EUROPEAN COMMISSION Brussels, 14.9.2016 SWD(2016) 301 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

on the modernisation of EU copyright rules Accompanying the document Proposal for a



Directive of the European Parliament and of the Council

on copyright in the Digital Single Market



and



Proposal for a



Regulation of the European Parliament and of the Council

laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes {COM(2016) 593}

{COM(2016) 594}

{SWD(2016) 302}



1.Introduction 1.1.EU copyright rules 1.2.Policy context 2.Objectives and scope of the initiative 2.1.Objectives 2.2.Scope 3.Ensuring wider access to content 3.1.Introduction 3.1.1.Background 3.1.2.Why should the EU act? 3.1.3.What should be achieved? 3.1.4.Methodology 3.2.Online transmissions and retransmissions of TV/radio programmes 3.2.1.Background data on the TV and radio sector 3.2.2.Online transmissions of broadcasting organisations 3.2.3.Digital retransmissions of TV and radio programmes 3.3.Access to and availability of EU audiovisual works on VoD platforms 3.3.1.What is the problem and why is it a problem? 3.3.2.What are the various options to achieve the objectives?

3.3.3.What are the impacts of the different policy options and who will be affected? 3.3.4.How do the options compare? 3.4.Out-of-commerce works in the collections of cultural heritage institutions 3.4.1.What is the problem and why is it a problem? 3.4.2.What are the various options to achieve the objectives? 3.4.3.What are the impacts of the different policy options and who will be affected? 3.4.4.How do the options compare? 4.Adapting exceptions to digital and cross-border environment 4.1.Introduction 4.1.1.Background 4.1.2.Why should the EU act? 4.1.3.What should be achieved? 4.1.4.Methodology 4.2.Use of protected content in digital and cross-border teaching activities 4.2.1.What is the problem and why is it a problem? 4.2.2.What are the various options to achieve the objectives? 4.2.3.What are the impacts of the different policy options and who will be affected? 4.2.4.How do the options compare? 4.3.Text and data mining 4.3.1.What is the problem and why is it a problem?

4.3.2.What are the various options to achieve the objectives? 4.3.3.What are the impacts of the different policy options and who will be affected? 4.3.1.How do the options compare? 4.4.Preservation of cultural heritage 4.4.1.What is the problem and why is it a problem? 4.4.2.What are the various options to achieve the objectives? 4.4.3.What are the impacts of the different policy options and who will be affected? 4.4.4.How do the options compare? 5.Achieving a well-functioning market place for copyright 5.1.Introduction 5.1.1.Background 5.1.2.Why should the EU act? 5.1.3.What should be achieved? 5.1.4.Methodology 5.2.Use of protected content by online services storing and giving access to user uploaded content 5.2.1.What is the problem and why is it a problem? 5.2.2.What are the various options to achieve the objectives? 5.2.3.What are the impacts of the different policy options and who will be affected? 5.2.4.How do the options compare? 5.3.Rights in publications

5.3.1.What is the problem and why is it a problem? 5.3.2.What are the various options to achieve the objectives? 5.3.3.What are the impacts of the different policy options and who will be affected? 5.3.4.How do the options compare? 5.4.Fair remuneration in contracts of authors and performers 5.4.1.What is the problem and why is it a problem? 5.4.2.What are the various options to achieve the objectives? 5.4.3.What are the impacts of the different policy options and who will be affected? 5.4.4.How do the options compare? 6.Overall conclusions 6.1.Summary of preferred options 6.2.Analysis of the combined application of the preferred options 6.2.1.Impact on stakeholders 6.2.2.Subsidiarity and proportionality 6.2.3.Choice of instrument 6.3.Monitoring and evaluation 6.3.1.Monitoring and evaluation plan 6.3.2.Operational objectives and monitoring indicators

Acronym list

AV Audiovisual CHI Cultural Heritage Institution CMO Collective Management Organisation CoO Country of Origin DSM Digital Single Market ECJ / CJEU European Court of Justice / Court of Justice of the European Union ECL Extended Collective Licensing EP European Parliament IA Impact Assessment IPTV TV/radio over closed circuit IP-based networks MOOCs Massive Open Online Courses MS Member State OER Open Educational Resources OoC Out-of-commerce (works) OTT Over The Top PPPS Public-Private Partnerships SME Small and Medium-sized Enterprise STM Scientific, Technical and Medical (Publishers) SVoD Subscription Video on Demand TDM Text and Data Mining

TV Traditional Television TVoD Transactional Video on Demand VoD Video on Demand WIPO World Intellectual Property Organisation

1.Introduction 1.1.EU copyright rules Copyright and related rights are rights granted to authors (copyright) and to performers, producers and broadcasters (related or neighbouring rights). They include so-called "economic rights" which enable rightholders to control (license) the use of their works (e.g. a novel) and other protected material (such as a record or a broadcast), and be remunerated for their use. These rights are limited in time (in Europe, between 50 and 70 years). Economic rights (and their term of protection) are, to a large extent, harmonised at EU level. Authors are also granted so-called "moral rights" (notably the right to claim authorship and the right to object to any derogatory action in relation to the work). Moral rights are not harmonised at EU level. Copyright systems balance the recognition of rights with exceptions in order to facilitate the use of protected content in specific circumstances, notably to facilitate the achievement of specific public policy objectives such as education or access to information. Exceptions provide a “legal authorisation” to beneficiaries to use protected material without needing to seek authorisation from the rightholders. The EU copyright rules set out an exhaustive list of exceptions to rights across various copyright directives. The harmonisation achieved is however limited: most of the exceptions are optional (Member States may decide to implement them or not), and broadly formulated, leaving Member States (MS) a relatively wide margin of manoeuvre when implementing them. Copyright systems also provide for procedures and remedies against infringements of copyright (enforcement). These have been partly harmonised at EU level (e.g. evidence-gathering powers for judicial authorities, powers to force parties commercially involved in an infringement to provide information on the origin of the infringing goods, provisions on the payment of damages). Directive 2001/29/EC (the "InfoSoc Directive") was designed to update copyright rules to the (then nascent) digital networks and to implement the two 1996 WIPO Internet Treaties - the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty . It harmonises several exclusive rights that are essential to the online dissemination of works and other protected subject-matter, notably the right of reproduction, i.e. the right to prevent the unauthorised copying of protected content and the right of making available, i.e. the right to prevent unauthorised dissemination of protected content online, as well as exceptions to exclusive rights. Licensing is the main mechanism for the exercise of copyright and related rights. Depending on the relevant right, the type of use and the sector, licences are most often granted directly by the right holder (e.g. film producer, software producer) or via collective management organisations (CMOs), representing normally a category of rightholders (e.g. authors) and of rights (e.g. rights in musical works). Collective management of exclusive rights (these are typically the most important rights for economic exploitation, e.g. distribution in the physical world and making available in the online world) is voluntary, except in certain specific cases allowed by law and copyright international treaties. For example, Directive 93/83/EC (the "Satellite and Cable Directive") imposes mandatory collective management of cable retransmission rights in order to facilitate the clearance of rights by cable operators. The EU has recently adopted legislation to improve the functioning of CMOs, including in order to facilitate the provision of multi-territorial licences (Directive 2014/26/EU- the "CRM Directive"). Copyright is territorial (referring to national territories) in the sense that the rights granted under copyright are provided for in national law, and not in the form of unitary rights at EU level. For example, the author of a book has not a single EU-wide right of reproduction but 28 different national rights of reproduction. The geographical scope of these 28 rights is limited to the territory of the MS that grants the right in question. 1.2.Policy context Digital technologies are changing the ways creative content is produced, distributed and accessed. They create opportunities as well as new challenges for the creative industries, authors and artists, the education and research communities, online service providers including search engines and content distributors, telecommunication operators, cultural heritage institutions, individual users and other players in the digital economy. These new uses and opportunities, together with the cross-border nature of digital networks, have brought to the fore questions related to the degree of harmonisation achieved by the EU copyright rules. The Digital Single Market (DSM) Strategy adopted in May 2015 called for addressing in the EU copyright framework a set of key obstacles to the functioning of the DSM and announced legislation "to reduce the differences between national copyright regimes and allow for wider online access to works by users across the EU", notably as regards portability and cross-border access to copyright-protected content services; exceptions, in particular in the area of education and research; and the role of intermediaries in the distribution of copyright protected content. It also indicated that the Commission would review the Satellite and Cable Directive to assess whether it has facilitated consumers' access to satellite broadcasting services across borders, as well as the possible extension of some of the Directive principles/mechanisms to the licensing of rights required for certain broadcasters' online service. As a first step to implement the DSM strategy in the area of copyright, the Commission adopted a proposal for a regulation on the cross-border portability of online content services in December 2015, in order to in order to allow EU residents to travel with the digital content they have purchased or subscribed to at home. At the same time, it adopted a Communication "Towards a modern, more European copyright framework" in which it presented a plan including targeted actions and a long-term vision to modernise EU copyright rules. The Communication highlighted the need to inject more single market into the current EU copyright rules and to adapt them to new technological realities. This Impact Assessment (IA) on the modernisation of EU copyright rules supports the targeted initiatives presented in this Communication, as a second step in the implementation of the DSM strategy on copyright. EU action in the area of copyright complements other EU initiatives recently adopted in the context of the Digital Single Market Strategy, notably on the revision of the Audiovisual Media Services Directive (" the AVMS Directive"), on measures addressing unjustified geo-blocking and on online platforms. The analysis presented in this IA strongly relies on the preliminary work conducted by the Commission on the review of EU copyright rules between 2013 and 2016. The review process covered a broader set of matters than those presented in this IA. Such a broad exercise was necessary for the Commission to gain an understanding of the full range of questions being discussed in the context of copyright policy and digital networks. However, not all those questions relate to matters requiring legislative intervention or, most importantly, requiring legislative intervention at this stage. There are issues where the Court of Justice of the European Union (CJEU) may have provided sufficient clarity to the existing rules or where cases are pending. There are also issues where the necessity to intervene has not been established or where there is not the required degree of maturity in terms of evidence of a problem and/or of the effects of intervention. This is notably the case for the issue of remote consultation of works held in libraries and other relevant institutions and for the issue of "freedom of panorama", which were both mentioned in the Communication of December 2015. The consultation exception (authorising libraries and other institutions to allow on-screen consultation of works for research and private study on their premises) has not been addressed in the context of the IA as the issue needs to be reconsidered in light of the outcome of a pending case before the CJEU on electronic lending.On the panorama exception, the first results of the public consultation do not indicate a need to address problems at EU level, notably because most MS have incorporated such exception in their national legislation. Concerning private copying, the Commission will continue assessing the need for action to ensure that the different levies' systems in place in MS do not raise obstacles in the single market, as announced in the Communication of December 2015. This assessment needs to take into account recent and pending cases before the CJEU.

The IA also takes into account the conclusions of the ex-post evaluation of the Satellite and Cable Directive. 2.Objectives and scope of the initiative 2.1.Objectives The key policy objective of this initiative is to ensure a smooth functioning of EU copyright rules in the Digital Single Market (DSM). This IA covers a number of different areas within the EU copyright framework that are all relevant for the completion of the DSM. Three general objectives have been identified: (i) allow for wider online access to protected content across the EU, focusing on TV and radio programmes, European audiovisual (AV) works and cultural heritage; (ii) facilitate digital uses of protected content for education, research and preservation in the single market and (iii) achieving a well-functioning market place for copyright where rightholders can set licensing terms and negotiate on a fair basis with those distributing their content (notably as regards new forms of content distribution). The initiative aims at addressing copyright-related obstacles to meet those general objectives. The specific objectives of the initiative are described within each section of the IA. 2.2.Scope This IA considers adjusting existing rules or introducing new rules in three distinct areas: (i) access to content online; (ii) the functioning of key exceptions in the digital and cross-border environment; and (iii) the functioning of the copyright marketplace. These three areas have been identified in the Communication of December 2015, together with actions on the enforcement of IP rights, which are not part of the initiatives considered on this IA but for which specific initiatives are being considered separately. This IA focuses on the targeted actions identified in the Communication within these three areas: On access to content, the Commission proposed in the above mentioned Communication "a gradual approach to removing obstacles to cross-border access to content and to the circulation of works". The proposal for a regulation on portability constituted a first important step in this direction. This IA concentrates on further actions in relation to the cross-border distribution of TV (Traditional Television) and radio programmes online, the licensing of European AV works and the digitisation and making available of out-of-commerce works. As indicated in the Communication of December 2015, accompanying measures aimed at ensuring a wider access to creative content online will be proposed in the context of the 'Creative Europe' programme and are therefore not covered by this IA. In relation to exceptions, this IA looks into the exceptions which are relevant for access to knowledge, education and research, which have been substantially affected by technological developments and have a cross-border dimension. It examines whether new exceptions are required in EU rules to cover digital uses in teaching activities, text and data mining and preservation activities by cultural heritage institutions (i.e. publicly accessible libraries, educational establishments and museums, as well as archives and film or audio heritage institutions). Legislative measures are also being considered to introduce a new exception allowing people with print disabilities to access books and other print material in formats that are accessible to them. They are not considered in this IA as they relate to the implementation of EU international obligations (Marrakesh Treaty). On the functioning copyright market place, the IA concentrates on issues related to the distribution of value in the online copyright value chain, thus responding to the objective stated in section 4 "achieving a well-functioning market place for copyright" of the Communication of December 2015. The IA addresses problems faced "upstream" by rightholders when trying to license their content to online service providers (use of protected content by online service providers storing and giving access to user uploaded content and rights in publications) and those faced "downstream" by creators when negotiating contracts for the exploitation of their works (fair remuneration in contracts of authors and performers). 3.Ensuring wider access to content 3.1.Introduction 3.1.1.Background Digital technologies have facilitated the distribution of and access to copyright-protected content, with 49 % of EU citizens accessing music or AV content online. The Internet has favoured the entry of new market players and the development of new services (e.g. music streaming services, Video on Demand – VoD - platforms, etc.) providing access to a large quantity and variety of content online. It has also provided a growth opportunity for traditional players. TV still remains the most important channel to access AV content, but both broadcasters and retransmission service providers (e.g. cable operators) are increasingly investing in the development of digital and online services in order to improve consumers' experience and offer more flexibility. Digital technologies also offer new opportunities to cultural heritage institutions (CHIs) willing to digitise and disseminate parts of their collections that would otherwise remain confined to their premises with limited access to the public. Despite the rapidly growing variety of online services available to citizens, cross-border access to and availability of digital content (both in terms of content provided by online services in other MS and of content produced in other MS) vary. While broadcasters play an important role in informing, entertaining and educating the general public, their programmes often remain unavailable online to European citizens living in other MS. In addition, the variety of TV / radio channels from other MS provided by retransmission services differs across the EU. Also, European films, documentaries and series are often under-represented in the catalogues of VoD platforms. Finally, only a limited part of the collections of CHIs are available online and across borders.

The existence of barriers to the portability and cross-border access to content was highlighted in the Digital Single Market (DSM) Strategy. The Commission presented a legislative proposal on portability in December 2015 and proposed a "gradual approach to removing obstacles to cross-border access to content and to the circulation of works" in the Communication "Towards a modern, more European copyright framework" adopted at the same time. In this context, three fields of possible EU legislative intervention were identified: improving cross-border distribution of TV and radio programmes online; facilitation of licensing agreements for the online availability of European AV works and digitisation and making available of out-of-commerce (OoC) works across the EU. The present section of the IA refers to these fields. The Commission has carried out an evaluation of the Satellite and Cable Directive and in particular of the effectiveness and relevance of the principle of "country of origin" applicable to satellite transmissions and of the mandatory collective management applicable to cable retransmissions. Even though this evaluation, being limited to particular technologies of transmission (satellite an cable), is not directly relevant for the measures considered in this IA (online transmissions), its main findings have been taken into acccount where meaningful parallels could be drawn. In the online environment, players engaged in the distribution and dissemination of content (notably broadcasters, retransmission service providers, VoD platforms, but also CHIs as far as the access to the heritage is concerned) may face significant difficulties when trying to clear the rights for the online exploitation of protected works across the EU. Also, VoD platforms willing to enrich their catalogue with European AV works often face problems to acquire online rights. Finally, OoC works held in the collections of CHIs often remain unavailable online, due, in part, to significant difficulties in the clearance of rights. This section of the IA examines how the clearance of rights can be facilitated to improve the online availability of content across the EU. 3.1.2.Why should the EU act? Legal basis The EU's right to act follows from Article 114 of the Treaty on the Functioning of the European Union (TFEU), which confers on the EU the power to adopt measures for the establishment and functioning of the internal market and has provided a legal basis for a wide range of EU instruments in the area of copyright. The rights relevant for online dissemination of content (notably the reproduction and making available rights) have been harmonised in the InfoSoc Directive. The definition of harmonised rules simplifying, where appropriate, the licensing of rights for online transmissions and retransmissions of TV and radio programmes, and for the dissemination of OoC works by CHIs, would contribute to improving the functioning of the Digital Single Market, and in particular the distribution of and access to digital content. The same applies as regards the facilitation of negotiations to acquire online rights for AV content notably as regards rights for the exploitation in different territories. Furthermore, Article 167(4) TFEU provides that the EU shall take cultural aspects into account in its action under other provisions of the Treaties, in particular in order to respect and to promote the diversity of its cultures. All proposed options take into account the implications of EU action for cultural diversity. Subsidiarity and added value The problems identified in this section of the IA have an important cross-border dimension: broadcasters face difficulties in particular when clearing rights for making their content available online across borders; similarly, the acquisition of rights can be complex for retransmission services other than cable operators when they offer channels from other MS. MS cannot intervene by legislation in order to establish a uniform regime applicable to the licensing of rights (which have been harmonised at EU level) for cross-border transmissions of TV and radio programmes. Concerning the exercise of retransmission rights, national solutions may generate further fragmentation in the Digital Single Market. Only intervention at EU level can ensure legal certainty for all retransmission operators and rightholders. As regards the online availability of European AV works, MS' action may not be sufficient to improve the online availability of European (including non-national) AV works. The dialogue between the relevant stakeholders and negotiations for the licensing of online rights need to be encouraged at EU level in order to have an impact on the diversity of the content offered by online services, and in particular on the presence of European works in catalogues of these services. Regarding OoC works, EU action responds to the need to facilitate the making available to the public of the heritage held in CHIs, including across borders. Without EU intervention, such actions would be limited by national borders (and would happen only in some MS, or at a varying pace). CHIs pointed to the importance to solve the cross-border aspect of this problem, as also did right holder signatories to the Memorandum of Understanding on Key Principles on the Digitisation and Making Available of Out-of-Commerce Works, signed on 20 September 2011. 3.1.3.What should be achieved? The general objective of EU intervention is to allow for wider online access to protected content by users across the EU, in particular in the following areas: transmissions and retransmissions of TV and radio programmes; European AV works and cultural heritage. EU action aims at removing the copyright-related obstacles and at creating the conditions allowing broadcasters, service providers and CHIs to offer wider online access to content across the EU. The specific objectives are therefore defined in terms of facilitating clearance of rights (and negotiation) between the relevant parties. 3.1.4.Methodology Problem definition

As illustrated in the problem tree presented below, the problems reported in this section of the IA are all directly related to difficulties encountered with the clearance of rights: broadcasters when acquiring the rights for their online services available across borders; retransmissions services (different from but functioning like cable operators) for the clearance of rights for retransmissions of TV and radio programmes from other MS; VoD platforms in obtaining online rights of European AV works; CHIs clearing the rights for digitisation and dissemination of OoC works in their collections. The specific drivers and consequences are explained in the following sub-sections. However certain overarching elements are presented here as they apply to different contexts. The territoriality of copyright and the specific licensing practices existing for certain types of works are one of the drivers contributing to the complexity of rights clearance in cross-border contexts. A service provider that is making the content available online in more than one MS must have the relevant rights to use such content for the relevant territories. Where the relevant rights for all the relevant territories are held by one single right holder/distributor, the service provider can obtain a multi-territorial licence covering all territories. As regards the online rights in musical works, some CMOs license rights on a territorial basis, while a number of music publishers and CMOs grant multi-territorial licences. The multi-territorial licensing of these rights is facilitated by the CRM Directive. Multi-territorial licensing is widely used for the rights held by record producers. AV content is mainly licensed and distributed on a territorial basis. AV producers of premium content often grant an exclusive licence to a single distributor/broadcaster/service provider in each MS. This form of licensing is considered important by the AV industry for the financing of AV works, with rights being often pre-sold at the pre-production stage. In exchange for an upfront payment to the film producers, distributors and/or broadcasters often obtain exclusive exploitation rights in a specific territory for a defined period of time. As regards OoC works in heritage collections, existing solutions, where available, are also territorially confined. Beyond licensing issues, the limited availability of content online across borders is also the result of decisions taken by service providers (which may be related to commercial strategies, regulatory requirements, technological or financial constraints, etc.). As a result, there are instances where even if multi-territorial licences are granted by rightholders or even if agreements between rightholders and service providers do not include limitations on territorial exploitation, cross-border access remains a problem. This is however not a problem that can be addressed by copyright specific legislation. This section of the IA does not directly address these issues. Difficulties in clearing rights for online exploitation, including across borders, often result in less varied content being available online and in consumers facing restrictions when trying to access content online. There is however consumer interest for content from other MS: In the Eurobarometer survey carried out in 2011 on cross-border demand for content services, 19 % of Europeans indicated they were interested in receiving content from another EU country, with 15 % interested in TV programmes, 3 % in on-demand services and 2 % in other types of content; In the Eurobarometer survey carried out in 2015 on "Cross-border access to online content", almost one in ten Internet users (8 %) indicated they have tried to access content from an online service meant for users in another MS, while 50% of respondents who have not tried indicated they would be interested to do so (the most popular type of content being AV - 29 % of respondents); In the 2014 public consultation on the review of the EU copyright rules and in the 2015 public consultation on the review of the Satellite and Cable Directive, the vast majority of consumers argued in favour of cross-border access to online content; In the public consultation on the AVMS Directive, 82 % of the respondents who expressed an opinion on the issue of "Promotion of European works" indicated being interested in watching more content produced in another MS. Identification of policy options The policy options have been developed in relation to the specific issues at stake in each area. Different licensing regimes, considered as enabling mechanisms to facilitate the clearance of rights, are examined in the legislative options. Views from stakeholders, European Parliament and Member States The views from the different stakeholders are reported after the description of each policy option. In its resolution of 9 July 2015, the European Parliament (EP) urged the Commission “to propose adequate solutions for better cross-border accessibility of services and copyright content for consumers” while acknowledging the importance of territoriality. A number of MS support the objective of enabling more cross-border access to online transmissions of TV and radio programmes but call for caution, as in their view a possible intervention should not undermine contractual freedom, a high level of protection of intellectual property and the exclusivity of rights. Concerning retransmissions of TV and radio programmes, a number of MS are in favour of simplifying rights clearance for services comparable to cable, though some have concerns and in particular underline the necessity to ensure fair competition. On out-of-commerce works, only a few MS provided views on the need of EU action in this area, generally to explain national systems and favouring contractual mechanisms. In recent Council Conclusions, they have simply taken note of the Commission’s intention to assess options and consider legislative initiatives in this area.



Impacts of policy options

Stakeholders affected The policy options related to online transmissions and retransmissions of TV and radio programmes would affect, on the one hand, broadcasters (TV and radio), retransmission service providers and other online service providers, and on the other hand, all rightholders whose works are used in TV and radio programmes (mainly in the AV, music and visual art sectors). Regarding the availability of works in VoD platforms, the policy options examined in the IA would affect all types of stakeholders in the AV sector (authors, producers, distributors, broadcasters, VoD platforms, etc.). The policy options considered in relation to OoC works would have an impact on CHIs such as libraries, archives, museums and film heritage institutions, and on rightholders in all sectors (the collections of CHIs contain OoC which can be books, phonograms, AV works, photographs, etc.). Impacts on consumers/users are assessed for each policy options, mostly in terms of access to and availability of online content. Obligations and costs for MS resulting from the preferred policy options are presented in Annex 3. Type of impacts and availability of data Only the most significant and likely impacts are reported in this IA. The impacts are assessed by group of stakeholders (e.g. broadcasters, service providers, rightholders), focusing mainly on economic impacts, notably transaction costs and licensing revenues. In addition, broad social impacts (e.g. impacts on cultural diversity) and impacts on fundamental rights are assessed separately. All policy options considered in this section of the IA may have an impact on copyright as a property right (Article 17(2) of the Charter of Fundamental Rights of the European Union – "The Charter") and on the freedom to conduct a business (Article 16). In addition, impacts on freedom of information (Article 11), freedom of the arts and sciences (Article 13), and right to education (Article 14) are examined where appropriate. Impacts on third countries or on the environment are not elaborated upon as the policy options presented in this section of the IA are considered not to have any substantial impact on them. No significant impacts on employment have been identified. Whereas general market data is widely available on the different sectors and distribution channels examined in this section of the IA (TV market, VoD market), specific data related to transaction costs and licensing revenues is not publicly available. Other than in a few cases, this data could not be obtained from stakeholders despite repeated attempts (through direct requests to stakeholders or dedicated studies).



Impacts on SMEs The policy options considered in this IA do not target SMEs but may have an impact on them, as the large majority of companies that may be affected are SMEs. In the sector of programming and broadcasting activities, 98.9 % of companies are SMEs (85 % micro-companies) generating 17.9 % of the value added. In the sector of film and music production, 99.9 % of companies are SMEs (96 % micro-companies) generating 85 % of the value added (32 % by micro-companies). The policy options examined in this section of the IA are expected to reduce the administrative burden faced by TV and radio broadcasters as well as service providers willing to obtain rights for the online and/or cross-border exploitation of works and would therefore be positive for SMEs active in this area. Most rightholders may also benefit from the licensing or negotiation mechanisms examined in the different policy options, in particular individual rightholders or micro-companies that do not have the capacity to manage individual licensing deals with a high number of service providers and have a limited market power. Furthermore, the policy options examined in the different areas covered by this section of the IA could generate new licensing opportunities for rightholders and possibly additional licensing revenues. Therefore, mitigating measures in favour of SMEs have not been deemed necessary. Comparison of policy options The policy options are compared against the criteria of effectiveness (i.e. to what extent they fulfil the specific objective), efficiency (i.e. at what cost they do so), impact on the different groups of stakeholders and coherence with regard to cultural diversity, fundamental rights and/or other EU policies. Each option is rated between "--" (very negative), "-" (negative), 0 (neutral), "+" (positive) and "++" (very positive). 3.2.Online transmissions and retransmissions of TV/radio programmes 3.2.1.Background data on the TV and radio sector Despite the way TV has been transformed by the emergence of digital technologies and the internet, traditional TV remains relevant both economically and as the source of information and entertainment for viewers. In 2014, the EU-28 TV market was worth around €86 billion. In the same year, TV content (linear and time-shifted viewing) equated to 96 % of all video consumption in six countries (FR, ES, DE, IT, UK and US). 96 % of Europeans watch television at least once a week, predominantly on a TV set but increasingly online (in 2014, 20 % of Europeans – but 40 % of those aged 15-24- watched TV online at least once a week, representing a 3 % increase compared to 2012). The average TV viewing time for the whole EU population in 2013 was 223 minutes per day. While viewing patterns are changing, particularly among younger viewers, TV programming still represents an important part of their video viewing.

TV and radio remain the main source of news for a large majority of Europeans, compared to other sources (notably print and online). For example, 72 % of consumers in FR, 69 % in DE, 63 % in DK and 59 % in the UK indicated TV or radio as their main source of news. 80 % of the EU population listens to radio for at least 2 to 3 hours a day – and mostly to local or regional programmes. On average, 6 to 8 % of total listening of radio is done online in Europe. A broadcaster may make a TV or radio channel available directly through a traditional terrestrial transmission, or via a satellite, cable or other telecommunications network. TV and radio channels can also be offered online over the open internet. Many satellite, cable and IPTV operators offer such services to their subscribers. There are also some online services of this type provided by entities that do not offer satellite, cable or IPTV transmissions. The following diagram illustrates the functioning of direct, including online, transmissions of TV and radio programmes (section 3.2.2) and of retransmissions of TV and radio programmes (section 3.2.3). The problems addressed by this IA concern the transmissions and retransmissions marked by dotted lines below. 3.2.2.Online transmissions of broadcasting organisations 3.2.2.1. What is the problem and why is it a problem? Problem: Broadcasting organisations face practical difficulties with the acquisition of rights for their online services when they are offered across borders Description of the problem: As viewing habits of consumers are changing and demand for access to TV and radio online grows, broadcasters have responded by expanding their services online and allowing consumers' access through screens such as tablets and smartphones. The online offerings of broadcasters include simulcasting services (TV/radio channels which are transmitted online alongside traditional broadcasting by satellite, cable, terrestrial), webcasting services (online only linear channels), TV catch-up services and podcasts, i.e. radio programmes that can be streamed or downloaded as well as other on-demand services (e.g. VoD). Simulcasting and catch-up services are often monetised through advertising (although some broadcasters charge for access to these services). In order to make their online services available across borders, broadcasters need to have the required rights for the relevant territories. This may require engaging in a complex process for obtaining online rights, generating high transaction costs, and may reduce broadcaster's incentives to provide cross-border services. Despite requests to the relevant stakeholders, no data could be obtained on transaction costs related to clearing online rights on a cross-border basis. For satellite broadcasting the clearance of rights has been facilitated by the application of the country of origin principle enshrined in the Satellite and Cable Directive according to which the act of communication to the public by satellite takes place solely in the MS where, under the control and responsibility of the broadcaster, the programme-carrying signal is introduced into an uninterrupted chain of communication leading to the satellite and down towards the earth. Therefore the rights for such satellite transmission must only be cleared for one MS. This same principle does not apply when a broadcaster clears rights for its online services. The need to facilitate the clearance of rights for broadcast-related online services has been recognised by stakeholders in the music sector and in the acquis. Article 32 of the CRM Directive introduces a derogation from the rules on the multi-territorial licensing of rights in musical works for the clearance of rights required by broadcasters for simulcasting and other online transmissions which are ancillary to the initial broadcast of radio or television programmes. The rationale behind this derogation, as explained in recital 48 of the CRM Directive, was to leave the required flexibility for the licensing of online rights in musical works for such transmissions to be licensed via local CMOs (rather than by other EU CMOs or "hubs" aggregating rights which may not necessarily be in the same MS as the broadcaster seeking the licence). Drivers: [High number of works and short timeframe] In addition to content such as films, TV series or music produced by other parties (for which rights have to be cleared with the relevant rightholders), broadcasters on a daily basis transmit a very high number of hours of original TV and radio programmes such as news, cultural, political, documentary or entertainment programmes that they produce themselves, which use variety of content protected by copyright the rights to which have to be cleared. This results in a complex clearance of rights with a variety of rightholders, including authors (of music, of scripts, of images, of texts), directors, film producers, performers, record producers. The overall number of transactions is much higher than for an online content service offering a catalogue of films or music on demand. Major public service broadcasters conclude more than 70,000 contracts with rightholders per year. For example, one episode of series produced by a broadcaster may include up to 100 underlying rights. Often the rights need to be cleared in a short time-frame, in particular when preparing programmes such as news or current affairs which represent an important part of broadcasters' transmissions. The relevant rights may be held by CMOs (e.g. rights in musical works) or by individual rightholders such as producers (e.g. rights in AV works). With regard to some other works, e.g. pictures and photographs the situation is mixed as some rights are represented by CMOs and some by individual rightholders. There can be also situations where one work is embedded in another e.g. music in an AV work or a picture in a text which further complicates the rights clearance. This means that in their daily operations TV broadcasters face significant transaction costs related to the clearance of underlying rights for their programmes. The transaction costs for radio broadcasters are less significant, since (i) radio broadcasts contain fewer types of works protected by copyright (notably, no images or AV works) and (ii) there are well-established collective management structures for the main type of copyright-protected work used in radio broadcasts, i.e. music, which makes it easier for radio broadcasts to clear rights. [Need to clear rights on a territorial basis] These costs and the complexity of the task increase significantly if broadcasters want to make their online services available across borders. As described in section 3.1.4 , in some cases multi-territorial licences are available but often broadcasters must clear rights for certain works territory by territory. As regards radio broadcasting, according to the information provided in meetings with the stakeholders, agreements between radio broadcasters and local CMOs may allow cross-border transmissions up to certain % of audience (e.g. 5 or 7.5 %) which could explain why there is a broad offer of online radio services. Beyond the complexity of rights clearance other factors influence to a different extent the cross-border accessibility of TV and radio programmes. They are presented below but this IA is not addressing these particular issues, as they are mostly linked to business models and commercial strategies. [Territorial exclusivity] Another factor strongly influencing the access to TV and radio programmes across borders is the fact that the rights in premium content (e.g. films and TV series of particular interest for the audience), as explained in section 3.1.4 , are generally licensed on the basis of territorial exclusivity. The important role this licensing plays for the AV industry is also explained in section 3.1.4 . Broadcasters willing to serve audiences across borders may not be able to acquire the relevant rights if the rights in other territories are granted, on an exclusive basis, to another service provider(s). At the same time, they may enter into contracts under which they agree to limit or block cross-border access to premium content to which they have acquired the rights for territories in which they operate. This is confirmed by initial findings of the Commission’s e-commerce sector inquiry. [Remit of public service broadcasters] Some public service broadcasters may be limited in their possibility of offering certain content in their online services by their national public service remit. For example in Germany public service broadcasters are not allowed to place TV-feature films and series purchased from third parties online By contrast, the remit of other public broadcasters may allow them to serve audiences outside the MS. [Commercial decisions of broadcasters] Finally, in some cases, broadcaster’s themselves may take decision to focus on a specific territory and to tailor their offerings to the specific audience due to a variety of factors. For example, broadcasters may decide to geo-block access to their own programming where they see possibilities of licensing it in other territories. According to the feedback received from stakeholders, other considerations such as the demand for the services, language spoken by consumers, the complexity of the legal framework as well as the viability of revenues may result in broadcasters deciding not to enter certain markets at all. Consequences: In consequence of the combination of the drivers described above, TV broadcasters often make their online services available only in a territory of one MS and put in place measures which prevent cross-border access to these services such as geo-blocking of IP addresses from other territories. According to the initial findings of the Commission’s e-commerce sector inquiry published on 18 March 2016, 82 % of the public service TV broadcasters and 62 % of commercial TV broadcasters who responded to the inquiry implemented at least one type of geo-blocking to their online services. As illustrated in Annex 6B, data provided by the European Broadcasting Union (EBU) as well as data collected in the SatCab study on cross-border availability of online services of TV broadcasters indicates that international content such as sports, fiction, documentaries and entertainment, as well as content based on foreign formats is in principle geo-blocked. The situation with the original content produced by TV broadcasters is mixed but often broadcasters also block access to their own content. In the case of radio broadcasting both online live streaming and podcasts are usually not geo-blocked. How the problem would evolve: Without intervention at EU level addressing the particular complexity of the clearance of rights this problem would persist as broadcasters would face the same practical difficulties in clearing rights for cross-border transmissions. EU consumers would remain limited in their cross-border access to TV programmes such as news, cultural or political programmes, documentaries or entertainment programmes which due to their national specificities often cannot be easily replaced by programmes offered in other MS. 3.2.2.2. What are the various options to achieve the objectives? This IA assesses the baseline scenario, one non-legislative and two legislative options to facilitate licensing in order to enhance cross-border transmissions of TV and radio programmes online. The options considered in this IA are enabling options aiming to facilitate licensing of rights, in order to allow the market to respond gradually to legal and policy changes. Baseline No policy intervention. This option would consist in relying on market players to progressively offer cross-border access to TV and radio programmes distributed online as well as on the courts, and notably the CJEU, to clarify the application of the Treaty and of provisions of EU secondary law relevant to the free movement of services. It would also mean continuing to rely on the application of competition law to agreements including limitations on territorial exploitation of content. .

Stakeholders' views All public service broadcasters, commercial radios and certain other service providers consider that the baseline option cannot solve the identified problems. They consider that a heavy administrative task and transaction costs linked to licensing rights across borders would remain. Rightholders, CMOs and the majority of commercial broadcasters support this option, arguing that the current framework already offers possibilities to license rights on a multi-territorial basis and that the limited cross-border supply is driven by a limited consumer demand and language barriers. Consumers' representatives consider that the current regulatory framework does not sufficiently ensure access to TV/radio programmes available online in other MS and that market-driven solutions would not be sufficient to solve this problem. Option 1 – Voluntary agreements to facilitate the clearing of rights for broadcasters' online services ancillary to their broadcasts This option would promote maximising a voluntary aggregation of the rights necessary to provide multi-territorial licences for broadcasters' online services. It would build on the voluntary agreements between rightholders and broadcasters which already exist in the music sector and would aim to introduce them in other content sectors important for broadcasting (such as AV and visual arts) and also with regard to commercial broadcasters who are not party to the arrangements with authors' CMOs. Based on such arrangements, broadcasters would be able to acquire from CMOs multi-territorial licences to aggregated repertoires. It would focus on online services of broadcasting organisations which are ancillary to the initial broadcast, i.e. simulcasting (linear simultaneous transmission of a broadcast by the broadcaster), catch-up TV/radio services (on-demand transmission of a broadcast available for a limited period of time after it has been broadcast in a linear manner) and material related to the broadcast (e.g. previews). In order to facilitate the clearing of the rights for cross-border transmissions of broadcasters' online services ancillary to their broadcast, the Commission would assess the functioning of the existing voluntary agreements in the music sector and foster a dialogue between the parties (rightholders, CMOs and broadcasters) if there is a need to improve their functioning. It would also promote similar agreements at EU level for the AV sector and other content sectors important for broadcasting services (such as visual arts). Stakeholders' views Public service broadcasters are likely to consider that this option is not sufficient to achieve the identified objective. Commercial broadcasters and some other service providers may favour this option as it would rely on industry-based solutions. Rightholders and CMOs are likely to support such option. However, in the case of AV stakeholders, the usual practice for licensing is individual agreements thus it is less likely that they would support voluntary aggregation of repertoires by CMOs, especially for the premium AV content. Consumers' representatives consider that market-driven solutions would not be sufficient to solve the identified issues. Option 2 - Application of country of origin to the clearing of rights for broadcasters' online services ancillary to their initial broadcast Introduce a rule providing that as concerns the licensing of rights for certain online transmissions by broadcasting organisations, the copyright relevant act takes place solely in the MS where the broadcasting organisation is established. As a result, in order to provide certain services in the Union, rights would only need to be cleared for the "country of origin" (CoO) of the broadcasting organisation (and not for the countries of reception). This option would cover the same online services of broadcasting organisations as under Option 1. The CoO rule would enable broadcasters to provide services across borders but it would not oblige them to do so (Option 2 would not entail any rules limiting the contractual freedom of broadcasters and rightholders). The application of the CoO rule and the contractual freedom of broadcasters and rightholders would be subject to the application of the Treaty as well as to the applicable secondary law (notably, as regards the freedom to provide services). The licence fee payable to rightholders would have to take into account all aspects of the online transmission of the broadcast, including the audience, unless agreed otherwise with rightholders. The Commission would put in place a monitoring mechanism to assess the cross-border availability of broadcasters' online services covered under this option. Stakeholders' views All public service broadcasters and commercial radios support this option. Commercial TV broadcasters are generally against this option due to the fear that, considered together with the application of the free movement of services principle and competition law, it may lead to the weakening of territorial licensing or even to mandatory pan-European licences. They argue that this, in turn, would limit possibilities for smaller broadcasters/ broadcasters operating in smaller markets to obtain licences in premium AV content, as rightholders, without exclusivity guarantees, would focus on the largest/most lucrative markets. Other service providers than broadcasters call for a cautious and well-measured approach, ensuring a level playing field. Rightholders and CMOs are against such option for similar reasons as commercial TV broadcasters, underlining that this may undermine incentives to invest in AV production. They also raise a possible risk of establishment shopping and of disaggregation of repertoire. Consumers' representatives support the application of the CoO rule to broadcasters' online transmissions. Option 3 – Application of country of origin to the clearing of rights for the services covered by Option 2 and for TV and radio-like linear online transmissions (and services ancillary to such transmissions) This option would cover, in addition to the services covered under Option 2, TV and radio-like linear online transmissions which are not linked to a broadcast but are online only transmissions (webcasting) and services ancillary to the webcast (such as catch-up and previews of the webcasts). The "country of origin" (CoO) rule would apply to such services. TV and radio-like linear online transmissions would be defined as (i) linear services; (ii) which are provided on the basis of a schedule; (iii) and under the editorial responsibility of the service provider. The other main elements of this option would be the same as under Option 2. Stakeholders' views Public service broadcasters support the CoO rule for broadcasters' transmissions however do not ask for the application of the CoO rule beyond that, underlying a special situation of broadcasters. Commercial TV broadcasters do not support this option for the same reasons as Option 2. Majority of service providers other than broadcasters underline the importance of a level playing field and some of them call for a technology-neutral approach. Rightholders and CMOs would oppose this option for similar reasons as commercial TV broadcasters and underline that, as a result, this option may decrease incentives to invest into AV content. Also, they are concerned that extending the CoO rule to webcasting services would entail an even higher risk of establishment shopping by online service providers and encourage "race to the bottom": search of the lowest copyright fees. This, in turn, may lead to disaggregation of repertoires licensed by CMOs. Consumer representatives support the application of the CoO rule to all online transmissions. Discarded options Overarching CoO rule: The identified objectives could be achieved also by applying the "country of origin" rule to all communication to the public and making available acts online in which case the rule would apply also to services such as VoD services, on demand music streaming services, etc. However, such option is not considered in this IA as its scope is broader than the targeted objective raised in the DSM Strategy : "to tackle […] measures to ensure enhanced cross-border access to broadcasters' services in Europe". The Copyright Communication acknowledges the necessity of a gradual approach, in order to allow the market to adapt to policy and legal changes. As a first step, the initiative will focus on TV and radio programmes which are a main way to access content in the EU, in particular as regards news and cultural programmes. Linear transmissions offer to consumers the ability to consume content as it happens which is extremely important for event driven programming. The Commission will continue monitoring the situation in the market, following its long-term vision.

Restrictions to contractual freedom: Options which, in addition to establishing the CoO rule, would prohibit contractual arrangements concerning territorial exploitation of content were discarded. Such options could de facto result in pan-European licences. Many operators, including SMEs, may not have financial means to acquire pan-European licences. If the market does not have a possibility to adapt to changes gradually such options could push smaller operators out of this segment of the market. Also, such options may impact the way how the creative, especially AV, content is financed and distributed. 3.2.2.3. What are the impacts of the different policy options and who will be affected?

Approach The above options would affect broadcasters, webcasters and other online service providers as well as rightholders whose works are used in TV and radio programmes. They would also affect consumers. The impacts affecting these groups of stakeholders are presented separately. For broadcasters, the following economic impacts have been considered: impacts on transaction costs linked to clearing rights, on possibilities to offer services across borders and, where relevant, impacts on licensing costs (licence fees paid by broadcasters to rightholders directly or through CMOs). The same types of impacts have been examined for webcasters in Option 2. In addition, the impacts on the competitive situation with other service providers (not covered by the options) were considered. For rightholders, the main economic impacts are on licensing models (in particular, a possibility to exploit rights on an exclusive territorial basis) and on licensing revenues. The impacts would vary depending on the sector: the AV works are more often distributed on the basis of territorial exclusivity as compared to other works used in TV and radio programmes (such as music, literary works, artistic works, e.g. photographs). Therefore, impacts are assessed separately for AV, music and visual arts sectors. For consumers, the impacts on access to online transmission services across borders have been considered, as well as impacts on prices (where relevant). The majority of commercial broadcasters as well as Rightholders and CMOs are concerned that the intervention may oblige broadcasters to provide consumers with cross-border access to their online services. As explained above, the options considered in this IA would not oblige broadcasters to provide services across borders and would not entail any rules limiting the contractual freedom of broadcasters and Rightholders. The same stakeholders also underline a risk that introducing the CoO rule for online transmissions will weaken territorial licensing of rights (or even lead to mandatory pan-European licensing). They argue that the establishment of the CoO rule in combination with the application of the free movement of services principle and competition law would have a detrimental effect on territorial licensing. As it is not possible to predict the future effects that the application of the free movement of services principle and competition law may have on the territorial licensing of rights, this IA does not attempt to assess impacts that the proposed intervention may have in combination with these rules. The assessment below is mainly qualitative, as the publicly available data or data that could be obtained from stakeholders on licensing revenues and transaction costs is limited. Baseline Impacts on stakeholders Broadcasters Impacts on transaction costs: Under the baseline scenario, broadcasters would continue facing high transaction costs linked to licensing of rights for cross-border online transmissions, including for their own programmes. Existing voluntary initiatives aimed at promoting the aggregation of rights and the granting of multi-territorial licences, as mentioned in section 3.2.2.1, could nevertheless contribute to facilitating the clearance of rights for musical works and phonograms used in in radio and TV broadcasts. Impacts on possibilities to offer services across borders: Due to persisting difficulties in acquiring underlying rights for online cross-border transmissions, broadcasters are likely to continue geo-blocking access to their own programmes. AV premium content is likely to continue being licensed on a territorial basis and with either the entire programme being geo-blocked or certain parts of the programme being blacked-out. These agreements based on territorial exclusivity would be subject to the application of EU law, notably as regards the application of the free movement of services principle and competition law. However, it is not possible to predict the future effects that developments in these areas of law may have on the licensing of rights and the cross-border access to online TV and radio programmes. As concerns music, availability of multi-territorial licences is expected to increase due to the implementation of the CRM Directive. As for visual arts, no significant changes to the current licensing practices are expected. Other service providers The baseline option would not have any impacts on the competitive situation between broadcasters and service providers other than broadcasters. Rightholders Impacts on licensing models and revenues: The baseline option would not have any impact on licensing models applied by rightholders or on the licensing revenues received from broadcasters or webcasters. In particular, the AV sector would continue to be able to collect revenues based on the territorial licensing of rights (subject to EU rules). However, other rightholders whose content is distributed in limited geographic areas by broadcasters may lose opportunities to have their content reaching audiences across borders. The potential of the Digital Single Market for some creative content may remain underexploited, especially for content which does not rely on exclusive territorial licensing. Consumers Impacts on access to online transmission services: Consumers are likely to continue facing restrictions to cross-border online access to TV and radio programmes. This is in contrast with consumers' demand for cultural, information and entertainment content from other MS. Social impacts The baseline scenario would not affect the production of new cultural content. However, access to cultural diversity may remain limited under this option, as consumers would continue facing restrictions to access TV and radio programmes online from other MS (including as regards access to content such as news, current events or other non-fiction TV, which represent a significant proportion of broadcaster's programming ). This situation would affect the role of broadcasters as key players for linear transmissions of current events and of cultural programmes. Impacts on fundamental rights The baseline scenario would not have any impact on copyright as property right or on the freedom to conduct a business, as recognised in the Charter (Articles 16 and 17). It may have an indirect impact on the freedom of information enshrined in the Charter (Article 11), to the extent that this option would not facilitate further development of access to information.

Option 1 – Voluntary agreements to facilitate the clearing of rights for broadcasters' online services ancillary to their broadcasts Impacts on stakeholders Broadcasters Impacts on transaction costs: Option 1 could facilitate the clearance of rights and reduce transaction costs for cross-border online transmissions only on the basis of voluntary agreements concluded between rightholders, CMOs and broadcasters. The effectiveness of such agreements would depend on the sectors' willingness to license rights collectively (which may be limited in the case of AV works). As mentioned above, voluntary initiatives have already been developed in the music sector to facilitate licensing of broadcasters' online services. A recommendation, signed by music composers and songwriters, music publishers, authors' CMOs and public broadcasters, provides guidelines for the aggregation of rights in CMOs. The CMOs representing major and independent record producers have set up a network of reciprocal representation agreements that allows for the granting of multi-territorial licences for broadcasters online related activities by a single CMO. The first of such agreements covered only simulcasting and was cleared by the Commission in 2002. Subsequently further agreements have been concluded to cover other online related services such as some forms of webcasting and catch-up services. Option 1 would allow to assess the functioning of these practical tools developed by the industry, resolve possible blockages and identify ways in which they could be further used. An increased use of such voluntary agreements could reduce transaction costs for the clearance of underlying rights in radio and TV programmes (e.g. broadcasters could clear online music rights with one single CMO instead of negotiating with CMOs and rightholders in each territory). This would be particularly relevant for broadcasters' original productions but in some cases could be also important for third-party content. The dialogue foreseen under Option 1 could allow exploring the need for and feasibility of similar agreements for other types of works, notably AV content and visual art works and, as regards authors' rights in musical works, also for commercial broadcasters. However, this would mainly depend on the willingness of rightholders to enter such dialogue. As explained below, rightholders in the AV sector are likely to be reluctant to engage into such agreements. Impacts on possibilities to offer services across borders: By facilitating the clearance of underlying rights, the voluntary agreements fostered under Option 1 could help broadcasters to make part of their own programmes available online and across borders. The type of programmes and the availability of different services (simulcasting, previews, catch-up) would depend on the feasibility and functioning of such voluntary agreements as well as the conditions foreseen in them. The cross-border availability of programmes, in particular through catch-up services, is likely to remain limited. Option 1 is not expected to have any impact on the possibility to offer premium content across borders. Impacts on licensing costs: Option 1 is not expected to have any direct impact on licensing costs for broadcasters. To the extent that voluntary agreements could lead to multi-territorial licences, licence fees would be adjusted taking account of the audience in different territories. Other service providers Impacts on the competitive situation: Option 1 would encourage and facilitate discussions between broadcasters, rightholders and CMOs for the licensing of certain online rights, but it would not grant a special licensing regime to broadcasters. Therefore, it would not have any impact on the competitive situation between broadcasters and other service providers (who would be in a position to negotiate similar licensing schemes with CMOs and rightholders). Rightholders Impacts on licensing models and revenues: Option 1 would encourage rightholders to aggregate their rights with CMOs for the purpose of licensing broadcasters' online ancillary services; however it would not impose any licensing regime (e.g. mandatory collective management) and would not affect their contractual freedom. Rightholders in the music sector are expected to support a further development of voluntary agreements with CMOs and broadcasters. It is not excluded, however, that rightholders may be reluctant to aggregate at CMOs certain rights (e.g. for catch-up services or music channels) in order to protect their revenues in the on-demand market. Producers of AV works which are not distributed on the basis of exclusivity may see an interest in such agreements, as it could increase the exposure of their works and generate additional revenues. They could for example decide to transfer their online rights, for the purpose of licensing broadcasters' online ancillary services, to CMOs which currently manage their cable retransmission rights. Such arrangements based on collective management of rights are more likely to be developed for simulcasting than for catch-up services (rightholders may be more reluctant to license rights for catch-up through CMOs in order to optimise licensing of their on-demand rights). Rightholders in the AV sector who rely on territorially based licensing models are likely to be very reluctant to engage in licensing practices based on aggregation of rights or multi-territorial licensing. This option could encourage visual arts industry to enter into agreements with broadcasters based on the aggregation of their rights with CMOs, in particular those who already rely on the collective management of rights. Consumers Impacts on access to online transmission services: Depending on the feasibility and effective implementation of the voluntary agreements signed between rightholders and broadcasters, Option 1 could result in consumers having access across borders to more content through broadcasters' online ancillary services (in particular broadcasters' own productions ). Access to premium content through simulcasting or catch-up services would most likely remain geo-blocked.



Social impacts

Option 1 would not affect the production of new cultural content. It may have a limited positive impact on access to cultural diversity, if more TV and radio programmes from other MS are made available online. Impacts on fundamental rights Option 1 would not have any impact on copyright as property right. It may have a slight positive impact on the freedom of information, to the extent that it could facilitate cross-border access to information. Option 2 – Application of country of origin to the clearing of rights for broadcasters' online services ancillary to their initial broadcast Impacts on stakeholders Broadcasters Impacts on transaction costs: This option would simplify the clearance of rights needed for cross-border online transmissions: broadcasters would only need to clear the rights for the country of origin while they would be able to offer their services in the entire EU. It would lead to important savings in transaction costs and would also enable broadcasters to clear rights more swiftly, which is in particular important for time-sensitive programming. Such savings in transaction costs would be beneficial to both large broadcasters with large number of licensing contracts and to smaller broadcasters whose resources to carry out the administrative task associated with obtaining licences covering multiple territories are limited. However, Option 2 entails a limited risk of disaggregation of repertoire currently managed by CMOs (see below under 'impacts on rightholders'), which would have a negative effect on transaction costs (broadcasters would have to negotiate with individual rightholders instead of CMOs). Impacts on possibilities to offer services across borders: While this option would facilitate clearance of rights, the ultimate outcome in terms of offering programmes across borders would depend on the business decisions by broadcasters and rightholders. Option 2 does not entail any obligation on broadcasters to provide services across borders (broadcasters could still decide to restrict the provision of the service to a particular MS), but it would open new opportunities for them to do so, in particular as concerns content which does not rely on territorial exclusivity. This in particular covers original productions of broadcasters for which they clear underlying rights. Thanks to reduced transaction costs, broadcasters would be enabled to target new markets and enlarge their audiences. Such opportunities would in particular apply to broadcasters who transmit TV and radio programmes in languages which are widely understood in other MS. 37 % of Europeans say that they regularly use foreign languages when watching films/television or listening to the radio. Also other broadcasters could expand their audiences, for example, by serving linguistic minorities in other MS or offering services to Europeans who live in other EU MS than their MS of origin. About 4 million EU citizens are members of linguistic minorities. 13.6 million EU citizens live in an EU MS other than their country of citizenship. These people may have an interest to keep up with the developments in their linguistic/home country as well as maintain cultural links with that country and therefore would constitute a potential audience for broadcasters. By enlarging their audience across borders broadcasters would be able to collect additional revenues. As concerns premium AV content, it is not expected that Option 2 would change its cross-border distribution by broadcasters in a short or medium term. Rightholders and broadcasters are likely to continue relying on territorially based exploitation of this content (see below). Also, broadcasters may continue to geo-block premium AV content across borders. However, such agreements between rightholders and broadcasters would be subject to the application of EU and national law. Impacts on licensing costs: Licence fees are expected to be an important element in broadcasters' decisions to make their programmes available across borders and in rightholders' decisions to grant licences. If broadcaster's audience would grow due to cross-border transmission facilitated by the CoO rule, licence fees are expected to be adjusted (to reflect the larger audience). In accordance with this option licence fees should be set taking into account all aspects of the broadcast, including the actual audience, the potential audience and the language version. The feedback collected during the public consultation shows that setting licence fees for satellite transmissions under the CoO rule available across borders has not caused any substantial practical problems. Some respondents to the consultation pointed to difficulties with measuring the audience, a task which is significantly easier for online services. Other service providers Impacts on the competitive situation: Option 2 would not significantly affect the on-demand services market because it would not apply to broadcasters' on-demand services, which are not ancillary to the initial broadcast. For example, if a broadcaster creates a VoD library, it would need to acquire rights according to the same rules as VoD service providers. Therefore, on-demand service providers would continue competing on an equal footing with broadcasters offering such services. Yet, there may be a partial overlap between on-demand services (such as VoD) and broadcasters' online catch-up services, which in fact are on-demand services for a limited duration. However, catch-up services do not constitute a complete substitute to VoD services as they are limited in time and are linked to the initial broadcast transmitted according to a schedule. Moreover, rightholders would be able to address this issue by negotiating with broadcasters limitations to catch-up services. Other service providers than broadcasters, which transmit linear TV or radio-like channels only online (operators of webcasting services) would not benefit from Option 2. However neither would a broadcaster offering an online-only channel (webcast) and therefore such broadcasters would compete with such service providers on an equal basis. Rightholders Impacts on licensing models and revenues: The introduction of the country of origin would constitute a new constraint for rightholders when licensing their content to broadcasters for online transmissions. However, considering its scope of application (limited to online services by broadcasting organisations which are ancillary to the broadcast) and the fact that it does not restrict the contractual freedom of the parties, Option 2 is not expected to fundamentally disrupt the existing licensing models and the distribution of revenues between rightholders and broadcasters. Rightholders would remain free to determine whether granting a licence to broadcasters for online services such as simulcasting and catch-up services and could adapt the conditions of the licence in view of the application of the country of origin (e.g. for instance by defining the time in which the content may be available through catch-up services) as well as the licence fees. Furthermore, the introduction of the country of origin principle would on its own not affect the possibility for rightholders to agree with broadcasters on territorial limitations concerning the exploitation of their rights. The impacts would vary by type of content, depending on the existing licensing practices: Option 2 is not expected to impact the licensing of premium AV content (rightholders would be able to continue licensing their rights on a territorial basis, subject to the requirements of EU and national law). However, it could be beneficial to those AV rightholders whose productions attract smaller audiences and who do not rely on territorial exclusivity: the CoO rule would facilitate the possibility for broadcasters to make such content available across borders and could result in additional revenues for rightholders. Option 2 is likely to have a concrete effect on how rights are licensed by rightholders who do not rely on a geographic distribution of their content, such as music and visual arts. This option may have a positive impact on their revenues thanks to a larger audience facilitated by the CoO rule. Rightholders are likely to adapt the licensing mechanisms to ensure that the revenues match the exploitation of their content (if this leads to a measureable increase in audience/revenues of that broadcaster). However, where the tariffs are already calculated on the basis of usage or the volume of audience, for example a percentage of broadcaster's revenues, no change to the contractual arrangements may be necessary. Moreover, in contrast with the "traditional" broadcasting, online distribution can offer accurate measurement of actual usage. As regards the rights managed by CMOs, there is a risk that rightholders would like to exercise more control over the licensing of rights under the CoO rule and would decide to withdraw rights from CMOs. This could cause disaggregation of repertoires currently managed by CMOs. However, this risk is limited under Option 2, as the online services covered only concern ancillary services to the initial broadcast. Furthermore, the feedback received during the public consultation have not identified any concrete substantial risk that broadcasters would relocate their place of establishment due to the reasons linked to licensing of copyright and related rights. This is mainly due to the fact that broadcasters are generally established in the country where their main audience is located and rely on infrastructures which cannot be easily relocated. Therefore, this option would not create any substantial risks that the revenues of rightholders would suffer due to "establishment shopping" by broadcasters.

Consumers Impacts on access to online transmission services: Option 2 is expected to result in consumers having access to more broadcasters' programmes across borders, especially to content which is distributed without territorial exclusivity. However, as this option would not oblige broadcasters to transmit TV and radio programmes across borders, the availability of their programmes to consumers would depend on a number of factors including agreements between broadcasters and rightholders (subject to applicable laws) and broadcasters' commercial decisions. As concerns premium AV content, restrictions to cross-border access may continue to apply, as explained above. Impacts on consumer prices: The impact on prices would depend on broadcasters' business models and on their decision to make their online transmissions accessible on a cross-border basis for free (or on ad-financed basis) or for payment. The increased cross-border availability of broadcasters' online services could have an impact on consumers' decisions related to their consumption of TV programmes, e.g. on whether to take a package service (retransmission services) or not. As consumers would have more choice in terms of available programmes across borders, they may better structure their consumption depending on their needs. Social impacts Benefits may be expected in terms of enhanced access to information and cultural content, in particular news, current events and cultural programmes. As a result, consumers would be able to better satisfy their diversified interests for programmes originating from other MS, including cultural, educational (e.g. learning languages) and entertainment. This is in particular relevant for non-fiction content, which is less available to consumers through means other than broadcasters' programmes. Impacts on fundamental rights By establishing the licensing regime applicable to certain types of cross-border online transmissions, Option 2 would have a slightly negative impact on copyright as property right, limited by the targeted scope of the proposed intervention (broadcasters' online ancillary services). It would have a positive impact on the freedom of information, to the extent that this option would facilitate access to information.



Option 3 – Application of country of origin to the clearing of rights for the services covered by Option 2 and for TV and radio-like linear online transmissions (and services ancillary to such transmissions) The core difference between Options 2 and 3 is that Option 3 also covers online linear TV and radio-like transmissions (webcasting services) and online services ancillary to webcasting. The impacts discussed below are linked to these additional services. One general challenge in assessing impacts of this option is the fact that webcasting market (in the sense of online-only, linear TV or radio-like services) is at a development stage and not yet fully formed. As opposed to settled rules pertaining to broadcasting organisations, the acquis and national regulatory frameworks regarding webcasting services are only developing, including the very definition of these services. Impacts on stakeholders Broadcasters The impacts of Option 3 on broadcasters could in principle be comparable to the ones described under Option 2. In addition, broadcasters would be able to rely on the CoO rule for their webcasts. However, the higher risk of content disaggregation identified under Option 3 (see 'impacts on rightholders' below) is likely to have a negative impact on transaction costs (even if licensing would be required only for one territory, the number of individual transactions may increase) and undermine the effectiveness of Option 3 in terms of facilitation of licensing. Webcasters Option 3 would align webcasters' licensing regime to that of broadcasters. Webcasters could in principle save transaction costs for their online transmissions and have better possibilities to offer their services across borders in the same way as in the case of broadcasters described under Option 2. However, they may also be negatively affected by the risk of disaggregation of repertoire brought about by this option (see 'impacts on rightholders' below). Other service providers Impacts on the competitive situation: Option 3 could substantially impact the competitive situation between service providers offering on-demand services (VoD, music on demand, which would not be covered under this option) and service providers offering webcasting services. Increasingly, webcasting services can directly compete with on-demand services. Especially over time, the boundary between on-demand services and online linear transmissions may be even more blurred. Services offered to consumers by new entrants have evolved: service providers such as Spotify and Deezer do not only offer on-demand services on the basis of catalogues but also online radio-like services, offering to consumers special programming (e.g. 'artist radio' or 'channels') which are often partly interactive (e.g. the subscriber may influence the transmission by indicating his or her preferences and dislikes). Similar services are being developed by platforms such as YouTube. With these new models emerging, it becomes more difficult to distinguish what constitutes an online linear transmission and an on-demand service. Therefore, Option 3 could create a grey area, where it would not be clear whether certain online services would be covered by the legal intervention or not. As a result, it would not provide to the market players the necessary legal certainty nor would it ensure an even competitive situation. Furthermore, online service providers can relocate their services more easily than traditional broadcasters and therefore they can gain a competitive advantage over broadcasters by relocating their establishment to a jurisdiction with lower copyright fees. Rightholders Impacts on licensing models and revenues: Under Option 3, the application of the CoO rule to webcasters could lead to new forms of content exploitation (e.g. similar to near on-demand services) which would be fundamentally different from broadcasters' online ancillary services. For example, it is possible to imagine linear streaming services providing access to a limited range of content (one or several films, one or several recordings) in a near on-demand manner over certain period of time - such services would be competing with on-demand services (where the latter would not be able to rely on the CoO rule).

Option 3 would generate market uncertainty for rightholders and significantly increase the risk of content disaggregation of rights currently held by CMOs. As mentioned above, it is easy for online operators to relocate their establishment in the EU, for instance in order to lower fees paid to rightholders or for reasons not related to copyright (e.g. taxes or the regulatory regime). The risk of "establishment shopping" would in particular apply when rights are managed by CMOs (especially music). As rightholders cannot directly control the tariffs fixed by CMOs for the licensing of rights, there is a risk that service providers, who heavily rely on music content, would establish in territories with lower tariffs. Thus it could encourage "race to the bottom" in terms of copyright fees. This would be detrimental to rightholders and could trigger withdrawal of their rights from local CMOs in order to protect their revenues. Also, as the application of the CoO principle to a market which is not yet fully formed and where boundaries with on-demand (such as VoD) services are not clearly delineated would be likely to drive rightholders to withdraw rights from CMOs in order to exercise more control over the licensing. As a result, this could lead to disaggregation of repertoires managed by CMOs, contrary to the objective of the CRM Directive. Consumers Impacts on access to online transmission services: Impacts on consumers would depend on the effects that this option would have in the effective facilitation of licensing. In addition to the positive impacts mentioned under Option 2, consumers could benefit from cross-border access to webcasting services, notably with regard to content distributed without territorial exclusivity. However, due to a risk of negative impact on broadcasters' transaction costs explained above, there is a risk that the impact on consumers may be negative. Impacts on consumer prices: would be similar to the impacts described under Option 2, as long as this option leads to more availability of cross-border services. Social impacts The risks associated with Option 3 may result in this option, as explained above, having a neutral or even negative impact on the distribution of and access to cultural content. Impacts on fundamental rights Because it would impose a licensing regime for cross-border transmissions to a wider range of services (compared to Option 2), Option 3 would negatively affect copyright as property right. Its impact on the freedom of information would depend on the extent to which this option would facilitate access to information. 3.2.2.4. How do the options compare? Option Effectiveness Efficiency Impact on stakeholders Social impacts and fundamental rights Baseline (0) Limited availability of TV and radio programmes across borders would persist (0) No direct costs associated with the baseline option (0) Impacts on stakeholders would depend on developments in the licensing market (0) No direct impact on cultural diversity (0) No direct impact on fundamental rights Option 1 – Voluntary agreements to facilitate the clearing of rights for broadcasters' online services ancillary to their broadcasts (0/+) Would enhance access to broadcasters online transmissions across borders to a limited extent (0/-) Possible one-off costs linked to negotiation of voluntary agreements but expected to be limited (0/+) Limited reduction of transaction costs for broadcasters due to the possibilities of aggregation of rights; better opportunities to offer their online services across borders (0) Neutral impact on other service providers (0/+) Impacts on revenues of rightholders expected to be neutral or adjusted according to the usage (0/+) Limited improvement to cross-border availability of content for consumers (0/+) Limited positive impact on cultural diversity (0) Neutral impact on the right of property (0/+) Limited positive impact on the freedom to information Option 2 – Application of country of origin to the clearing of rights for broadcasters' online services ancillary to their initial broadcast (+) Would enhance access to broadcasters online transmissions across borders (0/-) Possible one-off costs linked to renegotiation of contracts (+) Reduced transaction costs for broadcasters due to simplified clearance of rights; wider opportunities to offer their online services across borders (0/-) Neutral or marginal negative impact on other service providers (0/+) Impacts on revenues of rightholders expected to be neutral or adjusted according to the usage (+) Improved cross-border availability of content for consumers (+) Positive impact on access to information and cultural content (-/0) Limited negative impact on the right of property (+) Positive impact on the freedom of information Option 3 – Application of country of origin to the clearing of rights for the services covered by Option 2 and for TV and radio-like linear online transmissions (and services ancillary to such transmissions) (-) Market uncertainty and risk of disaggregation of repertoire may hamper the effectiveness of the Option (-) Possible high compliance costs linked to the risk of disaggregation of repertoire (+/-) Simplified clearance of rights applying to webcasts but risk of negative impact on transaction costs (-) Legal uncertainty on the application of the CoO rule to certain online services (-) Impacts on protection of rightholders interests expected to be negative due to the risks of "establishment shopping" (0/-) Risk of no effect (or negative effect) on cross-border availability of content for consumers (0/-) Risk of negative impact on access to cultural content (-) Negative impact on the right of property (0/-) Risk of negative impact on the freedom of information Option 2 is the preferred option, as it facilitates cross-border transmission of broadcasters' TV and radio programmes online, while preserving a balanced landscape taking into account the interests of rightholders. The baseline option would not allow reaching the objectives identified in this IA. Option 1 could enhance online and cross-border access to some of the broadcasters' programmes but its outcome would be more uncertain than the one of Option 2. While Option 3 seems more 'technologically neutral' than Option 2, it is likely to create legal uncertainty as it would be very difficult to draw the boundary between services covered by the intervention and not (i.e. on-demand services), in particular in a future-proof manner. It also entails risks of establishment shopping and may lead to a fragmentation of rights (notably those managed by CMOs). Option 2 will not impose any administrative burden on MS; it will require the application in the MS copyright system of specific rules for the licensing of rights for the services covered by this option. 3.2.3.Digital retransmissions of TV and radio programmes 3.2.3.1. What is the problem and why is it a problem? Problem: Providers of retransmission services face practical difficulties with the acquisition of rights for retransmission of TV and radio channels from other Member States by means other than cable Description of the problem: Nowadays TV and radio channels reach viewers and listeners through several types of retransmission service providers: cable TV/radio providers, satellite TV/radio (package) providers, IPTV (TV/radio over closed circuit IP-based networks) providers, digital terrestrial TV (DTT) providers and also the emerging over-the-top (OTT) TV/radio service providers. The core business activity of retransmission service providers is to aggregate TV and radio channels into packages (basic, premium, thematic, etc.) and to provide them to consumers simultaneously to their initial transmission, unaltered and unabridged, typically against payment.

Retransmission of TV and radio channels has proved to be a highly successful means to enable Europeans to access broadcasts from other MS: e.g. 177 "foreign" TV channels are available to cable subscribers in DE, 150 in FR, 158 in NL, 143 in PT, 163 in DK, 159 in PL, 168 in IE and 232 in HU. IPTV and OTT have been developing at a fast pace recently, which is explained by several technological and business factors: (i) IPTV and OTT have superior retransmission capacity; (ii) they are more attractive to consumers due to built-in interactivity of services and can be enjoyed (in the case of OTT) without the need for a dedicated hardware (such as a set-top-box and/or a satellite antenna); (iii) they are well promoted by numerous operators and major Internet platforms. When distributing TV and radio channels and programmes running on them, retransmission service providers routinely engage in a copyright-relevant act of communication to the public. The Satellite and Cable Directive provides for a system of mandatory collective management for retransmissions by cable of TV and radio broadcasts from another MS. This means that the right of cable retransmission with regard to TV / radio broadcasts from other MS cannot be exercised by rightholders individually but may only be exercised by a collective CMO. The only exception is made for the rights exercised by broadcasting organisations in respect of their own transmissions. The rationale behind this system is to ensure that cable operators are in a position to acquire all rights necessary for retransmission of TV and radio channels and that there are no black-outs in the retransmitted channels or programmes. At the time of adoption of the Directive it was considered that individual licensing was impractical in the case of retransmission, while voluntary collective management would not guarantee the absence of black-outs. The system provided for in the Satellite and Cable Directive is limited to retransmissions by cable and therefore does not extend to retransmissions by other means such as IPTV or OTT. This means that, depending on the MS (see below), providers of retransmission services by means other than cable cannot benefit from the system facilitating the clearance of relevant rights. Such providers therefore face a heavy rights clearing burden in order to be able to provide their services. Drivers: [Complex clearance of rights] Taking into account that each channel delivers numerous programmes composed of a multitude of copyright-protected works, that a typical retransmission service provider offers multiple channels, that the retransmission service provider has no control over the use of works in particular channels and no time to obtain licences for those works, the potential copyright clearing burden for retransmission service providers is important. Example: Belgian IPTV provider Proximus offers around 100 TV channels in its basic package, among them a channel of ZDF, German broadcaster. ZDF handles approximately 70,000 contracts with rightholders each year. Since ZDF has 9 generalist and thematic channels in total, each channel can be said to represent (approximately) the "copyright clearing burden" of 7,700 contracts. Extrapolating this "copyright clearing burden" to 100 TV channels offered by Proximus and considering that 15 of these channels are retransmitted in both standard and high-definition quality, the potential copyright clearing burden for Proximus can be estimated at approximately 650,000 contracts per year ((100-15)x7,700). In other words, providers of retransmission services offered on satellite, IPTV, mobile, DTT