RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/W/310 
12 January 2010 
 (10-0111) 
Council for Trade in Services  
  
 
AUDIOVISUAL SERVICES 
 
Background Note by the Secretariat
1 
  
1. This Note has been prepared at the request of  the Council for Trade in Services, with a view 
to stimulating discussions in the Council on th e sector of audiovisual services.  It provides 
background information and updates a previous No te on trade in audiovisual services (S/C/W/40, 
dated 15 June 1998).  This Note focuses on developments and issues cons idered to be most relevant to 
the GATS.  It is not intended to provide a comp rehensive account of the sector;  many of the 
observations contained in the previ ous Note remain pertinent today. 
I. INTRODUCTION  
2. The audiovisual sector's importance stems from the fact that it has both economic components 
as well as social and cultural ones.  Government po licies often play a significant role in the sector, 
whether to promote domestic cultural content or en sure diversity and pluralism, protect intellectual 
property rights, regulate advertising practices, or to proscribe illicit content.  Overall, the sector is 
subject to a number of trade restrictions in various countries.  In the WTO, the sector does not benefit 
from specific commitments from many WTO Members, and has attracted many MFN exemptions.   
3. The sector is skill-intensive.  It is also a leading user of new technologies and therefore a 
driver of investments in network infrastructure.   Although affected by the recession, audiovisual 
services have experienced dynamic economic and trade growth over the last decade.     
4. The sector has undergone - and will continue to experience - significant change as a result of 
technological advances, which, among other things, ma ke it easier, in terms of cost, quality and time, 
to transmit greater amount of content within and acr oss borders;  make it possible for content to be 
distributed on a variety of platforms and devices by  diverse operators;  and give greater control to 
consumers over what they want to watch or liste n, when, where, and how.  This naturally has 
consequences for economic operators as well as regulators.   
5. This Note is structured as follows.  Part II discusses the definition of the sector in a GATS 
context.  Part III  reviews recent trade and economic trends in the sector.  Part IV analyzes GATS commitments and MFN exemptions, and Part V concludes by highlighting some regulatory issues and main trade barriers.
2    
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. 
2 This Note does not address Members' offers in  the ongoing negotiations nor commitments undertaken 
in preferential trade agreements.  Neith er does it discuss in any detail classi fication issues.  These various topics 
have been addressed elsewhere, including in JOB(05)/192;  S/C/W/40 and S/C/W/78;  Roy (2008). S/C/W/310 
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  II. DEFINITION OF THE SECTOR 
6. In the Services Sectoral Classification Li st (W/120), audiovisual services fall under 
Communication Services (Sector 2), along with postal (2.A), courier (2.B), and telecommunication services (2.C), as well as a residual category (2.E - Other).  Audiovisual services essentially comprise 
services relating to television and radio, motion pict ures, and sound recording.  The W/120 definition 
of the sector, including corresponding CPC (prov. ) categories, is summarized in Table 1.  
 
Table 1: Summary of the Classification of Audiovisual Services according to the W/120 
 7. It is interesting to note, first, that two categories have no suggested CPC definition: the 
residual category "other" and "sound recording".  Second, a number of services that have, in the 
business world, a close relationship to audiovisual services are classified elsewhere under W/120.  For 
example, performing of live concerts falls under sector 10.A - Entertainment Services (CPC 9619), rental of videotapes under 1.E.e (other - Rental/Licensing Services without Operators (CPC 83202)), 
or wholesale and retail of merchandise under sector 4 - Distribution Services (e.g. the wholesale of 
cinematographic films is covered under CPC 62263, and the wholesale and retail of video tapes under 
CPC 63234). 
8. As regards services relating to motion pict ures, 2.D.a (CPC 9611) and 2.D.b (CPC 9612) 
cover the production, distribution and projection, but  also a variety of services auxiliary to production 
and distribution, such as dubbing or editing.  C oncerning television, the classification includes not 
only the production of programming, but also the transmission of television signals (CPC 7524, which 2.D. Audiovisual services  
2.D.a. Motion picture and video tape production and distribution services (CPC 9611) 
- containing CPC 96111 (promotion or advertising services), CPC 96112 (motion picture 
or video tape production services), CPC 96113 (motion picture or video tape distribution 
services) and CPC 96114 (other services in connection with motion picture and video 
tape production and distribution). 
2.D.b. Motion picture projection services (CPC 9612) 
 
- containing CPC 96121 (motion picture projection services) and CPC 96122 (video tape 
projection services). 
 
2.D.c. Radio and television services (CPC 9613) 
- containing CPC 96131 (rad io services), CPC 96132 (t elevision services) and CPC 
96133 (combined programme making and broadcasting services). 
2.D.d. Radio and television transmission services (CPC 7524) 
- containing CPC 75241 (television broadcast transmission services) and CPC 75242 
(radio broadcast transmission services). 
2.D.e. Sound recording (no CPC correspondence indicated) 
2.D.f. Other (no CPC correspondence indicated)  S/C/W/310 
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  includes CPC 75241: Television broadcast transmi ssion services).  However, such other services as 
the provision of television programming packages via cable and direct-to-home satellite services, are not explicitly mentioned in the existing classification under 2.D.
3   
9. Having been developed more than 15 years a go, the W/120 and relevant CPC classifications, 
naturally, do not explicitly reflect the current mark et realities given the technological changes that 
have occurred in the sector, e.g. the fact that a udiovisual content can now be transmitted through a 
much wider variety of means, and that networks u sed to carry audiovisual content nowadays are, in 
many cases, not dedicated exclusively to audiovisual content, but are also used to provide various 
other types of services (e.g. cable systems to carry  television programming, telephony and Internet).  
That said, a specific commitment under GATS on telecommunication services (2.C.) would generally 
cover the transmission of signals, but would not entail a commitment on the supply of audiovisual 
content or, for that matter, the supply of other services, be it legal advice or financial services. 
III. ECONOMIC AND TRADE PROFILE 
A. TRADE  STATISTICS 
10. Statistics on international trade in audiovisu al services have limitations, but nevertheless 
permit to highlight certain key trends.  Balance-of-p ayments data show that trade in audiovisual and 
related services has expanded rapidly over the last years.  Global exports have grown at an average 
annual rate of 8 per cent since 2000 to reach US$35 billion in 2007.4   
11. BOP data also suggest that the United Stat es (US$15 billion) and the European Communities 
(US$9.9 billion or US$4 billion without intra-EC trade)  are the largest exporters.  Other top exporters 
include such developing countries as China, Mexico or Argentina (see Table 2).  A number of other 
developing countries (e.g. India, Turkey or Malaysia) do not figure in this list simply because they do 
not collect BOP data at this level of disaggregation.  
12. Table 3 suggests that the preponderant share of  US exports go to othe r developed countries: 
60 per cent to the European Communities alone, and 80 per cent if Canada, Ja pan and Australia are 
added.  In the case of the EC, while most trade is  intra-European (59 per cent), the US is the main 
export market (17.8 per cent of total EU exports).   Statistics on Hong Kong China's exports highlight 
the importance of regional trade in the sector, with more than a quarter of exports (28 per cent) going to Malaysia, China and Japan combined, 13 per cen t to the US, and 7.6 per cent to the European 
Communities.   
                                                     
 
3 DTH satellite services are explicitly excluded from the definition of CPC 75241, while television 
programming packages via cable are included in CPC 7530.  These services are not listed explicitly elsewhere in 
W/120 either, although they would pr esumably be captured by a residual category.  It can be recalled that, 
according to the Scheduling Guid elines, it is possible to depart from the CPC definitions includ ed in W/120, and 
various Members have done so (see Part IV).  See the Guidelines for the Scheduling of Specific Commitments 
under the GATS  (S/L/92), para. 23-24. 
4 WTO Secretariat estimates on the basis of available data.   S/C/W/310 
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Table  2: Major exporters and importers of audiovisual and related services, 2007 RankEx po r t e r s V a l u eShare 
in 15 
econo-
miesAnnual 
percen-
tage 
change
RankImporte rs ValueShare 
in 15 
econo-
miesAnnual 
percen-
tage 
change
1 United States 15043 51.5 23 1 European Union (27) 13893 63.7 1
2 European Union (27) 9962 34.1 1 4   Extra-EU (27) imports 6315 29.0 -16
    Extra-EU (27) exports 4063 13.9 6 2 Canada 2001 9.2 6
3 Canada 2021 6.9 -3 3 United States 144 0 6.6 32
4China 316 1.1 130 4Japan 104 4 4.8 6
5 Mexico 308 1.1 -19 5 Australia 798 3.7 13
6A r g e n t i n a 2 9 4 1.0 21 6 Russian Federation 62 4 2.9 36
7 Norway 272 0.9 18 7 Brazil 456 2.1 18
8 Hong Kong, China 249 0.9 -3 8 Korea, Republic of 381 1.7 66
9 Russian Federation 196 0.7 28 9 Norway 30 0 1.4 -21
10Korea, Republic o f 183 0.6 8 10 Mexico 259 1.2 -21
11 Australia 139 0.5 -8 11 Argentina 212 1.0 24
12 Japan 126 0. 4 22 12 China 15 4 0.7 27
13 Albania 61 0.2 59 13 Ecuador 126 0.6 9
14Ecuado r 44 0.1 7 14 Albania 59 0.3 83
15 Colombia 21 0.1 -2 4 15 Croatia 55 0.3 64
Ab ov e 15 29235 100.0    - Ab ov e 15 21800 100.0    -
Note :  Based on information available to the Secretariat. As certain major traders in personal, cultural and 
recreational services do not report the item audiovisual and related services separately, they may not appear in the list.    (Million dollars and percentage)
 
Source : WTO (2009), International Trade Statistics. 
13. Overall, trade in audiovisual and related ser vices, when measured on a balance-of-payments 
basis, only represents a small part of total comme rcial services trade (approximately 1 per cent).  The 
relative importance varies across countries, and this is due  in part to statistical limitations.  In the case 
of the US, the largest exporter, exports of audiovi sual and related services represent 3.2 per cent of 
total exports of commercial services, and is one of th e services sectors that generates the largest trade 
surpluses (US$13.6 billion in 2007)  - behind "royalties and license fees" (US$57.6 billion), which 
ranks first.5  
14. Available balance-of-payments data on audiovi sual services significantly underestimates 
global trade in this sector.  As noted earlier, not all WTO Members collect statistics at this level of 
disaggregation.  Moreover, as for any other sector, BOP data only capture a fraction of trade in services as defined by the GATS' four modes of supp ly.  BOP data focus on cross-border trade, thus 
omitting mode 3, which can be very important in the sector.   
 
                                                     
 
5 United States International Trade Commission (2009).  S/C/W/310 
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Table 3:  Exports of audiovisual and related services of selected economies by destination, 2007  
 
(Million dollars and percentage)                                                                                                                                                                         
Value Share Value Share 
2007  2007 2004 2006 2007 2007  2007 2004 2006 2007
United States  European Union (27)
World 15043 100.0 13 21 23 World 9962 100.0 -1 -8 14
European Union (27) 9048 60.1   ...   ...   ... European Union (27) 5899 59.2 4 -8 2 0
Canada 1218 8.1 2 0 25 41 United States 1769 17.8 -10 -10 4
Japan 1085 7.2 8 19 9 Japan 371 3.7 -15 -33 0
Australia 668 4.4 2 0 31 34 Switzerland 308 3.1 -28 -48 -2
Brazil 467 3.1 4 0 16 66 Norway 245 2.5 -2 -18 2 0
Ab ov e 5 12486 83.0 - - - Ab ov e 5 8592 86.2 - - -
Mexico 384 2.6 13 0 61 Australia 228 2.3 0 - 6 19
Korea, Republic of 265 1.8 4 0 90 79 Brazil 10 4 1.0 15 4 17
China 169 1.1 71 22 177 India 103 1.0 192 ... 19 4
Norway 132 0.9 4 0 51 59 Korea, Republic of 74 0.7 -4 37 3 6
South Africa 124 0.8 4 21 19 Russian Federation 65 0.7 28 64 3 0
New Zealand 114 0.8 15 32 46 Singapore 64 0.6 93 16 7
Switzerland 106 0.7 43 109 58 Canada 57 0.6 0 9 0
Taipei, Chinese 89 0.6 2 6176 11 South Africa 52 0.5 10 55 -6
Bolivarian Rep. of Venezuela 84 0.6 -9 -1 4 29 Hong Kong, China 43 0.4 31 6 5
Hong Kong, China 77 0.5 22 35 33 Turkey 31 0.3 3 56 22
Ab ov e 15 14030 93.3 - - - Ab ov e 15 9412 94.5 - - -
Canada Hong Kong, China
World 2021 100.0 7 10 -3 World 249 100.0 -1 5 -3
Malaysia 44 17.7    ... 0 -8
United States 33 13.3    ...    ...   ...
European Union (27) 19 7.6    ...    ...   ...
China 17 6.8 -4 0 31
Japan 8 3.2    ... -17 6 0
     Ab ov e 5 121 48.6 - - -percentage 
change percentage 
change 
 
 
 
15. Further, the definition of "audiovisual and related services" for the purpose of BOP statistics 
(BPM5) does not include the purchase and sale of rights to motion pictures, television and radio 
programmes, or recorded music.6  In addition, fees in relation to the authorized use of music, motion 
pictures, television programmes (e.g. charges or licen ses to reproduce and/or distribute) are excluded, 
as they rather pertain to the BOP category "royalties and license fees".7  The newest edition of the 
IMF Balance of Payments and Inter national Investment Position Manual  (BPM6), from December 
2008, provides for further modifications and clarificat ions in relation to trade statistics on audiovisual 
services.8 
                                                      
6 See IMF (1993).  BPM5 provided the basis on whic h IMF members have collected data over the last 
years.   
7 Nevertheless, the category "audiovisual and related se rvices" includes fees for distribution rights sold 
to the media for a limited number of showings in specifi ed areas.  See UN et al. (2 002).  The BOP category also 
diverges from the GATS classification because it covers su ch activities as fees to actors, directors and producers 
involved in live productions, which in W/120 would fall under Sector 10 - Recreational, Cultural and Sporting Services.   
8 In the BPM6, all charges in relation to the use of  radio, television, motion pictures, or music are 
excluded from audiovisual and related services and included in "changes for the use of intellectual property" (which replaced "royalties and license fees").  Another modification in BPM6 is that the sales of original rights 
to such products as motion pictures, television programming or sound recordings are included under 
"audiovisual and related services", instead of "royalties an d license fees".  A further clarification is that, unlike 
BPM5, BPM6 specifies that mass-produced video or sound recordings that are sold outright or for perpetual use 
are included in the "audiovisual and related services" if downloaded, i.e., delivered electronically, while those S/C/W/310 
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  16. As noted above, data on trade flows under mode  3 are not captured by balance-of-payments 
statistics.  Foreign Affiliates Trade in Services (F ATS) statistics provide a good measure of mode 3 
trade, but are only available for a few Members and t ypically not at a sufficiently disaggregated level.  
For example, in 2006, sales by affiliates of US multinational companies abroad in recreational, 
cultural and sporting activities (of which audiovisual  forms a large part) totalled US$23.7 billion.  
Such sales totalled US$6.9 billion for foreign affilia tes of Japanese companies, and US$1.5 billion in 
the case of Germany.
9     
B. ECONOMIC  IMPORTANCE 
17. The global market for the audiovisual sector was estimated at US$516 billion in 2008.10  By 
way of comparison, the global market for intern et access (wired and mobile), for example, was 
assessed at US$215 billion, that for internet adver tising at US$58 billion, and that for newspaper 
publishing at US$182 billion in 2008.  The TV segment accounts for most of the sector (68 per cent or US$352 billion), followed by film (US$84 billion or 16 per cent), radio (US$49 billion or 9.4 per cent), and music (US$31 billion or 6 per cent).  The se market segments differ in terms of both their 
relative importance and recent growth.  The televisi on segment has been most dynamic with a 27 per 
cent growth between 2004 and 2008, while the global ma rket for recorded music has declined by 18 
per cent over the same period (9.8 per cent betw een 2007 and 2008 only), and the one for film has 
largely been stable.  Although its full effects s till remain to be assessed , the economic crisis is 
expected to have an important impact on the a udiovisual market, which was estimated to decline 
overall in 2009, especially the advertising revenue streams.
11   
18. In terms of geographical distribution, Nort h America accounts for 42 per cent of the global 
audiovisual sector.  The fastest growing markets are found in developing countries, however.  For 
example, the average annual growth of India's television industry was 17.4 per cent between 2004 and 
2008, while that of its film industry reached 15.6 per cent over the same period.  Other developing 
countries experiencing similar growth rates over r ecent years include China, Turkey, and Colombia.12  
19. Additional information on the sector's econom ic importance can be gleaned from a broad 
array of studies on the importance in national economies of copyright - or "creative" - industries, of 
which audiovisual forms an important part.  For example, in the United States, core copyright 
industries were estimated to generate value-adde d representing 6.4 per cent of GDP and 4 per cent of 
total employment in 2007.  Core copyright indus tries include audiovisual services, but also the 
software and press industry, however.13    
                                                                                                                                                                     
on physical support (e.g., DVD, CD) are included under general merchandise, not services.  See IMF (2008),    
p. 266.  The forthcoming edition of the Manual on Sta tistics for International Trade in Services will suggest 
more detailed categories in relation to audiovisual, which should better respond to users' needs in relation to the 
GATS. 
9 OECD (2009).  The US Bureau of Economic Analys is provides a more preci se account: the value of 
services supplied by foreign affiliates of US multinational companies are estimated at US$11.3 billion in 2006 
for the movie and sound recording indust ries alone;  sales in the US by a ffiliates of foreign companies amounted 
to US$1.3 billion. 
10 The estimation is for the audiovisual sector broadly defined, i.e., including some non-services 
elements.  Computed on the basis of data for TV, radio, motion picture and recorded music in PWC (2009a).   
11 PCW (2009a).   
12 PWC (2009b); PWC (2009a). 
13 See Siwek (2009).  Other studies using a similar methodology developed by WIPO can be found at: 
http://www.wipo.int/ip-development/en/ creative_industry/economic_contribution.html  See also: UNCTAD 
(2008), pp. 149-151;  KEA European Affairs (2006).    S/C/W/310 
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  C. RECENT  TRENDS  IN THE  INDUSTRY14 
1. Motion Pictures 
(a) Market Trends 
20. Available data on the production of motion pictur es highlight an important role for a number 
of developing countries.  India is the largest produ cer with 1,132 feature films in 2007, followed by 
the United States, Japan and China (528, 418 and 400 films in 2008).15   
Table 4:  Number of Motion Pict ures Produced, 20 08 (provisional) 16 
 
                                                      
14 The services and companies reviewed here do not necessarily conform precise ly with "Audiovisual 
Services" as described in the W/120, but rather aim to provide an overview of tr ends in the industry, in 
particular in relation to motion pictures and television.     
15 EAO (2009). 
16 Data for India, Thailand and Indonesia are for 2007.  According to the EAO's new methodology for 
counting the production of feature films (which includes feature documentaries), the EC-27 has produced 1,033 films in 2007 and 1,145 in 2008.   India 1,132 
United States  528 
Japan 418 
China  400 
France 240 
Spain 173 
Italy 155 
Korea (Rep.) 113 
Argentina 85 
Brazil 82 Russia 78 
Indonesia 77 
Canada 75 
Mexico 70 
Switzerland 68 
Belgium 64 
Thailand 55 
Hong Kong, China 53 
Turkey 50 
Poland 46 
 
            Source : European Audiovisual Observatory (2008). 
 S/C/W/310 
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  21. In terms of value of production, however, India tr ails the United States, with the value of its 
film production 24-times lower;  according to so me estimates, the investments of developing 
countries in film production represent approximately  5 per cent of those of developed economies.
17  
When video formats are taken into account, Nige ria ranks among the top producers.  Indeed, a 
UNESCO study estimates at 872 the number of Nigerian productions in 2006.  Nigeria's approach 
differs significantly from the European or American  models of production and distribution:  producers 
rely on video rather than film;  production costs are much more limited; the videos are not viewed in 
cinema theatres; the production is typically dome stically-owned;  and the videos are distributed 
informally (hard copies sold or rented and privat e screenings in small- and medium-size businesses), 
including outside the country, even though piracy is important.18    
22. While many countries experienced a decline in production from 2007 to 2008 as a 
consequence of the economic crisis , the trends in production were ge nerally upwards as  globally more 
films were produced in 2008 than in 2004.19  
23. An important characteristic of the movie market is the dominance of US-based studios.  The 
top companies in terms of global box office revenue are located in the United States and the level of 
concentration is high, with the releases of six film distribution companies typically accounting for 
more than 70 per cent of North American box office revenues.20  US movies derive a significant part 
of their total receipts from international audiences: of the top 20 films worldwide by gross box office revenue in 2008, 19 were US-produced or co-produced.
21   
24. Even if based in Hollywood, several of the main  studios are wholly or partly foreign-owned.  
These largest film companies are typically part of larger media groups, whose businesses can also 
include cable television networks, broadcast te levision, telecommunications, or internet-based 
business, with movies representing on average 25 per cent of these companies' overall revenues.  For 
example, the Walt Disney Company owns the ABC network, as well as several cable channels (e.g. 
Discovery, ESPN), while Time Warn er owns Time Warner Cable, American Online (AOL), HBO and 
CNN.22  
25. Company size is an important asset in terms of be ing able to diversify risk or negotiate with 
TV networks or exhibitors.  Indeed, motion pictur es, like television, require high levels of initial 
investment.  Since these are often high risk, invest ors tend to invest in a variety of productions.  
Advertising and distribution represent 30-40 pe r cent of total costs for major studios. 
26. International co-productions are also an importa nt feature of the indus try, sometimes between 
US studios and production companies in the UK (in particular), continental Europe, Australia, New 
Zealand, or Japan, but also often among European-b ased companies.  On average, between one-third 
and one-half of productions in the main European  film-producing countries have recently been co-
productions.23  
27. Despite the quantity of productions from other countries, the demand for US movies is strong 
in many foreign markets, at least when measured in box office revenues.  For a sample of countries 
reviewed by the European Audiovisual Observatory , US movies accounted for more than 50 per cent 
                                                      
17 Cocq and Lévy (2006). 
18 UNESCO (2009);  Cocq and Lévy (2006);  Barlet (2006). 
19 EAO (2009). 
20 Standard and Poor's (2007).  The six comp anies are: Fox Entertai nment Group Inc. (20th Century 
Fox), NBC Universal Inc. (Universal), Sony Pictures  Entertainment (Sony/Colombia), Time Warner Inc. 
(Warner Bros.), Viacom Inc. (Paramount), and Walt Disney Co. (Buena Vista, Miramax). 
21 EAO (2009), p. 13. 
22 OECD (2008). 
23 Ibid.  S/C/W/310 
 Page 9 
 
 
  of the market share in such countries as Germany (73 per cent), Italy (71 per cent), Spain (72 per 
cent), UK (65 per cent), Russia (75 per cent), Canada ( 88 per cent) or Australia (84 per cent).  Only in 
China (61 per cent), Japan (60 per cent), India (91 pe r cent), Egypt (85 per cent) and the United States 
(92 per cent) did domestic films account fo r more than 50 per cent of the market.24  At the same time, 
a number of other countries, especially developi ng countries (e.g. India and Hong Kong, China), 
increasingly rely on foreign markets for earnings, of ten markets in the same region, as well as those 
hosting a large diaspora population. 
28. The movie exhibition business has been subject to important pressures and transformations 
recently.  Globally, cinema admissions have been, at best, stagnant in recent years, going from 7.4 
billion visitors in 2004 to 7.1 billion in 2008.  Asia-Pacific accounts for about 60 per cent of 
worldwide admissions, even if the region's share of  box office revenues is much smaller (24 per cent 
in 2008) due to lower prices of admission.25  The movie exhibition segment is much less concentrated 
at the global level than the production/distributi on segments.  In national markets, levels of 
concentration vary: from very fragmented markets in  China or India to others such as Thailand, 
Malaysia or Singapore, where the top exhibitors have  more than two-thirds of screens.  This industry 
segment is also less "internationalized", even if some cinema chains, including developing country 
ones, have operations abroad.   
29. Confronted with modest growth, piracy, and competition from other means of movie delivery 
and consumption (e.g. DVD sales and rentals,  video-on-demand), as well as other types of 
entertainment activities (e.g. video games), the exhibition segment in many countries was modernized 
via significant investments.  Such investments have  been associated with th e growth of multi-screen 
theatres, the increasing use of digital technology,  and the establishment of venues that provide 
additional on-site entertainment activities to movie-goe rs (e.g. games, restoration, etc.).  Multiplex 
cinemas, in particular, permit a better use of space for exhibitors and yields economies of scale.  Such 
transformations have so far mostly taken place in a number of developed countries, as well as, 
through foreign investment, in such developing countries as Thailand, Mexico, or the Republic of 
Korea.  Investments in these developing countries have been associated with  increases in admissions, 
as well as with greater concentration.26    
30. Nonetheless, overall, the number of screens pe r capita in developing countries is still much 
lower than in developed countries.  Developing coun tries also lag behind in terms of multiplex and 
digital screens.  For example, less than 10 per cen t of screens in India were found in multiplexes in 
2008, and the country had only 35 digital screens;  in the US, multiplexes accounted for 74 per cent of 
screens in 2008, and there were more than 5,0 00 digital screens (representing 14 per cent of all US 
screens and 64 per cent of all digital screens in the world; and up from 324 digital screens in the US 
just three years previous, in 2005).27   
31. Movies have initially been viewed in theatres only.  These still represent an important revenue 
stream, but the importance of other outlets has gr own over time.  For one, television networks offer 
more opportunities given the diversity of delivery sy stems and skyrocketing growth in the number of 
channels in many markets.  Second, the sale and rental of DVDs (previously videotapes) have grown 
sharply in the last decade and outsized box office revenue in some key markets, including the United 
                                                      
24 Data are for 2008 (provisional), ex cept in the case of India (2007): EAO (2009).  Domestic films also 
account for a significant share in Fr ance (45 per cent) and the Republic of Korea (42 per cent).   
25 MPAA (2009).    
26 Cocq and Lévy (2006), p. 74-76: admissions increased by 265 per cent in Thailand, 36 per cent in 
Mexico, and 123 per cent in South Korea between 1992 and 2002.   
27 EAO (2009);  MPAA (2009). S/C/W/310 
Page 10  
 
  States.
28  However, after an earlier boom, sales of DVD s have declined in 2007 and 2008, in particular 
in the US, as Blue-Ray HD videos have not offset the decline in DVD sales.   
(b) International Production 
32. The production of movies involves a degree of international specialization, as production can 
encompass stages in different c ountries.  The growing use of digital technologies, which permits 
content to be transmitted across borders efficiently and at low cost, makes it more practicable and 
interesting for economic actors to undertake phases of  production or post-production in different parts 
of the world (e.g. special effects, animation, editi ng).  A combination of specialized skills and lower 
costs in a number of countries induce firms to take this  route.  The same is true for other segments of 
the audiovisual sector, e.g. the production of tele vision programmes.  This greater international 
divisibility of production and offshor ing of production-related tasks also leads to foreign investment 
as, for example, investors establish or form part nerships in developing countries to seize the 
opportunity of specialized skills and lower cost s, and provide services (e.g. post-production) from 
these locations to studios located elsewhere in the world.29  Decisions on whether to offshore certain 
services, however, may also be affected by concer ns over infringements of intellectual property rights 
in foreign jurisdictions.    
33. In addition, the shooting of movies themselves can  take place in foreign sites, which often 
compete to attract productions, including through tax breaks or other advantages.  Canada, for 
example, developed a role as a location for film  and television production offshoring.  Between 1991 
and 2007, almost a third of the US$58 billion spent in Canada on movie and television production was 
associated with foreign location production;  these ar e estimated to have provided 14,000 direct jobs 
and 23,100 indirect jobs in 2006/07, and to account for more than 85 per cent of export earnings of the 
Canadian film and television production industry.   
34. A 2006 industry study highlights this trend.  It pointed out that between 1998 and 2005, the 
production value of feature films in the US dec lined from US$3.9 billion to US$3.4 billion, while 
production outside the US, in contrast, more than doubled over the same period, growing from 
US$1.6 billion to US$3.8 billion.  In other word s, the proportion of total production spending 
occurring in the US went from 71 per cent down to 47 pe r cent, while that of the rest of the world rose 
accordingly.30  Main destinations for such US movie pr oduction abroad include Canada, in particular, 
as well as the UK, Australia, and New Zealand.  Africa accounted for 8 per cent of spending in 2005 
(US$314 million). 
35. Production companies do not only go abroad durin g a limited time span to shoot a movie, 
they also invest and establish partnerships abroad .  For example, Warner Bros. signed movie deals 
with People Tree Films and Tandav Films, Indian co mpanies.  Developing country companies are also 
venturing abroad, as highlighted by Reliance A DA Group’s association with Dreamwork studios, 
where it will hold a 50 per cent stake.31  Another example is the Mexican multiplex operator 
                                                      
28 According to Screen Digest, consumers worldwide (excepting North America) spent US$26.4 billion 
on video software in 2008 (videotape, DVD, and Blue-ray), of which US$18.1 billion was spent on buying 
DVDs: Screen Digest, Press release, 15 June 2009.  In the US, sales of DVDs amounted to US$22 billion         
in 2009 (EAO (2009)).  According to Media Control GfK International, a research firm, sales of        
videogames were for the first time bigger than those of DVDs in 2008: 
http://www.videobusiness.com/article/CA6631456.html?desc=topstory 
29 Schwender and Leet (2008).   
30 CEIDR (2006).  This study looks at feature films released in the US, including foreign ones, that 
grossed over US$500,000 at the box office in North America.  See also: Davis and Kaye (2009), and Chase (2008). 
31 Wall Street Journal , "Spielberg, India's Reliance to Form Studio", 20 September 2008.  S/C/W/310 
 Page 11 
 
 
  Cinepolis, which has established a subsidiary in India and announced plans to open 500 movie screens 
over the next seven years.32   
(c) Technological Developments 
36. Many activities in the motion picture value-ch ain are already substantially digitised, in 
particular the pre- and post-production phases, e.g.  production design, special effects, editing.  
However, this is not the case for the shooting a nd distribution segments, as most motion pictures are 
normally still shot on cinematographic film.  Digital cinema facilities, which are growing rapidly, but 
remain a small fraction of total screen capacity, ma y accelerate the conversion to full digitisation of 
the value-chain.33  Among other things, this would greatly  reduce duplication and distribution costs 
for producers, and provide customers with enhanced  viewing experience.  However, digitisation may 
be more difficult to achieve in the movie bus iness than in, say, the television segment, because 
exhibitors have to bear important costs to e quip themselves with the new technology, while in 
television this is partly done  with government assistance or through purchases of new equipment by 
final consumers.   
37. Online distribution of motion pictures is growing rapidly, but remains limited in terms of its 
overall economic importance, even if several compan ies are now offering such services.  This is due 
in part to competition from sale and rental of DVDs  (including online sale or rental where the good is 
subsequently shipped), but also the growing use of television services.  The downloading of motion 
pictures on the PC takes much more time than mu sic or other types of videos, while streaming 
requires high bandwidth and means that content is ge nerally not transferable to other devices.  In 
OECD countries, various companies are active in the online distribution of motion pictures and videos 
(excluding online sale/rental of hard copies), mo stly operated by communication and media firms 
although non-media companies are also involved, such as Wal-Mart in the US.34  This still represents 
a small share of the overall market, but it is expected  to gain steam in main markets as the major film 
studies and television networks now license content to such providers as Google Video, MSN video, 
or Yahoo Video, while Apple’s i-Tunes now provid es for movie downloads in several countries.  
Major studios also provide downloads of movies  through their website.  Game consoles, when 
connected to the Internet, offer a download service as  well (e.g. Sony’s PlayStation 3 and Microsoft’s 
Xbox 360).35  Like for other audiovisual content, online distribution of motion pictures raises risks of 
piracy.   
2. Television and Video 
38. Largely as a result of technological advances, th e television market has experienced important 
changes over the last 10-15 years.  This is exemplif ied by the increase in content offering due to the 
rise in the number of channels and the emergence of competing networks (e.g. satellite, cable), as well 
as consumers’ greater capacity to exercise contro l over what they want to watch and when.  
39. The global television market was estimated at US$354.4 billion in 2008, up 26 per cent from 
2004.  This is composed of US$186 billion for th e subscription and license fee market (e.g. cable 
subscription, pay-per-view, video-on-demand, m obile TV, public TV license fees), and US$168.3 
billion with respect to television advertising.  The "subscription and license fee" segment has 
experienced the most rapid growth lately and is worth more than the "advertising" segment since 
2007.  Within "subscription and license fees", vide o-on-demand accounted for US$4.6 billion in 2008, 
more than twice as much as in 2005, but represente d 2.5 per cent of that market, while mobile TV 
                                                      
32 PWC (2009b). 
33 OECD (2008). 
34 OECD (2008). 
35 Standard & Poor's (2007);  EAO (2009). S/C/W/310 
Page 12  
 
  accounted for less than 1 per cent.  In the "adve rtising" segment, the multi-channel market (e.g. 
satellite, cable, digital terrestrial) has been ri sing rapidly (39 per cent from 2004 to 2008) and 
accounts for 26 per cent of advertising spending.   Th e terrestrial component accounts for 74 per cent.   
40. North America, Europe and Japan account fo r more than three-quarters of the global 
television market - mainly attributed to the "sub scription/license fees" component rather than to the 
"advertising" one -, even though the most dyna mic market growth has occurred in developing 
countries such as India, China, Brazil, Argentina or South Africa.   
41. In a number of developed countries, European in  particular, the introduction of competition in 
the television market first took place through the opening of conventional free-to-air television to 
private operators, and was later followed by the de velopment of subscription television (e.g. through 
cable, satellite).  In contrast, in many developi ng countries, the conventional segment has evolved 
less, as it often continues to be dominated by monopolies or duopolies.  In these countries, the 
introduction of new actors and the impact of compe tition has mostly resulted from the development of 
multi-channel, subscription television.  In the conv entional segment, in a number of countries, the 
market is sometimes dominated by public operators  relying on advertising (e.g. China, India).
36  In 
other developing countries, conventional TV licens es have been granted to private operators, but 
without reversing the dominance of the public operato r (e.g. Nigeria, Burkina Faso).  That said, 
private operators have managed to challenge the domi nant player in such developing country markets 
as Mexico or the Republic of Korea.37  In both developed and devel oping countries, access to the 
conventional TV market is often subject  to foreign ownership restrictions.  
42. A key development in the sector has been the surg e in the number of channels and, therefore, 
of TV programming on offer.38  This trend, facilitated by technological developments – resulting in a 
shift to cable, satellite or IPTV, as we ll as from analogue to digital - is set to further intensify.  This 
contrasts with the conventional free-to-air analogue broadcasting with limited spectrum.  Worldwide, 
the proportion of households receiving television programming via cable, satellite, or DSL has 
increased significantly.  For example, in the US, th is share amounted to 87 per cent in 2005, compared 
with 56 per cent in 1990.  Over the same period, the audience share of all traditional broadcast 
stations during prime time fell from 80 per cent to 53 per cent.39 TV advertising has also followed 
audiences to channels dependent on satellite or cable transmission.  For example, in India, the public 
broadcaster's share of the advertising market d eclined from 75 per cent in 1995 to 36 per cent in 
2002.40   
43. Despite the rapid growth of multi-channel TV, its  penetration rate is still relatively low in 
developing countries, which suggests important potential for future growth in the sector.  For instance, 
the penetration rate of multi-channel television was 47  per cent in India, 30 per cent in China, below 
20 per cent in the Philippines, less than 5 per cent in Thailand, and 18 per cent in Latin America.  
Accordingly, free conventional television still attract s most of the audience in developing countries.  
In contrast, in developed economies,  the penetration rate of multi- channel television is on average 
more than two-thirds of TV households.41   
44. In developing countries in particular, the adve nt of cable or satellite TV transmission has 
permitted the arrival of new players.  It also a llowed public operators to launch new channels, and 
                                                      
36 Cocq and Lévy (2006), pp. 42-44. 
37 Ibid, pp. 44-46. 
38 EAO (2008) estimates that over 5000 TV channels are established in the European Union.  There is 
an additional 400 channels originating from third countries that are availa ble to EU consumers. 
39 Standard and Poor’s (2007)   
40 Cocq and Lévy (2006), p. 47. 
41 OECD (2007);  Cocq and Lévy (2006), pp. 48-51.  S/C/W/310 
 Page 13 
 
 
  provided the opportunity for new and old players to st rike partnerships with foreign providers.  In 
India, liberalization in the cable and satellite  television industry from the 1990s reportedly has 
attracted foreign investment, spurred the growth of the television programming production industry as 
a result of the upsurge of channels  offered, led to a general upgrad e of technologies and improvement 
in quality across the sector, encouraged Indian exports of audiovisual services, and widened the 
choice available to Indian viewers.42     
45. The expansion of delivery platforms and the in crease in the number of channels offered has 
meant an increase in the shelf-space for content, th erefore providing greater opportunities for trade in 
television programming.  Like for motion pictures,  the United States is the main exporter, sourcing 
more than half of broadcast fiction programming in the European Communities.43  I n  E C  M e m b e r  
States, the proportion of imported fiction (non-EC + extra-EC) appears higher in smaller countries, 
e.g. Denmark, Belgium, and Austria.  The same seems true in terms of TV channels; larger EC 
countries such as France, Germany, Italy, Spain and the UK have significantly more national and 
regional channels than such smaller Member States as  Estonia or Malta, which rely to a greater extent 
on international channels (a lmost 50 per cent of their digital terrestrial offer).44  US programming also 
reaps large market shares in other English-sp eaking countries (e.g. Canada, Australia, and New 
Zealand), while it does not dominate in such othe r OECD countries as Japan, Mexico, Turkey or 
Korea.45  
46. Although comparable data is scarce, eviden ce suggests that foreign programming is 
significant in many developing countries, especially on multi-channel platforms.  However, given the 
still prevalent role of conventional free television, for such countries as India, China, Mexico, Korea 
and Thailand, the most watched programmes tend to be domestic ones - in 2003, the top 10 
programmes in terms of audience were domestic in these countries.  In some cases, such results may 
be linked to government restrictions or suppor t programmes.  According to a study covering 72 
countries, 71 per cent of the most popular programmes are of domestic origin, 12 per cent are from another country in the region, and 9 per cent from the US.
46  There is much variation across countries 
though.  In Africa (e.g. Senegal and Burkina F aso), the programming of fictions on convention 
television often relies on free or low cost foreign content (e.g. European, American or Latin American).
47   
47. The development of multi-channel television also  incited further development of production 
firms and exports in a number of count ries.  In addition to India, Mexi co is also an important producer 
and exporter of television programming.  Many c ountries export television programming, mainly to 
regional markets, e.g. China, Japan (anima tion in particular), Brazil, Argentina.  
48. Television transmission services have traditionally been less internationalized than 
programming or packaging (i.e., channels) segments .  Nevertheless, foreign investment has grown 
strongly recently, especially in satellite and cable transmission, since conventional broadcasting is 
often subject to ownership restrictions.  Competiti on between different delivery platforms is leading 
to increased demand for content as a way to attract consumers.  Greater interest by viewers for better 
                                                      
42 Mukherjee (2005). 
43 OECD (2008);  EAO, "American Fiction Is Still Overwhelmingly dominant on European Television 
Screens But Is Giving Way to Nationally Produced Fic tion", Press Release, 24 March 2009.  See also EAO 
(2008). 
44 EAO, "DTT Comes of Age in the European TV Market", Press Re lease, 1 April 2009. 
45 OECD (2008), pp. 38-39. 
46 Médiamétrie, "L’année de télévision dans le monde", Paris, 2004, quoted in Cocq and Lévy (2006). 
47 Cocq and Lévy (2006), pp. 55-56;  Barlet (2006). S/C/W/310 
Page 14  
 
  content offering provides an incentive to improve the transmission infrastructure, which in turn 
permits to provide greater quantities of content.
48     
49. Another important technological development is that television programming can now be 
received through a variety of platforms (cable, satellite, terrestrial) and terminal devices (television set, computer, mobile phone).  This has implicat ions for regulators (see next section) and also 
operators, as, for example, telecom provide rs have also become content providers.
49  Content 
producers are also exploring opportunities for direct content delivery (e.g. over the Internet).  This contrasts with the traditional situation, where on ly broadcasters using terrestrial "free-to-air" 
transmission could transmit television programming, a nd often were also the main producers of such 
content.   
50.  Further, technological developments have give n greater control to consumers over what they 
want to watch, when, where, and how.  The breadth of  content offered, but also such new functions as 
video-on-demand or di gital video recorders, mean that consumers are much less constrained by the 
television schedule than before.  Further, a number  of TV studios are allowing their TV programmes 
to be downloaded or streamed through Internet direc tly from their website, or through such other sites 
as Joost, Apple's iTunes Music Store, Netflix, Amazon, or YouTube.
50  Technological advances also 
permit various additional and in teractive services to be provided in conjunction with the 
programming.  More and more, with technological de velopments, the dividing line between television 
sets and TV monitors will become thinner, allowi ng consumers to view television programming on a 
computer monitor or to use the computer to watch programming on the television screen.  The latest incarnation of these technological developments is IPTV  (television delivered over Internet Protocol), 
which is still in its infancy in most markets however.
51  
3. Sound Recording and Radio  
(a) Music  
51. As is well known, the music industry has e xperienced a revolution in recent years, as 
digitization, increased bandwidth, and skyrocketing growth in sales of digital audio players – as well 
as piracy – impacted global sales and forced a change in business models in the industry.   
52. Global sales of recorded music have dropped significantly over the last ten years.  Even if 
digital sales have grown at a fast rate, they have fa iled so far to make up for the decline in sales of 
music in physical form (e.g. CDs).  Sales of r ecorded music totalled US$17.6 billion in 2008 (trade 
value), a decline of 8.3 per cent from 2007, includ ing a 18.6 per cent drop in the US market.  Only 
three years prior, in 2005, they totalled US$20.7 billion.  Global sales have declined year after year 
since 1999.52   
53. In terms of market size, Europe represents 37 per cent of worldwide sales of recorded music 
(trade value, 2008), the US 28 per cent, and Asia 26 per cent.  Sales of music in physical form represented 79 per cent of global sales of recorded mu sic in 2008, and declined by 15.4 per cent from 
2007 (trade value).  In the US, the drop was sharp est: -31.2 per cent from the previous year.  In 
contrast, global sales of music in digital form (o r music distributed electronically, e.g. Internet 
downloads, mobile digital content) increased by 24 per cent from 2007 to reach US$3.8 billion (trade 
                                                     
 
48 OECD (2007b). 
49 OECD (2007b); OECD (2004). 
50 A number of these sites also sell physical copies of the movies.  OECD (2007b); EAO (2008);  Roy 
(2008).  A recent study estimated that video and audio streaming (e.g., through YouTube) accounted for about 
27% of the Internet's gl obal traffic in 2008 ( Multichannel News , 26 October 2009).  
51 OECD (2007b), p. 6;  OECD (2007c). 
52 IFPI, www.ifpi.org  S/C/W/310 
 Page 15 
 
 
  value) in 2008.  Digital platforms accounted for about 20 per cent of total recorded music sales in 
2008, up from 15 per cent just a year before and fr om 2 per cent in 2004.  The US is the leading 
digital music market, as it accounts for 47 per cent of global sales, followed by Asia (28 per cent), and 
Europe (20 per cent).  In the US, digital sales repr esent 36 per cent of total sales of recorded music 
(2008).53  In China and Korea, digital sales account for approximately 60 per cent of total sales.54   In 
the medium term, sales of digital music are expected to overtake physical distribution.55 
54. An additional revenue stream for record co mpanies are performance rights, which reflect 
payments from collection societies for licenses grante d to third parties for the use of sound recordings 
in music videos, broadcasting, public performance (e.g. restaurants, hotels), and certain Internet uses.  
These were estimated to amount to US$802 million worldwide in 2008.   
55. Four large companies dominate the recorded music industry: Universal Music Group, Sony 
Music Entertainment, Warner Music Group and EMI,  which account for more than two-thirds of 
worldwide sales of recorded music.  Faced with d eclining sales in recent years, the leading companies 
have consolidated or attempted to do so.56  These companies or their subsidiaries are present 
worldwide and account for a large proportion of production and sales in countries throughout the 
world.  In Europe, North America, and Latin Ameri ca, the "majors" have a market share above 75 per 
cent on average.  In such countries as Japan, India and China, however, the majors do not dominate.  
In India, for example, domestically-owned compan ies are predominant, partly as a result of the 
importance of sales of soundtracks of domestic motion pictures, as well as due to government regulations.
57  Further, major record companies only ha ve a limited presence on the African continent 
where their presence is limited to South Africa.  In  other countries, the production is therefore largely 
independent, but also small-scale and informal.  T echnological developments have made it less costly 
to record music and such countries as Mali, Nigeria,  Kenya or Senegal have seen independent studios 
emerge, which attract recording artists from the continent.58  
56. The music industry is facing pressure to change its ways as a result of the rise of electronic 
distribution.  Hundreds of online distributors around the globe are now offering music, either through 
à-la-carte  downloads (e.g. iTunes and AmazonMP3), subscriptions or advertising-supported 
streaming.  iTunes, a precursor, is the leading pl ayer, with six billion downloads since its launch, and 
with a presence in 22 countries in 2009.  It became th e largest music retailer (whether in physical or 
digital form) in the US in 2008.  Predominantly br icks-and-mortar retailers such as Wal-Mart in the 
US also have a large role in the digital distribution of music.  In many Asian markets, the predominant 
way to consume digital music has been through mob ile technologies;  in Japan, for example, mobile 
digital content represented 90 per cent of the digital music delivery market in 2007, in contrast with 8 
per cent for Internet downloads.59   
57. Among the new business models used by record companies is the bundling of music with 
other services or devices, with a view to adding value to the latter in the eye of the consumer.  For example, mobile phone manufacturers, mobile phone operators or Internet providers may offer access 
to music as part of the sale of their good or servi ce.  The industry expects that such partnerships 
between record companies and other technolog y companies will represent an increasing revenue 
stream, since they see music as a key driver in the digital economy, where content is used to attract 
                                                     
 
53 IFPI (2009). 
54 Wall Street Journal , "China Sets New Rules for Music Sold Online", 5 September 2009. 
55 PCW (India, p. 82) estimates this will happen in 2012. 
56 Sony and Bertelsmann merged in 2004 after some reversals to form Sony BMG Music 
Entertainment.  Sony acquired Bertelsmann’s share in Sony BMG in 2008.  Various attempted mergers between 
EMI and Warner Music Group failed in recent years. 
57 Cocq and Lévy (2006), pp. 77-78.   
58 UNCTAD (2008), pp. 78-79;  IFPI (2009). 
59 RIAJ (2008), p. 2. S/C/W/310 
Page 16  
 
  consumers to devices or networks.
60  Further, in light of the drop in physical sales, artists – and 
increasingly their record companies – rely to a greater extent on concerts and merchandizing as a revenue stream.  
58. The technological transformation in the audiovis ual sector also exposed consumers to greater 
quantities of musical content.  While in the traditional market, dominated by hard-copy music 
recordings, the offer was limited by what retaile rs could hold in stock, the digital environment 
expands the "shelf-space" as readily available catal ogues are almost limitless.  Since on-line suppliers 
are no longer incited to focus on best-selling products  so as to not use scarce space for products of a 
more limited appeal, it is more profitable to offe r – and easier for consumers to come across – more 
specialized music, including from particular forei gn countries/cultures.  Since the music industry has 
been most affected by technological transformations, su ch trends have been strongest in this segment, 
and are likely to further intensify.  
59. Although there is no extensive set of comparab le data, sales of foreign music appear to 
account for a significant part of world sales, alt hough in many markets domestic music still holds a 
dominant position.  For examples, domestic music accounted for 93 per cent of sales in the United 
States, 92 per cent in Turkey, 91 per cent in India, 75 per cent in Japan, 70 per cent in Thailand, 68 
per cent in Brazil and 63 per cent in France.  Fore ign music (not including "repertoire", such as 
classical music) represented more than 75 per cent of  sales in such markets as Canada, Switzerland, or 
Ireland.
61 
(b) Radio  
60. The global radio broadcasting sector was estimat ed at US$48.7 billion in 2008, down by 2.2 
per cent from 2007, but up 9 per cent since 2004.  A further decline was expected in 2009, given the 
impact of the economic crisis on advertising.  Advertising contributed 67 per cent to the sector's 
global revenues, public radio license fees 26.5 per cen t, and satellite radio subscriptions 6.6 per cent. 
Satellite radio subscriptions, in contrast, accounted fo r less than 1 per cent of revenues in 2004.  North 
America represented 45 per cent of the global market.62  While satellite radio, especially in the United 
States, has progressed, as have online radio stations , terrestrial analogue radio broadcasting (i.e., over 
the airwaves) remains dominant. 
61. Like television, radio broadcas ting has an important role in society, often with significant 
involvement of the public sector.  In many regions of  the developing world, radio is the main source 
of outside information and communication, ahead of television or Internet, since the proportion of the 
population receiving radio signals is much higher in various countries than television households.   
62. In Asia, with the exception of China, Indonesia and Thailand, ra dio reaches more than 90 per 
cent of the population in an average week.  In Indi a, government reforms have led to the increase of 
private FM stations from almost zero to 270 stations over the last four years.63  Further, radio 
broadcasting provides the most localized content (new s, etc.) and is most easily accessible in poorest 
regions.  Like television free-to-air broadcasting, radio thus plays an important role in the transfer of 
information to citizens, including the poorest, since receivers are relatively inexpensive and 
production of programming, as well as transmission,  are inexpensive as well.  Competition and 
plurality in the sector can therefore promote tr ansparency and governance, and be an important 
                                                      
60 IFPI (2009). 
61 IFPI (2007). 
62 PWC (2009a). 
63 Media, "Radio Reaffirms its Value in the Market", 26 February 2009.  
http://www.media.asia/Featuresarticle/2009_03/Ra dio-reaffirms-its-value-in-the-market/34562  S/C/W/310 
 Page 17 
 
 
  development tool.64  However, worldwide, the top five radio stations per country were on average 
predominantly state-owned.  The same  applies to television broadcasting.65 
IV. GATS COMMITMENTS AND MFN EXEMPTIONS 
63. A relatively limited number of Members has unde rtaken specific commitments in audiovisual 
services under the GATS.  At the same time, the sector has attracted a large share of MFN 
exemptions.66  The GATS contains neither specific provisions  governing trade in audiovisual services 
nor specific exceptions in relation to culture or cultural policy.    
64. Thirty WTO Members currently have commitments in one or more sub-sectors under 
Audiovisual Services, as summarized in Table 5.   A large proportion of these commitments have 
emerged from accessions negotiations (12 Members).  Almost all Members with commitments in the 
sector are developing countries, except Japan, New Zealand and the United States.  Many important 
producers of audiovisual services (e.g. United States;  China;  India;  Mexico;  Japan;  Hong Kong, 
China) have undertaken commitments. 
Table 5:  Summary of Specific Comm itments in Audiovisual Services 
Members 02.D.a. 02.D.b. 02.D.c. 02.D.d. 02.D.e. 02.D.f. Total 
Armenia X X X   X   4 
Cape Verde X   X  X   3 
Central African Rep. X X X X X X 6 
China X X     X   3 
Dominican Republic       X   X 2 
El Salvador       X   X 2 
Gambia X X X X     4 
Georgia X X X   X   4 
Hong Kong, China X       X X 3 
India X           1 
Israel X           1 
Japan X X     X   3 
Jordan X X    X   3 
Kenya X X         2 
Korea RP X       X   2 
Kyrgyz Republic X X X X X   5 
Lesotho X X X X     4 
Malaysia X     X     2 
Mexico X X         2 
New Zealand X X X X   X 5 
Nicaragua X X         2 
Oman X X         2 
Panama X X X   X   4 
Saudi Arabia X   X      2 
Singapore X       X   2 
Chinese Taipei X X X  X  4 
Thailand X   X       2 
Tonga X X X  X   4 
                                                      
64 Eltzroth and Kenny (2003);  Locksley (2009).   
65 Djankov et al. (2003).  On the basis of a survey of 97 countries.  See also World Bank (2001), 
chapter 10, for a discussion of government ownership in the sector television and radio.   
66 For further discussion of commitments on audiovisual services, including in PTAs, see Roy (2008). S/C/W/310 
Page 18  
 
  Members 02.D.a. 02.D.b. 02.D.c. 02.D.d. 02.D.e. 02.D.f. Total 
United States  X X X X X X 6 
Viet Nam X X     X   3 
Total 28 19 14 9 16 6   
Legend:        
02.D.a. Motion Picture and Video Tape Production and Distribution    
02.D.b. Motion Picture Projection Service      
02.D.c. Radio and Television Services      
02.D.d. Radio and Television Transmission Services     
02.D.e. Sound Recording       
02.D.f. Other        
Note: This table updates the information found in S/C/W/40 by adding the relevant acceding 
Members. 
 
65. As suggested by Table 5, few of the 30 Member s concerned have undertaken commitments in 
all sub-sectors.  Services related to motion pictures have been more "popular", compared to services 
relating to radio and television, and sound recording.  Several Members have decided not to use in full 
the CPC definitions suggested by W/120, electing in stead to commit on part of a given sub-sector, to 
use different sectoral entries (with or without defi nitions), or sometimes to add precisions to the 
W/120 and corresponding CPC categories. 
66. Leaving aside sectoral carve-outs, commitments scheduled are relatively free of limitations, 
as suggested by Table 6.  It may seem that several of the relevant Members have opted not to 
undertake specific commitments in ar eas where they currently had restrictions in place, preferring not 
to guarantee any level of access and non-discriminat ory treatment.  Except for mode 4, which 
typically refers back to horizontal commitments, mode 3 is where most partial commitments are found, while mode 1 contains the highest share of non-bindings.     
Table 6: Level of Commitment for Sub-Sectoral Entries in Audiovisual Services (Modes 1 to 3) 
Percentage of entries per 
level of commitment 
(market access and 
national treatment 
columns)  
Mode 1  
Mode 2  
Mode 3 
Full Commitments  66.7% 87.3% 66.8% 
Partial Commitments  11.1% 3.7% 22.6% 
Unbound 22.2% 8.9% 10.5% 
Note: updates table from Roy (2005).  Does not take account of horizontal limitations, nor limitations 
in the sectoral column. 
 
67. Limitations scheduled often consis t of foreign equity ceilings and restrictions on the type of 
legal entity (including joint-venture requirements) .  Some content quotas are scheduled as well (e.g. 
Chinese Taipei and Malaysia as regards television; Mexico as regards motion pictures).  While a few 
sector-specific limitations pertain to discriminatory subsidies, a number of Members have inscribed such limitations at the horizontal level, i.e., for all scheduled sectors.   
68. It can be noted that various Members have undertaken commitments in relation to services 
that, while related to the audiovisual industry, are classified in other sectors in W/120, e.g. 
Distribution Services, rental/leasing services under Busi ness Services, or Entertainment Services.  In  S/C/W/310 
 Page 19 
 
 
  particular, 12 acceding Members have included co mmitments on “cinema theatre operations services” 
under Entertainment Services (sector 10A).67 
69. Many Members (48) have scheduled one or more  MFN exemptions pertaining to audiovisual 
services.68  Most of these Members have no specific commitments in the sector.69  Overall, 114 MFN 
exemptions have been listed for audiovisual servic es, making it the sector with most exemptions.  
These often relate to the conferring of nationa l treatment to works covered by co-production 
agreements, support programmes, or , in the case of European countries, the Council of Europe 
Convention on Transfrontier Television.  Some MFN exemptions also reserve the right to retaliate 
against adverse, unfair or unreasonable trading condi tions abroad.  MFN exemptions in the sector are 
often justified by the relevant Members on the basis of cultural policy purposes.   
V. GOVERNMENT MEASURES IN THE SECTOR 
70. Audiovisual services are typically subject to a wide array of government regulations, due to 
the sector's high social, cultural and economic import ance.  Regulations may relate, for example, to 
the protection of intellectual property, competition,  protection against illicit or offensive content, 
advertising, language requiremen ts as regards subtitling and dubbi ng or, more traditionally, the 
management of the use of the spectrum.   
71. Governments may also take measures to atta in certain cultural objectives, including the 
protection and promotion of the diversity of cultura l expressions, an issue that is the subject of a 
UNESCO Convention ratified by 103 countries and the European Community.70  The Convention, 
among other things, recognizes the distinctive na ture of cultural goods and services, highlights 
measures that Parties may adopt to protect and pr omote the diversity of cultural expressions, and 
encourages international and deve lopment cooperation in this area.71   
72. Further, as noted earlier, public operators also play an essential role in television and radio 
transmission services, and are subject to specific regulations.  These operators are often given the mandate to provide public services with a view, for example, to promoting national cohesion and integration.   These objectives vary from country to country.  Governments will sometimes suggest or 
prescribe the type of content that public operators should provide to the public.   
                                                     
 
67 These Members are: Albania, Cambodia, Cape Verde, Croatia, Estonia, FYR of Macedonia, Latvia, 
Lithuania, Moldova, Nepal, Tonga, and Ukraine.  Chin a has a similar entry ("cinema theatre services"), but 
scheduled under Sector 2.D. Audiovisual Services.   Most of the Members that took commitments on cinema 
theatre operations have no commitments on Audiovisual Services (Cape Verde and Tonga are the exceptions).  Only Tonga has commitments on both motion picture projection services and cinema theatre operations 
services.   See also Roy (2005). 
68 Counting EC-12 as one. 
69 As indicated in the Scheduling Guidelines  (S/L/92), MFN exemptions only allow the Member 
concerned to provide more favourable (preferential) treat ment to certain other Members to the extent that it has 
not undertaken full commitments.    
70 Ratifications as of 23 November 2009.  The UNESCO Convention on the Protection and Promotion 
of the Diversity of Cultural Expressions was adopted by the UNESCO 33rd General Conference in October 2005 
and entered into force on 18 March 2007.   
71 See the UNESCO website for greater details on the Convention, including operational guidelines: 
www.unesco.org  S/C/W/310 
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  A. B
ARRIERS TO TRADE72 
73. Many governments also maintain various measures to promote or protect domestic content, as 
well as, in many cases, domestic industry more gene rally.  Subsidies are tools commonly used in the 
sector, either in the form of tax breaks, grants, or lo ans on preferential terms.  These typically relate to 
the production of motion pictures, but are also used in other segments of the sector, especially 
television programming.  Subsidies in the sector are often granted on a discriminatory basis, namely 
when their availability is tied to cer tain nationality conditions.       
74. Internationally comparable statistics on subsid ies are scarce.  Available information suggests 
that subsidies are a key feature of the motion picture industry in both developed and developing 
countries, although their value is overall much larger  in the former.  Across the European Union, for 
example, around €1.6 billion is spent on national film support each year, of which 70 per cent targets 
film production.  In addition, at the European level, the MEDIA programme (2007-2013) has a budget 
of €755 million.73  Recent trends in EU State aid include support for segments other than film and TV 
production, such as film distribution and digita l projection, as well as competition to attract 
investment from foreign film companies - mainly American - through state aid.74   
75. A recent study on film subsidies in the EU highlights that "film producers are highly 
dependent upon state aid".  For example, 68 per cent of film aid in the EU is awarded on a selective basis, but this proportion jumps to 87 per cent when  the largest European film funding body (CNC of 
France) is excluded from the sample.  Remaining aid is awarded automatically.
75  Within the EU, the 
study estimates that France grants most film s ubsidies (€512 million in 2004), followed by Germany 
(€203 million), UK (€118 million), and Italy (€90 million).76  Various other examples of subsidy 
regimes for audiovisual services can be found in the WTO Trade Policy Reviews.77  Further, a number 
of WTO Members require television res ources to finance domestic film production.78 
                                                      
72 The terms "barriers to trade" or "trade restrictions " are used here to refer generally to measures that 
may negatively affect trade, and not to  depict solely limitations on mark et access or national treatment as per 
Articles XVI and XVII  of the GATS.   
73 European Commission, "State Aid: Commission consults on three year extension of film support 
criteria", IP/08/1580, 24th October 2008;  European Commission, Pr ess Release: "State aid: Commission 
prolongs film support rules until end of 2012", 28 January 2009. 
74 European Union (2009), "Communication from the Commission concerning the State aid assessment 
criteria of the Commission communication on certain legal aspects relating to cinematographic and other 
audiovisual works (Cinema Communication) of 26 September 2001", Official Journal of the European Union, 
7 February 2009 (2009/C 31/01).  As per Article 87(3d), the EC Treaty provides an exception to the general EU rules on State aid, providing that the Commission may consider aid to promote culture, under certain conditions.  
Under the 2001 Cinema Communicati on, the Commission set out criteria according to which aid for the 
production of films for cinemas or television can be approved.  For example, the producer must be free to spend at least 20 per cent of the production budget in other Member States.   
75 Cambridge Econometrics (2008): Selective State ai d means that criteria and procedures for granting 
State aid are based on conditions such as quality or or iginality, where experts apply this criteria to evaluate 
projects.  Automatic State aid is where criteria and proc edures are based on conditions set forth by applicable 
rules without involving any discretionary judgement by experts (e.g., grant of a support on basis of box office 
revenues).   
76 Naturally, these estimates are subject to a numbe r of caveats.  They only look at the budget - 
excluding tax incentives - of funding bodies with annual budgets that exceed €1 million.   
77 See S/WPGR/25 and addenda.  As of the last S ecretariat Note compiling subsidies mentioned in TPR 
reports (March 2007), subsidies in audiovisual services had been mentioned in relation to 17 WTO Members 
(counting the European Communities as one).   These are: Argentina, Australia, Benin, Burkina Faso, Burundi, 
Canada, the European Communities, the Gambia, Jamai ca, the Republic of Korea, Mexico, New Zealand, 
Paraguay, Singapore, Chinese Taipei, Tanzania, the Unite d States.  The S/WPGR/W/25 series have a number of 
limitations (see page 1 of S/WPGR/W/25), one of which is that TPR reports are not intended to provide a  S/C/W/310 
 Page 21 
 
 
  76. Public funding of the television sector is also im portant.  In the European Union, for example, 
the European Audiovisual Observatory estimates th at public funding (e.g. grants, license fees) for 
public radio and television companies amounted to  €22.9 billion in 2006.  This represented 69 per 
cent of these companies' revenues and 26 per cent of  the net revenues of all radio and television 
companies.79  In Canada, the Canadian Television Fund h as contributed C$2.7 billion over its 12-year 
history (C$242 million in 2007/08) for the developm ent, production and broadcasting of Canadian-
made programming.80 
77. A number of countries are also re-orienting th eir financial support to promote the production 
of audiovisual content available for digital distribu tion and to promote digital infrastructure (cinemas, 
terrestrial television).  Another important trend in  terms of government suppor t, for the film industry 
in particular, is the granting of incentives to a ttract foreign productions (e.g. location shooting).  
Competition to attract film shootings often also involves sub-central entities, for example provinces in Canada or States in the United States, as well as municipalities or regional governments.
81 
78. Another policy tool used by several governments is content quotas, whereby a proportion of 
television or radio broadcast time, or screen time at cinemas, are reserved to domestic content, be it 
music, television programming, motion pictures or advertising.  Such quotas are more commonly used 
in the television and radio segments.  Screen quotas less so, although a number of countries still apply 
them or at least have laws permitting their applicatio n.  Domestic content obligations may also relate 
to television channels, as well as to advertising an d dubbing.  Other trade barriers in the sector are 
varied and include foreign equity restrictions (esp ecially as regards TV and radio broadcasting), limits 
on the number of operators, discriminatory taxes, lim itations on the capacity of foreign channels to 
use proportions of advertising time to target the local market, and restrictions on the movement of 
personnel, for example, requirements that foreign productions contract a proportion of local cast or 
crews.82  Other measures with an effect on trade incl ude non-discriminatory cross-ownership limits to 
ensure plurality of viewpoints in the media, and must-carry rules, which typically require certain 
national channels to be offered on cab le and satellite television platforms. 
B. SOME IMPLICATIONS OF TECHNOLOGICAL DEVELOPMENTS  
79. The span of regulatory issues confronting govern ments in the sector is important, especially 
in light of quick changes coming about through the technological developm ents mentioned above.  
While these cannot all be listed here (e.g. fight against piracy and update of regimes to protect 
intellectual property), a few key challenges linke d to technological developments are brought up 
below.   
1. Foreign Content Restrictions and New Technologies 
80. In a context where (i) more content can be tr ansmitted over different networks and with the 
use of different devices and (ii) consumers have gr eater capacity to exercise control, governments 
may have to consider whether such traditional tools as content quotas need to be  reviewed or adjusted 
in order to meet the relevant policy objectives.  In television, for example, such policies had first 
come about when the number of channels was limited and the prevailing model was one where 
content was "pushed" towards all.  Nowadays, the "pull" model is gaining in importance, where  
                                                                                                                                                                     
comprehensive survey of subsidies granted and that they do not cover all service sectors.  Since audiovisual 
services are usually not discussed in TPR reports, various Members that are not listed above may also provide 
subsidies in the sector.   
78 Cocq and Lévy (2006);  EAO (2006);  Guerrieri et al. (2005).   
79 EAO (2008). 
80 See www.ctf-fct.ca 
81 OECD (2008). 
82 Cocq and Lévy (2006) ;  Roy (2005) ;  Solon Consultants (1998) ;  Guerrieri et al. (2005).   S/C/W/310 
Page 22  
 
  viewers have greater capacity to seek out their preferred content.  With greater choice, it is less 
obvious that quotas can ensure that domestic content w ill be watched.  Further, with the increase in 
the number of channels on offer on television, dome stic content quotas may only cover a fraction of 
the total universe of content that can be carried.  To meet the same policy objectives, traditional policy 
tools may need to be modified to support the same objectives.
83 
81. Further, in light of convergence, which implies that content can be delivered through different 
types of networks to various types of devices, gove rnments will have to consider whether any content 
regulations, including quotas, must be extended to the new, developing, platforms and, if so, how.  
For example, regulators may have to consider whet her content regulations on  broadcasting should be 
extended to content delivered over the Internet.84   
82. The EC's revision of the Television Without Frontiers Directive represents a recent example 
to adapt the regulatory framework to the new busin ess and technological environment.  In November 
2007, the European Parliament adopted the Audi ovisual Media Services Directive (AMSD), which 
entered into force in December 2007, and must be tr ansposed into national law by the end of 2009.  
The AMSD amends and renames the Television W ithout Frontiers Directive (TWFD).  The new 
Directive expands its coverage to all audiovisual media services, including online and on-demand 
audiovisual content, and draws a distinction be tween linear (with a programme schedule such as 
conventional television) and non- linear services (video on-demand).85  The latter are subject to a 
number of rules (e.g. advertising, protection of mi nors, prohibition of illicit content) on the same 
footing as traditional linear services (e.g. as regards rules on advertising) so as to ensure similar 
treatment (e.g. as regards regulatory burden, but also in terms of benefiting from the single market).   
83. Sometimes, the non-linear services are subject to less strict rules, recognizing that consumers 
have greater control and choice over non-linear services as well as the different impact these services have on society as a whole (i.e., one-to-many tran smission versus one-to-one transmission).  All 
covered services are subject to oblig ations relating to the promotion of domestic content, although in 
different ways.  While the TWDF obligation to reser ve a majority proportion of transmission time to 
European works (excluding time appointed to such matte rs as news, sports or advertising) applies to 
linear services (including IPTV or mobile TV), the AMSD stipulates that Members States shall ensure that providers of non-linear services promote, where practicable and by appropriate means, the production of and access to European works.  Th e Directive does not mandate specific quotas or 
measures, but notes that "suc h promotion could relate, inter alia , to the financial contribution made by 
such services to the production and rights acquisiti on of European works or to the share and/or 
prominence of European works in the catalogue of  programmes offered by the on-demand audiovisual 
media service".
86   
2. Other regulatory challenges a ssociated with convergence 
84. Convergence confronts governments with the ch allenge of reconciling previously distinct 
regulatory frameworks.  In the past, each type of c ontent had a dedicated network.  Television content 
was delivered over one technology, but now, in additi on to traditional broadcasters, the same content 
can be transmitted by cable, mobile, phone comp anies, or Internet access providers.  While 
broadcasters have traditionally been subject to more  regulation, including with respect to content, 
                                                      
83 See: OECD (2007c);  World Bank (2007). 
84 See, for example, Noam (2008). 
85 The Directive covers services that come under the editorial responsibility of a media service 
providing programmes, and does not cover, for example, platforms for the exchange of user-generated content 
such as YouTube, where there is no editorial control as regards a broadcast schedule or an on-demand catalogue.   The Directive does not cover radio either.  See: http://ec.europa.eu/avpolicy/reg/avms/index_en.htm 
86 Article 1.8 of Directive 2007/65/EC.    S/C/W/310 
 Page 23 
 
 
  telecommunication services tend to be regulated to a lesser extent, with a greater focus on carriage 
regulation and competition.  Convergence and the arriva l of such new systems as IPTV or mobile TV 
challenge regulatory frameworks based  on traditional distinctions.  A ccording to the World Bank, as 
of 2007, 22 per cent of countries worldwide had ad opted new policies to address the convergence of 
telecommunications, IT, and broadcasting, while 50 per cent were planning to do so in the future.  
Areas where regulatory frameworks may need to be revisited or updated include:  
(a) authorizations and licensing, e.g. ensuring that the licensing regime is reconciled with 
the fact that licensees can offer different services using different networks; determining whether such services as IPTV should be licensed as broadcasting services, information services or telecommunication services; 
(b) ensuring a level playing field, e.g. c onsidering whether and to what extent 
asymmetrical treatment between telecom operators and broadcasters as regards rules on foreign equity participation, concentr ation limits, or mergers and acquisitions 
should remain;  developing rules to ensure that transmission networks' access to content is not undul y limited by anti-competitive practices; 
(c) cross-ownership limits, i.e., revisiting lim its on one's ownership across different 
media, which aim at ensuring pluralism, in  light of additional means of providing 
content;   
(d) the application of must-carry obligations to emerging ways of delivering content; 
(e) unbundling of local loop in order to allow new entrants to provide advanced services 
(e.g. IPTV) and increase competition in these areas; 
(f) reducing obstacles that hinder the exploitati on of digital content across frontiers.  For 
example, governments may facilitate the adap tation of the collective management of 
rights in the digital environment (e.g. musi c), through collecting societies setting up 
new or improved schemes to address the licensing of new media exploitation and/or by streamlining their methods to facilitate multi-territory licensing of digital rights; 
(g) improve regulations to ensure effective and secure payments for online transactions, 
including facilitation of small payments.
87 
 
_______________ 
  
                                                     
 
87 World Bank (2007);  Meisel (2007);  Hernandez and De La Torre (2008);  OECD (2007c);  OECD 
(2007b);  OECD (2004b);  Screen Digest et al. (2006);  OECD (2005). S/C/W/310 
Page 24  
 
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