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However, there is no certainty that the European Commission’s plan to modernise EU copyright will be completed in the near future. This “political preview” will have to be translated into legislative proposals and policy initiatives in the coming months, taking into account all inputs from several consultations.

Currently, EU copyright is governed by the principle of territoriality, which is an exception to the freedom to provide services uniformly across the EU. Indeed, each European country has its own system to ensure copyright protection and the level of protection can be very different from one country to another. France copyright protection is known to be one of the most favorable to authors and a consequent part of the French cultural economy is based on this system. Even if we can only admit that copyright protection needs to evolve in order to provide appropriate answers to new technologies, it is important to highlight that an alignment of French copyright to European requirements may seriously overturn the French cultural economy.

Financing sources can either be public (state aid related to direct funding or tax incentives) or private (voluntary or imposed by state regulation). Two important financing sources are thus: (i) business-related choices connected to pre-sales or licensing, which rely on the copyright package, and (ii) audio-visual media service providers investments resulting from investment obligations derived from the discretion left to European member states by the Audiovisual Media Service Directive (AVMSD).

As a result these financing methods are not the same all across the European Union and the arrival of new audio-visual online services generated conflicting situations at all levels of the audio-visual industry: financing and consuming (I), and broadcasting and marketing (II) which created new challenges at both French and European levels.  

I. Audio-visual consumption challenging the principle of territoriality  

The principle of territoriality plays a key role in the financing of audio-visual works (A), however, this principle is being challenged by European measures aiming to improve consumers conditions for viewing online audio-visual contents across the European Union (B).

a. Territorial pre-sales have a key role in audio-visual financing

Because films are risky investments, they require the intervention of numerous players of different sizes and expertise and it is often difficult for producers to obtain financing at the very early stages of development. In this respect, the territorial sale of rights and exclusivities play an important role in the financing and distribution of European films. Indeed, film production and distribution are generally part of the same business model. It is common, at the development stage of a film, to set the pre-sale of rights to major television broadcasters, distributors and publishers. In the European Union, such pre-sales are generally organised by platform, language and/or territory. This allows producers to cover high up-front production costs and often forms the collateral for a production loan from a bank.

In comparison with the United States, territorial pre-sales in the European Union are key to financing. Indeed, because of the wide diversity of languages, cultures and regulations, producers are able to identify many different distributors from different countries who can contribute to the financing of the film. Furthermore, the diversity of distributors and publishers of different origins fosters the distribution of European films across national boundaries, as it gives them the expertise on how to make films reach foreign audiences.

After hearing the European Commission action plan to modernise copyright rules, rights holders raised their concerns regarding cross-border portability and underlined that only less that 3 per cent of EU population resides in a Member State other than their country of origin. Furthermore, rights holders highlight that territorial licensing with exclusive distributors per territory helps them secure adequate financing at the pre-production stage. They fear that removing territoriality would only benefit major global players who could be the only ones able to close pan-European licensing deals against lump-sum payment, instead of territory-by-territory licenses. In this respect, French rights holders’ defenders indicate that a better solution would be to make major online actors such as Google, Amazon, Facebook and Apple aware of their responsibilities in order to get them involved in the collecting and payment of royalties to authors.

b.  A first harm to the principle of territoriality: cross-border portability

For European consumers, the separation of markets along national borders negatively impacts their freedom of choice and often leads to price discrimination. In this respect, they also report that technological protection measures, such as “geo-blocking”, prevent them from accessing their own national services they already have paid for, when travelling. As a result, consumers may be charged several times for services purchased online as they are crossing national borders.

Up to this date, the European Commission didn’t express its intention to remove the territoriality principle but claims that "unjustified geo-blocking and other forms of discrimination based on nationality or place of residence are clearly contrary to the principles of the EU Treaty". This doesn’t mean it will completely eradicate geo-blocking, but will adopt measures aiming to foster freedom of online audio-visual services. In this respect, the European Commission plans to make legislative proposals in the first half of 2016 to stop “unjustified” geo-blocking. To that end, it could amend the applicable EU legislation (in particular the e-Commerce Directive and the Services Directive). However, if audio-visual and cinematographic services were to be included in the scope of the Services Directive, (that so far does not apply to them) this could seriously impact licensing and marketing practices of providers of audio-visual services in Europe.

Within this context, the French government represented by Fleur Pellerin is emphasising its commitment to defend and protect creativity, cultural diversity and rights holders’ fair compensation at all levels. Even if the French government welcomes the proposal on the cross-border portability of online content services, it underlines that such portability should only be available for temporary travels across the European Union, and this is essentially because the principle of territoriality of copyright is at the core of our creativity and cultural diversity financing. The European Parliament also agrees on the role of territoriality in the financing of European works and underlines the territorial licenses are at the core of audio-visual financing. In this respect, the Parliament calls on the Commission to ensure that any initiative to modernise copyright will be preceded by consequent studies of the possible impact of the production, financing and distribution of audio-visual content and cultural diversity.

II. Audio-visual broadcasting and marketing challenging French and European copyright regulation

Both broadcasting and marketing can be important sources of audio-visual financing. As a result international digital players are taking advantage of the European principle of country of origin (A) and preparing their next move towards marketing thanks to online data collection (B).

a. Principle of country of origin challenged by French regulation

Audio-visual financing sources can result from investment obligations deriving from European member states regulation in application of the AVMSD. According to this directive, each member state can adopt specific regulation requiring broadcasters to reserve a majority proportion of their transmission time for European works and /or at least 10 per cent of their programming budget for European works. This directive also implements the principle of “country of origin” according to which, for audio-visual media services, the laws of the state where the service provider has its headquarters shall be applicable.

As a result, audio-visual players are subject to more or less stringent rules depending on their country of establishment and many international online operators are tempted to base their server and headquarters in certain countries only for fiscal reasons not connected to the location of the economic activity. As a result, like stated in the JRC report on Models of ICT Innovation: “the new digital environment is jeopardizing a funding system based on box office revenues collected on the domestic market structure (…) with the growth of alternative distribution channels and services provided by suppliers located outside the national territories or event outside the EU”.

Nevertheless, it is interesting to underline that France is willing to fight these practices notably by taxing the revenues of foreign video retailers. Indeed, the French 2013 budget law  aims to have the same taxes applicable to all VOD providers offering their services in France regardless of their country of origin. However, such provision will only become applicable once the European Commission has approved it. Since then, no official text was published in this respect and in an answer from the French culture minister dating from 16 December 2014, the latter explained that it initiated discussions at the European level to have the principle of country of origin replaced by the principle of country of destination.

b. Online audio-visual marketing and data collecting: the new challenge for the European Commission

Beyond their primary goal of launching new audio-visual digital services inside the European Union, new players, like Netflix, have a long-term objective: to generate an evolution in the way marketing is used in the audio-visual industry in order to reorient traditional television advertisers towards SVoD services. Indeed, even if up to this date audio-visual services are not generating the same level of revenue as traditional players, they are in a position to collect data on their users (strategic for ad targeting, personalisation of content, commissioning and buying of new content), which may highly impact audio-visual marketing.

The European Commission is already aware of this concern, and is currently discussing the positives of data sharing despite the increasing fear of online data breaches. Even if, as Matthew Fell, director for competitive markets at CBI, said: “Data does enable all the fantastic things we enjoy about the internet and the digital age”, data needs to be carefully looked after, especially when there are big international corporations that become victims of data hacking.

To conclude, it is obvious, that data collecting will play a key role in audio-visual financing through marketing. Certain players such as Apple, Facebook, Google and Netflix are already dominating their respective markets. In this respect, traditional European players may fear those dominant players and will certainly need to find successful strategies in order to exist in the digital world. Players who will deliver quality content, taking advantage of the distribution enabled by the internet, and at the same time know how to attract the attention of the fragmented audiences will continue to thrive in the future. Resisting the inevitable change in media distribution and consumption habits in order to secure still existing revenue streams will certainly be detrimental in this new competitive landscape.

Anne-Marie Pecoraro is an intellectual property, new technologies and entertainment law expert specialised in advertising, literary and artistic property and trademark law. She has built expertise in service contracts preparation and negotiation and regularly assists clients during litigation cases (notably IP/IT infringement proceedings). Ms Pecoraro has acquired valuable expertise in strategic communication, from privacy right protection to crisis communication and is also well known for her legal knowledge in designs and unfair competition (at a national and international level). She represents numerous talented performers, key actors in the music and entertainment industries as well as institutional and non-profit entities. Ms Pecoraro is a member of the ABA, IAEL, APRAM, AFPIDA-ALAI, ACEECCA and Art & Droit Association, she actively participates each year, in major international trade shows (MIDEM, MIPCOM) and major events such as the Cannes Film Festival and the sxsw.com Festival in Austin.


Marianne Lecron is the key contact lawyer of A Turquoise in Miami, FL, USA. She has developed cross skills in philanthropy and entertainment, and has extensive skills in copyright matters in the audiovisual and music industry. She has built her expertise in both counseling and litigation. Her experience encompasses the legal and business aspects ranging from development and production to exploitation of works and projects, along with communication/ media issues and strategies both on a national and international level. Ms Lecron has legal and management master degrees, in this respect she regularly provides strategic advice adapted to clients’ needs, taking into account marketing, economic, financial and legal aspects. She is involved in many events related to intellectual property such as the Cannes Film Festival, the Miami Winter Music Conference, the E-merge summit in Miami, and regularly publishes articles related to intellectual property.


French and European Audio-Visual Financing Facing New Challenges

Written by Anne-Marie Pecoraro and Marianne Lecron,

A Turquoise

Anne-Marie Pecoraro

Marianne Lecron

On 09 December 2015, the European Commission presented its action plan to modernise EU copyright rules as well as a proposal on the cross-border portability of online content services aiming to allow Europeans to travel inside the European Union with their online content. Cross-border portability might be implemented in all European countries by the end of 2017.


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