Europe is finally waking up and realizing that in order for the digital market to flourish, barriers need to be demolished. If European Union was created for the free circulation of men and goods, one cannot understand why it is not so in the digital space.
The plan to create a Digital Single Market within the 28 EU countries has been unveiled, with the goal of “bringing down barriers to unlock online opportunities”.
The three policy areas that have been identified by the Commission are:
- better online access to digital goods and services;
- an environment where digital networks and services can prosper;
- digital as a driver for growth.
The proposals, which will be on the agenda of the European Council meeting on June 25-26, have already attracted criticism: Robert Atkinson (@robatkinsonitif), President of Washington-based think tank the Information Technology and Innovation Foundation, says Europe would create an isolated market at the expense of the global digital economy, whereas Reed Hastings (@reedhastings), CEO of Netflix, says they are already solving the problem of making the content accessible worldwide at the same time commercially (source: The Hollywood Reporter).
However, the main point here is in fact creating an open and more fertile market that would also benefit the global digital economy, enhancing the circulation of content and therefore empowering the internal market for digital goods, including entertainment, and therefore giving consumers the possibility to choose from more than one content provider. This is what “open market” means. Creative Europe (formerly known as Media Programme) the programme for “supporting Europe’s cultural and creative sectors”, is already working in this direction since 1991, with a budget of €1.46 billion for the period 2014-2020.
Others, such as Randy Greenberg (@RandyGreenberg), Managing Director, Entertainment Content & Investment Strategy at The Greenberg Group and Instructor of Business of Entertainment at UCLA, as well as former SVP International Theatrical Marketing and Distribution at Universal Pictures, have argued that the immediate effect would be the end of the licensing territory by territory and a substantial drop in audiovisual content sales price because a handful of big buyers would emerge to dominate the Old Continent market and drive the smaller ones out of business, which will in turn cause content pricing to drop and ultimately overall revenue for the film and television industries to fall, not only in the digital market, but also in the traditional media and the theatrical distribution as a consequence.
True, it can be reasonably argued that the existence of more powerful buyers could ultimately drive content prices down for the Studios because of a diminished (or, better balanced) contractual power. However it could as well mean the opportunity for European content producers and distributors (as well as for digital startups) to benefit from a stronger internal market and flourish, starting from the digital space. Antitrust law enforcement will hopefully ensure that such power does not grow beyond control jeopardizing consumers.
In addition, as explained by Andrus Ansip (@Ansip_EU), the European Commission’s vice president in charge of the digital single market, a borderless Europe would not mean an end to territorial licensing – selling the rights to a film in various territories on an exclusive basis — or windowing, the system whereby a movie is released in stages on different platforms, from cinemas, to VOD to television. “We do not want to change the system or principle of territoriality,” Ansip said. “We are in favor of the principle of territoriality, but I am not accepting absolute territorial exclusivity.” Furthermore, the planned measures would be nurturing cultural diversity – while opening new opportunities for creators and the content industry. At the end of the day, Europeans will still be very different within each member state, and therefore they will keep liking different kind of content from local producers and distributors.
According to the European Commission, tearing down regulatory walls and moving from 28 national markets to a single one of more than 500 million potential customers could contribute €415 billion per year to the European economy and create 3.8 million jobs.
All in all, it is reasonable to claim that such measures would enhance the circulation and monetization of digital content, should help European digital businesses to grow, balance the power of the Studios as well as of digital e-commerce giants such as Amazon and eBay that by the way already operate cross-borders enjoying the benefits of tax havens such as Ireland and Luxembourg. Finally, increasing the accessibility by eliminating geo-blocking and harmonizing copyright laws wold also have the incredibly positive effect of helping to fight piracy.