and in the distribution of content online, exemptions or mitigating measures have not been deemed appropriate as they may create possibilities for businesses to circumvent the obligations and would not allow to reach the objectives defined above. Comparison of policy options The policy options are compared against the criteria of effectiveness (i.e. to what extent they fulfil the specific objective), efficiency (i.e. at what cost they do so), impact on the different groups of stakeholders and coherence with regard to cultural diversity, fundamental rights and/or other EU policies. Each option is rated between "--" (very negative), "-" (negative), 0 (neutral), "+" (positive) and "++" (very positive). 5.2. USE OF PROTECTED CONTENT BY ONLINE SERVICES STORING AND GIVING ACCESS TO USER UPLOADED CONTENT 5.2.1. What is the problem and why is it a problem? Problem: Rightholders have no or limited control over the use and the remuneration for the use of their content by services storing and giving access to large amounts of protected content uploaded by their users. Description of the problem: The functioning of the online content market place is complex. There has been a progressive shift from ownership to access-based models. Today, copyright 405 Source: Eurostat, Structural Business Statistics, 2013 data for publishing of books, periodicals and other publishing activities (J581); motion picture, video and television programme production, sound recording and music publishing activities (J59); data processing, hosting and related activities; web portals (J631). 137 protected content is no longer only distributed directly by a digital service provider to end users. Instead, access to online content often takes place at the end of a process in which several parties participate. As a result, rightholders do not always have control over the way their content is distributed online. With the rise of Web 2.0 technologies, interactive services including participatory networks have emerged and increasing amounts of content is accessed through content sharing platforms that make available protected content uploaded by their users without any involvement of rights holders. Such user uploaded content services often provide the public with large amounts of protected content. In addition to giving access to the content, these platforms provide functionalities such as categorization, recommendations, playlists, or the ability to share content. These services use copyright protected content in order to attract and retain users to their websites thereby increasing the value of their services. Access to such content is generally "free" for users and the service draws its revenues, directly or indirectly, from advertising and user data. While some of the providers of these services have de facto become major actors of online content distribution406 and have substantial number of users407 and significant market valuations408 rightholders are not necessarily able to enter into agreements with them for the use of their content. This affects rightholders' possibility to determine whether, and under which conditions, their content is made available on the services and to get an appropriate remuneration for it.409 406 See, for example, results from a study commissioned by GESAC showing that cultural content could represent up to 66 % of YouTube views and that music videos received 59 % of total views: http://www.rolandberger.com/gallery/pdf/Report_for_GESAC_Online_Intermediaries_2015_Nov_EUR .pdf. 407 As of October 2015, Youtube had 1.3 billion users, i.e. 33 % of internet users. It is the world’s largest online video platform with 400 hours of video content uploaded every minute, https://www.youtube.com/yt/press/statistics.html and http://www.statisticbrain.com/youtube-statistics/. Daily Motion advertises itself as one of the biggest video platforms and most popular European sites attracting 300 million users watching 3.5 billion video views every month, http://www.dailymotion.com/be-fr/about. Vimeo, another global online video platform, has a monthly audience of more than 170 million people and 35 million registered users, http://iac.com/brand/vimeo. SoundCloud currently has approximately 250 million registered users while it had about 150 million registered users in 2015 (and 11 million in 2011), http://www.bloomberg.com/news/features/2015-07- 10/can-soundcloud-be-the-facebook-of-music-. Pinterest states that it has more than 100 million monthly active users, http://venturebeat.com/2015/09/16/pinterest-finally-shares-its-size-100m- monthly-active-users-and-counting/. 408 Youtube is estimated to be worth more than $70 billion, and its revenues are reported to have reached $9billion in 2015, http://www.bloomberg.com/news/articles/2015-05-27/a-bank-of-america-analysis- says-youtube-is-worth-more-than-85-percent-of-companies-in-the-s-p-500, http://www.musicbusinessworldwide.com/youtube-will-earn-9bn-in-revenue-this-year-towering-over- spotify/. Pinterest has been valued at $12 billion in 2015, http://expandedramblings.com/index.php/pinterest-stats/. Soundcloud has been valued at $700 million in 2014 http://www.businessinsider.com/soundcloud-valuation-2014-1?IR=T. Dailymotion was valued at $295 million in 2015, see http://techcrunch.com/2015/06/30/vivendi-buys-80-of-frances-dailymotion- valuing-the-youtube-rival-at-295m/. 409 See for example the letter sent by 186 artists to the US Congress in June 2016, http://www.musicbusinessworldwide.com/revealed-the-186-artists-protesting-against-youtube- shielding-dmca-laws/. See also the position of Impala, the independent music companies' association, regarding the situation on the market, http://www.thedigitalpost.eu/2015/channel-digital-single- market/copyright-birds-eye-view-independent-music-sector. 138 Some online service providers refuse to negotiate any agreement, which means that despite the availability of copyright protected content on these platforms no revenues are generated for rightholders for the use of their content. Refusals of agreements have above all been reported by rightholders in the music and images sectors.410 At the same time, some online service providers have argued that rightholders have requested terms that they considered unreasonable for the type of service they provide.411 In some cases, platforms have offered rightholders agreements for a share of the revenue generated by advertising placed around their content.412 However, these agreements have been reported by some rightholders to be different from copyright licensing agreements as the platforms argue that they are not under a legal requirement to negotiate with rightholders and that they enter into such "monetisation agreements" on a purely voluntary basis.413 Rightholders argue that this alleged absence of legal requirement impedes fair negotiations. An example provided by the music industry shows that, in 2015, pure advertising-supported online services storing and giving access to content uploaded by end users which have an estimated user base of more than 900 million generated revenues amounting to US$634 million, which is (approximately) four per cent of global music revenues.414 Given the significant user base, rightholders argue that such revenues are insignificant compared to what other service providers415 are generating for rightholders. At the same time, there is publicly 410 Collective management organisations representing authors in the music sector have reported failures to obtain licences with services like Dailymotion, Vimeo or Myspace. Besides refusals of licences, renewals of contracts may also fail, as reported by GEMA, the German authors' collecting society, http://www.dw.com/en/german-battle-over-youtube-royalties-wages-on/a-5951245. For images, CEPIC has reported in their reply to the public consultation on online platforms that 80 %-90 % of their images used online are unlicensed, https://ec.europa.eu/eusurvey/pdf/answer/6b37d157-1c33-44f8-893e- af86b3c96aa1. Services mentioned include Pinterest, Flickr and Tumblr. In submissions to the Commission from July 2015, Getty Images indicates that "it has been frustratingly difficult to enter into licensing arrangements with online platforms in respect of images that have been uploaded by unlicensed third parties". 411 See the reply by Soundcloud to the public consultation on online platforms, https://ec.europa.eu/eusurvey/pdf/answer/6acf2b21-865a-402c-876a-e2b67c0ceef9. Despite initial failures to reach agreements in certain cases, Soundcloud has by now concluded agreements with rightholders. 412 The information provided by rightholders, including in their replies to the public consultation on online platforms, shows the existence of some agreements on the market - see for example the reply by GESAC, https://ec.europa.eu/eusurvey/pdf/answer/4ebd8857-927d-411f-9ff1-282e9f822ff3. 413 For the music sector, see for example a report published by the Music Managers Forum in 2015, "Dissecting the digital dollar", at p. 67, http://themmf.net/digitaldollar/. Youtube has argued that its service rather creates additional value - where no value at all could be obtained - for rightholders through the possibility to generate revenues from user uploaded content, and a greater exposure of artists. According to Youtube, fan-uploaded content accounts for roughly 50 % of the music industry’s revenue from YouTube. See article in the Guardian where Youtube's point of view on the value gap is described, http://www.theguardian.com/music/musicblog/2016/apr/28/youtube-no-other-platform- gives-as-much-money-back-to-creators. Youtube also argues that their average user spends just one hour watching music on Youtube a month (as opposed to the 55 hours a month the average Spotify subscriber consumes), http://youtubecreator.blogspot.be/2016/04/setting-record-straight.html. 414 IFPI digital music report 2016, available at http://www.ifpi.org/news/IFPI-GLOBAL-MUSIC- REPORT-2016. 415 The recording industry points to $2 billion having been paid by subscription services that had an estimated user base of 68 million in 2015. See IFPI Digital Music Report 2016. Artists have also voiced concerns about the level of payments, see for example https://www.theguardian.com/music/musicblog/2016/may/02/nelly-furtado-youtube-artist-royalties- fair-pay. 139 available information about the payments made by a major service provider to rightholders for the use of their music.416 The negotiation position of rightholders is affected by the fact that they are not in a position to keep their content away from these platforms. When uploaded content is infringing, they can only ask the platforms to take down the content, in each individual case, which leads to significant costs for them and appears insufficient to them given the large scale of uploads.417 At the same time, some platforms have voluntarily taken measures to help rightholders in identifying and monetising the use of content on their services, in particular through content identification technologies. Solutions have been developed both by user uploaded content platforms and technology providers and are based on different types of technologies, providing for different functionalities or levels of services and identifying different types of content (e.g. music, images, audiovisual).418They can be applied at the time of upload of the content or later on to verify through an automated procedure whether the content uploaded by users is authorized or not, based on data provided by rightholders.419 While some services have claimed high rates of successful content identification420, the identification of some types of content, such as bootleg remixes and DJ sets, or more generally of content that has been transformed or differs significantly from the original content, may be very challenging.421 Also, it has been reported by rightholders that the 416 See the position of Youtube, indicating the amount it has paid to the music industry since its foundation available at http://www.musicbusinessworldwide.com/youtube-and-google-play-have-paid-out-3bn-to- record-industry/ and http://www.digitalmusicnews.com/2016/06/14/youtube-responds-artists-fair-pay/. 417 See sections 4.3 and 4.4 of the public consultation on online platforms, https://ec.europa.eu/digital- single-market/en/news/full-report-results-public-consultation-regulatory-environment-platforms-online- intermediaries as well as the replies of the music community to the US Copyright Office related to the section 512 study, http://www.riaa.com/wp-content/uploads/2016/03/Music-Community-Submission- in-re-DMCA-512-FINAL-7559445.pdf. Sony Music Entertainment has provided some evidence on this issue before the US Copyright Office: "… prior to reaching a licensing agreement with the popular music focused uploaded content service Soundcloud from April 1, 2015 to April 2016, Sony spent hundreds of thousands of dollars to manually review 1.5 million metadata matches and to send takedown notices to remove approximatively 218,000 infringing copies of Sony recordings from the soundcloud platform. Despite the scale of this enormous effort, it was only sufficient to monitor approximatively 15% of Sony's catalog on this single platform", see https://www.regulations.gov/document?D=COLC-2015-0013-90111. See also IFPI reply to the public consultation on online platforms stating that: "around 90% of infringements that IFPI locates and addresses with a takedown request could have been avoided if the relevant services had taken measures to avoid that infringing content reappears after the first notification. For example, in 2015, One Direction’s “Drag Me Down” reappeared over 2,700 times on YouTube following the first notice", see https://ec.europa.eu/eusurvey/pdf/answer/138c7b30-556b-4b7b-adf1-fe5ab8406f4c. 418 See some illustrative examples in Annex 12A. 419 See Annex 12A for more information on the functioning of different technologies depending on the type of content. 420 Youtube for example indicates that only 0.5 % of all music claims are issued manually and that they handle the remaining 99.5% with 99.7% accuracy (through Content ID), https://www.theguardian.com/music/musicblog/2016/apr/28/youtube-no-other-platform-gives-as-much- money-back-to-creators. This is contested by creators, see above. Audible Magic - the content identification technology and service provider - has indicated positive identification rates that exceed 99%, http://www.audiblemagic.com/why-audible-magic/. 421 http://www.ft.com/intl/cms/s/0/0e2abaa2-f58d-11e5-96db-fc683b5e52db.html#axzz4AEnEjaF4. See for instance the statement made by the French start up Blue Efficience regarding Google's Content ID technology (regarding the identification of films): "The Content ID robot does not enable to identify content that has been skilfully modified with a view to slip through the tracks", http://www.pressreader.com/france/edition-multim%C3%A9di/20160215/28150075030257. See 140 functioning and efficiency of the technologies remains generally opaque for them (for instance with regard to changes implemented by the service or reasons why some content has not been identified). In parallel, it has been argued that content identification technologies may lead to "false positives" (i.e. situations where content is wrongly identified and removed).422 At this stage, it seems also clear that cooperation with rightholders is required (notably to provide data such as fingerprints) for the efficient functioning of these technologies.423 The situation described is also said to result in a decrease of the value of copyright protected content. Several broadcasters for example have started legal actions against different online platforms that disseminate their programs online claiming that these platforms are actively exploiting the content and benefitting financially from it.424 They consider that these services limit their ability to monetize certain types of content on other services.425 Besides rightholders, other online content service providers (those that acquire a licence from rightholders and distribute protected content directly to end users) are affected by this situation. They find themselves at a competitive disadvantage - they negotiate and conclude licences with rightholders in order to operate their services426 while online platforms distributing user uploaded content have no or very limited content acquisition costs.427 This is particularly relevant as both online content distribution services and user uploaded platforms however recent statements made by Google saying that content ID "can now even detect melodies, helping further stymie bad actors' efforts to fool the system" (How Google fights piracy, http://googlepolicyeurope.blogspot.be/2016/07/continuing-to-create-value-while.html). See also for example the service provided by Dubset, which specializes in the identification of DJ mixes & remixes and holds a related rights management database, http://www.dubset.com/#intro-to-dubset-. 422 This risk is put forward in particular in respect to automated notifications. See the Chilling Effects Clearinghouse, a collaborative archive founded by several law school clinics in the US which collects and analyses legal complaints and requests for removal of online materials, http://chillingeffects.org/. 423 See for example the mission launched by the French CNC (Centre national de la cinématographie) in 2016 with the objective, inter alia, to encourage rights holders to understand better and use more the functionalities offered by content recognition technologies (see letter of the CNC n°127 – 29 February 2016). Already in 2013 the Lescure report commissioned by the French government concluded: "they [the content identification tools] remain insufficiently used by the rights holders who do not always master the modus operandi and the functioning (it is particularly the case of the small players)", see Lescure report, page 404 http://www.culturecommunication.gouv.fr/var/culture/storage/culture_mag/rapport_lescure/index.htm. 424 See e.g. the recent case against Break.com in Italy (R.T.I vs TMFT Enterprises LLC/Break Media, N. 8437/2016), TF1 et autres / Dailymotion, Cour d’appel de Paris, Pôle 5 - Chambre 1, arrêt du 2 décembre 2014. See also the long lasting litigation between Youtube and TF1 that ended in 2014 by an agreement after several court decisions. 425 According to Mediaset, an imbalance is created in the market with digital platforms gaining an increasing percentage of advertising revenues. See the 2016 LEAR report prepared for Mediaset; Developments of the audiovisual markets and creation of original contents - http://www.learlab.com/wp-content/uploads/2016/09/Report-Mediaset_EN_03_06_16.pdf. 426 In the case of Spotify or Deezer, the payments to rightholders for the rights in the content they distribute represent around 70 % of the services' revenues. See Deezer's CEO statement on the impact of Youtube at http://www.cnbc.com/2016/04/19/blame-taylor-swift-youtube-for-low-artist-pay-from-streaming- deezer-ceo.html. 427 See the statement by indie labels at http://www.digitalmusicnews.com/permalink/2014/05/22/19-indie- label-organizations-speak-youtube, according to which: “the contracts currently on offer to independent labels from YouTube are on highly unfavourable, and non-negotiable terms, and undervalue existing rates in the marketplace from existing music streaming partners such as Spotify, Rdio, Deezer and others”. 141 may be seen by consumers as equivalent sources for content consumption.428 This is notably the case in the music sector where platforms are largely used by consumers to access music online. In this context, a Eurobarometer on users’ preferences for accessing content online conducted in March 2016 shows that 31 % of respondents use most often video or music- sharing websites to access music online.429 Drivers: [Presence of large amounts of protected content which is uploaded by users] Given the fact that content is uploaded by users, it is in practice difficult for rightholders to determine the availability of protected content on user uploaded platforms. In the case of platforms which services (or one of their services) result in the provision of access to significant amounts of, e.g. videos or other AV works, music or pictures, rightholders face particular difficulties when wanting to negotiate licences or reach agreements. Rightholders have described their negotiation relationship with certain of these platforms as a "take it or leave it" situation: they must either accept the terms offered by the service or continue to send notifications for each individual content which can be infringed thousands of times.430 Such a situation is further exacerbated in certain cases by the difference in bargaining power between rightholders and some of user uploaded services which have gained an important position on the market.431 Even if major user uploaded content services have put in place measures such as content identification technologies,432 their deployment remains voluntary and is subject to the conditions set by the services. [Legal uncertainty hampering the possible negotiation of agreements with services storing and giving access to protected content uploaded by their users] Under copyright law, rightholders can exercise their right to authorize and exploit commercially the communication to the public of their works or other protected subject-matter, by the conclusion of licences in return for payment of remuneration,433 if they so choose.434 When content is disseminated 428 See the 2015 JRC technical report "Let the music play? Free streaming, product discovery, and digital music consumption", page 8, footnote 11: "Youtube offers a different music consumption experience than interactive streaming services like Deezer or Spotify. However, it allows users to access music in an almost unrestricted way, making this service rather similar to the premium subscriptions offered by fully interactive streaming services". See also the report published by the Music Managers Forum (p. 66) cited above indicating that "…sites like Youtube and Soundcloud soon boast music libraries very similar (and often larger) to those of services like Spotify and therefore compete with those platforms". 429 Professional music streaming services come second with 22% of respondents indicating that they use such services most often. See the results from Flash Eurobarometer 437, Internet users’ preferences for accessing content online (Annex 12B). 430 See the synopsis report to the online consultation on public consultation, section 3.6.1, https://ec.europa.eu/digital-single-market/en/news/full-report-results-public-consultation-regulatory- environment-platforms-online-intermediaries. 431 See for example the reply of Impala, representing independent record labels, to the public consultation on online platforms stating that "Excessive market power repeatedly leads to unfair trading practices in the digital market. Independent record labels are often presented with “take it or leave it” terms which do not meet acceptable standards", https://ec.europa.eu/eusurvey/pdf/answer/85514243-17b3-47b2- 8df4-60d966679921 432 See Annex 12A for examples of content identification technologies used by certain services. 433 See for instance Judgment of 4 October 2011 in Football Association Premier League and Others (C- 403 and C-429/08, EU:C:2011:631, paragraph 107). 434 A copyright licence can be given for free. Instances where rightholders may decide to do so include the case of new authors or artists seeking exposure for their works or performances (services, such as YouTube and Myspace, have launched the careers of unknown artists, see for example http://youtubecreator.blogspot.be/2016/04/setting-record-straight.html, 142 online, an act of communication to the public takes place which may, depending on the circumstances, involve more than one actor. The CJEU has not addressed the specific case of online services giving access to content uploaded by their users.435 With some exceptions,436 national case law is not very clear either as to who engages into an act of communication to the public when content is uploaded on a sharing website. Additional uncertainty arises from the question of whether specific service providers that store and give access to content uploaded by a third party can benefit from the hosting service provider status provided under the Directive 2000/31/EC437 (E-Commerce Directive- "ECD").438 It is up to the courts to assess on a case by case basis whether a given service qualifies as a mere technical, automatic and passive hosting service provider. National courts have often found that user uploaded content services were covered by Article 14 ECD.439 However, in a number of recent cases, national courts have deemed such services to go beyond Article 14 ECD, highlighting the importance of protected content for the business models and the revenues of user uploaded content services.440 Consequences: The situation above has led to the situation where rightholders are confronted with large use of their content on user uploaded content services, have no or limited control over the use of their content, and fail (or have difficulties) to enter into agreements for the use of their content and obtain a remuneration. How would the problem evolve?: If no action is taken at EU level, the described situation is likely to remain and affect negatively rightholders' possibilities to negotiate agreements and http://www.forbes.com/sites/lorikozlowski/2012/05/15/how-myspace-spawned-a-startup- ecosystem/#56cce0f56364). Soundcloud's objective at the beginning was to provide an open platform that directly connected, on a free basis, creators with their audience. 435 When dealing with broadcasting which involved two actors in the chain of communication (broadcasters and distributors), the CJEU has taken different positions. In one instance, it has indicated that there can be two parties involved in one single act of communication to the public, i.e. the broadcaster and the distributor (see judgment of 13 October 2011, in Airfields and others (C-431/09 and C-432/09,(EU:C:2011:648)) while in another instance, it has ruled that only one party is communicating to the public, suggesting that it was likely to be the distributor (see judgment of 13 November 2015, in SBS Belgium and Others (C-325/14, EU:C:2015:764)). 436 In the context of the GEMA vs Youtube cases in Germany (Higher Regional Court Hamburg, July 2015; Higher Regional Court Munich, January 2016, file number 29 U 2798/15), the courts considered that while a service like Youtube increasingly takes over the function of an attractive and competitive music service and presents itself as a comprehensive alternative to Spotify and similar services, it does not carry out an act of communication to the public pursuant to Article 3 of the Infosoc Directive (which is carried out by the uploaders). See also the ruling of the first instance Court of Paris 29 January 2015 Kare productions/Youtube. 437 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (OJ L 178, 17/07/2000, p.1-16). 438 Article 14 ECD limits the liability of "hosting service providers" provided that they are not aware of illegal content and that, on gaining such knowledge, they take expeditious action to remove or disable access to it. The CJEU has clarified that the status of hosting provider can be claimed only by a provider whose activity is of a mere technical, automatic and passive nature (see for example judgment of 12 July 2011, in L'Oréal and Others (C-324/09, EU:C:2011:474)). 439 See for example in FR, the ruling of the Court of Cassation, 17 February 2011 Societe Nord- Ouest/UGC image vs Dailymotion 440 See for example the GEMA vs Youtube case in Hamburg; the Decision by the Court of Rome in case RTI vs TMFT/Break Media of 27 April 2016 and the Decision by the Court of Rome of 15 July 2016 in case RTI/Megavideo. 143 the level playing field on the online content market. This in turn risks constraining the sustainable growth of digital content markets and future investment in content creation and production. The general trend in content consumption, which is moving away from physical media towards the digital services, may further exacerbate the current problem, as seems to be indicated by the fact that the increase in consumption has not been accompanied by a proportionate increase in payments to rightholders441. At the same time the market has been undergoing certain changes with technologies being more generally available and deployed and licensing and partnership agreements being struck between rightholders and online services that had so far refused to conclude agreements442. This trend may continue but it may still follow the pattern whereby services operate without the rightholders' agreement and build an audience before agreements are concluded.443 Moreover, whereas it is possible that the CJEU will bring clarity to the question of whether an uploaded content service is responsible for acts of communication to the public and/or can benefit from the hosting provider status under the ECD, this cannot be predicted as it is entirely dependent on referrals by national courts. Under such circumstances, rights holders will continue to have limited possibilities to determine the conditions of and the remuneration for the exploitation of their works and other protected subject matter by user uploaded content service providers. The situation will continue to have a negative effect on the functioning of the online market place. 5.2.2. What are the various options to achieve the objectives? Baseline No policy intervention. This option would rely on the voluntary deployment of technologies by user uploaded content services, which will continue to apply their own terms and level of transparency as to the functioning of the technologies. 441 According to the 2015 Yearbook of the British Phonographic Industry (BPI), Vevo and YouTube were responsible for more than 50 % of all on-demand music streams in the UK. Despite an 88 % rise in YouTube and Vevo plays, money coming into labels from ‘pure ad-supported’ platforms rose by just 4%, see http://www.musicbusinessworldwide.com/youtube-is-paying-less-than-0-0009-per-stream-to- uk-record-labels/. In FR, Snep has reported that income from ad-funded video services – including the likes of DailyMotion, Vevo and YouTube – dropped by 8.8 % year-on-year. In the US: according to the Recording Industry Association of America (RIAA) report, in 2014, ad-supported, on-demand streaming grew 63 percent year on year, while revenue rose just 34 percent. See an article in the New York Post citing the report http://nypost.com/2016/03/22/record-labels-slam-youtube-ad-supported- streaming-services/. 442 See article describing the agreement into which Soundcloud has entered with PRS, the UK authors' collecting society: http://www.musicbusinessworldwide.com/soundcloud-signs-legal-settlement-with- prs-in-time-for-christmas/. Besides SoundCloud, Youtube has launched a new paid service called Youtube Red (so far only in the US), http://www.cnet.com/how-to/youtube-red-details/. Pinterest has signed a partnership agreement with Getty images, see article https://techcrunch.com/2013/10/25/pinterest-inks-deal-with-getty-images-will-pay-a-fee-for-the-photo- agencys-metadata/. 443 For example, the music service provider Soundcloud, founded in 2008, has entered into its first licensing deal with independent labels in 2015, six years after its foundation: http://www.theguardian.com/technology/2015/jun/04/soundcloud-signs-licensing-deal-independent- labels. See also the deal that Soundcloud recently concluded with SACEM, the French authors' collecting society, and UMPI (Universal Music Publishing International): https://societe.sacem.fr/en/press-resources/per-publication/Press+releases/a-new-deal-license-sacem- universal-music-publishing-international-and-soundcloud-strike-new-european-deal. 144 Stakeholders' views Rightholders will not support this option as they consider that the current legal framework needs to be clarified and that players on the market will generally not improve the efficiency and transparency of technical measures when used. Online service providers storing and giving access to user uploaded content will support this option as they consider that the legal framework is clear and that they are already taking voluntary measures.444 Other content service providers are likely not to be in favour of this option as it maintains the imbalance on the market. Consumers will be in favour of this option as they do not see the need for a change to the status quo and will fear that any intervention may have a negative impact on the freedom of information/expression.445 Option 1 – Stakeholder dialogues between rightholders and online services which store and give access to large amounts of content uploaded by their users Main elements:  The Commission would launch stakeholder dialogues that would bring together rightholders and providers of user uploaded content services to encourage them to define best practices for the use of technologies such as content recognition technologies and to promote their use. It would aim at improving the capacity of rightholders to determine the conditions for the use of and remuneration for their content.  The dialogues would focus on service providers which store and provide access to large amounts of copyright protected content uploaded by their users as, in view of the amount of content available and the size of their audience, they have an important impact on the online content market.  Technology providers would be involved in the dialogue. Account would be taken of existing technologies, their availability, efficiency and costs for each contracting party in order to find a balanced approach. The best practices could also focus on the ways to ensure that the services (i) obtain the necessary data from rightholders to make the technologies work and (ii) are transparent towards rightholders in terms of the operation, characteristics and efficiency of the technologies used.  Given the different dynamics in each sector (music, audiovisual, images), the dialogues would be conducted on a sector by sector basis Stakeholders' views Due to the non-binding nature of this option, rights holders will oppose it as they will consider it would not improve the current situation to a sufficient degree. Online service providers giving access to user uploaded content may support it while arguing that they 444 See the synopsis report on the public consultation on the regulatory environment for platforms, online intermediaries and the collaborative economy, sections 3.6 and 4, https://ec.europa.eu/digital-single- market/en/news/full-report-results-public-consultation-regulatory-environment-platforms-online- intermediaries. 445 In their replies to the public consultation on online platforms, individual users expressed their views on the relations between rightholders and platforms and on the possible duty of care on online platforms with regard to tackling (all) illegal content (not only copyright infringing content). See the synopsis report on the public consultation on the regulatory environment for platforms, online intermediaries and the collaborative economy, https://ec.europa.eu/digital-single-market/en/news/full-report-results-public- consultation-regulatory-environment-platforms-online-intermediaries. 145 already implement on a voluntary basis the necessary technologies that allow rightholders to decide on the use of their content.446 Other content service providers are likely to find this option insufficient. Consumers are likely to view the possible stakeholders' dialogues as impacting negatively their freedom of expression (as it could result in a wider and more efficient deployment of content recognition technologies on the basis of industry agreements).447 Option 2 – An obligation on online services which store and give access to large amounts of content uploaded by their users to put in place appropriate technologies and to increase transparency vis-a-vis rightholders Main elements:  This option would establish an obligation on service providers which store and provide access to large amounts of copyright protected content to put in place measures, such as content identification technologies, to allow rightholders to determine better the conditions for the use of their content. The determination of what constitutes "large amounts of content" will need to be made on the basis of a combination of factors including the number of users and visitors and the amount of content uploaded over a certain period of time.448 These factors are independent from the size of the service provider itself, which can also be an SME. It is clear that online service providers may have very different services (a user uploaded content platform, their own channels, third party channels). This obligation would only apply to the user uploaded content services to the extent that the content is copyright protected.  These services will be targeted because they have become important sources of access to content online and also in view of their role in giving access to the public to works and other protected subject matter, requiring the conclusion of licensing agreements with rightholders.  Cooperation with rightholders will be required for the functioning of the measures, such as content identification technologies. Rightholders should provide the data that are necessary for the services to identify the content whereas the services would be obliged to provide adequate information to rightholders on the deployment and functioning of the technologies. This could, for instance, include information on the type of technologies used, periods of unavailability (e.g. due to maintenance), plans for further improvements, success rates of the technologies deployed for identifying content and information on possible reasons for failures of identification. 446 See the above cited synopsis report on the public consultation on online platforms. 447 See the reply by BEUC to the public consultation on online platforms, https://ec.europa.eu/eusurvey/pdf/answer/452cd1fc-7e4f-4102-aae3-254d219876e8. 448 It can be difficult to quantify the exact amount of copyright protected content uploaded by users due to the diversity of content which in many cases may not be copyright relevant (such as family pictures) or be uploaded by rightholders themselves. See for instance the Hadopi study regarding an estimated quantification of content and types of content on YouTube and Daily Motion https://www.hadopi.fr/observation/publications/qualification-et-quantification-des-contenus-sur- youtube; https://www.hadopi.fr/actualites/actualites/qualification-et-quantification-des-contenus-sur- dailymotion. It seems however clear that even if protected content available on user uploaded content services was to represent only a part of the overall content available on these services, the amount would still be very significant due to the scale many of these services have reached. 146   In order to safeguard end users' rights, the services will be required to provide for procedures that enable users to contest situations where the application of the technology would limit the uploads of content in an unjustified manner.  The above obligations will be without prejudice to liability regimes applicable to copyright infringements and the application of Article 14 ECD. In particular, with regard to services that are covered by Article 14 ECD, the obligation to put in place content identification technologies would not take away the safe harbour provided that the conditions of Article 14 are fulfilled. The notice and takedown regime will continue to apply for hosting service providers covered by Article 14 with respect to content not covered by agreements or in cases where the content is not properly identified.  Member States would be required to facilitate cooperation between service providers and rightholders where appropriate, notably in cases where no individual agreement is reached between the parties on appropriate measures to be put in place by the services. Stakeholders' views Rightholders may support this option if it establishes an obligation on service providers to take effective measures that improve the current situation,449 and provided there is sufficient clarity as regards the notion of communication to the public. Online service providers storing and giving access to large amounts of user uploaded content are likely to oppose this option, including those that already use the technologies - as they would want their initiatives to remain voluntary. They will also argue that the intervention would counter the freedom of expression and freedom to conduct business.450Other content service providers are likely to support this option if it improves the level playing field on the online content market. Consumers are likely to argue that this option will have a negative impact on their freedom of expression/information.451 5.2.3. What are the impacts of the different policy options and who will be affected? Approach The options presented above would have an impact on rightholders across all sectors, on online services that store and give access to the public to large amounts of content uploaded by their users, as well as on online content services that distribute content provided directly by rightholders and that can be perceived, from a user 449 Related to the technologies, see the synopsis report on the public consultation on the regulatory environment for platforms, online intermediaries and the collaborative economy, sections 4.4 and 4.5, https://ec.europa.eu/digital-single-market/en/news/full-report-results-public-consultation-regulatory- environment-platforms-online-intermediaries. 450 See also the open letter sent to the Commission in April 2016, co-signed by a number of associations representing internet companies (e.g. CCIA, EuroISPA, Digitaleurope) and other stakeholders: http://libereurope.eu/wp-content/uploads/2016/04/Open-letter-Copyright-Reform.pdf. Youtube has also expressed its opinion on the issue of the value gap in the press, arguing that the service creates additional value for rightholders through monetization of fan videos as well as providing additional value through user data. See article in Financial Times: http://www.ft.com/intl/cms/s/0/37dcc5fc-0ca3- 11e6-ad80-67655613c2d6.html#axzz47ANNJ4A4. 451 BEUC has co-signed the open letter cited above. See also the reply by BEUC to the public consultation on online platforms referred to above. 147 perspective, as equivalent sources for content consumption. The options also affect consumers. The likely impacts on each stakeholder group are presented separately.  For rightholders: the impacts assessed are those on their capacity to control better the availability of their content on user uploaded content services and thereby be in a better position to negotiate with the services the conditions of such use  For online services that store and give access to large amounts of user uploaded content: the most important impacts described relate to the implementation of technologies and the negotiation with rightholders in case they want to keep the content on their services  For other online content service providers distributing content: the main impacts relate to the level playing field in the market and to their business model.  For consumers/end users: the impact is assessed on the content consumption possibilities and the possibility for them to upload content.  The policy options are also assessed in relation to their social impact, with focus on cultural diversity.  For fundamental freedoms, the impact is assessed on copyright as a property right, freedom of expression and information, as well as the freedom to conduct a business as recognised respectively by Articles 17, 11 and 16 of the Charter. The assessment below is mainly qualitative, based on the data publicly available, replies submitted via the public consultation on online platforms452, or provided by relevant stakeholders, as well as a Flash Eurobarometer survey on users' preferences in accessing content online conducted in March 2016. Baseline IMPACTS ON STAKEHOLDERS Creative industries/Rightholders: Impact on their capacity to control better the availability of their content on user uploaded content services and thereby negotiate with the services the conditions of such use: as the implementation by the services of technologies, such as content identification technologies, will remain voluntary and based on the terms set by the services, it is likely that the baseline scenario will not lead to improvements for rightholders who are likely to continue having difficulties to enter into negotiations and/or negotiate fair terms for the use of their content.453 While some of the service providers may voluntarily or under pressure from artists454 and from major rightholders (including risks of litigation)455 decide to seek agreements for the use of copyright protected content, this is unlikely to become a general trend in the short to mid- term. It can be expected that the ability to negotiate agreements will also depend on the market position of rightholders, with small rightholders likely to continue to face more difficulties than major ones456. 452 https://ec.europa.eu/digital-single-market/en/news/full-report-results-public-consultation-regulatory- environment-platforms-online-intermediaries. 453 See problem description. 454 See problem description quoting a letter sent by artists to the US Congress in June 2016 asking for a reform 'that balances the interests of creators with the interests of the companies who exploit music'. 455 See problem description regarding the litigation between PRS and Soundcloud that resulted into the conclusion of an agreement after five years. See also the announcement in October 2015 of a collaborative agreement by Google/YouTube and Mediaset España, putting an end to 8 years of legal disputes, http://www.mediaset.es/inversores/en/GoogleYouTube-Mediaset-Espana-collaborative- agreement_MDSFIL20151021_0005.pdf, http://www.panoramaaudiovisual.com/en/2015/10/21/Mediaset-sign-peace-with-google-and-will- circulate-its-content-on-youtube/. 456 For example, Impala, the association representing independent labels, has pointed to difficulties in negotiating with Youtube threatening that the content will be blocked if the contract proposed by it is 148 Online services that store and give access to large amounts of user uploaded content: Compliance costs/ investments needed for putting in place appropriate measures and negotiating with rightholders the use of their content: no impact. The services are likely to continue to use technologies on a voluntary basis and subject to their own terms.457 An evolution could result from case law in some MS458 but it would however remain subject to national courts and may lead to diverging obligations for the services in different Member States. Given the importance of protected content for the business models of user uploaded content services, a certain evolution can be expected in the mid to long term with regard to agreements with rightholders for content that the services would want to have on their websites. This trend is confirmed by agreements that have already been concluded (not only in the music sector459 but also in the AV and in the images sector where a few partnerships are being concluded).460 Other content service providers: Impact on the level playing field: no impact. They will continue to face an uneven playing field. This uncertain environment and diverging legal and financial obligations will put new entrants under unfair competitive pressure from incumbent services that do not play by the same rules. This may constitute a deterrent for new services to enter the market. Impact on their business model: The pressure to compete with user uploaded services which face lower operating costs will continue to make it more difficult for these other online content services to have or build a sustainable business model.461 Consumers: no impact in the short to mid-term as the user uploaded content services will in the majority of cases continue to operate in the same manner. In the long term, there could be a risk of reducing consumer choice if the current situation affects fair competition in the market and the availability of content. SOCIAL IMPACTS There could be an indirect negative impact on cultural diversity in the long term if the revenues generated for the commercial use of copyright protected content cannot sustain the production of new (and diverse) content. IMPACTS ON FUNDAMENTAL RIGHTS This option has no direct impact on copyright as a property right, nor on the freedom of expression and information or the freedom to conduct a business. not signed by the independents, see http://www.impalamusic.org/content/youtube-issues-content- blocking-threats-independent-labels-win-and-impala-raise-concerns. 457 See Annex 12A for the description of different technologies and their usage by major user uploaded content services. 458 See for instance the Hamburg regional court decision of July 1st 2015 in which the user uploaded content service is imposed to take appropriate measures aimed at avoiding further infringements. 459 See the above reference to Soundcloud. Youtube has already signed a number of agreements and is said to be renegotiating agreements with music labels, see e.g. http://www.ft.com/cms/s/0/2c310ae8-fbc2- 11e5-8e04-8600cef2ca75.html#axzz4CK050l97 461 Having a sustainable business model on today's streaming market has proven to be very difficult, as demonstrated by the losses incurred, the failures by some streaming services (e.g. Deezer), to raise funds, or by cases of bankruptcy (e.g. the US streaming service Rdio). See https://www.theguardian.com/technology/2015/oct/28/deezer-ipo-music-streaming, http://www.musicbusinessworldwide.com/another-streaming-service-fails-ipo-guvera-move-blocked/, http://www.hollywoodreporter.com/thr-esq/rdio-was-losing-2-million-840977 149 Option 1 – Stakeholder dialogues between rightholders and services which store and give access to large amounts of content uploaded by their users IMPACTS ON STAKEHOLDERS Creative industries/Rightholders Impact on their capacity to control better the availability of their content on user uploaded content services and thereby negotiate with the services the conditions of such use: due to its voluntary nature, it seems unlikely that stakeholder dialogues will result in sufficient improvements in the take up, efficiency and transparency of technologies in comparison to the possible evolution of the market. The voluntary nature of the dialogues is likely not to change the behaviour patterns of services which have not deployed any technologies so far or for those which have been using these technologies on a voluntary basis for several years, but under their own terms. Rightholders will remain in a weak bargaining position for the use of their content by the services. Moreover, stakeholder dialogues in a context where some of the user uploaded content services have already been imposed higher responsibilities with regard to protected content could be viewed as a step back in some MS, in comparison to existing obligations.462 Online services that store and give access to large amounts of user uploaded content: Compliance costs/ investments needed for putting in place appropriate measures and negotiating with rightholders the use of their content: limited impact due to the voluntary nature of the stakeholder dialogues and the limited likelihood of an agreement on best practices. Other content service providers: Impact on the level playing field: unlikely to have any effect as, for the reasons explained above, different content service providers are likely to continue playing by different rules. Impact on their business model: an impact similar to the one under the baseline scenario can be expected. Consumers: no direct impact on consumers. They could be impacted if online services giving access to user uploaded content agreed to take steps which led to a change in their services. This is however unlikely given that agreements, if they are reached, are likely to take into account the popularity of the current services (and the important role they play for the overall business models of certain platforms).463 SOCIAL IMPACTS This option might have a slight positive impact on cultural diversity if the stakeholder dialogues were to result in a further use of technologies, thereby increasing the possibility for rightholders to decide on the use of their content. IMPACTS ON FUNDAMENTAL RIGHTS This option is likely to have no impact or a very limited positive impact on copyright as a property right. It may have a limited negative impact on the freedom of expression and information (if, following the stakeholder dialogues, services implemented technologies 462 See the above mentioned Hambourg decision. 463 See Annex 12B containing the results from the Flash Eurobarometer on Internet users’ preferences for accessing content online showing the predominance of "free" for accessing content online. 150 limiting the upload of content for unjustified reasons, for example when an exception or a limitation to copyright applies). In such an unlikely case there would also be a limited negative impact on the freedom to conduct a business of service providers covered by this IA due to the costs they may need to incur as a result of the stakeholder dialogues. Option 2 – An obligation on online services which store and give access to large amounts of protected content uploaded by their users to put in place appropriate and proportionate technologies and to increase transparency vis a vis rights holders IMPACTS ON STAKEHOLDERS Creative industries/Rightholders Impact on their capacity to control better the availability of their content on user uploaded content services and thereby negotiate with the services the conditions of such use: against the backdrop of the role of these services in the communication to the public of protected content, the establishment of an obligation to deploy technical means will have a positive impact on rightholders. As the services will be obliged to cooperate with rightholders and provide them adequate information with regard to the technologies to be deployed, it is expected that the efficiency of the technologies will grow and thereby enable rightholders to have a better control over the content that is available on user uploaded services. This will improve their possibilities to conclude agreements and increase revenues. This is notably the case for the music sector where, as explained above, some agreements are already in place and there is an overall readiness from rightholders to conclude agreements with the services. In the case of AV content, this option may increase the willingness of rightholders to allow more of their content to be available on user uploaded content services while continuing to take down premium content. While the ability for rightholders to decide on the availability of their content is expected to increase their possibilities to obtain fair remuneration, it is not possible to quantify the concrete impact of this option in terms of revenues, as this would also depend on the outcome of commercial negotiations, including the size of the service as well as possible developments in their business models. There have been indications from some rightholders in the music sector that the expected remuneration should be similar to the revenues generated by the free tiers of other content services (to the extent it is possible to differentiate free tier revenues from premium service ones).464 The deployment of technologies that are necessary to identify content and make the conclusion of agreements possible will imply some costs for rightholders. These costs will arise where they provide data (e.g. contents or fingerprints depending on the technology used465) necessary for the content identification technologies to work. When rightholders already provide such data to major online services, the impact is expected to be limited and outweighed by the positive impacts of this option. 464 See for example an article at http://www.musicbusinessworldwide.com/youtube-are-under-paying- exploiting-creators-and-getting-away-with-it where the independent community is asking for a minimum per-view guarantee at least as great as existing services that have a free tier. At the same time, it should be acknowledged that the payment resulting from the free tier is linked to the coexistence of freemium and premium pricing. 465 See Annex 12A on content identification technologies. 151 Online services that store and give access to large amounts of protected content uploaded by their users466 Compliance costs/ investments needed for putting in place appropriate measures and negotiating with rightholders the use of their content: The need to put in place measures, such as content identification technologies, will involve costs which will depend on the quantity and the type of content to be identified, but also on whether online services already use technologies or not. This option does not impose any specific technology to be used. An online service can choose between appropriate technology solutions taking into account the specificities and needs of its service as well as its size. Different technologies and related services are available on the market. The prices offered by the technology providers vary with the scale and types of services provided.467 In practice, technologies with basic functionalities, allowing one to one recognition of content (such as music recordings) would be the least costly, whereas more elaborate technologies that could be required to identify certain types of works (e.g. the underlying composition of a recording) would be more costly. Many of the online intermediaries replying to the public consultation on platforms indicated that it is very difficult to provide an estimation of the financial costs of running such technologies.468For example, on the basis of the information available, it is estimated that a small scale online service provider with a relatively low number of monthly transactions can obtain such services as from €900 a month.469 For online services hosting large amounts of different works, the cost can be significantly higher. At the same time, the major online user uploaded content services have already put in place content identification technologies470 and therefore the costs for them are likely to be limited and would above all relate to the need to cooperate with rightholders on the functioning and efficiency of the technologies used and to provide greater transparency. Some costs may also arise from the need to put in place procedures to enable users to contest situations where the application of technology would limit, in an unjustified manner, their possibility to upload content. These costs are however expected to be limited as procedures with the similar purpose are in 466 Based on the current market situation (and the examples of services cited by the respondents to the Flash Eurobarometer), it is estimated that the number of services affected would be those that have a high number of users (from several millions to over a billion) and daily uploads ranging from hundreds to millions of files. This category includes services which may differ significantly in terms of size: Youtube is clearly the biggest service but services such as Dailymotion, Vimeo, Pinterest are also likely to fall into this category. 467 See Annex 12A for some examples of services with different functionalities and prices. 468 An estimation of costs related to all types of illegal content (and not only copyright) ranging from 5-10 % of operation costs or several thousand to million euros per year has been put forward by certain intermediaries, see https://ec.europa.eu/digital-single-market/en/news/full-report-results-public- consultation-regulatory-environment-platforms-online-intermediaries. 469 See the submission by Audible Magic to US Copyright Office in the context of the Section 512 study https://www.regulations.gov/#!documentDetail;D=COLC-2015-0013-85992. The above mentioned price applies for music identification for up to 5000 monthly transactions. See for more details their price list accessible at https://www.audiblemagic.com/copyright-compliance-pricing/. 470 YouTube uses its own technology – Content ID; Soundcloud uses a combination of Audible Magic and its own technology; Dailymotion uses the services of third parties - Audible Magic and l'Institut National de l'Audiovisuel (INA). When services decide to invest in their own technology the costs are likely to be higher. YouTube has indicated that it has invested more than $60 million to develop its Content ID system Google's submission to US Copyright Office, https://www.regulations.gov/#!documentDetail;D=COLC-2015-0013-90806. Soundcloud has estimated in its reply to the public consultation on online platforms that it has spent approximately €5m on such technologies, see; https://ec.europa.eu/eusurvey/pdf/answer/6acf2b21-865a-402c-876a-e2b67c0ceef9. 152 practice in many cases already in place, including in the context of notice and take down mechanisms for hosting service providers.471 Due to the improved control for rightholders over the presence of their content on user uploaded content services, the services are expected to negotiate agreements with more rightholders to be able to keep their content available to the end users. In such cases, costs would arise for service providers that have so far refused to enter into negotiations or for those that may need to renegotiate their existing agreements at the request of rightholders. Currently, the major user uploaded content services tend to be enterprises of a large size for which these costs are expected to be reasonable. The costs related to the negotiation of agreements will be higher for SMEs but they should remain reasonable as the obligation to use technologies is limited to those service providers giving access to large amounts of content. New entrants which start their business with a small quantity of user uploaded content would not be impacted. Other content service providers: Impact on the level playing field: this option is likely to have a positive impact on content service providers which would not have to incur any additional costs and can only benefit from a market where providers compete on more equal grounds. Impact on their business model: given the expected improvement of the level playing field, it would help the services to sustain or strengthen their business model. Consumers: the impact on consumers will depend on the possible changes made by the services to the way they function as a result of the deployment of technologies and of possible agreements with rightholders, which could reduce the content freely available on the service. However, as indicated in option 1, negotiations are likely to take into account the popularity of the current user uploaded content models among consumers. On the other hand, consumers may in the long term have an increased choice of content due to more incentives for rightholders to create new content. This would result from the increased possibility for rightholders to determine the conditions for the use of their contents and therefore to negotiate agreements and be remunerated for such use. SOCIAL IMPACTS Option 2 is expected to have a positive impact on cultural diversity as it would lead to better control over the use of and remuneration for copyright protected content. This should bring more certainty and incentives to rightholders to create new content. As a result, the access to a culturally diverse content is expected to be positively impacted. IMPACTS ON FUNDAMENTAL RIGHTS Option 2 would have a positive impact on copyright since rightholders will benefit from an improved framework that allows them to have a better control over the availability of their content on user uploaded content services and to negotiate better the conditions for the use of their content by such services. The freedom of expression and information may be affected negatively in cases where the services limit user uploaded content in an unjustified manner 471 See the submission of Soundclound to the Commission consultation on online platforms in 2015: " Content is removed in response to notifications from rights holders, automatically by content filtering and by rights holders directly using a tool provided by Soundcloud. Anyone whose content is removed in any of these ways may challenge that removal if t they believe the content was wrongly identified, or if the uploader believes that they have the necessary rights to upload the relevant content". 153 (for example when an exception or a limitation to copyright applies or the content is in public domain) or when the technologies fail to identify the content correctly.472 This negative impact should be mitigated by the fact that the services would be obliged to put in place the necessary procedural safeguards for the users which in the majority of cases already exist in the related context of notice and take down requests. In all, as content recognition technologies are already applied by the major user uploaded content services, it is likely that this option would not lead to significant increases in unjustified cases of prevented uploads compared to the current situation. Furthermore, the cooperation with rightholders and the evolution of technology are likely to improve on an on-going basis the accuracy of content identification. Additionally, as the limited liability regime for hosting service providers is not changed, there is no risk of increase in removals of content due to the fear of liability by such services. At the same time there is likely to be a positive impact on users who in the long term should have access to an enhanced range of creative content and services as incentives to invest will improve. The impact on the freedom to conduct a business could be negative due to the costs to implement the technologies. At the same time, the level of this impact is expected to be limited due to the fact that the obligation is imposed on services giving access to large amounts of protected content only, that the option builds on existing voluntary practices and that technologies are increasingly available in the market which makes the implementation of the technology obligation easier for the services. This impact is further limited by the fact that the proportionality in the choice and in the deployment of effective content identification technologies will allow to take into account the size and the nature of the individual services. Overall, this option is considered to strike the necessary balance between copyright and other fundamental freedoms. 5.2.4. How do the options compare? Option Effectiveness Efficiency Impact on Coherence stakeholders Baseline (0) No impact – (0) No direct costs (0) No direct impacts (0) No direct absence or limited associated with this on stakeholders impact on possibility for option cultural diversity rightholders to (0) No impact on determine the other conditions of use of fundamental their content by the rights services will persist Option 1 – (0/+) Limited impact (0/-) Limited (0/+) Limited positive (0/+) Limited Stakeholder on rightholders' compliance costs for impact on rights positive impact dialogues possibility to user uploaded holders' possibility to on cultural between determine the content services reduce use of content diversity and on rightholders and conditions of use of which implement the not covered by the property services which their content by the best practices (to the agreements and to right. store and give services extent the negotiate such (0) Neutral access to large stakeholder agreements impact on amounts of dialogues result in (0/-) Limited negative freedom of content best practices) impact on user expression and 472 See the issues raised with regard to fundamental rights in the Study of fundamental rights limitations for online enforcement through self-regulation, http://www.ivir.nl/publicaties/download/1796. 154 uploaded by (0/-) Limited uploaded content information in their users compliance costs for services which cases where best rightholders implement the best practices are practices implemented (0/+) Limited positive 0/-) Limited impact on other negative impact content services on freedom to (0) No direct impact conduct business on consumers in cases where best practices are implemented Option 2: An (++) Positive impact (-) Compliance costs (++) Positive impact (++) Positive obligation on on rightholders' for user uploaded on rightholders' impact on impact services which possibility to content services possibility to reduce on cultural store and give determine the (0/-) Limited the use of content not diversity and on access to large conditions of use of compliance costs for covered by property right. amounts of their content by the rightholders agreements and to (0) Neutral content services negotiate agreements impact on uploaded by (-) Limited negative freedom of their users to impact on user expression and put in place uploaded content information. appropriate services (0/-) Limited technologies (+) Positive impact on negative impact together with other content services on freedom to more (0) No direct impact conduct business transparency on consumers Option 2 is the preferred option. The deployment of appropriate technologies would increase the capacity of rightholders to control better the presence of their content on user uploaded content services and give them a better position to negotiate agreements for the use of their content. By contrast, Option 1 could only result in best practices, which would not be binding for service providers and would therefore not be sufficient to lead to improvements on market practices. The compliance costs of Option 2 for service providers are limited by the fact that the technologies to be put in place need to be proportionate, and that a majority of the services covered already deploy some content identification technologies. Option 2 is the best option to reach the policy objectives while maintaining a balance between the relevant fundamental rights. Proportionality and impacts on Member States: The measures foreseen under Option 2 are proportionate to the nature of the services covered. Because of the presence of large amounts of protected content on their websites, these services have a significant impact on the online content market and may therefore be expected to put in place certain measures to protect the content in cooperation with rightholders. MS would need to adapt the legislation to establish the obligation imposed by Option 2. 5.3. RIGHTS IN PUBLICATIONS 5.3.1. What is the problem and why is it a problem? Problem: The shift from print to digital has enlarged the audience of press publications but made the exploitation and enforcement of the rights in publications increasingly difficult. In addition, publishers face difficulties as regards compensation for uses under exceptions. Description of the problem: Publishers are increasingly facing difficulties in relation to the digital exploitation of, and the enforcement of rights in, press publications such as newspapers and magazines. The changes to the way copyright-protected content is distributed 155 and consumed in the digital environment have affected press publications in a specific way. The publishing industry is in the middle of a shift from print to digital. Print circulation of daily newspapers has been constantly declining for years (by 17 % in the period 2010-2014 in 8 EU MS),473 a trend that is expected to continue. In all MS sampled by a recent survey, the proportion of consumers who indicated that the internet was their main source to access news largely outweighed those for whom the favourite source was printed newspapers (e.g. 29 % to 3 % in FR; 23 % to 7 % in DE, 34 % to 8 % in IT; 38 % to 10 % in the UK).474 Digital audiences of newspapers and magazines have been growing exponentially: web traffic has doubled over the last five years (from 248.4 to 503.4 million unique users between 2011 and 2015).475 Today, newspapers and magazines' websites and apps are the main services used to access news for 42 % of users in the EU.476 Despite the growing success of publishers' content online, the increase of publishers' digital revenues has not made up for the decline of print. Between 2010 and 2014, news publishers' total print revenues decreased by €13.45 billion477 and digital revenues rose by €3.98 billion: a net revenue loss of €9.47 billion (-13 %).478 In addition, news publishers report that the current decline of the industry has already led to closing down or reducing their editorial teams, in particular in the case of smaller and regional newspapers. 479 Several factors may explain this situation. On the one hand, press publishers have traditionally made available online large proportions of their content for free, since the early days of the internet. This business model was sustainable when print revenues ensured sufficient returns of investments and the internet was an additional source of brand exposure and advertising revenues. With the decline of print, publishers have become increasingly dependent on the monetisation of their digital content, but they manage to do so today only to a limited extent. Paywalls and B2C digital-subscription offers are being increasingly proposed, in particular by the main newspaper and magazine brands, but today they only account for around 10 % of news publishers' online revenues.480 Freely-available content remains crucial as it attracts advertising revenues, which are today still the main contributor to press publishers' digital 473 See Annex 13A. Data regarding BE, FR, DE, FI, PL, IT, ES, UK: decline of daily newspapers range from -8 % in BE to -52 % in IT. Of magazines from -6 % in BE to -39 % in IT. These data have been provided by the press publishing sector (EPC, EMMA, ENPA and NME after carrying out an internal survey among their members). Other sources show similar trends: according to a Deloitte study commissioned by Google, the circulation of traditional print journalism decreased in DE by 41 % between 2001 and 2014; FR -10 % between 2001 and 2011. Source: “The impact of web traffic on revenues of traditional newspaper publishers. A study for France, Germany, Spain and the UK”, Deloitte, March 2016. http://www2.deloitte.com/content/dam/Deloitte/uk/Documents/technology-media- telecommunications/deloitte-uk-impact-of-web-traffic-on-newspaper-revenues-2016.pdf 474 Source: Reuters Institute Digital News Report 2015, p.10. http://www.digitalnewsreport.org. In some MS, online is the first source of news, in others this is TV. See Annex 13A for further details. 475 See Annex 13A. Data provided by the press publishing sector as regards BE, FR, DE, FI, PL, IT, ES, UK. 476 Source: Eurobarometer on Internet users' preferences for accessing content online (n° 437/ March 2016) – Types of services used to access the news online. See Annex 13A. 477 See Annex 13A. The decrease of print revenues is caused by a decline of both sales and advertising revenues; the latter have declined by €7 billion between 2010 and 2014. Source: PwC Entertainment and Media Outlook 2015-2019. 478 Source: PwC Entertainment and Media Outlook 2015-2019. For country specific figures data provided by the press publishing sector see also Annex 13A. 479 2016 public consultation on the role of publishers in the copyright value chain. 480 Source: Deloitte, 2016, p.12-13. For example, according to this study, advertising revenues captured by newspaper publishers in the UK were estimated to reach €285 million or 11 % of the total local display advertising market in 2014. 156 revenues. However, the large proportion of press publishers' content available online has also favoured, over time, the emergence of online service providers, such as social media and news aggregators, which base in full or in part their business models on reusing or providing access to such content. In 2016, social media (22 %), news aggregators (14 %) and search engines (21 %) are, taken together, the main way to read news online for 57 % of users in the EU.481 The relation between these online services and press publishers is complex. On the one hand, they increase the visibility of press content and bring new traffic –and thus advertising revenues– to newspaper websites.482 According to a recent study covering FR, DE, UK and ES, 66 % of visits to newspapers' websites consist in referral traffic, i.e. traffic channelled by other online services, the total value of which has been estimated to be €746 million in the 4 MS considered.483 On the other hand, 47 % of consumers browse and read news extracts on these websites without clicking on links to access the whole article in the newspaper page, which erodes advertising revenues from the newspaper webpages.484 Press publishers have attempted to conclude licences with online service providers for uses of their content online, and sought to participate in the advertising revenues generated by their content on third parties' websites. However, they have generally not managed to do so, despite the fact that these services often engage in copyright-relevant acts.485 More generally, the opportunity offered by the digital environment has not translated into the emergence of a solid B2B licensing market for online uses of press publications. Press publishers generally point out that B2B-licence revenues are a very low proportion of their online revenues and that they face considerable difficulties in concluding licences with online service providers.486 Services distributing digital press publishers' content to consumers based on licensing agreements are just beginning to be tested now.487 Cooperation agreements between major online service providers and publishers, which aim at supporting technological solutions to improve readers' experience (in particular on smartphones) and generate higher advertising revenues, are beginning to emerge.488 However, these agreements generally do not specifically target the use of content by online service providers. 481 See Annex 13A. Source: Eurobarometer Flash 437- Types of services used to access the news online. 482 According to Google, their services alone send 10 billion clicks worth of traffic to news publishers' websites each month, and each visit is for them an opportunity to earn revenue through advertising and subscription. They state that in 2015 their partners around the world earned more than $10 billion using their AdSense products. Source: Google's answer to the 2016 public consultation. 483 Source: Deloitte, 2016. 484 See Annex 13A. Source: Eurobarometer Flash 437 - Use of news aggregators, online social media or search engines to access the news online. 485 According to the case-law of the CJEU, copying parts of newspaper articles is copyright relevant (covered by the exclusive right of reproduction) in all cases where these parts are original, in the sense that they are their author's intellectual creation (see Case C-5/08, Infopaq). 486 At the moment, a B2B licensing market for digital publishing content appears to have only emerged in the area of media monitoring. Licences have brought revenues to publishers amounting to €6 million in FR and £26 million in the UK in 2015 according to media monitoring industry. Source: AMEC-FIBEP's answer to the 2016 public consultation. 487 Notably the Dutch based company Blendle. See Annex 13C. 488 See Annex 13C. In 2015 and 2016, Facebook (Instant Articles), Google (AMP) and Apple (Apple News) developed three platforms aimed at delivering news to mobile users in an optimised (easier/faster) way, so as to increase exposure of publishers' content while allowing them to achieve a better monetisation of their content, notably through advertising. Yahoo also established mechanisms to facilitate the monetisation of news content, based on a share of advertising revenues when portions of publishers' articles are included within their service and/or payment of a fee for inclusion of articles as a whole (source: Yahoo's answer to the 2016 public consultation). On a wider scale, Google's Digital 157 The problem described above does not affect publishers other than press publishers to the same extent, due to the different nature of their products and business models. Book publishers generally do not make their content freely accessible online in the same way press publishers do. As a consequence, online services such as news aggregators and social media hardly play a role as distributors of book content at the moment. The online distribution of e-books generally follows a more traditional linear model, based on copyright licences between publishers and online distributors (with or without the intervention of intermediaries), in many cases large multimedia online service providers. Scientific publishers generate revenues either through subscription licences with universities and similar establishments or, when they make available their content online under the open access model, by charging authors for the publication. Because of the specific nature of the scientific publications, advertising revenues as well as traffic generated by online service providers hardly play a role in this market. An additional, more specific problem which affects all publishers, in particular book and scientific publishers, relates to their ability to receive compensation for uses of their publications under exceptions. Publishers bear the economic risks linked to the exploitation of the works contained in their publications and may suffer losses when such works are used under exceptions or limitations to copyright. However, they currently face legal uncertainty as regards their ability to receive compensation for such uses. This issue has come to the fore following a recent decision of the CJEU where, stressing the fact that publishers are not rightholders under the current EU rules, the Court has questioned the lawfulness of mechanisms existing in a number of MS under which publishers have traditionally received compensation for uses of their publications under exceptions or limitations. 489 This case-law concerns predominantly the private copying and reprography exceptions, but extends potentially to uses under other exceptions that are subject to compensation. As illustrated in the table below, publishers currently receive compensation in at least 18 MS, under different national arrangements. Detailed quantitative information was available concerning 12 of these MS and is presented in Annex 13D. National situation Member State490 Compensation paid to both authors and AT, BE, BG, CZ, DE, EE, publishers for uses under one or both of the ES, EL, FR, HU, HR, LT, private copying / reprography exceptions LV, NL491, PL, PT, RO, SI, SK Compensation paid only to authors for uses DK, FI, IT, SE under private copying / reprography exception No compensation for uses under private copying CY, LU, MT / reprography exception No private copying / reprography exception IE, UK News Initiative (DNI) – of which AMP is part - is an ongoing collaboration/forum with publishers based on granting funds or technology support to innovative projects in online news. 489 Judgment of 12 November 2015 in Hewlett-Packard and others (C-572/13. EU:C:2015:750) 490 The overview over national practices provided here is indicative. It is based on the Commission's best effort based on information available at the time of writing. MS on which detailed data is available in Annex 13D are presented in bold. 491 Available information concerning the NL was inconclusive as to the actual payment of compensation to publishers. 158 Some of these MS492 are currently considering introducing national legislation to take into account the case-law of the CJEU and keep in place compensation schemes benefiting publishers. Others could follow if no action is taken at EU level. However, under the current EU rules it is not fully clear to what extent MS are allowed to do it. The economic implications of this problem are illustrated by the fact that in the 12 MS for which data were available, an aggregated total amount of €40 million was distributed to publishers over the course of the respective last financial year, as indicated in Annex 13D.493 It is important to note that for publishers these revenues are not associated with any marginal costs and therefore represent a significant source of income, in particular for smaller publishers. Drivers: [Incomplete protection of publishers' contribution and investments in publications at the EU level] EU copyright law recognises and incentivises the economic and creative contribution of film producers, phonogram producers and broadcasting organisations by granting them related rights. Publishers across different sectors also play an important role in assembling, editing and investing in content. However, today, despite playing a comparable role in terms of investments and contribution to the creative process to film and phonogram producers in their respective industries,494 publishers are not identified as rightholders under EU copyright rules.495 They generally exploit and enforce their content on the basis of the rights transferred to them by authors (writers, journalists, photographers, etc.).496 Some MS grant a specific additional protection to publishers as authors of collective works (e.g. PT). In addition, other MS (notably DE and ES) have recently adopted national measures (generally referred to as ‘ancillary rights’) to grant publishers specific protection as regards uses of their content online largely as an attempt to address the above described problems related to the exploitation and enforcement of rights in press publications in the digital environment. The DE law grants an exclusive right covering specifically the making available of press products to the public, which has been implemented by the main press publishers under collective management schemes.497 The ES law establishes an obligation for online service providers to pay compensation to publishers (which cannot be waived) for uses of their content online.498 492 BE and DE in particular. 493 2014-2015. See International Survey on Text and Image Copyright Levies 2014, available http://www.ifrro.org/sites/default/files/levies_2014_online.pdf and also Annex 13D. 494 In the analogue era, press publishers had a stronger control of the exploitation of their press publications, as the main means of dissemination of their content was the distribution of tangible copies of newspapers and magazines. Licensing out their content to third parties was generally not needed to further disseminate it once published. 495 EU copyright law provides exclusive rights of reproduction and making available to the public to film producers, phonogram producers and broadcasting organisations. In contrast, under EU law publishers do not hold such rights in respect of their publications. 496 The transfer of journalists' rights to publishers is governed in MS by copyright law and contract law. A publisher is typically transferred the journalists' rights against the payment of remuneration (as part of his salary or as an addition; or independently in the case of freelancers). The scope of the transfer is set out in the contract (normally what is needed for the exploitation of the newspaper or magazine, but it may go beyond). It can also be established in a legal presumption in copyright law. For further details on the industry practices, see 2016 study on the “Remuneration of authors of books and scientific journals, translators, journalists and visual artists for the use of their works”, Institute for Information Law (IViR) of the University of Amsterdam, together with Europe Economics, PLS. 497 See Annex 13B for an overview of provisions in MS copyright law granting specific protection to publishers. 498 Legally, the ES law is an exception allowing certain uses of news content online, coupled with an unwaivable compensation, subject to compulsory collective management, to be paid to the publishers or authors of the original press article. 159 None of these two recent ‘ancillary rights’ solutions at national level have proven effective to address publishers' problems so far, in particular as they have not resulted in increased revenues for publishers from the major online service providers. This incomplete protection in the EU causes legal uncertainty, notably as regards exploitation of press publications through B2B licences, and makes enforcement complex and sometimes inefficient (e.g. proving the chain of title of all rights related to a publication).499 Moreover, different approaches to the protection of publishers at national level result in fragmentation in the single market. The fact that publishers are not protected as rightholders at the level of EU law but rely on the rights of the authors transferred to them has furthermore contributed to the situation of legal uncertainty concerning their ability to receive compensation under exceptions as described above. [Differences in bargaining power] The gap in the current EU rules further weakens the bargaining power of publishers in relation to large online service providers and contributes to aggravate the problems faced by press publishers as regards the online exploitation of, and enforcement of rights in, their content. Online service providers often have a strong bargaining position and receive the majority of advertising revenues generated online (e.g. 40 % of total advertising investments in BE, according to publishers).500 This makes it difficult for press publishers to negotiate with them on an equal footing, including regarding the share of revenues related to the use of their content. Consequences: The works and other protected subject-matter published by different publishing industries (e.g. newspapers and magazines, books and scientific journals) are essential in a democratic society, as they play an important role in citizens' access to knowledge and good quality information, including on issues related to democracy and democratic decision making. The problems described above contribute to a situation of general decline of publishers' revenue streams in the press sector and to potential substantial loss of revenues linked to compensation for uses under copyright exceptions across the entire publishing industry. If the investments and contribution of publishers increase the value of publications but are not backed by appropriate revenues, the sustainability of publishing industries in the EU may be at stake, with the risk of negative consequences on media pluralism, democratic debate, quality of information and cultural diversity in the European society. How the problem would evolve: In the near future, the production and distribution of digital content, notably on online service providers (both websites and apps) will continue to require growing investments from press publishers. Without intervention at EU level, press publishers will continue licensing the use of their publications mainly on the basis of the rights transferred to them by the content creators. In a constantly-evolving market, with more and more players and means of content distribution, 499 Today, publications comprise a large variety of content including text, images and videos. In the news sector, these are created and updated constantly by hundreds of creators. Traditional news publishers like Trinity Mirror in the UK and Bild in Germany have gained audience and advertising revenue through creating a range of video output for their own websites and for distribution through social media. The video news consumption online is increasing in the EU (e.g. in 2015: 27 % of users accessing online news in ES; 25 % in IT; 18 % in DE and DK). Source: Reuters Institute Digital News Report 2015. 500 Source: “Vers un modèle économique durable pour les éditeurs belges de journaux et de magazines: aperçu de l'importance des licences”, 2014, p.10-11. This report was published by Journaux Francophones Belges (JFB), The Ppress and Vlaamse Nieuwsmedia. https://www.mediaspecs.be/files/upload/file/etude-d-impact-licences-fr.pdf. 160 this is likely to increase legal uncertainty, weaken the position of press publishers, accentuate their loss of revenues, complicate enforcement of rights and eventually affect the number and quality of print media. This would be prejudicial for the media pluralism, good quality information and the role they play in democratic societies. MS may decide to address these problems at national level, as DE and ES have recently done, but this is likely to be ineffective, due to the lack of scale of national solutions. Furthermore, it would only increase fragmentation of the legal framework on the online uses of press publications in the EU. In addition, in the absence of EU intervention, the decreasing share of the compensation due for uses under exceptions resulting from the current situation following the recent case-law of the CJEU would put at risk in particular the smaller players throughout the whole publishing industry (news, books and scientific publishers), who are currently relying on this compensation and are essential for the cultural diversity and media pluralism in this sector. 5.3.2. What are the various options to achieve the objectives? The general and specific objectives are described in section 5.1.3. Baseline No policy intervention. Under this option, the use of publications would remain governed by the rules applicable to the rights transferred to press publishers by authors and other rightholders. Issues related to the different bargaining position of press publishers and online service providers would not be addressed, without prejudice to the possible application of competition law. This option would rely on market developments and stakeholders reaching voluntary agreements to cooperate and find win-win solutions concerning the online dissemination of publishers' content, notably as regards newspaper and magazine online content.501 At the same time, certain MS could decide to amend their national legislation to introduce rights for press publishers at national level, which is likely to be ineffective and increase fragmentation of copyright rules in the single market. Some MS may try to address the problem of legal uncertainty as regards publishers' (across different sectors) ability to receive compensation for uses under private copying, reprography and other exceptions through national law within the boundaries of the current EU rules, including the case law of the CJEU. Other MS may hesitate to do so in the absence of EU intervention because of the situation of legal uncertainty described above. Stakeholders' views Most online service providers, such as content aggregators and social networks, oppose legislative intervention and support the status quo, as they consider that the relationships between them and press publishers should be left to the market. Most publishers consider that the status quo cannot solve the identified problems. Option 1 – Encouraging stakeholders' dialogue and cooperation to find solutions concerning the dissemination of press publishers' contents Under this option, the Commission would encourage stakeholders, namely press publishers and online service providers, to identify collaborative solutions to facilitate the conclusion of agreements for the online use of press publishers' contents. Notably, the Commission would: (i) launch a structured dialogue between press publishers and online service providers which would take stock of existing market initiatives502 and foster discussions to identify common solutions which would facilitate the emergence of cooperation agreements between the two categories of stakeholders; and 501 See Annex 13C for an overview of market-led solutions in the press sector. 502 See Annex 13C. 161 (ii) monitor the implementation of any resulting initiative and assess its effectiveness to ensure a fair distribution of revenues generated by the reuse of press publishers' contents, in particular to assess whether specific EU legislative intervention at a later stage is warranted. Stakeholders' views Services providing access to publications could be supportive of this option, as it would not imply creation of any further rights at EU level. Most publishers consider that such a non-legislative approach would not be sufficient to tackle the challenges they currently face. Option 2 – Introduction in EU law of a related right covering digital uses of press publications This option would ensure that the creative and economic contribution of press publishers (such as newspaper and magazine publishers) is recognised and incentivised in EU law, as it is today the case for other creative sectors (film and phonogram producers, broadcasters). The creation of a new category of rightholders (press publishers) would not affect the scope of the exclusive rights granted to them, notably the rights of making available to the public and of reproduction, which are harmonised under current EU copyright rules. This means, in particular, that this intervention would not change the legal status of hyperlinks in EU law as it follows from the case-law of the CJEU according to which the “provision on a website of clickable links to works freely available on another website” does not constitute a copyright relevant act.503 The legal intervention would be as follows:  Protected subject-matter: The protection would benefit publishers of press publications such as newspapers and magazines according to the definition provided for in the legal instrument.  Rights covered: press publishers would be granted the exclusive rights of making available to the public and reproduction to the extent needed for digital uses.  Exceptions: exceptions and limitations laid down in EU copyright law, including new ones introduced by this legislative intervention, would apply.  Protection of TPMs and Rights-Management Information and enforcement: Articles 6, 7 and 8 of the InfoSoc Directive, as well as Directive 2004/48504 (the "Enforcement Directive"), would apply.  Relationship with authors' rights: Publishers' rights would apply without prejudice to authors and other creators' rights on their individual contributions (news or magazine articles, photographs, videos) which compose the protected subject-matter (the final press product).  Term of protection: The term of protection of other related rights such as those granted to film and phonogram producers is usually 50 years. A shorter term of protection should be proposed in this case, taking into account the shorter economic cycle of the exploitation of press content (a relatively short period after publication). This is consistent with the situation in the MS where publishers are granted self-standing protection in copyright law (see Annex 13B) and in which the term of protection is usually shorter than for other related rights. Three scenarios are considered in this IA: o A) Medium term of protection (between 10 and 50 years). o B) Short term of protection (between 5 and 10 years). o C) Very short term of protection (between 1 and 5 years). 503 See judgment of 13 February 2014, in Svensson and others (C-466/12, EU:C:2014:76). 504 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 57, 30.4.2004, p. 45–86. 162 Stakeholders' views Most press publishers, in particular the main newspaper and magazine organisations which replied to the public consultation, support the introduction of a new related right at EU level. Authors in the press sector (notably journalists) have expressed mixed reactions when replying to the public consultation. They generally consider that the bargaining power of the publishing industry in relation to online service providers should be strengthened but they express some concerns as to the possible negative impact that new rights granted to publishers could have on them. Service providers, such as news aggregators and media monitoring services, are generally opposed to granting a new related right to press publishers as they claim that this would disincentive investments in innovative online services and create barriers for small businesses. Consumer organisations have expressed reservations as regards the possible introduction of a related right and the concern that this could make it more difficult for consumers to access existing press content online. At the same time, some consumer organisations recognise that a related right could have a positive impact on the quality of news content. Option 3 – As Option 2 plus introduction, in EU law, of the possibility for MS to provide that publishers may claim compensation for uses under an exception In addition to the introduction of the new related right for online uses of press publications described under Option 2, this option would introduce a specific provision in EU law clarifying that MS may choose to establish in their legislation that where an author has transferred or licensed a right to a publisher, such a transfer constitutes a sufficient legal basis for the publisher to claim compensation for the uses made under an exception to the transferred or licensed right. Stakeholders' views (In addition to position as regards Option 2). In the replies to the public consultation, publishers other than press publishers (book and scientific publishers) have mainly pointed to problems different from those raised by press publishers, notably the legal uncertainty as regards compensation for uses under exceptions. Therefore, publishers across different sectors are expected to be supportive of this option, as it establishes a margin of manoeuvre for MS to introduce national laws that foresee the distribution of compensation to publishers as derived rightholders, thus in principle allowing the existing systems in many MS to endure, although there may be adaptations necessary. In the public consultation some authors have expressed support for such national arrangements, whereas others are sceptical regarding the extent to which they benefit from them. Consumers are expected to take a neutral view as regards the additional elements in Option 3, as this intervention in the area of compensation for exceptions should not increase the overall level of compensation due and hence of levies charged to final consumers. Discarded option Introduction in EU law of a related right covering all publications, including publications other than press: The identified objectives could be achieved also by introducing in EU law a related right covering all publishers in all sectors (press, book, scientific publishers, etc.). However, such an option is not considered in this IA as it would not be a proportionate way to address the problems faced by the publishing industry and described in Section 5.3.1. The problem related to press publishers' difficulties to reach agreements and monetise use of their content by online service providers can be addressed by a related right applicable to press publications only (Options 2 and 3). The situation as regards publishers' ability to receive compensation for uses under exceptions, which affect publishers across all sectors (news, book, scientific publications) can be addressed in a proportionate way by the introduction of the clarification concerning publishers' claim for compensation (Option 3). 5.3.3. What are the impacts of the different policy options and who will be affected? Approach The options presented above would primarily affect publishers and authors whose works are part of publications (in particular journalists, writers, photographers, etc.) as well as online services providing access to or using publications, and consumers. The impacts affecting these four groups are presented separately:  For publishers, the main impacts are related to legal certainty and their ability to obtain revenues (including from compensation) for the use of their publications and to enforce their rights. 163   For authors and other creators of the individual contributions which compose a publication, the impacts on their current revenues and their ability to exploit their individual rights independently from publishers' rights are considered.  For service providers, impacts on legal certainty in their relations with publishers and economic impacts in their business models (licensing and transaction costs) are considered.  For consumers, impacts related to the conditions to access content are considered. The policy options are also assessed in relation to their general social impacts (on cultural diversity and the availability and findability of content) and impacts on fundamental rights (property right and freedom of information). Baseline IMPACTS ON STAKEHOLDERS Publishers Without intervention at EU level, legal uncertainty in this sector is expected to increase and publishers' bargaining position would further weaken. Print circulation of daily newspapers in Europe is expected to decline by 19 % between 2014 and 2019.505 In terms of revenues, the number of people who pay for news is projected to grow in the future between 7 % and 23 % in the UK, ES, IT and other MS.506 However, the loss of print revenues is not expected to be compensated by the increase of online revenues. Online revenue streams feature smaller margins, as the competition for digital advertisement revenues is tough and free-access press items are widely available. Moreover, access to news through smartphones is increasing every year (e.g. in the UK, of those who use a device to access digital news, those who say it is now their main device have risen from 15 % to 27 % since 2013 – this figure has risen to 47 % of those aged 25-34).507 As advertising revenues linked to access through smartphones are lower than through computers, this evolution of news consumption would make overall revenues decrease. PwC estimates that Europe's newspaper and magazine revenues will decrease, under this option, by 7.34 % in the period 2014-2019.508 In this scenario, service providers may be willing to agree on the use of publishers' content in a satisfactory way for both publishers and themselves, as some of them do today.509 However, it is difficult to envisage whether these agreements will be kept or extended in the long term if there are no external incentives, particularly as this market is constantly evolving. Publishers would still face difficulties to license their publications or prevent unauthorised uses thereof. In the long term, the quality of their content and the reputation of their brands may be affected. Legal uncertainty as regards publishers' ability to receive compensation for uses under exceptions would persist. Authors A decline in the publishing industry would have a negative impact on rightholders who depend on this sector. Journalists, photographers and other authors would continue to see their contributions to publications being reused by services other than the publishers they have transferred their rights to, without getting any appropriate income in return. As a result, the quality of journalism may be negatively affected in the medium term. 505 See Annex 13A. Source: PwC Entertainment and Media Outlook 2015-2019. 506 Source: Reuters Institute Digital News report 2014, p.58. 507 Source: Reuters Institute Digital News report 2015, p.68. 508 See Annex 13A. Source: PwC Entertainment and Media Outlook 2015-2019. 509 Xavier Grangier, Head of Digital / CTO at Libération sets out the positive impacts of using Facebook's Instant Articles: https://www.linkedin.com/pulse/lib%C3%A9ration-facebooks-instant-articles-xavier- grangier 164 Service providers Under this scenario, some online service providers would continue negotiating the use of publications with publishers on the basis of the transferred rights as it is the case, for instance, of some media monitoring and analysis organisations which already pay licence fees to publishers.510 Others would continue to use the publications without licence or other commercial agreement. Finally, it should be noted that a decrease of the number or quality of press publications could be generally negative for service providers, as they would have less content to base their business models on. Consumers This option would be neutral regarding economic impacts on consumers. SOCIAL IMPACTS Under the baseline scenario, incentives to create and invest in publications would largely remain the same, which may negatively affect the number of publications in the medium term. This would entail negative social impacts, including regarding cultural diversity, media pluralism and the availability and findability of a wide variety of publications for consumers. IMPACTS ON FUNDAMENTAL RIGHTS This option would have no impact on copyright as property right (Article 17 of the Charter), since there will be no change to current copyright rules. The right to freedom of expression and information (Article 11 of the Charter), which includes the pluralism of the media, may be negatively affected in the long run if the sustainability of the press industry is at stake. Option 1 – Encouraging stakeholders' dialogue and cooperation on finding solutions concerning the dissemination of press publishers' contents IMPACTS ON STAKEHOLDERS Publishers The non-binding nature of the stakeholders' dialogue would make the impacts of this option and its effectiveness to solve the problems raised by publishers mainly depend on the willingness of the stakeholders to participate in it and to take commitments. The complexity of the market and the variety of players and business models, as well as their unequal bargaining power and the opposed views of the relevant stakeholders as to how the reuse of press content benefits the other party, are all factors which may limit the effectiveness of this option. As a result, the impacts of this option are expected to be rather limited and only slightly better than the baseline scenario. This option would not solve the specific problem concerning publishers' ability to receive compensation from uses of their publications under exceptions (which can only be addressed through legislation). In all, these limited impacts may not make up for the costs related to the participation in the dialogue, considering in particular that many publishers are SMEs. Services providers Neutral impacts are expected, or slightly positive if they manage to reach long-lasting favourable agreements with press publishers, when they see a business opportunity to do so. 510 Source: AMEC-FIBEP's answer to the 2016 public consultation. 165 Impacts on authors and consumers Like baseline. SOCIAL IMPACTS Like baseline. IMPACTS ON FUNDAMENTAL RIGHTS Like baseline. Option 2 – Introduction in EU law of a related right covering digital uses of press publications IMPACTS ON STAKEHOLDERS Publishers Under this option, press publishers would still need to acquire authors' authorisation to publish their contributions in a newspaper or a magazine, as they do today.511 Therefore, the relationship authors-publishers would remain untouched. In contrast, this option would provide these publishers with a substantial added value when it comes to licensing out their publications for online uses by third parties, something that, as explained in Section 5.3.1, is increasingly important for them in the digital environment. Being able to authorise the use of their press publications on the basis of an own self-standing right would place press publishers in a comparable situation to the one of other related rightholders in EU law, such as film and phonogram producers, thus recognising their role in terms of investments and overall contribution to the creative process and allowing them to benefit from: 1. More efficient licensing mechanisms. While a self-standing related right would not remove the need from publishers to acquire authors' rights also for the purposes of further licences with third parties, it would nevertheless provide them with a clearer position in the context of negotiations with them as they will be able to rely on their own right. Harmonised protection at EU level would further increase the legal certainty to the benefit of press publishers. 2. More efficient enforcement of rights. Enforcing transferred rights is burdensome and time- consuming if the number of content contributors is very high, as it is typically the case with press content. As set out in Section 5.3.1, a court may ask a publisher, as licensee or transferee, to prove that it owns all the allegedly infringed rights (e.g. in one case reported by the publishing industry up to 22,000 contracts with journalists in order to file a lawsuit for the mass infringement of publishers' rights in DE). In contrast, under this option publishers would enforce their own rights. They would be treated by the national courts as original rightholders, not as licensees. As a result, publishers would be able to fully benefit from the remedies provided for under the Enforcement Directive and the related national laws.512 Consequently, getting injunctive relief or instituting infringement proceedings before the court would be swifter. 3. Stronger incentives on online services to seek licences for the reuse of press publishers' content. Today, some online service providers take advantage of the inefficiencies in the 511 Subject to provisions in national law regarding presumption of transfer of rights, which would not be affected. 512 In particular the presumption of ownership pursuant to Article 5(b) of Directive 2004/48/EC, which only applies to rightholders, would also apply to press publishers. 166 enforcement of large numbers of transferred authors' rights, knowing that they would not face any significant opposition due to the burdensome processes press publishers would have to go through to enforce those rights. More efficient enforcement is therefore likely to result in increased licensing opportunities for publishers as it would discourage online service providers from infringing publishers' rights and incentivise them to seek the required licences. As a combined effect of the above mentioned factors, this option would increase press publishers' bargaining power vis-à-vis third parties, thus creating new licensing opportunities in the digital environment. The expected reduction of piracy in this sector is likely to increase revenues related to the legal exploitation of press publications (i.e. the reduction of piracy would redirect readers to legal sources). Moreover, some of the online service providers which reuse press publications without the required authorisation may seek licences or monetisation agreements with press publishers, thus raising revenues stemming from licences. While it is difficult to quantify these benefits, it is important to note that losses for news publishers related to piracy have been estimated to be around €10.76 million per year in BE, and the industry estimates €27.59 million annually on increased licensing revenues if piracy decreased513. News publishers have also estimated that piracy causes 30 % loss of digital transaction volume and a potential 10-20 % of turnover in DE, while the introduction of a new related right could lead to a 10 % increase in revenues or between 10-15 % in publishers' operating profit margin514. Similar potential revenues have been estimated to amount to €31 million in FR515. The positive impacts on publishers of the protection granted under this option would be reinforced by its EU scale, thus providing a more effective protection than under different national laws.516 In particular, intervention at EU level is expected to strengthen publishers bargaining powers in a more effective way than it has happened under national measures such as the ‘ancillary rights’ adopted in DE and ES (see Annex 13B), where major online service providers either closed down their news aggregation services (ES) or concluded free licences for the use of publishers' content (DE) which has not generated any remuneration for publishers so far. Moreover, the related right granted to press publishers under this option would be different from the DE law, which can only be exercised against specific categories of online service providers, and from the ES law, as it would be an exclusive right and not an unwaivable compensation. Accordingly, the related right recognised to publishers at EU level would leave press publishers a greater margin of manoeuvre to negotiate different types of agreements with service providers than it has been the case in DE and ES and is therefore expected to be more effective for them in the long run (notably as it will allow press publishers to develop new business models in a flexible way). The effects on press publishers described above would materialise in all the three scenarios considered as regards the term of protection. Scenario A (10 to 50 years) would place press publishers in a situation comparable to that of other related rightholders. Scenario B (5 to 10 years) would address the problem of press publishers as regards the use of their content by online service providers such as news aggregators and social media, and would also provide publishers with a clearer legal framework when concluding licensing agreements with service providers having a different business model (e.g. distributors of multi-publishers content, services providing access to news archives). Scenario C (1 to 5 years) would address specifically the situation concerning online service providers such as news aggregators and 513 Source: “Vers un modèle économique…”, op.cit., p.19. 514 Data provided by the press publishing sector as regards BE, FR, DE, FI, PL, IT, ES, UK. 515 Source: Syndicat de la Presse Quotidienne Nationale's answer to the 2016 public consultation. 516 See Annex 13B. 167 social media but may not be fully future-proof as regards exploitation of press content by other businesses. Under this option, publishers other than press publishers would not be affected, as per the baseline scenario. Therefore, problems faced by these publishers as regards claims for compensation would not be addressed. Authors Improvements to the press publishers' bargaining position under this option could indirectly have a positive impact on authors and other rightholders working in this sector insofar as publishers transfer part of these benefits to the authors in terms of job creation or better salaries/remuneration (which would vary on a case-by-case basis). Authors, journalists in particular, have expressed concerns, in the context of the public consultation, that a publishers' right could make it more difficult for them to exploit their works separately from the publisher. The related right under this option would protect the value added by the publisher, which in a print product is not always easily separable from the author's work (in contrast with, for instance, a cinematographic work, where the subject- matter of protection of the producer, the film, is clearly different from the script, which is a text-based work). Today, when a journalist grants a publisher a non-exclusive authorisation to use an article,517 he generally remains entitled (as the author of the work) to further use it (e.g. to authorise the use by a third party or to publish it himself in a collection or anthology). This is common industry practice even when the author's original manuscript has been subject to amendments during the editing process carried out by the publisher. Intervention in EU law under this option will clarify that the introduction of a related right for press publishers does not affect authors' ability to exploit their works independently. Provisions to this effect exist in MS laws granting self-standing protection to publishers.518 The three scenarios (A, B, C) as regards the term of protection should be generally neutral on authors considering that the related right granted to publishers will not affect authors' rights. Service providers The impact of this option on service providers would depend on the size, bargaining power and business model of the different players. The clear identification of press publishers as rightholders is likely to prompt more online service providers to conclude agreements with publishers for the use of their content online, thus accelerating the cooperation which is starting to emerge between larger online service providers and the publishing sector (see Section 5.3.1 and baseline). The introduction of a new right is not likely to substantially affect the ongoing initiatives and would probably foster the conclusion of more agreements between the major internet players and the publishing industry in the medium to long term. Some service providers which already conclude licences covering specifically the use of digital press content, such as the media monitoring services, have expressed the concern that licence fees may increase as a result of the introduction of a new publishers' right.519 In practice, licence fees would depend on specific negotiations and business models and not on the legal basis on which agreements are concluded (transferred authors' rights today, press 517 In the context of a contract (e.g. licence or employment relation). 518 ES, IE, IT, RO and other MS provide for similar provisions in their current national laws. See Annex 13B. 519 Source: AMEC-FIBEP's answer to the 2016 public consultation. 168 publishers' rights under this option). Therefore, publishers may not have an interest in raising licence fees in licensing markets which already function today. In summary, the main impacts of this option would affect those online services providers which are not concluding licences for the reuse of publishers' content today when they should in principle do so, pursuant to copyright law. Therefore, neither the services which today have agreements with publishers nor new entrants in this market would be negatively affected in terms of additional costs or fees. As indicated in the description of the options, the introduction of a new related right for press publishers would not alter the scope of the right of making available to the public. Therefore, the question whether certain uses, including hyperlinking and browsing, are today copyright relevant under EU law, would not be affected by this option. Finally, the introduction of uniform rules at EU level under this option would have the positive effect for service providers to reduce fragmentation of the rules protecting publishers across MS, making it easier for them to conclude licences for multi-territorial uses of publishers' content. This aspect, together with better market conditions supporting the emergence of new B2B licence opportunities for press products, could foster innovation and facilitate the emergence of new and diverse business models of digital press content distribution (such as streaming, access to broad multi-brand catalogues of different newspapers and magazines, etc).520 Service providers could in principle be affected by the three term of protection scenarios (A, B, C) to a varying extent, depending on their business models (i.e. whether they target the distribution of daily news, as it is generally the case of online service providers such as news aggregators and social media, or rather longer term uses, such as access to newspaper archives). However, in practice, the impact of a press publishers' right on these stakeholders may not substantially change under the three scenarios. This is due to the fact that service providers would have in any event to seek authorisation for the use of press content even after the expiry of the publishers' right because they would still need to clear – as it is already the case today – the rights of the authors in press publications (which have a longer term of protection: i.e. life of the author plus 70 years). Consumers Consumers reap considerable benefits from news aggregators and social media. At the same time they also benefit from high quality newspaper content feeding these channels of consumption. By fostering the production of high quality press content, this option is expected to have a positive impact on consumers. Better market conditions for the press publishing industry could give rise to the development of innovative offers for the digital distribution of press content, with larger catalogues and more choice. Consumer organisations have raised concerns that granting additional protection to publishers could negatively affect consumers as a result of the consequences that they believe this intervention could have on online services providing access to press content online. The extent to which this may happen in practice depends at least in part on the impact of the option on service providers (see above), including as regards the different scenarios for the term of protection (scenarios A, B and C, above). However, problems experienced by 520 As mentioned above, differently from music and films, where streaming services have now become mainstream of the last few years with brands such as Spotify, Deezer, Netflix, etc, in the press publishing sector these business models have not emerged as consolidated offers yet (one example of service trying this business model is Blendle - see Annex). 169 consumers in ES – which are often quoted as a source of concern in relation to a possible intervention on publishers at EU level (given that a major news aggregators decided to discontinue its service in ES) – are not expected to arise under this option since the related right proposed is different from the unwaivable compensation measure under the ES ‘ancillary rights’ law (see above: impact on publishers). SOCIAL IMPACTS By improving the sustainability of the press publishing sector, this option would have a very positive impact on the number and quality of press publications. European society would benefit from media pluralism and enhanced participation in the democratic debate. IMPACTS ON FUNDAMENTAL RIGHTS Positive impacts on copyright as property right and the right to freedom of information, resulting from the fact that this option is expected to increase the level of protection of press publications and to foster the quality of journalistic content. Option 3 – As Option 2 plus introduction, in EU law, of the possibility for MS to provide that publishers may claim compensation for uses under an exception IMPACTS ON STAKEHOLDERS In addition to the impacts of Option 2, Option 3 would have the following impacts: Publishers This option would have a positive impact on all publishers, in particular book and scientific publishers but also on press publishers regarding their ability to receive compensation for uses under exceptions (notably the reprography exception).521 For example, in DE, the reprography compensation distributed to press publishers has numbered in recent years around €1.5 million per year and has been used exclusively for the education and training of journalists.522 For other publishers, in particular book and scientific publishers, Option 3 is highly significant, as their publications are often used under an exception such as private copying. For instance, in DE in 2013 over €20 million have been distributed to scientific publishers (books and journals) alone and an additional €3 million to other book publishers.523 In 2012 the sum that scientific publishers received amounted even to over €30 million and to €2.3 million to other book publishers.524 Until now, publishers in 18 MS have received (part of the) compensation for uses of their publications under an exception.525 The basis and the details of the respective arrangements in place differ, but in many MS there are joint authors/publishers collecting societies in place that are in charge of negotiating tariffs and collecting the compensation, e.g. in the form of a 521 Press publishers would be able to rely on the new related right for compensation claims regarding online uses of their works under an exception. However, since the new related right covers only online uses, they would not be able to claim compensation under the reprography exception under Option 2 but they would be able to do so under Option 3. 522 See e.g. Verwertungsgesellschaft Wort, Bericht des Vorstands über das Geschäftsjahr 2013, http://www.vgwort.de/fileadmin/pdf/geschaeftsberichte/Geschaeftsbericht_2013.pdf, p. 6 and Bericht des Vorstands über das Geschäftsjahr 2012, http://www.vgwort.de/fileadmin/pdf/geschaeftsberichte/entwurf-final-ende-R.pdf, p. 7. 523 See Verwertungsgesellschaft Wort, Bericht des Vorstands über das Geschäftsjahr 2013, p. 7. 524 Ibid. 525 According to information provided by the book publishing industry: AT, BE, BG, CZ, EE, ES, FR, DE, EL, HU, LV, LT, NL, PL, PT, RO, SI, SK. 170 levy, and distributing it to authors and publishers. In their replies to the public consultation these collecting societies have expressed the concern that their very existence could be put in danger by the current situation of legal uncertainty. In the 12 MS for which detailed data was available, the compensation to publishers amounted to an aggregated sum of €40 million in the respective last financial year.526 Figures differ greatly from MS to MS and range from €24 million in DE to €7,000 in LT for reprography. Option 3 would not change this situation but allow MS to keep the existing systems and provide a clear legal basis for them. More precisely, Option 3 leaves it to MS to decide if they want to put publishers in a position to receive compensation for uses of publications under an exception on condition that the original rightholders benefit in an adequate manner, directly or indirectly, from the compensation due. It also remains neutral regarding the issue of levies as such and aims merely at giving MS discretion regarding the recipients of compensation for uses under an exception or limitation under certain conditions. Thus, depending on the concrete legislative measures passed by the MS, the existing schemes providing for a split of the compensation between authors and publishers as well as the established practise of joint collecting societies could be maintained, so long as it is ensured that authors benefit adequately from the compensation due. Authors The impact on authors (journalists, writers, photographers) would vary across MS, depending on their choices to make use of this option and on the starting situation in the respective MS. Authors have regarded positively, in those MS where they exist, compensation schemes encompassing both authors and publishers. They have traditionally been considered as instrumental to the good functioning of collecting societies and of the print publishing market overall. Therefore the intervention under this option aiming at providing MS with the legal space to keep these systems in place is likely to ultimately benefit authors as well. Accordingly, this option would benefit authors by enhancing transparency regarding the economic value of the compensation due for uses under an exception and the way in which they benefit from it, after transferring or licensing their rights to a publisher. Service providers The additional elements under Option 3 should have no impact on online service providers. Consumers The additional elements under Option 3 should have no additional impact on consumers, as the overall level of compensation would stay the same. This is the case because the optional mechanism proposed additionally under Option 3 would be neutral as to the overall level of harm caused by uses under the exception. SOCIAL IMPACTS Additional positive impacts on cultural diversity are expected under this option, because of the added value that it would bring to publishers across all sectors, in particular smaller book publishers. IMPACTS ON FUNDAMENTAL RIGHTS No additional impact on fundamental rights. 526 See Annex 13D. 171  5.3.4. How do the options compare? Option Effectiveness Efficiency Impact on stakeholders Social impacts and fundamental rights Baseline (0) Publishers would (0) No direct costs (0) Impacts would (0) No direct impact continue to face associated with the depend on the evolution on fundamental difficulties to license baseline option. of the market. This rights. Cultural their publications or uncertainty would diversity may be to get enough prejudice publishers. negatively affected in revenues (including the long term. compensation) for the reuse of their content. Option 1 – (0/+) It could foster (-) Costs linked to (0) Main impacts on (0) No direct impact Stake- new agreements but the organisation of stakeholders would on fundamental holders' depending mainly on the stakeholders' depend on the uneven rights. Cultural dialogue the willingness of the dialogue. willingness of the parties diversity may be parties to participate. to participate in the negatively affected in (0) Legal certainty dialogue and reach the long term. (including on the agreements. claims to receive compensation) across the EU would not be achieved. Option 2 – (++) The EU-scale of (0) No direct costs (++) More efficient (+) Positive impact Introductio the recognition of a associated with this licensing mechanisms on copyright as n in EU law related right for press option. and enforcement property right. of a related publications would measures would help (+) It would help right provide more press publishers to secure the quality covering effective protection conclude digital licences and plurality of digital uses than provisions in and monetise the reuse of journalism. of press national law. their content. publica- (+) As a result, legal (0/+) Authors to benefit tions certainty and stronger indirectly from positive bargaining powers impact on press would foster the publishers. conclusion of B2B (-/+) It will be clearer licences for online that some online service uses of news. The providers that today do positive impact on not do so (even if they publishers would may already be legally remain but decrease required) have to acquire under the three prior licences from press scenarios (A, B, C) publishers. At the same concerning the term time, new innovative of protection. business models for the (-) It would not solve distribution of press the unclear situation could emerge. regarding publishers' (0/+) Positive impact on possibility to claim consumers as regards the compensation for enhanced availability of uses made under an quality content in the exception. long term. Option 3 – Same impacts as Option 2, and additional impacts as follows: As Option 2 (+) It would (+) If provided by (+) Specific positive plus EU effectively solve the national law, publishers impacts on small law unclear situation would be entitled to get book publishers possibility regarding publishers' compensation from would be positive for for claims possibility to claim exceptions in most MS. the cultural diversity. for compensation for compen- uses made under an 172 sation exception. Option 3 is the preferred option. This IA does not take a decision as to whether the term of protection of the related right for press publishers should be as under scenario A, B or C (at this stage this is left for political decisions). Option 1 would not solve the problems effectively, as self-regulatory solutions alone, which depend on the willingness of the different market players to reach agreements, cannot fully address the identified problems. Both Options 2 and 3 would strengthen the bargaining position of press publishers and foster the conclusion of licences. Option 3 would have in addition positive impacts on all publishers in relation to their possibility to claim compensation for uses under an exception, without giving rise to any negative impact on other stakeholders. Proportionality of the preferred option and impacts on MS: Option 3 is the most proportionate option as it allows addressing in a targeted way and in their own merits the specific problems faced by different categories of publishers, without going beyond what is needed to achieve this objective. All MS will have to reflect in their legislation the new related right granted to press publishers at EU level. This is not expected to directly affect the existing provisions in MS laws which are broader (e.g. protection of collective works, presumptions of transfer of rights) or have a totally different subject-matter of protection (typographical arrangements) but may require adapting national laws which have a similar subject-matter of protection to bring them fully in line with the scope of the right granted at EU level. The complementary element introduced in Option 3 (possibility for MS to provide that publishers may claim compensation for uses under an exception) is an enabling provision that does not require MS to change their existing laws, but should they wish to do so, provides them with a clear margin of manoeuvre to allow for the sharing of compensation for exceptions between authors and publishers. 5.4. FAIR REMUNERATION IN CONTRACTS OF AUTHORS AND PERFORMERS 5.4.1. What is the problem and why is it a problem? Problem: Authors and performers face a lack of transparency in their contractual relationships as to the exploitation of their works and their performances and as to what remuneration is owed for the exploitation. Description of the problem: Economic rights granted to authors and performers (hereafter: 'creators') over the use of their works and performances (hereafter: 'works') have been harmonised at EU level by several directives, in particular by the Infosoc Directive. In the case of creators, these directives provide a framework wherein the exploitation of the content protected by those rights can take place. Works are not generally exploited by the creators themselves; commercial exploitation is often arranged through the grant of licences or the transfer of rights e.g. to a publisher, producer, or a broadcaster (hereafter collectively: 'contractual counterparties'). These contractual relationships constitute the exercise of the economic rights and govern the exploitation of works and the remuneration owed to creators. Creators should be able to license or transfer their rights “in return for payment of appropriate remuneration”,527 which is a prerequisite for a sustainable and functioning marketplace of 527 Judgment of 4 October 2011 in Football Association Premier League and Others (C-403 and C-429/08, EU:C:2011:631, paragraph 107-108); Judgment of 27 February 2014 in OSA and others (C-351/12, EU:C:2014:110, paragraph 23); Judgment of 20 October 1993, in Phil Collins and others (C-92/92, 173 content creation, exploitation and consumption.528 The determination of what constitutes appropriate remuneration depends on factors such as the nature and scope of the use of the works. However, there is sufficient evidence of creators lacking access to such information, and calling for legislative intervention by the EU.529 For example, creators point to the poor quality and/or lack of accounts and reporting by publishers and producers with regards to the use of the rights they have transferred.530 The information received from creators and some recent studies531 indicate that the lack of transparency in the creators' contractual relationships concerns:  the possible exploitation, i.e. how the work may be used;  the actual exploitation, i.e. how the work is used and with what commercial result; and  the remuneration that is owed for the exploitation. There may be uncertainty about possible exploitation because licence and transfer agreements do not always specify the obtained rights while modes of exploitation and supply chains have become very diverse and complex. Concerning actual exploitation, on the basis of the information available there seems to be many instances when creators do not receive satisfactory or any information from their contractual counterparty on the modes and extent of use and on the revenues generated from the exploitation,532 which may lead to uncertainty about owed remuneration. This situation can be described as an information asymmetry because the information that would be required to ensure transparency may, in fact, be available to the contractual counterparties but it is not shared with creators.533 Transparency is also affected by the increasing complexity of new modes of online distribution, the variety of intermediaries and the difficulties for the individual creator to measure the actual online exploitation, notably due to the evolution of consumption patterns in some sectors, for instance from ownership to access/streaming modes of consumption. EU:C:1993:847, paragraphs 12, 21); Judgment of 18 March 1980, in Coditel and others, (C-62/79, EU:C:1980:84, paragraph 14) 528 Recital (10) of the InfoSoc Directive: "If authors or performers are to continue their creative and artistic work, they have to receive an appropriate reward for the use of their work." 529 See, for example, in the "Declaration towards a modern, more European copyright framework and the necessity of fair contracts for creators" by the Authors' Group, an umbrella organisation of ECSA, EFJ, EWC, FERA and FSE; the Paying Artist Campaign launched in the UK by visual artists or the Fair terms for creators campaign coordinated by the Creators Rights Alliance. 530 See, for example, the replies to the July 2014 public consultation on the review of the EU copyright rules (hereafter the 'Public Consultation'), where the issues raised included poor quality and/or lack of accounts and reporting by publishers and producers with regards to the use of the rights transferred by the author or the performer. 531 For example, the 2015 study on the "Remuneration of authors and performers for the use of their works and the fixations of their performances" concerning the audiovisual and music sectors (hereafter: 'AV/M Study'), Institute for Information Law of the University of Amsterdam, together with Europe Economics, PLS, and the 2016 study on the "Remuneration of authors of books and scientific journals, translators, journalists and visual artists for the use of their works" (hereafter: 'Print Study') from the same authors to be published (copy available on request). See also infra the study of the European Parliament. 532 Even when there is reporting, the provided information may be unclear or inconclusive according to creators' testimonies. See Annex 14B for examples of the contents of reporting statements. See "Contractual arrangements applicable to creators: law and practice of selected Member States" (2014), a study commissioned by the European Parliament, S. Dusollier, C. Ker, M. Iglesias and Y.Smits, p.76, 164. 533 As reported by authors and performers in the 2014 Public Consultation, ibid. 174 Online distribution is expected to become the main form of exploitation in many content sectors. Transparency is, therefore, even more essential in the online environment to enable creators to assess and better exploit these new opportunities. The situation of creators varies to some extent depending on MS or the sector and seems to be better where collective bargaining is allowed and efficient534 but problems related to lack of transparency and information asymmetry seem to arise in most creative sectors.535 The problem has a significant European dimension. Cross-border exploitation and production of content is a reality in Europe. For instance, in the music sector the share of non-local EU repertoire consumed in MS ranges between 20 and 40 % in radio and between 15 and 32 % in digital downloads; in the AV sector co-productions account for an average of 25 % of total productions.536 In this context, it is important to ensure that authors and performers enjoy in practice the high level of protection established by EU legislation (including as regards the digital dissemination of their works and performances) and do so disregarding where in the EU they assign or transfer their rights and where their works and performances are exploited. Tools to effectively exercise rights are as important as the recognition of such rights at EU level. Drivers: [Weaker bargaining power of authors and performers in contractual negotiations] The main underlying cause of this problem is related to a market failure: there is a natural imbalance in bargaining power in the contractual relationships,537 favouring the counterparty of the creator, partly due to the existing information asymmetry. The difference in bargaining power can also create a "take it or leave it" situation for creators and therefore full “buy-outs” using catch-all language that covers any mode of exploitation without any obligation to report to the creator.538 534 In FR, the adaptation of the publishing contract to digital which provides increased transparency safeguards to the authors was negotiated by the main publishing stakeholders and constitutes a good example, Also see for the US: O'Rourke, M. (2003), "Bargaining in the Shadow of Copyright Law after Tasini", Case Western Reserve Law Review, Vol. 53, Issue 3 535 The Council of the European Union in its conclusions on "The transition towards an Open Science system" (adopted on 27/05/2016) also stressed the importance of clarity in scientific publishing agreements. 536 In the music sector, a recent study shows that the share of non-local EU repertoires in radio airplay / digital download song sales is 34 %/29 % in DE, 39 %/21 % in PL, 33 %/32 % in NL, 22 %/18 % in FR, 22 %/17 % in ES and 20 %/15 % in SE. [E. Legrand, Monitoring the cross-border circulation of European music repertoire within the European Union, Report commissioned by EMO & Eurosonic Noordeslag, in partnership with Nielsen, January 2012.] In the audiovisual sector, on the basis of data collected by the European Audiovisual Observatory between 2011 and 2015, 25 % of European feature films (between 260-300 films/year) are co-productions, and the recent increase in production activity is primarily linked to the growing number of co-productions. The Eurimages support scheme which is a cornerstone of European film financing (supporting 92 European co-productions in 2015) requires the financial, technical and artistic co-operation of the co-producing European countries which entails creators working in multiple MS. 537 Laffont J.J., Tirole, J., 1988,"The dynamics of incentive contracts", Econometrica, Vol 56, No 5, p.1153 538 Recent figures suggest that creators face difficulties in securing stable working conditions: in 2014, nearly half (49 %) of all artists and writers in the EU were self-employed (vs 15 % in total employment). Compared to the total workforce, artists are less likely to have full-time job (70 % vs 80 %), and are more in the need to find a second job (90 % held one job vs. 96 % for total workforce). In addition, artists and writers stood less chance of securing a contract than employees as a whole (76 % vs 86 %) [Eurostat, Cultural statistics, 2016 edition]. In the UK, it is reported that on an individual standpoint "36 % of writers thought their own bargaining position had got worse over the last five years whereas 22 % thought it had got better" whereas "when considering the industry as a whole 5% of respondents thought that the position for writers had got better over the period whereas 64% thought 175 [Weaker bargaining power of authors and performers in contract enforcement] Another driver of the issue, also related to the difference in bargaining power, is that often creators depend on their contractual counterparties and are unwilling to challenge them or to request further information for fear of possible consequences.539 [Legislative solutions ensuring transparency in MS are not sufficient] A regulatory aspect of the problem is that most MS impose either too generic transparency or reporting obligations, or transparency obligations only applicable to certain sectors (without the necessary mechanisms to ensure enforcement). The fact that some MS, notably FR and DE, have recently introduced or are currently planning to introduce or to strengthen such measures540 also confirms the existence of the problem. Book / Press Sector Music Sector Audiovisual Sector Number of MS with legislative reporting/transparency 14 6 14 obligations Consequences: As a consequence, creators are confronted with instances where they are unable to effectively monitor the use, measure the commercial success and assess the economic value of their works. Because of this, there is a risk that creators are unable to negotiate an appropriate remuneration in exchange for their rights, to verify that they are receiving the agreed amounts or to enforce their claims for remuneration effectively.541 This situation has been reflected in statements on lack of fair remuneration from stakeholders542 and, in recent studies conducted in the UK and France, for example.543 Lack of transparency has effects on the internal market as well. Firstly, creators are, in the absence of transparency, unable to effectively compare deals and offers, including across borders. This undermines their ability to exercise their freedom of movement544 and to enter into contractual agreements with economic partners from different MS.545Secondly, contractual counterparties face a fragmented situation between the different MS546 as regards it had got worse", J. Gibson, P. Johnson, and G. Dimita 2015, "The Business of Being an Author – A Survey of Authors’ Earnings and Contracts", London, Queen Mary Intellectual Property Center 539 According to information shared by creators with the Commission, such behaviour can also be experienced in MS and sectors where there are reporting obligations in place if such obligations are not supported by measures that help enforcement and verification of the reporting. 540 See Annex 14A for a summary of recent and ongoing transparency initiatives of MS. 541 The AV/M Study points out that (i) contract terms and conditions and (ii) sales are the factors that are directly linked to the determination of the remuneration of creators. Yet, these are the two areas where lack of transparency was identified as a major problem (p.114). 542 See Public Consultation results that mention lack of "adequate or fair remuneration" and underline that "online exploitation, especially in a cross-border context, makes it particularly difficult to ensure that there is a relationship between the use and success of the work or performance and the remuneration provided to the creator". 543 See, for example: "What are words worth now", a survey conducted in the UK by ALCS (2014) http://www.alcs.co.uk/Resources/Research; "Économies des droits d’auteur Place et rôle de la propriété littéraire et artistique dans le fonctionnement économique des filières d’industrie culturelle", conducted in France by Françoise Benhamou et Dominique Sagot-Duvauroux for the French Ministry of Culture, http://books.openedition.org/deps/440 544 Differences between national legislations may seem unclear for creators and limit their ability to understand their remuneration in different MS. 545 According to the AV/M Study, the "absence of information represents an implicit barrier to their movement across jurisdictions (non-tariff trade barrier)". 546 Different transparency obligations exist in at least 20 MS. See Annex 14A for an overview of national legislation and soft-law on transparency. 176 transparency which prejudices a level playing field in the Internal Market. Companies established in different MS and in competition for the same online market have to comply with different transparency obligations, resulting in a competitive advantage for those under a lighter transparency regime. Furthermore, differences between MS may create legal uncertainty for both creators and contractual counterparties, and lead to greater transaction costs and "jurisdiction shopping" by transferees. How the problem would evolve: All things being equal, this situation is not likely to improve to a sufficient extent, notably as there are no indications that the current bargaining positions will become more balanced. It is not clear either whether the information asymmetry would improve. In fact, as exploitation is getting more complex and more intermediaries join the value chain there is a risk of less transparency. On the other hand, the constantly improving information technology should allow providing for more efficient, more accurate and more economic reporting mechanisms.547 Without EU intervention, these technologies are not likely to be used to their full potential. Creators will not be able to force transparency on their contractual counterparties since they are in a weaker bargaining position and, in many instances, have few alternatives. Some MS may follow the example of recent initiatives to legislate to introduce transparency measures but such interventions are not likely to happen in all MS or sectors and could risk further fragmenting the Internal Market. Some stakeholders and studies548 argue that ex-ante intervention (i.e. at the stage when a contract is being defined) via options such as prohibition of certain contractual clauses, would be more effective. However, EU intervention on copyright contract law concerning fair and unfair clauses raises questions at this stage in terms not only of proportionality and contractual freedom but also of its articulation with the very different approaches in MS and differences between the creative sectors. Therefore, the scope of this IA covers ex-post aspects linked with lack of transparency and unbalanced bargaining positions. 5.4.2. What are the various options to achieve the objectives? The general and specific objectives are described in section 5.1.3. Baseline No policy intervention. This option would rely on MS or self-regulation by industries at national level to impose transparency obligations on the contractual counterparties, or on industry specific agreements (resulting from collective bargaining for example) and other market developments to improve transparency. Stakeholders' views Creators would consider that this option cannot solve the identified problems as they believe that, for a large number of them, due to the natural imbalance between the parties, problems with lack of transparency in the internal market can only be remedied by imposing transparency obligations through EU legislative intervention. Contractual counterparties are of the opinion that creators are appropriately remunerated thanks to existing law and practice in different sectors of the creative industries. They would support the baseline option and consider that the existing competition and market developments/industry practices are the best way to address transparency problems if they exist. They would also argue that an intervention in this area would affect their contractual freedom. Consumers would deem that this option is not satisfactory since they consider that there is a need for EU intervention in this area in order to ensure adequate remuneration for creators. 547 An increasing number of music stakeholders such as record companies and online service providers develop online royalty portals which enable artists to have a complete overview of revenues generated by the exploitation of their works and received royalties. 548 See p. 59 of the AV/M Study and policy options 1 and 3 on p.142. 177 Option 1 – Recommendation to MS and stakeholders' dialogue on improving transparency in the contractual relationships of creators  Under this option, the Commission would issue a recommendation to MS to adapt their national laws to ensure greater transparency in contracts between authors and performers on the one hand and those to which they transfer or assign rights on the other.  In addition, the Commission would recommend to MS to put in place stakeholder dialogues between representatives of authors and performers on the one hand, and producers, publishers, distributors on the other, to explore ways of improving transparency and develop collective or model agreements and best practices for reporting. These dialogues would have to be sector specific due to the different dynamics of different content sectors.549 Stakeholders' views Views are different among creators as to whether a recommendation can address the identified problems but most creators are likely to consider that this option is still insufficient to solve them because the recommendation would be followed by MS to a different extent and may be disregarded. Equally, creators will consider that stakeholders' dialogues are not likely to produce concrete results (notably if not linked to legislation). Contractual counterparties would favour this option over a legislative intervention but would still oppose it, notably if it is seen as likely to lead to legislative intervention at national level. Consumers who underlined the need for EU intervention would consider this option to be insufficient. Option 2 – Imposing transparency obligations on the contractual counterparties of creators This option would oblige MS to lay down some basic obligations to improve transparency. Thus, MS should establish a minimum reporting obligation550 on the contractual counterparty of a creator, with the following elements:  The obligation would lie with the first licensee/transferee. In case the contractual counterparty is replaced entirely (by way of legal succession or right transfer, for example), the obligation shall lie with the new right holder.  The reporting would be done on a regular basis without having to be requested by the creator.551 The reporting should occur with reasonable periodicity.552  The minimum content of reporting - including information about the modes of exploitation and corresponding revenues - would be set out by EU legislation in a general manner while sector specific details should be defined for different sectors553 at MS level in consultation with the relevant stakeholders. This is necessary in order to reflect the 549 See Annex 14A for examples. 550 A reporting obligation in EU legislation to ensure more transparency has been consistently advocated for by creators, including the Authors' Group, in their recent "Declaration towards a modern, more European copyright framework and the necessity of fair contracts for creators" and their "Information note for President Martin Schulz". 551 Creators point out that an "on demand" obligation would not be effective as they would seldom request reporting due to their weaker bargaining position. 552 Frequency of reporting would depend on the sector, and if it is not agreed otherwise in stakeholder dialogue it should occur at least once a year as this is the general minimum standard across sectors. 553 Sectors will have different methods of reporting as their value chain structures and models of exploitation vary. For example, final cost of the film production could be relevant as part of the reporting in the audiovisual sector, whereas in the print sector data on the number of copies printed, sold and on stock would have to be included. See Annex 14C for a selection of potential sector specific impacts. 178  large variety of contracts and remuneration arrangements across sectors as well as the differences between the relevant information required for transparency.  Proportionality test: In order to make the obligation proportionate, in cases where the contribution of the creator is not significant to the overall work, reporting obligation would not be mandatory. Subject to the proportionality test (i.e. provided that the contribution of the creator is significant), lump-sum remuneration arrangements would also be covered by the reporting obligation.554 In the cases where the administrative burden of reporting would be disproportionate to the generated revenues, the obligations on contractual counterparties could be limited.555 Agreements concluded with collective management organisations would be exempted as these are covered by the CRM Directive's reporting obligations.556  The reporting obligation would only have an ex-post effect on contracts which means that parties would still be free to negotiate the commercial terms. Transparency would not mean redistribution of revenues or change in remuneration on its own: it would be a tool to increase bargaining and enforcement power of creators and to reveal whether their remuneration is appropriate or not. Stakeholders' views Creators would strongly support such transparency obligations leading to appropriate solutions per sector. Some would however claim that transparency obligations on their own are not sufficient and would call for further intervention on unfair contracts or the introduction of an unwaivable remuneration right.557 Contractual counterparties would object to this option. They would argue that compliance would be too burdensome and the intervention would limit their contractual freedom.558 Consumers would be supportive of this option. In the Public Consultation, they expressed their concerns about the remuneration of creators and claimed that they would be more willing to pay for protected content if the appropriate remuneration was ensured. Option 3 – Imposing transparency obligations on the contractual counterparty of creators supported by a contract adjustment right and a dispute resolution mechanism This option would oblige MS to introduce the reporting obligation as described under Option 2, with the following additional elements:  A contract adjustment mechanism 554 Reporting in these cases is practically non-existent. Nevertheless, lump-sum payments are based on the anticipated commercial success of a work and information on use and generated revenues is required to assess the commercial value, therefore, excluding lump-sum payments would be an unjustified discrimination among creators. Moreover, it would incentivise contractual counterparties to offer more lump-sum deals which are already considered by creators unfair and too commonly used in some sectors. In the UK, a study reported that 69 % of writers have mentioned that at least 40 % of the contracts they have signed were buy-out contracts (The Business of Being an Author, A Survey of Author’s Earnings and Contracts, Queen Mary University of London, April 2015). Also p.91 AV/M study 555 For instance, in sectors like press publishing, reporting on all works to all creators may not be proportionate considering the large number of works used in their daily output. Nevertheless, specific proportionate transparency requirements should be determined even for these sectors through the stakeholder dialogue. 556 Article 17 of the CRM Directive. 557 Some stakeholders claim that intervention into contracts is needed to strengthen the creators' rights and that an unwaivable right for remuneration is necessary to ensure a minimum appropriate remuneration to creators. See the position of SAA (SAA White Paper 2015) and of AEPO-ARTIS, EuroFIA, FIM and IAO (Fair internet for performers campaign). 558 See Public Consultation results where contractual counterparties expressed a need for a healthy competition to ensure fair remuneration for creators, also referring to the possibilities in reporting offered by technological developments. 179 The mechanism would ensure a right to request the adjustment of the contract, ultimately by a court or other competent authority, in case the remuneration originally agreed is disproportionate to the relevant revenues and benefits derived from the exploitation of the work.559 This option would help restoring the relation between the remuneration and the success of the work and would ensure appropriate remuneration when the agreement of the parties is unbalanced.  A dispute resolution mechanism The dispute resolution mechanism would help ensuring effective enforcement of the reporting obligation and the contract adjustment mechanism. This will be a voluntary dispute resolution mechanism560 competent for (i) adjusting disproportionate remuneration arrangements deriving from unfair agreements or changed circumstances (e.g. unexpected success, new modes of exploitation), and (ii) settling contractual disputes about transparency. It would address the problems identified since disputes that may arise in relation with new transparency obligations may be resolved faster and with adequate expertise. It should help creators, who are usually reluctant to go to court against their contractual counterparties, to enforce their rights to transparency or contract adjustment. This option would of course not deprive creators of the possible use of other existing means notably a court or other competent authority to seek to adjust the remuneration.561 Stakeholders' views Creators would clearly support a contract adjustment mechanism.562 They would also welcome an alternative dispute resolution mechanism because they are usually reluctant to bring their contractual counterparty to court. As with Option 2, some of these stakeholders would consider that these mechanisms would only partially addresses their concerns about remuneration. Contractual counterparties would oppose these additional mechanisms on the basis of contractual freedom and the re-negotiation cost of contract adjustment. Consumers would welcome transparency obligations supported by these mechanisms. 559 The contract adjustment mechanism for unforeseen revenues is usually called a “best-seller clause”. This expression may be somewhat misleading because it suggests that it only applies to actual best- sellers, which constitute the top 5-10 % of sales lists, while in theory the clause should trigger when there is a significant disproportion between the agreed remuneration and the actual revenues (i.e. the commercial value) which can happen to any kind of work, even of low/medium success provided that such success (revenue) had been unforeseen and is not in proportion to the agreed remuneration. Therefore, “better-seller clause” would be a more appropriate name for a contract adjustment mechanism that applies when a work sells better that expected. Such clause exists, among others, in the legislation of DE, FR, HU, PL, ES and SL. See Annex 14D for more details. 560 A similar mechanism can be found in NL where the June 2015 amendment of the Author's Right Act introduced a new dispute resolution committee (see article 25g of the Dutch Author's Right Act). See also in the UK the mechanisms managed by The Publishers Association. 561 Under current national legislations (see Annex 14D), when proceedings are initiated on the basis of a better-seller clause, courts conduct, in most of the cases, a judicial revision of the contract. For lump- sums, it often results in damages granted to the creator corresponding to the difference between the agreed remuneration and the remuneration that s/he should have received (such remuneration is for instance often calculated in FR taking into account the professional usages). In the less common case where a better-seller clause would be enforced for proportional remuneration (as opposed to lump-sum based), courts would be able to revise the royalty percentage taking into account the exploitation of the work. 562 In the Public Consultation, they often mentioned that a buy-out contract “prevents their adequate or fair remuneration as the payment does not relate to use, and even less so to the success, of their work or performance”. The Authors' Group's recent "Declaration towards a modern, more European copyright framework and the necessity of fair contracts for creators" highlights that "authors’ contracts lack provisions allowing them to renegotiate their terms, particularly in case of use of the work in additional formats and commercial success beyond expectations". 180  5.4.3. What are the impacts of the different policy options and who will be affected? Approach The options presented above would mainly affect the two parties of a licence or right transfer agreement: creators on the one hand, and their direct contractual counterparties563 on the other. Following some general impacts under each option, the impacts affecting these two groups are presented separately. Only the most significant and likely impacts are reported in this IA.  For creators, the following impacts have been considered: (i) impacts on transparency of contracts; and (ii) impacts on the capability to receive appropriate remuneration (even retroactively).  For the contractual counterparties, the main impacts are economic and are related to (i) compliance costs and (ii) competition. As most of the European companies active in the creative sectors are SMEs, all impacts are examined in this context.  The assessment of Option 3 also includes an analysis of the impacts on Member States, in terms of implementation costs. The assessment below is mainly qualitative, with some limited quantitative evidence, as the data publicly available or that could be obtained from stakeholders on the lack of transparency is limited. Baseline IMPACTS ON STAKEHOLDERS Creators Impacts on transparency of contracts: Considering recent and upcoming initiatives some development may be expected564 but the problem of information asymmetry is not likely to be resolved by market developments, including self-regulation, or MS legislation. Problems for creators as regards lack of information on the exploitation and revenues generated by their works will continue in a number of MS and the cross-border aspects of the problem will not be addressed. At the same time exploitation – particularly online exploitation – is expected to become more complex and varied, involving new intermediaries and forms of use.565 This risks making it even more difficult for creators to understand and monitor the exploitation and the revenue flow, resulting in an increased information asymmetry. Impacts on the capability to receive appropriate remuneration: Under the baseline scenario the weaker bargaining position of authors and performers is not likely to improve overall which entails a risk of non-appropriate remuneration. Contractual counterparties Impacts on compliance cost: This option would not generate any direct compliance costs for contractual counterparties, unless such costs arise from self-regulation or individual MS intervention. The costs linked to the differences between transparency requirements in MS relevant for those parties active in several MS will remain. 563 While the majority of affected first licensees/transferees will be producers, publishers and broadcasters, it is to note that creators may enter into contractual relationships directly with platforms or other distributors in which case these will be the affected contractual counterparties. 564 In the music sector, for example, Worldwide Independent Network (WIN), the international association representing independent labels established the principles of revenue sharing with artists and more transparency in contracts with digital platforms in their Fair Digital Deals Declaration. Also, in their "Recommendation for the licensing of broadcast-related online activities", several stakeholders, including public broadcasters (EBU) and music publishers (ICMP), have agreed on the necessity of transparency of licence agreements. The French publishers association (SNE) also provides detailed practical guidelines on reporting to its members in view of promoting transparency. 565 For example, distribution of music via user uploaded content platforms or of newspaper articles via social media. 181 Impacts on competition: Without any EU intervention, the contractual counterparties of creators would benefit from the information asymmetry, especially in MS and sectors where there are no transparency obligations at all. The fragmentation of the internal market would continue.566 SOCIAL IMPACTS In a market where conditions for fair remuneration are not optimal, creators may dedicate less time to content creation and creative professions would become altogether less attractive which is detrimental to cultural diversity.567 IMPACTS ON FUNDAMENTAL RIGHTS This option will not have a direct impact on copyright as a property right (although problems for the effective exercise of this right by creators will continue and therefore there would be an indirect impact on the medium to long term). Weak bargaining position of creators may also prejudice their freedom of expression through artistic creation. This option would have no impact on the freedom to conduct a business of contractual counterparties. Option 1 – Recommendation for MS and stakeholders' dialogue on improving transparency in the contractual relationships of creators IMPACTS ON STAKEHOLDERS A recommendation would act as guidance to those MS which plan to take steps towards ensuring more transparency. This option could result in positive developments, even though it would not ensure a similar level of transparency in all MS and in all sectors. Those MS that take action are not likely to do so consistently, but this option could provide more flexibility to MS to adapt their legislation. Creators Impacts on transparency of contracts and on the capability to receive appropriate remuneration: The effects of a recommendation will depend on the extent to which it is followed by MS. It will also provide an opportunity for creators to push for changes at national level through the stakeholder dialogue. In fact, according to the available information, a sector specific dialogue seems to be an essential element in implementing transparency efficiently, as evidenced by examples in different MS and sectors (see Annex 14A). Thus, a recommendation may have positive impacts on transparency in certain MS. Contractual counterparties Impacts on compliance costs: The effects on compliance costs will depend on the extent to which the recommendation is followed in MS. Contractual counterparties are likely to face different costs in different MS. Impacts on competition: A recommendation may reduce the fragmentation between different national legislations to some extent but still would not create a level playing field for businesses in the EU. 566 For instance, a book publisher operating in FR, LT and LU would have to comply with very different transparency obligations: in FR, a detailed mandatory reporting obligation based on co-regulation (Art. L.132-17-3 and the underlying industrial agreement); in LT, a more generic obligation to provide information and only at the author's request; whereas in LU, the publisher would not have to comply with any transparency obligations. 567 According to the findings of the survey "What are words worth now" ibid, the percentage of authors earning their income solely from writing dropped from 40 % to just 11.5 % between 2005 and 2013. 182 SOCIAL IMPACTS Depending on the MS, there might be positive social impacts (compared to the baseline option) but not across the whole EU. IMPACTS ON FUNDAMENTAL RIGHTS The impact of this option on fundamental rights would depend on the take-up of the recommendation by the MS. Impacts on copyright as a property right and on the freedom of expression may range from neutral to positive (e.g. if MS action result in a better bargaining position of creators and an more efficient enforcement of their rights). At the same time, there may be some limited negative impacts on the freedom to conduct a business, depending on the obligations imposed at national level. Option 2 – Imposing transparency obligations on the contractual counterparty of creators IMPACTS ON STAKEHOLDERS Creators Impacts on transparency of contracts: The reporting obligation would greatly decrease the information asymmetry as creators would receive the relevant information on the uses of their works and the corresponding revenues. As a direct impact, the enforcement of contracts would become much easier and effective, particularly in the case of royalty-based remuneration arrangements because the correct payment of remuneration could be verified. Having information on the specific modes of use would ultimately bring transparency to the scope of the contracts and would highlight the difference between different rights and modes of exploitation which may be taken into account by creators for future negotiations.568 This option would therefore have a significant indirect impact without a disproportionate intervention in the contractual freedom of the parties. It is important to note that the implementation of the reporting obligation may lead to disagreements between the parties as to the revenues and remuneration. In view of this the possibility to resort to a dispute settlement mechanism such as the one described under Option 3 could be important. Impacts on the capability to receive appropriate remuneration: As a major impact, creators would be able to effectively assess the commercial value of their works which would greatly improve their bargaining position in future deals. Contractual counterparties Impacts on compliance cost: The main impact would be the administrative burden of compliance.569 The stakeholder dialogue included in this option is intended to establish feasible and proportionate transparency obligations tailored to the needs and practices of different sectors. It is also to note that transparency requirements have already been imposed on other important players in the value chain such as CMOs.570 Annex 14C provides for an economic assessment of the possible specific impacts by sector. Costs would depend on a large number of factors, such as the number of creators and works, 568 It has been shown that specifying the scope of licence/transfer has a direct and positive effect on the remuneration of creators, see Print Study and AV/M Study p.136 and policy recommendations p. 142 and "Contractual arrangements applicable to creators…", ibid, p.103-104. 569 See Annex 14C for an economic assessment of potential sector specific impacts. 570 Article 17 of the CRM Directive. 183 the complexity of exploitation, the quality of the data received from intermediaries, the frequency of reporting and, perhaps most importantly, the already existing reporting practices: - Some contractual counterparties already report to creators on the basis of contractual clauses, royalty-deals or statutory provisions.571 In such cases the intervention would have practically no impact or only a limited impact in adapting reporting to the new requirements, for example, by broadening the scope of reporting or providing more regular information to creators. - For those who do not report to creators yet, the incurred expenses would include the one-off cost of developing reporting processes and the recurring cost of actual reporting. However, even in these cases contractual counterparties would have to report on information that is already available as it should have been previously gathered and processed for intellectual property management and accounting purposes.572 Therefore, following the one-off investment, complying with the reporting obligation would mainly consist of taking the effort to extract the relevant information and to share it with the creator in a structured, comprehensible way. It is also to note that transparency requirements have also been imposed on other important players in the value chain such as CMOs.573 In order to produce reporting statements, contractual counterparties would use different types of electronic tools going from widely available spreadsheets to complex reporting software specifically designed for companies' reporting needs.574 Limited information allowing only anecdotal estimation of the potential costs related to these reporting tools is available. The extent of costs would depend on whether and what reporting tools are already used by affected companies and which type of use. The costs would further vary depending on the type of information required for each creative sector. However, costs linked to the utilisation of a reporting electronic tool are not expected to be significant for a large majority of SMEs since they would likely use commonly deployed spreadsheets. In most cases, costs could be absorbed in the routine software maintenance costs of those companies. Furthermore, labour-related costs linked to reporting are very difficult to estimate as they would, among other things, depend on the type and the number of works, the complexity of the authorship and on the number of actors from which the information has to be gathered. As an example, book publishing stakeholders informed us that reporting can be dealt with on simpler cases within 2-3 minutes while the more difficult ones require 10 to 15 minutes. Audiovisual stakeholders stated that time allocated to reporting to all creators of a movie could range between one or two hours for simpler cases to ten hours for the most intricate ones. On the basis of the limited information on reporting mechanisms we received from contractual counterparties, the following examples of cost estimations could be made for different sectors as guidance to illustrate the potential impacts, assuming that there is currently no reporting in place at all by a given contractual counterparty (see more information on these examples and calculations in Annex 14C). 571 For examples see Annex 14A, also for an example of contractual clauses: in Denmark, Sector agreement entered into between Danish producers' association and the Danish writers' association in 1996 or the sector agreement entered into between Danish producers association and Danish actors' association. Sectors agreements can be found on the Website of Danske Dramatikere 572 AV/M Study, p.146. 573 Article 17 of the CRM Directive. 574 For instance, one company offers business management software for small publishers from €790. 184 Examples A) According to a medium-sized book publisher, reporting on 600 titles on the basis of spreadsheets takes 80 man-hours per year, and the average time required for compiling and sending a report on a title is 8 minutes (simpler cases can be dealt with in 2-3 minutes while the more difficult ones can take 10-15 minutes). To make reporting even more efficient, they are now investing in an accounting and reporting software, the one-off cost of which is approximately €10,000. B) In the music sector, where regular reporting is well established, the information received from independent record labels shows how the cost of reporting differs according to, amongst others, the size of the catalogue, the number of titles released per year and the staff involved in the reporting activities (frequency of reporting being twice a year in all cases for which the information has been shared). In one medium-sized label (105 employees in the EU), which holds a total catalogue of over 3000 titles and releases 50 titles per year, 3 employees deal with reporting full time, which costs the label €198'000 per year. Together with the software maintenance it amounts to €103 per title. A small label employing 36 staff of which 2 full time equivalent work on reporting (total catalogue: 50,000 tracks) incur similar total cost of reporting annually €200,000, or €64 per title. According to the information received on nine micro labels, the cost per title of reporting done by three of them (holding 60, 62 and 250 title catalogues) is comparable to the one incurred by small and medium but in several other cases, where catalogues range from 150 to 400 titles, it is much lower per title (between €7 and €12). This may stem from the fact that, having smaller catalogues to deal with, micro labels can do without specialised accounting software and/ or employ free-lance staff or external bookkeepers to deal with the reporting twice per year when it is due. C) On the basis of the collected information from the AV sector, assuming that a producer wants to report on a film that has 8 creators entitled to reporting and reporting occurs annually; reporting would take 4-6 hours in the first year and 2-3 hours in subsequent years. As for external service providers, prices would be expected to be in the range of €1,000 per movie per year and would not surpass the cost of €4,000 + 0.5-1 % of revenues in total.575 According to the estimations presented in Annex 14C, the costs of reporting in the book publishing sector range from 0.02% of the turnover for large and medium-sized companies to 0.39% for micro companies. In the AV sector, depending on a scenario assumed (reporting done internally or involving a collection agency or other external provider) the share of these costs in the turnover situates between 0.1 % and 2.3 % for micro companies, 0.01 % and 0.2 % for small and are around 0.1 % for medium and large. Time spent on reporting annually accounts on average for around 1 % of the total working time for micro book publishers and between 0.1 % and 0.2 % for the other size categories. The administrative burden would decrease with time as it would become part of the "business as usual" process. From MS where similar transparency obligations are already in place, no disruptive effect of such measures has been reported. In addition, evolving technologies will continue to reduce the costs of collecting and processing the relevant data and therefore reduce the administrative burden. Thanks to the proportionality provisions built in Option 2, contractual counterparties may not be obliged to provide information to minor contributors to a work, thus reducing the number of reports. In addition, in the case of works generating little to no revenues, the proportionality provision would allow MS to adjust the obligation in a manner that ensures a proportionate burden for contractual counterparties. Impacts on SMEs including micro enterprises: The reporting obligation could be more burdensome for smaller companies (e.g. a small publisher or record label) as they have fewer resources. At the same time, they also manage less works and they would need to provide a smaller number of reports to fewer creators. In addition, specifications of obligations per sector and stakeholders' dialogues at MS level would help ensuring that reporting obligations and their related compliance costs are proportionate for SMEs as they represent the vast 575 As it was reported by a French distributor and a Danish producer on a confidential basis 185 majority of contractual counterparties. Transparency remains however essential for creators who assign their rights to SMEs. The possible administrative costs are justified in view of the fact that the business of these companies is based on the exploitation of the copyright of the individual creators. The possibility of providing an exemption for micro enterprises was considered, however, taking into account the predominance of micro enterprises in the creative industries (above 90 % in some sectors), establishing such an exemption would result in the transparency obligation applying to a very limited number of contractual counterparties which would defeat the purpose of the intervention.576 It is to note that the majority of existing national provisions on transparency do not provide for an exemption or a lighter regime for SMEs. Impacts on competition: A general, mandatory reporting obligation with a set of common minimum content requirements would reduce fragmentation of the single market and would create a level playing field for businesses across Europe by eliminating the commercial disadvantage of players located in MS that already have transparency obligations.577 The use of effective reporting as a tool to compete for creators is already becoming clear in some sectors, particularly in the music industry.578 Due to the fact that the proportionality of the reporting obligation would be ensured, this option is not expected to have a disruptive effect on existing business models. SOCIAL IMPACTS Better transparency and bargaining position for creators would help reaching the goal of appropriate remuneration thereby making creative careers more attractive, which would result in a greater number of professional creators and more creative output altogether. Transparency would give a powerful message to consumers as they indicate to be more willing to pay for copyright protected works if they know that a fair remuneration would reach the original creators.579 No negative indirect impacts on consumers are expected, for example due to compliance costs passed on to them. IMPACTS ON FUNDAMENTAL RIGHTS This option would positively affect copyright as a property right by improving the creators' bargaining position and contributing to a better enforcement of their rights. This in turn would support their freedom of expression through artistic creation. Transparency would make any offers within and between MS comparable and creators would exercise their freedom of movement between MS more easily. On the other hand, Option 2 would introduce constraints 576 99.4 % of European companies active in the book publishing sector (books, newspapers, journals) are SMEs, of which 90 % are micro-companies (0-9 employees). SMEs generate 49 % of the value added of the sector (including 10 % from micro-companies). In the sector of film and music production, 99.9 % of companies are SMEs (96 % micro-companies) generating 85 % of the value added of the sector (32 % by micro-companies). Source: Eurostat, Structural Business Statistics, 2013 data for publishing of books, periodicals and other publishing activities. 577 See Print study, p.121 and p. 105 of the AV/M Study on "ex post accuracy". 578 See, for example, statements from Universal: "the flexibility and transparency (…) will be unprecedented for our industry, and set a new standard of service to our important clients", Sony: "Transparency has been the key word when we developed this", or Kobalt: "Our industry-defining Kobalt Portal provides full transparency with real-time updates, powerful reporting, and user-friendly analysis tools". 579 96 % of Europeans believe that IP is important because it supports innovation and creativity by rewarding inventors, creators and artists, see: "The European citizens and intellectual property: perception, awareness and behaviour", 2013, study commissioned by the EUIPO. In the Public Consultation, users also suggest that “the way in which new online streaming services are licensed may circumvent the payment of digital royalties to artists”. 186 on the right to conduct a business of contractual counterparties insofar as the production of reporting statements would constitute an additional administrative burden. The reporting obligation introduced by Option 2 would only have a limited and proportionate impact on contractual freedom as this ex-post instrument would not affect formulation of the terms of the contracts. Option 3 – Imposing transparency obligations on the contractual counterparty of creators supported by a contract adjustment right and a dispute resolution mechanism In addition to the impacts of the reporting obligation as presented above, the mechanisms under this option would have the following impacts: I. Contract adjustment mechanism IMPACTS ON STAKEHOLDERS Creators Impacts on transparency of contracts: This mechanism would improve the effectiveness of the reporting obligation under Option 2 since it would provide creators with legal means to request adjustment of the remuneration on the basis of the information received in reporting statements. Impacts on the capability to receive appropriate remuneration: This option would have a positive impact on the capability of creators to renegotiate contracts, particularly in extraordinary circumstances.580 The contract adjustment mechanism could remedy those cases in which a lump-sum/buy-out deal turns out to be unfair, and it also addresses outright unbalanced deals as well as changed circumstances.581 The mechanism would reinforce creators' bargaining position. In MS where such a mechanism already exists (including DE, FR or HU), the related case-law582 and information received from stakeholders is extremely limited suggesting that contract adjustment rights are mainly used as leverage in negotiations before and after signing the contract. Nevertheless, creators would be more likely to invoke such a right if they received more information on revenues because of the reporting obligation. Contractual counterparties Impacts on compliance cost: Contractual counterparty would incur a renegotiation cost when adjusting the contract. Such cost includes the renegotiation cost itself and the cost related to the increase of the remuneration owed to the creator. Costs associated to the renegotiation of contracts are very difficult to estimate as they would depend on various factors as the number of relevant works, the scope of the assigned rights, the extent of changes that parties want to introduce and the current practices of remuneration negotiation. The Commission has not 580 As advocated by creators themselves, for example, in the abovementioned Declaration of the Authors' Group: "In most instances, authors’ contracts lack provisions allowing them to renegotiate their terms, particularly in case of use of the work in additional formats and commercial success beyond expectations". 581 The mechanism tackles the common problem of assigning all rights, including those to unknown future modes of exploitation, which is allowed in many MS and can also be applied to pre-digital contracts which have become disproportionate even if they were balanced at signing. AV/M Study, policy recommendation no. 3; "Contractual arrangements applicable to creators…", ibid 582 Perhaps the most well-known dispute is the Das Boot case: the creator (the director of photography of a film) first had to raise a claim to obtain information on the exploitation of the work (he faced a lack of transparency on the exploitation of the work and the yielded revenues) before initiating proceedings on the basis of Article 32a of German copyright law which provides for a fairness clause. 187 been able to obtain any estimation of such costs. However, in light of the bargaining position of the majority of creators, the long-term duration of many contracts and the unpredictability of the commercial success of works in many sectors, the possible cost of compliance with a contract adjustment right seems justified on fairness grounds and proportionate. In case of unsuccessful negotiations, if the contractual counterparties and creators choose to use the dispute resolution mechanism, they would face alternative dispute resolution costs, as the ones described below. Costs related to the increase of the remuneration owed cannot be considered as an additional financial impact since they would constitute an eventual rebalancing of the share of value between creators and their contractual counterparties. Even though such measures would be very important for the affected individual creator, the direct impact on contractual counterparties would be limited since it would affect a limited number of contracts. Such cases will arise only when a significant disproportion between the agreed remuneration and the revenues yielded from the exploitation of the work occurs. In addition, in countries where legislation already provides for an adjustment mechanism, it is recognised that this clause is rarely enforced before the courts.583 II. Dispute resolution mechanism The implementation of dispute resolution mechanisms will have impacts both on MS which will have to set up such mechanisms and on creators and their contractual counterparties which will initiate dispute settlement proceedings. IMPACTS ON MEMBER STATES Impacts on implementation costs: MS would incur some cost for setting up the dispute resolution mechanism. These costs would depend on the system of dispute resolution chosen by a MS. They are expected to remain reasonable for the majority of MS which already have dispute resolution mechanisms for CMOs and commercial users in place and could therefore build on the existing structures. As a matter of comparison, when the implementation of dispute resolution mechanisms aimed at solving disputes arising between CMOs and their members was assessed, it was reported that the costs of establishing such mechanisms would be in the range of €35,000, and the operating costs in the range of €11,000 per year.584 Given the similarities between the envisaged dispute mechanism and the one assessed for CMOs, MS will arguably bear similar costs to the ones reported above. Finally, as alternative dispute resolution mechanisms tend to be cheaper than judicial proceedings, in the long term the cost of setting-up such a mechanism could be offset by savings made due to a lower number of court cases. IMPACTS ON STAKEHOLDERS Creators and contractual counterparties Impacts on transparency of contracts: The dispute mechanism will enable creators to enforce more efficiently transparency obligations and the possibilities offered by the adjustment mechanism. Since dispute settlement proceedings will be less costly and faster that court proceedings, creators will be more incentivised to seek enforcement of their rights. 583 It is reported that "litigation cases are rare" under French law, Communication Commerce électronique n° 9, September 2007, comm. 104, C. Caron; also, stakeholders provided very limited data on such cases. 584 See the impact assessment accompanying the document Proposal for a Directive of the European Parliament and of the Council on collective management of copyright and related rights and multi- territorial licensing of rights in musical works for online uses in the internal market (p 119, 176) 188 Impacts on the capability to receive appropriate remuneration: Thanks to a more effective implementation of transparency obligations and a better enforcement of the contract adjustment mechanism, creators will be able to seek more appropriate remuneration without risking their professional relationships as much as they would by going directly to court. Impacts on cost of proceedings: The operating costs would be borne by the creators and their contractual counterparties. Costs are expected to be relatively similar to the fees set for already existing alternative dispute resolution mechanisms. As an example, the British Publishers Association set up an Informal Dispute Settlements mechanism whose fees incurred by parties include the referee's fee (£400 for half-day hearing, £650 for full-day hearing), the referee's expenses (travel, telephone, copying), and the Association's fees (without charge for members of the Association, non-member publishers: £250, other parties: £100).585 WIPO estimates fees for a mediation proceeding at $250 (administration fee) + mediator's fees calculated on the basis on the amount in dispute (amount in dispute up to $250,000: $2,500. Amount in dispute over $250,000: $300-600 per hour / $1,500-3,500 per day).586 As this would be a completely voluntary procedure it would have no economic impact on stakeholders that do not participate, and those who agree to it would be doing so for their own benefit. SOCIAL IMPACTS The contract adjustment mechanism and the dispute resolution mechanism would encourage contractual relationships between creators and contractual counterparties to become fairer and more balanced. This would improve collaboration between creative stakeholders and incentivise a more conductive environment for creation. These mechanisms would also highlight the protection of creators to everyone in the value chain, including consumers. IMPACTS ON FUNDAMENTAL RIGHTS Option 3 would further strengthen copyright as a property right since it would provide creators with legal remedies to claim for additional remuneration in the case where the information received would reveal that the agreed remuneration is disproportionally low compared to the revenues derived from the exploitation of the work. The negative impact of the contract adjustment mechanism on the right to conduct a business would be offset by the implementation of the dispute resolution mechanism which would provide a non-binding opportunity for contractual counterparties to find an agreement on the remuneration owed to the creators. 5.4.4. How do the options compare? Option Effectiveness Efficiency Impact on stakeholders Social impacts and fundamental rights Baseline (0) Lack of (0) No direct costs (0) Impacts on (0) No direct transparency in the associated with the stakeholders in particular impact on contractual baseline option the difference in cultural diversity relationships between bargaining powers would and fundamental creators and their depend on reforms at rights contractual national level and/or on counterparties would commitments taken by remain the industry 585 Rules of Informal Dispute Settlements, the Publishers Association 586 WIPO, Fees Calculator, http://www.wipo.int/amc/en/calculator/adr.jsp 189 Option 1 – (0/+) Could result in (0/-) Limited costs (0/+) Main impacts on (0/+) No direct Recommendati some improvements linked to the stakeholders would impact on on and in certain MS but organisation of the depend on the possible cultural diversity stakeholders' would not allow to stakeholders' changes introduced in and fundamental dialogue ensure increased dialogue MS legislation rights but MS transparency across (0/-) Compliance costs developments the EU depending on the may have outcome at MS level positive impacts Option 2 – (++) Would increase (-) MS level costs (+) For authors and (+) Positive Imposing transparency in the linked to the performers it would impact on transparency contractual organisation of the decrease information creation and obligations on relationships between stakeholders' asymmetry, improve cultural diversity the contractual creators and their dialogue to enforcement and (+) Positive counterparty contractual determine reporting bargaining position, and impact on right to of authors and counterparties obligations bring transparency to the property, and performers scope of contracts freedom of (-) Administrative movement and burden and costs for the expression creators' contractual (-) Negative counterparties impact on the freedom to conduct a business Option 3 – (++)Would increase (-) MS level costs (+) Increase of (+) Positive Imposing transparency in the linked to the transparency and the impact on transparency contractual organisation of the certainty for creators to creation and obligations to relationships between stakeholders' benefit from an cultural diversity contractual creators and their dialogue to appropriate remuneration (+) Positive counterparty contractual determine reporting (-) Administrative impact on right to of authors and counterparties, obligations burden and costs for the property, and performers improve contract (-) Costs of setting creators' contractual freedom of supported by a (+) improved up and counterparties movement and contract enforcement and administering (-) Renegotiation costs expression adjustment means for some dispute resolution for creators and their (--) Negative right and a creators to mechanisms within contractual impact on the dispute renegotiate MS counterparties freedom to resolution agreements conduct a mechanism business Option 3 is the preferred option. Transparency measures would rebalance contractual relationships between creators and their contractual counterparties by providing the creators with the information necessary to assess whether their remuneration is appropriate in relation to the economic value of their works and if the remuneration is deemed inappropriate, a legal mechanism in order to seek out a renegotiation of their contracts. In contrast, Option 1 may not be sufficiently effective and Option 2 would only provide transparency measures without instruments to counter the effects of lack of transparency. In comparison to Option 2, Option 3 has a more positive impact on creators who would have tools to take action for requesting a fairer share of value on the basis on the information provided on reporting statements but would have a higher impact on the contractual freedom of the parties. The additional costs entailed by the dispute resolution mechanism would be justified by the need to provide remedies to the lack of transparency in the contractual relationships between creators and their contractual counterparties. Option 3 would help achieving a level playing field for creators and their contractual counterparties by providing incentives for an increased transparency and enhanced collaboration. Proportionality and impacts on MS: Option 3 is composed of a set of measures which are all necessary to achieve increased transparency and balance in the contractual 190 relationships between creators and those to which they assign or transfer their rights. The combination of the different measures ensures the effectiveness of the intervention, by providing creators with practical tools allowing them to obtain information on the exploitation of their works, and, when the agreed remuneration is disproportionate to the revenues generated by the exploitation of the work, to negotiate a further appropriate remuneration. Moreover, this Option includes provisions to ensure that the transparency obligations do not become unnecessarily burdensome for contractual counterparties. Option 3 is therefore proportionate to the policy objective. It introduces a common approach of transparency requirements across the EU while allowing MS to take account of the specificities of each sector. Beyond the impacts on costs which are presented under Option 3 (costs related to the setting up of the dispute resolution mechanism), Option 3 would entail some changes in MS legislations. Several of them already have legislative transparency obligations which are often sector specific (14 MS have them for the book sector, 6 for the music sector and 14 for the AV sector) and in these cases the proposed measures would only represent incremental policy changes. The preferred option would require MS to review these obligations in consultation with stakeholders to make sure that they comply with the minimum requirements set out by the legal instrument. In MS and sectors where contractual counterparties do not have to comply with transparency obligations and that do not have contract adjustment and dispute resolution mechanisms yet, these would have to be introduced. 191 6. OVERALL CONCLUSIONS 6.1. SUMMARY OF PREFERRED OPTIONS The following table sets out the preferred options: Area Preferred policy option Ensuring Online transmissions Option 2 - Application of country of origin to the clearing of rights wider access to of broadcasting for broadcasters' online services ancillary to their initial broadcast content organisations Digital Option 1 - Mandatory collective management of rights to retransmissions of TV retransmission of TV / radio broadcasts by means of IPTV and other and radio programmes retransmission services provided over "closed" electronic communications networks Access to and Option 2 – Stakeholders' dialogue + Obligation for Member States availability of EU to establish a negotiation mechanism to overcome obstacles to the audiovisual works on availability of audiovisual works on VoD VoD platforms Out-of-commerce Option 2 - EU legislative intervention (i) requiring MS to put in works in the place legal mechanisms to facilitate collective licensing agreements collections of Cultural for all types of OoC works and to foster national stakeholder Heritage Institutions frameworks, and (ii) giving cross-border effect to such legal mechanisms. Adapting Use of protected Option 3 - Mandatory exception with a cross-border effect covering exceptions to content in digital and digital uses in the context of illustration for teaching, with the digital and cross-border teaching option for MS to make it (partially or totally) subject to the cross-border activities availability of licences environment Text and data mining Option 3 - Mandatory exception applicable to public interest research organisations covering text and data mining for the purposes of both non-commercial and commercial scientific research Preservation of Option 2 - Mandatory harmonised exception for preservation cultural heritage purposes by cultural heritage institutions Achieving a Use of protected Option 2 - An obligation on online services which store and give well- content by online access to large amounts of content uploaded by their users to put in functioning services storing and place appropriate and proportionate technologies and to increase market place giving access to user transparency vis a vis rights holders for copyright uploaded content Rights in publications Option 3 - Introduction in EU law of a related right covering digital uses of news publications + introduction, in EU law, of the possibility for MS to provide that publishers may claim compensation for uses under an exception Fair remuneration in Option 3 - Transparency obligations supported by a contract contracts of authors adjustment right and a dispute resolution mechanism and performers 192 6.2. ANALYSIS OF THE COMBINED APPLICATION OF THE PREFERRED OPTIONS 6.2.1. Impact on stakeholders The combined application of the preferred options would affect all types of stakeholders differently, but is not expected to result in any disproportionate impact on a specific category of stakeholders. All the options and their impacts have been analysed and compared in the preceding sections against a set of policy objectives originally outlined in the Communication from the Commission on "Towards a modern, more European copyright framework" from December 2015.587 As a result of an in-depth analysis based on the existing evidence and stakeholder consultation, a package of options has been chosen. The wide scope of the package aims to provide clear benefits to consumers / users (measures related to wider access to content and to exceptions) and rightholders (measures related to the better functioning of the online copyright marketplace); in addition the balance between the interests of consumers / users and rightholders has been taken into account in determining the preferred policy option for each topic. The impacts on the different types of stakeholders and possible synergies arising from the set of preferred options are presented below. Rightholders – As a result of the preferred options for "Ensuring wider access to content" (section 3), rightholders would face new conditions for the licensing of rights to broadcasters for their ancillary online services (country of origin) and for the licensing of rights to certain retransmission services (mandatory collective management). The targeted nature of the measures proposed would mitigate potential negative impacts for rightholders. Rightholders would benefit from the licensing mechanisms to facilitate the clearing of rights in EU AV works for use on VoD platforms and for the digitisation and dissemination of out-of- commerce works in cultural heritage collections for the purpose of better dissemination of their works and revenue opportunities. Following the intervention for "Adapting exceptions to digital and cross-border environments" (section 4), rightholders would need to take account of the scope of the new exceptions on teaching, TDM and preservation when licensing their content to institutional users. Potential negative impacts would be mitigated by several relevant factors (e.g. the TDM option being based on the lawful access condition and allowing rightholders to take proportionate technical measures to ensure the security of their content, the teaching option allowing flexibility for MS to take account of the existing licensing arrangements, the preservation exception applying only to the works already in the collections of CHIs). The intervention for "Achieving a well-functioning market place for copyright" (section 5) would have as a consequence the possibility for rightholders to better control the presence of their content on user uploaded content services. The solution envisaged for publishers would give press publishers legal certainty and additional bargaining power in relation to online services, and would enable MS to allow all publishers to claim compensation for uses under exceptions of rights transferred by authors. Authors and performers would benefit from increased transparency on the exploitation of their works and performances and from improved capability to receive appropriate remuneration, while their contractual counterparts (notably producers and publishers) would have to comply with the new reporting obligations. Overall, the proposed measures are expected to strengthen the competitiveness of European creative industries, notably in the online environment. 587 COM(2015) 626 final, cit. 193 Broadcasters and retransmission services – Pursuant to the intervention on "Ensuring wider access to content" (section 3), broadcasters (as far as their online transmissions ancillary to the initial broadcasts are concerned) - and retransmission services operating by certain means other than cable – would benefit from simpler and faster clearance of rights. The reduction of transaction costs resulting from the proposed intervention would encourage broadcasters and retransmission services to better exploit the opportunities of the Digital Single Market. As rightholders themselves, broadcasters would be subject to the same impacts as other rightholders (see above). Online service providers would be differently affected depending on their business models and on the type of content they distribute. VoD platforms would be able to submit contractual blockages for obtaining online rights to the negotiation forum proposed as part of the preferred options under "Ensuring wider access to content" (section 3). As a result of the intervention for "Achieving a well-functioning market place for copyright" (section 5), online services storing and giving access to large amounts of content uploaded by users would have to use the necessary means to identify protected content and provide more transparency. This would help creating a level-playing field with other online content service providers. Online services such as news aggregators or social media services would need to secure the agreement of press publishers to use their content. Consumers are expected to benefit from wider access to TV and radio programmes online, when broadcasters and retransmission services make use of the licensing arrangements as per the preferred options of the "Ensuring wider access to content" part of this IA (section 3). Consumers are also expected to benefit from a greater availability of EU AV works on VoD platforms across MS, when the negotiating mechanisms proposed under the same section help rights' negotiations. Also as part of "Ensuring wider access to content" (section 3), the measures to facilitate the dissemination of out-of-commerce works would provide consumers with access to content that would otherwise be unavailable to them, nationally and across borders. Consumers would also benefit, directly or indirectly, from the improved possibilities for use of content and increased legal certainty as regards notably education and preservation activities stemming from the preferred options under "Adapting exceptions to digital and cross-border environment" (section 4). The measures proposed to "Achieving a well- functioning market place for copyright" (section 5) are likely to have in the medium term a positive impact on the production and availability of culturally diverse content and on media pluralism, for the benefit of consumers. Institutional users (cultural heritage institutions, research institutions and educational establishments) would benefit from higher legal certainty when using protected content for specific purposes (respectively, preservation, TDM and illustration for teaching), as a result of intervention under "Adapting exceptions to digital and cross-border environment" (section 4). Cultural heritage institutions would benefit from easier licensing solutions for the digitisation and dissemination of out-of-commerce works in their permanent collections, as outlined under "Ensuring wider access to content" (section 3). This would reduce their rights clearance transaction costs and support them in making out-of-commerce works available across borders. 6.2.2. Subsidiarity and proportionality The problems identified in this IA have an important cross-border dimension stemming from the harmonisation which is already in place as a result of existing EU copyright rules (notably in terms of rights) and the cross-border nature inherent in the distribution of content online. The solutions designed to address these problems and selected as preferred policy options on 194 the basis of their effectiveness and efficiency have all been scrutinised from the subsidiarity and proportionality angle in each thematic section. The results of this analysis show that the options chosen are proportionate to the objectives in that they address the underlying problems without generating unjustified costs. On the basis of this IA it also appears that a common approach should be provided at EU level as relying on national solutions for the problems identified would generate further fragmentation in the functioning of the Single Market. Finally, EU intervention is indispensable to achieve one of the key objectives of the copyright modernisation, which is to guarantee legal certainty in cross-border situations. 6.2.3. Choice of instrument The preferred policy options identified in section 3.2 of this IA (online transmissions and retransmissions of TV and radio programmes) would be best implemented through a regulation. This instrument would ensure that the new rules are applicable in all MS at the same time. It would also allow a uniform application of the rules in the EU, which is particularly important to guarantee legal certainty to service providers operating in different territories. The direct applicability of the provisions would prevent legal fragmentation and provide a harmonised set of rules to facilitate online access to TV and radio programmes across borders or originating from other MS. For the other topics covered by this IA, a directive is a more suitable instrument as it would allow MS to determine the technical or practical aspects complementing the EU harmonised rules and to take into account the existing national legislative frameworks. 6.3. MONITORING AND EVALUATION 6.3.1. Monitoring and evaluation plan The Commission will ensure that the actions selected in the course of this IA contribute to the achievement of the policy objectives defined in sections 3.1.3, 4.1.3 and 5.1.3. The monitoring process would partly depend on the type of legal instrument that will be chosen to implement the preferred policy options. For the topics covered by the regulation, the first data collection should take place when the regulation enters into force in order to establish the baseline for future evaluations. The monitoring process would then focus on progress made in relation to the cross-border availability of TV and radio programmes, with data collection taking place every 2-3 years. The main indicators are presented in the table in section 6.2.2. For the directive, the monitoring process could consist of two phases: - The first phase would concentrate on the short-term, starting right after the adoption of the legislative proposal, and would focus on the correct transposition of the directive in MS. Before the transposition deadline, the Commission would organise transposition workshops and meetings with MS' representatives (e.g. group of experts) to assist them in the transposition process and to facilitate the mutual exchange of information. After the transposition deadline, the Commission would verify the timely adoption and correctness of the transposition measures. - The second phase would be mid to long-term and would focus on direct effects of the rules contained in the directive. The table in section 6.2.2 below presents the main indicators that will be used to monitor progress towards meeting the objectives pursued in the modernisation of EU copyright rules, as well as the possible sources of information. Depending on the data needs, information would be gathered from MS, creative 195  industries or institutional users. Where needed, the Commission would send questionnaires to MS or stakeholders or organise specific surveys. The first data collection should take place before the end of the transposition period in order to establish the baseline. The information-gathering should then take place every 2-3 years after the transposition deadline in order to monitor progress in the achievement of the objectives. A comprehensive evaluation could take place at the latest 10 years after the adoption of the directive and 5 years after the adoption of the regulation, in order to measure their effectiveness, efficiency, relevance, coherence and added value, in accordance with the Commission's Better Regulation principles. 196  6.3.2. Operational objectives and monitoring indicators Objectives Indicators Source of information ENSURING WIDER ACCESS TO CONTENT Facilitate the clearance of rights for transmissions of TV and radio programmes online Operational objective: 1. Number of simulcasting services available This information would be Increase the number of TV across borders in the EU and percentage of obtained from publicly and radio programmes geo-blocked content available data sources accessible online across [Benchmark: see table 1.4 in Annex 6B (European Audiovisual borders covering a sample of broadcasters in 11 MS] Observatory) or directly 2. Number of catch-up services available across from broadcasters borders in the EU and percentage of geo- (through bilateral contacts blocked content or questionnaires). [Benchmark: see table 1.5 in Annex 6B covering a sample of broadcasters in 11 MS] 3. Online cross-border availability of radio and TV programmes, by type of content (news, shows, cultural programmes, films, series, etc) 4. Audience of online radio and TV programmes [Benchmark 2014 data: 20 % of Europeans watch television online at least once a week; 6 to 8 % of total listening of radio is done online in Europe.588] Facilitate the clearance of rights for retransmissions services by means other than cable Operational objective: 1. Number of retransmission services provided This information would be Increase the number of over closed electronic communications obtained from publicly TV/radio channels offered by networks available data sources retransmission services 2. Number of foreign TV / radio channels (European Audiovisual provided over closed available in each MS through those Observatory) or from electronic communications retransmission services business intelligence networks [Benchmark: for IPTV services see table services (e.g. IHS, Digital presented in Annex 7B covering a sample of TV research) 11 MS; 2015 data] 3. Share of IPTV retransmission or retransmission over closed electronic communications networks in the EU television market (in comparison to cable and satellite) [Benchmark 2015 data: IPTV service providers account for 14 % of EU28 subscription revenues; cable 36 % and satellite 50 %.589] Facilitate the negotiation and dialogue between relevant parties for the exploitation of European audiovisual works on VoD platforms Operational objective: 1. Number and type of self-regulatory measures This information would be Increase the number of adopted following the stakeholders' dialogue gathered directly from MS European audiovisual works 2. Number of cases submitted to the negotiation (in particular for available through VoD mechanism in each MS and identification of indicators n°2 to 4), from platforms the type of stakeholder resorting to this the European Audiovisual mechanism (VoD platforms, aggregators, Observatory (for rightholders) indicators n°5 and 6) or 588 Source: Standard Eurobarometer 82 (for TV) and AER (for radio). See Annex 6A. 589 Source: European Audiovisual Observatory Yearbook, 2015. See Annex 6A. 197  3. Number of successful negotiations through from VoD platforms the negotiation mechanism in each MS (through bilateral contacts 4. Costs related to the set-up and functioning of or questionnaires). the negotiation mechanism in each MS 5. Number of (or percentage of) European audiovisual works available on VoD / SVoD platforms [Benchmark 2015 data (sample analysis): European non-national films accounted for 14.7% of the films available in the VoD catalogues and 22.8% of the SVoD catalogues.590] 6. Share of VoD / SVoD revenues in total revenues [Benchmark 2013 data: VoD revenues amounted to €1,526 million, which represents approximatively 1/4 of cinema gross box- office over the same period.591] Facilitate the clearance of rights for digitisation and making available of out-of-commerce works in the collections of CHIs Operational objective: 1. Number of institutions engaging in This information would be Increase the number of OoC digitisation and dissemination projects of gathered from beneficiary works in the collections of OoC works, by type of works institutions (for indicators CHIs made available to the 2. Number of licences for OoC works issued to n°1, 3, 4, 5) and collecting public, incl. across borders cultural heritage institutions based on ECL, societies (for indicators PoR or similar systems; n°2, 6), through bilateral 3. Number of in-copyright OoC works made contacts or questionnaires. available online by beneficiary institutions (by type of work); The European 4. Number of in-copyright OoC works made transparency web portal available online by beneficiary institutions would allow to monitor (by type of work) – across borders; the number of OoC works 5. Number of users accessing digitised OoC made available by CHIs. works online, including across borders 6. Revenues for rightholders stemming from collective licensing in this area. ADAPTING EXCEPTIONS TO DIGITAL AND CROSS-BORDER ENVIRONMENT Make sure that teachers/students can use protected content in full legal certainty in their digital teaching activities, including across borders Operational objective: 1. Number of educational establishments This information would be Increase the use of protected offering online courses / cross-border or gathered through content in digitally-supported distance education programmes educational authorities in teaching activities, including [Benchmark 2013 data for higher education each MS and through across border (sample analysis): 82 % of higher education surveys among teachers institutions offered online courses.592] and students. In addition, 2. Number of students involved in cross-border data could be obtained or distance education programmes from publishers and 3. Frequency of use of different types of collecting societies. protected content (print, images, films, etc) in digital / online and cross-border education; 4. Number of MS making the exception subject to the availability of licences and in these countries, number of collective licensing schemes for educational uses 590 Source: European Audiovisual Observatory, November 2015. See Annex 8A. 591 Source: European Audiovisual Observatory, March 2015. See Annex 8A. 592 Source: European University Association. See Annex 10A. 198  5. Types of initiatives implemented to promote the availability and visibility of licences 6. Number of MS requiring compensation of the exception and amount of the compensation; 7. Licensing costs for educational establishments; 8. Rightholders' revenues deriving from educational uses (through compensation and/or secondary licensing) and part of the revenues stemming from digital uses [Benchmark: see data on the revenues stemming from digital uses provided in Annex 10D for several MS.] Make sure that researchers can carry out text and data mining of content they have lawful access to in full legal certainty, including across borders Operational objective: Make 1. Number of (cross-border) research and This information would be sure that researchers can text innovation projects using text and data gathered through the and data mine content they mining; H2020 participants, the have lawful access to in full 2. Number of text and data mining services; H2020 statistics Unit in legal certainty 3. Number of text and data mining related the Commission, statistics scientific publications. from OpenAire Data [Benchmark: 303 articles published on TDM Platform or data provided in the EU from 2011 to 2016.593] directly by stakeholders (publishers, institutional users, etc). Make sure that cultural heritage institutions can make preservation copies of protected works in their permanent collections in full legal certainty, taking into account digital technology Operational objective: 1. Number of CHIs engaging in digital This information would be Increase the number of CHIs preservation gathered from beneficiary engaged in digital 2. Number of CHIs sharing digital preservation institutions and MS, preservation and of works that infrastructure mainly through surveys, are preserved by CHIs 3. Number of digital preservation projects including building on 4. Number of works undergoing digital existing frameworks (e.g. preservation the Enumerate project, reporting on EU Recommendations). ACHIEVING A WELL-FUNCTIONING MARKET PLACE FOR COPYRIGHT Ensure that rightholders benefit from a legal framework allowing them to better control and be remunerated for the use of their content vis-à-vis online services storing and giving access to large amounts of content uploaded by their users Operational objective: 1. Take-up of efficient content identification This information would be Reduce unauthorised content technologies gathered from rightholders on the services and increase 2. Number of agreements concluded between and services covered by the number of agreements the user uploaded content services and the intervention, mainly between online services rightholders for the use of content by technology providers storing and giving access to and through surveys and large amounts of content reports uploaded by their users and rightholders for the use of copyright protected content Ensure a fair share of revenues stemming from the use of publications among the different 593 Source: Lisbon Council, 2016, based on Reed Elsevier Science Direct database. See table in Annex 11E. 199 players of the publishing value chain Operational objective: 1. Number of users who have access to news This information would be Ensure that the increase in the content (directly through publishers' websites gathered from consumption of publications and apps or indirectly through online service periodically-published is reflected in a return on the providers) reports on the publishing required investments [Benchmark 2016 data: 42 % of users have industry (Reuters News access to news online directly via the website Report, PwC Global or app of newspapers and magazines and entertainment and media 57% indirectly via online social media, outlook, etc.) or directly search engines and news aggregators.594] through 2. Online revenues obtained by press publishers questionnaires/surveys to (licences, subscriptions or advertising publishers. Figures to revenues) measure indicator 3 will [Benchmark 2015 data: digital revenue of be obtained from European newspaper and magazine: €7.12 collective management billion.595] organisations. 3. Revenues obtained by publishers on the basis of compensation stemming from exceptions to copyright [Benchmark 2014/205 data In the 12 MS which operate a levy-scheme and foresee an author-publisher split and for which there was data available, an aggregated total amount of €40 million was distributed to publishers.596] Increase legal certainty, transparency and balance in the system that governs the remuneration of creators Operational objectives: 1. Number of creators receiving reporting This information would be Facilitate contract statements gathered on the basis of enforcement in relation to 2. Of which: number of those who receive surveys among creators transparency and satisfactory reporting (to have an indication (authors and performers remuneration on quality of reporting) associations) and surveys Increase the number of 3. Number of companies producing reporting of the contractual reporting (where missing), statements counterparties (depending Increase the quality (where 4. Number of cases brought before the on the sector – publishers, the quality is not sufficient). alternative dispute resolution bodies producers, broadcasters). 5. Number of cases of use of contract adjustment mechanism 6. Satisfaction of creators: perception of impact of reporting obligation on remuneration 594 Source: Eurobarometer 437, March 2016. See Annex 13A. 595 Source: PwC Global entertainment and media outlook, March 2016. See Annex 13A 596 Source: IFRRO. Annex 13D 200 EUROPEAN COMMISSION Brussels, 14.9.2016 SWD(2016) 301 final PART 2/3 COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT on the modernisation of EU copyright rules Accompanying the document Proposal for a Directive of the European Parliament and of the Council on copyright in the Digital Single Market and Proposal for a Regulation of the European Parliament and of the Council laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes {COM(2016) 593} {COM(2016) 594} {SWD(2016) 302} EN EN ANNEXES TO THE IMPACT ASSESSMENT on the modernisation of EU copyright rules 2 ANNEX 1 – PROCEDURAL INFORMATION .................................................................... 4 ANNEX 2 – STAKEHOLDER CONSULTATION ............................................................ 11 Annex 2A – Stakeholders' consultation strategy ...................................................................... 11 Annex 2B – Extract of the report on the responses to the public consultation on the review of EU copyright rules ..................................................................................................... 16 Annex 2C – Synopsis report on the responses to the public consultation on the review of the Satellite and Cable Directive...................................................................................... 33 ANNEX 3 – WHO IS AFFECTED BY THE INITIATIVE AND HOW .......................... 39 ANNEX 4 – THE COPYRIGHT REVIEW PROCESS: SUMMARY OF THE MAIN RELEVANT FINDINGS ......................................................................................... 42 ANNEX 5 – CREATIVE INDUSTRIES IN THE EU ECONOMY .................................. 63 ANNEX 6 – ONLINE TRANSMISSIONS OF BROADCASTING ORGANISATIONS 64 Annex 6A – European TV and radio markets .......................................................................... 64 Annex 6B – Availability of broadcasters' online services across borders................................ 81 ANNEX 7 – DIGITAL RETRANSMISSIONS OF TV AND RADIO PROGRAMMES 98 Annex 7A – Application of licensing facilitation regimes (collective licensing) to the retransmission services other than cable .................................................................... 98 Annex 7B – TV channels available on cable and IPTV retransmission services .................. 100 ANNEX 8 – THE VOD MARKET AND ITS LICENSING SYSTEM ........................... 101 Annex 8A – The European film industry with a special focus on the VoD market............... 101 Annex 8B – Main actors in the audio-visual industry ............................................................ 104 Annex 8C – Value chains: the audiovisual sector and digital distribution, and the video-on- demand services ....................................................................................................... 106 Annex 8D – Revenue streams in the video on demand (VoD) sector.................................... 107 Annex 8E – Copyright accompanying measures ................................................................... 107 3  ANNEX 1 – PROCEDURAL INFORMATION Consultation within the Commission DG CONNECT has the lead of this file which is in the Commission Work Programme for 2016. The number of the entry in the Agenda Planning is 2016/CNECT/009. The work on the IA started in December 2014. The first meeting of the Copyright Inter- Service Steering Group ("ISSG"), chaired by the SG, took place on 25 March 2015, and the second meeting on 13 May 2015. The ISSG met in the second half of 2015 to discuss the IA accompanying the regulation on cross-border portability and the Communication "Towards a modern, more European copyright framework" which were both adopted on 9 December 2015. Discussions on the topics covered by this IA were resumed in April 2016, with four additional meetings taking place on 28 April, 23 May, 14 June and 27 June. In addition to DG CONNECT, DG COMP, EAC, ECFIN, EMPL, ESTAT, GROW, JRC, JUST, LS, RTD and TRADE participated to the ISSG. Consultation of the RSB The Impact Assessment Report was examined by the Regulatory Scrutiny Board on 20 July 2016. Recommendations from the Board were transmitted on 22 July 2016 and were implemented as follows: Recommendations of the RSB Changes in the IA report 1) Problem definition and situation in - The introduction has been revised to better Member States. The report should briefly explain why certain issues are not covered explain on what basis it was decided to tackle by the IA (section 1.2) certain topics now and why other issues that - Where relevant, the relative importance of were announced in the 2015 Communication the different drivers has been clarified. on modernisation of the copyright framework were not considered. It should better assess the - The views of Member States and of the likely magnitude of each of the problems, European Parliament on the different issues providing at least anecdotal evidence at covered by the IA have been added in the Member State level. The report should indicate introduction to each area (sections 3.1, 4.1 which drivers are dealt with by the initiative and 5.1) and their relative importance should be better - Information related to the existing national assessed in order to set the expectations at the legislations in the areas covered by this IA right level, in particular for consumers. The has been added where relevant (tables added report should also present the views of Member in relation to exceptions, rights in States and of the European Parliament, and publications, fair remuneration of authors include tables showing the applicable national and performers). frameworks. Moreover, the baseline scenario - The impacts of the preferred option on MS should be further developed, by presenting has been specifically added after the current trends or developments at national comparison of the options for each topic. level. 2) Need to act at EU level. Given the rapid - Where relevant, the impacts of the baseline evolution of the digital single market, the on- option have been further developed to better going regulatory and self-regulatory initiatives, explain why the problems identified would competition cases and pending law cases, the not be solved without EU intervention. report should better justify, using robust - The arguments justifying the need to act at evidence, that the problems identified will not EU level have been further elaborated be resolved without regulatory intervention. (under sections 3.1.2 and 5.1.2). Moreover, based on a clearer picture of the situation in the different Member States, the 4 report should better justify why action is needed at EU level, in particular if national authorities did not regulate in the area. (3) Analysis of options. The report should - The IA now includes a sub-section on the outline which legal instruments are most choice of the legal instrument (section appropriate to be used for each of the 6.2.3). measures. It should also clarify which - The analysis of impacts of the legislative measures represent significant versus options has been revised in order to specify incremental policy changes, and to what extent the extent of the changes for the different the options under consideration are likely to stakeholders (notably in terms of business have significant impacts on the relevant models, revenues and management of industry sectors and disrupt current business rights). models or rights management patterns. It should clearly spell out how the separate - For each topic, a short paragraph has been measures are likely to change the distribution added after the comparison of options in of income among the actors (for instance, order to explain the proportionality of the following the extension of the country of preferred option, including in relation to origin principle). The report should also better fundamental rights. The impacts of the assess the proportionality of the different preferred option on MS has also been measures and explain why lighter regimes are clarified after the comparison of the options. not presented for SMEs, given the likely - Section 6.2 presents an analysis of the disproportionate level of compliance costs (e.g. combned application of the preferred regarding the fair remuneration in contracts options, including in terms of balance of authors and performers). The between the interests of consumers/users proportionality of the options should be better and right holders. assessed, among others by better presenting the likely magnitude of impacts in the various Member States that the implementation of the preferred options would imply on the ground. Given the reference to impacts on fundamental rights, in particular regarding property rights and freedom to conduct a business, the report should better justify why the measures are considered as proportionate. The report should clarify to what extent the package of measures is balanced between the interests of consumers, or users, and of right holders and further explain the likely impacts on fundamental rights. Ensuring wider access to content - The impacts on right holders of the option Online transmission of broadcasting introducing the country of origin for the organisations: The report should more clearing of rights for broadcasters' online convincingly demonstrate, based on robust ancillary services have been further clarified evidence, that the benefits of introducing the (section 3.2.2.3, Option 2) country of origin principle to clear the rights - The analysis of the options introducing for certain online services of broadcasters mandatory collective management for the would outweigh the costs for right holders. retransmissions of TV and radio Digital retransmission of TV and radio programmes by means other than cable now programmes: The management of rights includes an assessment of the impacts in through collective management or licensing terms of management of rights (section should be better described. 3.2.3.3., Options 1 and 2). Video-on-demand (VoD) platforms: The - The option introducing an obligation to report should better justify the need to act at have a negotiation mechanism to facilitate EU level, present in more detail how the the licensing of EU AV works on VoD 5 options would work in practice (e.g. the platforms has been further assessed (section negotiation mechanism), and assess the likely 3.3.3, Option 2). Additional elements have costs they would entail (e.g. costs for national been provided on the costs for Member authorities depending on the existing structures States and the link with the review of the and the frequency of use). Moreover, it should AVMSD. clarify the link and coherence with the review of the AVMSD, which relies on an extension of obligations to the VoD services to create a level playing field and imposes new obligations on European content. Adapting exceptions to digital and cross- - A table summarizing the main differences in border environment the implementation of the exceptions in MS Tables summarizing the national legal has been added in section 4.1.4, in addition frameworks should be included in the main text to the detailed tables provided in Annex 4. (rather than only in the annexes). Regarding - The limits of the voluntary approach for the text and data mining exception, the TDM has been further explained in the reasons for the apparent underachievement of problem definition (section 4.3.1) and in the the voluntary approach (taken up with the analysis of Option 1 ("industry self- "Licences for Europe") should be further regulation initiatives") explained. Achieving a well-functioning market place - In relation to the use of protected content by for copyright online services storing and giving access to Use of protected content by online services user uploaded content, the scope of Option storing and giving access to user uploaded 2 has been adapted and its assessment has content: The report should further assess the been revised. effectiveness of the preferred Option 2, given - The benefits of the option introducing a new the disproportionate bargaining power between right for news publishers have been further the service providers and right holders when explained and substantially beefed up there is an obligation to engage in negotiations (section 5.3.3, Option 2) but no obligation to conclude them. It should more convincingly demonstrate the need to act - The problem definition related to the at EU level and, based on evidence, show that remuneration of authors and performers has the preferred option would effectively ensure been amended in order to clarify the extent more balanced relations across the copyright of the problem (lack of transparency on the value chain and will positively affect the exploitation of works and on the owed situation of right holders, while taking into remuneraiton). The EU dimension of the account impacts on the online ecosystem. It problem has been strenghtened, including should be clarified that the proposal would not on the basis of data illustrating the impose a certain technology. importance of the cross-border exploitation Rights in publications: The report should of content. Additional elements have been more convincingly demonstrate that the included to better explain the need to act at creation of a new standalone right for news EU level. (section 5.4.1 and 5.1.2 in relation publishers would effectively contribute to to subsidiarity). reinforcing their role in the digital world and that action at EU level is needed. Fair remuneration in contracts of authors and performers: The report should justify, using more robust evidence, that the remuneration of authors and performance is unfair in the online environment, with a proper reflection of remuneration issues and new opportunities brought by the new online services. Moreover, the cross-border dimension of the problem should be better demonstrated, 6 as well as why national solutions are likely to be less effective. Given that contracts are usually private matters, the legal justification for intervention should be clearly set out, and the proportionality of the measures duly justified. Procedure and presentation - A new Annex 15 has been introduced, In order to make the report more accessible provinding the list of the main relevant for non-specialists, technical terms should be Directives related to this IA and a glossary explained in an extended glossary and all of technical terms. acronyms inserted in an annex. Moreover, - The executive summary has been beefed up the main messages of each section should be and now it contains more detailed clearly presented and, where possible, visual informaiton as requested. aids explaining complex issues at stake - The monitoring indicators have been should be included. The report should clearly completed with quantitative benchmarks mention when it presents results from studies were availble. commissioned by interested parties and label - Generally presentation has been improved them with the necessary caveats. The in several parts of the document. executive summary should be more informative, in particular on the problems to be tackled for each of the areas, on the need to act at EU level, on the preferred options and their likely costs and benefits. Benchmarks/targets should be set out for the monitoring indicators in order to judge the effectiveness of the framework when conducting the retrospective evaluation. Evidence used in the IA The IA was prepared using diversified sources of information, including information received from stakeholders, input from external experts, market reviews, sources of statistics (including Eurostat), external studies (see below) and surveys (Eurobarometer surveys or specific surveys carried out in the context of studies). The Commission carried out several public consultations, a stakeholder dialogue ("Licences for Europe") and a series of meetings with stakeholders (see Annex 2). These exercises brought input from various stakeholders, which was taken into account in the IA. For certain topics, the Commission also used evidence presented in reports on the implementation of existing EU policies, notably: - European Commission, "Report on the Implementation of Commission Recommendation 2011/711/EU - 2013-2015 on digitisation, online accessibility and digital preservation", 2016; - European Commission, "Report on the Implementation of the European Parliament and Council Recommendation on Film Heritage 2012-2013", 2014. External expertise used in the IA process Studies and surveys A series of legal and economic studies were conducted for the Commission on various aspects of the existing copyright rules: 7  "Study on the application of Directive 2001/29/EC on copyright and related rights in the information society (The InfoSoc Directive)" (December 2013):1 the study provides an analysis of the existing national rules implementing the InfoSoc Directive in eleven EU countries (Germany, France, the United Kingdom, Italy, Spain, Poland, Denmark, Hungary, Belgium, Luxembourg and the Netherlands). It concentrates on the functioning of exclusive rights (in particular the "making available" right) and of certain exceptions (including the exceptions benefiting to libraries and the exceptions for teaching and scientific research) in the digital environment. The study also provides an analysis of the right of retransmission by cable and assesses the relevant provisions of the SatCab Directive.  "Study on the making available right and its relationship with the reproduction right in cross-border digital transmissions", (December 2014):2 the study complements the "Study on the application of Directive 2001/29/EC on copyright and related rights in the information society" by providing an analysis of the relation between the making available right and the reproduction right.  "Economic analysis of the territoriality of the making available right in the EU" (March 2014):3 the study analyses the use of territorial licensing in the music and audiovisual industries, identifies key economic mechanisms underlying the choice of territorial licensing (vertical agreements, price discrimination and transaction costs) and assesses the impacts of different policy scenarios on the existing licensing models.  "Survey and data gathering to support the evaluation of the Satellite and Cable Directive 93/83/EEC and assessment of its possible extension" (ongoing): the study provides an overview of the EU TV/radio market, an analysis of the geographic coverage of TV channels and an analysis of cross-border availability of broadcasters' online services. It includes an analysis of the legal frameworks implemented in the Member States concerning cross-border (re)transmissions of broadcasting services. It also assesses the performance of the Satellite and Cable Directive and identifies the legal issues to be assessed in case of a possible extension of its mechanisms to online (re)transmissions of TV/radio programmes.  "Survey Report on Digitisation in European Cultural Heritage Institutions 2015" (June 2015), and "Survey Report on Digitisation in European Cultural Heritage Institutions 2014" (June 2014), produced as part of the ENUMERATE projects, co-funded by the European Commission: the surveys provide information on the status of digitisation of cultural heritage in EU based on a detailed questionnaire submitted to cultural heritage institutions across the EU. They include data on institutional holdings, including born digital collection, types of holdings, ways to provide digital access and, for the 2014 issue only, an indicative break-down of the incidental and structural costs of digitisation, including copyright clearance and the cost of licensing. 1 J-P. Triaille et alii, "Study on the application of Directive 2001/29/EC on copyright and related rights in the information society (The InfoSoc Directive)", De Wolf & Partners, December 2013 http://ec.europa.eu/internal_market/copyright/docs/studies/131216_study_en.pdf 2 S. Depreeuw et alii, "Study on the making available right and its relationship with the reproduction right in cross-border digital transmissions", De Wolf & Partners, December 2014, http://ec.europa.eu/internal_market/copyright/docs/studies/141219-study_en.pdf 3 G. Langus et alii, "Economic analysis of the territoriality of the making available right in the EU", CRA, March 2014 http://ec.europa.eu/internal_market/copyright/docs/studies/1403_study1_en.pdf 8  "The Cost of Digitising Europe's Cultural Heritage. A Report for the Comité des Sages of the European Commission" (November 2010): the study estimated the total cost of digitising Europe's cultural heritage, looking into different types of material in different categories of cultural heritage institutions. It also provides an aggregate estimate of cultural heritage institutions and their holdings in Europe and fed into the recommendations of "The new Renaissance. Report of the "Comité des sages", which were delivered in 2011 to the Commission on the digitisation, online accessibility and preservation of cultural heritage.  "Challenges of the Digital Era for Film Heritage Institutions", (December 2011): the study looked into challenges and opportunities for film heritage institutions in preserving and continuing to provide access to film heritage in Europe. It provides an analysis of the market and technological developments affecting European film heritage, evaluates the cost of digitising and looks at various issues including copyright aspects.  "Assessing the economic impacts of adapting certain limitations and exceptions to copyright and related rights in the EU – Analysis of specific policy options" (May 2014): 4 the study provides an economic analysis of specific policy options regarding exceptions (including preservation and text and data mining), based on the methodology set out in the related report: "Assessing the economic impacts of adapting certain limitations and exceptions to copyright and related rights in the EU" (October 2013).5 The study identifies the economic mechanisms at play in relation to copyright exceptions and provides a qualitative assessment of the potential effects of different policy options on various stakeholders.  "Assessment of the impact of the European copyright framework on digitally supported education and training practices": the study provides a mapping of the exceptions relevant to education in national laws and identifies legal uncertainties and obstacles on the use of copyright-protected works in digital education. The findings of the study are based on desk research, interviews with stakeholders and on two online surveys.  "Showing films and other audiovisual content in European Schools : Obstacles and best practices" (May 2015):6 the study analyses how films are used in schools and identifies obstacles and best practices. One chapter of the study is dedicated to the copyright framework applicable to the use of audiovisual works in the context of education.  "Study on the legal framework of text and data mining (TDM)" (March 2014): 7 the study identifies the rights relevant for TDM activities and assesses how current 4 J. Boulanger et alii, "Assessing the economic impacts of adapting certain limitations and exceptions to copyright and related rights in the EU – Analysis of specific policy options”, CRA, May 2014, http://ec.europa.eu/internal_market/copyright/docs/studies/140623-limitations-economic-impacts- study_en.pdf 5 G. Langus et alii, "Assessing the economic impacts of adapting certain limitations and exceptions to copyright and related rights in the EU”, CRA, October 2013, http://ec.europa.eu/internal_market/copyright/docs/studies/131001-study_en.pdf 6 J-M Pérez Tornero et alii, "Showing films and other audiovisual content in European Schools : Obstacles and best practices – Final report" https://ec.europa.eu/digital-single-market/en/news/schools- europe-are-not-using-films-and-audiovisual-material-full-concluded-eu-study 7 J-P. Triaille et alii, "Study on the legal framework of text and data mining (TDM)", De Wolf & partners, March 2014, http://ec.europa.eu/internal_market/copyright/docs/studies/1403_study2_en.pdf 9  exceptions can apply to such activities. It also examines legal provisions, decisions or judgments affecting TDM in 11 Member States (Germany, France, the United Kingdom, Italy, Spain, Poland, Denmark, Hungary, Belgium, Luxembourg and the Netherlands). The objective was to examine the need for legislative changes in this specific area.  "Standardisation in the area of innovation and technological development, notably in the field of Text and Data Mining, Report from the expert group" – European Commisson, DG Research and Innovation, 2014. The report looked at TDM from an economic and legal point of view in the context of the EU policy for research and innovation.  "Remuneration of authors and performers for the use of their works and the fixations of their performances" (July 2015): the study compares, from legal and economic perspectives, the existing national systems of remuneration for authors and performers in the music and audio-visual sectors in ten EU countries (France, United Kingdom, Germany, Spain, Poland, Italy, Hungary, the Netherlands, Denmark and Lithuania). The objective was to gather evidence whether, and to what extent, the differences that exist among the Member States affect levels of remuneration and the functioning of the internal market.  "Remuneration of authors of books and scientific journals, translators, journalists and visual artists for the use of their works" (ongoing): the study compares, from legal and economic perspectives, the existing national systems of remuneration for authors in the print sectors in ten EU countries (France, United Kingdom, Germany, Spain, Poland, Italy, Hungary, the Netherlands, Denmark and Ireland). The objective was to gather evidence whether, and to what extent, the differences that exist among the Member States affect levels of remuneration and the functioning of the internal market. Drawing upon statistical analysis of a survey of authors to test and corroborate the findings of the legal analysis, the study draws a number of policy recommendations to improve the functioning of the Single Market in this area. 10  ANNEX 2 – STAKEHOLDER CONSULTATION ANNEX 2A – STAKEHOLDERS' CONSULTATION STRATEGY The consultation strategy supporting the modernisation of EU copyright rules included a stakeholders' dialogue, several public consultations and Eurobarometer surveys. The Commission also organised several roundtable discussions with stakeholders and took part to a number of conferences and seminars on the issues covered by this IA. In addition, DG CONNECT held a series of ad-hoc meetings with stakeholders to discuss specific issues and gather detailed input on various policy options. The IA largely builds on the outcome of these consultations with stakeholders. Stakeholders' dialogue The Commission held a structured stakeholder dialogue "Licences for Europe" between February 2013 and November 2013.8 As announced in the 2012 communication on content in the digital single market,9 the purpose of this dialogue was to address a number of issues on which rapid progress was considered necessary and possible. The dialogue consisted in four Working Groups, which led to 'Ten Pledges to bring more content online'10 presented at a final plenary session on 13 November 2013. In the context of this dialogue, the areas of text and data mining and digitisation of film heritage were discussed, in particular, to explore possible concrete solutions (such as for instance standard licensing models). Public consultations  Public consultation on the review of the EU copyright rules ('the 2013-2014 public consultation'): 11 the consultation was held between 5 December 2013 and 5 March 2014. It allowed to gather input from all types of stakeholders on the Commission's review of the EU copyright rules, including in the areas of access to cross-border content, exceptions, and remuneration of authors and performers. The report on the responses received was published in July 2014.12 An extract of the report covering the issues dealt with in this IA is included in Annex 2B.  Public consultation on the review of the EU Satellite and Cable Directive13: the consultation was held from 24 August to 16 November 2015. It invited respondents to give feedback on the functioning of the rules related to the clearance of rights for satellite broadcasters and cable companies, notably with regards to cross-border access 8 For further details concerning this stakeholder dialogue see https://ec.europa.eu/licences-for-europe- dialogue/en/content/about-site 9 COM(2012) 789 final, cit. 10 Licences for Europe - Ten pledges to bring more content online, http://ec.europa.eu/internal_market/copyright/docs/licences-for-europe/131113_ten-pledges_en.pdf 11 For further details concerning this public consultation see http://ec.europa.eu/internal_market/consultations/2013/copyright-rules/index_en.htm. 12 Report on the responses to the Public Consultation on the Review of the EU Copyright Rules, July 2014 http://ec.europa.eu/internal_market/consultations/2013/copyright-rules/docs/contributions/consultation- report_en.pdf 13 For further details concerning this public consultation see https://ec.europa.eu/digital-single- market/en/news/contributions-and-preliminary-trends-public-consultation-review-eu-satellite-and-cable 11  to broadcasting services, and to assess the possible need to extend these rules to online transmissions/retransmissions. The report on the responses received has been published in May 2016.14 It is presented in Annex 2C.  Public consultation on the regulatory environment for platforms, online intermediaries, data and cloud computing and the collaborative economy:15 the consultation was held between 24 September 2015 and 6 January 2016. It covered a broad range of issues including, in particular, the role of online intermediaries as well as ways to tackle illegal content on the Internet. Insofar as relevant, the consultation provided evidence and views from all stakeholders on the liability of intermediaries. A first brief overview of the results of the consultation has been published in January 2016.16 The report on the responses received has been published in May 2016.17  Public consultation on the role of publishers in the copyright value chain and on the 'panorama exception':18 the consultation was held between 23 March 2016 and 15 June 2016. It focussed on two specific issues that were flagged in the communication "Towards a modern, more European copyright framework"19 but had not been covered by the previous copyright consultations: the possible introduction in EU law of a new neighbouring right for publishers and the so-called 'panorama exception'. With regard to the possible introduction of a new neighbouring right for publishers, the objective of the consultation was twofold. First, to gather views on the impact that granting an EU neighbouring right to publishers could have on the publishing sector, on citizens and creative industries. Second, to collect input for the Commission's analysis whether the need (or not) for intervention is different in the press as compared to other publishing sectors. The report on the responses received on the role of publishers in the copyright value chain is published at the same time of this IA.20 Surveys  A Flash Eurobarometer on "Cross-border access to online content"21 was carried out in January 2015 among 26.586 respondents in 28 EU Member States (telephone 14 Synopsis Report on the Responses to the Public Consultation on the Review of the Satellite and Cable Directive https://ec.europa.eu/digital-single-market/en/news/full-report-public-consultation-review-eu- satellite-and-cable-directive 15 For further details concerning this public consultation see https://ec.europa.eu/digital- agenda/en/news/public-consultation-regulatory-environment-platforms-online-intermediaries-data-and- cloud 16 First brief results of the public consultation on the regulatory environment for platforms, online intermediaries, data and cloud computing and the collaborative economy, https://ec.europa.eu/digital- single-market/news/first-brief-results-public-consultation-regulatory-environment-platforms-online- intermediaries 17 Synopsis Report on the Public Consultation on the regulatory environment for platforms, online intermediaries and the collaborative economy https://ec.europa.eu/digital-single-market/en/news/full- report-results-public-consultation-regulatory-environment-platforms-online-intermediaries 18 For further details concerning this public consultation see https://ec.europa.eu/digital-single- market/en/news/public-consultation-role-publishers-copyright-value-chain-and-panorama-exception 19 COM(2015) 626 final, cit. 20 The report on the responses received concerning the 'panorama exception' (which is not addressed in this IA) is also published at the same time of this IA. 21 Flash Eurobarometer 411, http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/instruments/F LASH/surveyKy/2059 12  interviews). The survey allowed to gather information on consumers' experience with online content in general, as well as consumers' experience and possible interest as regards cross-border portability of online subscriptions and cross-border access to online content.  A Eurobarometer online survey on "Internet users’ preferences for accessing content online" was carried out in March 2016 among 13.483 Internet users aged 15-45 in 28 Member States. The survey gathers data illustrating online content consumption patterns for music, films and TV series, news and images. It provides information on the type of services chosen by Internet users to access content online and on the main criteria for choosing a service to access and consume content online. Meetings with stakeholders There have been regular contacts with all relevant stakeholders, to gather further information and data and to discuss specific issues, in particular, the options presented in this IA.22 Access to content A first roundtable discussion with Commissioner Oettinger took place on 30 January 2015 on territoriality and cross-border access to content, with representatives of the AV, music and print sectors. In particular, AV right holders (authors, actors, producers), public and commercial broadcasters, VoD/SVoD platforms, cable and telecom companies, and consumer organisations participated to the discussion. Two further roundtable discussions were held with representatives of the audiovisual sector: one in February 2016 in the context of the Berlinale Film Festival, covering different aspects of cross-border access to audiovisual works as well as ways to tackle copyright infringements; and another one in May 2016, during the Cannes Film Festival, concerning online transmissions and retransmissions of TV/radio programmes as well as access to and availability of EU audiovisual works on VoD platforms. The Commission also attended a meeting of the ad hoc "IPR and copyright reform" Working Group of the European Parliament (EP)23 which discussed ways to improve cross-border accessibility and availability of audiovisual works in the EU, with representatives of producers, distributors, broadcasters, and film archives on 17 September 2015. Issues related to online transmissions and retransmissions of TV and radio programmes were further discussed during bilateral meetings held with associations of public and commercial televisions and radios, CMOs and a number of individual stakeholders, including public and commercial broadcasters, telecommunications operators and right holders. With regard to the availability of EU audiovisual works on VoD platforms, various meetings and discussions were organised in the first half of 2016 with relevant stakeholders, including VoD platforms, distributors, film producers, aggregators and/or organisations representing audiovisual authors. The reasons of the limited availability of European audiovisual works on VoD platforms, as well as the solutions that could be envisaged, were discussed. Copyright aspects relevant for the digitisation and dissemination of out-of-commerce (OOC) works in the collections of Cultural Heritage Institutions (CHIs) were discussed on various 22 A short summary of stakeholders' positions is presented in the Impact Assessment under each option. 23 The agenda and minutes of the meetings of the working group are available under: http://www.europarl.europa.eu/committees/en/juri/subject-files.html?id=20150128CDT00182 13 occasions with representatives of CHIs and practitioners, including during recent meetings of the Member States Expert Group (MSEG) on digitisation and digital preservation (June and October 2015), at a meeting of the Film Heritage Expert Group in March 2016, at two Licensing workshops organised by Europeana in November 2014 and November 2015, and with National Archives at meetings of the European Archives Group (EAG) in June and October 2015, in addition to meetings with practitioners on the field. Several meetings to discuss these issues were also held with representatives of authors, publishers and producers, and collecting management organisations between 2014 and 2016. This matter was also part of the agenda at the roundtable with Commissioner Oettinger on access to knowledge and heritage held on 19 February (see below). Exceptions A roundtable discussion between stakeholders and Commissioner Oettinger took place on 19 February 2015 on access to knowledge and heritage through libraries, education and cultural heritage institutions. The roundtable gathered representatives of universities, libraries, cultural heritage institutions, consumers as well as representatives of authors, scientific and educational publishers, film producers, and CMOs. The need to adapt the exceptions for preservation and illustration for teaching to digital and cross-border uses was discussed in this context. Discussions on existing licensing mechanisms and exceptions, in particular in relation to the print sector, were also discussed at a meeting of the "IPR and copyright reform" Working Group of the EP on 12 February 2015. The Commission attended this meeting, together with representatives of public libraries, publishers, authors, journalists and distributors. Copyright issues related to uses of protected content in the context of teaching were discussed with representatives of universities and, more largely, educational users at various occasions (for example, 2014 Media and Learning conference in November 201424 and a policy debate organised in the European Parliament in November 2015). In addition, the interviews and surveys of educators and learners carried out in the context of the study "Assessment of the impact of the European copyright framework on digitally supported education and training practices"25 allowed to gather more detailed feedback from this group of stakeholders. Several meetings took place with representatives of publishers (in particular educational and academic publishers and sheet music publishers), reproduction rights organisation and collecting societies between 2014 and 2016. Given the relevance of the subject for the same categories of user stakeholders, copyright issues and the practicalities of the preservation, notably digital, of works in cultural heritage collections was discussed with institutional users and practitioners broadly on the same occasions and the same modalities as described above for out-of-commerce works. These issues were also covered on several occasions in meetings and telephone contacts with publishers, and other right holder organisations, and with third-party organisations engaged in preservation of scientific literature between 2014 and 2016. Views of a wide range of stakeholders have been gathered on TDM which informed the analysis carried out in this IA. TDM was the subject of one dedicated working group in the stakeholder dialogue "Licences for Europe" carried out throughout much of 201326. The 24 http://www.media-and-learning.eu/files/pdf/Media-and-Learning-2014_public_report.pdf 25 Over 60 interviews of learners, educators and librarians were carried out in the context of this study to establish illustrative case studies. In addition, an online survey was conducted in 2015 among more than 2000 respondents from 9 Member States. 26 Representatives from researchers, academics, technology companies, publishers and other right holders attended the discussions in all or some of the meetings. 14 mandate of the Licences for Europe group was to "explore solutions such as standard licensing models as well as technology platforms to facilitate TDM access"27. A continues constant dialogue with all relevant stakeholders was carried out after Licences for Europe and in the context of the preparation of the IA. Several meetings and a constant exchange took place with representatives from researchers and universities, from scientific publishers, including open access publishers, news and books publishers, technology and life science companies, consumer representatives. The Commission attended a meeting of the ad hoc "IPR and copyright reform" working group of the European Parliament which discussed TDM, in the presence of representatives of publishers and researchers, on 26 March 2015. The Commission also attended a number of public events which focussed specifically on TDM in the context of the copyright modernisation (e.g. Digital Agenda Intergroup and LERU hosted breakfast on research related reform on EU Copyright28 in October 2015, EP event "Demystifying TDM in copyright context" in April 2016, etc). TDM was discussed in a specific roundtable stakeholder meeting called by Commissioner Oettinger which took place on 3 February 2015. Well-functioning marketplace for copyright On the sharing of value in the online environment, a variety of stakeholders, representing right holders from different sectors, consumers, online platforms, online service providers, etc. expressed their positions through the public consultation on online platforms carried out between September 2015 and January 2016. Views of the various stakeholders were also sought through a number of meetings to discuss the role of online intermediaries which took place (on a bilateral basis or through their associations) between May 2015 and in the course of 2016. The role of online intermediaries was also discussed in the EP Working group on "IPR and copyright reform", notably at the meeting held on 16 March 2016, in which the Commission participated. The role of publishers in the copyright value chain and the rights in publications were discussed in a number of stakeholder meetings before and during the public consultation which took place between March and June 2016. The Commission discussed these issues with representatives of journalists, consumers, publishers, media monitoring services, digital media associations, as well as the main online service providers providing access to news and other publications. On the issues related to the remuneration of authors and performers, apart from the 2013- 2014 public consultation, stakeholders were regularly invited, both directly and through their organisations, to provide information and evidence. On top of numerous bilateral meetings with relevant organisations and stakeholders, dedicated meetings were organised to discuss the issue with representatives of authors, performers and their contractual counterparties (i.e. producers, publishers, broadcasters, record labels) during spring 2016. Some of these dedicated discussions were sector specific (e.g. for the audiovisual sector), while others were horizontal (e.g. discussion with contractual counterparties). The issue of remuneration of authors and performers was also discussed in the EP Working group on "IPR and copyright reform", notably at the meetings held on 12 February 2015 and 23 June 2015, in which the Commission participated. 27 See the Commission's services document summarising the results of the Licences for Europe discussions, including on TDM "Ten pledges to bring more content online". http://ec.europa.eu/internal_market/copyright/docs/licences-for-europe/131113_ten-pledges_en.pdf 28 http://www.leru.org/index.php/public/news/the-right-to-read-is-the-right-to-mine/ 15 ANNEX 2B – EXTRACT OF THE REPORT ON THE RESPONSES TO THE PUBLIC CONSULTATION ON THE REVIEW OF EU COPYRIGHT RULES The summary of the replies to the public consultation concerning the areas covered by this IA, i.e. out-of-commerce works, exceptions (preservation, teaching, research and TDM) and remuneration of authors and performers are presented below. 1. Out-of-commerce works (Questions 40 and 41) 40. [In particular if you are an institutional user, engaging or wanting to engage in mass digitisation projects, a right holder, a collective management organisation:] Would it be necessary in your country to enact legislation to ensure that the results of the 2011 MoU (i.e. the agreements concluded between libraries and collecting societies) have a cross-border effect so that out of commerce works can be accessed across the EU? 41. Would it be necessary to develop mechanisms, beyond those already agreed for other types of content (e.g. for audio- or audio-visual collections, broadcasters’ archives)? The first question on mass digitisation concerned the possible need to enact legislation to give cross-border effect to the 2011 Memorandum of Understanding (MoU) on out-of-commerce works29. The second question was more general and related to the possible need to develop new mechanisms to ensure the digitisation and making available of other types of content. End users/consumers Only few individual end users replied to the questions related to mass digitisation. End users/consumers and their organisations refer to two main reasons when acknowledging the importance of mass digitisation: firstly, the need to ensure the preservation of works for future generations, in particular for educational and cultural resources; secondly, the legitimate interest of the public in having online access to the collections of cultural heritage institutions across Europe. Users consider than an exception is necessary to allow cultural heritage institutions to make their collections available online. Some respondents suggest extending the scope of the existing exception for the consultation of works for the purpose of research and private study. Others consider that the mass digitisation could be facilitated by reducing the terms of copyright protection. Another possible solution mentioned in the replies (but not as the favoured solution) is the use of compulsory licences. End users generally consider that mechanisms facilitating mass digitisation should be adopted for all type of works beyond the print sector, including audio and audio-visual works. Several replies point to the need to make available broadcasters' archives, especially material produced with the contribution of public funds. Institutional users Most institutional users consider that the MoU on out-of-commerce works and the Orphan Works Directive30 are insufficient to address the copyright issues arising from mass digitisation projects. In particular, they consider that the requirement of diligence searches makes the Orphan Works Directive unsuitable for mass digitisation projects. Some academic libraries express concerns about the possibility of finding a balance, without arbitration by public authorities, between licensing conditions imposed by rightholders for digitising collections and the limited financial resources available for mass digitisation. Many cultural heritage institutions report a large demand from citizens, teachers, students and researchers for the digitisation of 20th century works. Some university libraries also explain that students and researchers increasingly make use of audio and audio-visual materials. Institutional users generally consider that legislation allowing cross-border use of the digitised works is necessary, but many of them indicate that this objective would be better achieved by an exception allowing for mass digitisation of out-of-commerce works (for example, by the introduction of a new exception or an 29 The Memorandum of Understanding on key principles on the digitisation and making available of out-of- commerce works aims to facilitate mass digitisation efforts for books and learned journals on the basis of licence agreements between libraries and similar cultural institutions on the one hand and the collecting societies representing authors and publishers on the other. See: http://ec.europa.eu/internal_market/copyright/out-of-commerce/index_en.htm 30 Directive 2012/28/EU on certain permitted uses of orphan works. 16 expanded version of the existing preservation and consultation exceptions in the InfoSoc Directive to cover the reproduction and making available of out-of-commerce works). They suggest that such an exception should cover all types of works. Alternatively, they suggest considering solutions based on the collective management of rights, such as extended collective licensing, which are in place in some Member States. Museums explain that without a mass digitisation exception they are prevented from presenting their digital collections to the public and also from sharing them with other museums for research purposes. Institutional users generally consider that mechanisms facilitating mass digitisation and online access to collections should not be limited to certain types of content. Certain respondents suggest to set up further Memoranda of Understanding for sound recordings and audio-visual works. Languages research centres indicate that EU-wide access to broadcasters' archives would be very helpful to enhance contemporary language research. Authors/performers Quite a large number of authors and their organisations consider that the mechanisms in place at national level are sufficient and that no legislative intervention is needed. A few respondents argue that it would be unrealistic to carry out mass digitisation for cross-border uses considering the marginal demand for access to works available only in national languages. On the other hand, other authors and authors' organisations suggest that a mutual recognition system would be necessary to give a cross-border effect to the licences issued at national level under collective rights management systems. Several respondents highlight in their replies that the signatories of the MoU called on the Commission to consider legislation to ensure legal certainty in the cross-border context. Others argue that legislation enabling mass digitisation applicable throughout the EU would be preferable, with an unwaivable remuneration for right holders. Certain authors express a clear opposition to solutions based on mandatory collective management with opt-out mechanisms. They consider that the consent of each author needs to be obtained for mass digitisation projects and that the remuneration has to be individually negotiated. Several organisations representing visual artists, particularly photographers raise the question of the use of images embedded within other works, which in their view, is not considered properly in the 2011 MoU. Different views are put forward on the development of further mechanisms for other types of works. Audio- visual authors in particular support further discussions on the digitisation of works in the archives of public broadcasters. A few respondents consider that the mechanisms in place in their countries (e.g. extended collective licensing) already provide a satisfactory solution for broadcasters' archives. Film directors indicate that they are committed to the statement agreed for mass digitisation of cinematographic works in the context of Licences for Europe. Performing arts organisations favour an MoU for the digitisation and making available of out-of-commerce works in the performing arts sector (e.g. sound or video recordings of theatre productions and concerts). They indicate that a stakeholder dialogue including organisations, collecting societies and publishers could be helpful to prepare such an MoU. Other authors insist on the need to foresee an unwaivable remuneration for rightholders, whatever solution is chosen. Collective management organisations (CMOs) CMOs put forward mixed views on the need to enact legislation to give a cross-border effect to the MoU on out- of-commerce works. Several CMOs refer to the national frameworks in place, in particular the extending collective licensing system in Denmark, the law on out-of-commerce books in France establishing a system of collective management and the recent law based on legal presumption of representation of rights in Germany. While certain CMOs indicate clearly that they would welcome solutions for the recognition of national laws and licensing mechanisms across borders, others simply highlight that the MoU calls on the Commission to propose solutions for cross-border availability. Concerning the possibility of extending this type of solution to other sectors, the views of CMOs are also quite heterogeneous. Certain CMOs in the audio-visual sector express their willingness to implement the principles agreed in the context of Licences for Europe and to continue the dialogue on broadcasters' archives. CMOs representing visual artists express a preference for legislative solutions allowing mass digitisation with a fair remuneration. Other CMOs prefer to deal with digitisation questions through voluntary agreements between the interested parties. Several CMOs underline that the main obstacle to mass digitisation projects is the lack of public funding, in particular in the audio-visual sector where digitisation costs are very high. 17 Publishers/producers/broadcasters Many publishers in the print sector consider that there is no need for further legislation at EU level if the MoU on out-of-commerce works is effectively implemented in all Member States. Instead, voluntary agreements should be promoted to ensure access to digitised works (e.g. bilateral agreements between collective management organisations). Publishers explain that the main obstacle to large scale digitisation projects is very often the lack of public funding. In general, this category of respondents does consider there is an urgent need to develop mechanisms similar to the MoU in sectors other than the print sector Representatives of the newspaper publishers consider that providing mechanisms to facilitate the mass digitisation of newspaper content would threaten publishers' business models and their ability to respond to digital challenges. They note that the solutions set out in the 2011 MoU were specific to the book sectors and cannot be automatically extended to publishing of newspapers. Public service broadcasters explain that rights clearance on an individual basis for making available the content of their archives is practically impossible. The main difficulties are related to the large amount of audio and audio-visual material and the large number of contracts and rightholders. Therefore they favour the introduction of an EU framework which would encourage the adoption of legislative solutions based on collective licensing (for example on the extended collective licences model) in Member States to facilitate the digitisation of their archives. Commercial broadcasters express a different view and do not report any problems with the clearing of archives for new uses. They consider that there is no need for collective management to ensure the digitisation of audio-visual collections or broadcasters' archives. Certain broadcasters mention that the decision of whether or not to exploit archives is based on consumer demand rather than on rights clearance challenges. The exploitation of archives has been facilitated by the multiplication of TV channels and online platforms and constitutes an asset for broadcasters. A large number of film producers consider that the approach used for the print sector (i.e. voluntary collective management backed by extended collective management or presumptions of representation) is not appropriate for audio-visual works, where individual rights licensing should be preferred. They are however in favour of a stakeholder dialogue to facilitate licensing solutions for the digitisation and making available of public broadcasters' archives. The use of extended collective licensing or presumption of representation in this context should be consistent with the three-step test and offer sufficient guarantees to rightholders. Music publishers explain that mass digitisation is not an issue for music and that rightholders can licence their work directly. They say that digitisation is common in the music industry and the chances of music being both in analogue form and out-of-commerce are remote. Intermediaries/distributors/other service providers This category of respondents did not express specific opinions on the questions related to mass digitisation. Member States Only a few Member States replied to the questions related to mass digitisation, explaining the systems in place at national level to allow mass digitisation of protected content (for example, extended collective management). In general, Member States favour contractual mechanisms and discussions between CMOs and cultural heritage institutions to address the challenges of mass digitisation. One Member State suggests establishing a provision at EU level to facilitate the digitisation of audio-visual works for archiving purposes, with the exploitation of the digitised works remaining subject to an agreement with rightholders. Other Certain academics suggest that mass digitisation should be allowed under the preservation exception, which should include digitisation and format shifting but not acts of making available (which would remain covered by Orphan Works Directive and the MoU on out-of-commerce works). Other respondents support the introduction of a specific exception to enable libraries and archives to undertake mass digitisation of their collections. 2. Exceptions Preservation and archiving (Questions 28 to 31) 28. (a) [In particular if you are an institutional user:] Have you experienced specific problems when trying to use an exception to preserve and archive specific works or other subject matter in your collection? (b) [In particular if you are a right holder:] Have you experienced problems with the use by libraries, educational establishments, museum or archives of the preservation exception? 29. If there are problems, how would they best be solved? 18 30. If your view is that a legislative solution is needed, what would be its main elements? Which activities of the beneficiary institutions should be covered and under which conditions? 31. If your view is that a different solution is needed, what would it be? These questions concern the exception allowing publicly accessible libraries, educational establishments, museums and archives to undertake specific acts of reproduction which are not for direct or indirect economic advantage (the preservation exception – Article 5(2)(c) of the InfoSoc Directive). Respondents were asked to give feed-back on their experiences with preservation activities carried out by these institutions and to provide their views on how problems, if identified, should be solved. End users/consumers A relatively small number of respondents in this category responded to the questions on the preservation exception. In some cases, end users/consumers are concerned about the divergent implementation of the preservation exceptions across the EU and consider that more harmonisation of the preservation exception is needed in view of technological developments. Some end users/consumers also suggest broadening the scope of this exception, notably to allow public libraries and other beneficiaries to make the works in their collections available online. Institutional users The vast majority of institutional users report that they have experienced problems when trying to use an exception to preserve and archive specific works in their collections. Respondents consider that both the scope of this exception and the way Member States have implemented it cause problems. Member States' implementations are excessively divergent and in many cases this exception has been implemented in a too narrow or unclear way. Examples given include Member States’ laws that limit the number of copies that can be made or that reduce the range of beneficiary institutions and prohibit or limit format shifting (the conversion of the copy of a work into a new format, something that is considered to be particularly important when a certain format – and devices used to read it - become obsolete or unavailable). Institutional users stress that the limited level of harmonisation of the current exception and the fact that it does not have cross-border effect have a negative impact on collaborative digitisation projects across countries. They generally believe that the preservation exception is too narrow. Some point out that the mere preservation of works in their collection is not the sole reason why libraries and other institutions wish to reproduce them. Other objectives include making these works more easily searchable or available across digital networks, including across research platforms and infrastructures. Some respondents highlight problems in relation to recital 40 of the InfoSoc Directive, according to which this exception should not cover uses made in the context of online delivery of content It is also stressed by some respondents that the exception should allow beneficiaries to go beyond the specific acts of reproduction which are currently allowed and that it should allow mass digitisation. Institutional users also raise issues with ‘born-digital’ content and highlight that the preservation exception does not allow them to produce back-up copies of content (for examples articles) that they subscribe to. More broadly, institutional users consider that licences are not a sustainable solution for the digital preservation of content in the long run. Licensors, for example publishers, may cease to exist and subscriptions may be stopped and, as a consequence, libraries and other institutions may lose access to content, which would prevent them from fulfilling their role as custodians of cultural heritage. Some institutional users also point to problems related to technological protection measures and their protection under the InfoSoc Directive, which they consider unbalanced and having negative effects on preservation activities. They also mention some difficulties with the fact that this exception only covers acts carried out without direct or indirect commercial advantage: they consider this requirement too broad and potentially problematic, for example when institutional users cooperate with commercial entities for preservation or other purposes. Other areas where difficulties are reported include, for example, website harvesting projects, the creation of open access directories and the provision of copies for evaluation purposes in academic settings. Proposed solutions include the harmonisation and broadening of the existing exception so that it would allow, for example, institutions to make multiple or unlimited reproductions of all types of works in their collection (i.e. mass digitisation), including born-digital content acquired through subscriptions and specific categories of works like old computer software. It is also proposed that the exception’s scope should clearly include format shifting. Some respondents in this category also call for the current exception to be made mandatory and for a clarification that contracts cannot override exceptions. They also call for a revision of provisions related to 19 technological protection measures. Finally, some respondents suggest that the introduction of a ‘fair use’ approach in EU copyright law would help libraries and cultural institutions to fulfil their role. Authors/performers Most authors and performers report having not experienced major problems with the existing preservation exception. They believe this exception allows institutions to fulfil their public interest missions, and that uses beyond the scope of this exception should rely on licensing solutions. Some of these respondents acknowledge that digitisation for preservation is an important public policy objective but consider that this objective is often hindered by budgetary, rather than copyright, restrictions. They consider that a lack of funding for public libraries should not be to the detriment of the remuneration of rightholders in the content held by these institutions. Licensing, both individual and collective, is generally considered to be the solution, if and when problems arise. Collective management organisations (CMOs) CMOs’ views on this subject are generally close to those of publishers, producers and broadcasters, with a general preference for market-based solutions - particularly collective management - where problems are present. Some CMOs report that cultural heritage institutions in certain Member States digitise not only for preservation purposes but also to make digitised content easily accessible (online) to a wider public. Some respondents point out that licences are available to cover both activities (at least in a number of Member States) but report that, in their view, cultural institutions are not always willing to use them and remunerate rightholders for their use of copyright protected content. Publishers/producers/broadcasters Publishers, producers and broadcasters mostly argue that they have not experienced major problems, if at any, with the preservation exception. They emphasise the importance of licensing solutions and voluntary cooperation to solve possible issues in this area, instead of legislative changes. They consider in particular that the preservation exception should not be broadened nor made mandatory. Generally speaking, for respondents in this category, legislative changes should only be considered in the presence of a market failure. They consider that stakeholder cooperation and agreements should be pursued in this area. Audio-visual producers refer to the principles and procedures for the digitisation of film heritage agreed upon in the context of Licences for Europe. Other concrete examples of market-based solutions are mentioned, for example STM (Scientifical Technical and Medical) publishers mention the PORTICO and CLOCKSS projects. Some respondents point to the fact that some public libraries request to be able to engage in certain preservation activities despite the fact that they do not qualify in their opinion as heritage libraries. In order to prevent unnecessary harm to commercial markets, a distinction should be made between heritage/deposit libraries, which have a clear preservation mission, and other libraries when defining the beneficiaries of libraries exceptions and the conditions attached to them. Intermediaries/distributors/other service providers Only a small portion of respondents in this category provided feedback on this matter, and their answers vary, in particular on whether problems with this exception exist. In some cases, service providers highlight the need for more legal certainty for libraries. Other respondents express a preference for cooperation and agreements among interested parties over legislative intervention. Some distributors in the audio-visual sector consider that there are no problems in this area and report examples where they themselves have a role in the preservation of cultural heritage (for example in Austria, in relation to public funding of audio-visual production). Member States Some Member States believe that there is no need to expand the scope of the current preservation exception. Others, while not necessarily against legislative changes, highlight the importance of formulating exceptions in this area in a technologically neutral way, or consider that this exception should cover all types of media. Other Member States suggest the possible extension of this exception to other essential uses not yet contemplated, taking into account that, currently, copies made under the existing exception cannot subsequently be made available to the public. Other respondents A number of academics consider that the current preservation exception should be revised, since the focus on specific acts of reproduction is too narrow. Feedback from respondents such as experts, non-governmental organisations and chambers of commerce range from very detailed comments on issues such as format shifting, web harvesting and the archiving of born-digital content to more general considerations on the importance of finding a balance between rightholders’ remuneration and opportunities offered by digital networks. A group of 20 respondents from the performing arts industry (e.g. theatre, opera houses, performing arts companies) present views similar to those of institutional users and advocate the broadening of the beneficiaries of the current exception. Teaching (Questions 42 to 46) 42. (a) [In particular if you are an end user/consumer or an institutional user:] Have you experienced specific problems when trying to use works or other subject-matter for illustration for teaching, including across borders? (b) [In particular if you are a right holder:] Have you experienced specific problems resulting from the way in which works or other subject-matter are used for illustration for teaching, including across borders? 43. If there are problems, how would they best be solved? 44. What mechanisms exist in the market place to facilitate the use of content for illustration for teaching purposes? How successful are they? 45. If your view is that a legislative solution is needed, what would be its main elements? Which activities of the beneficiary institutions should be covered and under what conditions? 46. If your view is that a different solution is needed, what would it be? These questions related to the teaching exception (Article 5(3)(a) of the InfoSoc Directive). Respondents were asked to share their experiences with the use of protected works for teaching purposes, including under existing market mechanisms, and to provide their views on how problems, if identified, should be solved. End users/consumers Organisations representing end users underline the restrictive implementation of the exception in Member States and the resulting legal uncertainty for teachers and students. In particular, some users report problems faced by teachers/trainers involved in the development of open educational resources (OERs), notably content such as images or parts of textbooks being removed from educational platforms at the publishers’ request. Other users consider that copyright rules are too complex and negotiations with rightholders too costly, making innovative learning methods impossible to use. As to the possible solutions, users call for a broad exception for non-commercial use of protected works in educational contexts: they believe that the exception should not be limited to educational establishments, teachers and students but should cover all educational activities (including non-formal education) and should not give rise to compensation. According to respondents, the exception should be technologically neutral, to cover face-to-face teaching and online education. They also point out that works produced by students should benefit from the same protection as other authors. Several civil society organisations support a broad educational exception that is mandatory for all Member States while others suggest a fair use mechanism, allowing teachers to use illustrative resources and to share their works. In addition, certain respondents propose an exception for non-commercial sharing and consider that educational resources funded by public money should be disseminated under free licences. Institutional users A large number of institutional users highlight the restrictive implementation of the teaching exception in the Member States and report practical problems in particular for distance learning and cross-border uses. Several respondents illustrate the difficulties faced by universities having campuses abroad and virtual learning environments. They consider that the current situation creates difficulties for the development of online educational resources involving a cross-border audience. Film heritage institutions explain that the possibilities to use audio-visual material for teaching purposes are very limited. Several respondents in this category mention the existence of licensing schemes in place at national level and the possibility to conclude licensing agreements with publishers. However a large number of institutional users consider that licensing solutions are expensive and create an administrative burden for schools and universities. Some libraries consider that licences are costly and conditions imposed by collecting societies do not guarantee the use of all works for educational purposes. Various respondents argue that licences should not be introduced to cover uses allowed under the exception. A certain number of respondents also mention open licences and massive online open courses (MOOCs) which provide valuable resources for teaching purposes. Concerning the possible solutions, institutional users nearly unanimously call for a broad mandatory teaching exception. They consider that the exception should cover all types of works (such as text, film, multimedia and born-digital resources) and should not include any limits on the amount of the work that can be used. It should cover uses in the classroom and in virtual teaching environments, as long as it is not for commercial purposes. It 21 should not be limited to any type of institution but rather defined by the teaching purpose. Less frequently mentioned conditions include the use of content for teaching compilations and the right of transformation. A number of institutional users are of the view that the exception should not be overridden by contracts. Certain respondents consider that the exception should not give rise to compensation, while others believe that a reasonable compensation could be considered to satisfy the three-step test. In the short term, certain institutional users consider that the Commission should clarify the scope of the teaching exception to encourage Member States to use the flexibility offered by the InfoSoc Directive. A small number of replies also insist on the need to increase awareness among teachers and students on the scope of their rights, through information campaigns or workshops. Authors/performers For a large number of authors' representatives, the use of works for illustration for teaching does not raise specific problems. However, certain authors point to the lack of compensation (in particular in Belgium, where compensation is foreseen for the uses under the exception but no agreement has been reached on the amount to be received by rightholders) or to extensive uses of their works by educational establishments. Journalists refer to possible problems when their rights are assigned to their employers (in this case they do not receive any remuneration for the use of their works under the teaching exception). Several authors' organisations explain in their replies the system in place in their respective Member State: in particular the licensing system existing in the UK, the national agreements between the Ministry of Education and collective management organisations in France and the extended collective licensing system in Denmark. The majority of organisations representing authors, performers and film directors express a strong preference for licensing mechanisms and agreements between collective management organisations and educational establishments. Some respondents favour a compulsory collective management system while others highlight the benefits of the extended collective licensing model. Representatives of journalists suggest raising awareness in schools of what is allowed under the exception. Collective management organisations (CMOs) Several collective management organisations in the category of reproduction rights organisations (RROs) underline that the notion of illustration for teaching in the teaching exception generates uncertainties which have resulted in litigation in some cases, with certain educational establishments refusing to take up a licence on the basis of the exception. Certain respondents in this category refer to the negative effects of the recent reform in Canada, where a new fair dealing provision covering education has been introduced, leading to extensive interpretations of the authorised uses by educational establishments and to legal proceedings. Other collecting societies consider that the existing framework for exceptions is appropriate and that cross-border access is not a pressing issue for schools. RROs refer to the individual licensing solutions offered by publishers which are frequently combined with collective schemes. A number of respondents explain the functioning of the collective agreements set out at a national level. For example, certain RROs indicate that the system of sector-specific agreements developed in France is appropriate but some stress the lack of budget to ensure a sufficient remuneration of right holders. The extended collective licences used in the large majority of schools in Denmark, Sweden and Finland were mentioned in several replies. Another RRO illustrates the functioning of the platform ‘Conlicencia’, in Spain, allows the use of works in the digital environment. Other respondents explain that the UK law foresees an educational exception which is subject to a licence. RROs ask for a clarification of the exception at EU and national level. They defend a narrow understanding of the notion of illustration for teaching which should not comprise the reproduction, making available and distribution of educational resources (for compilations, course packs, textbooks, e-reserves, etc.). They state that the exception should allow the use of small parts of works (or non-relevant excerpts), that copies should remain in the hand of teachers and that rightholders should be named and receive remuneration. In addition, they consider that the best solution would be to encourage licensing agreements which offer comprehensive, tailor- made solutions. Collecting societies representing authors consider that there is no need to make the exception mandatory, to extend it or to introduce new exceptions. They are of the view that it would be impossible to define the exception more precisely, given the difference in national education systems. Visual artists' collecting societies consider that a legislative solution can be envisaged if the scope of uses is not too wide and if authors receive a fair remuneration. In addition, moral rights of the authors should be preserved and opt-out solutions need to be foreseen. 22 Publishers/producers/broadcasters The majority of publishers and producers do not mention particular problems with the use of works for illustration in the context of teaching activities. They consider that the wording of the exception in the InfoSoc Directive is sufficiently broad to cover different types of uses, including in the digital environment. In addition, licensing solutions are in place to complement the exception where necessary. Several publishers' associations indicate that, so far, cross-border needs have not been reported in primary and secondary education, mainly because of the national nature of curricula. However, certain book publishers point to problems in the interpretation of the current exception, notably its application in the digital environment. They consider that schools and universities make extensive use of the exception, going beyond what is allowed by national laws. Problems are reported in particular in Germany and Spain. Several German publishers explain that large parts of books were made available on the intranet of certain universities, creating direct competition with the primary market. Surveys by the German collecting society VG Wort have shown that over 400 million copies of textbooks fragments are made each year in schools in Germany. Spanish publishers refer to legal disputes with universities on the scope of the activities allowed under the exception. Certain publishers express concerns on the fact that, in several Member States, national laws do not exclude from the scope of the exception works whose primary market is teaching. Many publishers refer to the innovative solutions proposed to respond to the needs of educational establishments in the digital environment (e.g. digital formats of works, use of interactive white boards, distance learning). Initiatives mentioned include the ‘Wizwiz’ in France, ‘Knooppunt’ and ‘Digiportail’ in Belgium; 'Digitale Schulbücher' in Germany; ‘Scuolabook’ in Italy. Several digital platforms or portals are available in Member States where teachers can find resources to be used in the classroom or in a digital learning environment. Publishers also propose providing customised eBooks to universities. Respondents from the software industry explain that the new digital textbook licensing model provides numerous benefits to students and teachers, including in terms of costs (digital textbooks are generally cheaper than print textbooks and are available for rental by students). The toolkit developed in the context of Licences for Europe for micro-licences (allowing the legal use of protected texts or images, including for education) is also mentioned. A few respondents in this category refer to open sources licensing models, indicating that they may offer flexible solutions in this area. Several publishers highlight in their replies the initiatives developed at national level to increase information and transparency on licensing schemes for educational establishments (e.g. the ‘onderwijsenauteursrecht.nl’ website in the Netherlands; including a practical ‘guide’ that answers questions from users; and the ‘schools’ website of the UK Copyright Licensing Agency in the UK. A large number of publishers consider that there is no need to modify the teaching exception in the EU legal framework. In their view, the absence of specific problems and the fact that they do not perceive there to be any market failure means that a legislative solution is not justified, and that if one is introduced it could limit new business models and consumer choice. Instead, they consider that individual and collective licensing solutions should be encouraged. They believe that licences offer more flexibility than a legislative solution and reduce possible uncertainties around the scope of the activities allowed under the exception. Moreover, licensing agreements can be easily adapted to rapidly-changing technologies. Some publishers suggest maintaining a limited teaching exception (covering only small parts of works, for the benefits of teachers and students only, with the indication of the author's name, a fair remuneration for right holders and the exclusion of textbooks and resources produced specifically for the education market). A further suggestion is to confer a supervisory role to CMOs in order for them to check whether educational establishments respect the terms of licences. Educational publishers and representatives of the software industry warn that a further harmonisation of the teaching exception could undermine the role of licences and the investment in the production of quality educational material, including educational software. (The educational publishing market represents about 20% of the publishing industry at EU level). Intermediaries/distributors/other service providers Only a few distributors and service providers expressed their views on the questions related to the teaching exception. They generally consider that there is no need for new legislation, given the recent developments in the market offering sufficient flexibility (for example, innovative tools developed by publishers, pay-per-use licences, open educational resources and open licensing models). Their main concern is that legislative solutions risk hampering the development of market-based solutions. One respondent notes that the market of open educational resources is still very young and believes that it would be premature for the Commission to regulate it. 23 Film distributors agree that educational establishments can use clips of works for the purposes of illustration but are of the view that schools should pay a licence when they use an entire film (in the classroom or in distance learning). They consider that an extension of the exception would not be compliant with the three-step test (remote access to a film by distance learners would conflict with the normal exploitation of a work). Member States Certain Member States underline in their replies the differences in the transposition of the teaching exception and in particular the different interpretations given to the term illustration for teaching. Several Member States acknowledge the cross-border relevance of the exception in the case of distance learning and argue that copyright rules should not hinder cross-border provision of courses in the EU. Clarifying the maximum scope of the teaching exception, in particular in relation to online uses, was suggested by several Member States among those that replied to the consultation, with some stressing the importance of ensuring a technology-neutral definition of the teaching exception. Several Member States favour a greater harmonisation, which would require making the teaching exception mandatory across the EU. For other Member States, there is no need to further harmonise or extend the scope of the existing exception. Other Groups of academics replying to these questions generally consider that there is a lack of harmonisation of the uses allowed under the teaching exception and that voluntary licensing is not sufficient to achieve the right balance between public and private interests. They suggest further guidance on the implementation of Article 5(3)(a) of the InfoSoc Directive as well as the introduction of a mandatory and uniform exception. According to other academics, the current system works quite well even if some modifications could be considered (for example, allowing the use of entire works rather than fragments). Research (Questions 47 to 49) 47. (a) [In particular if you are an end user/consumer or an institutional user:] Have you experienced specific problems when trying to use works or other subject matter in the context of research projects/activities, including across borders? (b) [In particular if you are a right holder:] Have you experienced specific problems resulting from the way in which works or other subject-matter are used in the context of research projects/activities, including across borders? 48. If there are problems, how would they best be solved? 49. What mechanisms exist in the Member States to facilitate the use of content for research purposes? How successful are they? These questions concerned the research exception set out in Article 5(3)(a) of the InfoSoc Directive and were intended to gather respondents’ experiences of the use of copyright protected works in the context of research projects/activities, including across borders, and their views on how problems, if identified, should be solved. End users/consumers End users/consumers, in particular researchers, are generally unsatisfied with the current situation. Even though a research exception exists in some Member States, respondents still report problems in accessing scientific publications or scholarly articles. Students and researchers highlight that access to the greatest possible range of academic publications is key for the completeness and accuracy of their research. They indicate not being able to access online certain material they would need for their academic work. Some respondents consider that the more reputable and high-quality scientific journals are usually those making access to their content more difficult, through 'paywall' restrictions. The cost of subscriptions is seen as disproportionate and excessive for individual researchers. Researchers consider that this situation is particularly difficult to accept in the case of publicly-funded research. They believe that publications which present the results of publicly funded research should always be made available without restriction. Most respondents consider that open access publishing is a suitable solution to increase access to research content. They mention in this context some examples of open access archives and networks. At the same time, many respondents argue that there are barriers that prevent open access from working in an optimal way and consider that open access should be better supported. It is also mentioned that open access journals are sometimes considered to be not very prestigious or have low citation index scores, making it less attractive to 24 publish in such a journal. A problem often raised by researchers is that scientific publishers often require that they (as authors of scientific publications) agree upon unduly restrictive contract conditions, for example that their work cannot be put in open access databases. Institutional users Many institutional users report problems in the practical implementation of the research exception at national level. Many find that this exception has been implemented too narrowly by some Member States, which, they argue, has resulted in a limited use of the exception by its intended beneficiaries. It is reported that only few Member States (e.g. Estonia) have applied the exception in a technology-neutral manner. More generally, some institutional users highlight that considerable online content that is relevant for scientific research is only available for payment and is burdened with digital rights management tools. They stress that remote access to university libraries collections should be further facilitated in the area of research as it is a much more practical option than onsite consultation. Some respondents note that licences for scientific articles often limit the amount of users that can access the material at the same time. This is problematic, they say, given that research projects often involve several researchers, sometimes from different universities or institutes including across borders which need to have access at the same time. A number of institutional users, in particular from Northern Europe, report their experiences with extended collective licences. Some point out that such mechanisms have not been very useful so far in the area of research as they are cumbersome to negotiate and limited in scope. As a solution, these respondents consider that a mandatory and technology-neutral research exception should be adopted at EU level. More generally, they express strong support for open access publishing. Authors/performers The vast majority of authors - other than researchers as authors of scientific publications - consider that there are generally no problems with access to content for research purposes and with current research exception. These respondents argue that the combination of licences and exceptions offer users considerable flexibility to access content for research purposes. Respondents argue that licences are a good addition to whatever use would not be covered by a national exception. However, some note that it can be difficult for them to track uses and receive adequate remuneration. Collective management organisations (CMOs) The majority of CMOs consider that the current research exception does not pose specific problems. They favour licensing agreements and other market-based commercial solutions as the preferred way to distribute scientific publications. However, one CMO in the visual arts sector considers that clarification of the term 'non- commercial' - currently employed as a condition for the application of the research exception under the Infosoc Directive– would be welcomed. Publishers/producers/broadcasters Respondents in this category consider that the current exception works well. Any possible shortcomings with access to research publications can be easily dealt with through licensing agreements. They consider that licences are the preferred option in the field of research as they ensure quality and security and protect against possible abuses (i.e. uses for purposes other than research). Licences terms are broad enough to allow for the exchange of information necessary to carry out research, including across borders. Some respondents state that scientific publishers already offer 90% of their products through licensing to educational institutions, which allows researchers, students and teachers to have access to that content. Representative of STM publishers report alternative access models that are being developed, such as ‘pay-per- view’ or rental for online viewing, which they consider particularly useful for researchers not affiliated to an institution or requiring only occasional access. Specific market-led initiatives are also mentioned, such as one in France where textbook publishers have been making works available in digital format via certain online portals (for example ‘Canal Numérique des Savoirs’ and ‘WizWiz’). Other licensing projects mentioned include the ‘RightsLink’ platform and ‘Conlicencia’ in Spain. Intermediaries/distributors/other service provider This category of respondents did not express specific opinions beyond those put forward by other stakeholders groups on the questions related to research. Some of them generally supported the views of users, while others raised points similar to those of rightholders. 25 Member States Some Member States would welcome further harmonising the research exception at EU level, in particular to take account of online uses (one of them emphasises that if there are changes the exception should keep only covering non-commercial uses, as it is currently the case). One Member States considers that this exception should be made mandatory. Other Member States would, on the contrary, prefer that the exception remains as it is. They stress the importance to maintain flexibility for national implementation approaches and licensing mechanisms as well as the need to comply with limits imposed by international law (in particular with the ‘three step test’). One Member State refers to its national policy, which requires publicly funded research to be made available through open access mechanisms. Text and data mining (Questions 53 to 57) 53. (a) [In particular if you are an end user/consumer or an institutional user:] Have you experienced obstacles, linked to copyright, when trying to use text or data mining methods, including across borders? (b) [In particular if you are a service provider:] Have you experienced obstacles, linked to copyright, when providing services based on text or data mining methods, including across borders? (c) [In particular if you are a right holder:] Have you experienced specific problems resulting from the use of text and data mining in relation to copyright protected content, including across borders? 54. If there are problems, how would they best be solved? 55. If your view is that a legislative solution is needed, what would be its main elements? Which activities should be covered and under what conditions? 56. If your view is that a different solution is needed, what would it be? 57. Are there other issues, unrelated to copyright, that constitute barriers to the use of text or data mining methods? Respondents were invited to share their experiences of using or providing services based on text and data mining. They were also asked to provide their views on how problems, if identified, should be solved. End users, consumers and institutional users Most respondents that provided views on this issue under the category of "end users" were individual researchers. In most cases, these respondents had similar views as research institutions, universities and similar undertakings which provided their views as part of the "institutional user" category. In addition some consumers provided answers to this topic in the consultation. Researchers and institutional users are generally dissatisfied with the current situation. They highlight that text and data mining is a fundamental tool for research and consider that, at present, Europe is missing out on the benefits that text and data mining can bring to competitiveness and innovation and to citizens. They put forward two main categories of obstacles to text and data mining: legal uncertainty on whether and how copyright may apply to text and data mining and problems with existing licensing mechanisms, which they generally consider inadequate. These respondents stress that it is not clear whether and to what extent text and data mining fall under current EU legislation on copyright and the database right and, if so, whether any of the existing exceptions may apply. They consider that mining should not be copyright relevant as it does not involve the expression of an idea that copyright law intends to protect, but just analyses the underlying facts. Some point out that the reproduction of copyright protected works for non-commercial research based on text and data mining could already be covered by existing exceptions and limitations to copyright and the database right in the laws of the Member States. However, they argue that in many Member States it is not clear whether the current exceptions, in particular the research exception (when implemented), could apply to text and data mining. According to these respondents, licences are not an appropriate solution to solve the uncertainty concerning text and data mining and rather constitute a barrier and a source of transaction costs. They report that using the breadth of works needed for successful mining require working through a wide variety of contractual negotiations and agreements. This situation, these respondents say, often limits the data that can be used for mining purposes to that available on the basis of licences that explicitly allow mining (such as some in the Creative Commons family of licences). Researchers and research institutions consider that licence terms currently proposed by scientific publishers are unreasonable, particularly because they argue that they require researchers to disclose information about their 26 projects, limit the number of articles that can be mined and – they say - unduly interfere with how researchers can make available the output of mining. Some of these respondents consider that text and data mining is easier in non-EU countries that have ‘fair use’ provisions in their legal systems. According to them, this gives North American universities a competitive advantage over universities and companies based in the EU. Several respondents also refer to issues related to technical access to content for mining purposes. They are concerned about the use of technological protection measures that block access to content, thus preventing text and data mining or rendering it more difficult. It is also suggested that the concerns of publishers on reduced performance and security issues linked to their infrastructure when crawled by mining robots are not shared by open access publishers. Researchers and institutional users consider that text and data mining should not be subject to licences. They believe that a legislative change is needed to introduce a specific mandatory exception for text and data mining in EU copyright law. They consider that the exception should cover both commercial and non-commercial scientific research, as confining it to non-commercial uses would create legal uncertainty and impede the full development of the potential of text and data mining. According to them, technological protection measures and contracts should not be permitted to override the exception. These respondents also consider that researchers should be entitled to share the results of mining with fellow researchers as long as such results are not substitutable for the original works which have been mined. Finally, a number of consumers’ replies raise concerns in relation to privacy and data protection. They believe that access and analysis of all data available on the Internet represents a tangible impediment to the constitutional rights of European citizens. Authors/performers and collective management organisations (CMOs) Authors, such as journalists and writers (individual researchers expressed their views mainly under the category of ‘end users’) and their representatives, as well as CMOs, generally consider that there is no major problem in the field of text and data mining. They state that licensing solutions are being developed and are the preferred way forward. They consider that more work could be done through dialogue between interested parties and between rightholders and governments to improve licensing practices. They also point to the fact that text and data mining is a new activity and that a lot of uncertainty still exists as to what exactly is meant by text and data mining. In their view, it would, therefore, be premature to deal with text and data mining in legislation. Authors and CMOs believe that if an exception is nevertheless considered (which they generally oppose) it should be limited to non-commercial uses. They consider that a broad and general text and data mining exception, covering both non-commercial and commercial uses, would be contrary to EU’s international obligations. Respondents in this category are concerned that an exception could favour commercial operators, in particular news aggregators or commercial news monitoring services. They highlight that it is essential that the output of text and data mining does not become a substitutable product for the original works that are subject to mining. Some respondents also point to the role that collective management could play in this area and a few suggest that if an exception is introduced, it should be linked to the payment of fair compensation to rightholders. The introduction of a remuneration right is also suggested as an alternative by some. Publishers/producers/broadcasters Publishers, in particular Science, technology and medical (STM) publishers indicate that they already meet requests and offer solutions allowing the possibility of mining texts and data. However, such requests are still rather limited in number, even if this is expected to grow. Licences are often granted under standard terms and at no cost to researchers who want to mine subscription-based content for the purposes of non-commercial scientific research. STM publishers, as well as book and newspaper publishers, report that practical and innovative solutions based on licensing mechanisms are being developed to ensure the effective use of mining technologies in Europe. Some of these solutions are already successfully implemented by publishers and researchers. Others are being launched or soon will be. They refer to initiatives presented in the Licences for Europe dialogue, in particular a sample licence clause and the mining hub ‘Prospect’, developed in the context of the ‘Cross-Ref’ initiative and the ‘Text and data mining Declaration’ signed by a number of STM publishers. They report that these initiatives make it possible to access cross-publisher content in one standardised format via a click-through licence for non- commercial uses. Other initiatives such as the digital clearing house ‘PLS Clear’ in the UK and a pilot project from the CCC (Copyright Clearance Centre) are mentioned. STM publishers also report that they have 27 developed licences for commercial uses of text and data mining in the pharmaceutical sector in collaboration with the ‘Pharma Documentation Ring’ (PDR). With regards to the way forward, publishers generally oppose the introduction of a text and data mining exception. They consider that there is no evidence of market failure for text and data mining that would justify the introduction of an exception, and that text and data mining is best dealt with through market-based licensing. They indicate that an exception would affect the licensing offers that publishers are currently developing. Moreover, according to these respondents, an exception would not solve issues other than copyright which are raised by text and data mining, such as the protection of data privacy, the risks of unfair competition and technical aspects which require the intervention and investments by publishers (e.g. to set up a specific technical environment, such as dedicated platforms from which researchers may download the content before mining it). Publishers are also concerned that an exception would increase the risk of damage to databases and infrastructure hosting their content when they are crawled by mining robots (as with an exception, they say, it will be more difficult for them to control access to these databases, in particular through contractual terms). More generally, some respondents also signal that an exception could give rise to abuses and facilitate piracy. Intermediaries/distributors/other service provider Many service providers - software companies in particular - refer to the dynamic market for text and data mining services, and to the new innovative solutions that are being developed in this area. In particular, new technologies for speech recognition, subtitling and software analytics, for example, rely on large amounts of data as input, including but not limited to materials found on the Internet. These technologies underpin the development of applications used in life sciences, humanities and health care and many other markets and applications. Software producers and telecom providers are, in general, concerned with the legal uncertainty that surrounds text and data mining. Some consider that text and data mining does not, and should not, involve copyright or database rights. Generally, these service providers consider that text and data mining should not be subject to licensing (although some say they are already acquiring licences to engage in text and data mining). Technological protection measures are considered to be obstacles to mining as they prevent the downloading of large amounts of content and the application of text and data mining techniques. On the other hand, other service providers that provide technical solutions for licensing (such as clearing centres), state that the rightholders with whom they work frequently report adverse implications from unauthorised mining of their websites and business models, particularly as Text and data mining-related crawling of websites poses security risks and can adversely affect website performance. Such respondents also highlight the risk of text and data mining facilitating the unauthorised creation of derivative works, and that it is not always possible to distinguish between a legitimate researcher and an entity who wishes to scan or copy content for piratical purposes. With regard to the possible way forward, opinions diverge. Many service providers, in particular from the software and telecom industry, would favour the introduction of a new exception to copyright and to the database right to make it clear that text and data mining is not subject to authorisation from the rightholder. Alternatively, they believe that it should be clarified that text and data mining is not covered by the reproduction right and hence, is not copyright relevant. Some consider that text and data mining should be exempted from authorisation by encompassing it an open ended ‘fair use’ general clause. At the same time some service providers specifically say that they consider that the exception should only kicks in when the user has lawful access to content to be mined. Another group of service providers argue that text and data mining licensing should be encouraged: for them, an exception would not solve several of the issues raised by text and data mining (e.g. data protection, unfair competition and technical needs). Member States Many of the Member States that responded to the public consultation recognise the benefit that text and data mining can offer to scientific research and highlight the need to deal with it appropriately and on the basis of sound evidence. Some Member States believe that the possibility to introduce a specific text and data mining exception in EU law should be considered. In particular, one Member State highlights the need to make sure that European researchers are not at a competitive disadvantage internationally. Some argue that, even within an exception-based approach, it would be important to maintain sufficient incentives for value-added services to be developed based on licences. One Member State points out that any exception should not give users free access to content they would otherwise not have access to. Some Member States stress the need to make sure that the technical security of content repositories and databases is preserved. 28 Other Member States, on the other hand, would oppose legislative changes. These Member States stress that text and data mining is a new issue and that introducing legislation would therefore be premature, all the more since licences are being developed. More generally, reference is made to the need to comply with international obligations, in particular with the ‘three-step test’. Some Member States also point to the need to further clarify whether existing exceptions, such as the one for research in Article 5(3)(a) of the InfoSoc Directive, already cover text and data mining. 3. Fair remuneration of authors and performers (Questions 72 to 74) 72. [In particular if you are an author/performer:] What is the best mechanism (or combination of mechanisms) to ensure that you receive an adequate remuneration for the exploitation of your works and performances? 73. Is there a need to act at the EU level (for instance to prohibit certain clauses in contracts)? 74. If you consider that the current rules are not effective, what would you suggest to address the shortcomings you identify? With regard to the remuneration of authors and performers, the public consultation attempted to explore views on the best mechanism to ensure that creators receive adequate remuneration for the exploitation of their works and performances. Views were sought on the possible need to intervene at EU level and, if the existing rules are considered ineffective, on the suggested ways to address the shortcomings. End users/consumers Some users point out that many contracts for the exploitation of works were concluded before the emergence of digital content distribution, hence they do not explicitly provide for royalties for online exploitation. According to some, the way in which new online streaming services are licensed may circumvent the payment of digital royalties to artists and hence contravene the aim of ensuring appropriate remuneration for creators and right holders in the digital world. The vast majority of end users/consumers consider that there is a need for EU intervention in this area in order to ensure adequate remuneration for authors/performers. Suggestions include the introduction of a ‘use it or lose it’ clause in legislation that would allow authors/performers to regain their rights if they are not exploited by the publisher/producer; or of a ‘best-seller’ clause that would give authors/performers the right to renegotiate their contract and increase their participation in the proceeds from exploitation under certain circumstances. Other suggestions include the obligation to conclude separate contracts for digital use, with terms being adjusted to this type of exploitation, and the prohibition of ‘buy-out’ contracts (one-off payment in exchange for the transfer of rights). Institutional users Institutional users generally consider that there is a need for the EU to act in this area. The provisions of the German Copyright Act, which aim at ensuring adequate remuneration for creators, are often cited as a possible model for EU intervention. Some institutional users stress the importance of prohibiting certain contractual clauses, as well as confidentiality clauses in contracts as this widespread practice leads to the loss of information and bargaining power for authors/performers who enter into agreements with publishers/producers and service providers. Some respondents in this category argue in favour of an unwaivable right of remuneration for the benefit of authors and performers; others note that acting at an EU level would have added value at least in improving transparency. Some respondents, however, consider that this would be unnecessary and costly. Finally, certain respondents, due to the different economic and social conditions of the Member States, suggest leaving this matter to national legislation. Authors/performers Most authors and performers who responded report problems with contractual terms applied in different sectors of the creative industries. They do not question the need for the transfer of their rights to the publisher or the producer (i.e. the transferee) for the exploitation of their work or performance but they do argue that their weaker bargaining position in the market often leads to unfair contractual terms in their initial contracts. Authors and performers from the music and audio-visual sectors in particular, as well as from some segments of the print sector (e.g. journalists and translators) often mention that contractual terms are imposed on them. The contractual terms that they consider problematic relate to a number of different issues. Firstly, respondents often mention that any contract that involves the transfer of rights in exchange for a one-off payment (a ‘buy- out’ contract), by definition, prevents their adequate or fair remuneration as the payment does not relate to the use, and even less to the success, of their work or performance. It is very often raised that the contracts imply a global transfer of rights, going beyond what is necessary for the exploitation of the work or performance by the 29 transferee and/or they contain clauses that imply a transfer of rights of future works or for yet-unknown forms of exploitation. They criticise the duration of the contract as it often coincides with the term of the copyright protection without the possibility of the author or performer being able to renegotiate or terminate the contract. Such contracts are often accompanied by non-disclosure agreements. Another matter that is frequently raised is the poor quality or lack of accounts and reporting by publishers and producers with regards to the use of the rights transferred by the author or the performer. Authors and performers see a need for EU intervention in this area. With regard to contractual clauses, many argue that legislation should prohibit the global or general transfer of rights to the publisher or producer and the transfer of rights for yet-unknown forms of exploitation as well as the transfer or licensing of rights for future works. In specific circumstances, and especially where the transferee does not exploit the work, the author should have a reversion right (i.e. a possibility to regain his/her rights). Others suggest granting a right to renegotiate or terminate the contract in certain cases, setting a time-limit on the term of the contract, imposing so-called ‘best-seller’ clauses (a right to request the renegotiation of the contract under certain circumstances) and banning non-disclosure agreements by law. It is occasionally mentioned that these measures would not suit all authors and performers in all sectors equally, and that appropriate solutions have to be explored sector by sector. Many respondents also emphasise the need for imposing transparency with regards to accounts and regular reporting by the publisher or producer to the author or performer. Moreover, authors and performers, in particular in the music and audio-visual sectors, often underline that online exploitation, especially in a cross-border context, makes it particularly difficult to ensure that there is a relationship between the use and success of the work or performance and the remuneration provided to the creator. In particular, the remuneration of an author or performer not only depends on the fair or unfair terms of the initial contract with the publisher or performer but also on the content of the multiplicity of contracts entered into by the transferee with broadcasters, online service providers, etc. for the exploitation of the work or performance. According to many authors and performers, in particular in the audio-visual sector, only the creation of an unwaivable remuneration right for the benefit of authors and performers, in particular if it is managed by collective management organisations, would be suitable to ensure adequate and fair remuneration in the case of online exploitation. Other authors and performers, in particular in countries with a strong tradition of collective bargaining, however express concerns that the introduction of an unwaivable remuneration right would reduce the value of the author’s or performer’s exclusive right and weaken their bargaining position, which traditionally relies on these exclusive rights. A high number of respondents in this stakeholder group highlight the importance of collective bargaining in ensuring fair and adequate remuneration to authors and performers. Industrial agreements and model contracts can both improve their situation and counterbalance the weaker bargaining position of individuals. In this respect, the US system and German law are often cited as best practices. Competition law is often highlighted as a barrier to successful collective negotiations in the Member States and some authors and performers argue in favour of derogation to the competition rules to improve the situation in this respect. Some also encourage the Commission to foster a dialogue between stakeholders, at EU level, towards more flexible contracts. Finally, some respondents (journalists and photographers, in particular) express concerns about the waiver or transfer of their moral rights and argue in favour of a legal ban on such contractual provisions. Publishers/producers/broadcasters Most publishers/producers/broadcasters are of the opinion that authors and performers are appropriately remunerated thanks to existing law and practice in all sectors of the creative industries. They consider that this area should be regulated by the market and the most important issue is ensuring that there is contractual freedom, freedom of negotiation and the right for an author to choose his/her representative. Music publishers advance the argument that the existing competition between them in the market is an important means to ensure the fair remuneration of authors. Book publishers underline that publishing contracts are almost always based on individual negotiations with authors. They also note that German rules on ‘adequate remuneration’ resulted in a drop in the translation market in the country. Audio-visual and phonogram producers often argue the decline of revenue in the industry is the result of piracy and not of the contractual relationship between producers and creators. They, as well as some broadcasters, underline that investment in creative content entails high financial risk and that more complex contractual arrangements would result in higher costs and consequently a decline in the competitiveness of the European creative industry. A number of respondents in this category underline the importance of the collective bargaining agreements that exist in a number of Member States. However, newspaper publishers in particular argue that these arrangements should only be addressed at national level due to their close connection to labour law. 30 Most of these stakeholders do not think that there is any reason for the EU to intervene in this area (or argue that the EU lacks competence to intervene), because they consider that contract law is a national competence, and because there are differences between sectors which are best addressed at as low a level as possible. Newspaper publishers in particular point to the risks of a ‘one-size-fits-all’ approach. Stakeholders in this category also argue that there is no evidence underpinning the need for action at EU level. They strongly object to the introduction of an unwaivable right to remuneration managed by collective management organisations as they feel that this would lead to an increasing fragmentation of rights and would prevent the centralisation of rights in the hands of the producer, therefore making licensing slower and more difficult. They also believe this would increase administrative costs for creators and hamper the accessibility of content to consumers. It is often proposed that Europe-wide or global technological development towards a database on rights ownership as well as towards managing rights in a machine-readable way (tracking usages, etc.) should be encouraged. However, even when the idea of a common EU platform as a centralised location for licensing and the collection of remuneration is supported, the respondents argue that it should only function as the ‘umbrella’ gathering information and acting on behalf of the national organisations without interfering in contractual matters. Finally, some stakeholders in this category suggest that an obligation imposed on online platforms to co- finance audio-visual productions, as is the case for traditional broadcasters, would further improve the situation for creators. Collective management organisations (CMOs) CMOs usually underline the importance of collective rights management in assisting individual authors and performers so they can effectively enforce their rights. In their view, collective management not only facilitates rights clearance and increases legal certainty but is also the best solution to ensure the fair and adequate remuneration of creators as it rebalances unequal bargaining positions in the market. Some note that the exclusivity of mandates is necessary so that CMOs can play this role. They also refer to the recently adopted Collective Rights Management Directive as a guarantee of the transparency and accountability of these organisations. Like authors and performers, a number of CMOs report what they consider to be unfair contractual practices and a majority see a need for intervention at EU level along the same lines as the former group of stakeholders. Finally, CMOs, particularly in the audio-visual sector and, to some extent, in the music sector, strongly argue in favour of an unwaivable remuneration right in relation to the making available right, that should be based on the revenues generated from online distribution and which is collected by collective management organisations from the final distributor (e.g. from online platforms). They cite the remuneration right granted for performers by Article 8(2) of the Rental and Lending Directive, for example, for the broadcasting and communication to the public of phonograms. Intermediaries/distributors/other service providers Intermediaries, distributors and service providers who responded underline the importance of adequate or fair remuneration for authors and performers. They generally argue in favour of maintaining contractual freedom while some note that there is a need to ensure fairer contractual terms between the author or performer and the publisher or producer by legislative intervention. These respondents generally can see no reason to act at EU level. Some respondents in this category consider that the remuneration of creators is a matter for the initial contract with the producer or the publisher; hence they do not see the introduction of an unwaivable remuneration right as a suitable solution. Some raise concerns about the effect that such a right may have on the provision of multi- territorial or pan-European services, if such remuneration is due and collected in each and every Member State. Some other consider that a collectively managed remuneration right would increase the role and management fees of collective management organisations but would benefit authors and performers to a lesser extent. They also note that the introduction of such a remuneration right would reduce the value of the exclusive rights and consequently the payments distributors were willing to make to the producer or publisher. Others note that an increasing number of creators use alternative methods of getting their works and performances to the public (e.g. by directly placing it online). These authors and performers may have very different sources of revenue to those using traditional channels and should be taken into account in any policy intervention. Finally, intermediaries, distributors and service providers often emphasise that levies should not be considered as a solution for ensuring the remuneration of authors and performers. This issue should be addressed separately. Member States Member States which responded highlight the importance of appropriate and fair remuneration for authors and performers but consider that it is for Member States to decide whether or not to intervene in this matter by 31 legislative means. One Member State underlines the need for a thorough impact assessment before any policy intervention is proposed. Other Other respondents provided divergent replies but most of them see a need for action at EU level in order to ensure an adequate remuneration for authors and performers. Suggestions include the harmonisation of certain contractual terms (the prohibition of ‘buy-out’ contracts, specifying that the transfer of rights can be for a limited time, etc.), an unwaivable remuneration right for some forms of exploitation and the encouragement of collective bargaining. Some note that while an overarching harmonisation of copyright contract law does not seem realistic, targeted provisions to address certain question (e.g. written form of contracts) seem feasible and could add value. Any provisions however should seek a balanced split of economic risk between the creator and the exploiter. Other respondents, on the contrary, are against any intervention and favour the freedom of contract and negotiation. 32 ANNEX 2C – SYNOPSIS REPORT ON THE RESPONSES TO THE PUBLIC CONSULTATION ON THE REVIEW OF THE SATELLITE AND CABLE DIRECTIVE 1. Introduction The public consultation on the review of Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (the "Directive") was held from 24 August 2015 until 16 November 2015. This review is part of the Digital Single Market Strategy which has as one of its objectives to enhance cross-border access to TV and radio programmes in the European Union. This report provides an overview of the responses received, grouping them by category of stakeholder. The responses of those stakeholders who gave their consent to publication are also publicly available. 2. Overview of responses: statistics The public consultation gathered a total of 257 replies. Of these responses, 56 are from individuals and 201 are from organisations, companies or institutions ("non-individual respondents"). The below graph provides a breakdown of non-individual respondents by category. As to the geographical distribution of all responses, contributions came from 24 EU Member States. The largest number of responses came from Germany (41), the United Kingdom (29) and Portugal (21). 25 responses are from non-EU countries. Repondents per Member State 41 29 25 21 15 12 13 10 11 10 12 11 10 4 4 6 5 3 2 2 3 3 1 3 1 Denmark Greece Italy Portugal Slovakia Slovenia France Germany Ireland Latvia Non-EU United Kingdom Luxembourg Netherlands Sweden Austria Belgium Bulgaria Czech Republic Estonia Finland Hungary Poland Spain Romania 33  3. Analysis of responses 3.1. The principle of country of origin Respondents were asked about the functioning of the existing rules applicable to clearance of copyright and related rights for satellite broadcasting (the "country of origin" principle). Respondents were also asked about their views on the impact of a possible extension of the application of the principle to the different online services. Evaluation of the current provisions Overall, about half of the respondents consider that the existing provisions facilitated the clearance of rights at least to some extent. Respondents' views are split as to whether the application of the country of origin principle has increased consumers' access to satellite broadcasting services across borders. A significant part of consumers and their representatives raise that the current provisions of the Directive do not sufficiently ensure access to content available in other Member States. Some consumers underline that these problems concern not only premium content (such as sports and films) but also other content, for instance cultural programmes. The majority of Member States' public authorities consider that the country of origin principle facilitated the clearance of rights. Some of them, however, underline that the practical application of this principle is limited for audiovisual. The majority of right holders do not consider that the application of the country of origin principle facilitates the clearance of rights. Right holders indicate that multi-territorial licences are available and that therefore there are no problems with acquiring them. In their view, cross-border offerings of content are limited because of insufficient consumer demand, language barriers as well as commercial choices of service providers. Certain right holders, in particular film/AV producers, argue that the application of the country of origin principle diminishes the scope of their rights because it limits their freedom to license the rights as they see fit. A significant proportion of collective management organisations (CMOs) considers that the application of the principle of country of origin has not facilitated copyright clearance. The majority of CMOs do not have an opinion on whether its application has increased consumers' cross-border access to TV and radio programmes. The vast majority of broadcasters consider that the country of origin principle facilitates the clearance of rights at least to some extent. Also, they generally consider that this principle increased consumers' cross-border access to satellite broadcasting services. A number of commercial broadcasters submit that there are obstacles to cross- border access which are not related to copyright. Similarly to right holders, they mention insufficient consumers' demand and language barriers. Other service providers (internet service providers (ISPs), internet protocol television (IPTV) operators, digital terrestrial television (DTT) providers, cable operators, telecommunication network operators and video on demand (VOD) operators) do not have much experience with the practical application of the country of origin principle. Yet, the majority of them consider that it facilitates the right clearance and cross-border access by consumers. Assessment of the need for the extension Views are divided as concerns the need of an extension of the country of origin principle to online transmissions. Consumers representatives call for a broad extension of the country of origin principle to cover all online services. In addition, certain argue that introducing this principle with regard to online transmissions would not be sufficient on its own - such an intervention would need to be accompanied by a rule explicitly prohibiting technical or contractual restrictions on "passive sales" across EU borders (restrictions on responding to unsolicited requests from consumers residing in other Member States). While a number of Member States/public authorities are open for discussions with the view of enabling more cross-border access to content, there is a strong call for caution. In their view, any reform should not undermine contractual freedom, a high level of protection of intellectual property and the exclusivity of rights and should ensure a level playing field. Certain Member States submit that they are against any extension of the application of the country of origin principle because of risks of unintended negative consequences, especially for the audiovisual sector. Right holders are, in general, against any extension of the application of the country of origin principle. They consider that any such extension would de facto lead to pan-European licences and would restrict their ability to license rights on a territorial basis. They are in particular concerned about an extension which would cover 34 broadcasters' VOD services and, even more so, any online services by any service providers. The main reasons given against it are:  negative consequences for the value chain of the production (e.g. financing of AV works) and the distribution of creative content (notably for AV works, as producers would no longer be able to rely on pre-sales of distribution rights with territorial exclusivity);  right holders would be no longer able to decide for which territories in the EU they license their rights;  not needed, as voluntary multi-territorial licensing schemes already exist;  the application of the principle to online services and the consequential focus of the licensing system on the country of origin could have a negative impact on creators' revenues;  risk of forum shopping by service providers and more complicated enforcement by right holders;  risk that rights in musical works may be withdrawn from CMOs if right holders come to the conclusion that CMOs cannot ensure the effective collective management of rights across the entire EU. CMOs do not favour any extension of the principle. They raise the same arguments against it as right holders. Broadcasters’ views on the extension are split along the public service versus commercial broadcaster line. However, all broadcasters share the view that in all cases full contractual freedom should be maintained, enabling them to limit the exploitation of rights by territories. The majority of commercial broadcasters argue that an extension of the principle would amount to pan- European licences. They raise the same arguments against the extension as right holders. By contrast, all public service broadcasters as well as commercial radios call for the application of the principle to EU broadcasters' transmissions by any technological means as well as to all broadcast-related online services. The main reasons given by those in favour of such an extension are:  it would enable broadcasters to expand their services to other Member States;  it would provide broadcasters with legal certainty;  it would reduce significant administrative burden and costs associated with clearance of rights;  it would provide for additional revenues for right holders by ensuring a wider dissemination of TV and radio programmes and, therefore, of their works and other protected subject matter. Views of other service providers vary, though most of them call for a careful and measured approach. ISPs express most favourable views: they argue that it would enable digital content providers to offer services EU- wide. Telecommunications network operators, cable operators, IPTV operators, DTT providers and VOD operators are more cautious, even though some of them indicate that they favour technology-neutral approach. All of service providers other than broadcasters underline the importance of a level playing field. Also, many of them argue that contractual freedom should be maintained. They claim that if the extension of the application of the principle were to lead to pan-European licencing, it would put European and local market players at a competitive disadvantage in relation to multinational operators as they would not have the means to acquire pan- European licences. 3.2. The management of retransmission rights First, respondents were asked about the existing rules applicable to clearance of copyright and related rights for the simultaneous cable retransmission. Second, respondents were asked about the impact of a possible extension of the mandatory collective management regime to different forms of online simultaneous retransmissions. Evaluation of the current provisions The majority of respondents consider that the Directive has facilitated the clearance of rights for the simultaneous retransmission by cable of programmes broadcast from other Member States and has helped consumers to have more access to broadcasting services across borders. The few consumers who have replied to the questions related to cable retransmission have a rather negative view of the effectiveness of the current provisions and the degree to which they increased consumers' access to broadcasting services. Some of them stress the existence of gaps in the offer of channels on cable networks. Member States / public authorities consider that the Directive has facilitated the clearance of rights for cable retransmission and has helped increasing consumers' access to broadcasting services across the EU. Some, however, underline that sometimes it is not clear which rights are managed by collective management organisations and which are managed by broadcasters. The majority of right holders do not think that the current cable retransmission rules have either facilitated the clearance of rights or have resulted in greater consumers' access to broadcasting services across the EU. Phonogram producers, music publishers and audiovisual producers consider that they are adversely affected by 35 these rules, because they cannot issue licences on fair market terms. Some right holders highlight the limited consumer demand for cross-border access to audiovisual content services or the limited business demand for foreign TV channels or multi-territorial licences. Respondents representing authors and performers have a much more positive view. The vast majority of collective management organisations (CMOs) consider that the Directive has facilitated the clearance of rights and has helped increasing consumers' access to broadcasting services across the EU. Similarly, a clear majority of broadcasters evaluate positively the current provisions and their role in ensuring consumers' access to broadcasting services across the EU. This is especially the case for public service broadcasters. However, some commercial broadcasters point to the scope for double payments in case CMOs assert their rights to license all rights irrespective whether they have been transferred to broadcasters or not. Finally, the majority of other service providers (including cable operators) also consider that the Directive has facilitated the clearance of rights and has helped increasing consumers' access to broadcasting services across the EU. Still, according to some of them, it is not always clear which rights are managed by CMOs and which by broadcasters. Assessment of the need for the extension The few consumers who have replied to these questions tend to consider that the extension of the regime to the simultaneous retransmission of TV and radio programmes on platforms other than cable is likely to increase the cross-border accessibility of online services. They also tend to oppose maintaining the different treatment of rights held by broadcasting organisations. Member States/public authorities, but also right holders, CMOs and broadcasters, recall that voluntary collective management, extended collective licensing and individual licensing are all used to clear rights relevant for the different new TV and radio transmission and re-transmission methods and services. In this respect some Member States argue that voluntary approaches lead to legal uncertainty since service providers cannot be sure that they have cleared all the rights or that the distinction between transmission and retransmission is not always clear. Regarding the possible extension of the mandatory collective management regime to the simultaneous retransmissions on platforms other than cable, some Member States note that certain platforms (e.g. IPTV) are already covered by national provisions. Others are in favour of the extension. Finally, the Member States that expressed an opinion on a possible introduction of a system of extended collective licensing conveyed concern with regard to the possibility of using opt-outs, the risk of repertoire fragmentation and the lower level of legal certainty for retransmission service providers compared to mandatory collective management. Right holders underline the important role of individual licensing and argue that current licensing approaches work well and no changes are required. Most right holders are against the possible extension of the mandatory collective management regime to the simultaneous retransmissions on platforms other than cable due to potential disruptive effect on the markets. Right holders also argue that extending the mandatory collective management regime could raise questions regarding compliance with international copyright obligations. Some right holders point to the potential negative effect on the value of rights. CMOs' views on the licensing of the different new TV and radio transmission and retransmission methods and services differ: some note that such "new services" are sometimes reluctant to engage in licensing; others consider that the current licensing approaches, notably voluntary collective management, work well. Some are concerned that the "direct injection" technology has led to challenges to the retransmission regime by cable operators in some Member States. The vast majority of CMOs are in favour of a possible extension of the mandatory collective management regime and do not find it problematic in the context of the international copyright obligations. Many insist that 36 the extension should be limited to "closed environments" or services functioning "in a territorially limited way" because those services resemble cable retransmission services and should benefit from a level playing field. Some CMOs, alongside some right holders and other service providers, see a need to abolish or change the provisions on the different treatment of rights held by broadcasting organisations, e.g. by making the transfer of rights from audiovisual producers to broadcasters conditional on the payment of effective remuneration to producers. Finally, while for some CMOs extended collective licensing is a well-working and recommendable system, many expressed concern as regards the possibility of using opt-outs, the risk of repertoire fragmentation and the lower level of legal certainty for retransmission service providers compared to mandatory collective management. Many broadcasters see value in individual licensing of the different new TV and radio transmission and retransmission methods and services and consider that current licencing approaches work well. However, some public service broadcasters highlight the lack of an effective licensing system for third parties' services allowing interactive access to broadcasters' content (e.g. catch-up TV). Broadcasters are divided on the question of the possible extension of the mandatory collective management: commercial broadcasters tend to oppose it, while public service broadcasters support the extension and argue that no problems of compliance with the international copyright obligations would arise. Most of the latter suggest limiting the extension to "closed" networks or territorially-limited services provided using open internet. Both commercial broadcasters and public service broadcasters (alongside some right holders, cable operators and CMOs) consider that the different treatment of rights held by broadcasting organisations should be maintained. Broadcasters are also divided on the merits of introducing a system of extended collective licensing: while for many commercial broadcasters direct licensing should be favoured whenever possible, some public service broadcasters support using extended collective licensing to enable the provision by third parties of services giving access to broadcasters' content on an interactive basis where such content is clearly related to broadcasters' linear (non-interactive) transmissions. A range of other service providers complain, in general, about difficulties in clearing copyright for innovative audiovisual services. Some stress that the distinction between transmission and retransmission is not always clear. Cable and telecoms operators tend to be in favour of the possible extension of the mandatory collective management regime and consider that it could result in greater cross-border accessibility of online services. While some of them insist that the extension should be limited to "closed" networks, others argue that it should not be tied to particular means of communication, devices or "technology environments". Nevertheless, some VOD providers see a danger that the extension could result in competitive distortions. 3.2. The mediation system and obligation to negotiate First, respondents were asked if they had used the existing negotiation and mediation mechanisms established under the Directive. They were invited to describe their experience. Second, respondents were asked to give their view about a possible extension of these rules to facilitate the cross border availability of online services, and they were invited to suggest any other measure that could facilitate contractual solutions and negotiations in good faith. Evaluation of the current provisions Overall the replies to the public consultation indicate that the mediation mechanism has had very limited practical relevance. Consumers did not express any particular view concerning the application of the current provisions. Member States and public authorities in general did not address this issue. Right holders and most of collective management organisations (CMOs), broadcasters and other service providers such as ISPs, IPTVs, DTTs and telecom operators indicated that the mechanism has not been used or has been used only occasionally. These respondents list as the main reasons for this situation the fact that the 37 negotiations usually bring expected results and hence there is no need to resort to mediation, the non-existence of the appropriate mediation mechanism or alternatively the inefficiency of the existing system. On the latter, the respondents pointed to time-consuming procedures, deficiencies as to the confidentiality of the process, high costs involved and the fact that the results of mediation are not binding for the parties. Occasional use of the mechanism and the overall positive role played by the mechanism was reported by cable operators and a limited number of CMOs. Despite a very limited practical relevance of the mechanism, some CMOs, broadcasters and IPTV operators support its application but complemented and reinforced e.g. by a firm timeframe to ensure efficient process. Assessment of the need for the extension The majority of respondents do not support the extension of the application of the mediation mechanism. Consumers did not express any particular view. Out of the Member States/public authorities which responded to the public consultation only one respondent commented on this matter, supporting the possible extension of the negotiation mechanism while also expressing doubts about its practical implementation. In general right holders are against the extension of the application of the mechanism. The vast majority of authors oppose the extension, due to their negative view of the current mechanism's application. They also do not see the need for additional measures. Film/AV producers stressed their preference for freedom of commercial negotiations. All phonogram producers were against the extension of the mediation to online services, indicating potential interferences with right holders’ freedom to exercise their exclusive rights. As regards new measures, they all referred to the need for a level playing field and a better balance in the digital markets, demanding that all online services which make the content available to the public comply with right holders’ exclusive rights (and are not sheltered by Articles 12-14 of the E-commerce Directive31). Most of publishers did not express any particular opinion. As regards additional facilitating measures, they mentioned the need to engage stakeholders in cooperation on enforcement issues as well as the need to encourage investment in new business models. Most collective management organisations (CMOs) were sceptical about the possible extension arguing that the current system has had only limited results. Some indicated that the Collective Rights Management Directive32 already contained provisions in this respect covering CMOs' activities, while other highlighted their preference for freedom to exercise exclusive rights. Only a minority of CMOs supported the idea of extending this mechanism to online services. CMOs suggested a variety of possible measures for facilitating contractual solutions, such as greater transparency and quality of data and information, the obligation to conduct negotiations in good faith, the recognition of CMOs' mandate to represent audiovisual authors and the need for all online services to comply with the rules related to right holders’ exclusive rights. Broadcasters are split on the issue. Most of public broadcasters responding to this question supported the extension of the mediation to all broadcasters' services, while only few opposed it. They mentioned the need for effective, binding and cost-efficient mechanisms, called for extending the application to any use covered by the Directive and recommended the use of similar mechanisms as those already present in the Collective Rights Management Directive. Most of commercial broadcasters are reluctant as regards the extension of the mediation mechanism. Other service providers such as TV and radio aggregators, VOD and DTT operators did not provide any views on the potential extension. ISPs, IPTV operators, cable operators and some other service providers supported the extension on condition that the current lack of effectiveness of the mediation mechanism is redressed. As regards additional measures, some recommended to focus on the respect of competition law and the Collective Rights Management Directive by the CMOs as well as on the facilitation of market entry for new businesses. Some cable operators mentioned the need for a more transparent, rapid and non-discriminatory mediation procedure. 31 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, OJ L 178, 17.7.2000, p. 1–16. 32 Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market, OJ L 84, 20.3.2014. p. 72-98. 38  ANNEX 3 – WHO IS AFFECTED BY THE INITIATIVE AND HOW This annex sets out the practical implications of the initiative for affected stakeholders, namely right holders, CMOs and service providers, as well as for public authorities in Member States. It focuses on the key obligations foreseen under the preferred policy options (see section 6.1) and indicates how these obligations could be fulfilled. Indications of possible costs are provided where available. Practical implications of the initiative in the area of "access to content" Online transmissions of broadcasting organisations The introduction of the "country of origin" rule for the clearance of rights (Option 2 under section 3.2.3.1) would not generate any obligation for businesses or public authorities. The measure would provide that the licence fee payable to right holders have to take into account all aspects of the online transmission of the broadcast, including the audience, unless agreed otherwise with right holders. In practice, where licence fees are based on the actual or potential audience or calculated on a 'per-view' / 'per-stream' basis, or as a percentage of broadcasters' revenues, this would not have any significant impact. Otherwise, the contracts would need to be renegotiated during the transition period, but the extent of such renegotiations is expected to be limited. Digital retransmissions of TV and radio programmes The introduction of mandatory collective management of rights to retransmissions by IPTV or other retransmission services over closed electronic communication networks (Option 1 under section 3.2.3.2) would impose obligations both on right holders and retransmission services: right holders would be obliged to have their retransmissions rights managed by CMOs (or broadcasters) and IPTV and similar retransmission services would be obliged to obtain such rights through CMOs (or through broadcasters). In practice, it is likely that the existing CMOs representing right holders for the purpose of cable retransmission rights would be in charge of managing retransmission rights for IPTV and other retransmission services offered over closed networks. The possibility to use existing structures of collective management to new retransmission service providers would therefore allow this option to be implemented with limited costs. Also, a number of the CMOs are already licensing rights to such new retransmission services (in such cases the implementation of the proposed rule would not result in any additional cost). Access to and availability of EU audiovisual works on VoD platforms The negotiation mechanism aimed at addressing problems related to the licensing of online rights for VoD exploitation (Option 2 under section 3.3.2) would create an obligation for Member States to identify or create an impartial instance to facilitate negotiation between the relevant parties. The possible costs for MS are assessed under section 3.3.3 (impacts of Option 2). The one-off costs are expected to be limited, since MS could rely on existing bodies with the relevant expertise in the AV sector to implement the negotiation mechanism. The operating costs would vary according to the structure of the negotiation body, the choices made by MS on whether the parties resorting to the negotiation mechanism should bear part of the costs, and the number of cases. Examples of existing arbitration or mediation mechanisms are presented in section 3.3.3 in order to estimate the range of operating costs. 39 Out-of-commerce (OOC) works in the collections of cultural heritage institutions The preferred option (Option 2 under section 3.4.2) does not include any obligation for right holders or cultural heritage institutions to conclude licensing agreements for the digitisation and dissemination of OOC works. When such licensing agreements are concluded and if the use is intended for cross-border effect within the EU, one of the contracting parties or another other entity (as determined nationally) would be required to publish relevant information concerning the OOC collection to be digitised and/or disseminated in the EU transparency portal to be created and managed by the EU Intellectual Property Office (EUIPO). The administrative burden is expected to be limited because such information would have to be available for the purposes of the national agreement anyway. Practical implications of the initiative in the area of exceptions Use of protected content in digital and cross-border teaching activities The introduction of a mandatory exception for digital and online uses in the context of illustration for teaching (Option 3 under section 4.2.2) is not expected to generate any obligation for businesses or public authorities, except in MS that would decide to use the flexibility foreseen under this Option and make the exception subject to the availability of licences: In this case, Member States would have to take specific measures to ensure the availability and visibility of licences for educational establishments. A wide range of measures could be envisaged by MS: stakeholder dialogue to encourage the development of specific educational licensing schemes by CMOs and right holders; information campaign targeted at educational establishments and teachers to make the existing licensing schemes more visible; development of online verification tools to check the availability of licences by work or type of works. Given that the measures to be taken would be at the discretion of Member States, the costs are difficult to estimate. Text and data mining The introduction of a mandatory exception for text and data mining benefitting public interest research organisations (Option 3 under section 4.3.2) is not expected to generate any obligation for businesses or public authorities. In particular, the lawful access condition which is a condition for the exception to apply means that right holders of the content being mined would not be required to make the content available for mining in specific formats (different from the format of the content made available for the purposes of the lawful access). Preservation of cultural heritage The introduction of a mandatory exception for preservation purposes by cultural heritage institutions (Option 2 under section 4.4.2) is not expected to generate any obligation for businesses or public authorities. Practical implications of the initiative in the area of "well-functioning market place" Use of protected content by online services providers storing and giving access to user uploaded content The legal intervention (Option 2 under section 5.2.2) imposes an obligation on online services storing and giving access to large amounts of user uploaded content to put in place appropriate and proportionate content identification technologies and to provide sufficient transparency to right holders with regard to the functioning of the deployed technologies. The 40 services would also be obliged to put in place appropriate procedures allowing users to contest limitations on the uploaded content. Compliance costs can be expected for the online service providers as a result of the possible investments needed to put in place the required measures (where online service providers are not yet using such technologies) and procedures. A more detailed assessment of the impacts can be found in section 5.2.3 of the impact assessment. Publishers' right The introduction of a new related right for press publishers (Option 2 under section 5.3.2) would not create as such any specific obligations for businesses or public authorities. The same goes with the clarification in EU legislation concerning publishers' ability to claim compensation for uses under exceptions. Remuneration of authors and performers The preferred option (Option 3 under section 5.4.2) includes reporting obligations on businesses (notably publishers, producers, broadcasters) which have contractual relationships with creators (authors or performers). The reporting should, in particular, include information on the modes of exploitation of the works or performances and on the corresponding revenues. The impacts of such obligation, including in terms of compliance costs, are assessed in section 5.4.3 (impacts of Option 2). This option also foresees an obligation for Member States to organise stakeholders' dialogues. The costs of organising such dialogues would vary according to the number of stakeholders involved and the number of meetings required. Finally, MS would be required to set up a dispute resolution mechanism. The costs for MS are assessed in section 5.4.3 (impacts of Option 3). These costs would depend on the system of dispute resolution chosen by a MS. It should be noted that the majority of MS already have dispute resolution mechanisms for CMOs and commercial users in place, and collective societies reported that the costs of establishing such mechanisms would be in the range of €35,000, and the operating costs in the range of €11,000 per year. 41  ANNEX 4 – THE COPYRIGHT REVIEW PROCESS: SUMMARY OF THE MAIN RELEVANT FINDINGS 1.1. Purpose and scope of this Annex This Annex summarises the key relevant findings of the process of review of the EU copyright rules carried out by the Commission in the period 2013-2016 (See Section 1.2. of the main IA Report) as they are relevant for the subjects presented in this Impact Assessment. With the copyright review process, the Commission intended at the same time to assess the functioning of the existing copyright rules (retrospective analysis) and to devise possible changes to these rules with the declared objective to "ensure that copyright and copyright- related practices stay fit for purpose in the new digital context" (Communication from the Commission on content in the Digital Single Market of 18 December 201233). The copyright review process started before the adoption of the Commission's Better Regulation Agenda in May 2015,34 and the related guidelines. Therefore, a formal evaluation process within the meaning of Better Regulation was not carried out. However, a retrospective assessment of the existing rules was done and it formed a key element of the analysis presented in the main IA report in particular as regards the definition of the problems to be addressed. Accordingly, even if not formally subject to it, the copyright review was carried out in the spirit of the Better Regulation Agenda, according to which "major policies should be continuously assessed and evaluated over their lifetime to ensure they stay fit for purpose" and "policy preparation should be supported by both retrospective performance evaluations and forward-looking impact assessments". This Annex encompasses those subjects covered by the review process and by the IA that are directly related to existing EU copyright rules or policies: the exceptions on illustration for teaching, research (as it relates to text and data mining) and on specific acts of reproductions (as it relates to preservation), as well as the digitisation and dissemination of out-of-commerce works (often referred to simply as "mass digitisation"). In doing so, it focuses only on whether existing provisions and policies have delivered expected outputs and does not aim at presenting a complete analysis of the reasons behind. To the extent relevant, this analysis is presented in the problem definition sections of each of those subjects in the main IA report. For each topic reference is made in this document to the existing EU copyright legislative framework (and, where relevant, soft law and policy) as well as to the preparatory work undertaken by the Commission in the context of the review process and the key relevant results emerged. In some cases the same source (e.g. studies or public consultations encompassing several areas) is relevant for more than one subject. When this is the case, the same source is mentioned under different subject-specific sections of this Annex (sections 2 and 3), with the explanation of how it specifically relates to each topic of the review. Transparency for authors and creators, The use of protected content by online services storing and giving access to large amount of content uploaded by the users, rights in publications and fair remuneration in contracts of authors and performers – i.e. the topics mentioned under section 5 of the IA ("Achieving a well-functioning market place for Copyright") – are not specifically discussed in this Annex as no EU copyright rules exist in these areas. Evidence 33 COM(2012) 789 final. 34 COM(2015) 215 final. 42 collected to inform the IA on these three topics, including the relevant public consultations, is described in Annexes 1 and 2A. This Annex does not extend either to the REFIT evaluation of Directive 93/83/EEC ('the Satellite and Cable Directive').35 This REFIT evaluation, which took place against the backdrop of the Digital Single Market Strategy,36 is described separately, in a separate Staff Working Document.Stakeholder consultations and studies carried out during the review process also covered aspects of the existing copyright rules which are not discussed in the IA nor directly form the part of the copyright modernisation initiative backed by this IA (see Section 1.2. of the main IA report). These topics are not discussed in this Annex. Additional information on the findings of the review process including as regards areas not covered by the IA (in particular all the studies commissioned in the context of the review process as well as the summary results of the public consultation on the review of the EU copyright rules conducted between 2013 and 2014) can be found in the website http://ec.europa.eu (pages related to the EU copyright policy).37 1.2. The EU copyright rules covered by the review process: notably the InfoSoc Directive The EU copyright framework is composed by several directives which have been adopted over the last twenty-five years. A number of these directives cover specific aspects of copyright and/or specific subject matters of protection. The general framework of EU rules on rights and exceptions and limitations is set out in the InfoSoc Directive. Therefore, even if not strictly confined to this directive, worked carried out in the context of the process of review of the EU copyright rules has particularly focussed on this instrument. As regards the topics specifically covered in this Annex, rules on exceptions and limitations on illustration for teaching and research are laid down in particular in Article 5(3)(a) of the InfoSoc Directive38 and rules on exceptions and limitations allowing cultural heritage institutions to carry out specific acts of reproduction (relevant in particular for preservation purposes) are laid down in Article 5(2)(c) of the InfoSoc Directive. The mass digitisation of out-of-commerce works is not covered by specific existing EU rules but has been the subject of non-legislative policy action at EU level over the last few years. The InfoSoc Directive was adopted on 22 June 2001 (the initial Commission proposal had been tabled on 10 December 1997 and an amended proposal on 21 May 1999). It had to be implemented by Member States (MS) in national law by 22 December 2002. It was one of the centrepieces of the Lisbon Agenda of 2000, which aimed to make the European Union "the most dynamic and competitive knowledge-based economy in the world" by 2010. 35 Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, OJ L 248, 6.10.1993, p. 15. 36 COM(2015) 192 final. 37 Studies are available at: http://ec.europa.eu/internal_market/copyright/docs/studies/; the summary of the 2013/2014 public consultation at http://ec.europa.eu/internal_market/consultations/2013/copyright- rules/index_en.htm 38 OJ L 167, 22.6.2001, p. 10. Rules on exceptions and limitations on teaching and research are also laid down, in a similar way, in Articles 6(2)(b) and 9(b) of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases, and Article 10(1)(d) of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property. See also infra, section 2.1. 43 The adoption of the directive marked the conclusion of several years of Commission's preliminary work on the challenges brought about for the information society by the emergence of the digital networked environment. One of the key documents published on the issue was the Commission’s Green Paper of 1995 on Copyright and Related Rights in the Information Society.39 The explanatory memorandum to the proposal explains40 that this directive was designed to provide a harmonised and appropriate European legal framework for copyright and related rights in the (then nascent) information society. It aimed at complementing the existing framework so as to "ensure the smooth functioning of the Internal Market and bring about a favourable environment which protects and stimulates creativity and innovative activities" within the EU. Recital 1 of the directive recalls that "the Treaty provides for the establishment of an internal market …" and that "Harmonisation of the laws of the MS on copyright and related rights contributes to the achievement of these objectives". As recital 2 in the preamble to the directive clarifies, it was considered that a favourable legal framework at EU level which fosters the development of the information society in Europe "requires, inter alia, the existence of an internal market for new products and services" and "copyright and related rights play an important role in this context as they protect and stimulate the development and marketing of new products and services and the creation and exploitation of their creative content." In particular, action was considered necessary in two areas: "first, through harmonised legal protection, by adapting copyright and related rights to the new risks and opportunities, in order to achieve a level playing field for copyright protection across national borders to allow the Internal Market to become a reality for new products and services containing intellectual property. Secondly, on the technological side, by developing adequate systems allowing for electronic rights management and protection."41 As recital 9 clarifies, it was considered that copyright and related rights "are crucial to the intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interest of authors, performers, producers, consumers, culture, industry and the public at large." Moreover the InfoSoc Directive aimed at bringing EU copyright rules in line with international obligations. As recital 15 recalls,42 the Diplomatic Conference held under the auspices of the World Intellectual Property Organisation (WIPO) in December 1996 led to the adoption of two (then new) treaties, which constitute a major step forward in international protection of copyright and related rights: the WIPO Copyright Treaty43 the WIPO Performances and Phonograms Treaty.44 At the time the directive was adopted, both treaties required to be implemented in the EU in the light of the acquis and of the needs of the internal market. These general objectives also inform the specific rules of the InfoSoc Directive in the area of exceptions, and therefore have to be taken into account when looking retrospectively at how specific rules of the directive have been working overtime as regards the relevant topics 39 COM(95) 382 final. 40 Explanatory memorandum to the Proposal for a European Parliament and Council Directive on the harmonisation of certain aspects of copyright and related rights in the Information Society, COM(97) 628 final, p. 2 point 1. 41 Ivi, p. 3 point 4. 42 In the same sense see also Explanatory memorandum, cit., p. 3 point 5. 43 http://www.wipo.int/treaties/en/ip/wct/ 44 http://www.wipo.int/treaties/en/ip/wppt/ 44 covered by the copyright modernisation IA. The specific rules and objectives as regards the exceptions on teaching and research and on specific acts of reproduction are described in each of the section below, which summarise the findings of the review process in these areas. 2. The main findings of the review process in the area of exceptions and limitations covered by the copyright modernisation impact assessment 2.1. Use of protected content in digital and cross-border teaching activities The existing EU framework The exceptions and limitations on teaching and research are laid down in the same provision of the InfoSoc Directive, i.e. Article 5(3)(a). This article provides that MS may adopt exceptions and limitations to the rights provided for in Article 2 (the reproduction right) and Article 3 (the communication to the public right) covering the "use for the sole purpose of illustration for teaching or scientific research, as long as the source, including the author's name, is indicated, unless this turns out to be impossible and to the extent justified by the non- commercial purpose to be achieved". Article 5(4) of the InfoSoc Directive provides that MS may also provide for exceptions to the act of distribution to the extent justified by the purpose of the authorised act of reproduction. Similar provisions providing for exceptions in the area of teaching and research are laid down in the Database Directive45 and in the and in the Rental and Lending Directive.46 These provisions are specific to these directives and thus not discussed in this document. Recital 14 in the preamble to the InfoSoc Directive indicates that the main objectives of the teaching exception are "to promote learning and culture by protecting works and other subject-matter while permitting exceptions or limitations in the public interest for the purpose of education and teaching." The explanatory memorandum to the proposal indicates47 that, under this provision, MS may "exempt the use of a work, such as a work of literature or photography, or other subject matter, such as a sound or visual recording, or parts of it, for instance for a compilation of an anthology provided that such use exclusively serves the purpose of illustration for teaching […]" and that this exception "does not only cover traditional forms of using protected material, such as through print or broadcasted media, but might also serve to exempt certain uses in the context of on-demand delivery of works and other protected matter." Main sources of the review process in this area The implementation of the teaching exception has been analysed by the "Study on the application of Directive 2001/29/EC on copyright and related rights in the information 45 Articles 6(2)(b) and 9(b) of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ L 077 of 27/03/1996, p.20-28) provides similar exceptions, respectively, to copyright and to the sui generis right. 46 Article 10(1)(d) of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (codified version) (OJ L 376, 27.12.2006, p. 28-35). 47 Explanatory memorandum to the Proposal for a European Parliament and Council Directive on the harmonisation of certain aspects of copyright and related rights in the Information Society, COM(97) 628 final, p. 32. 45 society"(hereinafter "the 2013 study" or just "the study").48 The study, in particular, aimed at "assessing whether there is a need to adapt limitations and exceptions provided for teaching and research to the digital environment in order to ensure that their application remains relevant – while, at the same time, ensuring the required balance with rightholders' legitimate interests and the normal exploitation of the work and other protected subject matter."49 To this aim, the study examined national legislation implementing the teaching exception in 11 MS: Belgium, Luxembourg, the Netherlands, Denmark, France, Germany, Hungary, Italy, Poland, Spain and the United Kingdom.50 Information about implementation of this exception in other MS has been collected as far as possible through discussions with MS and stakeholders and is presented in Table 1 in this Annex. The teaching exception was also covered by the 2013-2014 public consultation on the review of EU copyright rules: respondents were asked to share their experiences with the use of protected works for teaching purposes, including under existing market mechanisms, and to provide their views on how problems, if identified, should be solved (see Annex 2B).51 (see Annex 2A). Key relevant results Evidence collected throughout the review process suggests the following findings:  Limited and/or unclear transposition into national legislation The 2013 study finds that, although optional, the exception provided for in Article 5(3)(a) of the InfoSoc Directive has been transposed in all the MS analysed.52 The study highlights at the same time that "The open-ended content of [this exception] left ample manoeuvre for the Member States to enact the conditions under which the exception could be enjoyed. Nothing prevents domestic laws to further define the beneficiaries, the types and quantities of works that can be used, as well as the type of use."53 As a consequence, national transpositions of this exception vary widely. In some cases, evidence suggests that the implementation of the exception is unclear or narrower than what the directive permits, for example: o The condition of illustration is sometimes missing in certain national copyright laws (e.g. PL, IT, DK).54 o National exceptions sometimes limit the type, format and extent of works that can be used.55 For instance, music scores are out of the scope of the exception in FR and audiovisual works can be used under the exception in DE only after two years upon release. Some MS (e.g. FR, DE, AT) do not admit the exception for textbooks or other 48 J-P. Triaille et alii, "Study on the application of Directive 2001/29/EC ", cit. See in particular p. 357- 387. 49 Ivi, p. 245. 50 Ivi, p. 3. 51 "Public Consultation on the review of the EU copyright rules", Questions 42-46. 52 J-P. Triaille et alii, op. cit., p.368. Examples of national implementation of this exception in all MS, are illustrated in Table 1. 53 Ivi, p. 380. 54 Ivi, p. 368-369. 55 Ivi, p. 372-373. 46  works made explicitly for educational purposes. In several Member States, the exception applies only to extracts or parts of works (e.g. BE, LU, IT), while in others a specific limit is set in legislation (e.g. UK). The format can also be determined (e.g. low resolution and degraded images in IT). o Moreover, national laws do not always clearly deal with e-learning, even if recital 42 in the preamble to the directive explicitly includes distance learning within the scope of the exception.56 In some cases, face-to-face teaching seemed to be the only situation to which the exception applies (e.g. HU, ES57). In countries where the exception applies to e-learning, national rules generally determine specific conditions (e.g. communication within a closed electronic network), to prevent dissemination of teaching material outside the students enrolled in the course (e.g. BE, FR, UK). o Another difference concerns the provision of a fair compensation for rightholders, which recital 36 in the preamble to the directive leaves at the discretion of MS.58 While in some countries the use of works under this exception does not give rise to the payment of compensation, in others (e.g. BE, FR, DE, NL) the exception is accompanied by a fair compensation system, which can be put into practice through collective agreements. Differences in the transposition of this exception (in particular as regards digital uses) and, in particular, different interpretations given to the term 'illustration for teaching' were also reported by a number of stakeholders responding to the 2013-2014 public consultation.59 Collective right management organisations and publishers pointed to problems due to the broad interpretation of the notion of illustration for teaching, institutional users including schools and universities indicated on the other hand that the restrictive implementation of the exception in some countries caused problems and legal uncertainty for teachers and students.60  Limited harmonisation as regards digital uses and lack of cross-border effect According to the 2013 study, the significant differences that exist in national laws, notably as regards the uses permitted under the teaching exception and additional conditions, "become real obstacles when the teaching occurs totally or partially on-line in an e-learning program or supported by e-learning tools."61 The study in particular finds that "This complexity, which could probably be mastered by teachers accustomed to their national system, becomes difficult to tackle when several laws need to be complied with, due to a cross-border dimension of e-learning that requires the application of more than one law."62 The study therefore concludes that, "Due to such diversity, the current exception cannot be said to be harmonised at EU level, which renders the task of developing a legally compliant offer of online education all the more daunting."63 56 Ivi, p. 374-376. 57 The teaching exception was recently amended in Spain in order to cover digital and online uses. 58 Ivi, p. 377. 59 Report on the responses to the Public Consultation on the review of the EU copyright rules, July 2014, p. 58. 60 See also Annex 2B, reporting relevant extracts from the report to the public consultation. 61 J-P. Triaille et alii, op. cit., p. 381. 62 Ibidem. 63 Ibidem. 47 Similarly, many institutional users (libraries, universities) responding to the 2013-2014 public consultation brought forward difficulties in particular for distance learning and cross-border uses (e.g. problems faced by universities with campuses abroad or virtual learning environments or by universities located close to a national border and attracting students from several MS, problems for the development of resources in the context of Lifelong Learning and Erasmus+ programmes involving with a cross-border audience).64  Insufficient or inadequate licensing mechanisms covering illustration for teaching (at least in some MS) The teaching exception is put into practice or completed by collective agreements or particular licensing mechanisms in several MS. The 2013 study identifies different models65: o Collective mechanisms putting the exception into practice and organising the remuneration associated thereto (e.g. FR); o Collective mechanisms extending the scope of the exception by adding further authorised uses (e.g. FR, ES); o Collective mechanisms implementing the exception of the EU directive into an extended collective licensing system (e.g. DK, FI, SE). In addition, the application of the exception is subject to the availability of licences in certain countries (e.g. UK, IE). In the 2013-2014 public consultation, authors, publishers and collecting societies considered that licensing solutions are in place to complement the exception where necessary and offer flexible and appropriate solutions for educational establishments.66 Several institutional users also mentioned the existence of licenses schemes in place at national level and the possibility to conclude licensing agreement with publishers, but considered that such licensing solutions are expensive, create an administrative burden for schools and universities and do not guarantee the use of all works for educational purposes.67 Conclusion: The evidence collected during the review process suggests that the key objective of the teaching exception of promoting learning and culture "by protecting works and other subject-matter while permitting exceptions or limitations in the public interest for the purpose of education and teaching" (recital 14) has been achieved to a large extent. However the review process highlighted the legal uncertainty coming from the different way the exception has been implemented across MS and pointed to problems for the use of protected content in digital and cross-border education, at least in certain MS. This appears to be mainly due to the sometimes narrow implementation of the exception, to the differences existing between national provisions and to the lack of cross-border effect of the exception. 2.2. Text and data mining The existing EU framework 64 Report on the responses to the Public Consultation on the review of the EU copyright rules, cit., p. 54- 55. 65 J-P. Triaille et alii, op. cit., p. 378-379. 66 Ivi, p. 55 (on Authors/performers) and p. 56-57 (on Publishers/producers/broadcasters). 67 Ivi, p. 54. 48 No specific EU rules exist explicitly covering text and data mining (hereinafter TDM). As explained in the IA,68 TDM techniques generally involve the making of copies of copyright protected content. If these copies go beyond the specific conditions for the exception on temporary acts of reproduction under Article 5(1) of the InfoSoc Directive to apply, under the current EU rules, prior rightholder authorisation has in principle to be sought. At the same time, since TDM is a particularly relevant technique used in the field of research, the research exceptions laid down in the EU copyright rules, in particular in the already mentioned Article 5(3)(a) of the InfoSoc Directive are particularly relevant here. Under the already mentioned Article 5(3)(a), MS may (in addition to teaching) "to the extent justified by the non-commercial purpose to be achieved" also provide for exceptions and limitations for the purposes of scientific research. As in the case of teaching, research exceptions are also laid down in other directives, notably in the database directive. Main sources of the review process in this area As already mentioned, The 2013 study analyses the national implementation of the teaching and research exceptions provided for in Article 5(3)(a) of the InfoSoc Directive in 11 MS.69 Moreover, information about implementation of this exception in other MS has been collected as far as possible through discussions with MS and stakeholders and is presented in Table 2 in this Annex. In addition, TDM has been specifically analysed in the context of the 2014 "Study on the legal framework of text and data mining (TDM)" (the 2014 study).70 This study inter alia aimed at: "Assess whether text and data mining activities […] could be covered by the current exceptions and limitations to copyright and/or to the sui generis right.[…]; Verify whether there are explicit legal provisions (e.g. different from general provisions implementing the Information Society Directive or the Directive on the legal protection of databases such as generally worded exceptions “for research purposes”) in the MS, decisions or judgments affecting text and data mining".71 Like the teaching exception, the research exception and in particular TDM was covered by the 2013-2014 public consultation (see Annex 2B): respondents were asked to share their experiences of the use of the research exception set out in Article 5(3)(a) of the InfoSoc Directive and to provide their views on how problems, if identified, should be solved.72 Moreover, they were invited to share their experiences of using or providing services based on text and data mining and to provide their views on how problems, if identified, should be solved.73 Moreover, as announced in the 2012 Communication74, TDM was discussed at length in the context of the structured stakeholder dialogue "Licenses for Europe"75 carried out throughout 2013 with the assigned objective of "identify[ing] the scale of demand for TDM access at EU level for text mining of scientific publications and underlying data for research purposes, and 68 See the part on text and data mining of the IA, and in particular Annex 11C, which explains the EU legal framework applicable to TDM. 69 See section 2.1 of this Annex. 70 J-P. Triaille et alii, "Study on the legal framework of text and data mining (TDM)", cit. 71 Ivi, p. 6. 72 "Public Consultation on the review of the EU copyright rules", cit., Questions 47-49. 73 Ivi, Questions 53-57. 74 COM(2012) 789 final, cit. 75 https://ec.europa.eu/licences-for-europe-dialogue/en/content/about-site 49 appropriate means of meeting this demand" and of "explor[ing] the potential and possible limits of standard licensing models, as well as assess the appropriateness and feasibility of technology platforms to facilitate TDM access." In addition, after the Licences for Europe dialogue and in the context of the preparation of the IA, regular stakeholder meetings, including a high level round table focussing specifically on TDM were conducted (see Annex 2A) Key relevant results Evidence collected throughout the review process suggests the following findings:  Limited harmonisation of the research exception and legal uncertainty with specific regard to TDM activities The 2013 study highlights that the (optional) research exception set out in Article 5(3)(a) of the InfoSoc Directive has not been specifically transposed in all the MS (e.g. ES, NL).76 Accordingly, this situation "could put researchers in those countries in a less easy situation than their foreign peers."77 Moreover, the two studies78 report that, due to the open-ended content of the research exception, national transpositions – where present – vary widely and are in a number of cases narrower than what the directive permits, including as regards TDM: o The beneficiaries of the research exception vary across MS and the 2014 study highlights that this aspect could "raise difficulties for data mining activities (allowed for some MS under this exception and not in others)".79 E.g. according to the 2014 study PL applies it to research and educational institutions, BE to establishments officially recognised by public authorities, FR to the strict circle of "students, teachers or researchers".80 o There are no judgements of the CJEU to date as to whether the condition of "illustration" applies only to teaching or also to research. Accordingly, different interpretations exist throughout MS. The 2014 study highlights that national exceptions which specifically refer to the concept of "illustration" in relation to the research exception may be difficult to apply to TDM given that "data analysis involves de facto the use of the work for enriching the scientific research taking place and not just for "illustration" of scientific research".81 o In several MS, the exception only allow the reproduction of extracts or parts of works (e.g. BE, LU, IT), which, as well, "can be problematic for data analysis which involves, most of the time, the use of the works in full".82 76 J-P. Triaille et alii, "Study on the application of Directive 2001/29/EC ", cit., p. 370. 77 Ivi, p. 388. 78 J-P. Triaille et alii, "Study on the application of Directive 2001/29/EC", cit., p. 388; J-P. Triaille et alii, "Study on the legal framework of text and data mining (TDM)", cit., p. 53. 79 J-P. Triaille et alii, "Study on the legal framework of text and data mining (TDM)", cit., p. 55. 80 Ibidem. 81 Ivi, p. 61. 82 Ivi, p. 56. 50  o Another difference concerns the authorised acts. For instance, the DE copyright act limits the research exception to certain copyright relevant acts, such as the making available of limited parts of a work to e.g., specifically limited circle of persons for their personal scientific research. As regards reproduction, the German act provides that it shall be "permissible to make single copies of a work or to have these made […] for one's own scientific use if and to the extent that such reproduction is necessary for the purpose and it does not serve a commercial purpose". The 2013 study highlights that such discrepancies between national laws "complicate the compliance by scientists concerned with a possible exception"83 and specific uncertainties arise in particular as regards the nascent TDM techniques. At the moment of the publication of the two above mentioned studies, no MS had in place a specific exception covering specifically TDM. In June 2014, the UK adopted an exception on "Copies for text and data analysis for non-commercial research".84 Discussions concerning the possible adoption of national exceptions on TDM have taken place in other MS, e.g. EE, FR, DE. Concerns about legal uncertainty for TDM under the current EU copyright rules were also reported by many institutional users (libraries, universities) responding to the 2013-2014 public consultation.85 In particular, these respondents considered that, under the current framework, it is not clear whether and to what extent TDM may fall under current EU legislation, notably the research exception (when implemented).86  Diversity of licensing practices TDM licensing practices were discussed in particular in the context of the 2013 Licences for Europe process87. As an outcome, a group of STM publishers presented a declaration of commitment covering both contractual and technical initiatives to streamline licences for non- commercial mining of subscription based scientific publications.88 Specific initiatives to facilitate TDM licencing have been further developed in particular by STM publishers as a follow up to that declaration as described in the IA. At the same time, researchers have generally considered that licences-based solutions would not be able to fully solve the problems of legal uncertainty they face as regards the use of TDM techniques. This was also confirmed in these stakeholders' replies to the 2013-2014 public consultation (institutional users such as libraries and universities generally considered licences an inadequate source of transaction costs for TDM and indicated that a legislative change is needed to introduce a mandatory exception for text and data mining in EU copyright law).89 On the other hand, rightholders, in particular publishers, highlighted in their 83 J-P. Triaille et alii, "Study on the application of Directive 2001/29/EC", cit., p. 389. 84 http://www.legislation.gov.uk/uksi/2014/1372/contents/made 85 Report, cit., p. 59. 86 Ivi, p. 63-64. 87 The Licences for Europe process as it relates to text and data mining is discussed in more details in the IA section on TDM and related Annexes. 88 http://www.stm-assoc.org/2013_11_11_Text_and_Data_Mining_Declaration.pdf. See also the Commission document “Licences for Europe: ten pledges to bring more content online”, cit. 89 Ivi, p. 64. 51 replies to the public consultation the efforts made as a follow up to Licences for Europe to improve licencing solutions for TDM.90 Conclusion: Evidence gathered through the review process has highlighted that the research exception has not been implemented in all MS and that in any event it has generally been implemented without explicitly taking into account TDM (which can be explained by the relatively novelty of these techniques). A specific TDM exception in the context of the research exception has been adopted by only one MS so far, the UK. As a consequence, considerable legal uncertainty exists as to the EU framework applicable to TDM in scientific research and different conditions apply depending on the MS and rightholders' licencing practices. 2.3. Preservation of cultural heritage The existing EU framework Article 5(2)(c) of Directive 2001/29/EC sets out an optional exception to the reproduction right, which MS can implement in their national legislation, provided that it comply with the conditions enshrined in this article. In particular, this exception covers "specific acts of reproduction made by publicly accessible libraries, educational establishments or museums, or by archives, which are not for direct or indirect economic or commercial advantage".91 As to the objectives of this provision, recital 40 clarifies that the exception should be limited to certain special cases, and it should not cover uses made in the context of online delivery of protected works. This was also clarified in the explanatory memorandum to the proposal, which states: "The provision does not define those acts of reproduction which may be exempted by Member States. In line with the "three step test", Member States may not, however, exempt all acts of reproduction, but will have to identify certain special cases of reproduction, such as the copying of works which are no longer available on the market."92 According to the 2013 study, "It is generally understood that the objective served by this provision is to enable libraries to copy works for preservation purposes".93 Policy recommendations on preservation were also issued to MS by the European Parliament and Council in their Recommendation of 16 November 2005 on film heritage and the competitiveness of related industrial activities (2005/865/CE, hereinafter "the 2005 Recommendation"). The 2005 Recommendation called on the MS, in particular, to take measures with a view to "adopting legislation or using other methods in accordance with national practices in order to ensure preservation of deposited cinematographic works" and mentioned "the reproduction of films on new storage media" as part of those "preservation measures". Complementing the 2005 Recommendation on film heritage, policy recommendations on cultural heritage works more broadly were issued to MS by the Commission with its 90 Ivi, p. 65. 91 Copying of works and other subject matter constitutes an act of reproduction protected under the rightholders’ exclusive rights granted by Article 3 of Directive 2001/29/EC, Article 5 of Directive 96/9/EC ('Database Directive') and Article 4 of Directive 2009/24/EC ('Software Directive'). However, differently from Directive 2001/29/EC, the Database and Software Directives do not foresee any exception for preservation acts carried out by cultural heritage institutions. 92 Explanatory memorandum, cit., p. 31. 93 J-P. Triaille et alii, "Study on the application of Directive 2001/29/EC", cit., p. 265. 52 Recommendation on the digitisation and online accessibility of cultural material and digital preservation (2011/711/EU, hereinafter "the 2011 Recommendation"). The 2011 Recommendation invited MS, inter alia, to "make explicit and clear provision in their legislation so as to allow multiple copying and migration of digital cultural material by public institutions for preservation purposes, in full respect of European Union and international legislation on intellectual property rights". A similar objective for 2012-2015 was included in the Council Conclusions on the digitisation and online preservation of cultural material and digital preservation of 10-11 May 2012 which invited MS to ensure "the necessary legal framework conditions for long-term digital preservation in terms of multiple copying and migration of digital cultural material by public institutions for preservation purposes, in full respect of European Union and international property rights". Main sources of the review process in this area The exception provided for in Article 5(2)(c) of the InfoSoc Directive, as well as its implementation across the MS, has been analysed in the context of the above mentioned 2013 study, which focussed on the implementation in 11 MS.94 Information about implementation of this exception has also been collected through a review of national laws and discussions with MS and stakeholders and are presented in Table 3 in this Annex. With regard to this exception, in particular, the study aimed at "examin[ing] whether major problems have emerged in Member States as a consequence of the implementation of this exception to the reproduction right; assess[ing] whether clarifications are needed as regards the type (analogue or digital) and number of copies that may be authorised and whether the precise objective of the permitted acts of reproduction should be specified; assess[ing] whether other updates to this exception are needed to ensure the right balance between the interests of users of public establishments and rightholders."95 The impact of the relevant points of the 2005 and 2011 Recommendations was reviewed in periodical implementation reports. The latest ones were published in 2014 for the 2005 Recommendation96 and in 2016 for the 2011 Recommendation,97 based on individual MS reports. 2013-2014 public consultation and discussed in several meetings with stakeholders, including a high-level roundtable (See Annexes 2A and 2B). Key relevant results Evidence collected throughout the review process suggests the following findings:  Variable, unclear and/or narrow transposition into national legislation The 2013 study finds that, although optional, the exception provided for in Article 5(2)(c) of the InfoSoc Directive has been transposed in all the MS analysed.98 However, it highlights 94 Ivi, p. 264-284. 95 Ivi, p. 264. 96 "Report on the Implementation of the European Parliament and Council Recommendation on Film heritage 2012-2013", October 2014. 97 "Report on the Implementation of Commission Recommendation 2011/711/EU - 2013-2015", 2016. 98 Ivi, p.272. Examples of implementation of this exception at MS level are illustrated in Table 3. 53 that "many disparities have resulted from national implementations and from the ample discretion that the provision of the directive leaves to Member States. Particularly, Member states have been generally more detailed in the requirements imposed on the conditions and in many cases, more restrictive than the directive."99 According to the study, this can be due to four main reasons:100 o First, the purpose of the exception has been generally interpreted strictly by some MS. For instance, while several national laws refer to the general purpose of preservation (e.g. DK, LU, FR) or similar notions (e.g. archiving in HU, conservation in ES, maintaining and protecting collections in PL), other laws have even restricted the notion of preservation to more limited specific cases (the NL for example restricts the purpose of the exception to restoration or replacement).101 o Second, not all categories of works are covered by the national laws (e.g. text-based works are not covered for some CHIs by the exception in IT).102 o Third, only few MS have elaborated on the types of copies that are be allowed (only the NL, for example, explicitly allow format shifting – the practice by which the copy of a work is converted into a new format, to counter obsolescence – by mentioning the purpose of "keeping the work in a condition in which it can be consulted if there is no technology available to render it accessible").103 o Fourth, some national laws further limit the scope of the exception via additional conditions not foreseen in the directive, notably as regards the number of copies authorised for preservation (e.g. BE, NL, IT).104 The 2013 study indicates that these diverging implementations can be a barrier to preservation activities taking place across borders, for example "if a library or other eligible institution wants to outsource the digitisation of works abroad", or if libraries or other eligible institutions want "to mutualise their digitisation activities to do economies of scale."105 The study highlights the difficulties arising in such cases, and notably the uncertainty due to the cross-border elements, and concludes that "more efforts should be put on increasing the harmonisation in relation to the exception for certain acts of reproduction made by libraries."106 The most recent report (2014) on the implementation of the 2005 Recommendations confirmed variations and a "rather restrictive" implementation of Article 5(2)(c) of the InfoSoc Directive for preservation purposes as found by the 2013 study. It concluded that such situation "may hamper preservation activities of FHI [film heritage institutions], particularly in the digital era and could prevent or render very expensive the emergence of pan-European projects and cross-border sharing of digital preservation infrastructures". The 2016 report on the implementation of the 2011 Recommendation says that despite the fact that "a growing number of countries report explicit provisions to allow format-shifting and 99 Ibidem. 100 Ivi, p. 281-282. 101 Ivi, p. 272-273. 102 Ivi, p. 282. 103 Ivi, p. 276-277. 104 Ivi, p. 277. 105 J-P. Triaille et alii, op. cit., p. 283. 106 Ivi, p. 284. 54 migration of cultural material for preservation purposes […] some […] are only applicable to some sectors, institutions or government layers, or lacking the necessary comprehensiveness for a fully-fledged migration or format-shifting of all cultural material, wherever required for preservation purposes". Problems resulting from the limited or unclear implementation of the existing exceptions are also reflected in the submissions of a vast majority of institutional users (libraries, museums, archives and other cultural heritage institutions) responding to the 2013-2014 public consultation.107 In their view, both the scope of this exception and the way MS have implemented it cause concerns and are not adapted to digital environments. Examples given are similar to the ones identified by the 2013 study and include national laws that limit the number of copies that can be made or reduce the categories of beneficiary institutions and prohibit or limit format-shifting.108 They also reported that that the lack of harmonisation and the territorial effect of the current exception have a negative impact on collaborative digitisation projects across countries.109 Representatives of right holders and collective management organisations (CMOs) responding to the 2013-2014 public consultation, however, generally reported not having experienced major problems with the use of the existing exception, which, in their view, allows institutions to fulfil their public interest missions. Some of these respondents also highlighted that the digitisation for preservation is an important public policy objective but is often held back by budgetary, rather than copyright, restrictions. Conclusion: Evidence gathered in the context of the copyright review process suggests that the exception's objective of providing a conducive environment for preservation acts carried out by cultural heritage institutions has been achieved to a limited extent only. This appears to be mainly due to the divergent and limited and/or unclear implementations of the exception, which can raise difficulties for certain types of preservation copies, at least in certain MS. This problem is exacerbated in a digital environment, where preservation activities take different and new shapes than in an analogue one. 3. The main findings of the review process as regards EU policy relevant for the digitisation and dissemination of out-of-commerce works in the collections of cultural heritage institutions The existing EU framework The current EU copyright legal framework does not include specific provisions on the mass digitisation and dissemination of out-of-commerce (OOC) works in the collections of cultural heritage institutions (CHIs), including as regards cross-border dissemination.110 Mass digitisation and dissemination of these works is currently carried out at national level by means of licencing agreements. Policy recommendations to MS as regards film heritage were issued by the European Parliament and Council in their Recommendation of 16 November 2005 on film heritage and 107 Report, cit., p. 40. 108 Ibidem. 109 Ibidem. 110 For the specific case of orphan works (works whose rightholders are not identified or cannot be located despite a diligent search) digitisation and making available has been addressed at EU level in the 2012/26/EU Orphan Works Directive. According to recital 4 in the preamble to this directive, "this Directive is without prejudice to specific solutions being developed in MS to address large mass digitisation issues such as in the case of so called "out-of-commerce" works." 55 the competitiveness of related industrial activities (2005/865/CE, hereinafter "the 2005 Recommendation"). The 2005 Recommendation calls on MS to "improve conditions of conservation, restoration and exploitation of film heritage and remove obstacles to the development and full competitiveness of the European film industry" inter alia "by adopting, by 16 November 2007, legislative, administrative or other appropriate measures to ensure that cinematographic works forming part of their audiovisual heritage are systematically collected, catalogued, preserved, restored and made accessible for educational, cultural, research or other non- commercial uses of a similar nature, in all cases in compliance with copyright and related rights" […] adopting the necessary legislative or administrative measures to allow designated bodies to make deposited cinematographic works accessible for educational, cultural, research or other non-commercial uses of a similar nature, in all cases in compliance with copyright and related rights". Complementing the 2005 Recommendation on film heritage, policy recommendations on cultural heritage works more broadly were issued to MS by the Commission with its Recommendation on the digitisation and online accessibility of cultural material and digital preservation (2011/711/EU, hereinafter "the 2011 Recommendation"). The 2011 Recommendation emphasises that "for the large-scale digitisation of out-of- commerce works, legislative backing for licensing solutions voluntarily developed by stakeholders may be needed in the Member States, taking into account the need to ensure a cross-border effect. In this context, the approach followed in the stakeholders’ dialogue, sponsored by the Commission, on out-of-commerce books and learned journals, which resulted in a Memorandum of Understanding signed in Brussels on 20 September 2011, should be seen as a model for further dialogues to facilitate agreements for the digitisation of as much of the out-of-commerce material as possible". The Recommendation recommends that MS "improve conditions for the digitisation and online accessibility of in-copyright material by" inter alia "creating the legal framework conditions to underpin licensing mechanisms identified and agreed by stakeholders for the large-scale digitisation and cross-border accessibility of works that are out-of-commerce". Similarly, the Council Conclusions on the digitisation and online preservation of cultural material and digital preservation of 10-11 May 2012 underlined "the need to actively promote voluntary agreements on the large-scale digitisation and online availability of out-of- commerce works and to take the necessary measures to provide for the required legal certainty in a national and cross-border context". The Commission also sponsored a stakeholder dialogue on out-of-commerce books and learned journals, which resulted in a Memorandum of Understanding on "Key Principles on the Digitisation and Making Available of Out-of-Commerce Works" (hereinafter, "the 2011 MoU"),111 which was signed by library and right holder organisations on 20 September 2011. These principles are intended as a reference to assist with and promote collective licensing 111 Memorandum of Understanding on Key Principles on the Digitisation and Making Available of Out-of- Commerce Works, signed in Brussels on 20 September 2011 by the Association of European Research Libraries (LIBER), the Conference of European National Librarians (CENL), the European Bureau of Library, Information and Documentation Association (EBLIDA), the European Federation of Journalists (EFJ), the European Publishers Council (EPC), the European Writers' Council (EWC), European Visual Artists (EVA), the Federation of European Publishers (FEP), the International Association of Scientific, Technical & Medical Publications (STM), the International Federation of Reprographic Rights Organisations (IFFRO). 56 agreements in this area, covering books, learned journals and embedded images. The MoU indicates that, for the purposes of agreements concluded according to its principles, "where a rightholder whose work was first published in a particular Member State has not transferred the management of his rights to a collective management organisation, the collective management organisation which manages rights of the same category in that Member State of first publication shall be presumed to manage the rights in respect of such work". It recognises, however, that, for such scenario to be possible "legislation might be required to create a legal basis to ensure that publicly accessible cultural institutions and collective management organisations benefit from legal certainty when, under an applicable presumption, the collective management organisations represent rightholders that have not transferred the management of their rights to them". It therefore recommends that MS "in keeping their international obligations, may give effect to the key principles mentioned [in the MoU] in accordance with their national legal mechanisms and collective licensing traditions". It also calls on the Commission "to the extent required to ensure legal certainty in a cross-border context, to consider the type of legislation to be enacted to ensure that publicly accessible cultural institutions and collective management organisations which enter into a licence in good faith applying these key principles are legally protected with regard to licensed uses of works of rightholders who have been presumed to be within the scope of the licence". Finally, in the context of the Licences for Europe stakeholder dialogue, a Statement of Principles and Procedures for facilitating the digitisation of, access to and increased interest of European citizens in European cinematographic heritage works was undersigned by film heritage and film right holder organisations. Main sources of the review process in this area The impact of the relevant points of the 2005 and 2011 Recommendations was reviewed in periodical implementation reports. The latest ones were published in 2014 for the 2005 Recommendation and in 2016 for the 2011 Recommendation, based on individual MS reports. In the context of the 2013-2014 public consultation respondents were asked whether they considered necessary to enact legislation underpinning the 2011 MoU for cross-border effect, and whether mechanisms should be developed for other types of content than books and learned journals. The Commission has monitored the practical application the of the 2011 MoU since its adoption through regular contacts with stakeholders and MS to gather information on concrete licencing agreements adopted following its principles and the possible adoption of MS measures aiming to provide a legal space for licencing practices based on the principles of the MoU. Existing relevant provisions at national level at the time of writing are presented in Annex 9E to the IA. including a high level roundtable focussing on access to knowledge and cultural heritage were conducted (see Annex 2A). Key relevant results Evidence collected throughout the review process suggests the following finding:  Suitable licensing mechanisms underpinned by legislative provisions only available in some MS and with no cross-border effect. 57 The most recent report (2016) on the implementation of the 2011 Recommendation indicated that "fourteen countries already provide for some mechanism to facilitate digitisation and online accessibility of works which are out-of-commerce", with developments taking place "particularly in the print sector". The 2014 report on the implementation of the 2005 Recommendation on film heritage concluded that "the current legal framework does not facilitate the emergence of mass digitisation projects". The report does not refer to any development on legal mechanisms at national level to facilitate the mass digitisation and dissemination of OOC works part of film heritage. It reports however that the Statement of Principles and Procedures for facilitating the digitisation of, access to and increased interest of European citizens in European cinematographic heritage works "has not yet been used for the conclusion of digitisation agreements". The 2013 study, which predates the above reports, also confirms the presence of relevant legal mechanisms in some MS only, with projects inspired by the 2011 MoU "starting to emerge". During the 2013-2014 consultation, institutional users considered the 2011 MoU insufficient to address copyright issues related to mass digitisation, and that legislation allowing for cross- border uses was necessary (many indicated an exception as the preferred solution). They also indicated that solutions should be present for all types of works. Right holders had varying views regarding the best way ahead, both on the need for legislation (including to give cross- border effect to national solutions) and on basing solutions on collective management. Conclusions: Evidence gathered throughout the review process indicates that the objectives set out in the 2005 and 2011 Recommendations have been only partially achieved, with mechanisms facilitating collective licences for the digitisation and dissemination of OOC works also covering the rights of right holders that are not members of the licensor CMO, as referred to in the 2011 MoU, only present in certain MS and not having cross-border effect. While actual collective licences of this type are concluded, they are no widespread across the EU and only in very few cases/MS extend beyond books and learned journals. 58  Table 1 – Examples of limitations and exceptions in MS legislation based on Article 5(3)(a) of the InfoSoc Directive – illustration for teaching112 MS Implementation of the Compensation foreseen for Examples of specific conditions teaching exception use under the teaching under the exception or under exception113 collective agreements AT Exception Yes • Resources specifically intended for schools (e.g. textbooks) excluded BE Exception Yes, compensation foreseen under a legal license subject to compulsory collective management (not yet implemented) BG Exception No CZ Exception No CY Exception No DK Extended collective licensing Yes (remuneration under ECL) • Specific limitations on the extent of (ECL) copying (20% of a publication but not more than 20 pages) • Cinematographic works that are part of the general cinema repertoire of feature films are excluded from the ECL DE Exception Yes, compensation through • Resources specifically intended for collecting societies schools (e.g. textbooks) and Specific licensing agreement for recently released cinematographic textbooks. works excluded. EE Exception No EL Exception No • Uncertainty on whether digital uses are allowed • Uncertainty on the use of AV works ES • One general exception for • General exception not subject to • Use of textbooks and academic illustration for teaching, compensation books not allowed under the applicable to all education • Exception for universities and general exception levels public research subject to • One specific exception (for compensation through printed works only) for compulsory collective universities and public management research, allowing to use a chapter of a book or an article in a magazine or journal FI Extended collective licensing Yes (remuneration under ECL) • Cinematographic works not (ECL) covered under ECL • Specific limitations on the extent of use (different for each education level) FR Exception implemented through Yes – compensation defined in the • Resources specifically intended for several sectoral agreements sectoral agreement based on education (e.g. textbooks) and voluntary licensing. sheet music excluded from the exception but covered by sectoral agreement. HR Exception Yes • Reproduction is allowed only on paper or a similar medium HU Exception No • Uncertainty on whether digital uses are allowed 112 Sources: J-P. Triaille et alii, "Study on the application of Directive 2001/29/EC ", cit.; Study on copyright limitations and exceptions for educational activities in North America, Europe, Caucasus, Central Asia and Israel, Raquel Xalabarder, 2009 (WIPO); Study "Assessment of the impact of the European copyright framework on digitally-supported education and training practices",; Information received from publishers (FEP). 113 Only the compensation foreseen under the "illustration for teaching" exception is mentioned in the table (the compensation existing under the reprography exception is not mentioned). 59 IE • Fair dealing provision for Remuneration under licence research and private study • Exception for reprographic copying and recording of broadcasts and cable programmes by educational establishments subject to the availability of licences IT Exception implemented Partially: compensation foreseen • Online publications of images and partially (quotation and only for reproduction of works in musical works for educational or teaching exceptions are anthologies. research purposes allowed only in intertwined) low resolution / degraded quality; not allowed for AV works LT Exception No LV Exception No LU Exception No MT Exception No NL Exception Yes – through collecting societies • The current collective arrangements allow reproductions with maximum of 10% of a work or 10 pages PL Exception Yes • Uncertainty on whether digital uses are allowed PT Exception Partially: compensation foreseen for the making of teaching compilations RO Exception No SE Extended collective licensing Yes (remuneration under ECL) • Specific limitations on the extent of (ECL) copying (15% of a publication but not more than 15 pages) • Cinematographic works not covered under ECL SK Exception No SI Exception Partially: compensation foreseen • Uncertainty on whether digital uses only for reproduction of works in are allowed textbooks UK • Fair dealing provision for Remuneration under licence • Specific limitation in the law on the illustration for instruction extent of copying (5% of a work) • Exception for copying and use of extracts of works and for recording of broadcasts by educational establishments subject to the availability of licences 60  Table 2 – Examples of limitations and exceptions in MS legislation based on Article 5(3)(a) of the InfoSoc Directive – scientific research114 MS Implementation of the Examples of specific conditions under the existing exception research exception BE Exception • Making available limited to the establishments recognised or officially organised for that purpose by the public authorities • Specific limitation in the law on the works concerned (articles or works of fine art in part or in whole or short fragments of other works) DK Exception • Limited to works of art and works of a descriptive nature for the use in scientific presentation DE Exception • Limited to reproduction “for one's own scientific use” and making available “for a specifically limited circle of persons for their personal scientific research to be made available to the public” • Specific limitation in the law on the works concerned (small parts of a work, small-scale works or individual articles released in newspapers or periodicals or made available to the public) ES No exception (only provided for databases) FR Exception • Limited to short works or excerpts for purposes of illustration or analysis, provided that these works or excerpts are communicated within strictly limited circles of students, teachers, or researchers HU Exception • Limited to part of a literary or musical work or such a type of an entire work of a minor volume disclosed to the public IT Exception • Limited to fragments or parts of works LU Exception • Publication on the internet limited to short fragments of works NL No exception (the national law only allows for quotation in scientific writing) PL Exception • Applies to research and educational institutions (individual researchers not covered) • Limited to fragments of disseminated works UK Exception • In June 2014, the UK adopted a specific exception on "Copies for text and data analysis for non-commercial research"115 114 Sources: J-P. Triaille et alii, "Study on the application of Directive 2001/29/EC ", cit.; J-P. Triaille et alii, "Study on the legal framework of text and data mining (TDM)", cit. 115 http://www.legislation.gov.uk/uksi/2014/1372/contents/made 61  Table 3 – Examples of limitations and exceptions in MS legislation based on Article 5(2)(c) of the InfoSoc Directive – specific acts of reproduction116 MS Preservation purpose Examples of specific uses or conditions under the existing explicitly mentioned exception (as relevant for preservation) BE Yes • Number of copies allowed determined according to and justified by the preservation objective. DK Yes • Computer games explicitly included. DE No specific reference to • Limited to personal archives or archives acting in the public interest. preservation • Restriction to reprography on paper or similar medium and analogue uses if the reproduction is necessary for inclusion in a personal archive. ES Reference to conservation • Record libraries, film libraries, newspaper archives explicitly included. FR Reference to conservation HU No specific reference to • Copies possible for archiving purposes. preservation • Picture and audio archives qualifying as public collections are explicitly included. • Copies possible for internal purposes of the organisation but limited to a minor part of a published work or an article of a newspaper or periodical. IT No explicit reference to • Reprography only for publicly accessible and school libraries, public preservation museums and archives for their own services. • A single copy of phonograms and videograms only for state and public libraries, record and film archive. LU Yes • Libraries, film archives, documentation centres and other non-commercial scientific or cultural institution can reproduce works to preserve heritage and carry out all activities that are reasonably needed to safeguard the work. NL Yes • Copies of literary, scientific or artistic works can be made for restoration and to preserve them if at risk of degradation. • Format-shifting explicitly allowed if the technology to access a work becomes obsolete. PL Yes UK Yes 116 Sources: J-P. Triaille et al., "Study on the application of Directive 2001/29/EC", cit. complemented by review of national laws and information through discussions with MS and stakeholders. 62  ANNEX 5 – CREATIVE INDUSTRIES IN THE EU ECONOMY 33 sectors of the EU economy are considered to be copyright-intensive (for example: book publishing, news agencies, TV/movie business, and advertising agencies). These copyright- intensive industries account directly for 3.2% of employment in the EU with around 7.05 million jobs (on average in 2008-2010). Overall, 4.2% of the EU’s GDP is generated in copyright-intensive sectors (on average in 2008-2010). Copyright-intensive industries account for 4.2% of EU’s exports, with net exports of around €15 billion in 2010.117 In the EU, more than 120.000 companies are involved in motion picture, video and television programme production, sound recording and music publishing activities, providing over 400,000 jobs, with net contribution to the EU economy of over €25 billion. In addition, 11.800 companies are active in programming and broadcasting activities, employing 255.000 persons, and accounting for an added value of €27billion. The publishing sector (including publishing of books, journals, newspapers and software) includes 90.000 companies, accounting for 900.000 jobs and a value added of €60 billion.118 The creative industries in the EU are dominated by micro firms with 95% having fewer than 10 employees coexisting with very large corporations. 117 “Intellectual property rights intensive industries: contribution to economic performance and employment in the European Union. Industry-Level Analysis Report”. A joint project between the European Patent Office and the Office for Harmonization in the Internal Market, September 2013. 118 Eurostat data 2012. 63  ANNEX 6 – ONLINE TRANSMISSIONS OF BROADCASTING ORGANISATIONS ANNEX 6A – EUROPEAN TV AND RADIO MARKETS Overview of European TV market The EU-28 TV market is worth around €86 billion. This comprises direct revenues from three main sources: public funding (29%), television advertising (34%) and pay-television revenues (37%).119 Around 86 million homes in the EU receive free to air TV only, compared to 136 million that subscribe to a TV service, equivalent to a TV subscription per 3.7 people in a total population of over half a billion.120 The annual value of satellite, cable and IPTV subscriptions is over €30 billion. Satellite services represent around half the total consumer spending on pay TV subscriptions, while cable accounts for 36% and IPTV account for 14%.121 The average TV viewing time for the whole EU population in 2013 was 223 minutes per day.122 Viewing habits differ widely among Member States. In some countries, like Austria, Finland and Sweden these numbers are lower: 2:42, 2:56 and 2:33 hours/minutes per day respectively. In countries like Romania, Portugal and Hungary the viewing time reaches 5:42, 4:56 and 4:49 hours/minutes per day respectively. Since 2012, television viewing has reached a plateau in average in the European Union. As time-shifted television viewing has been increasingly included in television audience measurement, this stability implies that live television viewing has declined.123 Europeans predominantly watch television on a TV set (94% at least once a week, -1 percentage point). Although Europeans are far less likely to watch television over the Internet, this practice continues to gain ground: 20% of Europeans watch television online at least once a week (+2% versus autumn 2013 and +3% versus the EB78 report of autumn 2012). Europeans in the 15-24 age group are the most likely to watch television via the Internet: 40% do so at least once a week. The proportion of respondent who watch television via the Internet decreases gradually with age: 26% of 25-39 year-olds, 18% of 40-54 year-olds and 8% of those in the 55-plus age group watch television via the Internet at least once a week. Watching television via the Internet is particularly widespread in Sweden (48% do so at least once a week) and Finland (39%), but less so in Bulgaria (11%), Greece (12%) and Portugal (12%).124 Television is the most frequently used source of European political news by all age groups, but respondents in the 55+ age group are the most frequent users of this medium (83%). Online advertising revenues are growing globally, including online TV and video advertising’s share.125 Online television advertising revenue in Western Europe is estimated to 119 Source: European Audiovisual Observatory Yearbook, 2015. Figures for 2014. 120 Source: informitv analysis, SatCab Study, p. 7-8. 121 Source: European Audiovisual Observatory. Yearbook 2015. Figures for 2014. The development of the European market for on-demand audiovisual services. The figures include linear TV as well as short term catch-up (up to 7 days in some countries). 123 EAO On-demand Audiovisual Markets in the European Union (2014 and 2015 developments). 124 Standard Eurobarometer 82, Autumn 2014. Media use in the EU. See: http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/yearFrom/19 73/yearTo/2014/surveyKy/2041 125 Share of online in global advertising spending in 2013 was 20%, however it is increasing, see http://www.statista.com/statistics/272943/forecast-of-global-online-advertising-spending/ Television maintains the highest share of advertising revenue across all media: global total TV advertising 64 be worth just under €0.75 billion in 2015, although it is forecast to rise to €1.6 billion in 2019. The EU 28 advertising revenue for 2014 is €29.28 billion.126 While TV remains the preferred media for advertising (32% of the market), the Internet is likely to become the main advertising platform within the next two years, given its rapid development (+8.4% vs. 2012) and the market share already captured in 2013 (27.4%).127 In 2014, Internet advertising spending was higher than TV advertising spending in a number of EU countries: Czech Republic, Denmark, Germany, Netherlands, Sweden, the United Kingdom. According to the EAO Study on online advertising in the EU,128 the total size of the online advertising market in the EU in 2013 was €27.2 billion, an increase of 11.6% compared to the total of €23.2 billion in 2013. On the other hand, television advertising in the EU lost in 2013 more than EUR 300 million out of EUR 27.748 million overall investments (-1.1% vs. 2012).129 In 2009, EU broadcasters invested around 1/3 of their revenues in EU quality content. In that year, out of the EUR 34.5 billion programme spend in the EU by broadcasters approximately EUR 15.6 billion was spent on acquiring rights, EUR 5.8 billion on sports rights and EUR 9.8 billion on film and TV acquisitions.130 In 2014, European public broadcasters invested 84% of their programming expenditure in original content, amounting to 14.04 billion EUR.131 revenue’s share of global total advertising revenue was 31.5% in 2014, see PWC the Global entertainment and media outlook 2015 –2019,http://www.pwc.com/gx/en/industries/entertainment- media/outlook/segment-insights/tv-advertising.html. 126 SatCab Study, p. 57. 127 Source: European Audiovisual Observatory/WARC 128 Published in September 2015 129 Source: WARC 130 See SWD (2016) 168 final COMMISSION STAFF WORKING DOCUMENT, IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2010/13/EU on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services in view of changing market realities, Annex 6, p. 148. 131 EBU information, available at http://www.ebu.ch/files/live/sites/ebu/files/Publications/EBU-MIS%20- %20PSM%20Investment%20in%20European%20Content.pdf 65 Extracts from the SatCab Study 2.1.2. Overview of the distribution of broadcast channels The European Audiovisual Observatory MAVISE database lists over 13,000 television channels available in Europe, including over 5,000 international, national or regional channels established in the EU and over 1,900 free channels. In addition, there are thousands of radio channels or stations, which are not listed in the database. A television channel, in this context, is defined as a sequential presentation of audiovisual programmes provided for simultaneous viewing on the basis of a schedule. Individual broadcasters normally hold the regulatory licence for a particular channel and are editorially responsible for its content. A single channel brand may be available in different languages or regional variants, each of which counts as a separate channel. A radio channel, for the purpose of this Report, is defined as a service that offers a sequential presentation of audio programmes linked to a particular channel for simultaneous listening on the basis of a schedule using a technical method of (re)transmission that can be used also for television channels. Broadcasters may be public bodies, traded corporations or private companies. Public service broadcasters generally have a specific licence remit for one or more of their channels. Commercial broadcasters are partly funded by advertising. These categories are not mutually exclusive. For example, a broadcaster may be state- owned with a public service remit, offering some of its channels primarily funded by advertising and others on a subscription basis. In this report a public broadcaster refers to organisations that are owned by the public or the state. A channel typically originates as part of the playout function (i.e. the transmission of the channel) normally at the originating broadcaster. From this point there is necessarily an uninterrupted chain of communication to the point through the broadcasting network at which the signal is received and accessed in real time by the ultimate audience. A broadcaster may make a channel available directly through a traditional terrestrial transmission, or via a satellite, cable or other telecommunications network. Different channels may be delivered by any or all of these methods. Terrestrial radio and services are broadcast from transmission towers and received through an antenna. Traditionally, radio and television broadcasts have been free-to-air i.e. meaning they are accessible to anyone that has the technology to receive them. Some satellite services are free-to-air given that they can be received by holders of the necessary equipment. However, many satellite services are encrypted and therefore users are also required to pay for a subscription in order to access the content. Free channels are those which are free to view (i.e. meaning they are accessible to the public without payment) although they may be subject to a licence fee. Terrestrial channels are generally free to view, although some are available as part of subscription services (normally as part of a package of channels linked to the basic level of subscription). Services that are free-to-air (i.e. those that can be accessed by holders of the relevant technology) are effectively those which are free to view (although some free-to-air channels can be encrypted). A simplified overview of the provision of broadcasting services by direct to home satellite and cable redistribution is indicated in Figure 2.1. Figure 2.1 Direct to home satellite distribution and cable redistribution of free-to-air and encrypted pay television channels 66  Free satellite Free satellite Satellite subscriber Free to air Encrypted Cable television Basic Cable channel pay channel provider cable subscriber Direct to home satellite television and radio channels are uplinked from an earth station or teleport either directly by a broadcaster, by a third-party facility such as Arqiva (UK), MEDIA BROADCAST (DE) or rt1.tv (DE), by a satellite operator such as SES or Eutelsat, or by a television service provider like Sky (UK and IE) or Cyfrowy Polsat (PL). Satellite radio and television services are relayed through satellites in geostationary orbit and received through a dish antenna. Many broadcasters make their channels available via satellite as it provides broad geographic coverage at relatively low cost. Some channels, including some channels that are free to view, are encrypted and can only be decoded and viewed using a uniquely identifiable receiver. Pay channels are generally encrypted and are available on a subscription basis and therefore reception requires authorisation from the service provider. The satellite, generally operated by a satellite operator such SES, relays a signal that can be received anywhere within the service footprint, across national borders. Therefore, free satellite channels that are not encrypted can be received outside of a targeted country market as a result of signal overspill. However, some channels are intended for distribution across an entire continent, whereas other channels are mainly intended for reception in particular territories. Satellite television service providers typically aggregate and package multiple satellite channels as one or more service propositions or bundles. Service providers may originate and transmit their own channels, for which they may be considered broadcasters. The service platform provides features such as an electronic programme guide, through which users can find information about programmes and tune to channels. Such guides may be regulated to provide prominence to certain channels. The channel package may include a combination of free to view channels and subscription channels. Users may be able to add other available channels that are not part of the standard package (normally as part of premium subscription packages). However, some satellite platforms are free to view and simply require the purchase of a compatible receiver. Users can also purchase receivers that can be set up to tune to any available channels without reference to a service provider, although this is a less common consumer practice. Satellite television service providers like Sky Italia and NC+ (Poland) offer packages of services to satellite subscribers that may include encrypted pay television channels as well as television and radio channels that are available free-to-air. Some satellite packages of television and radio channels, such as Freesat, are available entirely free-to-air, without charge or subscription. Satellite channels can be received outside the country in which they are established by anyone with a compatible 67 receiver, anywhere within the satellite service footprint. Encrypted channels can only be decrypted with the authorisation of the service provider, so access can be individually restricted to the addresses of premises in particular territories. Cable television and radio services are generally carried over a co-axial cable. Signals are received at a cable head end, either via terrestrial or satellite transmissions. A cable television provider such as Liberty Global, can receive cross-border satellite signals and retransmit them via cable to customer homes. However, signals can also be received via direct injection of signals by arrangement with broadcasters, for instance through a satellite or fibre-optic feed. The channels are redistributed, typically over a fibre-optic network to neighbourhood nodes, from where they are delivered to homes over conventional co-axial cables. The cable service provider determines which channels will be available on its network and therefore needs to have the relevant rights to redistribute the respective channels. Service providers may also originate and distribute their own channels. Some channels may be provided free of charge, or as part of a basic cable service tier. Other channels may be encrypted and are offered on a subscription basis, typically in various bundled packages. National regulations may require some channels to be carried or offered for carriage on cable services. Some broadcasters may seek carriage fees for the redistribution of their channels. It is now possible for other telecommunications companies (which may be either former national telephone companies or competing providers of communications services) to distribute radio and television channels and other audiovisual services over fixed or wireless broadband data networks using internet protocols. Such services can offer a range of channels comparable to conventional cable networks. This is sometimes referred to as internet protocol television, or IPTV. Since any network, including cable networks, can potentially employ internet protocols, this report will refer to services delivered by telecommunications providers other than conventional cable companies as ‘telco television’. Television and radio channels can also be offered online over the open internet. Many satellite, cable and telco operators offer such services to their subscribers. There are also some standalone online services for example YouTube channels or iTunes radio. Many broadcasters also offer online simulcasts of their broadcast channels. It is technically possible to limit access to online services by internet address, service provider network, or subscriber account. This can be used to geo-restrict online services to an extent to particular territories. A problem faced by the industry relates to measurement of audience viewing behaviour. Typically, surveying methods, such as home panel surveys, are used that vary in their scale. As a result, viewer behaviour is normally based on estimations using sample data. Despite their shortcomings these provide the basis for advertising sales. On the other hand, online viewing can be much more accurately monitored through software code that can record actual usage. There are initiatives in some countries that make use of existing home panel surveys with a view to also monitoring their use of online services.132 2.1.3. Overall main findings of the market analysis Given the extensive volume of data examined by the market analysis, the main findings of this chapter are presented in the introductory section with a view to addressing the main research questions. Table 2.1 provides some of the key quantitative findings in terms of the overall assessment of the EU-28 television market. Table 2.1 Overall assessment of the EU-28 television market (2014) Indicators Results Overall EU-28 television revenues €86 billion Sources of overall EU-28 television revenues Advertising 34% Subscriptions 31.81% Public funding 29% 132 http://www.barb.co.uk/project-dovetail/ 68  Break down of EU-28 subscription revenues by satellite, cable and Satellite: €15 billion (50%) telco platforms Cable: €11 billion (36%) Telco €4.29 billion (14%)133 Number of households in the EU with subscriptions 136 million134 Number of households in the EU receiving free-to-air services Total: 86 million136 only135 Number of households in the EU receiving satellite services Pay: 41.2 million137 Free: 28.7 million Number of households in the EU receiving cable services 56.4 million138 Number of households in the EU receiving telco services 28.3 million139 EU-28 Member State geographical coverage of number of pay TV Highest: France 25 million subscribers Lowest: Cyprus 100 thousand140 EU-28 Member State geographical coverage of pay TV subscribers Highest: Denmark 46.3% as a proportion of the population Lowest: Greece 8.1%141 The assessment of industry data indicates that the EU28 television market is well developed. Around 86 million homes in the European Union receive only free-to-air television, compared to 136 million that subscribe to a television service, equivalent to 1 television subscription per 3.7 people in a total population of over half a billion.142 The annual value of satellite, cable and telco subscriptions is over €30 billion. Satellite services count for around half of the market with cable representing over a third and telco at less than fifteen percent. While there are more cable homes than satellite, nearly half of cable homes are still analogue, which limits revenue potential i.e. fewer channels and no high definition. Whereas average revenue per user for advanced satellite platforms such as Sky Deutschland is much higher. However, the geographical coverage of services is highly uneven across the EU-28 Member States. The proportion of pay TV subscription holders ranges from 46.3% in Demark to 8.1% in Greece. An overview of the geographical coverage of channels is provided in Table 2.2. Table 2.2 Overall assessment of the coverage of channels across the EU-28 and 11 sample countries (2015) Indicators Results Total number ‘international’, ‘national’ or ‘regional’ channels available across Overall: 5720 the 28 European Union Member States Free channels: 1903 Total number ‘international’, ‘national’ or ‘regional’ channels available in Overall: 5,231 total across the 11 sample countries Free: 483 Total number ‘international’, ‘national’ or ‘regional’ channels established in Overall: 3883 the 11 sample countries Free: 1187 Balance of trade (channels available minus channels established) for the 11 Overall: -1348 sample countries Free: 704 133 European Audiovisual Observatory Yearbook, 2015. 134 Ibid 135 i.e. services accessible to the public without payment 136 Digital TV World Databook, 2015 137 European Audiovisual Observatory Yearbook, 2015. 138 Ibid 139 Ibid 140 Ibid 141 Ibid 142 informitv analysis 69  Total number of channels available by platform in the 11 sample countries: Terrestrial: 483 Pay terrestrial: 283 Satellite: 2628 Cable: 2640 Telco: 2298 Mobile / other: 299 Number of channels established in one of the 11 sample countries which was One country: 2839 indicated as available in another sample country Two countries: 625 Three countries: 97 Five countries: 29 Six countries: 23 Seven countries: 20 Eight countries: 11 Nine countries: 7 Ten countries: 5 Eleven countries: 5 The assessment of the MAVISE database (2015) indicates that the number of television channels available in the EU-28 stands at 5720, with 5231 of those channels available in the 11 sample countries. Out of the 3883 channels established in the 11 sample countries, only 822 were indicated available in two or more of the sample countries. The analysis of availability in the 11 sample countries indicates that the distribution of television channels is mainly territorial. […] On the evidence of this analysis of channel availability, it appears that much of the international traffic in television channels is increasingly within the pay-television system. However, pay television service providers may still rely upon the availability of channels from the main national broadcasters to sustain their programming packages. While satellite services could potentially all be offered on a multinational basis, the analysis suggests that in practice there are relatively few pan-European services. With the exception of services such as some news and sports channels, the majority of satellite services are aimed at specific geographic markets. Although broadcast television is widely enjoyed in all countries in Europe, the television market in Europe is dominated by some of the larger Member States, notably the United Kingdom, which is a net exporter of channels. Table 2.3 Analysis of the market development of satellite broadcasting, cable and telco services Indicators for EU-28 Results 2020 - forecast of the market development for satellite services in terms of the 18% share number of subscriptions (flat growth rate since 2010)143 2020 - forecast of the market development for cable services in terms of the 24% share number of subscriptions (slowly declining since 2010)144 2020 - forecast of the market development for telco services in terms of the 16% share (steady rise number of subscriptions since 2010)145 Overall pay television market share by 2020 59% (steady increase since 2010)146 143 Digital TV Research, Global Pay TV Operator Forecasts 2015 144 Ibid 145 Ibid 146 Ibid 70  2016 number of digital television subscribers by platform Satellite: 41.17 million Cable: 30.74 million Telco: 28.32 million147 The market data (see Table 2.3) suggest that the current satellite and cable television markets are mature given their forecasts for flat growth or likely decline. The markets for other retransmission platforms, based on internet technologies, are developing rapidly. Key findings are as follows:  The adoption of satellite subscriptions is forecast by Digital TV Research to remain relatively flat through to 2020, at around 18% of television homes in the current 28 European Union countries;  Cable service providers are migrating from analogue to digital, a process that is forecast to be almost complete by 2020, giving digital cable a share of almost 24% of television homes;  The overall share for cable is forecast to decline, while that for telco television will continue to rise, to just below 16%;  Overall, pay television is forecast to rise to approaching 60% of households in the European Union by 2020. Table 2.4 Analysis of the market development of broadcast-related online services Indicators Results Number of households with online video on demand services 23 million in 2015 to 61 million in 2020148 2015 - Number of online video on demand services available (11 sample 2207 countries) 2015 - Number of online video on demand services established (11 sample 1343 countries) 2015 - Number of catch-up TV services available (11 sample countries) 629 2015 - Number of catch-up TV established (11 sample countries) 462 Online video-on-demand services (see Table 2.4) are expected to grow by 270% in the coming years (i.e. from 2015 to 2020). There are already 1343 broadcaster related online video services established in the 11 sample countries, with 2207 available. However, there appears to be a lower level of international availability of catch- up television services. […] 2.2.1. Assessment of the main revenue sources of the EU-28 broadcasting market and overall size of the market for pay TV and free-to-air services According to the European Audiovisual Observatory, based on figures for 2014, the television market in the European Union is worth around €86 billion a year (Figure 2.2). This comprises direct revenues from three main sources; public funding, television advertising and pay-television revenues. Pay-television subscriptions represent the largest proportion of direct television revenue at 37%. Figure 2.2 Direct television revenues for EU28 (2014) 147 European Audiovisual Observatory Yearbook 2015. 148 Digital TV Research Global SVOD Forecasts, 2015 Edition. 71  Total EU 28 Revenues €86bn Public Funding €25.57 Subscriptions 29% €31.81 37% Advertising €29.42 34% Source: European Audiovisual Observatory Yearbook 2015 Figures for 2014 Considering all three revenue sources, there are clear differences in the size of the markets of the EU-28 countries. By far the most valuable markets are the United Kingdom and Germany, each worth around €18 billion a year, followed by France (€12bn), Italy (€8bn), and Spain (€5bn) (Figure 2.3). These figures do not include the value of other revenue streams, such as the licensing of individual programmes for distribution by other broadcasters or platforms. In terms of the size of the market, there are approximately 136 million homes subscribing to television services in the EU-28, out of a total population of over half a billion, representing around one subscription per 3.7 people:  Over 41 million homes in the EU subscribe to satellite television services;  There are 56 million cable households, of which 30 million receive digital cable;  There are a further 28 million subscribers to telco television services;  There are around 6 million terrestrial television subscribers.149 In addition, around 86 million homes in the European Union receive only free-to-air television. The majority of these receive digital terrestrial television. Most of these homes are in Italy, Spain and the United Kingdom. Over 28 million homes receive free-to-air satellite services. More than half of these are in Germany.150 […] Table 2.17 International, national or regional channels available in EU28 by genre (2015) Channel Genre Total TV Free Channels TV High definition simulcast of an existing channel 1063 174 Sports 585 40 Regional/local 481 342 Entertainment 399 130 Film 344 27 Music 296 95 Children's 269 51 Adult 263 72 General 243 192 149 European Audiovisual Observatory Yearbook, 2015. 150 Digital TV World Databook, 2015. 72  Window 232 215 Documentary 226 11 TV fiction 203 14 Lifestyle/specific leisure 188 52 News 156 107 Time-shifted versions 110 30 Home shopping 109 89 Promotional/information channel of multi-channel packager 92 19 Religious 88 74 Cultural/educational 81 40 Others 71 26 International linguistic and cultural 53 34 Minority interest groups 50 30 Games/lottery/betting 35 8 Travel 32 3 Parliamentary/government/administration 20 14 Business 17 11 Weather 11 Dating/classified ads 3 3 TOTAL 5720 1903 Source: European Audiovisual Observatory MAVISE database informitv analysis […] Table 2.19 Comparison of international, national or regional channels available versus channels established in 11 sample EU countries for organisations with public or mixed ownership (2015) Channels established in country Viewing country DK DE IE ES FR IT HU NL PL SE UK Denmark 20 8 2 6 2 1 4 6 Germany 44 2 20 5 1 1 3 5 Ireland 12 8 30 Spain 1 23 19 1 1 1 France 8 8 31 6 4 4 Italy 7 2 17 23 1 1 6 Hungary 6 1 16 2 14 1 4 Netherlands 32 2 25 1 18 1 11 Poland 5 18 4 16 10 Sweden 3 2 1 3 2 2 1 7 9 United Kingdom 3 1 7 57 Source: European Audiovisual Observatory MAVISE database extract informitv analysis […] Table 2.25 Comparison of international, national or regional channels available versus channels established in 11 sample EU countries (2015) Channels established in country Viewing country DK DE IE ES FR IT HU NL PL SE UK Denmark 44 17 2 11 3 11 2 46 96 Germany 316 3 32 10 1 7 6 51 73  Ireland 26 13 5 436 Spain 1 201 28 1 1 1 33 France 34 10 352 14 24 6 2 90 Italy 7 2 23 348 2 2 44 Hungary 14 2 35 2 44 10 1 139 Netherlands 65 2 45 2 165 2 94 Poland 11 34 12 16 122 114 Sweden 3 3 1 18 3 2 11 2 127 134 United Kingdom 5 1 14 1 10 617 Source: European Audiovisual Observatory MAVISE database extract informitv analysis 74 Clearing underlying rights for TV programmes: examples In their daily operations, TV broadcasters face significant transaction costs related to the clearance of underlying rights for their programmes. A number of rights and time-line to clear them depend on the types of the programme. As the below examples demonstrate, one episode of series produced by a broadcaster may include up to 100 underlying rights. Other types of programmes (e.g. documentaries, cultural programmes, entertainment programmes) may require clearing a smaller but still significant number of underlying rights. An example of BBC TV series Doctor Who shows that more than 80 contributions per episode needed to be cleared151: The table below shows the number of underlying contributor rights usually included in a single episode of Doctor Who archives. […] Average number of contributions per episode Type of contribution Average number of contributions per episode Music tracks+ 2 Orchestras+ 1 Specially commissioned music+ 16 Walk-ons+ 14 Actors+ 15 Supporting or Additional Dialogue artists+ 12 Directors+ 1 Script* 1-2 Character format* 2+ Show runner* 1 Literary extracts* 1 Photographic stills* 23 + Collective body with mandate * Individual contract binding to third party group required (not retrospective) In 2007-2008, the BBC issued 305,000 contracts to contributors for in-house programming alone, and each week some 250,000 items of music are reported to the music collecting societies. In ZDF (Germany) experience, a single 30 minutes episode of a TV series can generally involve up to 100 contributions and right holders (actors, musicians, composer, phonogram industry etc.). ZDF concludes more than 70 000 contracts a year.152 ORF (Austria) examples: 153  For the “Documentary on the History of the National Anthem”, the rights on 26 clips had to be cleared, including 17 external license holders to be dealt with.  Culture programmes: o for the programme “Kultur Montag”, in average 4-6 rights holders have to be dealt with; 151 See http://webarchive.nationalarchives.gov.uk/20140603093549/http://www.ipo.gov.uk/ipreview-c4e- sub-bbc.pdf 152 Source: EBU. 153 Source: EBU. 75  o For the documentary “Künstlerportait” 32 rights to clear (13 clips).  Family/entertainment programmes: for the programme “Willkommen Österreich” (comedy talk) 12 rights to clear (7 clips). In addition music rights have to be cleared. These are cleared with CMOs. ORF has framework agreements with them, which run over several years. TVP (Poland) example In one episode of very popular TVP serial „M jak miłość” („L like love”) 18 underlying rights of contributors to the episode (director, author of screenplay, scenographer, 2 composers, operator of camera, cutter, 2 sound operators, 8 actors, 2 music performers) and 24 pre- existing works were embedded (mainly music). EU radio markets Radio in the EU is normally free-to-air, transmitted via wire or wireless means. Radio programmes typically consists of talk, stories, entertainment, news, music and surprises. 80% of the EU population listens to radio for at least 2 to 3 hours a day – and mostly to local or regional programmes, as shown by national audience measurement. There are 4 to 5 radio receivers in every household in Europe.154 On average, 6 to 8% of total listening of radio is done online in Europe.155 There is a large number of radios in Europe. For example, the Association of European Radios (AER) represents the interests of over 4,500 private/commercial radio stations across the EU28 and in Switzerland. As in the TV market, radios can be divided into commercial and public radios. Some radios function on regional or local scale, while others are national or offer services beyond a Member State. For example, in 2014 France there were 800 commercial radios and 7 networks of public radios; in the UK there were 344 commercial radios and 57 public radios: the BBC had 11 national stations, 6 in the nations and 40 local stations (as well as BBC World Service); in Lithuania, there were 18 national commercial radios, 10 regional and 21 local commercial radios, 3 public radios (total 52 radios); in Spain there were 3040 radios, of which 1724 public. 156 Radio broadcasters acquire licences for protected content, mostly for music rights from CMOs. They also acquire licences for using e.g. drama works and literature works. For the use of extracts from works (such as books, science works, etc) in their programmes, radio broadcasters often rely on exceptions and limitations, e.g. quotation. The detailed analysis of the radio market in ten EU Member States is presented below, showing the number of radios, turnover and advertisement revenues per Member State as well as advertisement market shares of radio, TV and online. 154 Source: AER press release, 2014. 155 Source: AER reply to the public consultation on the SatCab review, 2015. 156 Source: AER. 76  Number of radio stations in ten Member States157 Number of Austria Denmark Finland France Germany Ireland Italy Lithuania Spain UK radio stations Total 45 Approximately 70 73 800 274 34 780 49 1'575 340 (FM 238, AM 56 commercial http://www.zilio and DAB 48) in 2014 nis.lt/rtv/px.php? R National 1 6 (5 on FM and 12 N/A 18 2 14 18 N/A N/A commercial DAB, 1 on FM) Regional 44 50 See below N/A 74 4 (also have 1 No distinction 10 N/A N/A commercial multicity between regional licensed radio and local station) Local 0 See above 61 (incl. local N/A 182 27 766 21 N/A N/A commercial and regional radios total) Public 12: 4 FM / DAB 7 Radio France is 70 terrestrial 10 5 3 1'346 57 The BBC has 11 3 national national (one of divided into 7 radio (approximately national stations, 6 in 9 regional them a regional networks 100 web the nations and 40 network composed channels and local stations (and of 10 stations) loop streams) BBC World Service) Turnover and advertising revenues of radio stations and public broadcasters in ten Member States158 Radio income Austria Denmark Finland France Germany Ireland Italy Lithuania Spain UK (by category) Remarks All Euro figures are A substantial part of All Euro figures All Euro figures are calculated at a rate the data is from 2013 are calculated at a calculated at a rate 1£ of 1 DKK = rate of 1 LTL = = 1.2 € 0.134275 € 0.29 € 157 This table is based on data provided by AER; this data dates 2012/2014 (some data was updated in 2016). 158 This table is based on data provided by AER; this data dates 2012/2014 (some data was updated in 2016). 77 Annual N/A N/A 59,4 million € 680 million € In total: 4'468 No information 382 million € (2013) 6.37 million € N/A 710 million € turnover (estimate) million € [2012] national + local http://www.lrta.eu (private and Commercial commercial (without /Naujienos/Aktual commercial radios: 665 Radio Radicale - no ijos/Transliuotoju- radio stations) million € [2012] advertising income) ir-retransliuotoju- source: ZAW- pajamos-2013- Jahrbuch 2013, metais Wirtschaftliche Lage des Rundfunks in Deutschland 2012/2013 Advertising N/A Approx. 45 million € 100% It depends on the 746,11 million See above 351 million € (2013) N/A N/A 710 million € income (private company / some € [2013, net]; national + local and examples in 2013: 737,66 million comercial (without commercial Les indés Radios : € [2014, net]; Radio Radicale - no radio stations) 165 million € (all 742,79 million advertising income) activities) € [2015, net] NRJ Group: 203 source: ZAW- million € (for the Jahrbuch audio department, including radio) Next radio TV: 75 million € (for the radio department) Amount of the 2014: 589 DR receives approx. approx. 100 2012: 583 million € 2'757 million € RTE receives N /A LRT radios and N/A Licence-fee income compensation million € (for 492,824 million €, million € (Rapport d'Activités [2012] "Licence 182 million € LRT TVs receive currently: 4'327.2 public radio and TV and the regional TV2 Radio France 2012) fee" = from the 20,559 million € million € per year broadcasters ) regions 68.7835 approximately television per year receive to million € every year 2'797.96 licence fee, in accomplish million € addition to their general [2011] (ARD + being able to interest Deutschlandradi access mission o, GEZ 2011) additional funding distributed by the regulator t Total turnover N/A N/A approx. 100 650,141 million € Total income: N/A 139 million € (2013) Total income: N/A Total licence-fee of public radio million € (Rapport d'Activités 3'504 million € 5,797 million € income currently broadcasters Radio France 2012) (4'327.2 million € per Other income: year) + other income 532 million € generated (1'338.96 [2012] source: million €) = 5'666.1 Wirtsch. Lage million € des Rundfunks Source: BBC annual in Deutschland report 2011 12/13 78 Advertising 2014: 0€ No advertising 40,423 million € 214'63 million Roughly 22 29 million € 5,217 million € N/A 0 - although some BBC income of approx. 300 income allowed (Rapport d'Activités € [2012] million € Worldwide profits (187 public million € (for Radio France 2012) million € redirected to broadcasters radio and radio) TV) Total (TV, 2014: 912 561 million € per 470,7 million € N/A 8'648 million € 307 million € 2'746 million € 31,573 million € N/A 5'666.1 million € radio, online) million € year [planned for (2013) Source: BBC annual income of 2014]; report 2012/13 public 8'505 million € broadcasters [2013]; 8'525 million € [2012] source: Public broadcaster ARD, ZDF, Deutschland radio Advertising market turnover and expenditure share for TV, radio and online159 The below table shows that in the ten Member States for which data is available, radio advertisement expenditure amounts to between 2.3% (in Denmark) and 17% (in Ireland) of the total advertisement expenditure; TV advertisement expenditure amounts to between 17.66% (Denmark) to 55% (Italy). Advertising Austria Denmark Finland France Germany Ireland Italy Lithuania Spain UK market share expenditure Source Focus Media TNS Gallup N/A IREP: ZAW-Jahrbuch N/A Nielsen http://www.respubli Warc: Research http://www.ire 2013 ka.lt/lt/naujienos/li http://www.warc.com/ p.asso.fr/marc etuva/verslas/tns_lt he- _ziniasklaidos_rekl publicitaire- amos_rinka_stabili chiffres- zuojasi/,print.1 annuels.php#a Total 3'522 million € 1'681.37 1'155,4 million € 13'282 million 15'517 million € N/A 6'359.4 million € N / A (94 million € 5'570 million € N/A advertising (gross income; million € € [2012, net] = 100 (2013) (2010)) market in 2015 2015) %; for all media 15'254 million € [2013, net] = 100 % 159 This table is based on data provided by AER; this data dates 2012/2014 (some data was updated in 2016). 79 TV 28% 17.66% 22.10% 24.23% 4'038 million € 29% 55% 47% (2010) 41.60% 43.60% [2012, net] = 26.0 %; 4'125 million € [2013, net] = 27.0 % Radio 6% 2.30% 5.10% N/A (between 720 million € 17% 6.00% 8% (2010) 9.10% 5.5% 5 and 10%) [2012, net] = 4.6 %; 746 million € [2013, net] = 4.9 % Internet 7% 39.33% 24.80% 17.30% 1'079 million € 21% 7% (without 7,7% (2010) 1.30% 15.10% [2012, net] = 7.0 Search or Social) %; 1'152 million € [2013, net] = 7.6 % 80 ANNEX 6B – AVAILABILITY OF BROADCASTERS' ONLINE SERVICES ACROSS BORDERS This Annex provides data on cross-border availability of broadcasters' online services (simulcasting and catch-up-TV/radio). It contains data provided by EBU on public broadcasters' services from 14 EEA countries as well as data from the SatCab Study covering services from 11 MS (three commercial/public broadcasters' channels from each covered MS). According to the initial findings of the Commission’s e-commerce sector inquiry160, 82% of public broadcasters and 62% of commercial broadcasters covered by the sector inquiry implement at least one type of geo-blocking for their online services. The proportion of agreements requiring service providers to geo-block news (including current events) is 23% and 50% for other non-fiction TV.161 Examples of cross-border availability of broadcasters' online services162 Public broadcasters:  SVT (Sweden) geo-blocks its simulcasting TV services (they are available only in Sweden);  LTV (Lithuania) does not geo-block most of its simulcasting services, except for certain international entertainment;  Mediathek, the livestream channel of ZDF (Germany), is geo-blocked and cross-border access is allowed only to selected programmes;  BBC (UK) channels BBC1, BBC2, BBC4 online services (BBC iPlayer) are available only in the United Kingdom while BBC World News online services are available in other MS. Commercial broadcasters:  TV4 Play (Sweden) geo-blocks online simulcasting TV services except live TV news;  TV3 (Lithuania) news and own production is not geo-blocked but international entertainment programmes are geo-blocked;  RTL TV Now (Germany) makes simulcasting services available only locally while live TV News are available internationally (paid services);  ITV (UK) free online services are only available for individuals located in the United Kingdom, Channel Islands or Isle of Man, however, ITV offers ITV Essentials, a paid service which provides a selection of programmes available in 11 Member States. 160 An issues paper presenting initial findings is available at http://ec.europa.eu/competition/antitrust/ecommerce_swd_en.pdf. 161 Ibid, p. 55. 162 These examples are based on the information from the SatCab Study, information provided by EBU and own research. 81 PUBLIC SERVICE BROADCASTERS The below table provides detailed information about online services of public service broadcasters and their availability across borders for 13 EU Member States and Norway (based on information received from EBU): Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content Austria ORF public ORF1; ORF2; No. About 200 Partially- Geo blocking is Yes Partially - Only small parts ORF III programmes required due to contractual of the programmes available (culture & from the 4 obligations especially for as Video-on-Demand have information) ; ORF-TV- most of the sport-live- to be geo-blocked. The geo- ORFSport+ Channels ORF broadcasts but for all other blocked programmes can be eins, ORF2, kind of other programme from all categories. ORF III and categories as well. 5-10% is geoblocked ORF Sport + are made Percentage of geoblocked regularly content: available as - not available it depends livestream but on the program […] no entire channel. Czech Republic CT Public - CT1 -CT1- Yes - CT1- Not available -CT1- Yes (not -CT1- Not available (general) (not sports - CT Sport- not available sports news) -CT Sport- not available - CT Sport news) - CT 24- partially (no -CT Sport- Yes -CT 24- partially (no sports (Sport)s -CT Sport- sports news) (not sports news) news) - CT 24 Yes (not CT24- Yes (not (news & sports news) sports news) current affairs) CT24- Yes (not sports news) Denmark TV2 Public TV2 Yes Partially- TV 2’s own Yes Partially- Own produced DANMARK produced content, e.g. news and current affairs 82 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content news programming, and programming is not geo- some Danish content blocked. That also applies to produced for TV 2, e.g. current affairs programming documentaries, Danish commissioned by TV 2 with series (fiction), is not geo- independent Danish blocked. A number of producers. Danish programmes Information programming produced for TV 2, e.g. and other Danish entertainment, is based on programming commissioned foreign formats and is by TV 2 is not geo-blocked therefore geo-blocked to in general, but entertainment Danish ip-addresses. programming based on The same applies to foreign formats is often geo- licensed non-Danish blocked. That also applies to programme, such as sports news programming documentaries, fiction and coverage of (series), and feature films international sports events. which are also geo-blocked Danish sports events, as geo-blocking is required however, for which rights by the content providers. are licensed from Danish Furthermore, sports sports associations, are not programming – news and geo-blocked. licensed programming, in Series (fiction) particular foreign sports commissioned by TV 2 is events, is geo-blocked as generally not geo-blocked, geo-blocking is required but series licensed from by rights holders. Danish foreign licensors as well as sports events are not geo- foreign feature films are blocked. It is not possible geo-blocked. to provide a precise estimate of the percentage 83 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content of geo-blocked content, but approximately 69% of TV 2’s programme service consists of Danish language programming, which is not geo-blocked in general. However, it is not possible to say if this is the correct percentage of content that is not geo- blocked. Finland YLE Public YLE1; YLE2; Yes Partially – Yes Partially – YLE Teema; - Some of sports, - Some of sports, fiction, YLE Fem fiction, co-production, co-production, entertainment entertainment especially especially content content where music where music plays a plays a central role. central role. - About 40 percent is geo-blocked. Germany ZDF Public -ZDF main -ZDF.de: Cross-border access via the Yes– Around Partially channel http://live.ZD general livestream button 75% of the linear (General) F.de in the ZDF Mediathek programme is The most important part of Market share: (main page) to the available as catch- the ZDF main channel 12 % . -ZDFinfo.de: different ZDF channels up services. consists of news, reportage, -ZDFinfo http://live.ZD (ZDF, ZDF neo, ZDF info information programmes, (Information Finfo.de and others) is not possible consumer programmes and current since there is legal (around 40%). This is made affairs) -ZDFneo.de: insecurity whether the – wherever possible – Market share : http://live.ZD CoO applies to livestream. accessible on a cross border around 1% Fneo.de Since 28 different laws basis. 84 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content -ZDFneo have to be respected and Main problem: high number (General with YES: All 3 different provisions on the of still pictures, short audio- stronger focus channels are limitations on copyright visual material and/or sound on fiction and available as might be applicable, ZDF included/embedded. entertainment) 24/7 gives cross-border access Whereas music-rights can Market share: Livestream to the livestream only for be cleared on the basis of the around 1% individual programmes collective agreements (see items accessible through a recommendation GESAC, specific subpage of the EBU, ICMP and ECSA), ZDF Mediathek (ZDF this is not the case for the Einzelne Live Sendungen other parts included in the ‘live.zdf.de/start’). programme. Daily Practice - if not all embedded/included parts are cleared: (1) The entire programme has to be geoblocked. (2) Embedded material has to be geoblocked (black screen within a programme). (3) Embedded materials have to be changed in a post- production process before making this programme available without geoblocking. No acquired fiction – sport very restricted: German media law prescribes that 85 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content acquired feature films and acquired episodes of television series which have not been commissioned must not be offered on demand by public service broadcaster. Equally the availability of sport (events) on demand is very much restricted by media law. Commissioned production and co-production are made available wherever possible, in the case of international co-production normally only the German language version can be made available. ARD Public -Das Erste Das Erste: Das Erste: About 2-3 Das Erste: Yes Das Erste: Das Erste’s -MDR Yes programs per week cannot content is offered online as a Fernsehen be simulcasted due to catch-up service (insofar as copyright. Between 15%- the Channel has the 20% of the programmes necessary rights and the are geoblocked outside of making available is allowed Germany, amongst which: under German Media Law). - Sport content, as well Whether the content is as programmes geoblocked abroad is containing sports decided by the same criteria content used for simulcasting. - International motion pictures 86 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content - Other TV-films, for which ARD only obtained the rights for Germany - New films & series, whenever geoblocking is requested - Singular programmes due to personality rights - About 80-85% is not geoblocked, even though there might be legal uncertainty with regard to still pictures or short audio-visual materiel. MDR MDR Fernsehen: MDR Fernsehen: MDR Fernsehen: catch-up fernsehen: Everything is blocked Yes services are offered for the Yes outside of Germany content for which the because it is too expensive channel has the on demand- and too burdensome to rights. However, content is check the contractual blocked whenever required situation in each individual by the contractual situation. case Ireland RTE Public -RTE1 None are None are available outside Yes (all 3) Partially for all three (general) simulcast the island of Ireland channels; essentially the -RTE2 situation is: (general) A. fully RTE funded -RTEjr inhouse productions can be 87 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content (childrens’) available non-geo-blocked B. Programmes that are produced for RTE by independent producers where RTE the majority source of funding can be available non-geo-blocked if such availability will not have the effect of stopping the programme being sold internationally by the producer C. Programmes where RTE is not the majority funder and programming consisting of third party owned content such as sport, movies etc are geo-blocked and not available internationally. In some cases the geo-blocking is to island of Ireland and sometimes the geo-blocking is to Republic of Ireland, depending on who the UK rightsholder to the relevant programme is. Italy RAI Public -RAI UNO – Yes - fully RAI NEWS Yes- except for Partially - RAI only general RAI NEWS for provides catch-up services -RAI TRE – - partially; RAI UNO , which there is no for the programmes for general RAI TRE on line catch-up which RAI holds the rights 88 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content -RAI NEWS - services for the web, regardless if the news The programming end-user is in Italy or schedule of RAI UNO and abroad. The programmes RAI TRE are partially which are geo-blocked are available in streaming via sports/fiction/co- internet. RAI is not able to productions. apply a “selective encryption system” for those programmes which RAI does not hold the right for the distribution over the web outside the Italian territory. Programmes with limited access are mainly: sports/fiction/co- productions. The Netherlands NPO Public -NPO1, Yes - NPO1, NPO2: Yes - Partially: in principle NPO2: partially, In principle (npogemist.nl, available, but per general. geo blocked, but per catch up service programme geo blocking Largest programme geo for most can be applied. Geo audience blocking can be turned programmes of blocking mainly sports, -NPO Cultura off, if all rights are the general NPO- acquired and commissioned (cultural) available. Most channels) fiction, entertainment. NB content is geo some categories are not -NPO Best blocked, mainly: offered at all because rights (general, sports, acquired and are not available at all for drama) commissioned fiction, catch up services -NPO Nieuws entertainment. Fully […] (news). available material is a Thematic small percentage. 89 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content channels with - NPO Cultura en NPO niche Best; not available audiences - NPO Nieuws: fully available Norway NRK Public - NRK 1 Yes No, since some content Yes Partially- This is due to - NRK 2 needs to be geo-blocked copyright reasons, especially NRK 3/NRK- due to copyright reasons, regarding acquired content super and it is technically where NRK only has difficult to easily change acquired rights for Norway. from geo-blocking to no- blocking and back, all three of NRKs linear TV- channels are geo-blocked when simulcasted on Internet. Poland TVP Public -TVP1 & TVP1 and Yes – TVPInfo & TVP3 TVP makes Depending on licences and TVP2 TVP2 - no available online rights acquired. In case of (general) constant of almost all TVP productions, where -TVPinfo simulcasting. current TVP normally acquires all (information Only selected programmes (e.g. relevant rights - they are & current programmes films, series, news available in the EU. affairs) are simulcast bulletins, current Commissioned productions - -TVP3 (e.g. ESC, affairs depending on agreements. (regional some sports programmes, etc.) Third parties' content (e.g. channels) transmissions that are produced films and sports) are - if acquired by TVP in the normally not available rights permit, VOD.TVP.PL outside Poland. some official service, including state events). those broadcast on channels that TVPInfo and are not simulcast 90 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content TVP3 - yes (TVP1, TVP2) (constant and those simulcast in broadcast on TVP channels STREAM simulcast online service, (TVP3, TVPInfo). available also as mobile app.) Slovakia RTVS Public - Jednotka, Yes PaPartially - news and current Yes Partially - It is rather Dvojka (Both affairs as well as other own similar to the simulcasting, multi or commissioned programmes that are geo- genre channel programmes (information blocked for simulcasting are s, at present programmes, entertainme usually also geo-blocked RTVS nt, educational) are in for the online catch-up broadcasts general available service only two TV - acquired, sports, co- -no percentages available channels) productions and entertainment based on licence format are usually geo-blocked although it depends on the certain licence agreements - no percentages available Slovenia RTVSlovenia Public - TV SLO 1 – Yes PaPartially- the non-Slovene Yes Yes, partially – the same general with origin content is fully geo- rule as for the simulcasting emphasis on blocked, when to Slovene (streaming) news/culture/h origin only not in-house, igh level some co-production entertainment/ program (depending on the 91 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content documentary/h contract), all sports and igh quality some licensed program films and (formats acquired, series depending on the contract) -TV SLO 2 – is geo-blocked sport/leisure/re gional -TV SLO 3 – mainly news Spain RTVE Public - La1: general Yes- The -- - partially in the cases of Yes- but - partially- in the cases of - La2 cultural content La1, La2 depending on the La1, La2 & films & included in the ThThe content is geo-blocked rights. The content is geo-blocked documentarie channels wich based on the programme based on programme s is produced by categories (depending on categories (depending on the - CLAN Kids RTVE is the rights): sports, fiction rights): sports, fiction channel always (acquired), co-production. (acquired), co-production. (CLAN is available on An estimate percentage of An estimate percentage of only availab simulcasting, geo-blocked content would geo-blocked content about le " on de- but the content be about 30 % 30 % mand"). licenced by - not available in the third parties - not available in the case case of CLAN may vary of CLAN according to the agreement with the corresponding licensor. Sweden SVT public -SVT1 Yes Not available Yes Partially- Geoblocked -SVT2 content: -Barnkanalen - News & current affairs: 92 Member State Name of Type of Name and Simulcasting Simulcasting available Online catch-up Online catch-up services broadcaster broadcaster type of TV of the channel across-borders in the EU services available available across-borders in (commercial / channel (e.g. available in (fully/partially/no/NA) in the Member the EU public) news, films, the Member If partially, please (i) State (fully/partially/no/NA) cultural) State explain which content is (yes/no) If partially, please explain (yes/no) geo-blocked; (ii) provide which content is geo- an estimate percentage of blocked geo-blocked content (Childrens no Channel) - Information programmes (eg. Consumer programmes): no - Sports: yes, when acquired and has a potential demand in other countries - Fiction: acquired yes generally; commissioned or own only if based upon restricted formats - Educational: no educational programmes in catch- up services - Single programmes: yes, it happens Percentage of geo-blocked content: 42-44% SR (radio) public All SR Yes Yes- However Yes Yes – However, geoblocking channels geoblocking some major some major sports events sports events 93 AVAILABILITY OF CROSS-BORDER ONLINE SERVICES IN 11 MEMBER STATES: DATA FROM 163 THE SATCAB STUDY Table 1.1 Online services of leading broadcasters in 11 sample EU countries Country Broadcaster Type Online service Denmark DR Public DR TV TV 2 Public (subscription) TV 2 Play MTG Private TV3 Play Germany ZDF Public ZDF Mediathek ARD Public ARD Mediathek / DasErste.de RTL Private RTL TV NOW Ireland RTÉ Public RTÉ Player TV3 Private 3Player TG4 Public TG4 PLAYER Spain Mediaset Private mitele Antena 3 Private Atres Player RTVE Public RTVE A la carta France TF1 Private MyTF1 France Télévisions Public Francetvpluzz M6 Private 6play Italy RAI Public Replay TV Mediaset Private mediaset.it La 7 Private Riveldi La7 Hungary RTL Private RTLMOST TV2 Private tv2.hu Duna Public Mediaklikk Netherlands NPO Public NPO RTL Private RTLXL.NL SBS Private net5.nl Poland TVP Public TVP PL VOD TVN Private Player Polsat Private ipla Sweden SVT Public (non-commercial) SVT Play TV4 Private TV4 Play MTG Private TV3 Play United Kingdom BBC Public (non-commercial) BBC iPlayer ITV Private ITV Hub Channel 4 Public All4 Source: informitv analysis, based on broadcaster total share of viewing 163 See Section 3 of the SatCab Study for further details; in this Annex, the tables are renumbered for convenience. 94 Table 1.2 Categories of online programme availability Category Definition Not offered in country of origin Programming not apparent in the online player Available in country of origin only Programming available online in the country of origin but either not offered or not accessible from the other countries tested Available in country of origin only with exclusions Programming available online in the country of origin although some programmes were marked as being unavailable Available in country of origin only by subscription Programming promoted as available online in the country of origin on a subscription basis, which was not tested Available in some other countries Programming available online in one or more but not all of the test countries Available in some other countries with exclusions Programming available online in one or more but not all of the test countries, although some programmes are marked as being unavailable Available in some other countries by subscription Programming promoted as available online in one or more but not all of the test countries on a subscription basis, which was not tested Available across borders Programming available online in the country of origin and three other test countries without any apparent limitation Available across borders with exclusions Programming available online in the country of origin and three other test countries but some programmes were marked as being unavailable Available across borders by subscription Programming available online in the country of origin and three other test countries, although some or all programmes required a subscription, which was not tested Source: informitv analysis, based on online accessibility Table 1.3 Summary of main types of online programme availability Availability Symbol Country of origin only  Country of origin only with some exclusions  Some other countries with some exclusions  Across-borders  Across-borders with some exclusions  By subscription € Programme type not apparent in the online service - Moreover, these symbols can be combined where the analysis indicated varied results for a particular online service. For example, a combination such as o/o€ (open square slash open square euro) indicates that some programming is available free to view and some is available on a paid basis. So //€ (solid square slash open circle slash open circle euro) indicates that programming is available in the country of origin, with some programming available internationally free to view and some available internationally on subscription. 95 Table 1.4 Online availability of simulcast services from leading broadcasters in 11 sample EU countries Country Online service Live Radio Live TV Live TV News DK DR TV ●  - TV 2 Play - € ●€ TV3 Play - - - DE ZDF Mediathek -  - ARD / DasErste.de ●  ● RTL TV NOW - € ●€ IE RTÉ Player ●  ● 3Player - ◻ - TG4 PLAYER - ● - ES mitele - ● - Atres Player ● ◻/◻€ - RTVE A la carta ● ● ● FR MyTF1 -  ● Francetvpluzz - ◻ - 6play -  - IT Replay TV ●  ● mediaset.it -   Riveldi La7 - ○ ● HU RTLMOST - - - tv2.hu - - ● Mediaklikk ● ● ● NL NPO ●  ● RTLXL.NL - - ◻ net5.nl - - - PL TVP PL VOD - - - Player - € ●€ ipla - - ●€ SE SVT Play -  - TV4 Play - € ● TV3 Play - - - UK BBC iPlayer ●   ITV Hub -  - All4 -  - Source: informitv analysis, based on online accessibility 96 Table 1.5 Online availability of video-on-demand services from leading broadcasters in 11 sample EU countries (catch-up TV/radio)164 165 Country Online service News Entertainment Drama Local166 Other Local Other DK DR TV ● ● - ○ - TV 2 Play ○€ ○€  ○€ € TV3 Play - ○  -  DE ZDF Mediathek ● ● - ○  ARD / DasErste.de ● ● - ● - RTL TV NOW ● ○/◻€ - /◻€ /◻€ IE RTÉ Player ● ● - ● - 3Player ●     TG4 PLAYER ● ● - ● - ES mitele ● ○  ●  Atres Player ○€ ○ - ○€ - RTVE A la carta ● ● - ● - FR MyTF1 ● ○ -   Francetvpluzz ●  -  - 6play ● ○ -   IT Replay TV ● ○ - ○ - mediaset.it ● ● - ○ - Riveldi La7 ● ● - -  HU RTLMOST ● ● - ● - tv2.hu ● ● - ○ - Mediaklikk ● ● - - - NL NPO ● ●  ●  RTLXL.NL ● ○/◻€    net5.nl   -   PL TVP PL VOD ● ◻ - ◻ - Player    - ◻ ipla ● /○/○€ - /○/○€ - SE SVT Play ● ○ -  ○ TV4 Play ● ○ ○ ○  TV3 Play - ●  ●  UK BBC iPlayer   -  - ITV Hub  /€  /€  All4 ●  -   Source: informitv analysis, based on online accessibility 164 The SatCab Study explains concerning these data that "Individual programmes are also typically offered for access on demand, at the convenience of the user. In many cases, this is limited to a certain time after the initial broadcast. This so-called catch-up window is generally open for a period of 7, 14 or 28 days after broadcast. Other library titles may also be available for a longer period." 165 For entertainment and drama programming a distinction was made where possible between local programming that appeared to be produced in or for the local market and international programming apparently produced in another country for international distribution. 166 For entertainment and drama programming a distinction was made where possible between local programming that appeared to be produced in or for the local market and international programming apparently produced in another country for international distribution. 97  ANNEX 7 – DIGITAL RETRANSMISSIONS OF TV AND RADIO PROGRAMMES ANNEX 7A – APPLICATION OF LICENSING FACILITATION REGIMES (COLLECTIVE LICENSING) TO THE RETRANSMISSION SERVICES OTHER THAN CABLE EU Member Licensing If yes, on what Licensing If yes, on what State facilitation basis (legislation, facilitation basis (legislation, regime case-law, market regime case-law, market (collective practice)? (collective practice)? licensing) applies licensing) applies to IPTV? to other retransmission services (OTT, mobile, satellite, DTT)? MSs where licensing facilitation regimes apply to various retransmission services other than cable Denmark Yes (ECL) Legislation Yes (ECL), Legislation service neutral application Finland Yes (ECL without Legislation Yes (ECL without Legislation opt-out) opt-out), service neutral application Sweden Yes (ECL without Legislation Yes (ECL without Legislation opt-out) opt-out), service neutral application Hungary Yes Legislation, case- Yes, service Legislation, case- law neutral law application Slovakia Yes (ECL for Legislation Yes (ECL for Legislation retransmissions retransmissions over electronic over electronic communications communications networks other networks other than cable) than cable) Austria Yes Legislation, case- Yes, point to point Legislation, case- law rebroadcasting law Ireland Yes Market practice Yes, DTT Legislation Netherlands Yes Market practice Yes, DTT Market practice France Yes Market practice Yes, satellite Market practice Poland Yes Market practice Yes, satellite Market practice 98  EU Member Licensing If yes, on what Licensing If yes, on what State facilitation basis (legislation, facilitation basis (legislation, regime case-law, market regime case-law, market (collective practice)? (collective practice)? licensing) applies licensing) applies to IPTV? to other retransmission services (OTT, mobile, satellite, DTT)? MSs where licensing facilitation regimes apply to IPTV only Italy Yes Legislation No - Bulgaria Yes Legislation No - Belgium Yes Market practice No - Germany Yes Market practice No - Spain Yes Market practice No - MSs where no licensing facilitation regimes apply to the retransmission services other than cable Greece No - No - Cyprus No - No - Czech Republic No - No - Estonia No - No - Croatia No - No - Latvia No - No - Luxembourg No - No - Malta No - No - Romania No - No - UK No - No - 99 ANNEX 7B – TV CHANNELS AVAILABLE ON CABLE AND IPTV RETRANSMISSION SERVICES Comparison of international, national or regional channels available on cable services versus channels established in 11 sample EU countries (2015)167 Channels established in country Viewing country DK DE IE ES FR IT HU NL PL SE UK Denmark 24 17 1 11 2 7 1 22 74 Germany 262 3 26 8 1 5 6 45 Ireland 21 11 155 Spain 1 85 12 1 1 22 France 14 3 164 11 8 1 39 Italy Hungary 13 2 34 2 41 7 1 124 Netherlands 16 1 19 2 105 1 73 Poland 4 23 4 12 102 85 Sweden 3 3 1 9 3 2 7 2 61 70 United Kingdom 3 1 12 1 300 Source: European Audiovisual Observatory MAVISE database extract informitv analysis Comparison of international, national or regional channels available on telco (IPTV) services versus channels established in 11 sample EU countries (2015)168 Channels established in country Viewing country DK DE IE ES FR IT HU NL PL SE UK Denmark 23 14 2 5 3 7 2 19 62 Germany 253 10 5 4 4 16 Ireland 16 1 98 Spain 1 88 9 1 25 France 31 9 240 10 21 6 2 85 Italy Hungary 7 1 13 1 42 5 63 Netherlands 11 1 15 2 68 53 Poland 7 10 4 9 64 53 Sweden 3 2 1 6 2 8 2 59 57 United Kingdom 3 2 1 178 Source: European Audiovisual Observatory MAVISE database extract informitv analysis 167 SatCab Study, Table 2.27. 168 SatCab Study, Table 2.28. 100  ANNEX 8 – THE VOD MARKET AND ITS LICENSING SYSTEM ANNEX 8A – THE EUROPEAN FILM INDUSTRY WITH A SPECIAL FOCUS ON THE VOD 169 MARKET Overview The production of films can be characterised by high sunk costs at an early stage of the lifecycle (i.e. development and production stages) and great uncertainty surrounding the financial return of the film project (as it is difficult to predict the success of the film until it is actually shown in cinemas). The European film production industry is relatively fragmented and is made up of a large number of small independent production companies with the majority of them producing no more than one film per year. The supply chain is vertically disintegrated and individual parties in each stage of the supply chain are exposed to some risk and uncertainty with respect to their investments or inputs. For instance, producers and screen-writers, in the early stages of a film production, would not be guaranteed that adequate finance would be obtained to put their works into action. In recent years, however, a number of larger production companies, such as Canal Plus (France), Gaumont (France) and Sogepay (Spain), have started to adopt the Hollywood approach170, particularly in the distribution of products. European consumers tend to favour US films whereas consumption of European films varies heavily across Member States. Indeed, the EU has had a trade deficit with the US for film products for many years, reflecting the high penetration rate of American films in the EU. The market share of US films, defined in terms of cinema admissions in EU, was around 62 per cent while EU films (both domestic and non-domestic productions) only represented around 37 per cent in 2012171. As regards Video-on-Demand ('VoD')172, in a recent case study covering 75 VoD services and 16 SVoD services, it was found that European non-national films accounted only for 14.7% of the films available in the VoD catalogues and 22.8% of the SVoD catalogues173. Traditionally, a key point of consumption for both US and European films has been cinemas. Despite the significant technological changes in recent years, there is little evidence that cinemas are becoming significantly less important as a means of film consumption. Cinema 169 Large excerpts of this annex are copied from the Study on the "Remuneration of authors and performers for the use of their works and the fixations of their performances", 2015, prepared for the European Commission (CONNECT) by Europe Economics and IViR. 170 The six very large Hollywood studios opt for a vertically and horizontally integrated approach to completing the different stages of the production process, financed by complex financial instruments. In addition, they also dominate the distribution and exploitation chains with their large network and substantial resources. 171 Measured by cinema admissions. 172 According to the Study on the "Fragmentation of the single market for on-line video-on-demand services: point of view of content providers", commissioned by the European Commission (DG CONNECT) and prepared by iMinds (SMIT), 2014, "Television licensing revenues are for instance seen as significantly more valuable to rights holders than VoD licensing revenue. Some interviewed players noted that, as a result, the prices for VoD licenses are set too high by content owners, which makes it impossible to generate a return on investment". 173 On-demand audiovisual markets in the European Union - Developments 2014-2015, European Audiovisual Observatory, November 2015. Calculations based on the number of unique film titles. 101 admission numbers remain stable across the European Union: admissions amounted to 968 million in 2011 and slightly increased in 2015 with 976 million cinema admissions.174 As regards gross box office, after a decrease in 2013, revenues are now increasing again. In 2015, gross box office amounted to EUR 7 346.7 million, which represents an increase of 17% compared to revenues in 2013.175 Recent developments There have been significant developments in both the physical-format video and VoD markets during the past decade. In the early 2000s, the European video software market was shifting from video to DVD and high definition Blu-ray discs. In 2011, the estimated penetration rates of DVD and Blu-ray hardware in TV households in selected EU countries were 75.6 per cent and 3.1 per cent respectively. The introduction of VoD has changed the physical rental and sales markets dramatically. With the increasing use of VoD, consumers no longer need to rely on a specific TV broadcast time to watch their preferred films/TV programmes or wait for the delivery of a physical DVD, but can choose to watch it at any time. A range of new devices, such as laptops, tablets, smartphones and hand-held DVD players have also developed to support VoD systems so that users can play films when and where they want. As such, film distributors face some pressure to change their business models to ensure that the timeline of a film’s delivery fits the time preference of the targeted audience rather than what suits their traditional sequence of exploitation windows. The VoD market is still an emerging market The number of VoD services has increased significantly over the years and amount to around 2,000 services in Europe176. The main players include iTunes, Xbox Video, Netflix, Video Unlimited, Lovefilm, Ace Lrax, Crackle, Google play, HBO (central Europe), MUBI, VoYo etc. The majority of the film services (80%) are online while the remaining 20% operate on TV digital platforms. It is expected that the popularity of VoD services will continue in the future: by 2020, projections suggest that more than 20% of European households will have a subscription to a SVoD service177. In the meanwhile, physical medial sales and rentals are expected to fall as a result. Despite these promising figures, the VoD market is still an emerging market. Currently, revenues from theatrical exploitation largely outweigh VoD revenues. For instance, in 2013, VoD revenues amounted to €1 526 million178 which represents approximatively one fourth of cinema gross box-office over the same period. As regards the global linear television market in the European Union amounted to EUR 83.6 bn in 2013.179 174 European audiovisual observatory, World film market trends, 2016, p. 18 175 Compared to EUR 6 321.8 million in 2014 and EUR 6 273.1 million in 2013 – European audiovisual observatory, World film market trends, 2016, p. 15. 176 Data for February 2014. European Audiovisual Observatory, Study on on-demand audiovisual markets in the European Union, 2014. 177 Report 'Promoting growth, pluralism and choice: The Country of Origin principle and Europe's audiovisual sector', March 2016, p. 16. 178 The development of the European market for on-demand services, European Audiovisual Observatory, March 2015. 179 Studies from the European Audiovisual Observatory on trends on video-on-demand revenues (November 2015) and trends in linear television revenues (October 2015) 102 Between 2009 and 2012, the size of the audiovisual market in the EU has increased from EUR 28 046 523 million to EUR 35 526 810 million180.The following graph, partly covering the same period, provides a good overview of revenues of difference sources in the audiovisual sector. Evolution of EU film market revenues broken by source VoD as a means to fight piracy VoD – and more generally, legal online offer of works – is seen as one of the main solutions to fight piracy. According to a recent survey, the availability of affordable content via legal sources would be the primary reason to stop using illegal sources (almost two thirds (58%) of respondents). It is indeed estimated that 22% of Europeans181, and around one third of young Europeans182, believe that illegal download or illegal access to copyright-protected content is acceptable if there is no legal offer in their country. In countries where use of digital content from legal sources is considered as mainstream behaviour, legal sources have been on the market longer, but they are not only numerous, they also provide a broad and recent offer183. To help promoting legal offer, the EUIPO and some Member States have put in place tools to help users in finding audiovisual legal content184. In France, the CNC has developed a search engine to help finding legal offers185. Unavailability remains however an important issue. For instance, it was found that only 12,000 of the 28.000 existing French movies are available 180 The development of the European market for on-demand services, European Audiovisual Observatory, March 2015. 181 "European Citizens and Intellectual Property: perception, awareness and behaviour", 2013. European Observatory of audiovisual. 182 Respondents to Intellectual Property and Youth, Scoreboard 2016. EUIPO Survey (April 2016). 183 Intellectual Property and Youth, Scoreboard 2016. EUIPO Survey (April 2016) 184 E.g. Spain (me sientodecine.com), UK (findanyfilm.com, thecontentmap.com), France (offrelegale.fr), Poland (www.legalnakultura.pl), Netherlands (thecontentmap.nl), Italy (www.mappadeicontenuti.it), Denmark (www.sharewithcare.dk). For the EUIPO: https://euipo.europa.eu/ohimportal/en/web/observatory/where-to-buy-legally 185 Which can be accessed on the following website: http://vad.cnc.fr/ 103 online186. The HADOPI has already received almost 640 unavailability notifications from users187. The lack of availability is more stringent as regards some categories of works. For instance, despite a clear interest in that sense, the Hadopi report shows that 32% of the unavailability notifications concerned movies from between the 1950s and 1980s. A study has recently confirmed that the older a film, the smaller the number of countries on which it is available on VoD188. Exclusivity plays a limited role in the VoD market VoD platforms offer a wide variety of audiovisual works. A distinction has to be made between original content developed by platforms (e.g. House of cards by Netflix), content that is covered by an exclusive deal (mostly TV series and blockbusters) and other audiovisual works (the largest category that includes most of EU audiovisual works). For the two first categories, exclusivity is a key element destined to attract consumers and to differentiate a platform from its competitors. There is no lack of exploitation in those cases. For the third category, there is no exclusivity: works are simultaneously available on different platforms. Limited exclusivity (e.g. exclusivity granted for a few weeks) can occur, but this remains the exception (e.g. TV series). Rights are generally transferred for short-time periods. Most of the audiovisual works fall under this last category. Technical costs Technical costs can include (i) digitisation costs (however, recent works are generally already available in digital format); (ii) formatting costs (there is no uniform format; platforms request different formats); (iii) encryption costs; (iv) sub-titles costs (+/- 8 EUR per); etc. In principle, producers are the ones bearing the main costs, although some platforms also do. These costs could amount up to +/- 1,000 EUR (excluding sub-titles costs). ANNEX 8B – MAIN ACTORS IN THE AUDIO-VISUAL INDUSTRY189 Producers are a very important part of the productions process for both the film and the TV industry. A producer can either be an independent individual or may work on behalf of a studio company to develop the concept of a film and oversee the whole creation and production process of a film. There are several different types of production companies with their activities ranging from being solely concentrated on video production (film, TV show etc.) to being parts of vertically integrated organisations that are active in additional parts of the supply chain such as distribution and marketing. The European film production industry is relatively fragmented and is made up of a large number of small independent production companies with the majority of them producing no more than one film per year. 186 See 'exposé sommaire' of the French draft law amending Article L.132-27 of the Intellectual Property Code. 187 Notifications (from March 2014 to August 2015) concerning cinema and TV works consumers could not find online See the Hadopi's report, "Rapport intermédiaire sur le signalement des oeuvres introuvables", (2015). Not all works that have been notified were unavailable. 188 C. Grece, "How do films travel on VoD and in cinemas in the European Union – A comparative analysis", May 2016. This study also shows that the genre of a work has an impact on its availability on VoD platforms. 189 From the Study on the "Remuneration of authors and performers for the use of their works and the fixations of their performances", 2015, prepared for the European Commission (CONNECT) by Europe Economics and IViR. 104 The producer can sometimes act as a creator and work along with other creators to develop different parts of a film, such as the screenplay. In such cases, he would also share the right of his creation, along with other creators of the film. Besides the creation role, he would be responsible for all parts of the production, including acquiring the rights from creators and music rights from external parties and arranging finance for the production process. In principle, the rights that the producer will need to acquire from different rights holders would depend on the forms and mediums in which the producer intends to exploit the final product (e.g. online or offline). The producer will also be responsible for maximising the revenue of the completed film by securing favourable distribution and exhibition deals. Given their central role in the film making process, the producer is typically the main licensing entity of most, if not all, of the associated economic rights of the completed film product. Distributors are the entities that have the right to generate revenues from copyrighted material through releasing works to the public or managing the licensing to sub-distribution parties that are responsible for other areas of distribution (in terms of territory, language and medium). In order for distributors to be able to engage in the above activities they will need to have obtained clearance from the right holders (i.e. the producers). The combination of rights that will need to be obtained depends on the intended use. They are also responsible for the marketing of the product and often help fund the project (e.g. through pre-sales). Distributors can be established as part of a large studio company (such as StudioCanal in France) or an independent film distributor (such as Momentum Pictures in UK). Their size could vary from large international company to small local distributor specialising in certain types of films. Aggregators serve a similar function to traditional distributors but only focus on the online retail market. The aggregators operating in Europe include but are not limited to Juice, Under the Milky Way, LevelK, Do&Co Digital and the Movie Partnership. They act as a distribution outlet and maintain a network of video-on-demand platforms, through which content of film products are converted and distributed to the online service providers such as iTunes, Netflix, Google Play and Amazon Prime etc. They would also collect the revenue generated from the providers and distribute them to the right holders through the producer. Broadcasters distribute audio-visual content to their audience via terrestrial radio signals, through cable or satellite, as well as IPTV, either free-to-view or on a subscription basis. They are required to obtain the rights to broadcast the audio-visual products from the right holders. This can be done through a number of parties, including the producers, distributors, original broadcasters or the CRMOs of the right holders. Broadcasters can also undertake in-house production of TV programmes. The contractual practice in the audio-visual sector revolves around the figure of the producer. The producer tends to concentrate all economic rights in an audio-visual work, which means that he represents a ‘one-stop-shop’ for the clearance of rights. The pivotal role of the producer in today´s audio-visual contractual practice has not suffered under the structural changes brought about by digitalisation. 105 ANNEX 8C – VALUE CHAINS190: THE AUDIOVISUAL SECTOR AND DIGITAL DISTRIBUTION, AND THE VIDEO-ON-DEMAND SERVICES Value chain of video on demand services Producers Sales agents Distributors Aggregators VoD platforms 190 From "Multi-territory licencing of audiovisual works in the European Union", 2010, Study prepared for the European Commission (DG INFSO) and prepared by KEA European affairs and Mines ParisTech Cema and and the Study "New French and European film markets – Digital: a new growth driver for intra-community circulation and export?", Ernst& Young and uniFrance films, March 2015. 106 ANNEX 8D – REVENUE STREAMS IN THE VIDEO ON DEMAND (VOD) SECTOR191 For online platforms, revenues are collected where consumers pay a fee for their subscription to the online film library (SVoD) or pay per view of each film/TV programme (TVoD). Authors and performers are remunerated for the reproduction and making available rights according to their agreements with the exploiter. Three major business models are used by rights holders: - Indirect sales through a distributor: This is the most frequent model. The distributor acquires the VOD and SVOD as part of a set of bundled exploitation rights (in most cases, all of them) from the rights holder. These rights are integrated into the minimum guarantee paid by the distributor. - Sales through an aggregator: The aggregators play an intermediary role between rights holders and platforms, facilitating the access to the rights holders to VoD platforms for making available their audiovisual content. They handle the negotiations with local platforms and manage the aggregation of content and marketing materials for the producer. - Direct sales to platforms: Direct sale implies a “direct” negotiation between producers and platforms. It requires an additional commercial investment. This is a minority practice, but it is used by big studios. Direct sales mainly involve “big” films, which are self-driven and do not need a marketing intermediary to sell. ANNEX 8E – COPYRIGHT ACCOMPANYING MEASURES To ensure a wider access to audiovisual content across borders, the Copyright Communication "Towards a modern, more European copyright framework" sets an agenda of measures to accompany the legislative copyright reform. The rationale is that wider access to audiovisual works also requires investment without which the public will not be available to find them and watch them online. European works need to be available in formats and catalogues ready for use and to be understood (issue of language versions). They also need to appear prominently in the VoD services available. Otherwise the public will not watch them online. For this purpose, the Communication has identified 8 different measures, which are now being implemented through: • A structured dialogue intensified with the audiovisual industry: public conferences, closed door debates with the different segments of the audiovisual sector, structured partnership with national film funds (EFADs: European Film Agency Directors) and a continuous dialogue with stakeholders; 191 From the Study on the "Remuneration of authors and performers for the use of their works and the fixations of their performances", 2015, prepared for the European Commission (CONNECT) by Europe Economics and IViR and the Study "New French and European film markets – Digital: a new growth driver for intra-community circulation and export?", Ernst& Young and uniFrance films, March 2015. 107 • support projects/initiatives: grants proceeding from the Creative Europe programme, especially the MEDIA strand and also in some cases from H2020 and new financial instruments such as the guarantee facility. Support measures are not only a way to co-finance projects but also indirectly a policy instrument notably through the choice of conditions to which the support can be made subject. 1) Making films available in unsold territories Films in Europe are produced by a large number of small production companies and are distributed through individual exclusive distribution agreements territory per territory and are released successively in cinema, DVD, TV, VoD. In territories where no agreements have been signed with a local distributor (unsold territories), films are not released at all and are not available. (i) Ready to offer catalogue of European films For small producers, it is impossible to negotiate individual deals with VoD services in countries where their films have not been acquired by a local distributor. The reason is that, in general, VoD services do not deal on an individual basis. To address this problem, activities of aggregation have developed these last years. They directly offer to VoD services different films coming from different producers within a well curated coherent and attractive catalogue. Since 2015, the MEDIA programme supports "ready-to-offer" catalogues of European films from several producers aggregated and proposed together to VoD services: budget of 650.000 €. Next steps will be: - to monitor, showcase and share results of existing projects; - the launch of a study on the activity of aggregation of films in Europe (end 2016); - to monitor and increase the financial support to 1.3 million in 2016. (ii) Develop Licensing hubs to help licensing of works The purpose is to foster the development of online tools making possible legal access and monetisation in territories where films have not been acquired by local distributors. Currently the MEDIA programme supports a prototype of licensing hub i.e. ICE (International Cinema exchange) since 2015 (260.000 €) and H2020 supports RDI (Rights data Integration). The next steps will be to: - to help foster the deployment, step-up and scale-up of ICE or other licensing hub through financial support (via grants, guarantee facility). ICE has been showcased during the Cannes Film Festival of 2016. - to encourage the use of licensing hubs; showcase and share results; and the dialogue with the film industry through EFF. 108 2) Promote a common system of identification of films through (iii) Larger use of standard identifiers of works Unlike in the book sector where works are clearly identified by an identification number (ISBN), the audiovisual sector suffers from the absence of a common identification number, which would facilitate findability and licensing activities. Two main ISO standard identifiers coexist on the market i.e. ISAN and EIDR, which are not interoperable. The envisaged action is to promote either the use of a common identification system or the interoperability between the existing ones. This discussion with stakeholders takes place in the framework of the EFF. Next steps will include (i) to assess the last state of play of standard identifiers on the market and discuss with corresponding organisations (ii) to make access to the MEDIA distribution schemes conditional to the use of solution taken. 3) Make European films more findable and prominent The visibility and prominence of European works in the VoD services available online is a key condition for reaching audiences. Following actions have this purpose: (iv) Support the development of a European aggregator The purpose of this search tool is to enable people to find more easily films they would be interested to watch online (interesting model developed in FR). The current actions are: - Discussions with EFADs on search tools developed by both public and private sectors; - Follow-up of the prototype of EU aggregator developed by the European Observatory on infringements The next steps will include (i) to agree on appropriate features and encourage MS to develop and deploy search tools; (ii) to work with the Observatory on the EU aggregator and on the toolkits for the development of national search tools; and (iii) to showcase continuous progress through the EFF (this theme was developed at the last Berlinale in February 2016). (v) Promote legal offers and the discoverability and findability of films More widely the Communication foresees an intensified discussion with the audiovisual industry on promoting legal offers and on improving discoverability of European films The Commission will support online activities (VoD services and new models of distribution) and the promotion and development of attractive offers. 109 4) Promote more efficient funding for, and use of, subtitling and dubbing supported by public funds(vi) Subtitling/dubbing is essential for cross-border circulation of European works. It is supported by public funds both at national and European level. There is a need to make the existing funds more efficient. The envisaged actions include: - to provide support through online distribution schemes (beyond support for subtitling through classic distribution scheme); - to fund a pilot project and a preparatory action for expanding the audience of specific existing cultural audiovisual media services (ARTE and VPRO) to other territories through support to subtitling; - to fund a preparatory action on how to achieve innovative cost-effective subtitling. In the meantime, the Commission will continue its on-going support actions to subtitling and increase the efficiency of the current support and the use of subtitling through a dialogue with the sector and the development of a new online tool through a preparatory action. 5) Promote new models of financing and exploitation (vii) Find ways for a more sustained exploitation of existing European films The increasing number of channels of distribution allowed by digital technology (VoD, catch- up TV, TV channels) allows to make an infinite number of films available and to enable anybody to access them online. Nevertheless, a lot of European films cannot be found online after their exploitation cycle. The Commission will maintain the Expert group on film heritage and will launch studies on distribution and the value of film heritage. (viii) Explore alternative models of financing, production and distribution in the animation sector To foster alternative models of distribution requires a holistic approach: Modes of financing have an impact on the way films are distributed as well as on the forms of collaboration between the different actors across the value chain. Animation is a specific sector. Envisaged actions include continuing the dialogue with the animation sector and studying options for fostering the scale up of their activities at EU level. 110 EUROPEAN COMMISSION Brussels, 14.9.2016 SWD(2016) 301 final PART 3/3 COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT on the modernisation of EU copyright rules Accompanying the document Proposal for a Directive of the European Parliament and of the Council on copyright in the Digital Single Market and Proposal for a Regulation of the European Parliament and of the Council laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes {COM(2016) 593} {COM(2016) 594} {SWD(2016) 302} EN EN ANNEX 9 – OUT-OF-COMMERCE WORKS IN CULTURAL HERITAGE INSTITUTIONS ..................................................................................................... 113 Annex 9A – Cultural heritage institutions in Europe, their holdings and digital collections 113 Annex 9B – Copyright and digitisation.................................................................................. 119 Annex 9C – The '20th century black hole' .............................................................................. 120 Annex 9D – Transaction costs in individual rights clearance – estimates and examples ...... 124 Annex 9E – ECL and PoR: overview, national examples and evidence of opt-out levels .... 129 Annex 9F – The existence of collective management structures by sector............................ 132 Annex 9G – Stakeholder co-operation (e.g. MoU) in the area of digitisation and making available of heritage ................................................................................................. 133 Annex 9H – Illustration of the impacts of the three considered options for OOC ................. 134 Annex 9I – Technology for rights information for digitisation purposes .............................. 136 Annex 9J – Social and economic impacts of digitisation....................................................... 137 ANNEX 10 – TEACHING ................................................................................................... 140 Annex 10A – Development of digital and online education .................................................. 140 Annex 10B – Perception of the copyright-related obstacles in education ............................. 144 Annex 10C – Compensation and Licensing schemes for educational uses ........................... 147 Annex 10D – Data on digital uses and secondary licensing income ..................................... 153 ANNEX 11 – TDM ............................................................................................................... 155 Annex 11A – The scientific publishing market: facts and figures ......................................... 155 Annex 11B – Technical aspects of tdm .................................................................................. 158 Annex 11C – TDM: the current EU legal framework ............................................................ 159 Annex 11D – Initiatives facilitating tdm in practice .............................................................. 160 Annex 11E – TDM: Published articles on TDM in the EU (2011-2016) .............................. 163 ANNEX 12 – USE OF PROTECTED CONTENT BY ONLINE SERVICES STORING AND GIVING ACCESS TO LARGE AMOUNTS OF USER UPLOADED CONTENT .............................................................................................................. 164 Annex 12A – General information on, and examples of, content identification technologies .................................................................................................................................. 164 Annex 12B –Results from the flash eurobarometer on Internet users’ preferences for accessing content online (n°437/March 2016) ......................................................... 172 ANNEX 13 – PUBLISHERS ............................................................................................... 175 Annex 13A – Aggregated data on press circulation and news publishing industry trends in EU MS ............................................................................................................................ 175 Annex 13B – Legal provisions in some EU MS national laws related to the protection of publishers ................................................................................................................. 189 Annex 13C – Main Agreements or other initiatives between online service providers and Press publishers ........................................................................................................ 193 111 Annex 13D – Data on Member States with an author-publisher split of compensation due under exceptions and limitations .............................................................................. 198 ANNEX 14 – TRANSPARENCY AND BALANCE IN THE CONTRACTS OF AUTHORS AND PERFORMERS ....................................................................... 200 Annex 14A – Examples of national legislation and soft-law ................................................. 200 Annex 14B – Examples of content of reporting statements ................................................... 212 Annex 14C – Assessment of reporting in different sectors .................................................... 213 Annex 14D – Contract adjustment mechanisms in legislation and in practice ...................... 220 ANNEX 15 – LIST OF MAIN RELEVANT DIRECTIVES RELATED TO THIS IA AND GLOSSARY .................................................................................................. 225 Annex 15A – List of main relevant directives related to this IA ........................................... 225 Annex 15B – Glossary ........................................................................................................... 225 112  ANNEX 9 – OUT-OF-COMMERCE WORKS IN CULTURAL HERITAGE INSTITUTIONS ANNEX 9A – CULTURAL HERITAGE INSTITUTIONS IN EUROPE, THEIR HOLDINGS AND DIGITAL COLLECTIONS Cultural heritage institutions in Europe Estimations of the number of cultural heritage institutions in Europe Type of institution Source: Poole189 Source: EBLIDA190 National libraries 45 sites (Council of Europe - members) Higher 10,161 sites 2013: 5,974 (23 countries) education/university 2015: 4,452 (14 countries) libraries/academic libraries (includes university and national libraries) School libraries 164,436 sites - Public libraries 205,336 sites 2013: 56,664 (25 countries) 2015: 38,262 (15 countries) Special libraries 29,089 sites - Museums 17,673 sites (EU) - No overall number for the EU or Europe could be found for archives. For ES only, a Government directory counts 36,632 archives.191 Holdings: magnitude, variety and digital collections European level Poole192 estimated that in European libraries held: Libraries  between 59 and 95 million individual book titles (excluding multiples and book series)  a total book stock of approximately 5.4 billion books (including multiples and book series)  between 1.47 to 2.36 billion pages to be digitised 189 N. Poole, "The Cost of Digitising Europe’s Cultural Heritage. A Report for the Comité des Sages of the European Commission", November 2010. 190 Surveys carried out by the European Bureau of Library, Information and Documentation Associations (EBLIDA) in 2013 and 2015. The 2013 survey covers information related to years 2011-2012 (except for one country surveyed, which provided information for 2006), covering 23 countries for academic libraries and 25 countries for public libraries (mostly EU MS). The 2015 survey covers information related to years 2013-2015, covering 14 countries for academic libraries and 15 countries for public libraries. 191 Censo-Guía de Archivos de España e Iberoamérica (last accessed 20/06/2016). 192 These figures do not distinguish between in-copyright and out-of-copyright works. N. Poole, "The Cost of Digitising Europe’s Cultural Heritage. A Report for the Comité des Sages of the European Commission", November 2010. 113   approximately 6.9 million rare books eligible for digitisation (includes pamphlets and incunabula, and excluding material that is too fragile to digitise)  about 540 million newspaper pages  about 7.23 million maps  about 8.64 million photographs In the ENUMERATE 2015 survey193 on average 62 % of library respondents (87% of national libraries) said that they collect born-digital material. Poole estimated that in 2010 European museums held: Museums  almost 75.43 million works of art  approximately 265 million man-made artefacts eligible for digitisation (excluding material that is too fragile to digitise)  350 million photographs suitable for digitisation In a NEMO survey,194 at least 58 % of museum respondents indicated that their collections included works other than "museum objects":  58 % said that they hold archival pieces and archives  56 % said that they hold library collections  44 % said that they hold audio-visual collections;  12 % said that they hold other types of works. In the ENUMERATE 2015 survey, on average 52 % of museum respondents said that they collect born-digital material. Poole estimated that in 2010 EU national archives held (estimations based on 25 national Archives archives surveyed):  more than 26.98 billion pages of archival records, of which 17.27 billion suitable for digitisation  approximately 692,908 units of microfilm  approximately 8.29 million photographs In the ENUMERATE 2015 survey, on average 68 % of archive and other record office respondents said that they collect born-digital material. Poole estimated that in 2010 EU CHIs held approximately: CHIs (in general) &  10.81 million hours of audio material other institutions  12.14 million hours of video materials  1.04 million hours of film In the ENUMERATE 2015 survey, on average 69 % of CHI respondents identifying themselves as other than libraries, museums, archives and other record offices collect born- digital material. 193 G.J. Nauta – W. van den Heuvel, DEN Foundation on behalf of Europeana/ENUMERATE, "Survey Report on Digitisation in European Cultural Heritage Institutions 2015", June 2015. 194 Network of European Museum Organisations (NEMO), "Survey on museums and Copyright", August 2015. 114 Examples at institutional level195 The following figures give an estimation of archival holdings in FI. This is a minimum estimation as it covers 17 among the main archival institutions in FI but not all of them, and information was not available for all types of works for all the surveyed institutions. It should therefore not be regarded as a precise record of these institutions holdings. For time-based works (sound recordings and living images), data was sometimes collected in terms of hours, sometimes in terms of individual items (e.g. individual phonograms). Type of work Quantity Range (smallest to largest individual collection) Documents 286,762 shelf metres 344 to 208,274 Photographs 4,559,135 units 14,000 to 1,140,545 Sound recordings 77,800 hours + 17,292 items 489 to 35,210 hours / 650 to 8,669 items Living image 8,383 hours + 4,412 items 110 to 4,050 hours / 128 to 2,684 items Posters, drawings, maps 2,182,654 items 67 to 1,753,257 Total works subject to copyright Depending on the institution, it can vary from 0.25% to 95-100% (Information provided by the national archives of FI, data refers to 2014) Data referring to each of the 17 institutions is shown in the following table. It should be noted that not some of the figures are estimations. 195 Sources are mainly CHI themselves. 115 116 Institution Figures Sources196 In 2014 the library had 10,222,000 volumes in its collection, of which 160,000 were added in that year only. Its music department holds approximately 388,000 scores, 40,000 manuscripts, 92,000 sound carriers and 164,000 between books and periodicals Website of the library on music and is the guardian of about 303 musician (Bayerische Staatsbibliothek), Bavarian State archives. The book collection of its Eastern Europe last accessed on 04/03/2016 Library (DE) department amounted to about 890,000 volumes in 2005 and acquires approximately 15,000 titles in Website of the Münchener Eastern European languages every year. Its picture DigitalisierungsZentrum, last archives include some 140,000 pictures. Its map accessed on 04/03/2016 collection includes approximately 400,000 sheets. In February 2016, the volume of its digitised objects was 629 terabytes Library of the Institute of Slavic and Baltic Philology The library has 68,175 volumes and covers books, as Website of the library last of the Eötvös well as periodicals and student dissertations. accessed on 17/06/2016 Loránd University (HU) The library holds 18 million items, equivalent to National Library of Website of the library last 140,000 linear metres of shelving, as well as 8 million Sweden accessed on 09/07/2015 hours of audio and audio-visual materials. The library estimates its holdings in between 150 and British Library, "Living 200 million items, growing of some 0.8 kilometres of Knowledge: the British Library new items every month. The Sound Archive of the 2015-2023", September 2015 library has approximately 6.5 million sound recordings, growing by approximately 4,000 a month. British Library, "Digital British Library (UK) Digital content stored in the long-term digital library Preservation Strategy 2013- system is estimated at 280 terabytes, or 11,500,000 2016", March 2013 items, including 2 billion pages of UK web content. Website of the library last This is expected to increase to approximately 5 accessed on 23/05/2016 petabytes by 2020. AT 2015-2013 national report The museum has an image database of approximately on the implementation of the Museum of Modern 9,000 objects and 130,000 images, and an online Commission Recommendation Art in Vienna collection completed in 2012 that counts 4,643 on Digitisation and Online (MUMOK, AT) objects and 9,500 images of works from the 20th and Accessibility of Cultural 21st centuries. Material and Digital Preservation The museum's collections include: R.Peters – L. Kalshoven, Fashion Museum of  a 'core' collection of approximately 25,000 "Europeana Factsheet. What the Province of garments, of which about one third is rights clearance looks like for Antwerp (MoMu, estimated to be in-copyright, one third Cultural Heritage Organisations BE) orphan, and one third in the public domain; – 10 case studies", Europeana  an archival collection of approximately 300 Factsheet, 23 June 2016 shelf metres, of which about a third is 196 Where not otherwise specified, information was provided to European Commission services via direct contacts with the national authority or institution mentioned. 117  estimated to be in copyright;  a documentation collection of approximately 50 shelf metres (including items like photos, cards, press clippings, folders and flyers) which is estimated to be in-copyright. The museum holds approximately 250,000 books and Website of the museum last journals and 6 million photographs, of which roughly accessed 17/05/2016 10-15 % is considered to be still protected by Nordic Museum R.Peters – L. Kalshoven, copyright belonging to external right holders (the (Nordiska Museet, "Europeana Factsheet. What museum does not hold the rights). Part of these SE) rights clearance looks like for collections are 7,000 press photographs of the archive Cultural Heritage Organisations of publishing house Saxon & Lindström. The – 10 case studies", Europeana museum's archival holdings amount to 4,500 shelf Factsheet, 23 June 2016 metres. R.Peters – L. Kalshoven, "Europeana Factsheet. What Victoria and Albert rights clearance looks like for Museum (UK) The museum holds more than 2.5 million objects. Cultural Heritage Organisations – 10 case studies", Europeana Factsheet, 23 June 2016 State Archive of Records amount to 11,526,000 linear metres of Information provided by the Cyprus shelving. State Archive of CY German Federal Information provided by the DE The archives hold approximately 11 million pictures. Archives Federal Archive National Archives of The archive holds 107,287 archives, and in total they Information provided by the Denmark contain 4,564,034 items (boxes or volumes) (2015). National Archive of DK R.Peters – L. Kalshoven, It is estimated that the institute's archives, which also "Europeana Factsheet. What Netherlands Institute comprise the NL public broadcasters' archive, contain rights clearance looks like for for Sound and on million hours of audio-visual material and three Cultural Heritage Organisations Vision million items of non-AV materials, including – 10 case studies", Europeana photographs. Factsheet, 23 June 2016 The film archive holds150 million metres of film, Czech National Film more than half a million photographs, over 30,000 Website of the archive last Archive posters, 134,000 items of promotional materials, in accessed 17/06/2016. addition to other archival materials and a film library. Website of the institute last accessed 18/05/2016 The collections of the institute include about 1 million R.Peters – L. Kalshoven, International printed volumes and 400 archives. They include "Europeana Factsheet. What Institute of Social 713,547 prints and drawings, 129,901 posters and rights clearance looks like for History (NL) 570, 956 photos, in addition to a range of ephemera. Cultural Heritage Organisations – 10 case studies", Europeana Factsheet, 23 June 2016 The photographic archive of the institute includes Cultural Heritage Website of the institute last more than 700,000 items. Its library holds 40,000 Institute of Spain accessed on 25/05/2016. books and more than 1,600 magazine titles. 118 Aggregators Heritage content aggregators are service organisations that collect content metadata from several CHIs so that they are available online at a single access point. According to the "Report on the Implementation of Commission Recommendation 2011/711/EU" prepared by the European Commission in 2014, 24 MS had at least one national aggregator. Aggregators can cover all domains or specific ones (e.g. written cultural heritage). Examples of cross- domain aggregators include Kulturpool in AT, the Deutsche Digitale Bibliothek in DE, Hispana in ES, Culture.fr in FR, the "Hrvatska kulturna baština" portal in HR, CulturaItalia in IT, Letonica in LT, Polona in PL. Aggregators with a European scope also exist, notably Europeana, covering all types of works and cultural heritage items, but also more specific ones like the Archives Portal Europe and he European Film Gateway. ANNEX 9B – COPYRIGHT AND DIGITISATION The term 'digitisation', particularly in the phrase 'mass digitisation' is commonly used to describe both the analogue-to-digital reproduction (or creation of 'surrogates') of original works and the making available of the digitised copy through digital networks, for instance on Internet pages, portals and aggregators (see Annex 9A for a definition of aggregators). In other words, in this meaning the term encompasses the broader "set of management and technical processes and activities by which material is selected, processed, converted from analogue to digital format, described, stored, preserved and distributed".197 'Digitisation' can however also be used to refer to the reproduction/conversion (analogue to digital) only. This is the case when digitisation is done for preservation purposes. It should be noted that digitisation does not encompass all preservation activities, nor is digitisation carried out only or mainly for preservation or intended to replace the preservation of physical objects in their original form. Digitisation involves acts that are relevant for copyright purposes as they involve certain rights, notably the reproduction and making available rights. Clearing these rights in order to carry out digitisation activities can imply varying costs. Copyright-related aspects are however only one element of digitisation activities. Particularly, the costs of digitisation are attributable to a wide set of factors that go beyond the transaction costs associated to the identification of the copyright status of a given work, copyright clearance with right holders and the payment of licence fees, where applicable. Other costs include, for example, those related to the selection of materials, scanning, the creation of metadata, ongoing preservation, maintenance of web servers, user outreach and support, training, management costs etc. According to a 2014 survey of cultural heritage institutions,198 copyright clearance is estimated to account on average for 3% of the costs of setting up a digital collection by CHIs (as part of "incidental costs" that also include analogue to digital conversions, which take up 37% of expenditure, and metadata creation, estimated at 19%). Licences account for 8% of "structural costs" (those related to the ensuing maintenance, enhancement and preservation of a digital collection). These data do not distinguish between 197 N. Poole, "The Cost of Digitising Europe’s Cultural Heritage. A Report for the Comité des Sages of the European Commission", November 2010. 198 N. Stroeker – R. Vogels, Panteia on behalf of ENUMERATE, "Survey Report on Digitisation in European Cultural Heritage Institutions 2014", June 2014. 119 works covered by copyright and those that are not, and therefore, if in-copyright collections only were considered, the relative weight of copyright-related costs could be higher. It is also estimated that, beside digitisation intended as a conversion of works from analogue to digital, the long-term preservation and the provision of access to the digitised works can cost 10 to 100 % of the initial cost of creating the digital object.199 The actual mass digitisation of European heritage and its digital preservation therefore depends on this mix of factors, where the availability of sufficient funding also plays a major role. Copyright-related issues can however still be a defining factor in the decision and/or the possibility by CHIs to proceed with digitisation projects at all, as often reported by institutional respondents in the public consultation,200 depending on their relative weight. Such relative weight can be very high when individual transactions (a single licence) are the rule and cover only one work or a limited number of works. In these cases, transaction costs can be high compared to the number of concerned works in a given collection, affecting digitisation activities.201 For example, film heritage institutions indicate that, apart from funding, the other obstacle to the digitisation of film collection is the high financial and human resources for clearing rights.202 ANNEX 9C – THE '20TH CENTURY BLACK HOLE' The term '20th century black hole' is used to designate the relatively low level of works from the 20th century in digital collections of CHIs available to the public online, if compared to works from other centuries. The notion can apply to both individual institutions and aggregators. Such situation can be the result of various factors and no direct causal relation between copyright rules and the '20th century back hole' has been clearly established. The '20th century black hole' is however referred to as a possible illustration of the difficulties CHIs have in clearing copyright as copyright-protected works are also the most recent one in collections that spans centuries (for authors' rights, in the EU copyright extends to the life of the author plus 70 years). The most recent exercise to capture the '20th century black hole' was made by the Europeana Foundation, based on a sample of 6,223,992 digital items out of the approximately 45 million present in Europeana203 at the moment of the calculation. This is illustrated in the graph and table below. 199 See N. Poole, "The Cost of Digitising Europe’s Cultural Heritage. A Report for the Comité des Sages of the European Commission", November 2010. 200 See also See R.Peters – L.Kalshoven, "What rights clearance looks like for Cultural Heritage Organisations – 10 case studies", Europeana Factsheet, 23 June 2016 for concrete examples. 201 This problem can be more acute for certain types of works (e.g. right holders are often more numerous in an audio-visual work than in a print one). 202 European Commission, "Report on the Implementation of the European Parliament and Council Recommendation on Film Heritage 2012-2013", 2014. 203 Works were selected on the basis of how reliable data on the date of creation of the original work was (as opposed to the date of creation of its digital reproduction or other temporal references that are available to institutions when providing their metadata to Europeana). See "Europeana Factsheet. The 20th Century Black Hole: How does it show up on Europeana?", September 2015 for more information on the methodology used, the overall level of accuracy and explanations on the accuracy concerns at the basis of the selection of the sample. 120 X-axis = year Y-axis = thousands of works (source of graph: Europeana.pro website - available under a CC0 licence) The distribution of the digital object in the sample across historical periods is reported in the table below: Time period Number of objects Percentage 1st half (1800-1849) 747,741 12.01% 2nd half (1850-1899) 1,656,069 26.61% 1st half (1900-1949): 2,179,361 35.02% 2nd half (1949-1999) 680,084 10.93% 21st century 960,737 15.43% At institutional level, data available on the collection of digitised books from the Bavarian State Library also indicates a relatively low number of digitised books from the 20th century compared to previous ones, as illustrated in the table below. 204 204 Data retrieved from the website of the Munich Digitization Center (MDZ) - http://www.digitale- sammlungen.de (last accessed on 21/03/2016). 121  450000 406.777 400000 Number of digital items 350000 301.943 300000 250000 200000 153.966 150000 115.750 100000 50000 10.338 22.386 600 199 328 649 540 0 Century Sound recordings and audiovisual works in digital collections The low level of audio and audio-visual works in online digital collections, compared to other works, is also often mentioned as an illustration of the under-representation of in-copyright works in those collections. This is based on the assumption that audio and audio-visual recordings are a recent production (dating back to the 20th and 19th century at the earliest). In this case too, no direct causal relation with copyright rules can be established in this Impact Assessment. According to data provided by Europeana, the representation of sound and video-based works is relatively low compared to the total in the Europeana online collection, as illustrated by the following graphs referring to Europeana in general and broken-down per MS of origin:205 Europeana 3D; 0,00% Text; 42,70% Image; 53,60% Video; 2,10% Sound; 1,60% 205 Europeana Statistics Dashboard (last accessed 20/04/2016). 122 Portugal Text, 30.60% Video, 0.40% Image; 68,70% Sound; 0,20% Germany 3D; 0,20% Text; 38,10% Image; 60,20% Video; 1,10% Sound; 0,30% Estonia Image; 44,20% Text; 51,10% Sound; Video; 3,70% 1,00% 123 ANNEX 9D – TRANSACTION COSTS IN INDIVIDUAL RIGHTS CLEARANCE – ESTIMATES AND EXAMPLES Nature and availability of data While data on the overall costs of mass digitisation, at aggregated or project level, have been available for the purposes of this impact assessment, data specific to the transaction costs related to copyright clearance in the context of preservation or mass digitisation activities is more scarce, often anecdotal or specific to particular projects or circumstances. When available, data generally refer to the time required for copyright clearance (e.g. person-hours), and less frequently to costs expressed in monetary terms. Differences apply to different cultural sectors (print, sound, cinema and audio-visual, visual arts etc.) making available data unsuitable for comparisons or aggregation. The figures provided below should therefore be used with caution, to the extent that they are samples of an identified problem and are particular to individual MS (for example as regards personnel costs, average salaries, the available administrative infrastructure available to CHIs etc.), projects and types of works. The financial equivalent of values expressed as time (e.g. person-hours) is in some cases the result of estimations made by the Commission's services for illustrative purposes, and should be treated and quoted as such. Data included below generally refers to digitisation projects whose objective is the making available of works, in addition to the creation of a digital object starting from an analogue format. They were mainly provided by CHIs. Transaction costs Individual licensing is meant here as clearing the rights of one or several works whose rights are owned by the same right holder. For the purposes of this document, rights clearance is intended as starting after that the CHI has selected the works in its collection to be digitised and made available to the public, and generally requires the following steps: 1. Determining the copyright status of the works: public domain, in-copyright or unknown copyright status. 2. Identifying and locating the right holders. 3. Contacting the right holders. 4. Asking for permission/negotiating with right holders. All these steps involve 'transaction costs', i.e. costs incurred by the parties in pursuing an economic exchange, except from the agreed price (we use the expression transaction costs even for those cases where a successful rights clearance process does not give rise to any licence fee payment but only to a right holder's authorisation to use the work). Although in the case of transactions to be agreed upon between an institution and the relevant right holders these costs are mostly attributed to the institution, the rights clearance process may also give rise to costs on the side of the right holder (e.g. to reply to institutions' requests). The costs related to steps 1 and 2 are commonly referred to as "identification" or "search" costs, while those resulting from steps 3 and 4 may be called "negotiation" or "bargaining" costs. In the case of digitisation projects by CHIs, given the nature of the works involved, these transaction costs may become high enough to erode the gains that can be obtained through the transaction, and by far exceed the value of the use for the user or the available or allocated budget. This could result in the prospective licensee not even starting the transaction process or the transaction not coming to a conclusion with transaction costs already incurred 124 becoming sunk costs (i.e. non recoverable).206 Some CHIs having resorted to individual rights clearance in tests or individual projects indicated to the Commission's services that the incurred transaction costs preclude such approach being adopted as ongoing practice. "Identification costs" can be reduced by technology-based tools that automate the diligent search that is required to establish the copyright status of a work and find its right holders (and those who can issue licences on their behalf). Existing tools, notably ARROW, have proven to be useful in reducing the time it takes to do that (see Annex 9I below). Estimations and examples Printed works A study on individual rights clearance of printed works held in the British Library207 (hereinafter: 'the BL study'), including the transaction costs associated with it, based on a sample of 140 books, resulted in an average of 4 hours per book to perform steps 1 to 4 as described above. This figure results from considering all works of the sample used in the study, even in those cases where not all the four steps were needed (e.g. because after step 1 it was clear that the work was in the public domain). Where every step had to be taken, clearance took an average of 5 hours and 56 minutes for each book. It should be noted that these calculations refer to rights clearance carried out 'manually'. The study showed that by using the ARROW system it would take approximately 5 minutes per book to obtain rights information (e.g. copyright status, in or out-of-commerce, right holders and licensing CMO, where available). An indicative estimation of the financial cost equivalent to the time spent for individual rights clearance as per the study above can be obtained by taking into account the average hourly personnel costs for the staff that is assumed to be in charge of rights clearance in relevant institutions. As the data used in the study refers to the UK, we take here as a proxy for those personnel costs the average hourly earnings for librarians, archivists and related professionals as used by the UK government in its impact assessment on a "Copyright exception for archiving and preservation", carried out in 2012.208 That figure amounted to GBP 13.21 in 2011. Assuming an uplift of 16% to account for overheads, as per the UK impact assessment, the cost per hour in the UK can be assumed for the purposes of this assessment to be GBP 15.32, which equals to approximately EUR 17.62 according to the average official exchange rate in 2011.209 Taking the BL study average as a basis (4 hours and 5 hours and 56 minutes, i.e. 5.93 hours, to clear the rights of a book, in the two scenarios), an estimate of the cost of clearing the rights of a single book in this case study can be roughly estimated to be as high as EUR 70.48 per book on average and 104.49 per book when all the steps had to be taken (4 hours or 5.93 hours x EUR 17.62). This calculation does not take into account the reduction in identification costs that can be brought about by the ARROW system (ARROW is not available in all MS and can only be used for books). 206 See Gregor Langus et alii, " Assessing the economic impacts of adapting certain limitations and exceptions to copyright and related rights in the EU", Charles River Associates, October 2013, and for its application to CHI preservation and digitisation contexts, J. Boulanger et alii, "Assessing the economic impacts of adapting certain limitations and exceptions to copyright and related rights. Analysis of specific policy options", Charles River Associates, May 2014. 207 B. Stratton, "Seeking New Landscapes. A rights clearance study in the context of mass digitisation of 140 books published between 1870 and 2010", The British Library Board, 2011. 208 UK Government, "Impact assessment on copyright exception for archiving and preservation", 2014, http://www.legislation.gov.uk/ukia/2014/157/pdfs/ukia_20140157_en.pdf 209 1.15 EUR per GBP (European Central Bank reference exchange rates). 125 The Wellcome Library in the UK engaged in a project to digitise and make available books published between 1850 and 1990 and other materials related to the history of genetics. 987 of the initial list of candidate books were made available after a rights clearance process that also identified in-commerce works (excluded from the project) and works that were out-of commerce. The overall rights clearance costs, which also included fees paid to collecting societies for support in identifying rights, were estimated at an approximate total of GBP 45,000, i.e. around GBP 46 or EUR 52.90 per each work made available.210 The Wellcome Library concluded that the type of rights clearance used in this project "is not scalable".211 Sound recordings The British Library carried out a digitisation project concerning 45,000 sound recordings for its "Sound Archive Project". The reported cost was of 4,300 person-hours.212 Visual works ANLux, the national archives of Luxembourg, engaged in a project to make available 7,263 photographs dating back to the 1950s to 1970s from the collection of a government department charged with the touristic and economic promotion of the country.213 ANLux reported214 that, except from well-known national professional photographers, the rights clearance process was very time-demanding and that it can be estimated at approximately 1.5 person-day per author (photographer), even though all right holders were Luxembourgish. This amounts in total to approximately 33 person-days for only 22 photographers involved. Taking as a reference an average archivist salary for LU of approximately EUR 43.25 per hour215 and an average of 8.16 hours worked per day216, this amounts to a total cost of approximately EUR 11,645, or EUR 529 per author, EUR 1.60 per photo in the initial set of selected photograph and 1.78 per photograph made available (ANLux ultimately made available 6,544 photos out of 7,263). More than 90% of the right holders agreed to the digitisation and making available of the works free of charge. The individual licensing of the photographs took 2-3 years on its own and the project, started originally in 2004, was completed only in 2015. ANLux reported that the making available of the online photo exhibition resulted in a peak of visits at their website, confirming an interest from the public, but given the high transaction costs they would not be likely to venture in a similar project in the lack of a collective licensing opportunity. The NL-based International Institute of Social History (IISH) asked an external service provider for an estimation of the cost of clearing rights to make available online 20,799 210 The ARROW system was used in this case (see Annex 9I for more on ARROW). 211 These costs do not include royalty payments and do not cover the effort to identify all the right holders involved. See R. Kiley, "Clearing rights to digitise books published in the 20th century: a case study prepared by the Wellcome Library, the Authors' Licensing and Collecting Society and the Publishers Licensing Society", June 2013. 212 A. Vuopala, "Assessment of the Orphan works issue and Costs for Rights Clearance", May 2010. 213 For 23 photographs, the right holder could not be identified and for the remaining 696 excluded photographs, authorisation was not received by the heirs of the respective two photographers at the time of collecting the data. 214 Information provided by ANLux to the Commission's services. 215 For the purposes of this calculation, the average hourly wage for "Technicians and associate professionals" was used as available for LU from EUROSTAT for 2010 (data for more recent years than 2010 was not available). 216 Based on EUROSTAT data on hours worked per week of full-time employment in LU for 2014 (the ANLux project was carried out in 2014-2015). 126 photos in its collection whose photographers (253 in total) were known.217 The estimation provided (excluding licence fees) was EUR 15,000, equating to approximately EUR 60 per single photographer and EUR 0.70 per picture. The IISH described this cost as seemingly "proportionate" but still "prohibitive". The IISH estimated an overall cost per picture also including further administrative work to be done after the rights clearance process to publish the photo online at approximately EUR 1.40 per picture. The photographs selected for the estimation were those of individual photographers for whom the IISH held at least 10 pictures in their collections, distributed as follows, depending on the number of photographs present in the institute's archives for each photographer: Photographs whose author is known but not necessarily the right holder Number of photos of each Number of authors Total items author 1 2,306 2,308 2 to 9 1,347 4,582 10 to 19 128 1,744 21 to 49 72 2,176 50+ 53 16,859 TOTAL 3,906 27,669 More generally, the IISH indicates that a rough estimate of for rights clearance of works in general in its holdings would be EUR 10 per item.218 The Victoria and Albert Museum (V&A) engaged in a project to digitise and make available a collection of protest posters from the 20th century. The museum estimated that it took 546 working hours / 78 working days to identify right holders, where possible, and clear rights for 1,189 posters, requiring 1,913 enquiries to individual right holders due to multiple right holders in a single poster in certain cases. At a cost of GBP 10.50 per hour, the total transaction costs are estimated at approximately GBP 5,733 or GBP 4.82 / EUR 5.69219 per work if all concerned works in the collection are considered and GBP 12.52 / EUR 14.77220 per work if only the 458 posters for which they received explicit authorisation are considered.221 Another example is a digitisation project carried out by the Wellcome Library in the UK of posters used in AIDS awareness campaigns. Even though the posters were quite recent 217 Although not necessarily the right holder. 218 Case study based on information provided by the concerned CHI as part of R.Peters – L.Kalshoven, "What rights clearance looks like for Cultural Heritage Organisations – 10 case studies", Europeana Factsheet, 23 June 2016. 219 Based on an exchange rate of 1.18 EUR per GBP (European Central Bank reference exchange rates). 220 Based on an exchange rate of 1.18 EUR per GBP (European Central Bank reference exchange rates). 221 Case study based on information provided by the concerned CHI as part of R.Peters – L.Kalshoven, "What rights clearance looks like for Cultural Heritage Organisations – 10 case studies", Europeana Factsheet, 23 June 2016. 127 (1980s), the transaction costs linked to the rights clearance concerning 1,400 works reached EUR 70,000 or an average of EUR 50 per poster.222 Audio-visual works The Netherlands Institute for Sound and Vision (NISV) cleared rights on an individual basis for a collection of 6,700 short films made by non-professionals and created between the '10s and '80s of the 20th century, with a view to making them available online on the Amateurfilm Platform (a joint initiative with two other NL archival organisations). Rights clearing was considered necessary also for those works whose rights had already been transferred to the person who had put together the collection and had donated it to the NISV, as such transfer had occurred in the pre-internet era. The rights clearance process lasted about 2 and a half years, resulting in the making available online of 1,410 of the films, by 42 authors. NISV personnel spent approximately 200 hours in legal tasks related to contracts and another 800 hours in project management and rights clearance. The total cost of such work, excluding the initial elaboration of a rights clearance strategy, is estimated at EUR 37,634, excluding other costs like a licence with a CMO for cases where films included music and costs related to the organisation of information days for right holders and other 'community building' activities. This equates to approximately EUR 26.70 per short film made available.223 Various types of works The German National Library (DNB, Deutsche National Bibliothek) made a broad estimation of the transaction costs involved in five projects for the digitisation and making available of approximately 25,800 items in its collections. These case studies refer to works that were determined to be in the public domain or, in a number of cases, in copyright but out- of-commerce, and eligible for licences also covering the rights of right holders not represented in the licensor CMO.224 The estimated transaction costs mainly refer to the determination of the public-domain/in-copyright status of works, the determination (for copyright works) of their eligibility for the above mentioned collective licensing system, and obtaining such licence from a CMO in 500 cases. They therefore don't include costs for locating and contacting individual right holders and negotiating with each of them individually, as such cost was not incurred by the DNB (the institution decided to focus on public domain works or those that can be eligible for the collective licensing system mentioned above, which is based on a presumption of representation allowing CMOs, in certain specific cases, to also issue licences on behalf of non-represented right holders). The estimated transaction cost (excluding licence fees) was EUR 7.47 on average per item made available. For works eligible to the out-of-commerce licensing mechanism, a EUR 1, one-off registration fee per item must be added; in the case at hand, this concerned 500 items. The five projects covered the following items, for a total of 25,761 of them: 222 A. Vuopala, "Assessment of the Orphan works issue and Costs for Rights Clearance", May 2010. 223 Case study based on information provided by the concerned CHI as part of R.Peters – L.Kalshoven, "What rights clearance looks like for Cultural Heritage Organisations – 10 case studies", Europeana Factsheet, 23 June 2016. 224 This is possible in DE for out-of-commerce books, journals, newspapers or other writings (and embedded images) published before 01/01/1966, based on the provision in law that CMOs responding to certain criteria are presumed to also represent the rights of right holders that are not members of the CMO for licence. See also Annex 9E. 128 Project Number of items Type of works 1 22,275 Monographs about the German Exiles dating back to the 1930-1950s 2 1,500 Objects related to the 1st World War (including monographs, brochures, flyers, posters) 3 500 Legal text-based works (mainly books and journals) dated 1900 or later 4 863 Legal texts and commentaries, dated 1900 or later 5 623 Shellac records and wax cylinders from 1900 to 1960 TOTAL 25,761 - The DBN estimated that approximately 3,000 person-hours were needed to clear rights for all these collections, at a cost of EUR 64 per person per hour (including overheads but excluding assistance from the library's internal legal department).225 Summary of results of the case studies Overview of estimated transaction costs for rights clearance based on the above case studies:  EUR 53 and 104 per single book  EUR 0.70 and EUR 1.70 per single photograph  EUR 5.70 and EUR 50 for a single poster  EUR 26.70 for a single short amateur movie  EUR 7.45 (in a project that also uses a collective licensing system allowing for licences covering the rights of non-represented right holders) and EUR 10 for mixed collections. Important notice: these figures are case-specific and are calculated using different methods and assumptions (e.g. cost per item in the initial set of works vs. cost per actual work made available, clearance work carried out in-house vs. uses of external service providers, number of steps required, reference wage values used, different criteria for the selection of initial set of works etc.). They should therefore not be compared, or considered and quoted as having general validity. ANNEX 9E – ECL AND POR: OVERVIEW, NATIONAL EXAMPLES AND EVIDENCE OF OPT-OUT LEVELS Legal mechanisms allowing for collective licences to apply to works and other subject matter of right holders who are not members of the licensing collective management organisation (CMO) 225 Case study based on information provided by the concerned CHI as part of R.Peters – L.Kalshoven, "What rights clearance looks like for Cultural Heritage Organisations – 10 case studies", Europeana Factsheet, 23 June 2016. 129 Extended Collective Licensing (ECL) and Presumptions of Representations (PoR) are legal techniques allowing for collective licences to apply to works and other subject matter of right holders who are not members of the licensing collective management organisation used in some MS for the licensing of works in high volumes and low individual value, where the conclusion of individual transactions would be too burdensome and costly in terms of transaction costs to be incurred by the parties (e.g. photocopying in schools). Under ECL mechanisms, the effects of freely negotiated licensing agreements between a user and a CMO, which represents its own members, can be extended by operation of the national law to the non-members of the CMO. This mechanism has been regularly used in some members of the European Economic Area (SE, FI, DK, NO and IS) since the 1960s, and has been more recently introduced in other EU MS. Under a PoR, a legal fiction establishes that the CMO is deemed to represent the interests and rights of non-members, pursuant to the relevant provisions under national law. In this case, the extended effect does not apply to the licence itself, but to the CMO's mandate. As a result, the CMO would be able to provide a licence which would cover works and other protected subject-matter whose rights are owned by its members, as well as by non-members, in the areas of application, to the extent, and under the conditions allowed by national law. Both mechanisms generally include some core principles to offer safeguards for the protection of the interests of the outsiders. These are: (i) Sufficient representativeness of the licensor CMO, i.e. the requirement that the negotiating CMO is representative of a significant number of right holders in a given sector or type of works and for a given use. The fulfilment of this requirement must in some cases be formally acknowledged via an authorisation by a competent public authority, as part of government authorisation procedures where foreseen in national law. (ii) Explicit possibility for non-members to continue managing their rights individually (opt-out): non-members should normally have the right to opt out of ECL or PoR schemes and measures are often foreseen, including transparency/publicity procedures, so that sufficient information is available to them. In some cases, for example in certain schemes for the use of OOC works by CHIs, concerned works have to be encoded in public registers leaving time to right holders to have them withdrawn (this gives users to have certainty on what works or other protected subject-matter are excluded from the extended effect of the licence). (iii) Equal treatment between represented and non-represented right holders: if they do not opt out, non-members are entitled to receive remuneration for the use of their works, as per the agreed licence and under the same rules that apply to members, in furtherance of the general principle of non-discrimination. In addition to these, national legislation on ECL or PoR can also include additional elements, for example as regards proof required to the CMOs of them abiding by certain governance and transparency requirements, mediation, arbitration or legal procedures intervening in case the parties disagree on the terms and conditions of the licence being negotiated, opt-outs for members etc. Examples of existing EEA Member State legislation providing for extended collective licensing or presumptions of representation for collective management organisations (CMOs) applicable to the digitisation and dissemination of out-of-commerce (OOC) works by cultural heritage institutions (CHIs) 130 The following list226 illustrates some of the existing legislation in MS providing for collective licences that also cover the rights of right holders who are not members of the CMO that issued the licence. It covers provisions that can be used for licences for the digitisation and dissemination to the general public of full OOC works by CHIs, either because they specifically cater for that use, or because they have a broader scope that encompasses it (collections of works in CHIs irrespective of whether they are OOC, or general mechanisms). Additional specificities may apply nationally that are not covered here. Key: ECL = extended collective licensing mechanism PoR = presumption of representation mechanism DK – General ECL provision (use or sector is not defined in law) which can be applied to the digitisation and dissemination of works in CHI collection, upon Government approval of the scheme. FI – Specific ECL provision for the reproduction and communication to the public, including making available, of works in the collection of archives, and libraries or museums open to the public, irrespective of whether the works are OOC. SE – Specific ECL provision covering the reproduction and making available by certain libraries and archives of works (irrespective of whether they are OOC) contained in their collections, and general ECL provision that can be used for CHIs other than libraries and archives. DE – Specific PoR provision for OOC books, journals, newspapers or other writings published before 01/01/1966 (and embedded images) in the collections of publicly accessible libraries, educational establishments, museums, archives and film or audio heritage institutions. Works can be licensed through this mechanism if they are listed in an OOC works register managed by the federal Patent and Trademark Office. Works are inserted in the list if, after an initial proposal for insertion by a cultural institution, no right holder has objected within 6 weeks. Right holders can also opt their works out at any time later through the Patent and Trademark Office or the concerned CMO. SK – ECL mechanism applicable to various uses including the reproduction, making available and distribution of OOC works. The representative CMO is considered to be the one which directly (not on the basis of reciprocal agreements with another CMO) represents the biggest number of rightholders on the territory of the Slovak Republic and is indicated in the list of CMOs administered by Ministry of Culture. This broader provision (applicable to various uses) replaced a previous one that only applied to OOC literary works in written form in the collection of CHIs. PL – Specific ECL provision for the reproduction and making available of books, newspapers, magazines or other forms of printed material published before 24/05/1994 in the collection of archives, educational institutions, universities, research institutes and cultural institutions. Works can be licensed through this mechanism if they are in a list published and administered by the Ministry of Culture and National Heritage, and no opt-out notification has been submitted by right holders to the CMO within 90 days of the registration. 226 The list is not necessarily exhaustive. 131 UK – General ECL provision. The area of application is not defined in the law but CMOs need to obtain authorisation by the Government before operating a scheme. In order to be authorised for a maximum of 5 years, CMOs must demonstrate that they have procedures in place to allow outsiders to opt-out of the scheme including before the scheme commences. HU – General ECL mechanism that can apply to OOC works. Collective management of rights is subject to registration by the government in general, ECL schemes can therefore be run only by registered CMOs. NO – Specific ECL provision applicable to archives, libraries and museums for the reproduction and making available of works in their collections (irrespective of whether they are OOC), in addition to a general ECL provision. Data on opt-out levels In a licensing mechanism based on the PoR in DE as described above for OOC books, there was no objection by any rightholder. Licensing under this mechanism started in 2015. 1,442 books were licenced in 2015 and 2,419 in 2016 so far, with 18 libraries participating. 227 In the ECL-based project Bokhylla, which allows the National Library of Norway to make available online books of Norwegian literature, including in-commerce ones, only approximately 3,700 book titles were subject of an opt-out, against 205,000 titles made available online (the first figure represents about 1.8% of the total titles made available).228 Very low opt-out rates were also reported to the UK Government by certain Scandinavian CMOs in the context of the UK's consideration of legislation introducing ECL provisions. In the same context, the Copyright Licensing Agency, which in the UK offers a blanket licence that the UK Government describes as similar to an ECL in nature, indicated that works excluded from the repertoire offered amount to 0.0007%.229 ANNEX 9F – THE EXISTENCE OF COLLECTIVE MANAGEMENT STRUCTURES BY SECTOR Licensing mechanisms as described in Annex 9E require that, for the creative sector at stake, collective management of rights is possible and that at least one collective management body exists (or can be set up) that has or can obtain the required mandates and negotiate licences for the relevant uses. It also requires well-functioning CMOs. The landscape of collective management across the EU is varied. Depending on the MS and sector, collective management is generally more or less used for exercising rights. At the current moment, CMOs can claim different levels of representativeness of entire sectors and do not necessarily hold, or are in the position to easily collect, the necessary mandates from right holders. As regards literary works (as in books, journals and other written matter), CMOs are well developed and present across Europe. They represent a large part of right holders, particularly when it comes to secondary uses, and in many cases they deal specifically with uses in and by 227 Data as of July 2016, provided to the European Commission services by DE CMO VG WORT. 228 Data as of July 2016, provided to European Commission services by Norwegian CMO Kopinor. The Bokhylla project is aimed at giving access to Norwegian works of literature from the whole of the 20th century. Its ultimate target is to make available 250,000 books by 2017. The service is only available to Norwegian IP addresses. 229 UK Government, "Impact assessment on Extended Collective Licensing "ECL", May 2012. 132 libraries (for example for reprography rights and the collection of the remuneration right attached to public library lending). It is in fact with CMOs in the literary sector that well- known existing collective licences for the digitisation and making available of CHIs holdings have been concluded.230 For musical works the CMO landscape is also well developed, with CMOs representing authors for most rights. In this sector, collective management is already common, although licences with CHIs related to heritage works are not yet frequent. As regards phonograms producers and performers in the music sector, CMOs are also well developed (often taking the form of joint producers-performers societies). They tend to deal with the management of forms of exploitation such as broadcasting, public performance and certain online uses such as simulcasting and some forms of webcasting. In the visual arts field, collective management is available, but more widespread in certain MS than in others, and more developed for fine art than photography. Visual art and photography CMOs exist for example in all Nordic countries and in NL, but are absent in some other MS. Agreements between CHIs and CMOs, for the digitisation and making available of works online have already taken place.231 In the audio-visual sector (cinematographic works and other audio-visual works such as documentaries) collective management tends to be limited to remuneration rights for authors and performers (when they exist) and cable retransmission, although in certain MS CMOs also manage for authors such forms of exploitation as broadcasting, public performance and certain online uses such as on-demand services of broadcasters. This is an area where collective management plays a limited role. The rights in other works that make up the collection of CHIs, including new types of works like videogames, are generally not managed collectively or come in shapes and forms that are not directly or obviously considered as falling within the types of works that existing CMOs manage traditionally. ANNEX 9G – STAKEHOLDER CO-OPERATION (E.G. MOU) IN THE AREA OF DIGITISATION AND MAKING AVAILABLE OF HERITAGE In addition to the appropriate collective management structure (see Annex 9F) the success of collective licensing, including with an extended effect, depends on the openness and willingness of stakeholders to support it as a mutually beneficial solution, or one that is anyway supported by right holders and users. This is why stakeholder dialogue and cooperation, leading for example to instruments like Memoranda of Understanding or model contracts, can be conducive to the establishment of the necessary conditions for collective licensing to take place and be successful. For books and learned journals, in 2011 a Memorandum of Understanding (hereinafter: 'the 2011 MoU') was agreed – under the auspices of the Commission - between right holders and libraries to facilitate the clearance of the rights through collective management. It 230 This is the case, for example, in NO (Bokhylla project between the National Library of Norway and CMO KOPINOR) and in DK (agreement with CMO COPYDAN Writing for works to be made available on the website of the Royal Library). 231 For example, an agreement with CMOs KUVASTO (visual artists) and KOPIOSTO (photographers) in FI for the online display of works held by the Finnish National Gallery. 133 acknowledges the need that MS adopt legislative measures backing collective management schemes applying to all right holders in a particular category (including non-members). It foresees that sufficient safeguards are needed in terms of CMO representativeness, opt-out clauses, transparency obligations etc. The 2011 MoU, implementation is monitored by a task force of stakeholders. This type of initiatives can: (i) act as an incentive for relevant sectors to organise themselves so that collective licences can actually be negotiated (for example by setting up the necessary collective management infrastructure and mandating CMOs as appropriate); (ii) assist in the practical negotiation and conclusion of those licences; and (iii) identify those cases and MS where there is a need for a legislative solutions to support its implementation. The "Licences for Europe" stakeholder dialogue convened by the Commission in 2013 resulted in a "Statement of Principles and Procedures for facilitating the digitisation of, access to and increased interest of European citizens in European cinematographic works".232 The statement is however relevant for individual licensing transactions and is not per se of special assistance in mass digitisation contexts. ANNEX 9H – ILLUSTRATION OF THE IMPACTS OF THE THREE CONSIDERED OPTIONS FOR OOC Illustration of the practical impacts of the baseline scenario and the considered options through an hypothetical ideal case study Baseline scenario A CHI (A) wishes to digitise and made available on its website a collection of 2,000 books related to a particular artistic movement. Another CHI (B) is willing to do the same for 1,000 self-standing drawings related to a certain scientific discipline. Both wish to give access across borders in the EU to the collections. The maximum monetary equivalent that each of these CHIs can devote to rights clearance work is EUR 10,000 (CHIs would not undertake the project at all beyond this ceiling). It is assumed that there are no orphan works in these collections and that not all the concerned right holders are represented in the relevant CMOs. It is also assumed that transaction costs for both kinds of works for the clearance of rights attached to the works are on average EUR 50 per work through individual licensing, and less than EUR 10,000 for obtaining a single licence through a single CMO for all the concerned works. If resorting to individual rights clearance A and B would spend respectively EUR 100,000 and EUR 50,000 in resources for transaction costs (licence fees, if requested by right holders, would be on top) and would therefore not proceed with the project. Under the status quo CHI A would have the possibility to see these transaction costs reduced to less than EUR 10,000 only in the small group of MS that already have provisions in their 232 The statement was signed by the Association des Cinémathèques Européennes (ACE), the Federation of European Film directors (FERA), the International Federation of Film Producers Association (FIAPF), the Society of Audiovisual Authors (SAA). 134 national laws allowing for CMOs to licence the rights of 'outsiders. CHI B would have this possibility in an even lower number of MS, i.e. those that have such mechanisms potentially covering all types of works (e.g. general ECL provisions), as in some MS these mechanisms are only available for books or print works. Outside of these cases, transaction costs would still be EUR 100,000 and EUR 50,000 respectively, and the projects would therefore not be taking place. The possibilities for right holders to obtain licensing revenues and see their works digitised and made available (and therefore discoverable again) through the projects of CHI A and B would, accordingly, only exist in the same reduced group of MS. Even in these cases, the possibilities to make the works owned by outsiders available across borders in the EU based on a licence would not be possible for either CHI A or B. Option 1 Under this option, CHI A would be able to proceed with its digitisation project, since the possibility to reduce its potentially high transaction costs (EUR 100,000) to below EUR 10,000 will be possible in all MS. CHI B would however still be in the position to see the same reduction of transaction costs (from EUR 50,000 to under EUR 10,000) only, again, in a small number of MS. In most MS the project would therefore not be undertaken. Only the right holders of the book collection held by CHI A would have a new opportunity to see their works exploited and therefore obtain licensing revenue out of it irrespective of the MS. They would also be in the position to opt out of the scheme if they wish so (for example because they would like to exploit the work themselves at one point in the future). For the drawings collection of CHI B, these opportunities would only exist in a small number of MS, as under the baseline scenario. Only CHI A would be in the position to make the books whose right holders are outsiders available across borders in the EU. For CHI B, this possibility would not even exist in those MS where transaction costs can be reduced to under the ceiling that allows for the project to be financially viable for it. Option 2 As in Option 2, CHI A would be able to proceed with its digitisation project, since the possibility to reduce its potentially high transaction costs (EUR 100,000) to below EUR 10,000 would be possible in all MS. CHI B would be able to do so in the short term in all MS where a CMO representing visual artists exists and has the right mandates, as the necessary legal framework would exist in all MS. The number of MS where such CMOs are available would possibly increase thanks to the stakeholder dialogues that the Commission would foster. In all these cases, CHI B would be in the position to negotiate licences in a way that transaction costs can be brought down to below EUR 10,000. Relevant right holders for the book collection of CHI A would have a new opportunity to see their works exploited and therefore obtain licensing revenues potentially everywhere in the EU. The right holders of the drawings in the collection of CHI B would also have the same opportunity in all MS where a suitable licensing infrastructure exists. In all these cases, right holders would be in the position to object to the use of their work if they wish so. Both CHIs A and B would be in the position to make their works whose right holders are outsiders available across borders in the EU, once a licence is concluded. 135 ANNEX 9I – TECHNOLOGY FOR RIGHTS INFORMATION FOR DIGITISATION PURPOSES The EU, the creative industries and the user community have invested in technology-related innovation projects aimed to generate tools that allow obtaining rights information relevant for digitisation projects in a quicker and more accurate way. Their objective is to allow users, typically CHIs, to obtain information such as the copyright status of a work (in or out-of- copyright), whether it is orphan, its in- or out-of-commerce status, its right holders and available licensors in a quicker and more accurate way. This enables to reduce the time it takes to perform certain of the steps that right clearance processes involve. These tools and projects are at the moment either in a research and development phase (FORWARD, see below) or already established systems (ARROW). They are not concerned with the negotiation and issuing of licences and cannot, as such, be considered solutions to that part of the transaction cost issue explained under Annexes 9D and 9E, and to the outsider problem explained therein, at least to a substantial degree. It should also be noted that their geographical spread is not yet pan-European (although it potentially is) and that they are generally suitable for medium to large-scale projects. ARROW ARROW is a digital service infrastructure that can be used to facilitate libraries and other users in their diligent search for right information related to text-based works that are to be included in digitisation programmes. The ARROW rights information infrastructure (RII) links to and queries a network of data sources233 and can deliver, in automated form, relevant information, including the copyright status of a given work (in or out-of copyright), its orphan work status, whether it is in- or out of commerce, its right holders, up to whether a collecting society can issue licences for the concerned work. The infrastructure, born out of projects financed by the Competitiveness and innovation framework programme of the EU, was at the time the relevant projects ended available in 9 MS where the system is completely implemented, and at an advanced implementation stage in 7 additional MS.234 The ARROW system can be adapted to medium to large digitisation projects. FORWARD project The FORWARD project,235 also funded by the Competitiveness and innovation framework programme of the European Union, aims to create a system for audiovisual content, particularly in the context of film heritage, and implement this system by linking to different rights information sources within a single infrastructure. The FORWARD system aims at significantly reducing the high transaction costs associated to rights clearance, relying on existing rights information sources; where they do not exist or are not available, cerain data might still need to be searched manually by users. Once in place, the system would allow users to determine the copyright status of audiovisual works and whether they are orphan works. The system furthermore will log all requests and subsequently create a database of film rights. 233 Including library catalogues, Books in Print (BIP) databases and Reproduction Rights Organisations (RRO) repertoire. 234 ARROW and ARROW Plus website (http://www.arrow-net.eu/) last accessed on 16/06/2016. 235 http://project-forward.eu. 136 ANNEX 9J – SOCIAL AND ECONOMIC IMPACTS OF DIGITISATION236 As a relatively recent phenomenon, the actual social and economic impact of digitisation237 has not been conclusively studied and quantitative conclusions are hard to be drawn, particularly at EU level. The cultural heritage community and scholars that investigate digitisation as a research subject acknowledge that better evidence and analysis of impact is needed than is currently available, as opposed to a pure focus on outputs (e.g. number of digitised items, website visits, app use). They also often insist that such impact needs to be defined by indicators of value that are not uniquely economic.238 Efforts are being made to that end, starting from the elaboration of appropriate assessment frameworks,239 notably in the context of Europeana and its professional network.240 This section includes the information that it was possible to collect on the impact of digitisation as considered reasonable for the purposes of this impact assessment. The areas that are generally accepted as being affected the impacts of digitisation from a societal end economic point of view include the following: Public enjoyment, participation in society and community building Digitisation provides for new opportunities for individual members of the public or groups to engage with their heritage, for pure entertainment, personal study or research (e.g. on family history or local identities). Digital resources can also reinforce the sense of belonging to communities of all sizes and can be particularly important for geographically dispersed ones. The possibility to access heritage at a distance and under new formats can be crucial for the social inclusion of disadvantaged groups (e.g. people with disabilities, people that do not speak certain languages, people who live away from cultural institutions).241 This kind of impact is frequently demonstrated at disaggregate level, through case studies or anecdotal evidence. A study carried out to determine the social economic value of continued investment in Europeana in 2015-2020 has however estimated the economic value of time spent on Europeana by the general public as ranging from EUR 1.5 to 2.2 million.242 The value or 236 Considerations made here are valid for the digitisation of digital heritage irrespective of the copyright status of the works considered. 237 The term 'digitisation' refers here to the digitisation of cultural heritage, as opposed to broader or other meanings, and is used both to refer to the creation of digital equivalents of works in analogue formats, and to this operation associated to the broader making available of the work thanks to such conversion. Although most of the impacts associated to 'digitisation' inherently refer to the second meaning, some of the considerations made in this section are also applicable to the first meaning, notably when digitisation has a preservation objective. 238 See for example S. Tanner, "Measuring the Impact of Digital Resources. The Balanced Value Impact Model", King's Collece London, October 2012 and "Europeana Strategy 2015-2020, Impact". 239 See notably the Balanced Value Impact Model which, drawing from different impact assessment practices currently available, provides an impact assessment model specifically geared towards the benefits of digitisation and digital resources. The focus is broader than cultural heritage, as it also encompasses the academic and cultural industries sector. The model is presented in S. Tanner, "Measuring the Impact of Digital Resources. The Balanced Value Impact Model", King's Collece London, October 2012. 240 Understanding impact is one of the pillars of Europeana's 2015-2020 strategy. 241 These and other aspects are explored more in depth, with a UK focus, in S. Tanner and M. Deegan, "Inspiring Research, Inspiring Scholarship: The Value and Impact of Digitised Resources for Learning, Teaching, Research and Enjoyment", JISC, 2011. 242 Depending on more optimistic or pessimistic scenarios. The study aimed to measure the social and economic benefits of Europeana as a digital service infrastructure as such, based on a number of assumptions, rather than the impact of the digitisation and making available of cultural heritage per se. 137 effects of digitised resources from this perspective is sometimes described by expressions like 'existence and/or prestige value', 'community value', 'inheritance/bequest value',243 'usage value', 'option value', 'social value'.244 Education and learning Digitised resources add to the sources that can be used in teaching and in learning environments more broadly. It is considered that digitised resources can open new perspectives to teaching (e.g. it can become a more exploratory or active process). Digitised heritage makes it easier to use audio and video materials and to combine formats in teaching environments, including in new e-learning tools. Scientific research and particularly research quality The availability of digitised heritage online allows new areas of research as richer research content becomes available in formats that can be analysed with newer techniques and under different perspectives. It is also generally understood that digitisation helps researcher focus less on data collection than on its analysis (for example because finding relevant terms or data in a single document does not require reading the whole document). In general, digitisation makes research on heritage materials more efficient, for example because it allows the immediate comparison of related documents that are physically held in dispersed collections (through 'virtual reunification'). Direct economic opportunity In addition to the 'indirect' economic impact deriving from the social, educational and research impacts indicated above, the direct economic benefits of digitisation can generally be referred to two main areas:  Impact on the cultural industries. Digitisation makes works discoverable again. When works are in copyright, digitisation can generate new revenue opportunities for concerned right holders, particularly when works are out-of-commerce and therefore no actual exploitation occurs otherwise. It occurs for example that old footage held by film heritage institutions is used for news reporting or in new film productions. Through its preservation potential, digitisation makes the life of works, and therefore this new exploitation potential, last longer. On the other end of the chain, digitisation helps cultural industries wanting to re-use previous material in discovering it in easier way, reducing their search costs and providing broader choice. These effects are enhanced by the presence of aggregators like Europeana and are typically associated to the notion of 'long tail'.  Impact on other industries. The Comité de sages charged by the European Commission in 2010 to reflect on how to foster digitisation, online accessibility and However, given the mission of Europeana, we consider these benefits to be illustrative of the latter as well, with the exception of the calculations the study made of the cost savings benefiting to cultural heritage institutions that use Europeana as an infrastructure. The study concludes that the most significant impacts that can be quantified are these savings (estimations range from EUR 14.2 to 22.1 million depending on scenarios) and the potential impact on tourism as an economic activity (see main text below). It also states that welfare effects are associated to the creative industries, education and research but could not be measured in a significant way. See various authors, "The value of Europeana", September 2013. 243 See S. Tanner, "Measuring the Impact of Digital Resources. The Balanced Value Impact Model", King's College London, October 2012 and "Europeana Strategy 2015-2020, Impact". 244 See various authors, "The value of Europeana", September 2013. 138  preservation of cultural heritage in Europe identified three main areas where digitisation can boost employment and growth:245 1. Economic activity directly related to digitisation practices itself. This includes digitisation services, to which digitisation activities can be outsourced, and the production of the related machinery and software. The Report indicates that the process of digitisation, irrespective of its level of sophistication, is labour intensive and therefore a potential job creator. 2. Services and products emerging from digitised cultural content as a 'raw material'. Tourism, education and new technologies (for example mobile applications) are singled out as the areas where this effect could be more strongly felt. This area can partly overlap with the impact on cultural industries described above. The study on the social economic value of continued investment in Europeana in 2015-2020 calculated the potential economic benefit on tourism as ranging from EUR 43.9 to 68.3 million.246 One particular area where economic benefits derive from the digitisation of heritage are festivals. It is for example estimated that that the city of Bologna benefited from more than EUR 1 million from the 2013 edition of its film heritage event "Il Cinema Ritrovato".247 3. Economic activity related to the storage, preservation and processing of digital material. Environmental benefits It is also generally assumed that the ability for researchers, the general public and end-users in general to access cultural heritage resources at a distance brings about environmental benefits deriving from reduced travel and the related environmental impact. 245 E. Niggemann, J. De Decker, M. Lévy, "The new Renaissance. Report of the "Comité des sages", 10 January 2011. 246 Depending on more optimistic or pessimistic scenarios. See various authors, "The value of Europeana", September 2013. 247 European Commission, "Report on the Implementation of the European Parliament and Council Recommendation on Film Heritage 2012-2013", 2014. 139  ANNEX 10 – TEACHING ANNEX 10A – DEVELOPMENT OF DIGITAL AND ONLINE EDUCATION Use of digital works by educators and learners (at all education levels) The graph below illustrates the trends in certain MS as to the use of digital and non-digital works by educators and learners. Both (digital and non-digital) types of works remain important, even if learners tend to slightly favour the use of digital works. Data come from an online survey of learners and educators carried out in 2015 (more than 2000 respondents from 9 MS). Source: Study 'Assessment of the impact of the European copyright framework on digitally-supported education and training practices' Balance of the use of digital and non-digital educational works among educators and learners 50 Learners 40 Educators 30 20 10 0 All countries Czech Finland France Germany Italy Poland Hungary Spain United Other -10 (aggregate) Republic Kingdom countries -20 -30 -40 -50 The columns represent median numbers of learners' and educators' choices on a scale between -50, which stands for "I use only non-digital works" and 50, which stands for "I use only digital works" Use of digital resources in secondary education The graphs below illustrate the use of digital tools and resources in schools in 2011/2012. It shows for example that digital books or textbooks were used at least once a week by 33% of students in lower secondary schools (grade 8) and by 23% of students in upper secondary school (grade 11). The data is based on a survey of students, teachers and head teachers realised in 2011/2012 (190.000 responses). Source: 'Survey of Schools: ICT in Education: benchmarking access, use and attitudes to technology in Europe’s schools, Final study report, February 2013248 248 https://ec.europa.eu/digital-agenda/sites/digital-agenda/files/KK-31-13-401-EN-N.pdf 140 E-learning higher education The figures below represent higher education institutions' replies to the 2013 survey on e- learning carried out by the European Universities Association on e-learning (249 participating higher education institutions). Main findings:  82% of institutions indicated that they offer online courses  In 40% of the institutions at least half of the students are engaged in e-learning  85% of institutions indicated that they use digital courseware and 81% online repositories of educational material (at least in some faculties).  50% of institutions indicated that they offer a personalised study portal to their students. Source: 'E-learning in European higher education institutions, results of a mapping survey conducted in October-December 2013', European University Association249 249 http://www.eua.be/Libraries/publication/e-learning_survey.pdf?sfvrsn=2 141 142 143 ANNEX 10B – PERCEPTION OF THE COPYRIGHT-RELATED OBSTACLES IN EDUCATION Source: Study 'Assessment of the impact of the European copyright framework on digitally-supported education and training practices', Perceptions of copyright-related obstacles and consequences on teaching activities The figures presented below enable to identify the types of copyright-related restrictions encountered by educators and learners and the consequences on the use of illustrative content in teaching activities. Data come from an online survey of learners and educators carried out in 2015 (more than 2000 respondents from 9 MS). The obstacles most frequently reported by educators are related to legal uncertainty (34% of educators), cost of the licences (31%) and technological protection measures (31%). In most cases, educators facing these problems chose not to use protected content and/or to look for alternatives. Rates of reported restrictions with educational context The impact of obstacles on activities of educators and learners 144 Experience related to the access to and quality of protected content in digital education The following figures are based on a different online survey carried out in 2015 among stakeholders active the field of copyright in digitally supported education (about 500 respondents in 28 MS and Iceland, Norway, Lichtenstein), including both right holders and users and their representatives.250 Users are rather critical regarding the access to protected works (about 62% of users finding it difficult to access and use protected works), but are more positive about the quality of these works (54% of users considering the quality of protected works is high). More than 60% of users find it difficult to access and use protected works Is it easy to obtain and use copyrighted works in digital education in your country? 100.00% 7.70% 90.00% 80.00% 50.50% 48.80% 46.20% 46.70% 55.90% 55.60% 54.50% 70.00% 61.70% 64.30% 69.20% 60.00% 75.00% 79.50% 50.00% 92.30% 40.00% 30.00% 49.50% 51.20% 53.80% 53.30% 44.10% 44.40% 45.50% 20.00% 38.30% 35.70% 30.80% 10.00% 25.00% 20.50% 0.00% All users of All copyright Educational Educational Educational Libraries and Research Government / Social partners Civil society Collective Authors Others copyrighted holders institutions institutions businesses archives centres and public organisations management works (For-profit) (non-profit) including think tanks authority active in the organisations publishers active in the field of digitally field of digitally supported supported education education Yes, it is easy to obtain and use copyrighted works in digital education in my country No, it is difficult to obtain and use copyrighted works in digital education in my country Is the quality of copyrighted woks available for digital education in you country high? 100.00% 90.00% 25.00% 37.30% 33.30% 34.10% 80.00% 40.60% 41.70% 45.90% 44.40% 46.90% 51.00% 50.00% 70.00% 63.60% 66.70% 60.00% 50.00% 40.00% 75.00% 62.70% 66.70% 65.90% 30.00% 59.40% 58.30% 54.10% 55.60% 53.10% 49.00% 50.00% 20.00% 36.40% 33.30% 10.00% 0.00% All users of All copyright Educational Educational Educational Libraries and Research centres Government / Social partners Civil society Collective Authors Others copyrighted holders institutions (For- institutions (non- businesses archives and think tanks public authority organisations management works profit) profit) including active in the field active in the field organisations publishers of digitally of digitally supported supported education education Yes, the quality of copyrighted works available for digital education in my country high No, the quality of copyrighted works available for digital education in my country low Identification of cross-border problems In addition to the lack of information on copyright rules in other countries, users report problems related to differences between national exceptions and to the limited scope of the licences. 250 Most of the answers came from representatives of non-profit educational institutions (31.8 %), libraries and archives (12.3 %), governments/public authorities (10.4 %), educational businesses (10.4 %), authors (8.7 %) and collective management institutions (8.5 %). 145 Cross-border related problems in the field of digitally supported education encountered by users of works and their representatives Impossibility to use certain works across borders due to technical protection measures 10,6% High cost of using copyrighted works across borders 9,2% It is not possible in practice to have a licence for each country in which learners are located 11,4% The exceptions for uses in the context of education differ from one country to another 17,5% The licences do not cover cross-border uses 14,1% Lack of information on how to deal with copyright laws in different countries 21,8% None of the above 5,6% 0,0% 5,0% 10,0% 15,0% 20,0% 25,0% Perception of open licence works Table 1: Popularity of open license works Users of copyrighted works Copyright holders and their and their representatives representatives Agree Disagree Agree Disagree (Strongly (Strongly (Strongly (Strongly Agree) Disagree) Agree) Disagree) Open license materials are used in 66.8 % 14.9 % 58.1 % 18.8 % education (28.1 %) (3.4 %) (23.9 %) (5.1 %) Open license materials can fully 27.4 % 47.3 % 21.7 % 59.0 % cover the educational needs of the (9.1 %) (20.4 %) (7.2 %) (32.5 %) users Users of educational works use 36.5 % 29.0 % 24.3 % 36.8 % more open license works than (11.8 %) (11.3 %) (10.8 %) (18.1 %) licensed works Open license works are used more 84.8 % 6.0 % 85.7 % 7.2 % often mainly because they are freely (51.5 %) (1.5 %) (51.8 %) (1.8 %) available Licensed works are used more because they offer better 54.6 % 30.9 % 66.6 % 28.3 % quality/variety than open license (18.2 %) (16.4 %) (38.3 %) (15.0 %) alternatives Licensed materials are used more because the users of educational 52.7 % 32.7 % 32.8 % 54.1 % materials and tools are not (30.9 %) (14.5 %) (23.0 %) (31.1 %) sufficiently aware about open license works. Licensed materials are used more mostly because there are collective licencing agreements made (by the 36.6 % 34.6 % 36.1 % 29.6 % government or educational (9.1 %) (18.2 %) (16.4 %) (14.8 %) institutions) with certain copyright holders. Source: stakeholders’ survey. 146 ANNEX 10C – COMPENSATION AND LICENSING SCHEMES FOR EDUCATIONAL USES The use of protected content for teaching purposes is allowed under different types of agreements, compensation or licensing schemes in MS:  In some cases, these agreements are directly linked to the teaching exception and their purpose is mainly to organise the compensation of right holders, where this is required in national laws (FR, DE, ES). Licensing schemes are also frequently used in those countries to complement the exception (allowing for additional uses, e.g. textbooks in FR and DE).  In other MS (UK, IE), licensing schemes prevail over the teaching exception.  Finally, certain MS do not have a teaching exception in their law but foresee extended collective licensing (ECL) for educational uses (DK, FI, SE). This annex presents the main features of these compensation/licensing schemes in certain MS. Licensing/compensation schemes implementing and/or complementing the teaching exception FRANCE Legislation The teaching exception in France applies to uses in the digital learning environment, to the extent that access to protected content is limited to teachers and students. The exception allows the use of extracts of works only and does not apply to resources specifically intended for education (e.g. textbooks) and to sheet music. The French legislation foresees an obligation of compensation for right holders. Agreements/licences The Ministry of Education and Higher Education concluded a series of agreements with CMOs in order to apply the teaching exception and organise the compensation required by law as well as to complement the exception by covering additional uses and works (e.g. use of textbooks). These agreements apply to all educational establishments (primary, secondary, higher education). They are based on voluntary collective licensing and are organised by sector and types of works, as illustrated in the table below. Sector/works CMO Scope / Permitted uses Compensation / Remuneration Print works CFC, Works covered Remuneration to CFC (incl. works of AVA, The agreement covers works from more than 2000 (including for SEAM visual arts and SEAM publishers and pictures from more than 100000 and SACD) and AVA: print music)251 authors. Textbooks and sheet music, which are 1,700,000 € by year excluded from the scope of the teaching exception, for 2014-2015 are covered by this agreement. covering primary, secondary and higher The CFC website offers a search engine allowing education (1,437,000 educational establishments to identify the publishers, to CFC and 263,000 to newspapers and authors (in the case of pictures) AVA). This covers 251 2014 Memorandum of Understanding on use of books, published musical works, periodical publications, works of visual art for the purpose of illustrating teaching or research activities See: http://eduscol.education.fr/numerique/textes/reglementaires/aspects-juridiques/droit-auteur 147  covered by the agreement. only digital uses, allowed under the Digital and online uses exception The agreement allows the reproduction and making (compensation) + available of extracts of works through digital means additional uses in the classroom or through online means, via a (remuneration for secure electronic network (intranet/VLE) or via email exclusive rights). to the extent it remains limited to teachers and pupils involved in the teaching activities. The agreement does not cover the use of digital textbooks, unless these uses are explicitly allowed by the publishers. Extent of copying The agreement allows the use of extracts of works only (no quantitative limitation), except in the case of short works such as poems or visual art works for which entire works can be used. The notion of "extract" is defined only for works which are not covered by the teaching exception in France, i.e. textbooks (e.g. max 4 consecutive pages and max 10% of a book) and sheet music (max 3 consecutive pages and max 10% of the work). Cross-border uses: the agreement does not include any reference to cross-border uses but allows uses in the context of distance learning (CNED). AV and PROCIR The agreement allows to show (in the teaching Remuneration to cinematographic EP context) an entire film or documentary only if it is a PROCIREP: 150,000€ works252 recording of a broadcast (from free TV) and to use by year extracts of DVDs/ VODs (including the possibility to make these extracts available on secure electronic networks, up to 6 min). For using entire films, educational establishments must ask the authorisation to the right holders. The agreement excludes recreational uses. Musical works253 SACEM The agreement allows to perform or listen to an entire Remuneration to work in the classroom and to make extracts available SACEM: 150,000€ by on the intranet of educational establishments (max. year 30s). GERMANY Legislation The teaching exception in Germany applies to uses in the digital learning environment, to the extent that access to protected content is limited to those taking part to teaching activities. The exception allows the use of limited parts of works or small scale works and does not apply to resources specifically intended for schools (e.g. textbooks) and to recently released cinematographic works. The German legislation foresees an obligation of compensation for right holders. 252 2009 Agreement on the use of cinematographic and audiovisual works for the purpose of illustrating teaching or research activities ; see: http://procirep.fr/IMG/pdf/Accord_Education_Nationale_2009.pdf 253 2009 Agreement on the live interpretation of musical works, the use of audio recording of musical works and the use of video-music for the purpose of illustrating teaching or research activities; see: http://www.education.gouv.fr/cid50450/menj0901121x.html 148 Agreement/ licences There is a compensation scheme agreed between eight collecting societies (for audio, audiovisual, graphic) and higher education authorities for the uses of certain types of works under the teaching exception. However, negotiations for a framework agreement fixing the compensation due under the exception have failed so far for published works. Regarding textbooks (which are excluded from the exception), a specific licensing agreement was reached between the Culture and Education Ministers of the Länder, the association of educational publishers and the collecting societies VG Wort, VG Bild-Kunst and VG Musikedition. Under this agreement teachers are allowed to copy protected content (10% of a given work up to a maximum of 20 pages can be copied). Digitisation of small extracts of works, digital distribution and storage on teachers' computers is included. Compensation is paid at Länder level. SPAIN Legislation The Spanish legislation foresees a new exception (entry into force in November 2015) for universities and public research, allowing to use a chapter of a book or an article in a magazine or journal (around 10% of the whole work as a general rule) for the purpose of illustrating teaching or scientific research.254 Online uses under internal secure networks accessible only by registered users are allowed. The legislation foresees that right holders have the right to equitable compensation for the uses allowed under this exception, subject to compulsory collective management. Licences CEDRO (Spanish CMO for authors of literary works and publishers) and VEGAP (CMO for visual artists) reached an agreement with Spanish universities in March 2016 in order to organise the compensation required by the new legislation. The amount of compensation to be distributed to right holders has been set up at €3 million / year. Licensing schemes prevailing over exceptions UK Legislation The UK legislation includes a fair dealing provision for illustration for instruction that cannot be overridden by contracts. In addition, the legislation foresees an exception, which is however subject to the availability of licences, for copying and use of extracts of works (as well as for the recording of broadcasts) by educational establishments. Licences From April 2014, the Department of Education provides licences from the following CMOs for all primary and secondary state-funded schools in England: - Copyright Licensing Agency (CLA), for print and digital copyright content in books, journals and magazines 254 In addition, the legislation includes an exception (not subject to compensation) allowing teachers of official educational establishments to use fragments of works (for illustrating teaching (in the classroom or for online education). The use of textbooks or academic books is not allowed under this exception (except under very specific conditions). 149  - Newspaper Licensing Agency (NLA), for newspapers and magazines - Schools Printed Music Licence, for printed music - Educational Recording Agency, for recording and use of copies of radio and television programmes - Filmbank and Motion Picture Licensing Company, for showing of films CLA/NLA licence255 Works covered Type of works: print and digital books, journals, magazines, newspapers, printed music (for schools). The licence includes textbooks and academic books (including digital books). Repertoire: The licence covers all published works, unless a right holder chooses to exclude their work/s (the percentage of excluded works is estimated to be 0.2% and the revenue collected and identified for works that have not been expressly mandated is 1% per year on average). The CLA website offers an online search tool (also available as a mobile app) allowing educational establishments to check if a work is covered by the licence. Digital uses Digital uses and works are included in CLA licence: scanning, digital copying, making available of digital copies within a secure electronic network (including course packs). Extent of The licence allows the use of 5% of a work or one chapter of a book, one article of a serial copying publication, one short story or poem of max 10 pages from an anthology. Cross-border Cross-border uses by distance learners registered with UK higher education institutions are uses allowed (if works are accessed under secure electronic networks). In addition, CLA is running a trial scheme (which would be an optional licence add-on) to cover students based at an overseas campus of a UK institution or a third-party organisation that a UK university is in partnership with. Remuneration In 2014/15 CLA collected £15.7m from schools, £5.8m from further education institutions and £13.9m from higher education institutions. Total: £35.4m. Photocopying representing 79% of this total and scanning and digital re-use 21%. IRELAND Legislation The Irish legislation includes a fair dealing provision for the purpose of research and private study, as well as exceptions allowing reprographic copying and recording of broadcasts and cable programmes by educational establishments.256 However these exceptions do not apply if there is a certified licensing scheme covering the same uses. ICLA (Irish Copyright Licensing Agency) licensing scheme for educational uses is certified under a statutory instrument. Licences ICLA licence Works covered Type of works: Print and digital books, journals, magazines, and newspapers (under certain conditions). The licence does not cover printed music, workbooks, maps, charts. Photographs, illustrations and diagrams are only covered by the licence where they are integral to the text. The ICLA licence for schools also covers the rental of schoolbooks under Textbook Rental Schemes. Repertoire: The licence covers all published works (published in Ireland or in countries 255 CLA offers a licence for newspaper content to all education institutes on behalf of NLA. 256 The Irish legislation also foresees an exception allowing the copying of works in the course of instruction (not subject to licences), however this does not apply to copying made by reprographic process. 150  covered by a reciprocal agreement), unless a right holder chooses to exclude their work/s. A list of excluded works is available on the ICLA website. The repertoire varies according to the type of uses (photocopying, scanning and digital distribution, digital publications). Digital uses Digital uses (scanning, digital copying, posting on intranet or VLE) of print or digital works are included under ICLA licence. Extent of The licence allows copying 5 % or one chapter of a published work or one entire article of a copying publication, or one short story or poem of max 10 pages. Cross-border Cross-border uses by distance learners receiving direct tuition from IE higher education uses institutions are allowed. Remuneration Not available Extended collective licensing (ECL) The use of protected content for educational activities is based on extended collective licensing (ECL) in Denmark, Finland and Sweden DENMARK Licences Copydan Writing has been approved by the Danish Ministry of Culture to enter into licence agreements covering the exploitation of works for educational activities. Kopiosto licence Works covered Types of works: Print works in analogue or digital format Repertoire: legal extension of the repertoire, including to foreign right holders, on the basis of ECL. In Denmark, it is not possible for an individual right holder to opt out of licence agreements entered into on the basis of the specific ECL provisions (including on educational uses). Digital uses Scanning, digital display, storage on intranet Extent of The extent of digital copying allowed under the licence is 20% of a publication but not more copying than 20 pages. Scanning, digital copying and use of newspapers are not allowed. Cross-border Not available uses Remuneration In 2015, Copydan Writing distributed 41 mill € to Danish and foreign rights holders for educational uses (photocopying and digital uses) of protected content. FINLAND Licences Kopiosto licences are centrally acquired by the Ministry of Education for primary and secondary schools, including vocational secondary school, and by Universities Finland and the Rectors' Conference of Finish Universities for higher education institutions. The table below presents the specific conditions applying to the use of print works. Further agreements are in place for the recording of television broadcasts for teaching and research. Kopiosto licence Works covered Type of works: Print works (books, newspapers, magazines, photographs). Workbooks and exercise books are excluded from the licence. The licence does not cover software, audio- visual and other works broadcast on television or radio. Repertoire: legal extension of the repertoire, including to foreign right holders, on the basis 151  of ECL. Non-represented right holders can opt out to prohibit the (digital) copying and use of their works. Kopiosto maintains a list of right holders (and prohibited works) that opted out from the licence. Digital uses The licence allows photocopying, printing and digital copying of printed publications and of online materials. It allows the distribution of digital copies via secure networks and, for higher education, via email to the teaching group. Extent of Primary schools: The extent of digital copying allowed under the licence is 5 pages but no copying more than 50% of a print publication Upper secondary schools: The extent of digital copying allowed under the licence is 15 pages but no more than 15% of a print publication Higher education: The extent of digital copying allowed under the licence is 20 pages but no more than 20% of a print publication, or a full scientific article and 50% of an article published in a compilation Cross-border The licence covers distance learning (online courses available via secure networks) but does uses not allow cross border uses. Remuneration Licensing revenue: 16,1M€ in 2014 for photocopying and digital uses of publications SWEDEN Licence Bonus Copyright Access' licenses the use of print works for all schools and higher education institutions in Sweden. Licences for the use of AV works and broadcast are concluded with other organisations. Bonus Copyright Access licence Works covered Type of works: Print works (books, textbooks, newspapers, magazines, photographs, sheet music), including digital publications. Repertoire: legal extension of the repertoire, including to foreign right holders, on the basis of ECL. Non-represented rights holders have the possibility of prohibiting the use of their works. Digital uses The licence allows photocopying, printing and digital copying of printed publications and of online materials. It allows the distribution of digital copies via secure networks via email to the teaching group. Extent of The extent of digital copying allowed under the licence is 15% of a publication but not more copying than 15 pages. Copying from websites or digital publications is allowed up to a quantity correspond to 15 pages. Cross-border The licence covers distance learning (online courses available via secure networks) but does uses not allow cross border uses. Remuneration Not available 152 ANNEX 10D – DATA ON DIGITAL USES AND SECONDARY LICENSING INCOME Digital uses under collective licensing schemes The availability of data related to the extent and value of digital uses under existing collective licensing schemes (ECL or voluntary/mandatory collective management) is limited, mainly because reproduction rights organisations (RROs) generally do not measure income from analogue and digital uses separately. The available data (in most cases, estimates) is presented below: In countries where digital uses are allowed under ECL The estimates provided by RROs in Sweden and Denmark indicate that about 50% of the revenues collected from educational bodies derives from digital uses.257 In Finland, the licensing organisation (Kopiosto) indicated in its 2013 annual report that digital and online uses accounted for 23% of its licensing income from educational institutions.258 Such uses are estimated to account for 30% of its licensing income in 2014.259 In countries where digital uses are allowed under voluntary collective licensing with an obligation for educational establishments to take up a licence if available In the UK, digital uses (scanning and digital re-use) accounted for 18% of the revenue distributed by CLA to right holders in 2013/2014, 21% in 2014/2015 and 28% in 2015/2016 (average for all types of education institutions). However, uses in schools are much more limited than in higher education institutions, where they represent 62% of the revenue distributed from CLA licence, notably because of the increasing use of digital course packs.260 In countries where digital uses are allowed under voluntary collective licensing In Spain, the RRO (CEDRO) estimates that 50% of its income from usages in schools and 57% of its income from uses in universities is derived from digital uses. In Greece, the RRO (OSDEL) estimates that 58% of its income for usages in universities is generated by digital uses. In countries where digital uses are allowed under the exception with compensation In France, the compensation required for digital uses represents about 8% of the amount collected for secondary uses of protected works in all education levels.261 However, this 257 BONUS Copyright Access (SE) estimates that, at least, 50% of its revenue collection for usages in schools and from universities and other tertiary education derives from digital uses. COPYDAN (DK) estimates that some 50% of the income from usages in schools, and some 80% of the usages in universities, is connected to digital uses. Source: IFRRO 258 Source: Kopiosto Annual Report 2013, . Distribution of 2013 revenue from licences to educational institutions: €8.05million for photocopying and €2.45million for digital uses (total:€10.5 million ). See: http://www.kopiosto.fi/kopiosto/kopiosto_in_brief/en_GB/kopiosto_in_brief 259 In its 2014 Annual Report, Kopiosto indicated that the total revenue from licences to educational institutions (covering photocopying and digital uses of publications) amounted to : €11.56 million in 2014. The report also explains that licensing income from educational institutions increased by 10.1% from 2013, mainly due to a centralised Digital Licence acquired by the Ministry of Education and Culture for almost all educational institutions. 260 Source: CLA/ALCS/PLS 261 In France, the compensation required at national level on annual basis for digital uses of print works is €1.7 million (covering all types of educational institutions). The total amount (including photocopies) - distributed to authors and publishers was €17.5m for primary and secondary schools and €4.5m for higher education. Source: FEP 153 amount is not directly related to the actual extent of digital uses, as it is determined by the sectoral agreement. For educational publishers in particular, digital uses represent about 4% of secondary licensing income from primary and secondary schools, but already 17.5% of the revenue collected from higher education institutions.262 Secondary licensing income for educational publishers The table below illustrates the relative importance of secondary licensing income in the turnover of educational publishers in countries where the use of textbooks or other educational resources currently requires a licence. Secondary uses of Part of secondary uses in Educational publishers' textbooks / revenues of educational turnover (mio €)* educational publishers (in %) resources (mio €) France 306 9.80 3.2 Germany 550 6.40 1.2 Sweden 93 3.40 3.7 UK** 370 11.1** 3.0 * Revenues from educational publishers (covering primary and secondary education - except for UK) ** Data for primary, secondary and higher education. The figure reported in "secondary uses" corresponds to revenues from CLA educational licence distributed to publishers of educational content only and to publishers of educational and other content. (Exchange rate June 2016) Sources: FEP, CLA/ALCS/PLS; 2015 figures 262 Source: FEP 154  ANNEX 11 – TDM ANNEX 11A – THE SCIENTIFIC PUBLISHING MARKET: FACTS AND FIGURES Scientific publishers’ business model has traditionally been subscription-based only, but today, with the coming of digital age and the changing needs of researchers, the publishers' business models have become more varied. Notably, open access publishing is now widespread alongside with the traditional subscription model and an increasing number of “traditional” publishers now also offer open access solutions. The STM market The 2013 revenues for the global Scientific Technical and Medical (STM) market (this includes journals, books, technical information, databases, etc.) in the EMEA region has been estimated at 7056 millions of dollars.263 Revenues from journals and books amount approximately to 56% of this market. This market is expected to grow at about 4% annually through 2017. The main revenues linked to journal publishing are generated by academic library subscriptions (68-75%), followed by corporate subscriptions (15-17%), advertising (4%), membership fees and personal subscriptions (3%) and various author-size payments (3%). In 2014, there were around 34.550 scholarly peer-reviewed journals publishing more than 2.5 million articles a year.264 There are around 5.000 to 10.000 journal publishers globally.265 It is estimated that universities and other institutional users spend 5.5 billion dollars on content each year.266 For the UK, GBP 80million per annum is paid on big deals.267 More generally, the UK's higher education institutions pay between GBP160 million and 192 million for journals subscriptions and it is estimated that the French academic sector pays at least EUR 120 million per year for subscription to scientific journals.268 Researchers are the authors of scientific publications but generally assign their rights to publishers. Authors' remuneration in the field of scientific publishing does not usually take the form of royalties, other factors such as career recognition and prestige (including as a mean to obtain grants also play a more important role. The cost for publishing an article greatly varies. For instance, for subscription-based journal, it was estimated that this cost would be between EUR 3800 and 5000.269 Regarding open access journals, according to one of the main actors of the sector (PLOS, which has already 263 See the 2015 STM report, p. 23 (based on the Outsell report). The global STM revenues are estimated at $25.2 billion. See also the Max Planck Institute study, "Disrupting the subscription journals' business model for the necessary marge-scale transformation to open access", 2015, p. 5, which indicates that worldwide annual sales of academic journal currently generate EUR 7.6 billion. 264 See the 2015 STM report and the above-mentioned Max Planck Institute study which estimates that around 2 million journal articles are published each year. 265 The 2012 STM report, p.33. Moreover, the main English-language trade and professional associations for journal publishers collectively include 657 publishers producing around 11,550 journals. 266 Presentation from S. Reilly (Liber) before the European Parliament, "Publishing and copyright issues in the digital environment - focus on scientific research and educational issues", 26 March 2015. 267 Source: UCL 268 Max Planck Institute study, "Disrupting the subscription journals' business model for the necessary marge-scale transformation to open access", 2015, p. 8. 269 See the above-mentioned Max Planck Institute study, p. 5. 155 published more than 100.000 open access articles) the costs for publishing an article are about 1.000 USD.270 Commercial TDM licensing market The information provided by the STM association and its members indicates that they do not clearly separate business licensing from TDM which makes the provision of numeric data on the specific commercial value of TDM licensing market difficult. The market for explicit TDM rights is part of a whole series of usage rights into the commercial market for journal content. Overall, the STM publishers have indicated that researchers in commercial healthcare/pharmaceutical and engineering markets value highly the commercial usage rights which include right tools and content formatting needed for their TDM research. They foresee that the TDM market in Europe for publishers, based on current estimations (2million in 2015) will be worth in excess of 56 million in 2019. Their members report that even if the pharma sector tends to be more advanced in its use of mining technologies, the use of TDM is on increase also in other sectors, such as chemical manufacturing. STM publishers provide different services to their customers, depending on their TDM research needs. Examples of how their customers may carry out TDM include: • use of third-parties (e.g. Northern Light) to help pull data through a single hosting point, and publishers work with them on behalf of the customer. • data from publishers fed directly and integrated into their customers' own systems; • use of proprietary systems and data warehousing tools (e.g. Oracle) to consolidate various data sources. Some corporate customers, who may be conducting TDM occasionally, benefit from once-off licenses which are combined with “locally-hosted” licenses, while others may work through intermediaries (such as Copyright Clearance Centre). Open access publishing There are currently two main open access publishing models (although a number of alternatives and variations on these exist and are under development): Green open access (self-archiving): Under this model, the published article (or in some cases, the final peer-reviewed manuscript) is archived by the author – or a representative – in an online repository before, alongside or after its publication. There is generally delayed open access to the article (‘embargo period’). Publication costs are covered by subscription fees and pay-per-download/view fees received during this embargo period. Gold open access (open access publishing): Under this model, the published article is immediately freely available to the reader upon publication. Open access journals can be subsidised or the publication costs can be covered by a one-off payment by the author (often referred to as Author Processing Charges – "APCs"). The APCs are often covered by the author's research grant or paid by the author's employer (e.g. the research center or university). Under both FP7 and Horizon 2020, gold open access costs incurred during project duration are eligible for reimbursement. In addition, a Pilot action on the coverage of gold open access after project end began in Spring 2015. 270 See also and the above-mentioned Max Planck Institute study, p. 6. Costs are in average below 2000 EUR. 156 In the case of open access publications, there exists a trend towards using licenses to publish in which authors retain copyright and authorize under certain conditions different uses of the content. The most widely-used licenses in this context are Creative Common Licenses ('CC- licenses') that are publicly available and aim to facilitate the online dissemination of contents by providing several 'easy to apply/understand' copyright licenses.271 Nowadays, open access articles represent between 12 to 20% (depending on the sources272) of all scientific papers published each year and this figure is steadily rising.273 Open access journals are around 26-29% of all journals. There are currently around 10.090 fully open access journals listed in the directory of open access journals.274 Purely open access publishers generally act more as service providers and disseminators of knowledge. Their goal is to ensure the widest possible access to the content. Many (though not all) open access publishers allow TDM in their licenses: several of them have opted for a CC-BY license275 (instead of a CC-BY-NC276 or a CC-BY-SA license277) to allow TDM. As for funding bodies, they are gradually beginning to consider provisions that would ensure that TDM is possible. 271 For an overview of the different licenses, see: https://creativecommons.org/licenses 272 The 2015 STM report provides for that about 12% of articles published is open access. See the recent Max Planck Institute study, "Disrupting the subscription journals' business model for the necessary marge-scale transformation to open access", 2015, which indicates that open access publications have reached a market share of 13% (without counting the hybrid componenet). See also Mikael Laakso; Bo-Christer Björk, "Anatomy of open access publishing: a study of longitudinal development and internal structure", available on http://www.biomedcentral.com/1741-7015/10/124.: "Over the past decade, OA journal publishing has steadily increased its relative share of all scholarly journal articles by about 1% annually. Approximately 17% of the 1.66 million articles published during 2011 and indexed in the most comprehensive article-level index of scholarly articles (Scopus) are available OA through journal publishers, most articles immediately (12%) but some within 12 months of publication (5%)." 273 One of the reasons is that an increasing number of research funders are mandating open access. For example, the European Commission requires that all publications resulting from Horizon 2020 be published in Open Access, and is running a Pilot on Open Research Data requesting that the data underlying scientific publications resulting from Horizon 2020 be open access, and asking concerned beneficiaries to establish data management plans 274 See the Directory of open access journals website (https://doaj.org/) and the 2015 STM report. 275 A CC-BY license only requires the user to credit the author. This is the most accommodating CC license. For instance, Wiley (one of the main scientific publishers) reported to the Commission that their open access content under a CC-BY license may be freely used for mining purposes. 276 A CC-BY-NC license prevents any commercial use of a work but allow any non-commercial use. The user must credit the author. 277 Under the CC-BY-SA license, the user must credit the author and license the new creation under the same licensing terms. This is for instance the license used by Wikipedia. 157 ANNEX 11B – TECHNICAL ASPECTS OF TDM Text and Data Mining (TDM) is a term commonly used to describe automated analysis of large volumes of text and data. Depending on the context, other terms used to describe the same techniques are business intelligence, information analysis or text and data analytics. TDM is used for various purposes including scientific research, e.g. gene-disease mapping, clinical trial analysis, patent-mapping, sentiment analysis or development of language technologies, financial services. The sources for texts and data mined can be open access repositories, proprietary databases, social networks as well as all kinds of publicly available internet websites. Depending on the case, the person intending to do TDM will already have access to the content (e.g. on the basis of a subscription contract) or will ask for specific access Once access to content is available or granted, TDM generally implies the reproduction of the text or the data, either temporarily, e.g. by caching the content or permanently, e.g. by creating a database of key elements for facilitating searches (index).There are also TDM technologies which allow for analysing content without making any copies of the analysed content, e.g. by website crawling or screen-scrapping. Content that is text and data mined may come in different formats, such as machine readable formats (e.g. XML) or PDFs, which may be more or less easily mined. The data retrieved often needs to be normalized, annotated and aggregated into a corpus to allow for an efficient use of mining software. The normalization, annotation can be done either by the publishers, including as part of a commercial offer (e.g. data in an XML format, provided in a structured way) or by the researchers themselves, which is more the case for researchers in the public interest research organizations, who tend to prefer using their own tools (relying also more on PDFs than commercial users). The process of analysing the texts or data is to be distinguished from its result. The output of TDM might consist for example of a summary of the analysed text and data, visualisations such as graphics or charts, but also of new knowledge, patterns, and combinations of data that may lead to new discoveries and research results. Protection of databases used for TDM An important area linked to the technical aspects of TDM concerns the safeguards needed to ensure the integrity and security of databases, in view of potentially big number of users and the commercial value of the databases for their owners. The STM publishers in particular consider the technical safeguards critical to their business and have raised the attention of the Commission to this point. They have put in place enhanced access and usage control measures to avoid unauthorized access to and distribution of their content. For example, access to their data is controlled through IP address validation of their subscribers and different user authentication means, relying on their customer-issued access credentials that they integrate with, or their own issued credentials or API keys (in case of direct machine to machine access to content via an API provided by the publisher). Other examples of safeguards used by STM publishers focus on the prevention of abuse through the application of algorithms to differentiate between normal access patterns by their subscribers and illicit access attempts by pirates. In case of abuse, a range of measures may be taken, including temporary blocking of access, imposing download timeouts for a certain period, using CAPTCHA challenges or limiting the downloading rate. Users have often challenged measures applied by publishers. 158 ANNEX 11C – TDM: THE CURRENT EU LEGAL FRAMEWORK TDM techniques which do not involve copying of protected content are not copyright relevant altogether. TDM techniques may be covered by the mandatory exception in Article 5.1 of the InfoSoc Directive and in Article 6.1 of the Database Directive.278 TDM carried out for non- commercial research purposes could also be exempted from the authorisation requirement under the existing optional “research” exceptions279 under both the above mentioned Directives,280 depending on whether and how these exceptions have been implemented in the Member State where the mining takes place. Legal uncertainty arises because some Member States have not implemented the exception in Article 5.3 a) of the InfoSoc Directive281 and other Member States have implemented it in a more restrictive way than provided for in the Directive.282 For instance, in some Member States, the research exception only applies "to illustrate" scientific research.283 This limited scope would de facto exclude TDM from the scope of the exception. Other national exceptions only allow the reproduction of "extracts of works", which could also prevent them from applying to TDM.284 So far only the UK has adopted an explicit TDM exception.285 A table summarising MS implementation of the research exception in the Infosoc Directive is presented in Annex 4. 278 The exception for temporary reproduction in Article 5.1 of the InfoSoc directive is subject to several conditions the temporary acts reproduction must be transient or incidental [and] constitute an integral and essential part of a technological process. Moreover, such acts of reproduction must have as their sole purpose to enable both the transmission in a network between third parties by an intermediary, or a lawful use of a work or other subject- matter, and which have no independent economic significance. The exception covering the normal use of the structure of the database by the lawful user under Article 6.1 of the Database directive covers acts that are necessary for the lawful user to access a copyright- protected database. 279 For a legal assessment of how these exceptions can apply to TDM, see the study conducted by De Wolf & Partners on the legal framework of text and data mining, 2014, pp. 50-71. 280 See Articles 5.3 a) of the InfoSoc directive and Articles 6.2 (b) and 9(b) of the Database directive. 281 For instance, the Netherlands. See the study conducted by De Wolf & Partners on the legal framework of text and data mining, 2014, p. 51. 282 For an overview of the differences in the implementation of the research exception, see the study conducted by CRIDS and De Wolf&Partners on the application of Directive 2001/29/EC on copyright and related rights in the Information society, 2013. 283 For instance, France. It is considered that the research exception (article L.122-5 3° of the French Code of Intellectual Property which implemented into French law article 5.3, a) of Directive 2001/29) does not cover TDM (see in this respect the report of the Conseil supérieur de la propriété littéraire et artistique, "Mission sur l'exploration de données – "Text and Data Mining"", under the supervision of Jean Martin and Liliane de Carvalho, p. 30-31. 284 For instance, Italy and Luxemburg. 285 The exception covers data analytics carried out for the purposes of non-commercial scientific research. 159 ANNEX 11D – INITIATIVES FACILITATING TDM IN PRACTICE Different initiatives exist at different levels and by different players that aim at facilitating the TDM in practice for researchers. These range from the facilitation of access to a widest possible range of data via common infrastructures (single gateways) to the provision of text and mining tools. Some examples of such initiatives, far from exhaustive, are provided in the below table. Industry led i) CrossRef – established in 2000 by scholarly publishers as an initiatives to independent, non-profit entity, it enables researchers to navigate facilitate finding electronic journals, across publishers, based on open-standards and licensing of technology (the Digital Object Identifier, or DOI, system). More content from concretely, researchers can use the CrossRef search engines to different sources download the DOIs of content they are interested in as a list, without through common having to go to each paper to extract the DOI from it. They can then infrastructures submit the list of DOIs (either constituted by the search engine or directly by them) to the CrossRef Text and Data Mining API that tells them where the full text can be found and what they can do with it, based on the license information provided by the relevant publisher. If TDM is authorized, the researcher sends a request for the full-text using the DOI and retrieves the full text in order to mine it. The publisher is responsible for delivering the full text of the content requested. If the publisher requires a separate licence for TDM, the researcher must proceed with the CrossRef Click-through Service. He then can review, accept or reject the terms and conditions of the publisher. Once the researcher agrees to the terms and conditions, he is assigned an API token. There is one API token per researcher (which provides an overview of all the accepted and refused licences). This token allows the publisher to check whether the researcher has accepted the terms and conditions (the API token is included in the request). Publishers are also assigned token with which they can verify whether a researcher has agreed to the terms and conditions. CrossRef's TDM service has been launched in May 2014 and is free of charge to researchers. For more information, see http://www.crossref.org/ ii) PLSClear TDM : a web service functions as a digital clearing house for researchers’ requests. It leads researchers through a simple request form developed by a group of leading publishers. This gathers basic information about the text mining project (including the content to be mined and the format for reuse). The form is then forwarded to the appropriate manager within the publishing company. For more information, see http://www.plsclear.com/pages/ClearTDMWizard.aspx iii) CCC’s RightFind™ XML for Mining – a service developed by the Copyright Clearance Centre which allows commercial life science researchers to create sets of full-text XML articles from more than 160  4,000 peer-reviewed journals produced by over 25 STM publishers, and import them into their preferred text mining software. Reserachers can identify articles from publications to which they subscribe and from those that fall outside their subscriptions. Publishers participating in the offering include SpringerNature, Wiley, BMJ, the Royal Society of Chemistry, Taylor & Francis, SAGE, Cambridge University Press, Oxford University Press, American Diabetes Association, American Society for Nutrition, Future Medicine and more. For more information, see http://www.copyright.com/copyright- clearance-center-launches-text-mining-solution/ Licensing The FIN-CLARIN consortium consists of a group of Finnish arrangements universities along with CSC – IT Center for Science and the Institute facilitating TDM for the Languages of Finland (Kotus). FIN-CLARIN helps the through a researchers in Finland to use, to refine, to preserve and to share their collecting society : language resources. The Language Bank of Finland is the collection of the Finnish services that provides the language materials and tools for the research example community. FIN-CLARIN is a member of CLARIN ERIC that aims to build a common infrastructure for the digital humanities in Europe. The FIN-CLARIN relies on a licensing arrangement between the collecting society (Kopiosto) and the Language databank that allows the creation of a database consisting of all publications digitized by the National Library and commercial e-publications behind a paywall to which the publisher has given permission and to make the database available to the research community for TDM purposes (no full text). Full-text services are allowed via special permission. Additionally, the Kopiosto research material deposit agreement allows researchers, as long as needed for a verification purposes, to download and store any set of research material, or a collection of works, if the object of the research or part of the essential source material is in the Finnish Social Science Data Archive. The New KOPIOSTO - University agreement allows researchers, when necessary for scientific research, to scan and copy even entire works and publications, transmit copies via closed network, within the research group, and keeping the copies as long as the research takes place as long as the University research is considered to be non-commercial. (Source: the websites of the Language Bank of Finland and FIN- CLARIN and presentation by Kopiosto) Open source text i) OpenMinTeD – a three-year EU project under the H2020 and data mining programme project which aims at making operational a virtuous cycle tools in which: a) primary content is accessed through standardised interfaces and 161 access rules b) by well-documented and easily discoverable text mining services that process, analyse, and annotate text c) to identify patterns and extract new meaningful actionable knowledge, which will be used d) for structuring, indexing, and searching content and, in tandem, e) acting as new knowledge useful to draw new relations between content items and firing a new mining cycle". The platform, still in progress, aims to "foster and facilitate the use of text and data mining technologies in the scientific publications world". OpenMinTeD is planning to achieve this goal on the basis of three pillars: 1) getting research community requirements through use cases in life sciences, agriculture and biodiversity, social sciences, and scholarly communication; 2) building an interoperability framework and enacting guidelines "to allow existing tools, resources and content to become an integral part of the infrastructure" and specifically "to allow publishers, institutional or thematic repositories, scholarly or learning societies and providers of textual data to deliver content for TDM purposes in a uniform way"; 3) developing a service oriented platform in order "to make the infrastructure components visible and accessible by all" thanks to notably an annotation service. Additionally, OpenMinTeD will support trainings for users and developers of text and data mining. For more information, see http://openminted.eu/ ii) ContentMine – software and training resources by a project funded by the Shuttleworth Foundation. The tools, resources and services are fully Open and can be re-used by anybody for any legal purpose. The aim of the project is to enable everyone to perform research using humanity’s accumulated scientific knowledge….To make this a reality we are building software and training resources so that together we can liberate 100,000,000 facts from the scientific literature. For more information, see http://contentmine.org 162 ANNEX 11E – TDM: PUBLISHED ARTICLES ON TDM IN THE EU (2011-2016) Source: Lisbon Council, 2016, based on Reed Elsevier Science Direct database. 163  ANNEX 12 – USE OF PROTECTED CONTENT BY ONLINE SERVICES STORING AND GIVING ACCESS TO LARGE AMOUNTS OF USER UPLOADED CONTENT ANNEX 12A – GENERAL INFORMATION ON, AND EXAMPLES OF, CONTENT IDENTIFICATION TECHNOLOGIES Content recognition or identification technologies (or Automatic Content Recognition technologies286) help to detect content by online services. Different technologies exist and may be used depending on the type of content to be identified. The availability and effectiveness of technologies depends on the type of content. 1. MAIN TYPES OF TECHNOLOGIES There are two main types of content recognition technologies:  Fingerprinting, and  Watermarking. Fingerprinting can be used for audio, video and image content recognition. It allows easily recognisable features of the content to be extracted and thus identified as unique features of that content. These features are then compared against a reference database. For example, fingerprinting technology can look for a given musical pattern or melody in a soundtrack, and match it to a melody in a database. Using special features, or fingerprints, content owners can easily find out whether someone uploaded their content on a given site. The level of accuracy of a fingerprint can be very high, allowing the tracking of almost any content. Examples of service providers using fingerprinting technologies are Audible Magic,287 Vobile 288 and INA ('Signature' system).289 Figure 1 Graphical representation of the process of watermarking and fingerprinting290 Content identification suppliers provide various services. The most typical service provided to online services consists of an access to a fingerprinting database which is used to check 286 http://www.civolution.com/wp-content/uploads/2014/02/ACR-Creating-Content-Aware-Ecosystems- Civolution-White-Paper-Jan2013.pdf 287 https://www.audiblemagic.com/about/ 288 http://www.vobileinc.com/about/ 289 http://www.institut-national-audiovisuel.fr/en/products-services/signature.html 290 Source:https://www.smpte.org/sites/default/files/users/user26068/BBTB%20109%20Watermarking%2 0and%20Fingerprinting%20-%20Wim%20Bus.pdf 164 against content that an end user wants to upload. This content is matched against an audio or video file provided by right holders and present in the database. and video files. For example, Audible Magic's reference database contains music and audio- visual soundtracks. The 'Signature' detection system of INA specializes in videos, including when their soundtracks have been changed. Analytics and/or statistics can be provided to allow for a better understanding of the usage of (e.g. viewing, listening) of a song or video. Statistics can include summaries of what viewers search for, how they view their favourite shows or movies, listen to favourite music (audience measurement), how images are used. This information can then be used for targeted advertising by the services. Analytics and statistics can also be provided to right holders in relation to the usage of their content. The generation of fingerprints can be done by the right holder using software provided by the technology supplier, the technology supplier or the platform itself. Costs related to the generation of the fingerprints depend on the type of content and are not necessarily charged to copyright owners. The latter often have the facility to register business rules that will inform individual sites how their content should be handled. Common business rules are “Block”, “Allow” or “Monetize”. Audible Magic indicated that it has ingested over 24 million fingerprints of copyright content since its establishment in 1999, and currently ingests new fingerprints at a rate of around 250,000 each month. Watermarking can also be used for audio, video and image content recognition. It is an invisible tattooing operation that only allows identifying tattooed copies. Digital watermarks are embedded into the content and make each copy of the content a unique copy. Watermarks are commonly included in theatrical movie releases to allow tracing any illegally recorded version back to the original one. Civolution291 and Music Trace292 are examples of service providers providing digital watermarking. 2. EXAMPLES OF CONTENT IDENTIFICATION TECHNOLOGIES USED BY SOME MAJOR ONLINE SERVICES 2.1. Content identification on YouTube Since 2007, YouTube uses Content ID, a technical tool developed by Google, based on fingerprinting, which allows the screening of visuals, phonographic data, etc. The files that are uploaded on YouTube are matched against a reference database which includes files submitted by content owners with their chosen business rule (see below). It is reported that there are currently more than 35 million active reference files in the database.293 In case a new video is uploaded on YouTube and a match is found against a ‘hash’, the owner of the original content can decide that the following rules apply:294 - Content has to be blocked; - Content can be viewed freely and viewing statistics are gathered; - Content is being monetized (add advertisements). 291 http://www.nexguard.com/ 292 http://www.musictrace.de/products/products.en.htm 293 https://www.youtube.com/yt/press/statistics.html 294 https://support.google.com/youtube/answer/2797370?hl=en-GB. 165 Figure 2 Screenshot of the choice and steps a content owner can take295 2.2. Content identification on SoundCloud It is reported that SoundCloud uses two different content recognition technologies:  SoundCloud makes use of Audible Magic' technology since 2010.  Since 2012, SoundCloud has An in-house content recognition technology (as a result of acquiring specialised companies) since 2012.296 on SoundCloud, it is matched against both databases. The company fingerprints and matches every audio file at upload, and again after 40 hours and again after 14 days. In addition, SoundCloud also has a so-called emergency upload tool to enable rights holders to insert individual reference files directly into the reference database - this enables rights holders to act quickly in the event of leaks, rather than waiting for a reference file to be delivered via their usual supply chain. According to SoundCloud's own estimates, it has spent approximately EUR 5-10 million in developing its content identification system, plus the substantial historical and ongoing cost of employing 7 full time engineers and product managers to develop and maintain the technology, and 5 full time employees to manage takedown notices, copyright disputes and account terminations.297 295 Source: https://thetrichordist.com/2015/03/04/youtubes-content-id-375-00-per-million-views-this-is- what-were-fighting-for/ 296 http://techcrunch.com/2014/10/11/soundcloud-posted-a-29m-loss-in-2013-on-revenues-of-14m/ 297 See their reply to the public consultation on online platforms, https://ec.europa.eu/eusurvey/pdf/answer/6acf2b21-865a-402c-876a-e2b67c0ceef9. 166 2.3. Content identification on Pinterest Based on publicly available information, it is not known whether Pinterest uses content identification software. It nevertheless acquired an image recognition and visual search startup ‘VisualGraph’ in 2014.298 As part of the license agreement with Getty Images, Pinterest makes use of PicScout API, a subsidiary of Getty Images providing tools to allow images to be easily tracked, analysed and monetised online.299 This allows Pinterest to identify Getty Images and then link those images with Getty’s metadata.300 2.4. Content identification on Vimeo Vimeo uses ‘Copyright Match’.301 Vimeo partnered with Audible Magic to implement the use of this technology. 2.5. Content identification on Dailymotion302 uses Audible Magic. Dailymotion also makes use of the ‘Signature’ technology developed by INA.303 While audio content is cross-referenced with Audible Magic's database, video is matched against the ‘Signature’ database. It is reported that if a match is detected, the content will be removed. 3. EXAMPLES OF SUPPLIERS PROVIDING DIFFERENT TYPES OF TECHNOLOGIES Content recognition technologies are available on the market from various suppliers. Some online services have developed such technologies in-house, while others are using the services of technology providers. A non-exhaustive list of providers is presented below304: Services/products offered by content recognition technology provider Provider Description of Products / Price Description of products/payment offered services payment plan plans covered Attrasoft Inc.  Single site image  A number of Upon request Products include: Attrasoft Mini- search engine products AttraSeek, Attrasoft  Video Search featuring the ImageDeepLearner, Attrasoft Engine services ImageFinderLite, Attrasoft  Image offered ImageFinderSeg, Attrasoft recognition ImageFinder, Attrasoft  Object detection VideoFinderLite, Attrasoft within an image FlashFinderLite, Attrasoft  Video object IFSurveillance, Attrasoft 298 http://www.visualgraph.com/, http://techcrunch.com/2014/01/06/pinterest-visualgraph/. 299 http://www.picscout.com/what-is-picscout/ 300 See Article https://techcrunch.com/2013/10/25/pinterest-inks-deal-with-getty-images-will-pay-a-fee- for-the-photo-agencys-metadata/ 301 https://vimeo.com/blog/post/copyright-match-on-vimeo,https://vimeo.com/help/faq/legal- stuff/copyright-match. 302 http://www.dailymotion.com/gb/legal/contentprotection 303 http://www.institut-national-audiovisuel.fr/en/products-services/signature.html 304 The aim of the table is to give an indicative and non-exhaustive list of available services covering different content and different features, based on publicly available information. It is not to be read as a comparison of services and their prices. 167 Provider Description of Products / Price Description of products/payment offered services payment plan plans covered detection VideoFinderLive, Attrasoft VideoFinder  Image tagging , Attrasoft TransApplet 8.0, Attrasoft  Surveillance SecureImageMessage, Other video analysis Products.  Steganography Audible  Copyrighted A number of Music / Film,  Audible Magic offers flexible, multi- Magic content specific TV for tiered pricing plans designed to identification products, in (depending on meet the needs of broad range of  Ensuring particular: the number of customers. Monthly service fees copyright  Compliance transactions): start at $500 for use of Audible compliance Automation  $1,000/$500 Magic’s Film/TV database and  Collegial for Media for up to $1,000 for use of Audible Magic’s compliance Sharing 5,000 Music Database. insurance platforms transactions  One time setup fee $2,500  Content  $1,500/$750  Pricing for this service is based on identification on for between the number of transactions sent to devices and apps 5,0001 and Audible Magic in a billing month.  (creation and) 10,000 Subscribers are only billed for the maintenance of  Etc transactions that are used, media works  $5,500/$2,7 according to the monthly transaction database 50 for ranges in the following table  Anti-piracy between 45,001 and 50,000 BMAT Music Vericast Upon request Vericast is a global music identification identification service that monitors millions of songs service over 3000 radios and televisions across more than 60 countries worldwide. The solution provides real time recognition and auditable reporting based on an audio fingerprint that is resistant to signal alterations such as voice over, broadcast mastering or noisy channel degradation. Civolution  Copyright A number of Price is upon Description of features depends on the compliance products and request chosen product in consultation with  Copyright solutions to Civolution management help media content owners, rights holders and distributors to protect and 168 Provider Description of Products / Price Description of products/payment offered services payment plan plans covered manage their assets throughout the entire lifecycle, from the Pre- Release stage through Digital Cinema, B2B and B2C distribution Dubset Identification of Two products: Upon request Dubset's MixSCAN® technology original master MixBANK and parses mixes & remixes into smaller recordings of a mix MixSCAN micro audio segments and uses a or remix. combination of acoustic and textual fingerprinting technologies, along with proprietary heuristics and pattern analysis technology, to identify all the original master recordings used in the mix or remix. This information is then used to build a unique MixDNA track list and copyright structure that can be used to control usage and distribution of content by rights holders, and collection and administration of streaming royalties. MixSCAN® utilizes a library of over 100 million master recordings and dozens of additional authoritative databases to ensure accurate track identification and label/publisher rights holder association. Enswers  Analysis of ACR Upon request It provides access to a library of sound, image development software that helps you develop and video kit content recognition applications and content utilities and includes APIs, utilities, extensive documentation and sample demos. Audience It is a system that uses personal measurement mobile devices to automatically detect audio from TV to measure individual viewership. The only hardware our system requires are servers that fingerprint TV broadcasts in real-time, and all the subjects need to do is 169 Provider Description of Products / Price Description of products/payment offered services payment plan plans covered install a mobile app on their phone and enter their profile information. The audio source from real-time TV broadcast feeds and subject’s mobile devices are fingerprinted and matched against each other, then stored with individual profiles for data analytics. Embedded This product allows to provide a ACR platform that enables applications to deliver engaging interactive programming synchronized in real- time to what the user is watching on television. Geo Track ID Detection of Upon request Monitoring of tracks and reporting on usage. music in the online and offline world Google  Detection of  Cloud Vision 0  1-1,000 units per month objects on API  Label Detection, Optical Character images Recognition, Explicit Content  Detection of Detection, Facial Detection, inappropriate Landmark Detection, Logo Detection content Price per  1,001 – 1mln units per month  Detection of feature  $5 for Label Detection, emotional facial  $2.5 for Optical Character attributes Recognition, Explicit Content  Extraction of text Detection, Facial Detection, from images Landmark Detection, Logo Detection  1,000,0001 – 5 mln units per month  $4 for Label Detection,  $2 for Optical Character Recognition, Explicit Content Detection, Facial Detection, Landmark Detection, Logo Detection  5,000,001 – 20 mln units per month  $2 for Label Detection,  $0.6 for Optical Character Recognition, Explicit Content Detection, Facial Detection, Landmark Detection, Logo Detection INA  Detection of  Signature is an automatic video videos and copy detection system. It enables images TV broadcast & Internet monitoring for right payment optimization, as well as content monetization and incoming video stream filtering on 170 Provider Description of Products / Price Description of products/payment offered services payment plan plans covered platforms. LTU  Content Tracking Hajime 99€/month  500 images in the database technologies (Media  2,500 queries (as part of intelligence,  Bug only support Jastec) Brand protection, Kenschusei 249€/month  25,000 images in the database Social media  125,000 queries monitoring,  Email support Copyright Hyojun 599€/month  100,000 images in the database protection)  500,000 queries  Brand  Email support Intelligence Puro 1,299€/month  250,000 images in the database  Mobile Visual  1,000,000 queries Search  Email & Phone support  Online Visual Senpai 2,199€/month  500,000 images in the database Search  2,500,000 queries  Investigations  Email & Phone support  Free image consulting Sensei 3,499€/month  1,000,000 images in the database  5,000,000 queries  Email & Phone support  Free image consulting Customised Upon request  High volumes of images  Dedicated server  High performance guaranteed  Multi Search API on different sites  Integration in your own system Recognise.im  Object Start 0 USD  Scan limit: 500 recognition  Photo limit: 100  Similar images  Valid for 3 weeks recognition Startup $ 300  Scan limit: 50,000  Multiple object Package net/month  Photo limit: 10,000 recognition Standard $1,700  Scan limit: 100,000 Package net/month  Photo limit: 50,000 Premium $ 3,000  Scan limit: 300,000 Package net/month  Photo limit: 100,000 Enterprise $ 4,000  Scan limit: 1,000,000 Package net/month  Photo limit: 500,000 Customised Upon request  Upon request Shazam  Music recognition  Shazam app Free It creates an acoustic fingerprint based  TV recognition on the sample and compares it against a central database for a match. If it finds a match, it sends information such as the artist, song title, and album back to the user. SoundHound  Sound Mobile app Price is upon Description of features depends on the Inc recognition ‘SoundHound’ request chosen product in consultation with 171 Provider Description of Products / Price Description of products/payment offered services payment plan plans covered  Sound search Voice SoundHound recognition virtual assistant app ‘Hound’ Voice enabled developer platform ‘Houndify’ ANNEX 12B –RESULTS FROM THE FLASH EUROBAROMETER ON INTERNET USERS’ PREFERENCES FOR ACCESSING CONTENT ONLINE (N°437/MARCH 2016) The Flash Eurobarometer was carried out at the request of the European Commission’s Directorate-General for Communications Networks, Content and Technology by the TNS Political & Social network in the 28 Member States of the European Union, between 10 and 21 March 2016. The survey was designed to explore a range of issues related to the manner in which users access the following types of content online: music, films/TV series, images and news. In particular, the following issues were covered:  At what frequency do Internet users access each of these types of content?  What type of access do they tend to use (free and/or paid)?  What type of services do Internet users turn to when they want to access these types of content?  What are Internet users’ main criteria when choosing a service to access and consume these types of content? This survey specifically focused on Internet users aged 15 to 45 years old, since they represent the main users of the online contents being considered. A succinct summary of the main results at EU level is provided below. MAIN RESULTS AT EU LEVEL FREQUENCY AND TYPE OF ACCESS The majority of respondents declare using the Internet to access various types of cultural content in digital format, more than once a week: 72% of respondents declare using the Internet to access the press or news more than once a week, followed by 63 % for music, 54% for images and 53% for films or TV series. All four types of content are predominantly accessed online for free: nearly eight in ten respondents (78%) mentioned using free services (exclusively or mainly) to access music online. Similarly, 70% of respondents use exclusively or mainly free services to 172  access films or TV series online, and this proportion reaches 85% for images and 87% regarding accessing the news online. ACCESS TO MUSIC ONLINE The four types of services mentioned most often by respondents to access music online are video or music-sharing websites (31 %), professional music streaming services (22%), online radio stations (16%) and online social media (14%). The four important criteria most often mentioned for choosing a service are the following: the service provides access to content for free (71%); the service offers good quality audio/video (53%); it doesn’t require users to register (40%); and it allows to listen to music and also watch music videos (34%). ACCESS TO FILMS AND TV SERIES ONLINE To access films or TV series online, respondents mentioned using predominantly the four following types of service: professional film and TV series streaming services (25%), video-sharing websites (22%), broadcasters’ online TV services (19%) and online platforms providing access to a selection of TV channels or VOD services (13%). The four important criteria most often mentioned for choosing a service are the following: the service is free (64% of respondents); the service offers good quality audio/video (52%); it offers a large catalogue and wide variety of films and TV series (43%); and streaming is not interrupted by ads (42%). ACCESS TO IMAGES ONLINE The four types of services mentioned most often by respondents to access images online are: search engines (53%), online social media (27%), websites where users can share images (12%) and professional photo websites or image banks (6%). Half of the respondents (50%) most often use search engine results to access the websites where the images are located, while 40% declare viewing and using the images only on the search engine results page (without accessing the websites referenced in the results). The four most mentioned important criteria for choosing a service are the following: the service provides access to content for free (84%); the service doesn’t require the user to register (60%); it provides a quick browse and selection of images coming from different webpages (52%); and the service provides high quality professional images (size, proportion, etc.) (40%). ACCESS TO THE NEWS ONLINE The respondents who access the news in digital format most often use the four following types of services to do so: the websites or apps of newspapers or magazines (42%), 173  online social media (22%), search engines (21%) and online news aggregation services (14%). When they access the news via news aggregators, online social media or search engines, respondents are divided on what they do next: nearly half of respondents (47%) mention that they most often browse and read the main news of the day without clicking on links to access the whole articles. Conversely, a similar proportion (45%) say they click on available links to read the whole articles on their original webpage. The four important criteria most often mentioned as being important when choosing a service to read the news online are: the service is free (77%); it doesn’t require any registration (54%); opening or reading an article is not interrupted or disturbed by ads (40%); and the service is offered by a newspaper or magazine with a good reputation (35%). For more information, see the Eurobarometer. 174  ANNEX 13 – PUBLISHERS ANNEX 13A – AGGREGATED DATA ON PRESS CIRCULATION AND NEWS PUBLISHING INDUSTRY TRENDS IN EU MS 1. Member States specific data on circulation/audiences, digital revenues and forecast Source: Data provided by the press publishing sector (EPC, EMMA, ENPA and NME after carrying out an internal survey among their members) - May 2016. Data cover 39 publishers from 8 MS (Belgium, Finland, France, Germany, Italy, Poland, Spain and UK). Member States BE FR DE FI PL IT ES UK Circulation/ audiences Daily Newspaper -8% -11 % -14 % -22 % -35 % -52 % -38 % -18 % Print circulation (2010- (2011- (2011- (2010- (2010- (2010- (2010- (2010- 2014) 2015) 2015) 2014) 2014) 2014) 2014) 2014) Consumer Magazines -6% -12 % -13 % -14 % -16 % -15 % -39 % -29 % Print circulation (2012- (2010- (2011- (2010- (2010- (2010- (2010- (2010- 2013) 2013) 2015) 2013) 2013) 2013) 2013) 2013) Unique users/browsers 114 % 82 % 86 % 152 % 121 % 146 % (Digital audiences) - - (2011- (2011- (2011- (2011- (2011- (2011- 2015) 2015) 2015) 2015) 2015) 2015) Revenues Digital revenues (newspapers and 11 % 17 % 7% 13 % 9% 11 % 8% 18 % magazines) % total revenue (2015) (2015) (2015) (2015) (2015) (2015) (2015) (2015) Total revenues growth -9 % -4 % -9 % -13 % -17 % -26 % -26 % - 13 % (2010- (2010- (2010- (2010- (2010- (2010- (2010- (2010- 2013) 2013) 2013) 2013) 2013) 2013) 2013) 2013) Forecast 175 Forecast print revenues growth -17 % -20 % -16 % -24 % -13 % -25 % -17 % -20 % (2014- (2014- (2014- (2014- (2014- (2014- (2014- (2014- 2019) 2019) 2019) 2019) 2019) 2019) 2019) 2019) Forecast digital revenues growth 56 % 11,4 % 149 % 118 % 53 % 153 % 78 % 74 % (2014- (2014- (2014- (2014- (2014- (2014- (2014- (2014- 2019) 2019) 2019) 2019) 2019) 2019) 2019) 2019) Forecast total revenues growth -10 % -2 % -7 % -10 % -8 % -10 % -10% -6 % (2014- (2014- (2014- (2014- (2014- (2014- (2014- (2014- 2019) 2019) 2019) 2019) 2019) 2019) 2019) 2019) 176 Source: Data provided by the press publishing sector (EPC, EMMA, ENPA and NME after carrying out an internal survey among their members) - May 2016. Data cover 39 publishers from 8 MS (Belgium, Finland, France, Germany, Italy, Poland, Spain and UK). This graph refers to the growth of digital audience (webtraffic) of 39 publishers across the 8 European Markets (BE, FI, FR, DE, IT, PL, ES and UK). 2011 2012 2013 2014 2015 Unique user/browser data (millions)* 248.4 278.2 362.9 419.6 503.4 177 2. Aggregated data on print circulation of daily newspapers (Europe) Source: PwC – Global entertainment and media outlook 2015 - 2019 - http://www.pwc.com/gx/en/industries/entertainment-media/outlook.html Print circulation for daily newspaper (Europe) 120.000 100.000 80.000 60.000 40.000 20.000 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Print circulation for daily newspaper (Europe) 103,995 100,654 95,456 90,979 86,143 82,622 79,243 76,092 73,079 69,745 178 3. Consumers' habits as regards main sources of news Source: Reuters Institute Digital News Report 2015. http://www.digitalnewsreport.org/, p.15 179 180 Source: Reuters Institute Digital News Report 2016. http://www.digitalnewsreport.org/, p.10 181 4. Eurobarometer and Reuters Data on Internet users' preferences (as to the types of services) for accessing content online Source: Eurobarometer on Internet users' preferences for accessing content online (n° 437/ March 2016) - Types of services used to access the news online 182 183 Source: Reuters Institute Digital News Report 2016, http://www.digitalnewsreport.org/ 184 5. Eurobarometer data on consumer's habits when accessing news online Source: Eurobarometer on Internet users' preferences for accessing content online (n° 437/ March 2016) – Use of news aggregators, online social media or search engines to access the news online 185 186 6. Aggregated data on print advertising revenues of daily newspapers and magazines (Europe) Source: PwC Entertainment and Media Outlook 2015 - 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 European print advertising revenue (€m)* 30,600 29,460 27,086 25,192 23,622 22,418 21,331 20,254 19,275 18,309 187 7. Aggregated data on print vs digital revenue trend of daily newspapers and magazines (Europe) Source: PwC Entertainment and Media Outlook 2015 - 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 European newspaper and magazine revenue (Print) in €m * 70,302 67,375 63,248 59,728 56,852 54,479 52,286 50,147 48,193 46,280 European newspaper and magazine revenue (Digital) in €m* 2,034 2,901 3,970 4,962 6,011 7,117 8,317 9,582 10,842 11,971 188 ANNEX 13B – LEGAL PROVISIONS IN SOME EU MS NATIONAL LAWS RELATED TO THE PROTECTION OF PUBLISHERS In some EU Member States, press publishers benefit from a number of provisions in their copyright national law. The scope of these provisions varies among Member States, but they could be grouped in the following types:  Ancillary rights (e.g. DE), whereby specific exclusive rights are granted to press publishers.  Provisions on collective works, whereby a publisher may be granted rights as the person who publishes a work made up of contributions from different creators and discloses it under his name.  Provisions on presumption of transfer, whereby the employer is presumed to hold the rights of his employees, subject to different conditions pursuant to national law.  Copyright protection of the typographical arrangement of published editions, whereby the publisher is granted protection related to the format and layout of the publication of works.  Finally, if exceptions or limitations apply to the above-mentioned rights, publishers may benefit from compensation (e.g. ES). The table below presents a summary of some of the provisions in place in some EU Member States. MS Provision Type of provision Remarks DE Article 87f-h of the Act Ancillary right for press The press publisher is granted the exclusive right to make the press product or parts thereof available to on Copyright and publishers the public for commercial purposes, unless this pertains to individual words or the smallest of text Related Rights excerpts. The term of protection of this right is one year after publication of the press product. Authors are entitled to an equitable share of the remuneration. The right may not be asserted to the detriment of the author or the holder of a right related to copyright whose work or subject-matter is contained in the press product. Exception for uses by commercial providers of search engines or commercial providers of services which process the content accordingly. DK Article 6 of the Presumption of transfer of Conditions: Copyright Act rights to the employer (i) subject to agreement to the contrary. (ii) there is a permanent and regular relation of employment. (iii) the work is created as a part of the employment contract. 189 MS Provision Type of provision Remarks EL Article 51 of Law Copyright protection of the Publishers of printed matter have the right to authorise or prohibit the reproduction by reprographic, 2121/1993 Copyright, typesetting and format of electronic or any other means of the typesetting and pagination format of the works published by them, if Related Rights and published editions that reproduction is made for exploitation purposes. Cultural Matters ES Article 51 of Texto Presumption of transfer of Condition: Refundido de la Ley de rights to the employer In the absence of an agreement in writing. Propiedad Intelectual Article 8 of Texto Provisions on collective works Copyright vests in the person who publishes a collective work and discloses it under her name, subject to Refundido de la Ley de agreement to the contrary. Propiedad Intelectual Article 32.2 of Texto Compensation right for the use Publishers' right to equitable compensation stemming from an exception to their right of making Refundido de la Ley de by content aggregators available to the public, regarding small fragments of content already disclosed by periodic publications. Propiedad Intelectual Content aggregators (mostly news aggregators), as the beneficiaries of the exception, are the debtors of the compensation, which cannot be waived by rightholders and is subject to compulsory collective management. Article 52 of Texto Authors' rights to use their In the absence of provision to the contrary, authors shall preserve their right to use those works in any Refundido de la Ley de works reproduced in periodical form that does not prejudice the normal exploitation of the publication in which they have been inserted. Propiedad Intelectual publications FR Art. L. 113-2(3) and 5 of Provisions on collective works Rights granted to the person or legal entity that takes the initiative of creating and publishing a collective Code de la Propriété work, unless proved otherwise. Intellectuelle HU Article 7 (2) of the Provisions on collective works The copyright owner of a collective work shall be the natural person who edits/collects it, without Copyright Act prejudice to the independent rights of the authors of the individual works and of the right-holders in subject matter covered by related rights included in the collection. IE Section 23 of the Employer considered Conditions: Copyright and Related copyright owner of a work (i) subject to agreement to the contrary. Rights Act made by an employee (ii) the employee of the proprietor of a newspaper or periodical may use the work for any purposes, other than making it available to other newspapers or periodicals. 190 MS Provision Type of provision Remarks Section 17(2)(c) and 29 Copyright protection of the The publisher is considered the author of the typographical arrangement of a published edition. of the Copyright and typographical arrangement of a Term of protection: 50 years after the date on which it is first lawfully made available to the public. Related Rights Act published edition IT Article 12 bis of the LdA Employer is granted an exclusive right to exercise the exploitation rights on the works created by employees Articles 3, 7 and 42 of Provisions on collective works The person who organises and directs the creation shall be deemed its author, independently and without the LdA prejudice of the copyright on the works or part of the works that make it up. The author of the article or another work that has been reproduced in a collective work has the right to reproduce it in separate extracts or collected in a volume, but she has to indicate the collective work from which the single work is taken and the date of publication. NL Article 7 of the Aw Employer considered author of Condition: a work made by an employee When employee's labour consists in the making of ‘literary, scientific or artistic works’. PL Article 12 of the Polish Employer is granted an Conditions: Copyright Act (PrAut) exclusive right to exercise the (i) subject to agreement to the contrary. exploitation rights on the (ii) the work is created as a part of the employment contract. works created by employees (iii) within the limits resulting from the purpose of the employment contract and the mutual intent of the parties. Article 11 of the Polish Provisions on collective works Rights in a collective work, especially an encyclopaedia or a periodical, are vested originally in the Copyright Act (PrAut) publisher. Rights to individual autonomous parts of the work belong to their authors. PT Article 19 of Código do Provisions on collective works Copyright belongs to the single or collective entity that has organised and directed its creation and in Direito de Autor e dos whose name the work has been disclosed or published. Direitos Conexos If it is possible to distinguish the individual contributions of some or all of the authors in a collective work, the provisions on individual contributions to works apply. Newspapers and other periodicals are deemed to be collective works. 191 MS Provision Type of provision Remarks RO Article 6 of the Law on Provisions on collective works Unless otherwise agreed, the copyright in a collective work shall belong to the person, whether natural Copyright and person or legal entity, on whose initiative and responsibility and under whose name the work was Neighbouring Rights created. Article 45 of the Law on Authors' rights to use their Unless otherwise agreed, the owner of the copyright in a work appearing in a periodical publication shall Copyright and works reproduced in periodical retain the right to use it in any form, provided that the publication in which the work appears is not Neighbouring Rights publications thereby prejudiced. Article 44 of the Law on Employer is authorised to use Condition: Copyright and a work made by an employee The use of the work by employer is done within the framework of the object of his activity. Neighbouring Rights UK Section 11(2) of the Employer considered Conditions: Copyright, Designs and copyright owner of a work (i) subject to agreement to the contrary. Patents Act made by an employee (ii) the work is made in the course of the employee's employment. Section 9(d) of the Protection of typographical The publisher is considered the author. Copyright, Designs and arrangements of a published Patents Act edition Section 8 and 16 of the Copyright protection of the Copyright expires at the end of the period of 25 years from the end of the calendar year in which the Copyright, Designs and typographical arrangement of a edition was first published. Patents Act published edition 192 ANNEX 13C – MAIN AGREEMENTS OR OTHER INITIATIVES BETWEEN ONLINE SERVICE PROVIDERS AND PRESS PUBLISHERS 1. GLOBAL AGREEMENTS BETWEEN ONLINE SERVICE PROVIDERS AND PRESS PUBLISHERS ACROSS EUROPE Online service providers Involved parties Object Description general initiatives Digital News Initially: Partnership The DNI focuses on three areas in digital journalism: Google presents the DNI as a forum allowing an ongoing Initiative between Google and eight discussion between the Technology and News sectors aiming (DNI) European newspapers: Les  Product development: Google collaborate with at encouraging more sustainable news ecosystem and Echos, FAZ, The Financial news organisations to develop new business encouraging innovation in digital journalism. Google models in journalism, so as to increase revenue, Times, The Guardian, traffic and audience engagement, beneficial to all. Source: Google's contribution to the 2016 Public consultation. 2015 NRC Media, El País, La Stampa and Die Zeit  Supporting innovation: Google set a €150 million innovation fund over three years. So far, this fund has given grants of a combined €27 million to 128 Today 160 European projects in 23 EU countries. newspapers participate in  Training and research: over 12,000 journalists, the DNI. academics and students across Europe have received training support from the Google News lab team since April 2015. Accelerated Partnership between AMP is one example of the collaboration triggered by DNI With such open-source initiative, Google wants to limit the Mobile Pages publishers around the – a mobile publishing format/platform. decline of mobile web as a destination for news searches Project (AMP) world and technology particularly while, notably in US, readers are more likely to This is an open-source standard aiming at improving the companies (LinkedIn, find news through their Facebook feed. entire mobile content system for everyone, particularly at Google, Pinterest and making publishers’ webpages load faster on mobile devices Google/ DNI Twitter, etc.) while giving them a better control of their branding (the Audiences: Mobile design of their pages). - AMP format is being used by Google search (so far, only in Today, this standard is 2016 This initiative, helping publishers to reach an increasingly mobile browsers) and by Twitter, LinkedIn, Pinterest, used by over 100 European audience on mobile, enables them as well to benefit from a Medium and Nuzzel. publishers better monetisation, including through a better and faster Source: Google's contribution to the 2016 public consultation. integration of ads. 193 Instant Facebook was testing IA Instant Articles is a mobile publishing format/platform. It According to Facebook, for publishers this tool represents a Articles with a small set of aims to enhance the user access to publishers' content on faster mobile optimised way to publish and distribute their (FBIA) publishers (such as Facebook, by enabling them to load and read them far content as quickly as possible. Liberation in FR) but as of quicker within their Facebook app (mobile). Facebook For instance, the FR newspaper Libération reports that April 2016, the program is Facebook considers that, for publishers, it maximises the publishing on Instant Articles has been positive. Regarding Mobile opened to any content publication process and reach and thanks to a strong IT their traffic, they did not lose any user: people, on mobile, are publishers 2015-2016 structure they get the ability to track (content and audience still reading their stories published on their website (60 %) analytics: total views, time spent, etc.) and monetise their and on Facebook (40 %). The time spent by readers on FBIA content through various advertising options. has jumped. They have 10 % more followers on their Facebook Libération page, and they are successfully For instance, publishers can sell and serve their own monetising their articles, per page and stories reach, with advertisements and keep 100 % of revenue, and they can Facebook's Audience Network. (Source: Xavier Grangier, monetise with ads from Facebook's Audience Network. "Liberation on Facebook's Instant Articles, 17 March 2016 Source: Instant Articles: Frequently Asked Questions https://www.linkedin.com/pulse/lib%C3%A9ration- https://developers.facebook.com/docs/instant- facebooks-instant-articles-xavier-grangier ) articles/faq?locale=en_US Audiences: - FBIA will only be shown to users of the Facebook mobile app. Apple's News Apple initially opened this This App is a mobile publishing format/platform, which For publishers, this tool will, as with FBIA and AMP, make program to 20 publishers includes content from different news publishers while news articles load more quickly on mobile devices and Apple but as of March 2016, the ensuring the latter to better control the design of their page provide a better mobile experience. Mobile platform has been opened (custom typography, image and linked text), the article According to Apple, this tool also allows them to earn to all publishers. Those traffic (Analytic tools) and to better monetise their content 2016 revenue by including advertisements in their Apple News already on Apple News: through advertising solutions. Format channel and articles. They can sell their own ads and New York Times, CNN, With this tool, Apple considers that the user is able to keeping 100 % of revenue or allow Apple to sell ads in their Huffpost, The Atlantic, access faster and quicker content from different sources in content: they keep 70 % of the revenues. NPR, Buzzfeed, VOx, etc. the same app. This content is organised into channels Audiences: (publisher content's home in news) and assigned to topics, allowing then the users to follow what best match their - Publishers' content published to Apple News are only interest. available to IPHONE and IPAD users Source: "Publishing with Apple News format", https://developer.apple.com/news-publisher/ 194 2. Local agreements and initiatives between online service providers and press publishers across Europe Local agreements/ Financial aspect and Involved parties Object initiative other remarks Google – FIEG (Italian Google – FIEG (Italian General: Collaboration agreement aiming at "promoting innovative approach for Italian Google will earmark 12 Newspaper Publishers Newspaper Publishers Media in the digital era" million euros over three Federation) Federation) years with a focus on This agreement envisages "the recognition of the importance of copyright and the copyright protection of valorisation of editorial content with the use, via revenue sharing, of the mobile solution news publishers' Google Play Newsstand and the video platform YouTube". Italy content. This implies a Google's investment of €12 million over three years and a focus on four 7 June 2016 strategic areas: mobile and video, copyright protection tools and training (ex. Distribution of content on mobile devices via Google Play Newsstand, use of Google Analytics tools, creation of a Digital Lab@Fieg, joint action for the protection of online content). Source: Ansa, "FIEG-Google deal to boost media sector", 7 June 2016, http://www.ansa.it/english/news/lifestyle/arts/2016/06/07/fieg-google-deal-to-boost- media-sector-2_f044ce22-ebd3-4010-814d-e5a20cd88ad1.html Google Google and FR The agreement consists in two initiatives: According to Google, Newspaper publishers this is a business and 1° The creation by Google of a €60 million digital-publishing innovation fund to help technology agreement. support transformative digital publishing initiatives for French readers. France Creation of a €60 2° The French publishers' increase of online revenues by using Google's advertising 02/2013 million innovation fund technology. for digital news Source: Google Official Blog, "Google creates €60m Digital Publishing Innovation Fund publishers. to support transformative French digital publishing initiatives", Feb 1, 2013 https://googleblog.blogspot.be/2013/02/google-creates-60m-digital-publishing.html 195 Google Google - Belgian Background: Google was sued in 2006 by Copiepresse, an association of Belgian Google considers that French language news newspaper publishers, for displaying snippets in Google News and linking to cached "this is not paying publishers, authors' copies of their page in Google search. On 13 February 2007, the Court of Appeal held Belgian publishers or Belgium societies Google liable for copyright infringement. In 2012, the parties announced having reached a authors to include their set of agreements to end all litigation. content in its services. 12/ 2012 [It is rather a Under these, they agreed to collaborate on: collaboration] on a - a mutual promotion of their services, for instance: the publishers will optimise their use broad range of business of Google's Adwords to attract new readers; initiatives". - an increase of publishers' revenues, by a better monetisation (paywalls subscription and advertising solution such as Ad sense); - an increase of reader engagement, by implementing Google+ social tools on publishers' websites and launching official YouTube channels; - an increase of the accessibility of the publisher's content, in particular on mobile platforms. Under the agreements, Google had also to pay the publishers' legal fees. Source: Google Europe Blog, "Partnering with Belgian news publishers", Dec.12, 2012 http://googlepolicyeurope.blogspot.be/2012/12/partnering-with-belgian-news- publishers.html 196 3. Example of an EU online service providing access to press content further to an agreement with press publishers Local agreements/ initiative Involved parties Object Financial aspect and other remarks Blendle Blendle (a Dutch digital start- Blendle's ambition is to "put all newspapers After one year, Blendle has informed that the platform up) and the major magazine and and magazines in the country behind one had already 250,000 users, of which the majority is Netherlands newspaper publishers in the (quite sexy) paywall and make it so easy to use under 35 years old. 2015 Netherlands, as well as New that young people start paying for journalism York Times, Wall Street again". Journal, Washington Post. The idea behind their business model is to provide a similar experience to iTunes, for press contents. It is a micropayment model (pay per article / no monthly fees for entire websites), with less reliance on advertising and support for good quality journalism with: - a better reading and paying experience (with only one click) - a better consumer experience (with notably a refund policy) - a support to users to find the press content that best match their interest. Source: "Blendle: a radical experiment with micropayments in journalism, 365 days later", 28 April 2015. https://medium.com/on-blendle/blendle-a- radical-experiment-with-micropayments-in- journalism-365-days-later-f3b799022edc 197 ANNEX 13D – DATA ON MEMBER STATES WITH AN AUTHOR-PUBLISHER SPLIT OF COMPENSATION DUE UNDER EXCEPTIONS AND LIMITATIONS 198 199  ANNEX 14 – TRANSPARENCY AND BALANCE IN THE CONTRACTS OF AUTHORS AND PERFORMERS ANNEX 14A – EXAMPLES OF NATIONAL LEGISLATION AND SOFT-LAW References to legislation are indicated in the table "Examples of national legislations currently in force" below. This list is non-exhaustive and is only intended to provide examples of legislations and soft-law regulations. BELGIUM Belgian copyright law provides for several reporting obligations according to the type of the contract. Book publishers shall send to the author at least once a year a statement of the sales, revenue, assignments for each mode of exploitation. Where the remuneration is proportional to the revenues generated from the exploitation of an audiovisual work, the producer shall produce once a year a revenue statement (differentiating each mode of exploitation). BULGARIA A reporting obligation is imposed on audiovisual producers which shall, at the request of the authors, produce a reporting statement at least once a year. CROATIA Croatian copyright law provides transparency obligations for publishers and for audiovisual producers. Authors have the right to control at any time the accuracy of information provided by their publisher. No reporting obligation is however imposed on publishers. Film producers shall automatically transmit to their authors a report on the profits for each form of their work at least once a year. CZECH REPUBLIC The Czech copyright law provides a general transparency obligation according where the amount of royalty is proportional to the exploitation of the work. The licensee shall be obliged to facilitate the audit by the author of the relevant accounting documents. DENMARK A general reporting obligation has been introduced into Danish copyright legislation. Upon the request of creators, contractual counterparties have to make a settlement of revenues where the remuneration is proportional to the revenues at least once a year and may be required to provide any underlying information. FINLAND Finish law provides for reporting obligations imposed on publishers towards authors when a sale or rental has taken place for which the author is entitled to be remunerated. In such as case, the publisher shall render account to him within nine months from the end of the year concerning the sales or rentals during the year and the number of copies in stock at the end of the year. 200 FRANCE Current French legislation provides for several reporting obligations according to the type of the contract. Audiovisual producers shall transmit, at least once a year, to the authors and the joint authors a statement of revenues generated from the exploitation of the work with respect to each mode of exploitation305. In addition, the reporting obligations imposed on audiovisual producers were strengthened by a memorandum of understanding signed in 2010 by the main French audiovisual stakeholders. Under this MoU, producers undertook to communicate in addition to authors whose remuneration is proportional to the revenues generated by the film, within two months following the closing of the final cost of the cinematographic work, a statement containing inter alia the final cost of the work and the balance of the cost of the work still to be amortized. In addition, on 7 July 2016, a new law has been enacted which strengthens the obligations imposed on audiovisual producers in case of the assignment of the audiovisual contract to a third party and which introduces new transparency obligations imposed on the executive producers and the distributors (see below). In the publishing sector, a framework agreement on the publishing contract in the digital era signed in 2013 extended the publishers' reporting obligations provided by the French Intellectual Property Code and the French Code of Practice ('Code des usages'). Book publishers shall now produce, once a year, a reporting statement that shall contain specific information both for printed copies of books (number of copies manufactured, number of stock-in copies, etc) and for books exploited in their digital format. French legislation provides that if the report has not been transmitted to the author within six months from the reporting date defined by the contract, the author can give formal notice to the publisher to provide him with the report. If the book publisher does not communicate the report within three months following the formal notice, the contract will be terminated as of right. For phonogram producers, current French legislation does not provide any reporting obligations. Yet, on 18 October 2015, 18 music industry stakeholders signed a memorandum of understanding ("protocole d'accord") for a fair development of online music under the auspices of the French Ministry for Culture, under which they undertook to guarantee a fair remuneration to artists (Objective no. 5). More specifically, phonogram producers committed, inter alia, to report to artists on the revenues generated from the exploitation of their works in a transparent way. The format of the report which shall be available in an understandable and user-friendly layout both to the artists and their managers will be determined at a later stage by a stakeholders' dialogue. Finally, French legislation imposes lighter reporting obligations on entertainment promoters which have to notify to the author or his representatives the exact program of public performances and to supply to them a documented statement of receipts. GERMANY 305 Article L. 132-28 of the French Intellectual Property Code 201 Under the current German copyright law, a reporting obligation exists for music producers that shall provide, upon the performer's request, information on the revenue generated by the exploitation of the audio recording and other information necessary to assess his remuneration. GREECE Audiovisual producers shall give once a year all the information concerning the exploitation of the work. Audiovisual producers are exempted of such obligations for short advertising films. HUNGARY Hungarian cinematographic producers shall, at least once a year, render account to the author of the revenues generated by the exploitation of the film. ITALY Italian copyright law provides for an annual reporting obligation imposed on publishers concerning sold copies in the cases of profit participation agreements, LITHUANIA At the author's request, the publisher shall give written information including the number of copies sold as well as the revenues generated. POLAND Polish copyright legislation provides for a general transparency obligation. Where the remuneration is proportional to the revenues generated by the exploitation of the work, the author is entitled to receive information or to have access to the documentation necessary to establish such remuneration. PORTUGAL Book publishers shall transmit once a year to the authors a reporting statement including inter alia the number of sold and returned books and the balance of payment. ROMANIA Under Romanian copyright law, the audiovisual producer shall produce annually an account of the takings according to each mode of exploitation. Besides, the producer of theatrical or musical performance shall communicate at least once a year to the author the number of performances as well as a state of takings. SLOVAKIA Where the royalties are proportional to the revenues generated by the exploitation of the work, the Slovakian copyright law provides a general transparency obligation which enables the 202 author to control the accounting record of his contractual counterparty necessary for determining his remuneration. SLOVENIA Slovenian legislation provides a general transparency obligation according to which, where the agreed remuneration is proportional to revenues, contractual counterparties must keep the documents necessary to determine the amount of such revenues. In addition, a specific obligation falls on film producers that have to send at least once a year to the co-authors of the work a report on the revenues generated by the cinematographic work. SPAIN Spain provides for reporting obligations applicable to publishing contracts, audiovisual contracts and public performance contracts. The creators' contractual counterparties have to render accounts of the revenues resulting from the exploitation of a book, an audiovisual work or from the execution of a public performance where remuneration is proportional to the revenues. SWEDEN The Swedish copyright law provides for a legal reporting obligation only in the book sector. The publisher shall render account yearly to the author of the revenues generated by the exploitation of its work and of the number of copies sold as well as the stock at the end of the year. UNITED KINGDOM UK legislation does not provide for any reporting obligations. The UK Publisher Association undertook to foster constructive and co-operative relationships with book authors and to attempt to address some of the areas which may lead to avoidable conflict by publishing a Code of Practice on Author Contracts (1982, updated 1997 and 2010). This Code of Practice provides that "the publisher must ensure that the author receives a regular and clear account of sales made and monies due" (point 11). 203  Table - Examples of national legislations currently in force PHONOGRAM PUBLIC PRODUCERS COUNTRY PUBLISHING SECTOR / CONTRACTS AUDIOVISUAL SECTOR / CONTRACTS PERFORMANCE CONTRACT/ MUSIC CONTRACTS SECTOR Article XI.198 Article XI.202 Belgium Article XI.206 Notwithstanding any contrary agreement, the publisher will send the The beneficiary of the Loi du 19 avril 2014 portant author, at least once a year, a statement of sales, revenue and representation agreement is insertion du Livre XI «Propriété The amount of the remuneration is, unless otherwise stated, assignments for each mode of exploitation. required to communicate to Intellectuelle » dans le Code de proportional to the revenue generated from the exploitation of the author or his assignee droit économique, et portant the audiovisual work. In this case, the manufacturer will send the exact program of public insertion des dispositions propres Except in case of re-publishing of the work, the publisher is exempted the artist - performer, at least once a year, a statement of the performances and to au Livre XI dans les Livres I, XV et from this obligation if the work is not exploited in any manner generated for each mode of exploitation. provide a documented XVII du même Code whatsoever, for five consecutive years. statement of its revenues. Accounting to the Authors: Art. 66. At the request of the persons referred to in Art. 62, the producer shall provide to them at least once a year a statement on the revenues from each type of use of the work. Bulgaria [Art. 62. defines rights owners: (1) director, the author of the Law on Copyright and screenplay and the director of photography, artist-director. (2) Neighbouring rights (Published in The authors of the music, the dialogue, the pre-existing State Gasette No 56/1993; amended literary work on which the audiovisual work was based, the No 63/1994, No I 0/1 998, No costume designers, the set designers, as well as the authors of 2812000, No 77/2002) all other material, incorporated in the audiovisual work, shall enjoy the copyright in their individual works. (3) A producer within the meaning of this Title shall be the physical person or the legal entity who organizes the production of the work and provides its financing.] Croatia Article 58(1) Verification of accuracy of information - The author Article 119 Report on remuneration for rights to audiovisual shall have the right of insight and control, at any time, of the publisher's work The film producer of an audiovisual work must at least Copyright and Related Rights Act business records and documentation, to verify the accuracy of once a year submit to the co-authors a report on the profits for (O.G. 167/2003) information provided to him by the publisher. each form of use of the work. Czech Republic Article 49(4) Where the amount of the royalty has been agreed in dependence on the proceeds from the utilisation of the licence, the licensee shall be obliged to make it possible for the author to audit Consolidated version of Act No. the relevant accounting documents or other documentation in order to establish the real amount of the royalty. Where the licensee thus provides the author with information designated by the licensee as 121/2000 Coll., on Copyright and confidential, the author may not divulge such information to any third party, nor use it according to his needs in contravention of the purpose for which it has been made available to him. Rights Related to Copyright and on Amendment to Certain Acts (the Copyright Act). 204  PHONOGRAM PUBLIC PRODUCERS COUNTRY PUBLISHING SECTOR / CONTRACTS AUDIOVISUAL SECTOR / CONTRACTS PERFORMANCE CONTRACT/ MUSIC CONTRACTS SECTOR Settlement and Control – Article 57 Denmark (1) If the author's remuneration depends on the assignee's turnover, sales figures, etc., the author may demand that settlement is made at least once a year. The author may likewise demand that the settlement be accompanied by satisfactory information on the circumstances forming the basis of the calculation of the remuneration. Consolidated Act No. 1144 of October 23rd, 2014 (2) The author may demand that the accounts, bookkeeping and inventory together with certifications by the party who has exploited the work in connection with the annual settlement according to subsection (1) be made available to a state-authorised public accountant or registered accountant appointed by the author. The accountant shall inform the author of the correctness of the settlement and of irregularities, if any. The accountant shall otherwise observe secrecy about all other matters that become known to him in connection with his review. (3) The provisions of subsections (1) and (2) shall not be deviated from to the detriment of the author. Section 35(2) (2) If, during a fiscal year, sale or rental has taken place Finland for which the author is entitled to be remunerated, the publisher shall render account to him within nine months from the end of the year Copyright Act (404/1961) concerning the sales or rentals during the year and the number of copies in stock at the end of the year. The author shall moreover have the right to obtain information, at his own request, about the number of copies in stock at the end of a year even after the end of the accounting term. Article L. 132-13 The publisher is accountable. The author may, in the No legislation absence of special conditions stipulated in the contract, require at least an annual production by the publisher of a statement of the number of [Stakeholders dialogue] - copies published during the year and giving the date and the importance Memorandum of of prints and the number of copies in stock. Except contrary usage or Article L. 132-28 Audiovisual producers shall transmit, at understanding for a fair agreement, this statement shall also contain the number of copies sold least once a year, to the authors and the joint authors a development of online by the publisher and the copies unusable or destroyed by accident or statement of revenues generated from the exploitation of the music (2015) force majeure, and the amount of royalties due or paid to the author. work with respect to each mode of exploitation Phonogram producers Article L. 132-14 The publisher shall provide the author with all [Stakeholders dialogue] - Memorandum of understanding undertook to guarantee a fair Article L .132-21 evidence required to establish the accuracy of his accounts. If the (2010) Within 2 months following the determination of the remuneration to artists Entertainment promoters France publisher fails to provide the necessary evidence, he will be forced by final cost of the cinematographic work, the audiovisual (Objective no. 5). shall notify to the author or the judge producer shall communicate to the authors where his representatives the exact Intellectual Property Code – as remuneration is proportional to the revenues generated by the program of public amended by Order no. 2014-1348 They committed to report to Article L.132-17-3 I. - The publisher shall for each book explicitly and work: artists on the revenues performances and to supply of 12 November 2014 transparently report to the author on his remuneration. To this end, to them a documented generated from the publisher the addresses to the author, or makes available through an - the final cost of the work, exploitation of their works in statement of receipts electronic communication process, a statement of accounts stating: a transparent way. - the balance of the cost of the work still to be amortized, 1. When the book is published in a printed form, the number of copies The report shall be available made during the year, the number of copies in stock at the beginning - the nature and the amount of publishing costs to be opposed in an understandable and and end of the year, the number of copies sold by the publisher, number to authors user-friendly format both to of copies excluding duties and destroyed during the period; the artists and their managers that will be determined at a 2. When the book is published in digital form, the income from sales by later stage by a stakeholders' unit and each of the other operating modes of the book; dialogue. 205  PHONOGRAM PUBLIC PRODUCERS COUNTRY PUBLISHING SECTOR / CONTRACTS AUDIOVISUAL SECTOR / CONTRACTS PERFORMANCE CONTRACT/ MUSIC CONTRACTS SECTOR 3. In all cases, the list of transfers of rights carried out during the year, From the signature of the the amount of the corresponding royalties due or paid to the author as MoU, phonogram producers well as the rates of remuneration provided for in different publishing undertook to (i) provide contract. reports in an electronic format (ii) listing the A specific part of this statement of accounts is devoted to the royalties received from the exploitation of the book in digital form. main distributors (by mode of exploitation and by Accountability is performed at least once a year, on the date specified territory), (iii) to designate a in the contract or, in the absence of a date no later than six months after representative in companies the closing of accounts. having more than 10 employees to handle questions relating to II. - If the publisher has not fulfilled its obligation of accountability in reporting obligations, and to the manner and within the time stated in I, the author has a period of six (iv) provide a global months to notice the publisher to carry it . overview of all discounts applied to the artist's When this notice is not acted upon within a period of three months, the remuneration base. contract is automatically terminated. III. - When the editor has not performed, for two successive years, its reporting obligation, the contract is automatically terminated within six months of the second formal notice. IV. - The editor remain still under the obligation, even in the absence of formal notice by the author, to meet its legal and contractual obligations of accountability Article 79a Performer’s right to remuneration Germany (4) The producer of the audio recording shall be Copyright Act of 9 September 1965 obliged to provide the (Federal Law Gazette Part I, p. performer upon request with 1273) information about the revenue generated and other information required to quantify the right to remuneration in accordance with paragraph (1). 206  PHONOGRAM PUBLIC PRODUCERS COUNTRY PUBLISHING SECTOR / CONTRACTS AUDIOVISUAL SECTOR / CONTRACTS PERFORMANCE CONTRACT/ MUSIC CONTRACTS SECTOR Article 34 (3) The author of an audiovisual work shall retain the right to a separate fee for each form of exploitation of the work. The aforementioned fee shall be agreed as a percentage, Greece specified in the relevant contract. The calculation of the percentage shall be based on gross revenues, without exception, or the gross expenditure or on the combined gross Law No. 2121/1993 on Copyright, revenues and expenditure, realized in the course of the Related Rights and Cultural Matters exploitation of the work. The producer of the audiovisual work is obliged once a year to give the author of the work all information concerning the exploitation of the work, in writing, showing him also all relevant documents. Short advertising films shall be exempt from the provisions of this paragraph. Article 66 (5) The producer shall be accountable to the Hungary author, by manners of use, in writing and at least once a year, on the income related to the use of the cinematographic Act LXXVI of 1999 on Copyright creation. Italy Article 130 When contracts provide for a proportional remuneration, Law No. 633 of April 22, 1941, for the publisher shall render account every year of the sold copies. the Protection of Copyright Lithuania Article 46 Publisher’s Duties under the Publishing Agreement: 7) at the author’s request, furnish necessary written information together Law on Copyright and Related with necessary documents, or their copies, indicating the number of Rights 18 May 1999 No VIII-1185 copies of the published work, income received from the sold copies of Vilnius the published work, and the calculated remuneration. Poland Article 47 If the remuneration of the author depends on the proceeds from the use of his/her work, the author shall have the right to receive information and to have access, as necessary, to the Act No. 83 of February 4, 1994, on documentation being essential to determine such remuneration. Copyright and Neighboring Rights 207  PHONOGRAM PUBLIC PRODUCERS COUNTRY PUBLISHING SECTOR / CONTRACTS AUDIOVISUAL SECTOR / CONTRACTS PERFORMANCE CONTRACT/ MUSIC CONTRACTS SECTOR Article 96 (Accountability) 1 - If the compensation due to the author depend on the results of the sale or if your payment is subject to the evolution of this, the publisher shall provide the author with accounts at the agreed time or, failing that, every six months, as at 30 June and 31 Portugal December each year. 2 - For the purposes of the preceding paragraph, the publisher shall transmit to the author by registered letter within 30 Code of Copyright and Related days immediately following the end of the period, the map of the state Rights of sales and returns that took place during this period, accompanied by the payment of the balance. 3 - The editor always will provide the author or representative of the elements of his writing, indispensable for the proper verification of accounts, it referred to in the preceding paragraph. Article 61(1) The assignee shall be obliged periodically to communicate to the owner of the copyright the number of theatrical or musical Romania Article 71(2) The producer shall be obliged periodically to performances and also the submit to the authors an account of the takings according to state of the takings. To that Law No. 8 of March 14, 1996 on each mode of exploitation. end, the theatrical or Copyright and Neighboring Rights musical performance contract shall also specify the intervals between such communications, which shall not however be fewer than one a year. Article 4 (2) If remuneration was agreed upon according to the revenues resulting from the exploitation of the licence, the licensee shall be obliged to enable the author to control his/her accounting Slovakia records or other documentation necessary for determining the remuneration. If in this case the licensee provides the author with the information marked by the licensee as confidential, the author may neither pass such information onto a third person nor use such information for himself/herself in conflict with the purpose for which the information was provided to him/her. (3) If remuneration was Act No. 618/2003 on Copyright and agreed upon according to the revenues resulting from the utilization of the licence, at least once a year the licensee shall be obliged to provide the author, with information regarding the revenues Rights Related to Copyright resulting from the utilization of the licence separately for each manner of use of the work and simultaneously, the licensee shall also be obliged to provide the author with the remuneration accounting statement, if not agreed otherwise. Article 82 – Accounting (1) Where the royalty or remuneration is agreed to, or determined in proportion to the revenues derived from the exploitation of the work, the user of the work must keep the books or other documentation necessary to determine the amount of such revenues. (2) The user of the work shall allow the author to inspect the documentary evidence mentioned in the foregoing paragraph, and shall send him adequate reports on the revenues, both at usual intervals and to the necessary extent. Slovenia Article 108 Royalty Copyright and related rights act of 30 March 1995 (2) Film producer must at least once a year send to the co- authors of an audiovisual work a report on the revenues, separately for each authorized form of exploitation of the work. 208  PHONOGRAM PUBLIC PRODUCERS COUNTRY PUBLISHING SECTOR / CONTRACTS AUDIOVISUAL SECTOR / CONTRACTS PERFORMANCE CONTRACT/ MUSIC CONTRACTS SECTOR Article 78 The contractor shall: 5. Submit to the Article 90 3. (...) The managers of public performance author or his representatives Article 64 The publisher shall: 5. Provide to the author the stipulated premises should regularly make available to the authors the the exact program of public remuneration and, and when it is proportional to the revenues, at least amounts collected in respect of such remuneration. For this Spain performances, and where once a year, render accounts of the revenues. It shall also make purpose, the Government may introduce the appropriate remuneration is available annually to the author a statement which contains information control procedures. 5. In order to provide to the author with Real Decreto Legislativo 1/1996, de proportional to the relating to the printing, the distribution and the existing stocks. To this the exercise of the rights in relation to the exploitation of the 12 de abril revenues, a revenue end, if the author so requests, the publisher shall submit supporting audiovisual work, the producer shall, at least once a year, statement. Also, the documents. upon the request of the author, provide him with the necessary transferee must facilitate documentation. the verification of such programs and statements. Article 35 The publisher shall provide the author with a certification from the printer or whoever else reproduces the work concerning the number of Sweden copies produced. Act on Copyright in Literary and Artistic Works Swedish Statute If during the fiscal year sales have taken place for which the author is Book, SFS, 1960:729 entitled to remuneration, the publisher shall render account to him within nine months from the end of the year, stating the number of copies sold during the year and the number in stock at the end of the year. At his request, the author is also otherwise entitled to obtain a statement of the number in stock by the end of the year. [Stakeholders' dialogue] - The Publishers Association Code of Practice on Author Contracts Guidelines for Book Publishers Code of Practice 2010 - (11) The publisher must ensure that the author receives a regular and clear account of sales made and monies due. - (12) The publisher must ensure that the author can clearly ascertain how any payments due from sub-licensed agreements United Kingdom will be calculated. - (13) The publisher should if possible keep the author informed of important design, promotion, marketing and sub-licensing decisions. - (18) The publisher should endeavour to keep the author informed of changes in the ownership of the publishing rights and of any changes in the imprint under which a work appears. 209  2. Examples of draft legislations or legislations recently enacted France and Germany are considering or have enacted new legislations imposing or strengthening reporting obligations imposed on the contractual counterparties of creators. The German draft law foresees a general reporting obligation in case of the utilisation of an author's work in return for payment once a year on the basis of the information usually available in the ordinary course of business. The draft law provides a list of exceptions under which the contractual partner would not have to comply with such obligation (subordinate contribution to a work, computer program, and disproportionate claim). On 7 July 2016, a new French law has been enacted which strengthens transparency obligations imposed on audiovisual producers and imposes transparency obligations on executive producers and on audiovisual distributors: - Executive film producers have to establish, within six months following the completion of the audiovisual work, a production report that shall be transmitted to the author of the script, the author of the adaptation, the author of the dialogue, the author of the musical compositions and the director. The report shall enumerate all the costs engaged for the preparation, the realisation and the post-production of the work. It is specified that the format of the report will be determined during a stakeholders' dialogue; - Distributors have to establish, within six months following the theatrical release of the work, an exploitation report which shall contain the revenues generated and the costs incurred by the exploitation of the work, as well as the net revenues to which the producer is entitled to, the price paid by the public, and the retained commission if any. This report shall be transmitted to the producers of the work who shall then communicate it to the author of the script, the author of the adaptation, the author of the dialogue, the author of the musical compositions and the director. - COUNTRY CURRENT LEGISLATION DRAFT LEGISLATION N/A Article 32d - Entitlement to information and accountability (NEW) (1) In case of utilisation of his work in return for payment the author may request information and accountability from the contractual partner on the scope of the utilisation of the work and the income and benefits drawn from it once a year on the basis of the information usually available in the ordinary course of business. (2) The claim persuant to paragraph 1 shall be excluded if Germany 1. the author provides only a subordinate contribution to a work, a product (Government Draft Law - as of March or a service; a contribution is of subordinate nature in particular if it 16, 2016, amending the current characterizes the overall impression of a work or the composition of a German Copyright Act) product or service to a less extent. 2. a computer program is subject of the protection 3. the claim of the contracutal partner is disproportionate for other reasons. (3) Paragraphs 1 and 2 may be departed from to the detriment of the author only by means of an agreement based on a joint remuneration rule (article 36) or a collective agreement. 210  Article L. 132-28 Article L. 132-28 Audiovisual producers shall transmit, at least Audiovisual producers shall transmit, at least once a year, to the authors and the joint once a year, to the authors and the joint authors a statement of revenues generated from the exploitation of the work with authors a statement of revenues generated respect to each mode of exploitation from the exploitation of the work with respect to each mode of exploitation Any assignment of an audiovisual production contract to a third party can intervene only after prior information of the co-authors of the assignor in a minimum period of one month prior the effective date of the assignment. Any audiovisual production contract is subject to the requirement provided for in this paragraph. N/A Transparency of production accounts - Obligations of executive producers Art. L. 251-1. - Any producer who, in his capacity as executive producer, took the initiative and accountability, artistic and technical realization of an audiovisual work in the genres of fiction, animation, creative documentary or audiovisual adaptation of live performance, admitted to the benefit of financial aid for the production of National Center of Cinematography, and he has guaranteed the successful completion shall, within six months from the date of completion of the audiovisual work, prepare and transmit the production account of the work to other co-producers, companies with which it has concluded a financing contract giving them a share in the operating income, the television service publishers who contributed to financing the production of the work and the authors listed in Article L. 113-7 of the code of intellectual property and, where applicable, audiovisual to publishers holding adaptation rights of a printed work, provided that it concluded with these authors or publishers a contract giving them a share in the operating income of the work, conditioned to the amortization of the cost of production. The production account is also transmitted to any other person or entity with which the executive producer has a contract giving it a share in the revenue of the work, conditioned to the amortization of the cost of production. France The production account includes all expenses incurred for the preparation, Law enacted on 7 July implementation and post-production of the work, shall determine the final cost and 2016 indicates the means of funding. N/A Transparency of operating accounts - Obligations of distributors Art. L. 251-5. - Any distributor who, as assignee or agent has operating rights for the commercialization of an audiovisual work in the genres of fiction, animation, creative documentary or audiovisual adaptation live show and admitted to the benefit of financial aid for the production of the National film Centre is, in the first three months of the year following the first broadcast of the work by a service editor television, shall at least once a year during the term of the contract concluded with the executive producer, produce and transmit to the latter the operating account of this work. The elements of the operating account are provided for each mode of exploitation of the work in France and for each operating territory in which the work is exploited abroad, except for the elements that are not individualized. Operating costs and their depreciation status are indicated only when they are taken into account for calculating the amount of net revenue that is owed to the producer. Financial aids received by the distributor are mentioned only if they relate to the work concerned. The depreciation status of the minimum amounts guaranteed is indicated in all cases. N/A Transparency of operating accounts - Obligations of executive producers Art. L. 251-9. Executive Producer transmits the operating account that is given to it under subsection 1 of this section to the other co-producers, undertakings to which it is linked by a financing contract giving them a share in the operating income, the authors listed in Article L. 113-7 of the code of intellectual property and , where applicable, to audiovisual publishers holding adaptation rights of a printed work. For the authors, this transmission takes the place of the provision of the statement of revenue provided for in Article L. 132-28 of the Code. The operating account is also transmitted to any other person or entity with which the executive producer has a contract giving it a share in the revenue of the work. 211 ANNEX 14B – EXAMPLES OF CONTENT OF REPORTING STATEMENTS Book publishing - Number of copies sold in each format and for each territory - Number of (or the equivalent calculation) copies made available through online services (subscription/streaming) - Number of (or the equivalent calculation) copies made available through libraries (for lending) - Number of copies (or the equivalent calculation) used for marketing purposes - Number of free copies/author's copies - Advance paid to the author - VAT - Number of copies returned - The publisher's calculated royalty from the retailers' price/net income and royalty percentage of each format, including the number of copies sold at a discount (on sale or through campaigns) - Balance owed by publisher or author Audiovisual - Number of copies of the audiovisual work sold or rented for each network and territory - Unit price of the audiovisual work - VAT - Advance paid to the authors - Revenues for each territory and for each mode of exploitation - Number of copies (or the equivalent calculation) copies made available through online services (subscription/streaming) Music - Number of physical records sold / streams / downloads - Territories covered - Unit price of the musical work and revenues generated by the exploitation of the work - VAT - Revenues for each territory and for each mode of exploitation - Royalty rates and royalties amounts 212 ANNEX 14C – ASSESSMENT OF REPORTING IN DIFFERENT SECTORS This annex presents real examples of costs connected with periodic reporting to authors as well as estimations of cost for all companies in the sector both in monetary and time terms. The real life examples come from companies who already prepare such reports in book publishing and in the audiovisual sector. They were acquired through interviews and meetings conducted by Commission. These circumstantial evidence is presented in subchapters (a). The estimations and extrapolations are based on key figures provided in examples in subchapters (a) as well as on several additional assumptions needed to present a holistic picture per size category. Given that estimations are based on extremely limited evidence they should be treated with caution, as an illustration of potential scenario rather than hard facts. These estimations are provided in subchapters (b). A set of common assumptions used for estimation is reported in the last subchapter. Book publishing a) Evidence from stakeholders Stakeholders report that a large majority of book publishing deals (and all of them in case of foreign authors) are royalty-based which require some form of accounting and reporting to authors. (Lump- sum deals are common in academic publishing and commissioned books.) However, such reporting may not be very transparent if it does not specify modes and territories of use, stock information, or revenue split and expenses. According to an Eastern-European publisher, the most common reporting frequency is semi-annual but it can be quarterly occasionally and it is at least annual almost everywhere in the industry. They are currently publishing 600 titles per year and holding approximately 2500 titles in distribution. Until recently, they have been using spreadsheets for accounting and reporting but they are now developing an internal reporting system like all large European publishers. Reporting on 600 titles takes 1 week for two staff, and the average time required for compiling and sending a report on a title is 8 minutes. It is reported that simpler cases can be dealt with in 2-3 minutes while the more difficult ones can take 10-15 minutes. Reporting is easier and quicker for smaller companies with fewer titles because there are fewer sources to gather information from. The one-off cost of the reporting system was approximately €10,000. The new system is expected to further economise staff requirements for reporting while allowing a more reliable and even more frequent reporting. A large French publisher reports that they use a commercial business management enterprise software which they have adapted to their specific needs. Because of the large number of authors they report to, they need to have automated and integrated accounting and reporting processes. The cost of such software (with functionalities that go far beyond reporting) and the necessary human resources may be higher but relative cost of an individual report is moderate. b) Extrapolation There were around 28 thousand book publishers in the EU in 2013 according to Eurostat, employing around 150 thousand persons with combined turnover of €26,7bn (Table 1.) Table 1. Statistical characteristics of Book Publishers in EU in 2013 Micro Small medium-sized large TOTAL No. of enterprises EU 25,587* 2,137* 616* 163* 28,503 213  Turnover (EUR million) €3,074* €4,201* €7,155* €12,263* €26,693 turnover per publisher (EUR) €120,137 €1,965,841 €11,615,918 €75,230,275 €936,494 No. of persons employed 25,382* 25,679* 36,188* 64,409* 151,700 average no. of persons employed per firm 1.0 12.0 58.7 395.1 5.3 * - estimation based on distribution of group NACE J581 “Publishing of books, periodicals and other publishing activities” Classification to size group based solely on employment criterion Source: Eurostat, NACE code J5811 - Book publishing ; own calculations Assumptions: The time reported in (a) is assumed to be the same for all book publishers in the EU irrespective of location or size. Three variants are analysed minimum (3 minutes per report per title), average (8 min) and maximum (15 min). The firm in (a) is medium-sized, with 600 titles and one off cost of €10,000. These are reference values to estimate the number of titles of one-off cost for other size categories, with the assumption that for micro companies they stand at 25% of the medium-sized values, for small at 50% and for large at 1000%. The reporting frequency is once a year. Results:  Micro publishers One off cost is assumed at €2,500 per company. Time to report on 150 titles should take on average 20h (min. 7.5h; max.37.5h) representing 1.12% (min. 0.4%; max. 2.1%) of average annual working hours of company’s workforce. This corresponds to average annual cost of €460 (min. €170; max. €870) or 0.4% (min. 0.14%; max.0.72%) of annual turnover.  Small publishers One off cost is assumed at €5,000 per company. Time to report on 300 titles should take on average 40h (min. 15h; max.75h) representing 0.18% (min. 0.07%; max. 0.35%) of average annual working hours of company’s workforce. This corresponds to average annual cost of €930 (min. €350; max. €1,700) or 0.05% (min. 0.02%; max.0.09%) of annual turnover.  Medium-sized publishers One off cost is assumed at €10,000 per company. Time to report on 600 titles should take on average 80h (min. 30h; max.150h) representing 0.08% (min. 0.03%; max. 0.14%) of average annual working hours of company’s workforce. This corresponds to average annual cost of €1,900 (min. €700; max. €3,500) or 0.02% (min. 0.01%; max.0.03%) of annual turnover.  Large publishers One off cost is assumed at €100,000 per company. Time to report on 6000 titles should take on average 800h (min. 300h; max.1500h) representing 0.11% (min. 0.04%; max. 0.21%) of average annual working hours of company’s workforce. This corresponds to average annual cost of €18,600 (min. €7,000; max. €35,000) or 0.02% (min. 0.01%; max.0.05%) of annual turnover. 214 Table 2. Calculations for book publishers Medium- Micro Small sized Large Titles 150 300 600 6000 average time per title (min) 8 8 8 8 minimum time per title (min) 3 3 3 3 maximum time per title (min) 15 15 15 15 annual frequency 1 1 1 1 average total time (hours) 20 40 80 800 minimum total time (hours) 7.5 15 30 300 maximum total time (hours) 37.5 75 150 1500 % of time annually of average workforce/ company (av.) 1.12% 0.18% 0.08% 0.11% % of time annually of average workforce / company (min) 0.42% 0.07% 0.03% 0.04% % of time annually of average workforce/ company (max) 2.09% 0.35% 0.14% 0.21% estimated average cost per publisher (EUR) €464 €929 €1,857 €18,571 estimated minimum cost per publisher (EUR) €174 €348 €696 €6,964 estimated maximum cost per publisher (EUR) €871 €1,741 €3,482 €34,820 average annual cost as % of turnover 0.39% 0.05% 0.02% 0.02% minimum annual cost as % of turnover 0.14% 0.02% 0.01% 0.01% maximum annual cost as % of turnover 0.72% 0.09% 0.03% 0.05% Source: Evidence from company, Eurostat, own calculations Audiovisual a) Evidence from stakeholders It can be assumed that producers could rely on some form of reporting when they comply with the transparency obligations. They can receive sales and revenue data from distributors directly, more often from sales agents and sometimes from collection account managers (or collection agents). According to a collection account manager, producers will do everything to discover the revenues related to their films which data they then put into their administration that even smaller companies always have. Due to the complex financing of European audiovisual works, producers are often required to report to public film funds and other financiers. Based on available evidence, in the audiovisual sector reporting would include final production costs and information on financing/recoupment to the extent necessary for authors and performers assess the economic value. Creators will need to understand when an audiovisual work breaks even and when revenues start flowing or turn into profit. Stakeholders report that producers are willing to share such information so that creators understand the financial risk taken by the producer. According to a Danish producer, all authors entitled to royalty (composer, screenwriter, director) based on unionised contracts receive reporting and others can have access to sales and revenue 215 information if they request it. There is a lot of trust and transparency because the Danish Film Institute publishes a lot of information and 90% of the projects (including most co-productions) involve a collection agent. An audiovisual producer active in several Nordic countries also reported that the example/benchmark to look at in the audiovisual sector is collection statements generated by collection account managers. These companies are assigned by producers of films with usually more complex financing structures to collect all revenues and disburse them on the basis of the financing agreements. Multiple sources confirmed that the collection statements sent regularly by these companies should be more or less sufficient for compliance with the reporting obligation, therefore, producers receiving these could simply forward them to creators while others could use these as templates for reporting. Collection account managers would also add an additional layer of trust in the reported figures as they are an independent third party representing the project and not the producer. Established collection account managers report that the cost of engaging such a company (whose services go way beyond simple reporting as it collects and disburses revenue) depends on the budget but it is in the range of €4,000- €8,000 + 0.5-2,5% of the revenues after deducting costs. Another collection account manager reports that creating a report for a film starts with setting up the structure of the report, normally tailoring a previous example to the circumstances. Depending on the complexity, this can take up to 2-3 hours. Following this first exercise, a simple regular report can be created in 15 minutes and even the very complex ones can be done in 60 minutes. They noted that reporting is facilitated by a method of collecting and aggregating revenue data, in their case a unique database, but producers should always have some way of keeping track of their revenues. According to this company, difficulties in reporting in the audiovisual sector arise when information is not available or unclear but this will not affect the producer's ability to comply with the obligation and share the available information with the creators. An Eastern-European independent producer involved in many co-productions across Europe reports that they create and email their own reports to creators which takes approximately 10-15 minutes (although this can be more if they comply fully with the proposed obligation) each time. It is to note that for audiovisual works creators would receive almost the same reports as the modes of exploitation and the generated revenues would be the same for the same work. Frequency of reporting would depend on the lifecycle of the work. For example, a Swedish feature film contract stipulates that: "As of twelve months counted from the date of the premiere of the film the Producer shall every six months, no later than six weeks after each six-month period, render an account of the accrued receipts and pay such royalty to the Writer. As of two years from the date of the premiere of the film the Producer shall render such accounts once each year, no later than six weeks after the end of each twelve-month period. As of three years from the date of the premiere of the film the Producer shall render such accounts only when such de facto receipts are received." Also, a French producer mentioned that many companies in the audiovisual sector regularly produce reporting statements for accounting purposes. He stated that it took from 0.5 hour to two days to establish a statement report depending on the complexity of the reporting (different exploitations, gathering of information from different partners, number of creators involved). He added that reporting statements of his production company were produced by an external service provider who charged in average €1,000 per movie per year. In addition, financing stakeholders may require engaging a collection agency in order to manage financial flows and reporting statements, that is remunerated on a percentage of the revenues generated by the exploitation of the movie (between 0.5 and 1%). 216 Assuming that a producer wants to produce their own reporting for a film that has 8 authors/performers with a significant contribution to the work and reporting occurs annually, reporting would take: 2-3 hours set-up + 1*15-60min (first report) + 7*15min (subsequent reports to other creators on the same film and same period would be much quicker) = 4-6 hours. For subsequent years, the set-up time would not be required. Considering an average independent producer with 3-6 "active" projects in distribution, the annual time required to generate reports could amount to 12-36 hours. As for external service providers, it can be assumed that third parties would offer simpler services than what is required from a collection agent usually (revenue collection and disbursement on top of reporting) and prices would more in the range of €1,000 per movie per year and would not reach the lower ceiling of collection agency fees (€4,000 + 0.5-1% of revenues). b) Extrapolation There were around 77 thousands audio-visual producers in the EU in 2013 according to Eurostat, employing around 217 thousand persons with combined turnover of €34bn (Table 7). Table 3. Statistical characteristics of audio-visual producers in the EU in 2013. micro small medium-sized large TOTAL No. of enterprises EU 73,687* 3,025* 546* 68* 77,326 Turnover (EUR million) €9,648* €8,642* €8,146* €7,423* €33,860 turnover per publisher (EUR) €130,935 €2,856,866 €14,919,517 €109,164,884 €437,880 No. of persons employed 76,056* 49,770* 41,902* 49,412* 217,200 average no. of persons 1.0 16.5 76.7 726.6 2.8 employed per firm * - estimation based on distribution of group NACE J591 - Motion picture, video and television programme activities Classification to size group based solely on employment criterion Source: Eurostat, NACE code J5911 Motion picture, video and television programme production activities Assumptions: Scenario I. The time reported in (a) is assumed to be the same for all of audio-visual producers in the EU irrespective of location or size. Three variants are analysed for minimum (2h setup per production and 15 minutes per report per author/performer), average (2.5h setup and 37.5 min) and maximum (3h setup and 1h). The firm in (a) is medium-sized, with 6 productions and 8 authors/performers. These are reference values to estimate the number of productions and authors for other size categories, with the assumption that for micro companies they stand at 25% of the medium-sized values, for small at 50% and for large at 1000%. The reporting frequency is once a year. Scenario II. Assumes that all the reporting is done by an external provider who is charging a flat fee per production of €1,500 (min. €1,000; max. €3000 on the assumption of being lower than the fees of a collection agent as explained above). Number of productions as in scenario I. Results:  Micro producers Scenario I. Time to report on 2 productions each having 2 authors/performers is on average 7.5h (min. 5h; max.10h) representing 0.4% (min. 0.3%; max. 0.5%) of average annual working hours of company’s workforce. This corresponds to average annual cost of €170 (min. €120; max. €230) or 0.13% (min. 0.09%; max.0.18%) of annual turnover. 217 Scenario II. The average cost per producer is €3,000 (min. €2,000; max. €6,000) representing 2.29% (min. 1.5%; max. 4.58%) of annual turnover.  Small producers Scenario I. Time to report on 3 productions each having 4 authors/performers is on average 15h (min. 9h; max.21h) representing 0.05% (min. 0.03%; max. 0.07%) of average annual working hours of company’s workforce. This corresponds to average annual cost of €350 (min. €210; max. €490) or 0.01% (min. 0.01%; max.0.02%) of annual turnover. Scenario II. The average cost per producer is €4,500 (min. €3,000; max. €9,000) representing 0.18% (min. 0.1%; max. 0.32%) of annual turnover.  Medium-sized producers Scenario I. Time to report on 6 productions each having 8 authors/performers is on average 45h (min. 24h; max.66h) representing 0.03% (min. 0.02%; max. 0.05%) of average annual working hours of company’s workforce. This corresponds to average annual cost of €1,000 (min. €560; max. €1,500) or 0.01% (min. 0.004%; max.0.01%) of annual turnover. Scenario II. The average cost per producer is €9,000 (min. €6,000; max. €18,000) representing 0.06% (min. 0.04%; max. 0.12%) of annual turnover.  Large producers Scenario I. Time to report on 60 productions each having 80 authors/performers is on average 3150h (min. 1320h; max.4980h) representing 0.2% (min. 0.1%; max. 0.4%) of average annual working hours of company’s workforce. This corresponds to average annual cost of €73,000 (min. €30,600; max. €115,600) or 0.07% (min. 0.03%; max.0.1%) of annual turnover. Scenario II. The average cost per producer is €90,000 (min. €60,000; max. €180,000) representing 0.08% (min. 0.05%; max. 0.16%) of annual turnover. Table 4. Calculations for audiovisual producers Micro Small Medium-sized Large No. of productions 2 3 6 60 No of authors/performers per title 2 4 8 80 average set up per production (h) 2.5 2.5 2.5 2.5 minimum set up per production (h) 2.0 2.0 2.0 2.0 maximum set up per production (h) 3.0 3.0 3.0 3.0 average time per author/performer (h) 0.625 0.625 0.625 0.625 minimum time per author/performer (h) 0.25 0.25 0.25 0.25 maximum time per author/performer (h) 1 1 1 1 annual frequency 1 1 1 1 I. Producer does reporting internally average total time (hours) 7.5 15 45 3150 minimum total time (hours) 5 9 24 1320 maximum total time (hours) 10 21 66 4980 % of time annually of average workforce per company – average 0.40% 0.05% 0.03% 0.24% % of time annually of average workforce per company – minimum 0.27% 0.03% 0.02% 0.10% 218 % of time annually of average workforce per company – maximum 0.54% 0.07% 0.05% 0.38% estimated average cost per producer (EUR) €174 €348 €1,045 €73,123 estimated min cost per producer (EUR) €116 €209 €557 €30,642 estimated max cost per producer (EUR) €232 €487 €1,532 €115,604 average annual cost as % of turnover 0.13% 0.01% 0.01% 0.07% minimum annual cost as % of turnover 0.09% 0.01% 0.004% 0.03% maximum annual cost as % of turnover 0.18% 0.02% 0.010% 0.11% II. Producer does reporting via external provider external provider average flat fee €1,500 €1,500 €1,500 €1,500 external provider min flat fee €1,000 €1,000 €1,000 €1,000 external provider max flat fee €3,000 €3,000 €3,000 €3,000 average cost per producer €3,000 €4,500 €9,000 €90,000 min cost per producer €2,000 €3,000 €6,000 €60,000 max cost per producer €6,000 €9,000 €18,000 €180,000 average annual cost as % of turnover 2.29% 0.18% 0.06% 0.08% minimum annual cost as % of turnover 1.53% 0.11% 0.04% 0.05% maximum annual cost as % of turnover 4.58% 0.32% 0.12% 0.16% Source: Evidence from company, Eurostat, own calculations Summary table: Costs and time per company by size groups Average annual reporting cost as % of turnover Company size Micro Small Medium Large Book Publishers 0.39% 0.05% 0.02% 0.02% Audio-visual* 0.1% - 2.3% 0.01% - 0.2% 0.06% - 0.10% 0.07% - 0.08% * the range illustrates estimations for three scenarios for the annual reporting described above. Average time spent on reporting annually as % of average working time Company size Micro Small Medium Large Book Publishers 1.12% 0.18% 0.08% 0.11% Audio-visual 0.4% 0.05% 0.03% 0.24% Common data used for cost calculations -Hourly wage – €23.21 per hour. EU average hourly wage of “Technicians and associate professionals” of 2010 adjusted by 25% overhead as reported in Eurostat: Structure of Earnings Survey -Number of hours actually worked and paid per employee (EU28, 2012) (hours per year) – 1808 hours (Estat, lc_nnum2_r2) 219 ANNEX 14D – CONTRACT ADJUSTMENT MECHANISMS IN LEGISLATION AND IN PRACTICE Examples of contracts adjustment mechanism in Member States legislations This list of contract adjustment mechanisms on the basis of a disproportion between the agreed remuneration and the generated revenues (hereafter: "better-seller clause" for the purposes of this impact assessment, as explained under description of option 3) is non-exhaustive and is only intended to provide examples of legislations and soft-law regulations. BELGIUM Belgium legislation provides for better-seller clauses for publishing and performance contracts: - Publishing contracts: in case of flat remuneration, an imperative beter-seller clause allows the author to claim for a revision of the remuneration agreed upon by the parties, in case of success. - Performance contracts: there is an imperative better-seller clause in case the success of the shows is significantly disproportionate to the flat remuneration according to which the author is entitled to claim for an “equitable remuneration”. Article XI.196 (2)306: "If the author has assigned to the publisher the publishing rights to such conditions that, given the success of the work, the agreed fixed remuneration is manifestly disproportionate to the benefit derived from the exploitation the work, the publisher shall, at the request of the author, agree to a salary modification in order to grant a fair share of the profit to the author. The author may not waive enjoyment of this right ". Article XI.202: "If the author has authorized the public performance of a work to conditions such that, given the success of the work, the agreed lump sum is clearly disproportionate to the benefit derivate from the public performance, the holder of a performance contract shall, at the request of the author, agree to a salary modification in order to grant the author a fair share of the profit. The author may not waive enjoyment of this right." CROATIA Croatian copyright legislation provides for a better-seller clause where the profit derived from use of the work is obviously disproportional to the agreed or fixed remuneration to which the author cannot renounce. Article 54307 - Right of the author to modify a contract for the purpose of fairer share in the profit: "(1) If the profit derived from use of the work is obviously disproportional to the agreed or fixed remuneration, the author shall be entitled to demand the amendment of the agreement for the purpose of fixing more equitable share in the profit deriving from the use of his work.(2) The author may not renounce the right referred to in paragraph (1) of this Article". CZECH REPUBLIC Czech copyright legislation provides for a better-seller clause. 306 Loi du 19 avril 2014 portant insertion du Livre XI « Propriété Intellectuelle » dans le Code de droit économique, et portant insertion des dispositions propres au Livre XI dans les Livres I, XV et XVII du même Code 307 Copyright and Related Rights Act (O.G. 167/2003) 220 Article 49(6)308: "Where the amount of the royalty has not been derived from the proceeds from the utilization of the licence and where such an amount is so low that it is in obvious disproportion to the profit from the utilisation of the licence and to the importance of the work for the achievement of such profit, the author shall be entitled to an equitable supplementary royalty". FINLAND The Finnish copyright legislation provides for a general renegotiation provision if the case where a condition in an agreement on a transfer of copyright is unreasonable in view of good agreement practices in the field or in other respects. The law expressly mentions that a compensation for a transfer should be deemed as a condition in an agreement. Finnish creators can therefore seek adjustment of their remuneration on the basis of this legal provision. Section 29309:"The adjustment of an unreasonable condition in an agreement on a transfer of copyright (1) If a condition in an agreement on a transfer of copyright is unreasonable in view of good agreement practice in the field or in other respects, or if its application would result in an unreasonable situation, the condition may be adjusted or ignored. (2) The assessment of the reasonability of a condition shall take into account the entire content of the agreement, the position of the parties, conditions prevalent at the time of making the agreement and afterwards, as well as other factors. (3) If the condition referred to in subsection 1 is such that the staying in force of the rest of the agreement in unadjusted form cannot be considered reasonable because of the adjustment of the condition, the agreement may be adjusted in other respects or made expire. (4) A compensation for the transfer of a right shall also be deemed a condition in an agreement. (5) Provisions on the adjustment of an unreasonable condition in an employment contract on a transfer of copyright are laid down in section 2 of Chapter 10 of the Employment Contracts Act (55/2001). (6) Other provisions on the adjustment of an unreasonable condition are laid down in section 36 of the Contracts Act (228/1929)". FRANCE French legislation provides that, in case of flat remuneration, the author might claim a revision of the remuneration if his prejudice amounts to at least 7/12 of the remuneration he would have been entitled to if the remuneration had been proportional. Art. L. 131-5310: "If the exploitation right has been assigned and the author suffers a prejudice of more than seven-twelfths as a result of a burdensome contract or of insufficient advance estimate of the proceeds from the work, he may demand review of the price conditions under the contract. 308 Consolidated version of Act No. 121/2000 Coll., on Copyright and Rights Related to Copyright and on Amendment to Certain Acts (the Copyright Act) 309 Copyright Act (404/19610) 310 French Intellectual Property Code 221 Such demand may only be formulated where the work has been assigned against lump sum remuneration. The burdensome contract shall be assessed taking into account the overall exploitation by the assignee of the works of the author who claims to have suffered a prejudice.". GERMANY German copyright law provides for a fairness clause when the agreed remuneration is significantly disproportionate to the proceeds and benefits derived from the exploitation of the work. However, it is currently highly debated whether German courts can revaluate flat fees on the basis of common rules of control of general terms and conditions set out in the German Civil Code (in particular, in s. 307 BGB). Article 32a311 -Author’s further participation: "(1) Where the author has granted an exploitation right to another party on conditions which, taking into account the author’s entire relationship with the other party, result in the agreed remuneration being conspicuously disproportionate to the proceeds and benefits derived from the exploitation of the work, the other party shall be obliged, at the author's request, to consent to a modification of the agreement which grants the author further equitable participation appropriate to the circumstances. It shall be irrelevant whether the parties to the agreement had foreseen or could have foreseen the amount of the proceeds or benefits obtained. (2) If the other party has transferred the exploitation right or granted further exploitation rights and if the conspicuous disproportion results from proceeds or benefits enjoyed by a third party, the latter shall be directly liable to the author in accordance with paragraph (1), taking into account the contractual relationships within the licensing chain. The other party shall then not be liable. (3) The rights under paragraphs (1) and (2) may not be waived in advance. An expected benefit shall not be subject to compulsory execution; any disposition regarding the expected benefit shall be ineffective. The author may, however, grant an unremunerated nonexclusive exploitation right for every person. (4) The author shall not have a right pursuant to paragraph (1) if the remuneration has been determined in accordance with a joint remuneration agreement (Article 36) or in a collective agreement and explicitly provides for a further equitable participation in cases under paragraph (1)". HUNGARY Hungarian legislation provides for a better-seller clause in case a work becomes more popular than what was expected when the contract was concluded. In such as case, the author has the possibility to initiate a court proceeding to modify the initially agreed remuneration. Article 48312: "According to the general provisions of civil law the court may alter the license agreement even if such an agreement infringes the author's substantive lawful interest in having an equitable share in the income on use for the reason that because of the considerable increase in the 311 Copyright Act of 9 September 1965 (Federal Law Gazette Part I, p. 1273), as last amended by Article 8 of the Act of 1 October 2013 (Federal Law Gazette Part I, p. 3714) 312 Act LXXVI of 1999 on Copyright (as of 28/10/2014) 222 demand for the use of the work following the conclusion of the agreement the difference in value between the services respectively provided by the parties becomes strikingly great". NETHERLANDS The new Dutch copyright law enacted on 1 July 2015 has introduced a better-seller clause provision into the copyright legislation. An author may claim additional fair compensation in court if the agreed compensation is seriously disproportionate to the proceeds from the exploitation of the work. It the rights were assigned to a third party, the author may also claim such compensation against that third party. Article 25d313: "1. The maker may claim additional fair compensation in court from the other party to the contract if, having regard to the performances delivered by both parties, the agreed compensation is seriously disproportionate to the proceeds from the exploitation of the work. 2. If the serious disproportion between the maker’s compensation and the proceeds from the work’s exploitation arises after the other party to the contract with the maker assigns the copyright to a third party, the maker may bring the claim as meant in the first paragraph against that third party". POLAND Under Polish copyright law, a better-seller clause allows the author to request to a court to reassess his remuneration in case of gross discrepancy between remuneration of the author and benefits of the acquirer of author’s economic rights or licensee. Article 44314: "In the event of gross discrepancy between the remuneration of the author and the benefits of the acquirer of the author's economic rights or the licensee, the author may request the court for a due increase of his/her remuneration". PORTUGAL Portuguese copyright law provides for a better-seller clause and details on how the remuneration should be adjusted. The case of proportional remuneration is specifically mentioned (the percentage established is clearly lower than that customarily paid in transactions of the same nature). Article 49 - Additional Compensation315: "1 - When the intellectual creator or his successors which transferred its right, suffers grave economic injury resulting from the manifest disproportion between their income and profits earned by the beneficiary of those acts, he may claim additional compensation, which will focus on profits generated by the exploitation. 2 - In the absence of agreement, the additional compensation referred to in the previous paragraph shall be fixed taking into account the normal results of exploitation of all the similar works of the author. 3 - If the price of the transfer or assignment of copyright has been fixed in the form of participation, the right to additional compensation shall apply only where the percentage established is clearly lower than that customarily paid in transactions of the same nature. 4 – This right expires if it is not exercised within two years from the discovery of the suffered serious injury ". 313 Law of March 6, 2003, on the Supervision of Collective Management Organizations for Copyright and Related Rights 314 Act No. 83 of February 4, 1994, on Copyright and Neighboring Rights (as amended up to October 21, 2010) 315 Code of Copyright and Related Rights 223 ROMANIA Under Romanian copyright law, a better-seller clause allows the author to request to a court to reassess his remuneration in case of an obvious disproportion between the remuneration of the author of the work and the profits of the person who has secured the transfer of the economic rights. Article 43(3)316: "Where there is an obvious disproportion between the remuneration of the author of the work and the profits of the person who has secured the transfer of the economic rights, the author may request the competent jurisdictional bodies to revise the contract or increase the remuneration accordingly". SLOVENIA Slovenian copyright law provides for a general better-seller clause under which the author may request that the agreed remuneration be reviewed in case of a disproportion with the profit generated by the exploitation of his work. Article 81(2)317: "Where the profit derived from the exploitation of the work is in manifest disproportion to the agreed upon or determined royalty or remuneration, the author may demand that the contract be revised, so that a more equitable share of the revenues is provided for him". SPAIN Spanish copyright legislation grants to authors, in case of lump-sum remuneration, a possibility of action during ten years following the transfer of rights, to request the revision of the contract if there is a manifest disproportion between the remuneration of the author and the benefits obtained by the contractual counterparty. Article 47318: "Where a lump-sum remuneration has been agreed, if there is an obvious disproportion between the author's remuneration and the benefits obtained by the assignee should occur in the transfer lump sum, the author may demand that the contract be revised and, failing agreement, request to the court to determine a fair remuneration in the light the circumstances of the case. This authority may be exercised within ten years following the transfer of the rights". 316 Law No. 8 of March 14, 1996 on Copyright and Neighboring Rights 317 Copyright and related rights act of 30 March 1995 as last amended on 15 December 2006 318 Real Decreto Legislativo 1/1996, de 12 de abril – Last modification 31/12/2011 224  ANNEX 15 – LIST OF MAIN RELEVANT DIRECTIVES RELATED TO THIS IA AND GLOSSARY ANNEX 15A – LIST OF MAIN RELEVANT DIRECTIVES RELATED TO THIS IA  Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (the "InfoSoc Directive" or "the Directive").  Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (the "Satellite and Cable Directive").  Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (the "Database Directive").  Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (the "Rental and Lending right Directive").  Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (the "Software Directive").  Directive 2012/28/EU of the European Parliament and of the Council of 25 October 2012 on certain permitted uses of orphan works (the "Orphan Works Directive").  Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market (the "CRM Directive") ANNEX 15B – GLOSSARY "Collective management organisations (CMOs)": organisations traditionally set up by rightholders at national level to manage copyright or related rights on their behalf. "Collective rights management": includes one or more of the following services: the grant of licences to commercial users, the auditing and monitoring of rights, the enforcement of copyright and related rights, the collection of royalties and the distribution of royalties to rightholders. "Commercial users" or “service providers”: any person or entity involved in the provision of goods or services that for these activities needs a licence from rightholders of copyright and/or related rights. "Creative industries": include services such as publishing activities (e.g. books, periodicals), motion pictures, video and television programme production, sound recording and music publishing activities, programming and broadcasting activities, computer programming, advertising, design activities, photographic activities, translation and interpretation activities, creative arts and entertainment activities. 225 "Distribution right": the right to authorise or prohibit any form of distribution to the public of the original or copies of a work or other protected subject matter, by sale or otherwise. (Article 4 of the InfoSoc Directive and Article 9 of the Rental and Lending Directive). "Massive Open Online Courses (MOOCs)": online courses aimed at unlimited participation and open access via the internet. "Open Educational Resources (OERs)": any type of educational materials that are in the public domain or released under an open license. The nature of these open materials means that anyone can legally and freely copy, use, adapt and re-share them. OERs range from textbooks to curricula, syllabi, lecture notes, assignments, tests, projects, audio, video and animation.319 "Orphan works": a work is considered to be orphan if none of the rightholders in that work is identified or, even if one or more of them is identified; none is located despite a diligent search. "Other protected subject-matter": output of holders of related rights i.e. performers, phonogram and film producers and broadcasting organisations. "Repertoire": the sum of the works and rights of all rightholders that a collecting society directly represents. "Reproduction right": the right to authorise or prohibit direct or indirect, temporary or permanent reproductions of a work or other protected subject matter by any means and in any form, in whole or in part (Article 2 of the InfoSoc Directive). "Reprography copying": a possible exception or limitation of the reproduction right in respect of reproductions on paper or any similar medium, effected by the use of any kind of photographic technique or by some other process having similar effects (Article 5(2)(a) of the InfoSoc Directive) "Right of communication to the public": the right to authorise or prohibit any communication to the public of a work or other protected subject matter, by wire or wireless means. Recognised as a broad exclusive right encompassing the making available right (see below) to authors (Article 3(1) of the InfoSoc Directive); of a more limited scope for other rightholders (Article 8 of the Rental and Lending Directive). "Right of making available": the right to authorise or prohibit the making available to the public of a work or other protected subject matter in such a way that members of the public may access them from a place and at a time individually chosen by them (Article 3 of the InfoSoc Directive). "Three-step test": Copyright exceptions may only be applied in certain special cases (first step) which do not conflict with a normal exploitation of the work or other subject-matter (second step) and do not unreasonably prejudice the legitimate interests of the rightholder (third step). "Work": creative output of authors protected by copyright. It includes: literary (a novels , poetry, etc.), dramatic (plays, opera librettos, etc.), musical (e.g. a musical comositon) and artistic (photography, painting, etc.) works. 319 UNESCO definition. 226 EUROPEAN COMMISSION Brussels, 14.9.2016 COM(2016) 595 final 2016/0279 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the cross-border exchange between the Union and third countries of accessible format copies of certain works and other subject-matter protected by copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise print disabled EN EN  EXPLANATORY MEMORANDUM 1. CONTEXT OF THE PROPOSAL • Reasons for and objectives of the proposal The proposed Regulation will allow the Union to fulfil an international obligation under the Marrakesh Treaty to Facilitate Access to Published Works for Persons who Are Blind, Visually Impaired, or Otherwise Print Disabled (ʻthe Marrakesh Treatyʼ). The Marrakesh Treaty was adopted in 2013 at the World Intellectual Property Organisation (WIPO) with the aim of facilitating the availability and cross-border exchange of books and other print material in accessible formats around the world. It was signed by the Union1 in April 2014. The Treaty requires the parties to provide exceptions or limitations to copyright and related rights for the benefit of blind, visually impaired and otherwise print disabled persons and allows for the cross-border exchange of special format copies of books, including audio books, and other print material among the countries that are parties to the Treaty. The Union has thus made a political commitment to implement the Treaty, which both the Council and the European Parliament have since strengthened. The Commission separately presented a proposal for a Council Decision for the ratification of the Marrakesh Treaty by the Union in October 2014. In May 2015, the Council submitted a request to the Commission under Article 241 of the Treaty on the Functioning of the European Union (TFEU), in which it underlined its full commitment to the rapid entry into force of the Marrakesh Treaty and asked the Commission to submit, without delay, a legislative proposal to amend the Union legal framework in accordance with the Treaty. The beneficiaries of the Marrakesh Treaty, i.e. persons who are blind, visually impaired, or otherwise print disabled face many barriers to accessing books and other print material protected by copyright and related rights. The availability of books in formats that are accessible to print-disabled persons is estimated to be between 7 %2 and 20 %3 despite the fact that digital technology greatly facilitates accessible publishing4. Accessible formats include e.g. Braille, large print, e-books and audiobooks with special navigation, audio description and radio broadcasts. The Marrakesh Treaty obliges the contracting parties, on the one hand, to bring their internal legal provisions into line with the Treaty and, on the other hand, to allow for the cross-border exchange of accessible format copies made under national exceptions or limitations with third countries that are parties to the Treaty. In order to implement the Marrakesh Treaty within the Union, Directive […] requires Member States to introduce a mandatory exception to certain rights of right holders harmonised by Union law for the benefit of beneficiary persons and to ensure cross-border access to special format copies within the internal market. The purpose of the proposed Regulation is to implement the Union’s obligations under the Marrakesh Treaty in respect of the exchange of accessible format copies between the Union and third countries that are parties to the Marrakesh Treaty, for the benefit of beneficiary persons. 1 Council Decision 2014/221/EU of 14 April 2014 on the signing, on behalf of the European Union, of the Marrakesh Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired, or otherwise Print Disabled (OJ L115, 17.4.2014, p. 1.). 2 LISU for the Royal National Institute of Blind People (RNIB), ʻAvailability of accessible publications - 2011 updateʼ, October 2011. 3 Catherine Meyer-Lereculeur ʻException ʻhandicapʼ au droit d’auteur et développement de l’offre de publications accessibles à l’ère numériqueʼ, May 2013. 4 These figures refer to availability in some but not all accessible formats. EN 2 EN  This proposed Regulation therefore ensures that accessible format copies that have been made in any Member State in accordance with the national provisions adopted pursuant to Directive […] may be exported to third countries that are parties to the Marrakesh Treaty. In addition, the Regulation allows the import of accessible format copies made in accordance with the Marrakesh Treaty in third countries that are parties to the Treaty, for the benefit of beneficiary persons in the Union. Both beneficiary persons and authorised entities established in the Union should be able to obtain such copies and those copies should be able to circulate in the internal market under the same conditions as accessible format copies made in the Union in accordance with the national provisions adopted pursuant to Directive [...]. The proposed Regulation is also in line with the Union's obligations deriving from the United Nations Convention on the Rights of Persons with Disabilities (ʻthe UNCRPDʼ). The EU has been bound by the UNCRPD since January 2011, pursuant to Council Decision 2010/48/EC5. The provisions set out in the UNCRPD have thus become an integral part of the Union's legal order. The right of access to information and the right of people with disabilities to participate in cultural life on an equal basis with others are enshrined in the UNCRPD. Its article 30 requires parties to the convention to take all appropriate steps, in accordance with international law, to ensure that laws protecting intellectual property rights do not constitute an unreasonable or discriminatory barrier to access by persons with disabilities to cultural materials. In its Concluding observations on the initial report of the European Union6, adopted on 4 September 2015, the United Nations Committee on the Rights of Persons with Disabilities has encouraged the Union to take all appropriate measures to implement the Marrakesh Treaty as soon as possible. • Consistency with existing policy provisions in the policy area The proposed Regulation relates to the exchange of accessible format copies of certain copyright protected content with third countries that are parties to the Marrakesh Treaty. Together with Directive […], it therefore serves to implement the Marrakesh Treaty in Union law. The proposed Regulation will be the first piece of EU legislation to introduce provisions specifically on the international exchange of accessible format copies for beneficiary persons. • Consistency with other Union policies The proposed Regulation, together with Directive […], fulfils the Union's commitments and obligations relating to the integration of persons with disabilities as set out above. It is consistent with other EU legislation and policy in this area. 2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY • Legal basis The legal basis for the proposal is Article 207 of the Treaty on the Functioning of the European Union (TFEU). 5 Council Decision 2010/48/EC of 26 November 2009 concerning the conclusion, by the European Community, of the United Nations Convention on the Rights of Persons with Disabilities (OJ L23, 27.1.2010, p. 35). 6 CRPD/C/EU/CO/1, available at: http://tbinternet.ohchr.org/Treaties/CRPD/Shared%20Documents/EUR/CRPD_C_EU_CO_1_21617_E. doc. EN 3 EN  • Proportionality The Union is obliged to comply with its international obligations under the Marrakesh Treaty. This Regulation serves to implement the provisions contained in the Treaty on the exchange of accessible format works with third countries that are parties to the Treaty. Such measures can only be taken at Union level as the exchange of accessible format copies of works and other protected subject-matter concerns the commercial aspects of intellectual property. A Regulation is therefore the only appropriate instrument. In accordance with the principle of proportionality, as set out in Article 5 of the Treaty on European Union, this Regulation does not go beyond what is necessary in order to achieve this objective. • Choice of the instrument The proposed instrument is a Regulation, in accordance with Article 207 of the TFEU. 3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS • Ex-post evaluations/fitness checks of existing legislation The purpose of the proposed Regulation is to fulfil new international obligations as regards Union law. A retrospective evaluation of existing European law in this area is therefore not relevant and not required in this context. Available information on related European legislation was however taken into account, notably the results of public consultations and existing expert input. • Stakeholder consultations No specific stakeholder consultation was carried out for the purposes of the proposed Regulation, which implements provisions established at international level. The extensive public consultation on the review of the EU copyright rules carried out by the Commission between December 2013 and March 2014 also included a section on limitations and exceptions for the benefit of persons with disabilities and on the access to and circulation of works in accessible formats, which also referred to the Marrakesh Treaty7. Among other aspects, the views expressed by end users, consumers and institutional users (including organisations serving the needs of people with disabilities and libraries) pointed to a diverging scope of national exceptions or limitations, making it difficult to have legal certainty when exporting and importing accessible format copies made under a national copyright exception or limitation. Those institutional respondents were consistently of the opinion that the Marrakesh Treaty would satisfactorily address these concerns. Right holders and collective management organisations generally felt that there were no problems arising from the national implementation of the optional exception or limitation provided for in Union legislation. They also remarked that the existing market mechanisms were effectively addressing the problem of access to works for persons with disabilities. This view was not shared by end users, consumers or institutional users. 7 Report on the responses to the Public Consultation on the Review of the EU Copyright Rules, July 2014, p. 61-63. http://ec.europa.eu/internal_market/consultations/2013/copyright-rules/index_en.htm EN 4 EN  • Collection and use of expertise No expertise was collected specifically in preparation of this proposal. The Commission took into account a 2013 study on the application of Directive 2001/29/EC8, which assessed inter alia the application in 11 Member States of the EU optional exception or limitation for persons with a disability in Article 5(3)(b) of that Directive. • Impact assessment The proposed Regulation will adress the implications of the Marrakesh Treaty for the exchange of accessible format copies with third countries and aims to bring Union law into line with the Treaty in that respect. The Better Regulation Guidelines9 do not require an impact assessment to be carried out when the Commission has no discretion over the policy content. • Fundamental rights The proposed Regulation supports the right of persons with disabilities to benefit from measures designed to ensure their independence, social and occupational integration and participation in the life of the community, as enshrined in Article 26 of the Charter of Fundamental Rights of the European Union (ʻthe Charterʼ). The Regulation also reflects the Union's commitments under the UNCRPD. The UNCRPD guarantees people with disabilities the right of access to information and the right to participate in cultural, economic and social life on an equal basis with others. In view of this, it is justified to restrict the property rights of rightholders in light with the Union's obligations under the Charter10. The proposal would have a limited impact on copyright as property right as recognised in the Charter (Article 17(2))11. In this context, it is noteworthy that Directive […] has introduced a mandatory copyright exception for the benefit of the beneficiary persons of this proposal. The impact of this Regulation will thus be limited to regulating the exchange of accessible format copies with third countries that are parties to the Marrakesh Treaty. 4. BUDGETARY IMPLICATIONS The proposal has no impact on the Union budget. 5. OTHER ELEMENTS • Implementation plans and monitoring, evaluation and reporting arrangements In accordance with Better Regulation Guidelines and no sooner than five years after the date from which the Regulation shall apply, the Commission shall carry out an evaluation of the Regulation and present the main findings to the European Parliament, the Council and the European Economic and Social Committee, accompanied, where appropriate, by proposals for 8 "Study on the application of Directive 2001/29/EC on copyright and related rights in the information society", December 2013, De Wolf and partners, available at: http://ec.europa.eu/internal_market/copyright/docs/studies/131216_study_en.pdf , p. 417 et seq. 9 SWD(2015) 111 final. 10 Article 52(1) of the Charter allows for restrictions interfering with the exercise of the freedoms of the Charter: those restrictions must (i) be provided for by law; and (ii) respect the essence of those rights and freedoms. In addition, the limitations are (iii) ʻsubject to the principle of proportionalityʼ and ʻmay be made only if they are necessary and genuinely meet objectives of general interest recognized by the Union or the need to protect the rights and freedoms of othersʼ. 11 OJ C 83, 30.3.2010, p. 389–403. EN 5 EN  the amendment of the Regulation. In the same way, it will also carry out an evaluation of Directive […]. • Detailed explanation of the specific provisions of the proposal Article 1 specifies the subject-matter and the scope of the proposal. The proposed Regulation will regulate the exchange of accessible format copies of certain works and other subject- matter protected by copyright or related rights between the Union and third countries, in accordance with the Marrakesh Treaty. Article 2 gives the definitions of the terms ‘work or other subject-matter’, ‘beneficiary person’, ‘accessible format copy’ and ‘authorised entity’ that apply for the purposes of the proposed Regulation. Article 3 contains provisions on the export of accessible format copies from the Union to third countries. Article 4 contains provisions on the import of accessible format copies from third countries to the Union. Article 5 serves to specify the obligations that authorised entities are required to fulfil when exchanging accessible format copies with third countries. Article 6 sets out the applicable rules for the protection of personal data. Article 7 sets out the arrangements on the evaluation of this Regulation, in accordance with Better Regulation rules. Article 8 specifies the Regulation's entry into force and Article 9 its application in time. EN 6 EN  2016/0279 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the cross-border exchange between the Union and third countries of accessible format copies of certain works and other subject-matter protected by copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise print disabled THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 207 thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Acting in accordance with the ordinary legislative procedure, Whereas: (1) Persons who are blind, visually impaired or otherwise print disabled continue to face many barriers to accessing books and other print material. The need to increase the number of works and other protected subject-matter in accessible formats available to those persons and improve their circulation and dissemination has been recognised at an international level. The Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired, or Otherwise Print Disabled (ʻthe Marrakesh Treatyʼ) was signed on behalf of the Union on 30 April 201412. It requires contracting parties to provide exceptions or limitations to the exclusive rights of holders of copyright and related rights for the making and dissemination of copies in accessible formats of certain works and other subject-matter and for the cross-border exchange of those accessible format copies. The beneficiaries of the Marrakesh Treaty are persons who are blind, visually impaired or have a perceptual or reading disability, including dyslexia, preventing them from reading printed works to the same degree as persons without such disability, or are unable to hold or manipulate a book or to focus and move the eyes to the extent that would be normally acceptable for reading due to a physical disability. (2) Directive […] endeavours to implement the Union's obligations under the Marrakesh Treaty in a harmonised manner in order to improve the availability of accessible format copies for beneficiary persons and their circulation within the internal market. The Directive requires Member States to introduce a mandatory exception to certain rights of right holders that are harmonised by Union law. The objectives of this Regulation are to implement the obligations in the Marrakesh Treaty with respect to the export and import of accessible format copies for the benefit of beneficiary persons between the Union and third countries that are parties to the Marrakesh Treaty, and to 12 Council Decision 2014/221/EU of 14 April 2014 on the signing, on behalf of the European Union, of the Marrakesh Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired, or otherwise Print Disabled. (OJ L115, 17.4.2014, p. 1.) EN 7 EN  lay down the conditions for such export and import. Such measures may only be taken at Union level as the exchange of accessible format copies of works and other subject- matter concerns the commercial aspects of intellectual property. A Regulation is the only appropriate instrument. (3) The Regulation should ensure that accessible format copies of books, journals, newspapers, magazines and other writings, sheet music and other print material, which have been made in any Member State in accordance with the national provisions adopted pursuant to Directive […] may be exported to third countries that are parties to the Marrakesh Treaty. Accessible formats include Braille, large print, adapted e- books, audio books and radio broadcasts. The distribution, communication or making available of accessible format copies to print disabled persons or to authorised entities in the third country should only be carried out on a non-profit basis by authorised entities established in the Union. (4) This Regulation should also allow for the importation of and access to accessible format copies made in accordance with the implementation of the Marrakesh Treaty from a third country, by beneficiary persons in the Union and authorised entities established in the Union, for the benefit of print-disabled persons. It should be possible for those accessible format copies to be circulated in the internal market under the same conditions as accessible format copies made in the Union in accordance with Directive [...]. (5) In order to improve the availability of accessible format copies and to prevent the illegal dissemination of works and other subject-matter, authorised entities which engage in the distribution or making available of accessible format copies should comply with certain obligations. (6) Any processing of personal data under this Regulation should respect fundamental rights, including the right to respect for private and family life and the right to protection of personal data under Articles 7 and 8 of the Charter of Fundamental Rights of the European Union and must be in compliance with Directive 95/46/EC of the European Parliament and the Council13, which governs the processing of personal data, as may be carried out by authorised entities within the framework of this Regulation and under the supervision of the Member Statesʼ competent authorities, in particular the public independent authorities designated by the Member States. (7) The United Nations Convention on the Rights of Persons with Disabilities (ʻthe UNCRPDʼ), to which the EU is a party, guarantees people with disabilities the right of access to information and the right to participate in cultural, economic and social life on an equal basis with others. The UNCRPD requires parties to the Convention to take all appropriate steps, in accordance with international law, to ensure that laws protecting intellectual property rights do not constitute an unreasonable or discriminatory barrier to access by persons with disabilities to cultural materials. (8) This Regulation respects the fundamental rights and observes the principles recognised in the Charter of Fundamental Rights of the European Union. This Regulation should be interpreted and applied in accordance with those rights and principles. 13 Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data (OJ L 281, 23.11.1995, p. 31). EN 8 EN  HAVE ADOPTED THIS REGULATION: Article 1 Subject matter and scope This Regulation lays down rules on the cross-border exchange of accessible format copies of certain works and other subject-matter between the Union and third countries that are parties to the Marrakesh Treaty without the authorisation of the right holder, for the benefit of persons who are blind, visually impaired or otherwise print disabled. Article 2 Definitions For the purposes of this Regulation the following definitions shall apply: (1) ‘work or other subject-matter’ means a work in the form of a book, journal, newspaper, magazine or other writing, including sheet music, and related illustrations, in any media, including in audio form such as audiobooks, which is protected by copyright or related rights and which is published or otherwise lawfully made publicly available; (2) ‘beneficiary person’ means: (a) a person who is blind; (b) a person who has a visual impairment which cannot be improved so as to give the person visual function substantially equivalent to that of a person who has no such impairment; (c) a person who has a perceptual or reading disability, including dyslexia, and is, as a result, unable to read printed works to substantially the same degree as a person without an impairment or disability; or (d) a person who is otherwise unable, due to a physical disability, to hold or manipulate a book or to focus or move their eyes to the extent that would be normally acceptable for reading. (3) ‘accessible format copy’ means a copy of a work or other subject-matter in an alternative manner or form that gives a beneficiary person access to the work or other subject-matter, including allowing for the person to have access as feasibly and comfortably as a person without a visual impairment or any of the disabilities referred to in paragraph 2; (4) ‘authorised entity’ means an organisation providing education, instructional training, adaptive reading or information access to beneficiary persons on a non-profit basis, as its main activity or as one of its main activities or public-interest missions. Article 3 Export of accessible format copies to third countries An authorised entity established in a Member State may distribute, communicate or make available to beneficiary persons or to an authorised entity established in a third country that is a party to the Marrakesh Treaty an accessible format copy made in accordance with the national legislation adopted pursuant to Directive [...]. EN 9 EN  Article 4 Import of accessible format copies from third countries A beneficiary person or an authorised entity established in a Member State may import or otherwise obtain or access and thereafter use, in accordance with the national legislation adopted pursuant to Directive [...], an accessible format copy that has been distributed communicated or made available to beneficiary persons or to authorised entities, by an authorised entity in a third country that is a party to the Marrakesh Treaty. Article 5 Obligations of authorised entities 1. An authorised entity established in a Member State carrying out the acts referred to in Articles 3 and 4 shall ensure that: (a) it distributes, communicates and makes available accessible format copies only to beneficiary persons or other authorised entities; (b) it takes appropriate steps to discourage the unlawful reproduction, distribution, communication and making available of accessible format copies; (c) it demonstrates due care in, and maintains records of, its handling of works and other subject-matter and of their accessible format copies; and (d) it publishes and updates, on its website if appropriate, information on the manner in which it complies with the obligations laid down in points (a) to (c). 2. An authorised entity established in a Member State carrying out the acts referred to in Articles 3 and 4 shall provide the following information, on request, to any beneficiary person or right holder: (a) the list of works and other subject-matter of which it has accessible format copies and the available formats; and (b) the name and details of the authorised entities with which it has engaged in the exchange of accessible format copies pursuant to Articles 3 and 4. Article 6 Protection of personal data The processing of personal data carried out within the framework of this Regulation shall be carried out in compliance with Directive 95/46/EC. Article 7 Review No sooner than [five years after the date of application], the Commission shall carry out an evaluation of this Regulation and present the main findings to the European Parliament, the Council and the European Economic and Social Committee, accompanied, where appropriate, by proposals for the amendment of this Regulation. Member States shall provide the Commission with the necessary information for the preparation of the evaluation report. EN 10 EN  Article 8 Entry into force This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Article 9 Application in time This Regulation shall be applicable as of [date of transposition of Directive […]]. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, For the European Parliament For the Council The President The President EN 11 EN Euroopa Liidu Nõukogu Brüssel, 16. september 2016 (OR. en) 12253/16 PI 95 CODEC 1270 RECH 269 EDUC 284 COMPET 487 AUDIO 96 CULT 78 DIGIT 101 TELECOM 167 SAATEMÄRKUSED Saatja: Euroopa Komisjoni peasekretär, allkirjastanud Jordi AYET PUIGARNAU, direktor Kättesaamise 14. september 2016 kuupäev: Saaja: Jeppe TRANHOLM-MIKKELSEN, Euroopa Liidu Nõukogu peasekretär Komisjoni dok nr: COM(2016) 592 final Teema: KOMISJONI TEATIS EUROOPA PARLAMENDILE, NÕUKOGULE, EUROOPA MAJANDUS- JA SOTSIAALKOMITEELE NING REGIOONIDE KOMITEELE autoriõigustel põhineva õiglase, tulemusliku ja konkurentsivõimelise Euroopa majanduse edendamine digitaalsel ühtsel turul Käesolevaga edastatakse delegatsioonidele dokument COM(2016) 592 final. Lisatud: COM(2016) 592 final 12253/16 nr DGG 3B ET  EUROOPA KOMISJON Brüssel, 14.9.2016 COM(2016) 592 final KOMISJONI TEATIS EUROOPA PARLAMENDILE, NÕUKOGULE, EUROOPA MAJANDUS- JA SOTSIAALKOMITEELE NING REGIOONIDE KOMITEELE autoriõigustel põhineva õiglase, tulemusliku ja konkurentsivõimelise Euroopa majanduse edendamine digitaalsel ühtsel turul ET ET 1. SISSEJUHATUS Komisjoni digitaalse ühtse turu strateegias 1 , mis võeti vastu 2015. aasta mais, toodi digitaalne infosisu esile ühe peamise digitaalmajanduse kasvu hoogustava tegurina. Strateegias rõhutati vajadust võtta meetmeid, mis muudaksid digitaalse sisu (sealhulgas audiovisuaalne sisu, muusika, raamatud ja muu) ning juurdepääsu turu- ja õiguskeskkonnale kasutajate jaoks veebipõhiselt laialdasemalt kättesaadavaks, mis on endiselt loovust, selle jätkusuutlikku rahastamist ja kultuurilist mitmekesisust toetav tegur. Autoriõigusi käsitlevate ELi eeskirjade sihipärane ajakohastamine nende eemärkide saavutamise võtmeelemendina on välja toodud komisjoni 2015. aasta detsembri teatises „Autoriõiguse euroopalikuma ja aja nõuetele vastava raamistiku suunas“ 2. Teatises on esitatud suunatud meetmed ja pikaajaline nägemus, mis kajastab vajadust ühtset turgu kõnealuses valdkonnas edasi arendada, ajakohastada eeskirju vastavalt reaalse digitaalse olukorraga, tagada, et Euroopa loomemajandus on endiselt konkurentsivõimeline, ning säilitada vajalik tasakaal autoriõiguse ja muude avalikku huvi puudutavate poliitikaeesmärkide nagu hariduse, teadusuuringute, innovatsiooni ja puuetega inimeste vajaduste vahel. Lisaks 2015. aasta detsembri ettepanekule võtta vastu määrus veebisisuteenuste piiriülese kaasaskantavuse kohta 3, mille eesmärk on võimaldada ELi elanikel kodus ostetud või tellitud digitaalse sisuga reisida, teeb komisjon nüüd ettepaneku mitme seadusandliku meetme kohta, millel on kolm eesmärki: i) tagada kogu ELis kasutajatele ulatuslikum juurdepääs digitaalsele sisule veebis ning pakkuda seda ka uutele kasutajatele, ii) kohandada digitaal- ja piiriülesele keskkonnale teatavad erandid ning iii) edendada hästitoimivat ja õiglast autoriõiguse turgu. Veel töötab komisjon välja meetmed tulemusliku ja tasakaalus oleva autoriõiguste kaitse tagamise süsteemi loomiseks. See on eriti oluline võitluses kaubanduses lokkava autoriõiguse rikkumise vastu. Nagu on rõhutatud detsembri teatises, ei saa autoriõigust käsitlevaid ELi eeskirju käsitleda eraldi laiemast poliitikameetmete kogumist, sealhulgas eelkõige programmist „Loov Euroopa“, 4 mis edendab Euroopa rikkalikku kultuuriloomingut ja mõjutab kultuuri- ja loometööstuse, innovatsiooni- ning kultuurilise mitmekesisuse keskkonda. ELis asuvad muu hulgas ühed suurimatest kirjastustest, dünaamiline muusikatööstus ja ülemaailmselt tunnustatud filmisektor. Seetõttu on Euroopa üks ülemaailmse tööstus- ja kultuuritegevuse juhtivatest eestvedajatest. Samas seisab mõni Euroopa kultuuri- ja loomemajanduse valdkond silmitsi eriti suurte konkurentsi- ja ettevõtlusalaste ning rahastamisprobleemidega. Näiteks Euroopa filmitööstusele oleks abi uuest vaatajaskonnast nii Euroopa Liidus kui väljaspool seda. Sellel peaks olema positiivne mõju uute ärimudelite ja uute tuluallikate arendamisele, võttes arvesse toodangu suuruse, kättesaadavuse ja nähtavusega seotud küsimusi. Lisaks kultuurilise ja keelelise mitmekesisuse edendamisele, kultuuri- ja loomesektori professionaalsemaks muutmise toetamisele ning kultuuri ja loomesisu kättesaadavamaks muutmisele on programmi „Loov Euroopa“ eesmärk käsitleda mõningaid konkurentsiga 1 Komisjoni 6. mai 2015. aasta teatis „Euroopa digitaalse ühtse turu strateegia“. COM(2015) 192 final. 2 COM(2015) 626 final. 3 COM(2015) 627 final. 4 Programmi 2014.–2020. aasta eelarve on 1,46 miljardit eurot. Programm „Loov Euroopa“ hõlmab lisaks sektoriülesele tegevusele kultuuri- ja muu meediavaldkonna allprogrammi. seotud probleeme, sealhulgas rahastamise võimaldamist uuest tagatisrahastust, mis on juba loodud ja mille eelarve on 121 miljonit eurot 5. Komisjon teeb ettepaneku algatada seadusandlikke ja mitteseadusandlikke meetmeid sisaldav laiaulatuslik tegevuskava, et aidata Euroopa autoriõiguse sektoril ühtsel turul areneda ja Euroopa autoritel jõuda uute sihtrühmadeni, muutes samal ajal Euroopas loodud teosed laialdaselt kättesaadavaks nii Euroopa kodanikele kui ka piiriüleselt. Käesolevas teatises käsitletakse pärast detsembri teatise vastuvõtmist toimunud viimaseid arenguid ja hetkeolukorda. 2. Meetmed tagamaks digitaalsele sisule laialdasem juurdepääs kogu ELis Detsembri teatises tõi komisjon välja eesmärgi kaotada järk-järgult tõkked, mis takistavad piiriülest juurdepääsu infosisule ja teoste levikut üle kogu ELi, võttes eelkõige arvesse järjest levinumat internetiühendust ja digitaaltehnoloogiat. Eesmärk on suurendada teoste kättesaadavust Euroopa kodanike jaoks, pakkuda loojatele uusi turustuskanaleid, edendada liikmesriikide kultuuri ja tõsta tähelepanu keskmesse ELi ühine kultuuripärand. Detsembri teatises esitati sihipärased meetmed, et hõlbustada televisiooni- ja raadioprogrammide piiriülest levitamist veebis, tellitavate videoteenuste (VoD) platvormidel pakutavate Euroopa audiovisuaalteoste litsentsimist ning selliste teoste digiteerimist ja laiemat levitamist, mida enam ei turustata. Nagu on märgitud detsembri teatises, on programmi „Loov Euroopa“ allprogrammi MEDIA raames 6, mis on Euroopa päritoluga teoste arendamist, levitamist ja nende müügi soodustamist toetanud juba 25 aastat, võetud mitu meedet, mille eesmärk on teha Euroopa filmid laiemalt kättesaadavaks kogu ELis nii äri- kui ka mitteäriliste kanalite kaudu. Need meetmed on esitatud allpool koos uute kavandatavate autoriõigust käsitlevate õigusaktidega. Esiteks määruse ettepanek, 7 mille eesmärk on luua soodsad tingimused televisiooni- ja raadioprogrammide selliste uute internetipõhiste piiriüleste levitamisviiside kasutamiseks, mis on võrreldavad traditsiooniliste edastusviisidega satelliidi vahendusel ja kaabli kaudu. Uued eeskirjad, mis põhinevad kehtiva satelliit- ja kaabellevi direktiivi sätetel, 8 muudavad teatavate ringhäälinguorganisatsioonide osutatavate teenuste (programmid, mida ringhäälinguorganisatsioonid edastavad veebis reaalajas, ja kordusülekannete teenused) ja selliste vahendite kaudu nagu IP-televisioon (televisiooni- või raadioteenused sisetelevisioonisüsteemis internetiprotokollil põhinevates võrkudes) järelvaatamisteenuste saamiseks vajalike õiguste saamise lihtsamaks ja kiiremaks. Kõnealuste eeskirjade eesmärk on hõlbustada turu arengut ja levitada laiemalt Euroopa raadio- ja telesaateid, mis on eurooplaste jaoks olulised teabe- ja meelelahutusallikad. See omakorda suurendab tarbijate valikuvõimalusi ja kultuurilist mitmekesisust. Paralleelselt nähakse ettepanekuga võtta vastu digitaalsel ühtsel turul autoriõigusi käsitlev direktiiv 9 ette uus läbirääkimiste mehhanism, mis lihtsustab litsentsilepingute 5 Komisjon uurib ka muid selle sektori rahastamise allikaid, sealhulgas omakapitali kaudu rahastamist ja ühisrahastamist. 6 Programmi „Loov Euroopa“ allprogramm. 7 Ettepanek: Euroopa Parlamendi ja nõukogu määrus, milles sätestatakse eeskirjad, mis käsitlevad selliste autoriõiguste ja nendega kaasnevate õiguste teostamist, mis kuuluvad kohaldamisele teatavate ringhäälinguorganisatsioonide veebiülekannete ning televisiooni- ja raadiosaadete taasedastamise suhtes, COM(2016) 594. 8 Direktiiv 93/83/EMÜ. 9 Ettepanek: Euroopa Parlamendi ja nõukogu direktiiv, mis käsitleb autoriõigust digitaalsel ühtsel turul, COM(2016) 593. 3 sõlmimist audiovisuaalteoste kättesaadavaks tegemiseks tellitavate videoteenuste platvormidel. See on osa laiemast poliitikast, mille eesmärk on käsitleda erinevaid tegureid, mis põhjustavad Euroopa audiovisuaalteoste, eelkõige filmide vähest kättesaadavust kogu ELis 10 . Euroopa filme, mida üldjuhul toodavad väikesed filmiettevõtjad, levitatakse ELis veebi kaudu märkimisväärselt vähem kui USA filme 11. Sellistes piirkondades, kus kohalike levitajatega lepinguid sõlmitud ei ole, puudub Euroopa kodanikel võimalus neid filme seaduslikul viisil vaadata. Litsentsimisküsimusi ja nendega seotud õiguslikke ja lepingulisi probleeme Euroopa audiovisuaalteoste kasutamisel tellitavate videoteenuste kaudu käsitletakse ka struktureeritud dialoogis sidusrühmadega. Komisjoni eesmärk on dialoogi edendada ja kutsuda regulaarselt kokku kõiki väärtusahelas osalejaid (tootjad, autorid, müügiesindajad, levitajad, ringhäälinguorganisatsioonid, koondavad ettevõtjad, tellitavate videoteenuste platvormid). Dialoogi eesmärk on ühtlustada litsentsimistavasid ja soodustada valdkondlikke kokkuleppeid ning see tooks kaasa Euroopa teoste jätkusuutlikuma kasutamise ning laiaulatuslikuma kättesaadavuse. Komisjon esitab aruande dialoogi tulemuste kohta 2018. aasta lõpuks. Komisjon julgustab ka selliste praktiliste meetmete väljatöötamist, mis muudaksid audiovisuaalteoste litsentsimise nende kasutamise erinevates piirkondades kõikjal ELis lihtsamaks ja tõhusamaks. Need hõlmavad litsentsimiskeskuste ehk selliste veebipõhiste vahendite arendamist, mis võimaldavad Euroopas loodud teoste digitaalset levitamist riikides, kus neid ei ole kinodes levitatud või kus ei ole üleriigilist levitajat, ning erinevate tootjate audiovisuaalteoste selliste kureeritud kataloogide loomist, mida on võimalik tellitavate videoteenuste osutajatele pakkuda. Lisaprobleemid tulenevad sellest, et audiovisuaalsektoris puudub ühtne identifitseerimissüsteem. Selle asemel on turul kasutamiseks olemas kaks teoste standardtunnust 12 , kuid audiovisuaalsektoris ollakse nende kasutamise suhtes kõhkleval seisukohal, kuna tunnused ei ole koostalitlusvõimelised. See tähendab, et litsentsimistegevus on koormav ja seda ei ole lihtne automatiseerida. Kahe eraldi standardtunnuse eest vastutavad organisatsioonid töötavad hetkel koos komisjoniga selle nimel, et nende andmebaasid ja tunnused oleksid koostalitlusvõimelised 13 . Komisjon uurib ka võimalusi, kuidas ajendada õiguste omanikke tegema need teosed, mille levitamiseks saadakse toetust programmi „Loov Euroopa“ allprogrammist „MEDIA“, kättesaadavaks piirkondades, kus levitamise lepingut ei ole sõlmitud. Võetud on meetmeid, et lahendada puuduliku nähtavuse ja keelebarjääri probleemid, mis takistavad Euroopa kasutajatel Euroopas loodud teostele ligi pääseda. Subtiitrid ja dubleerimine on audiovisuaalteoste piiriülese levitamise võtmeks 14 ning neid 10 Euroopa filmid jõuavad keskmiselt 2,8 liikmesriiki, võrreldes USA filmidega, mis jõuavad tavaliselt 6,8 ELi liikmesriiki. Kinodes on vahe Euroopa filmide (2,6) ja USA filmide (9,7) näidatavuse vahel veelgi suurem (Euroopa Audiovisuaalsektori Vaatluskeskuse aruanne „Kuidas levitatakse Euroopa Liidus filme tellitavate videoteenuste ja kinode kaudu“, mai 2016). 11 Vähemalt ühe tellitavate videoteenuste platvormi kaudu on ajavahemikus 2005–2014 ELi kinodesse jõudnud ELis toodetud filmidest kättesaadavad 47 % (5 046 filmi 10 828st), samas kui osutatud ajavahemikus ELi kinodes näidatud USA filmidest on vähemalt ühe tellitavate videoteenuste platvormi kaudu kättesaadavad 87 % (2 404 filmi 2 748-st) (Euroopa Audiovisuaalsektori Vaatluskeskuse aruanne „Kuidas levitatakse Euroopa Liidus filme tellitavate videoteenuste ja kinode kaudu“). 12 ISAN (audiovisuaalteose rahvusvaheline standardnumber (International Standard Audiovisual Number)) ja EIRD (audiovisuaalteoste identifitseerimisnumbrite rahvusvaheline süsteem (Entertainment Identifier Registry)). 13 2016. aasta lõpuks teeb komisjon ettepaneku näha programmi MEDIA kaudu toetuse saamise kriteeriumina ette ühtse standardtunnuse kasutamine. 14 Teatavate audiovisuaalteoste puhul on vajalik minimaalne arv keeleversioone. 4 rahastatakse nii programmi „Loov Euroopa“ allprogrammist „MEDIA“ kui ka muudest riiklikest vahenditest. Komisjoni eesmärk on suurendada riiklikku rahastamist ning subtiitrite ja dubleerimise kasutamist programmi „Loov Euroopa“ allprogrammi „MEDIA“ alusel käimasolevate projektide ja sellise elektroonilise andmebaasi kaudu, mis võimaldab ELis tegutsevatel ettevõtjatel olemasolevatele subtiitritele ja dubleerimisele lihtsalt juurde pääseda ja mis käivitatakse 2016. aasta lõpuks. Ka interneti otsingumootorid on tõhusad vahendid, mille abil on tarbijatel võimalik leida seaduslikke võimalusi filmide vaatamiseks. Euroopa Liidu Intellektuaalomandi Amet on välja töötamas sellist otsingumootorit, mis toimiks Euroopa tasandil, ja riiklike otsinguvahendite loomise meetmete kogumit, mis hakkab täielikult toimima 2017. aastal ja on mõeldud liikmesriikidele tasuta kasutamiseks. Komisjon soodustab ka andmete ja automatiseeritud vahendite kasutamist sisusoovituste jaoks. See võimaldab võtta arvesse laiemat huvi- ja soovideringi ning arendada ja suurendada Euroopa päritoluga teoste publikut. Laiemas plaanis on on eesmärk tutvustada Euroopa filme oluline väljakutse, mille üle peab komisjon arutelusid Euroopa filmiagentuuride direktorite ühendusega. Arvestades võimalust, et koostöös toodetud filme levitatakse Euroopas ja väljaspool, 15 uurib komisjon koos Euroopa filmiagentuuride direktorite ühendusega 2017. aastal Euroopas koostööna valminud filmide ühiste müügiedendusmeetmete arendamise võimalust. Kõik need meetmed täiendavad hiljuti vastu võetud ettepanekut muuta audiovisuaalmeedia teenuste direktiivi 16 . Ettepanekuga nähakse ette tõhustatud nõue edendada Euroopa päritolu teoseid tellitavate videoteenuste platvormide kaudu, tagades nii teoste kättesaadavuse kui ka nähtavuse. Lisaks teeb komisjon tööd selle nimel, et uurida alternatiivseid rahastamis-, tootmis- ja levitamismudeleid, mille puhul võetakse algusest peale arvesse ühtset turgu ja ülemaailmset turgu. Sellega seoses pöörab komisjon erilist tähelepanu Euroopa animafilmide sektorile. Selles valdkonnas on lugude jutustamine erilise tähtsusega ja teosed liiguvad piiriüleselt lihtsamini. Animafilmide tootjad töötavad enamasti üheaegselt erinevate projektidega televisioonis ja filmitööstuses ning neil on võimalik teha teiste stuudiotega eraldi projektide kallal ühistööd. Paralleelselt olemasoleva toetusega, mida antakse programmi „Loov Euroopa“ allprogrammi MEDIA alusel, algatab komisjon enne käesoleva aasta lõppu dialoogi Euroopa suuremate animafilmide stuudiotega, et arutada, kuidas seda sektorit arendada. Dialoogist peaks ka selguma selle sektori vajadused erinevates valdkondades alates ajude äravoolu vähendamisest kuni animafilmide ja tele-animafilmide levitamise tõhustamiseni. Kõnealuse dialoogi eesmärk oleks leppida 2017. aasta keskpaigaks kokku ühine tegevuskava selle sektori jaoks. Ettepanekus võtta vastu digitaalsel ühtsel turul autoriõigust käsitlev direktiiv 17 nähakse kultuuripärandi valdkonna asutuste jaoks ette lahendused õiguste lihtsamaks litsentsimiseks. See on vajalik selliste tööde digiteerimiseks ja levitamiseks, mida enam ei turustata, kuid millel on suur kultuuriline väärtus. Töödele ligipääsu võimaldamine mittekaubanduslikel eesmärkidel nt haridusasutustele, avalikele raamatukogudele ja muudele platvormidele kui kino on samuti väga oluline vahend kultuurilise 15 Euroopa Audiovisuaalsektori Vaatluskeskuse hiljutise aruande „Kuidas levitatakse Euroopa Liidus filme tellitavate videoteenuste ja kinode kaudu“ (mai 2016) kohaselt levivad koostöös valminud filmid paremini kui muud Euroopa filmid. Euroopa filmid on kättesaadavad keskmiselt 2,8 riigis, samas kui koostöös valminud Euroopa filme levitatakse 3,6 riigis. 16 Ettepanek: Euroopa Parlamendi ja nõukogu direktiiv, millega muudetakse direktiivi 2010/13/EL audiovisuaalmeedia teenuste osutamist käsitlevate liikmesriikide teatavate õigus- ja haldusnormide koordineerimise kohta, et võtta arvesse muutuvat turuolukorda, COM(2016) 287 final. 17 Ettepanek: Euroopa Parlamendi ja nõukogu direktiiv, mis käsitleb autoriõigust digitaalsel ühtsel turul, COM(2016) 593. 5 mitmekesisuse tagamiseks, hariduslikel eesmärkidel ja ühiskonnaelus osalemiseks. Sellistel kanalitel koos paranenud meediapädevusega võib olla oluline roll Euroopa päritolu teoste tutvustamisel ja neile jätkusuutliku publiku loomisel. Lisaks uurib komisjon koos Euroopa filmiagentuuride direktorite ühenduse ja audiovisuaalsektoriga võimalust luua 2017. aastal hariduslikel eesmärkidel Euroopa filmide kataloog ja seda rahastada. See oleks kasulik katseprojekt tutvustamaks noortele Euroopa filmide mitmekesisust ja kvaliteeti. 6 3. ERANDITE KOHANDAMINE DIGITAALSELE JA PIIRIÜLESELE KESKKONNALE Erandid autoriõigusest võimaldavad teatavatel eesmärkidel ja tingimustel kasutada autoriõigusega kaitstud teoseid ilma autoriõiguse omaniku loata. Need erandid on kooskõlas avaliku poliitika eesmärkidega ELi tasandil ja neil on oluline roll autoriõiguse raamistikus laiemalt. Praegu on siiski enamik autoriõigusest tehtavad erandid vabatahtlikud ja neil ei ole piiriülest mõju. Veelgi enam, mõned neist eranditest tuleb tänapäeva tehnoloogiat arvesse võttes ümber hinnata, suurendades vajadusel ühtlustatuse taset, ent mõjutamata seejuures tõhusalt toimivaid riiklikke süsteeme. Täna ette pandud seadusandlike meetmetega viiakse erandite raamistik kooskõlla digitaalse keskkonnaga sellistes olulise tähtsusega valdkondades nagu haridus, teadustöö ja teadmiste kättesaadavus ning need meetmed on eeskätt keskendunud piiriülesele kasutusele, aidates nii kaasa ühtse turu süvendamisele. Ettepanekus võtta vastu digitaalsel ühtsel turul autoriõigust käsitlev direktiiv 18 nähakse ette uued kohustuslikud erandid hariduse, teadustöö ja kultuuripärandi säilitamise valdkonnas. Uus erand õppetöös näitliku materjali kasutamise suhtes annab täieliku õiguskindluse kaitstud teabesisu kasutamiseks digipõhiste õpetamismeetodite ja internetipõhise õppe puhul, sealhulgas piiriüleselt. See soodustab uusi õppemeetodeid, eeskätt kaugõpet, ning õpilaste ja õpetajate piiriülest liikuvust kõikjal ELis. Ettepanekuga kehtestatakse ka uus kohustuslik erand teadusuuringute eesmärgil tehtava teksti- ja andmekaeve suhtes. See erand võimaldab teadusasutustel kasutada teksti- ja andmekaeve tehnoloogiat täie õiguskindlusega. Kohustuslik erand kõnealuses valdkonnas võimaldab vältida eri lähenemisviiside järgimist erinevates liikmesriikides sellisel tegevusalal nagu teadusuuringud, kus tehakse üha sagedamini laiaulatuslikku piiriülest ja valdkondadevahelist koostööd. Sellega toetatakse teaduse ja innovatsiooni arengut ELis. Kavandatavas direktiivis on kultuuripärandi säilitamisega tegelevate asutuste jaoks ette nähtud ka uus kohustuslik erand seoses digitaalse säilitamisega, mis võtab arvesse digitaalse sisu vajadusi ja digitaaltehnoloogia kasutamist kultuuripärandi säilitamisel. See peegeldab nii digiteerimise kasutamist säilitusmeetodina kui ka suuremat hulka digitaalsena loodud teoseid kultuuripärandi säilitamisega tegelevate asutuste varamus. Suurem säilitamise määr on kasulik kultuuripärandi alalhoidmiseks ja võimaldab kodanikel selles protsessis kauem osaleda. Paralleelselt võetakse täna vastu kaks seadusandlikku ettepanekut 19 Marrakechi lepingu rakendamiseks ELi õiguses 20. Lepinguosalistelt nõutakse erandite kehtestamist trükikirja 18 Ettepanek: Euroopa Parlamendi ja nõukogu direktiiv, mis käsitleb autoriõigust digitaalsel ühtsel turul, COM(2016) 593. 19 Ettepanek: Euroopa Parlamendi ja nõukogu direktiiv, mis käsitleb autoriõiguse ja sellega seotud õigustega kaitstud teoste ja muu materjali kasutamise lubamist nägemispuudega või muu trükikirja lugemise puudega isikutele ja millega muudetakse direktiivi 2001/29/EÜ autoriõiguse ja sellega kaasnevate õiguste teatavate aspektide ühtlustamise kohta infoühiskonnas, COM(2016) 596 ning ettepanek: Euroopa Parlamendi ja nõukogu määrus, mis käsitleb teatavate autoriõiguse ja sellega seotud õigustega kaitstud kättesaadaval kujul teoste ja muu materjali piiriülest 7 lugemise puudega inimeste ligipääsuks raamatutele ja muudele trükistele, mis on neile juurdepääsetavad. Direktiivi ettepanekus nähakse ette kohustuslik erand ja tagatakse selle toimimine selliste juurdepääsetavas vormis teavikute valmistamisel ja vahetamisel ühtse turu raames. Määruse ettepanek võimaldab kõnealuste teavikute piiriülest vahetust ELi ja lepinguosalistest kolmandate riikide vahel. Komisjon analüüsib jätkuvalt mitmeid teisi detsembri teatises välja toodud eranditega seotud küsimusi. Mõned neist küsimustest tuleb võib-olla uuesti üle vaadata hilisemas etapis, võttes arvesse praegu Euroopa Liidu Kohtus pooleliolevate kohtuasjade lahendeid. See hõlmab ka erandit, millega antakse raamatukogudele ja muudele asutustele õigus võimaldada nende ruumides teostega teadustöö ja eraviisilise uurimistöö eesmärgil tutvuda. 21 Komisjon kinnitab avaliku konsultatsiooni tulemuste analüüsi põhjal sobivaks nn panoraamierandi 22 , millega lubatakse inimestel pildistada alaliselt avalikus ruumis paiknevaid teoseid, näiteks hooneid või skulptuure, ja need pildid üles laadida. ELi õigusaktide kohaselt on liikmesriikidel selliste erandite kehtestamisel lai kaalutlusõigus. Peaaegu kõik liikmesriigid on panoraamierandi oma siseriiklikusse õigusesse üle võtnud. Nüüd on ka liikmesriigid, kes varem seda ei olnud teinud, nimetatud erandi oma õigusnormidesse sisse viinud või arutavad selleks võetavaid meetmeid. Komisjon jätkab sellise arengu jälgimist ja soovitab tungivalt, et kõik liikmesriigid kõnealuse erandi kehtestaksid. 4. MEETMED, MIS ON VAJALIKUD AUTORIÕIGUSE SEISUKOHAST HÄSTI TOIMIVA TURU SAAVUTAMISEKS Viimastel aastatel on internetist saanud peamine kauplemiskoht autoriõigusega kaitstud infosisule ligipääsuks ja levitamiseks. Internetiteenused on nüüd üks peamisi teostest ja muu kaitstud infosisust saadava tulu allikaid ja nende osakaal eeldatavasti kasvab. Siiski teeb üha rohkem muret veebisisu uutest vormidest saadava väärtuse õiglane jaotamine kogu väärtusahela ulatuses. Õiguste omanikud on teada andnud raskustest seoses nende loodud veebisisu kasutamise lubamise ja sellest saadava õiglase tasuga. Selline olukord võib asetada ebasoodsasse olukorda ka need teenusteosutajad, kes tegelevad samalaadsete levitamisvormidega. Sellega on seotud küsimus – mis mõjutab ka offline- kasutust – autorite ja esitajate õiglasest tasustamisest ning läbirääkimisvõime erinevusest, kui nad oma õigusi taotlevad või need üle annavad. Kõnealused raskused kahjustavad direktiivi eesmärki tagada digitaalsel ühtsel turul kõigile õiglane investeeringutasuvus. Need küsimused on olulised kõigis kultuuri- ja loomesektorites, sealhulgas kirjastamis-, kujutava kunsti ning muusika- ja vahetamist liidu ja kolmandate riikide vahel nägemispuudega või muu trükikirja lugemise puudega isikute huvides (COM(2016) 595. 20 Marrakechi leping avaldatud teostele juurdepääsu lihtsustamise kohta nägemispuudega või muu trükikirja lugemise puudega isikutele, millele kirjutati ELi nimel alla 30. aprillil 2014. 21 Kohtuasi C-174/15. Vereniging Openbare Bibliotheken vs. Stichting Leenrecht. 22 Vt https://ec.europa.eu/digital-single-market/en/news/public-consultation-role-publishers- copyright-value-chain-and-panorama-exception. 8 audiovisuaalvaldkonnas. Lisaks detsembri teatisele kinnitati nende küsimuste käsitlemise vajadust ka 2016. aasta mai teatises veebiplatvormide kohta. 23 Ettepanekuga võtta vastu digitaalsel ühtsel turul autoriõigust käsitlev direktiiv 24 tagatakse ajakirjanduse kirjastajatele õiguskindlus ja parem läbirääkimispositsioon lepingulistes suhetes internetipõhiste teenuste pakkujatega, kes nende pakutavat infosisu kasutavad ja sellele ligipääsu võimaldavad. Direktiiviga antakse neile uus autoriõigusega seotud õigus, millega tunnustatakse ajakirjanduse kirjastajate olulist rolli investeeringute tegemisel ja nende üldist panust kvaliteetse ajakirjandusliku sisu loomisel ning antakse neile kaitse, mida nad enda avaldatud materjali digitaalses keskkonnas kasutamisel vajavad. Ettepanekus nähakse ka liikmesriikidele ette võimalus luua süsteeme, mille kaudu on kirjastajatel (sh raamatu- ja teaduskirjastused) võimalik osa saada sellistest hüvitusmehhanismidest nagu on ette nähtud isiklikuks tarbeks kopeerimise ja reprograafia valdkonnas. Lisaks tugevdab ettepanek õiguste omanike positsiooni selliste veebiteenuste osutajatega läbirääkimiste pidamisel ja neilt enda loodud infosisu veebipõhise kasutamise eest tasu nõudmisel, kes säilitavad infosisu, mida nende teenuste kasutajad üles laevad, ning kes võimaldavad sellele infosisule ligipääsu. Võttes arvesse selliste teenuste olulisust kaitstud infosisu edastamisel, nõutakse ettepanekus teenuste osutajatelt, kes säilitavad suurt hulka allalaetavaid teoseid ja kes võimaldavad neile ligipääsu, et nad võtaksid koostöös õiguste omanikega sobivaid ja proportsionaalseid meetmeid, sealhulgas sisu tuvastamise tehnoloogial põhinevaid meetmeid, et tagada õiguste omanikega sõlmitud kokkulepetest kinnipidamine. Selles valdkonnas on oluline ka aktiivne koostöö sidusrühmadega. Tarbijatel on jätkuvalt võimalik sellist infosisu üles laadida ja kasutada laiaulatuslikku infosisu pakkumisi õiglasemas ja õiguskindlamas keskkonnas. Lõpuks saavad autorid ja esitajad kasu nende teoste ja esituste kasutamisega seotud suuremast läbipaistvusest ning parematest tasustamisvõimalustest. See peaks endaga kaasa tooma paremini toimiva raamistiku kõigile osalistele tulenevalt õigusselgusest õiguste omandajate jaoks ning suuremast usaldusväärsusest autorite ja esinejate jaoks, sealhulgas internetikeskkonnas. Kõnealuste meetmete tõhus kasutamine nõuab liikmesriikidelt valdkonnaspetsiifiliste arutelude korraldamist, et määrata praktikas kindlaks asjakohased läbipaistvuskohustused iga infosisu liigi ja valdkonna osas. Komisjon jälgib tähelepanelikult tööd liikmesriikide tasandil, et tagada tulemuste tõhusus ja sidusus. Komisjon jätkab üldiste või valdkondlike dialoogide kaudu ka koostööd kõigi kultuuri- ja loomesektori huvitatud osapooltega, et arutada selles küsimuses toimivat arengut ja vajadust edasiste meetmete järgi. Kokkuvõttes aitavad need meetmed luua autoriõiguste turu, mis toimib kõikide poolte jaoks tõhusalt, pakub õigeid stiimuleid veebikeskkonnas investeeringute tegemiseks ja loomingulise infosisu levitamiseks ning kinnitab seda, kui oluline on ELi jaoks vaba ja mitmekesise ajakirjanduse olemasolu. 23 Vt teatis „Veebiplatvormid ja digitaalne ühtne turg. Euroopa võimalused ja probleemid“, COM(2016) 288 final. 24 Ettepanek: Euroopa Parlamendi ja nõukogu direktiiv, mis käsitleb autoriõigust digitaalsel ühtsel turul, COM(2016) 593. 9 5. MEETMED AUTORIÕIGUSE JÕUSTAMISE TÕHUSA JA TASAKAALUSTATUD SÜSTEEMI LOOMISEKS Autoriõiguse rikkumine kommertstasandil, kus rikkujad kasutavad tasuta teiste tööd ja investeeringuid, kujutab endast Euroopa loomeinimeste jaoks tõsist ohtu, kuna see takistab neid oma loomingu eest tasu saamast ja pärsib seega lõppkokkuvõttes loovust ja innovatsiooni. Ilma tõhusa ja tasakaalustatud jõustamissüsteemita ei ole autoriõigus ja muud intellektuaalomandiõigused piisavalt kaitstud, mis pidurdab investeeringuid loovusesse ja innovatsiooni. Pärast detsembri teatises tehtud avaldust hindab komisjon praegu kehtiva intellektuaalomandiõiguste jõustamise õigusliku raamistiku üldist toimimist osana laiemast algatusest, mille eesmärk on parandada kõigi intellektuaalomandiõiguste kaitset, keskendudes kaubandusliku mastaabiga rikkumistele. Selle hindamise toetuseks algatati avalik konsultatsioon intellektuaalomandiõiguste jõustamise õigusliku raamistiku hindamise ja ajakohastamise teemal 25 ning konsultatsiooni tulemused kinnitasid et suurim probleem on intellektuaalomandiõiguste, sealhulgas autoriõiguse rikkumine. Enam kui kolm neljandikku küsimustikule vastanud autoriõiguse omanikest ja ametiasutustest märkisid, et intellektuaalomandiõiguste rikkumiste arv on viimase 10 aasta jooksul suurenenud. Kuigi enamik vastanutest leidis, et olemasolevad eeskirjad on aidanud intellektuaalomandit tõhusalt kaitsta ja intellektuaalomandi õiguste rikkumist ennetada, olid paljud õiguste omanikud ja eelkõige internetivahendajad seisukohal, et intellektuaalomandiõiguste jõustamise direktiivis ette nähtud meetmeid ja õiguskaitsevahendeid 26 ei kohaldata kõigis liikmesriikides ühetaoliselt. See võib kaasa tuua erineva kaitstuse taseme liikmeriikides ja võib tähendada, et intellektuaalomandi õiguste jõustamise direktiiviga ei suudetud intellektuaalomandiõiguste jõustamise erinevusi liikmesriikide tasandil täielikult kõrvaldada. Märkimisväärne osa vastajatest leidis ka, et mõnda neist meetmetest on vaja kohandada, et tagada õiguskindlus ja suurendada nende meetmete tõhusust, kehtestades vahendusteenuste pakkujate suhtes ajutisi ja ennetavaid meetmeid ning tehes neile ettekirjutusi või tehes kindlaks asjakohase kahju suuruse. Autoriõiguse omanikud tõid eelkõige esile selle, et samade adressaatide suhtes rohkem kui ühes jurisdiktsioonis ajutiste ja ennetavate meetmete rakendamiseks ja ettekirjutuste tegemiseks tuleb läbida tülikas menetlus. Pärast hindamist teeb komisjon ettepaneku viia õigusraamistikku sisse vajalikud muudatused, mis aitavad parandada õigusliku jõustamise süsteemi intellektuaalomandiõiguste, sealhulgas autoriõiguse rikkumise korral, selgitada ajutiste ja ennetavate meetmete ning ettekirjutuste ulatust ja kohaldamist ning kahju arvutamise ja maksmise korda. Samuti uurib komisjon võimalusi hõlbustada samade rikkumiste eest samade adressaatide suhtes ajutiste ja ennetavate meetmete võtmist ning ettekirjutuste tegemist rohkem kui ühes jurisdiktsioonis ELi piires. Kiiresti arenev digitaalkeskkond ja tehnoloogia nõuavad aga, et intellektuaalomandi õiguste jõustamise direktiivis ette nähtud meetmeid, menetlusi ja õiguskaitsevahendeid võivad kohaldada ja nende suhtes korraldusi teha siseriiklikud kohtud põhjendamatu viivituseta. See on eriti asjakohane teoste ja muu kaitstud materjali kaitsmisel. Liikmesriigid peavad tagama, et nende kohtusüsteem suudab piisavalt kiiresti ja tõhusalt 25 Vt http://ec.europa.eu/growth/industry/intellectual-property/enforcement/. 26 Euroopa Parlamendi ja nõukogu 29. aprill 2004. aasta direktiiv 2004/48/EÜ intellektuaalomandi õiguste jõustamise kohta. 10 reageerida olukorras, kus on vaja kaitsta intellektuaalomandiõigusi, eelkõige internetis. Peale selle hindab komisjon võimalusi luua stiimuleid ajendamaks liikmesriikide kohtunikke spetsialiseeruma intellektuaalomandiõiguste rikkumist ja kehtivust käsitlevatele küsimustele, võttes arvesse nende liikmesriikide positiivseid kogemusi, kus sellised spetsialiseerunud kohtunikud juba töötavad. Detsembri teatises märkis komisjon veel, et „komisjon võtab viivitamatult meetmeid, et koos kõigi asjaomaste isikutega luua ja hakata rakendama rahavoogude jälgimisel ja isereguleerimisel põhinevaid mehhanisme“ 27. Lähtudes kehtivast ja hiljuti ajakohastatud vastastikuse mõistmise memorandumist võltsitud kaupade internetimüügi kohta, 28 on komisjon intellektuaalomandiõiguste kaitse eesmärgil heaks kiitnud vabatahtliku koostöö lepingute sõlmimise teiste vahendusteenuste pakkujatega, 29 sealhulgas internetireklaami, -maksete ja -pakiveoteenuste pakkujatega. Internetireklaam on autoriõigust rikkuvate veebilehtede jaoks peamine sissetulekuallikas. Internetireklaamiga seotud algatuse eesmärk on hoida ära reklaami paigutamist veebilehtedele, millel rikutakse intellektuaalomandiõigusi kaubanduslikul eesmärgil, vältides nii intellektuaalomandiõiguste rikkumise rahastamist reklaamitulust. Kuna autoriõigust rikkuvad veebilehed pakuvad nn eliit- või liitumismudeleid, mis võimaldavad tasu eest kiiremat juurdepääsu infosisule, võib ka makseteenuste osutajatel olla rahavoogude jälgimise põhimõtte rakendamisel oluline roll finantstehinguid tuvastades ja vajadusel oma teenuste osutamisest loobudes, muutes sellega nende ettevõtjate tegevuse kahjumlikuks. Komisjon on võtnud endale kohustuse saavutada neis protsessides reaalseid tulemusi, mis on määrava tähtsusega piraatluse vastu võitlemisel, ning loodab, et nende protsessidega ühineb võimalikult palju sidusrühmi, lähtudes siseriiklikul tasandil kehtivatest sarnastest kokkulepetest. Olenevalt nende algatuste edust uurib komisjon ka muid võimalusi tugevdada vahendusteenuse osutajate kaasamist intellektuaalomandiõiguste kaitsesse, näiteks nähes ette vahendajate vastutuse juhul, kui vahendaja on teadlik, et tema teenuseid kasutab kolmas isik, kes rikub intellektuaalomandiõigusi, kuid jääb seejuures tegevusetuks. 6. KOKKUVÕTE Kultuuri- ja loomemajandus on Euroopa jaoks mitmel viisil oluline. Selle näol on tegemist olulise majandussektoriga, kuid see on ka peamine teadmiste omandamise ja meelelahutuse allikas ning eriti oluline Euroopa kultuurilise mitmekesisuse säilitamisel ja edendamisel. Euroopa autoriõigusega seotud tööstusharude võime teha uuendusi digitaalkeskkonnas on nende edu ja üleilmse konkurentsivõime eeldus. Hästi kavandatud autoriõiguse raamistik ja seda toetavad meetmed on seega autorite, esitajate ning kultuuri- ja loomesektorite jaoks määrava tähtsusega, et neil oleks võimalik jõuda laiema publikuni ning lõppkokkuvõttes pakkuda kodanikele rohkem valikuvõimalusi. Komisjon viib ellu ulatuslikku tegevuskava, mille eesmärk on ajakohastada ELi autoriõiguse raamistikku kõigi sidusrühmade huvides ning toetada 27 Intellektuaalomandiõiguste rikkumine kaubanduslikul eesmärgil kujutab endast nii tasu maksmist intellektuaalomandiõigusi rikkuvate kaupade ja teenuste valmistamise või pakkumise ning levitamise või reklaamimise eest kui ka tulu saamist nende kaupade ja teenuste reklaamimise ja müümise eest. Rahavoogude jälgimise põhimõte hõlmab intellektuaalomandiõiguste kaitse valdkonnas erinevaid vahendusteenuste pakkujaid, nähes ette poliitikameetmed, mille eesmärk on tuvastada rikkumise tulemusel saadavaid tuluvoogusid ja need katkestada 28 http://ec.europa.eu/DocsRoom/documents/18023/ 29 Komisjoni avaldus siseturul kaubanduslikul eesmärgil intellektuaalomandiõiguste rikkumise ärahoidmiseks sõlmitud vastastikuse mõistmise memorandumi täitmise hõlbustamise ja selle üle järelevalve teostamise kohta: http://ec.europa.eu/DocsRoom/documents/18023/ 11 Euroopa kultuurilise ja loomingulise infosisu kättesaadavust ja nähtavust, sealhulgas piiriüleselt. Seadusandlike algatuste ja rahalise toetuse meetmed on vastastikku toetavad ja tugevdavad. Komisjon jälgib kõnealuste meetmete mõju ja võtab järelmeetmeid vastavalt jõupingutustele, mida tööstus on teinud eespool esitatud eesmärkide integreerimiseks oma ärimudelitesse. 12 Council of the European Union Brussels, 16 September 2016 (OR. en) 12283/16 PI 103 COMPET 493 TELECOM 173 ESPACE 41 AUDIO 101 CULT 82 COVER NOTE From: Secretary-General of the European Commission, signed by Mr Jordi AYET PUIGARNAU, Director date of receipt: 14 September 2016 To: Mr Jeppe TRANHOLM-MIKKELSEN, Secretary-General of the Council of the European Union No. Cion doc.: SWD(2016) 309 final Subject: COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE EVALUATION of the Council Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission Delegations will find attached document SWD(2016) 309 final. Encl.: SWD(2016) 309 final 12283/16 LK/np DGG 3B EN  EUROPEAN COMMISSION Brussels, 14.9.2016 SWD(2016) 309 final COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE EVALUATION of the Council Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission {SWD(2016) 308} EN EN The retrospective REFIT evaluation of the Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (the "Directive") was carried out in preparation of the EU copyright modernisation initiative set out in the Digital Single Market Strategy for Europe (Commission Communication of 6 May 2015, COM(2015) 192) and the Commission Communication "Towards a modern, more European copyright framework" (9 December 2015, COM(2015) 626). In particular, the evaluation contributes to the evidence base for a decision whether and to what extent the legal mechanisms similar to the ones established by the Directive could be used in the envisaged EU copyright modernisation measures. For satellite broadcasting the Directive introduced a harmonised exclusive right to authorise satellite transmissions of broadcasts and a principle according to which the copyright and related rights relevant act of communication to the public by satellite occurs solely in the Member State from which the programme-carrying signals originate (the 'country of origin' principle). The effect of this rule is that a broadcasting organisation, for its satellite transmission, has to clear copyright and related rights only for the country of origin. For cable retransmission the Directive provided a two-stop-shop copyright clearing mechanism (individual licensing by broadcasters combined with mandatory collective management of all other - "underlying" - rights) accompanied by an obligation to negotiate in good faith and a possibility to call upon the assistance of mediators in case of dispute. In accordance with the better regulation guidelines, the evaluation concentrated on effectiveness, efficiency, relevance, coherence and EU added value of the Directive. It also sought to establish the Directive's simplification potential. The evaluation took place between August 2015 and June 2016 and was based, in particular, on a study prepared for the Commission "The survey and data gathering to support the evaluation of the Satellite and Cable Directive and assessment of its possible extension", a questionnaire addressed to the Member States to gather details about the transposition and application of the Directive in national law and legal orders as well as an on-line public consultation carried out between 24 August 2015 and 16 November 2015. Obtaining quantitative data, especially data pertaining to the costs and benefits generated by the application of the Directive, has proved to be challenging. The main conclusions of the evaluation are the following: All Member States have introduced rules having as their objective the transposition of the Directive. The transposed rules have generated over the years relatively few legal disputes. The Directive can also be considered to have contributed to fostering thriving TV / radio broadcasting and distribution markets: 28.7 million EU households receive free-to-air satellite broadcasting services and 56.4 million - cable retransmission services. As regards the effectiveness, there are indications that overall the specific mechanisms introduced by the Directive have facilitated the clearance of copyright and related rights for (free-to-view) cross-border satellite broadcasts and for the simultaneous retransmissions by 1 cable of broadcasts from other Member States. Similarly, these mechanisms can be considered to have contributed to ensuring a high level of protection for right holders and have improved, to different extents, access to TV and radio programmes from other Member States. The negotiation and mediation mechanisms established under the Directive have been used to a varying, but overall limited, degree; they were found helpful in the cases where they have been used. The Directive can be considered to have been a cost-efficient and overall beneficial intervention. It has not created administrative burden or significant compliance / implementation costs for either stakeholders or Member States. The Directive has helped to reduce the transaction costs for the licensors and the licensees. Certain identified specific costs resulting from the application of the Directive (fees charged by collecting societies for managing cable retransmission rights) can be regarded to be outweighed by benefits - savings in transaction costs. Some right holders referred to the Directive's possible negative impacts on the market's functioning claiming that the country of origin principle undermines the territory-by-territory content distribution strategies and that mandatory collective management does not allow for the licensing of cable retransmission rights on fair market terms. However, these concerns are not estimated to be significant either in the case of the country of origin principle (since the Directive has left open the possibility to continue limiting the exploitation of satellite broadcasting rights in compliance with Union law) or in the case of mandatory management of cable retransmission rights (since individuals and SMEs, the category to which most right holders belong, are generally considered, due to their limited capacity to carry out multiple individual negotiations, to be the main beneficiaries of this approach). The Directive remains relevant, as a tool facilitating licensing of (free-to-view) cross-border satellite broadcasts and cable retransmissions of TV and radio broadcasts from other Member States as well as, more generally, for improving consumers' access to TV and radio broadcasts from other Member States. Within the scope of application of the Directive (satellite broadcasting and cable retransmission) its relevance has been limited by two factors: the proliferation of territorially-limited satellite pay-TV offerings and the practice to inject program-carrying signals directly into cable networks (without any prior broadcast). Otherwise the Directive - due to the technology-specific nature of its provisions - does not cover various transmission and retransmission means that have emerged in recent years. The Directive is coherent both internally and with other EU interventions pursuing similar objectives, notably those in the audiovisual and media sectors. Moreover, the Directive's objectives remain valid in view of the new Commission priorities, including the completion of the digital single market. As regards satellite broadcasting, the Directive has provided significant EU added value, since no action with a comparable result could have been taken at the Member State level. As regards cable retransmission, action at the Member State level is possible, but the Directive has provided added value by establishing harmonised rules across the internal market. In terms of REFIT, since the Directive has not created administrative burden or significant compliance / implementation costs for either stakeholders or Member States and since its 2 provisions are, generally, setting out principles rather than procedures, the available simplification potential is estimated as limited. 3 EUROPEAN COMMISSION Brussels, 14.9.2016 COM(2016) 596 final 2016/0278 (COD) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on certain permitted uses of works and other subject-matter protected by copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise print disabled and amending Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society (Text with EEA relevance) EN EN  EXPLANATORY MEMORANDUM 1. CONTEXT OF THE PROPOSAL • Reasons for and objectives of the proposal The proposed Directive will bring Union law into line with the EUʼs international commitments under the Marrakesh Treaty to Facilitate Access to Published Works for Persons who Are Blind, Visually Impaired, or Otherwise Print Disabled (‘the Marrakesh Treaty’). The Marrakesh Treaty was adopted in 2013 at the World Intellectual Property Organisation (WIPO) with the aim of facilitating the availability and cross-border exchange of books and other print material in accessible formats around the world. It was signed by the Union1 in April 2014. The Treaty requires the parties to provide exceptions or limitations to copyright and related rights for the benefit of blind, visually impaired and otherwise print-disabled persons and allows for the cross-border exchange of special format copies of books, including audio books, and other print material between countries that are parties to the Treaty. The Union has thus made a political commitment to implement the Treaty, which both the Council and the European Parliament have since strengthened. The Commission separately presented a proposal for a Council Decision for the ratification of the Marrakesh Treaty by the Union in October 2014. In May 2015, the Council submitted a request to the Commission under Article 241 of the Treaty on the Functioning of the European Union (TFEU), in which it underlined its full commitment to the rapid entry into force of the Marrakesh Treaty and asked the Commission to submit, without delay, a legislative proposal to amend the Union legal framework in accordance with the Treaty. The beneficiaries of the Marrakesh Treaty, i.e. persons who are blind, visually impaired, or otherwise print disabled ('beneficiary persons') face many barriers to accessing books and other print material protected by copyright and related rights. The availability of books in formats that are accessible to print-disabled persons is estimated to be between 7 %2 and 20 %3 despite the fact that digital technology greatly facilitates accessible publishing4. Accessible formats include e.g. Braille, large print, e-books and audiobooks with special navigation, audio description and radio broadcasts. The objective of the proposed Directive is to increase the availability of works and other protected subject-matter, e.g. books, journals, newspapers, magazines and other writings, sheet music and other print material, including in audio form, in formats that are accessible to beneficiary persons. It will do this by ensuring that all beneficiary persons and organisations serving their needs on a non-profit basis can rely on a mandatory and harmonised exception to copyright and related rights within the Union. This will allow to make accessible format copies of otherwise non-accessible works and other subject matter that have already been published or made available. The proposed Directive would amend the existing Union legislative framework accordingly and ensure that the accessible format copies made in one Member State can be disseminated and accessed throughout the Union. With respect to the 1 Council Decision 2014/221/EU of 14 April 2014 on the signing, on behalf of the European Union, of the Marrakesh Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired, or otherwise Print Disabled (OJ L115, 17.4.2014, p. 1.). 2 LISU for the Royal National Institute of Blind People (RNIB), ʻAvailability of accessible publications - 2011 updateʼ, October 2011. 3 Catherine Meyer-Lereculeur ʻException ʻhandicapʼ au droit d’auteur et développement de l’offre de publications accessibles à l’ère numériqueʼ, May 2013. 4 These figures refer to availability in some but not all accessible formats. EN 2 EN  obligations imposed by the Marrakesh Treaty on the cross-border exchange of accessible format copies between the Union and third countries that are parties to the Treaty, this Directive should be read together with Regulation […]. The proposed Directive is also in line with the Union's obligations deriving from the United Nations Convention on the Rights of Persons with Disabilities (ʻthe UNCRPDʼ). The EU has been bound by the UNCRPD since January 2011, pursuant to Council Decision 2010/48/EC5. The provisions set out in the UNCRPD have thus become an integral part of the Union's legal order. The right of access to information and the right of people with disabilities to participate in cultural life on an equal basis with others are enshrined in the UNCRPD. Its article 30 requires parties to the Convention to take all appropriate steps, in accordance with international law, to ensure that laws protecting intellectual property rights do not constitute an unreasonable or discriminatory barrier to access by persons with disabilities to cultural materials. In its Concluding observations on the initial report of the European Union6, adopted on 4 September 2015, the United Nations Committee on the Rights of Persons with Disabilities has encouraged the Union to take all appropriate measures to implement the Marrakesh Treaty as soon as possible. • Consistency with existing policy provisions in the policy area The Union has adopted a number of Directives in the area of copyright and related rights that provide legal certainty and a high level of protection for rightholders. The rights that are relevant for the proposed Directive are currently harmonised in Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society (ʻDirective 2001/29/ECʼ)7, in Directive 2006/115/EC on rental right and lending right and on certain rights related to copyright in the field of intellectual property8, in Directive 96/9/EC on the legal protection of databases9 and in Directive 2009/24/EC on the legal protection of computer programs10. Union law also provides for a number of exceptions or limitations to these rights, which allow, under certain conditions and for the purpose of achieving certain policy objectives, the use of content without the authorisation of the rightholder. The accessibility needs of persons with a disability were recognised in this context, and were provided for notably by Article 5(3)(b) of Directive 2001/29/EC. This provision allows Member States to introduce exceptions or limitations to copyright and related rights for the benefit of persons with disabilities, including print disabilities, in respect of uses which are directly related to the disability, of a non-commercial nature and to the extent required by the specific disability. In accordance with the requirements of the Marrakesh Treaty, the exception introduced by the 5 Council Decision 2010/48/EC of 26 November 2009 concerning the conclusion, by the European Community, of the United Nations Convention on the Rights of Persons with Disabilities (OJ L23, 27.1.2010, p. 35). 6 CRPD/C/EU/CO/1, available at: http://tbinternet.ohchr.org/Treaties/CRPD/Shared%20Documents/EUR/CRPD_C_EU_CO_1_21617_E. doc. 7 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ L 167, 22.6.2001, p. 10-19). 8 Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ L 376, 27.12.2006, p. 28-35). 9 Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ L 77, 27.3.1996, p. 20-28). 10 Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (OJ L 111, 5.5.2009, p. 16-22). EN 3 EN  proposed Directive will be mandatory for Member States, and will apply to rights that have been harmonised at Union level and that are relevant for the making and dissemination of accessible format copies as defined in the Marrakesh Treaty. The exception complements the existing optional exception or limitation provided for in Article 5(3)(b) of Directive 2001/29/EC by introducing a mandatory exception for the benefit of beneficiary persons that will have effect throughout the internal market. • Consistency with other Union policies With the adoption of this Directive, the Union aims to ensure that all beneficiary persons have access to books, journals, newspapers, magazines and other writings, sheet music and other print material to substantially the same degree as persons without an impairment or disability, and that the full potential of the internal market can be exploited to achieve this. In this respect, the proposed Directive is consistent with and complements other legislation and initiatives taken at Union level to ʻbuild on the strength of our single market and to fully exploit its potential in all its dimensionsʼ11. These include a proposal for a Directive of the European Parliament and of the Council on the accessibility of public sector bodiesʼ websites and one for a Directive of the European Parliament and of the Council on the approximation of the laws, regulations and administrative provisions of the Member States as regards the accessibility requirements for products and services (ʻthe European Accessibility Act proposalʼ). In particular, the European Accessibility Act proposal includes obligations to ensure that e-book services provided in the internal market as of its date of application comply with certain functional requirements so that they are accessible from the moment they are put on the market. 2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY • Legal basis The legal basis for the proposal is Article 114 of the Treaty on the Functioning of the European Union (TFEU). • Subsidiarity (for non-exclusive competence) The Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 TFEU. The objective of this proposed Directive is to facilitate access to certain content protected by copyright and related rights for the beneficiary persons of the Marrakesh Treaty within the internal market in an area that is already harmonised by Union law and consequently can only be amended by Union law. In the absence of Union intervention, this objective could not be achieved by Member States. In addition, by reason of scale and effects, this objective can be better achieved at Union level. • Proportionality The proportionality of the proposal is ensured as it does not go beyond what is necessary to implement the Union obligations under the Marrakesh Treaty within the Union. • Choice of the instrument The choice of a Directive is consistent with previous measures in this area, notably Directive 2001/29/EC which harmonised the rights of authors and other rightholders and introduced an optional exception or limitation for the benefit of people with a disability. The proposed Directive would amend the existing Union legislative framework by providing for a new 11 President Junckerʼs Political Guidelines. EN 4 EN  mandatory exception to the relevant harmonised rights and ensuring that accessible format copies made in one Member State under that exception can be disseminated and accessed throughout the Union. In so doing and by providing for clear definitions, it introduces a uniform approach to the Union's obligations under the Treaty, including the free circulation of accessible format copies in the internal market, providing the beneficiaries of the exception with the necessary legal certainty in undertaking the uses that it covers. At the same time, it allows for a certain margin of manoeuvre for Member States for adapting specific national legislation that might be directly or indirectly affected by the provisions of this Directive, for example in the area of education, healthcare or other social policies. 3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS • Ex-post evaluations/fitness checks of existing legislation The purpose of the proposed Directive is to fulfil new international obligations as regards Union law. A retrospective evaluation of existing European law in this area is therefore not relevant and not required in this context. Available information on related European legislation was however taken into account, notably the results of public consultations and existing expert input. • Stakeholder consultations No specific stakeholder consultation was carried out for the purposes of the proposed Directive, which implements provisions established at international level. The extensive public consultation on the review of the EU copyright rules carried out by the Commission between December 2013 and March 2014 also included a section on limitations and exceptions for the benefit of persons with disabilities and on the access to and circulation of works in accessible formats, which also referred to the Marrakesh Treaty12. Among other aspects, the views expressed by end users, consumers and institutional users (including organisations serving the needs of people with disabilities and libraries) pointed to a diverging scope of national exceptions or limitations, making it difficult to have legal certainty when exporting and importing accessible format copies made under a national copyright exception or limitation. These institutional respondents were consistently of the opinion that the Marrakesh Treaty would satisfactorily address these concerns. Rightholders and collective management organisations generally felt that there were no problems arising from the national implementation of the optional exception or limitation provided for in Union legislation. They also remarked that existing market mechanisms were effectively addressing the problem of access to works for persons with disabilities. This view was not shared by end users, consumers or institutional users. • Collection and use of expertise No expertise was collected specifically in preparation of this proposal. The Commission took into account a 2013 study on the application of Directive 2001/29/EC13, which assessed inter alia the application in 11 Member States of the optional exception or limitation for persons with a disability provided for in Article 5(3)(b) of that Directive. 12 Report on the responses to the Public Consultation on the Review of the EU Copyright Rules, July 2014, p. 61-63. http://ec.europa.eu/internal_market/consultations/2013/copyright-rules/index_en.htm . 13 "Study on the application of Directive 2001/29/EC on copyright and related rights in the information society", December 2013, De Wolf and partners, available at: http://ec.europa.eu/internal_market/copyright/docs/studies/131216_study_en.pdf , p. 417 et seq. EN 5 EN  • Impact assessment The proposed Directive will implement the Marrakesh Treaty in the internal market and aims to bring Union law into line with the Treaty. The Better Regulation Guidelines14 do not require an impact assessment to be carried out when the Commission has no discretion over the policy content. • Fundamental rights The proposed Directive supports the right of persons with disabilities to benefit from measures designed to ensure their independence, social and occupational integration and participation in the life of the community, as enshrined in Article 26 of the Charter of Fundamental Rights of the European Union ('the Charter'). The Directive also reflects the Union's commitments under the UNCRPD. The UNCRPD guarantees people with disabilities the right of access to information and the right to participate in cultural, economic and social life on an equal basis with others. In view of this, it is justified to restrict the property rights of rightholders in light of the Union's obligations under the Charter15. The proposed Directive is an essential first step in ensuring such access to information and participation in cultural, economic and social life. The proposal would have limited impact on copyright as a property right as recognised in the Charter (Article 17(2))16. It should be noted that, at present, all Member States have to some extent made use of the optional copyright exception or limitation provided for in Article 5(3)(b) of Directive 2001/29/EC. The impact of the proposed Directive on copyright as a property right will thus be limited to fully harmonising the existing divergent copyright exceptions or limitations for persons with print disabilities that are in force in the Member States. 4. BUDGETARY IMPLICATIONS The proposal has no impact on the Union budget. 5. OTHER ELEMENTS European Economic Area The proposed act relates to an European Economic Area (EEA) matter and it should extend to the EEA.E- • Implementation plans and monitoring, evaluation and reporting arrangements Member States will be obliged to bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 12 months after its adoption. Member States will be required to communicate to the Commission the provisions introduced to comply with this Directive, and other major legislative provisions adopted in the field covered by this Directive. The Commission will monitor the implementation of the proposed Directive and, in accordance with Better Regulation Guidelines and no sooner than five years after the 14 SWD(2015) 111 final. 15 Article 52(1) of the Charter allows restrictions interfering with the exercise of the freedoms of the Charter. Such restrictions must (i) be provided for by law; and (ii) respect the essence of those rights and freedoms. In addition, the limitations are (iii) ʻsubject to the principle of proportionalityʼ and ʻmay be made only if they are necessary and genuinely meet objectives of general interest recognized by the Union or the need to protect the rights and freedoms of othersʼ. 16 OJ C 83, 30.3.2010, p. 389–403. EN 6 EN  date of transposition, it shall carry out an evaluation of the Directive and present the main findings to the European Parliament, the Council and the European Economic and Social Committee, accompanied, where appropriate, by proposals for the amendment of the Directive. In the same way, it will also carry out an evaluation of Regulation […]. The Commission will also monitor the availability in accessible formats of works and other subject-matter other than those covered by this Directive, and the availability of works and other subject-matter in accessible formats for people with other disabilities, within the Union. The Commission will, by two years after the date of transposition of the proposed Directive, present a report on this matter. That report shall include an assessment on whether expanding the scope of this Directive in accordance with its findings should be considered. • Explanatory documents In the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents17, Member States agreed to provide the Commission, when notifying it of the measures taken to transpose a directive, with one or more documents explaining the relationship between the provisions of the directive and corresponding provisions of their national measures, where there is a justification for demanding this additional information. The explanatory documentation will help to ensure that all national legal systems put in place a mandatory exception in line with this Directive in the light of Union obligations under the Marrakesh Treaty. • Detailed explanation of the specific provisions of the proposal Article 1 specifies the subject-matter and the scope of the proposal. The proposed Directive will facilitate the use of certain copyright protected content, without the authorisation of the rightholder, for the benefit of persons who are blind, visually impaired or otherwise print disabled. Article 2 gives the definitions of the terms ʻwork and other subject-matterʼ, ʻbeneficiary personʼ, ʻaccessible format copyʼ and ʻauthorised entityʼ that apply for the purposes of the proposed Directive. Article 3 provides for a mandatory exception and states the specific permitted uses by beneficiary persons and authorised entities. Article 4 relates to the circulation of accessible format copies in the internal market. The provision aims to ensure that accessible format copies made under the exception provided for in Article 3 may circulate or be accessed in any Member State. Article 5 sets out the applicable rules for the protection of personal data. Article 6 states the amendments to be made to Directive 2001/29/EC to ensure coherence with this Directive. Article 7 states that the Commission will present a report on the availability in the internal market of works and other subject matter in accessible formats and for persons with disabilities other than those covered by this Directive. Article 8 sets out the arrangements on the evaluation of the proposed Directive, in accordance with Better Regulation rules. 17 OJ C 369, 17.12.2011, p. 14. EN 7 EN  Article 9 sets the time frame for the transposition of the proposed Directive by the Member States and specifies a number of accompanying obligations that must be met by the Member States, e.g. to notify the Commission of the main provisions that implement the proposed Directive in their national law. Article 10 specifies the date of the Directive's entry into force and Article 11 states that the Directive is addressed to the Member States. EN 8 EN  2016/0278 (COD) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on certain permitted uses of works and other subject-matter protected by copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise print disabled and amending Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee18, Acting in accordance with the ordinary legislative procedure, Whereas: (1) Union Directives in the area of copyright and related rights provide legal certainty and a high level of protection for rightholders. This harmonised legal framework contributes to the proper functioning of the internal market and stimulates innovation, creation, investment and the production of new content, including in the digital environment. It also aims to promote access to knowledge and culture by protecting works and other subject-matter and by permitting exceptions or limitations that are in the public interest. A fair balance of rights and interests between rightholders and users should be safeguarded. (2) Directive 96/9/EC of the European Parliament and of the Council19, Directive 2001/29/EC of the European Parliament and of the Council20, Directive 2006/115/EC of the European Parliament and of the Council21 and Directive 2009/24/EC of the European Parliament and of the Council22 harmonise the rights of rightholders. Those Directives provide for an exhaustive list of exceptions and limitations to those rights, which allow for the use of content without the authorisation of the rightholders under certain conditions in order to achieve certain policy objectives. (3) Persons who are blind, visually impaired or otherwise print disabled continue to face many barriers in accessing books and other print material which are protected by copyright and related rights. Measures need to be taken to increase the availability of 18 OJ C , , p. . 19 OJ L 77, 27.3.1996, p. 20-28. 20 OJ L 167, 22.6.2001, p. 10-19. 21 OJ L 376, 27.12.2006, p. 28-35. 22 OJ L 111, 5.5.2009, p. 16-22. EN 9 EN  those works in accessible formats and to improve their circulation in the internal market. (4) The Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired, or Otherwise Print Disabled (ʻthe Marrakesh Treatyʼ) was signed on behalf of the Union on 30 April 201423. Its aim is to improve the availability of works and other protected subject-matter in accessible formats for persons who are blind, visually impaired or otherwise print disabled. The Marrakesh Treaty requires contracting parties to provide exceptions or limitations to the rights of holders of copyright and related rights for the making and dissemination of copies in accessible formats of certain works and other subject-matter, and for the cross-border exchange of those copies. The conclusion of the Marrakesh Treaty by the Union requires the adaptation of Union law by establishing a mandatory exception for uses, works and beneficiary persons covered by the Treaty. This Directive implements the obligations that the Union has to meet under the Marrakesh Treaty in a harmonised manner, with a view to ensuring that those measures are applied consistently throughout the internal market. (5) This Directive is designed for the benefit persons who are blind, have a visual impairment which cannot be improved so as to give those persons visual function substantially equivalent to that of a person who has no such impairment, or have a perceptual or reading disability, including dyslexia, preventing them from reading printed works to substantially the same degree as persons without such disability, or are unable to hold or manipulate a book or to focus or move the eyes to the extent that would be normally acceptable for reading due to a physical disability. The objective of the measures introduced by this Directive is to improve the availability of books, journals, newspapers, magazines and other writings, sheet music and other print material, including in audio form, whether digital or analogue, in formats that make those works and other subject-matter accessible to those persons to substantially the same degree as to persons without an impairment or disability. Accessible formats include Braille, large print, adapted e-books, audio books and radio broadcasts. (6) This Directive should therefore provide for mandatory exceptions to the rights that are harmonised by Union law and are relevant for the uses and works covered by the Marrakesh Treaty. These include in particular the rights of reproduction, communication to the public, making available, distribution and lending, as provided for in Directive 2001/29/EC, Directive 2006/115/EC, and Directive 2009/24/EC, as well as the corresponding rights in Directive 96/9/EC. As the scope of exceptions and limitations required by the Marrakesh Treaty also includes works in audio form, like audiobooks, it is necessary that these exceptions also apply to related rights. (7) Uses laid down in this Directive include the making of accessible format copies by either the beneficiary persons or authorised entities serving their needs — whether public or private organisations, in particular libraries, educational establishments and other non-profit organisations that serve persons with a print disability as their main or one of their main activities or public interest missions —. Those uses should also include making accessible format copies, for the exclusive use of the beneficiary persons, by a natural person who does so on behalf of a beneficiary person or who assists the beneficiary person in doing so. 23 Council Decision 2014/221/EU of 14 April 2014 on the signing, on behalf of the European Union, of the Marrakesh Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired, or otherwise Print Disabled. (OJ L115, 17.4.2014, p. 1). EN 10 EN  (8) The mandatory exception should also limit the right of reproduction so as to allow for any act that is necessary in order to make changes to or convert or adapt a work or other subject-matter in such a way as to produce an accessible format copy. This includes providing the necessary means to navigate information in an accessible format copy. (9) The exception should allow authorised entities to make and disseminate online and offline within the Union accessible format copies of works or other subject-matter covered by this Directive. (10) It should be possible for accessible format copies made in one Member State to be available in all Member States, in order to ensure their greater availability across the internal market. This would reduce the demand for redundant work in producing accessible format copies of the same work or other subject matter across the Union, thus generating savings and efficiency gains. This Directive should therefore ensure that accessible format copies made in one Member State may be circulated and accessed in all Member States. An authorised entity should thus be able to disseminate those copies, offline or online, to beneficiary persons and authorised entities in any Member State. Moreover, authorised entities and beneficiary persons should be allowed to obtain or have access to those copies from any authorised entity in any Member State. (11) In view of the specific nature of the exception, its targeted scope and the need for legal certainty for its beneficiaries, Member States should not be allowed to impose additional requirements for the application of the exception, such as compensation schemes or the prior verification of the commercial availability of accessible format copies. (12) Any processing of personal data under this Directive should respect fundamental rights, including the right to respect for private and family life and the right to protection of personal data under Articles 7 and 8 of the Charter of Fundamental Rights of the European Union and must be in compliance with Directive 95/46/EC of the European Parliament and of the Council, which governs the processing of personal data, as may be carried out by authorised entities within the framework of this Directive and under the supervision of the Member Statesʼ competent authorities, in particular the public independent authorities designated by the Member States. (13) The United Nations Convention on the Rights of Persons with Disabilities (ʻthe UNCRPDʼ), to which the EU is a party, guarantees people with disabilities the right of access to information and the right to participate in cultural, economic and social life on an equal basis with others. The UNCRPD requires parties to the Convention to take all appropriate steps, in accordance with international law, to ensure that laws protecting intellectual property rights do not constitute an unreasonable or discriminatory barrier to access by persons with disabilities to cultural materials. (14) Under the Charter of Fundamental Rights of the European Union, the Union recognises and respects the right of people with disabilities to benefit from measures designed to ensure their independence, social and occupational integration and participation in the life of the community. (15) With the adoption of this Directive, the Union aims to ensure that beneficiary persons have access to books and other print material in accessible formats. Accordingly, this Directive is an essential first step in improving access to works for people with disabilities. EN 11 EN  (16) The Commission will monitor the effect of this Directive. As part of this, it will assess the situation regarding the availability in accessible formats of works and other subject-matter other than those covered by this Directive, as well as the availability of works and other subject-matter in accessible formats for persons with other disabilities. The Commission will review the situation closely. Changes to the scope of this Directive may be considered, if necessary. (17) Pursuant to Directive 2001/29/EC, Member States may continue to provide for an exception or limitation for the benefit of persons with a disability in cases which are not covered by this Directive. (18) This Directive therefore respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union. This Directive should be interpreted and applied in accordance with those rights and principles. (19) The Marrakesh Treaty imposes certain obligations regarding the exchange of accessible format copies between the Union and third countries that are parties to the Treaty. The measures taken by the Union to fulfil those obligations are contained in Regulation […] which should be read in conjunction with this Directive. (20) The objective of this Directive — implementing the Union's obligations under the Marrakesh Treaty in order to improve access to works and other subject-matter protected by copyright and related rights for persons who are blind, visually impaired or otherwise print disabled in the Union — cannot be achieved by the Member States acting independently, as it requires the adaptation of Union law. Furthermore, by reason of its scale and effects, the objective can only be achieved through action at Union level. The Union may therefore adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in the same Article, this Directive does not go beyond what is necessary in order to achieve that objective. (21) In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents24, Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified. HAVE ADOPTED THIS DIRECTIVE: Article 1 Subject matter and scope This Directive lays down rules on the use of certain works and other subject-matter without the authorisation of the rightholder, for the benefit of persons who are blind, visually impaired or otherwise print disabled. Article 2 Definitions For the purposes of this Directive the following definitions shall apply: 24 OJ C 369, 17.12.2011, p. 14. EN 12 EN  (1) ‘work and other subject-matter’ means a work in the form of a book, journal, newspaper, magazine or other writing, including sheet music, and related illustrations, in any media, including in audio forms such as audiobooks, which is protected by copyright or related rights and which is published or otherwise lawfully made publicly available; (2) ‘beneficiary person’ means: (a) a person who is blind; (b) a person who has a visual impairment which cannot be improved so as to give the person visual function substantially equivalent to that of a person who has no such impairment; (c) a person who has a perceptual or reading disability, including dyslexia, and is, as a result, unable to read printed works to substantially the same degree as a person without an impairment or disability; or (d) a person who is otherwise unable, due to a physical disability, to hold or manipulate a book or to focus or move their eyes to the extent that would be normally acceptable for reading. (3) ‘accessible format copy’ means a copy of a work or other subject-matter in an alternative manner or form that gives a beneficiary person access to the work or other subject-matter, including allowing for the person to have access as feasibly and comfortably as a person without a visual impairment or any of the disabilities referred to in paragraph 2; (4) ‘authorised entity’ means an organisation providing education, instructional training, adaptive reading or information access to beneficiary persons on a non-profit basis, as its main activity or as one of its main activities or public-interest missions. Article 3 Permitted uses 1. Member States shall provide that any act necessary for: (a) a beneficiary person, or a person acting on their behalf, to make an accessible format copy of a work or other subject-matter for the exclusive use of the beneficiary person; and (b) an authorised entity to make an accessible format copy and to communicate, make available, distribute or lend an accessible format copy to a beneficiary person or authorised entity for the purpose of exclusive use by a beneficiary person; does not require the authorisation of the rightholder of any copyright or related right in the work or protected subject-matter pursuant to Articles 2, 3 and 4 of Directive 2001/29/EC, Article 1(1) of Directive 2006/115/EC, Article 8(2) and (3) and Article 9 of Directive 2006/115/EC, Article 4 of Directive 2009/24/EC and Articles 5 and 7 of Directive 96/9/EC. 2. Member States shall ensure that the accessible format copy respects the integrity of the work or other subject-matter, having due consideration for the changes required to make the work accessible in the alternative format. 3. Article 5(5) and the first, third and fifth subparagraphs of Article 6(4) of Directive 2001/29/EC shall apply to the exception provided for in paragraph 1 of this Article. EN 13 EN  Article 4 Accessible format copies in the internal market Member States shall ensure that an authorised entity established in their territory may carry out the acts referred to in Article 3(1)(b) for a beneficiary person or an authorised entity established in any Member State. Member States shall also ensure that a beneficiary person or authorised entity established in their territory may obtain or have access to an accessible format copy from an authorised entity established in any Member State. Article 5 Protection of personal data The processing of personal data carried out within the framework of this Directive shall be carried out in compliance with Directive 95/46/EC. Article 6 Amendment to Directive 2001/29/EC In Article 5(3) of Directive 2001/29/EC, point (b) is replaced by the following: ʻ(b) uses, for the benefit of people with a disability, which are directly related to the disability and are of a non-commercial nature, to the extent required by the specific disability, without prejudice to the obligations of Member States under Directive […];ʼ Article 7 Report By [two years after the date of transposition], the Commission shall present a report to the European Parliament, the Council and the European Economic and Social Committee on the availability, in accessible formats, of works and other subject-matter other than those defined in Article 2(1) for beneficiary persons, and of works and other subject-matter for persons with disabilities other than those referred to in Article 2(2), in the internal market. The report shall contain an assessment on whether an amendment of the scope of this Directive should be considered. Article 8 Review No sooner than [five years after the date of transposition], the Commission shall carry out an evaluation of this Directive and present the main findings to the European Parliament, the Council and the European Economic and Social Committee, accompanied, where appropriate, by proposals for the amendment of this Directive. Member States shall provide the Commission with the necessary information for the preparation of the evaluation report and the preparation of the report referred to in Article 7. Article 9 Transposition 1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by [12 month after entry into force] at the latest. They shall forthwith communicate to the Commission the text of those provisions. EN 14 EN  When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made. 2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive. Article 10 Entry into force This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Article 11 Addressees This Directive is addressed to the Member States. Done at Brussels, For the European Parliament For the Council The President The President EN 15 EN