COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS concerning a proposal for a programme in support of the audiovisual industry (MEDIA Plus - 2001-2005)

(presented by the Commission)

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS concerning a proposal for a programme in support of the audiovisual industry (MEDIA Plus - 2001-2005)

1. Introduction

The development of digital technologies amounts to a revolution which will lead not only to a radical change in the economics of the audiovisual sector, but also to new methods of creation involving new players and new contents and services.

Against this background of the proliferation of methods of distribution, all those involved are agreed that the production of content, and in particular audiovisual content, will be a major value-added sector in the 21st century capable of strengthening economic growth and cultural diversity in the European Union [1].

[1] 1999 Telecoms Review (Commission Communication on the Review of the Regulatory Framework for Electronic Communications Services: Infrastructure, Transmission and Access Services), COM(1999) 539 final.

For producers and distributors, the advent of the digital age offers new opportunities with the diversification of direct and derived modes of exploiting works. It also presents challenges because of the reduction and fragmentation of the returns from each distribution, making it essential to develop financing and marketing strategies at international level.

In this framework, it is essential for the authorities - including the European authorities - to back these initiatives with specific, complementary financial support measures aimed at strengthening the presence and share of European content producers.

The Commission's proposal for a MEDIA Plus programme is a product of this approach. Faced with a new environment marked by the de facto globalisation of the methods of exploitation, the European audiovisual content industry, because of its fragmentation, is not yet fully able to stand up to the growing world-wide competition. The Commission's proposals are intended to establish optimum conditions based on a coherent strategy and clear objectives, with a view to overcoming these difficulties and allowing European operators to position themselves as best possible in these new markets while exploiting European cultural diversity.

2. A strategic sector: the audiovisual content industry

A strong potential for growth and a source of highly qualified jobs

The industries of the information society, including the audiovisual content industry, have become one of the dynamic sectors of the European Union's economy. The audiovisual industry employed 950 000 persons in the European Union in 1995, and 1 030 000 in 1997 [2]. Income from this market is expected to grow by 70% by 2005, and that could be reflected in the creation of more than 300 000 highly qualified jobs during that period [3].

[2] Job opportunities in the Information Society: Exploiting the potential of the information revolution, COM(1998) 590 final.

[3] Study produced for the Commission by Norcontel Ltd, Economic Implications of New Communications Technologies on the Audiovisual Markets, final report, 15 April 1997.

This growth will be due, in particular, to the development of bouquets of digital channels offering the consumer a range of diversified products. Even now, the number of television channels available in Europe has increased sixfold between 1990 and 1998, from 104 to 659. It is estimated that more than 1000 channels will be broadcast across Europe in 2000 [4].

[4] Screen Digest, May 1999.

The introduction of the first search engine for the World Wide Web in 1994 marked the start of the Internet as a mass medium. However, no-one could at the time could have foreseen the explosive growth of this means of disseminating information, which now reaches 180 million households throughout the world, of which 43 million are in Europe. Current developments in technology hint at a wide range of possible applications: creation of new on-line services for interactive television, video-on-demand (VOD), and electronic dissemination in cinemas. At this stage, however, it is impossible not only to forecast when these technologies will be in a position to become established on the market, but also to assess the real impact of these changes on the habits and choices of consumers.

An analysis of the market and forward studies nevertheless indicate that these new methods of distribution represent a real extension of the audiovisual markets, and not just a substitution phenomenon.

Existing methods of dissemination, such as cinema or video, are showing growth or even a major upswing, despite the proliferation of competing services (pay-TV, near-video-on-demand). For instance, with 814 million seats sold in 1998, cinemas in Europe have returned to a level comparable to that of the early 1980s, before the advent of private TV stations. The number of cinema films produced in Europe, as well as the number of films distributed, is also increasing. At the same time, the video market - and sales in particular - is continuing to grow despite the increased competition from television channels, including pay-channels.

A changing economy

The development of digital dissemination techniques (bouquets, Internet, DVD) is raising hopes because of the considerable increase in demand for content. This growth is reflected in a diversification of the modes of exploitation, an increase in the marketing life of productions, the emergence of new derived products and a globalisation of the market.

It is also raising some concerns because of the fragmentation of the audience for the new channels and the new audiovisual services. For instance, the number of television channels available in Europe tripled between 1995 and 1998, while the average time spent by Europeans in front of the TV set was 205 minutes per day in 1998 [5]. This fragmentation is reflected in a reduced financial capacity on the part of the distributors and by a longer exploitation cycle for works. As an example, a television production which could in the past pay for itself in one or two national broadcasts will now require a large number of broadcasts over a long period of time in order to amortise its costs.

[5] IP Study (CLT-UFA), 1998.

One of the expected effects of the proliferation of means of electronic dissemination is the disappearance of the bottlenecks caused, in particular, by the investment costs required for the physical distribution of the products (printing, storage and transport of copies of cinema films or video cassettes, for example), and this could promote the market access of a wider range of works. However, against a background of increased competition to capture the attention of the final consumer, the necessary investment will probably be devoted increasingly to advertising and marketing, thereby raising new barriers to entering the market.

As things stand at present, there is also a growing concentration of resources on certain types of programme (e.g. sport repeats), leaving fewer resources available for the production and acquisition of creative content (documentaries, films and features, animated films).

In this context, the key to market access for producers and holders of European content will lie more and more in defining marketing strategies developed at international level for the entire range of means of distribution.

European content industry ill-prepared

Confronted with this new digital economy, the European content industry appears inadequately prepared and still suffers from structural weaknesses:

- On top of the fragmentation of individual revenues as a result of the increasing number of distribution channels there is also a fragmentation of the national or regional markets, weakening the transnational movement of programmes within the European area.

- This fragmentation leads to a vicious circle of under-investment right from the conception of audiovisual works, and then at the production and distribution stage, resulting in low profitability of the works and hence a reduced investment capacity.

- Finally, this fragmentation is reflected in an under-capitalisation of undertakings that jeopardises their industrial development strategy at international level, particularly in terms of building up catalogues of rights which are sufficiently attractive to find different windows of exploitation in all types of medium.

The challenge: exploiting works at international level

In the context of developing digital distribution methods, taking account of the international dimension of the market is no longer an option for the producers and distributors of European content, but a vital necessity.

In particular, mastering the diverse modes of distribution at international level is the cornerstone of any strategy for developing the European content industry.

3. A new approach: audiovisual support policy in the digital age.

The growing economic importance of audiovisual content calls for the development of a European industry which is competitive and able to benefit from the strong growth in demand for content.

Since 1997, the Commission has been engaged in a detailed study of its audiovisual policy, in particular as regards the current and future implications of the advent of the digital age. This process was based above all on the wide-ranging consultation of professional circles, both at the conferences held in Birmingham (April 1998) and Helsinki (September 1999) and in the public consultations held in 1998 on the Green Paper on the convergence of the telecommunications, media and information technology [6].

[6] COM(97) 623 final and COM (1999) 108 final; the conclusions of the Birmingham and Helsinki conferences are available at the following web-sites: http://europa.eu.int/eac and http://presidency.finland.fi

These consultations, and the remarks and contributions received in response to the report from the High-Level Group on Audiovisual Policy [7], have produced a new approach to support policy at European level based on the following principles:

[7] The Digital Age: European Audiovisual Policy, report of the High-Level Group on Audiovisual Policy, Luxembourg, 1998.

- The support mechanisms set up at European level must take account of national diversity by being complementary to national and regional policies and by bringing the added value of the European dimension.

- Community aid must therefore concentrate on attaining industrial and structural objectives, while nevertheless bearing in mind the specific needs of countries and regions with a low audiovisual production capacity and/or small geographical or language areas.

- The European Union must give priority to establishing automatic mechanisms or support mechanisms for companies based on market performance with a view to generating structural effects in the sector.

- The new opportunities for exploitation opened up by digital technology provide new scope for both creation and distribution which must be taken into account. It is, however, difficult at this stage to assess the real consequences of these developments in the medium and long term. The approach adopted by the support systems in order to strengthen European operators must be pragmatic, in synch with the audiovisual market and reflect the changes in the sector (technological neutrality). To this end, it is necessary:

- to set up and develop an information system for monitoring developments in the market in response to technological developments (pilot projects),

- to make regular assessments and make the necessary adjustments to the support mechanisms,

- to set up an information system for exchanging experience with Member States with a view to achieving synergy.

Given this new environment, the results of the evaluation of the MEDIA II programme and of consultations undertaken by the Commission, an increase in the programme's resources appears to be necessary. This increase is, in particular, justified by:

- a greater consideration of the specific needs of the industries in countries with lower audiovisual capacity and/or restricted geographic and linguistic area;

- the increased use of automatic support mechanisms based on market performance;

- the emergence of new needs and new projects linked to the development of digital technologies;

- the predominance which must be given to the transnational circulation of European audiovisual works, within and outside the European Union.

4. Principles of intervention under the MEDIA Plus programme

As with MEDIA II, the measures planned under the MEDIA Plus programme concern two different fields of action: education and vocational training (Article 150 of the Treaty), and industry (Article 157 of the Treaty) [8]. The two proposals for Council Decisions presented in the Annex to this Communication reflect the new approach set out above and take into account the following elements:

[8] The MEDIA II programme was also based on two Council Decisions: in the field of training (Article 127 of the Treaty), the programme was implemented by Council Decision 95/564/EC of 22 December 1995, OJ L 321, 30.12.1995, p. 33; in the field of development and distribution (Article 130 of the Treaty), the programme was implemented by Council Decision 95/563/EC of 10 July 1995, OJ L 321, 30.12.1995, p. 25.

- the results and the mid-term assessment of the MEDIA II programme [9] highlighted the effectiveness of a number of mechanisms and the results obtained by the MEDIA II programme, while proposing measures to adapt the objectives and support instruments to the new challenges of the digital age; this assessment also vindicated the choice of the transnational movement of works as the priority for the programme, as well as the concentration of aid on three strategic sectors (vocational training, project development and production, distribution and promotion companies).

[9] Commission report on the results obtained under the MEDIA II programme (1996-2000) from 1.1.1996 - 30.6.1999, COM(1999) 91 final.

- the complementarity and coherence with the other Community measures following a common strategy, such as the education and training programmes, the support programmes for SMEs and information society technologies. The review of existing financing instruments to stimulate early stage financing in all parts of the Union as set out in President Prodi's eEurope initiative launched on 8 of December 1999, should offer new possibilities for start-ups developing and producing high-quality content using new technologies. A close link should be established with the relevant actions of the User-friendly information society programme under the 5th Framework Programme for Research and Technological Development. The relevant key actions of the programme develop technologies, test-beds, trials and services, which could be potential objects for support by MEDIA Plus in the market phase. Coherence is also needed with the forthcoming proposals for the follow-up of the INFO2000 and MLIS programmes.

- the desired complementarity with the policies implemented at national and regional level. In particular, Community action must concentrate on those stages of the audiovisual chain in which its interventions produce the greatest added value: upstream and downstream of the production process.

- The open-ended nature of the programme: following on from the cooperation already embarked upon with the countries of the EEA and Cyprus, the proposals clearly state the readiness to extend the programme to include Malta, the associated countries of Central and Eastern Europe, Turkey as well as the countries party to the Council of Europe convention on Transfrontier Television, subject to their national legislation being substantially aligned with the acquis communautaire, and in particular the provisions of the "Television without frontiers" Directive [10]. The existence of an adequate legal framework in terms of copyright will also be taken into consideration, with specific reference to the relevant Community directives [11]. Developing and strengthening the audiovisual content industry will provide positive and specific support for the enlargement process. Under certain conditions, the programme will also be open to other third countries in Europe. Finally, the two proposals offer the possibility of cooperation with third countries which share the European Union's objectives with regard to policy on audiovisual content.

[10] Directive 89/552/EEC, as amended by Directive 97/36/EC.

[11] Council Directive 93/98/EEC of 29 October 1993 harmonizing the term of protection of copyright and certain related rights; Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission; Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property.

- With a view to the regular updating of the support measures to take account of developments on the market for audiovisual content, the proposals provide for the implementation of pilot projects which, on the basis of conclusive results, may be used for the immediate updating of the main support mechanisms under the programme.

4.1 Training (legal basis: Article 150 of the Treaty)

Alongside the measures implemented by the Member States and under other Community programmes (such as Socrates and Leonardo), the measures proposed under the MEDIA Training programme are aimed at the following fields:

- application of the new technologies to the production and distribution of audiovisual programmes with a high artistic value and a strong commercial potential;

- exploitation of the development potential of the European and international market;

- economic and commercial management, including the legal aspects, financing of production, marketing and distribution;

- writing techniques, in particular for interactive programs intended for the new means of electronic dissemination.

In addition, the programme will encourage:

- networking, cooperation and the exchange of know-how between the partners concerned by the training activities (training establishments, professional associations, undertakings);

- training the trainers.

In these various fields, particular attention will be paid to training projects which use the new technologies as training tools or vectors, as well as to projects in countries with a low audiovisual capability or with a limited geographical/linguistic area.

The intensive training measures must ensure that a majority of the participants are of a nationality other than that of the country in which the training is taking place. They will have to comply with the rules established in the « framework for support to training » adopted by the Commission in 1998 [12].

[12] OJ C 343, 11.11.1998, pp. 10 to 16.

4.2 Development (legal basis: Article 157 of the Treaty)

The production of high-quality audiovisual programmes capable of generating substantial income on a growing number of media calls for considerable investment.

This investment must start at the stage of preparing the projects through adequate development to determine the feasibility of the project, the expected profitability of the work in the light of the cost of its production, and its commercial potential.

This process, which is widespread in other sectors of industry, remains too restricted in the case of audiovisual works and too often leads to the production of projects of limited economic viability.

In this sector, and while respecting the necessary complementarity between Community policy and national policies, the measures will aim to:

- encourage the investment of resources in the development of projects (writing and finalisation of the script, establishment of the financing plan, etc.), while insisting that, right from the development stage, there must be an international marketing strategy aimed at exploiting the work on a large number of media (direct and derived exploitation);

- encourage the most dynamic independent producers to implement genuine commercial development strategies based on packages of products.

The action lines implemented will be targeted at companies producing fiction, documentaries, animated films and interactive products (on-line, off-line and hybrid).

4.3 Distribution and marketing (legal basis: Article 157 of the Treaty)

A command of distribution techniques and networks allowing the investments to be amortised and generate profits is essential in order to ensure that European audiovisual content secures a strong position on the market. In particular, this involves the compilation and - especially - the exploitation of catalogues of programme works, such as cinema films, fiction, documentaries and animated works, which can be used and reused in many different formats.

Support for the distribution and marketing is thus the main component of the proposal for a MEDIA Plus programme.

The aim of the Community's intervention will thus be to improve the transnational movement of cinema and TV works and to stimulate European undertakings to use the new forms of exploiting programmes (on-line dissemination, programme digitisation, DVD).

The measures proposed must make it possible to:

- improve the movement and profitability of European works on the European and world market for all the media available to consumers;

- strengthen the competitiveness of distribution companies (cinema, video, TV) and the compilation and exploitation of catalogues of European copyrights;

- develop networking and joint strategies at European level by developing the links between distribution and production;

- increase the production of works intended for the European market (distribution-led production), while respecting linguistic and cultural diversity;

- develop the public's knowledge of, and taste for, works from other European countries, thereby strengthening European cultural identity in all its diversity (multilingualism);

- use pilot projects to encourage a permanent link between the programme and technological change, in particular by promoting the programming of European audiovisual works on digital special-interest channels.

4.4 Promotion and market access, festivals (legal basis: Article 157 of the Treaty)

The specific objectives of the support for promotion are generally similar to that for distribution: however, mechanisms additional to those introduced for distribution are aimed at improving access to European and international markets for European works and programmes.

These mechanisms must make it possible to:

- encourage the presence of European professional and audiovisual programmes on both traditional markets and the emerging European and international markets;

- encourage the participation of European professionals and audiovisual programmes in any measure intended to promote the movement, exchange and sale of European programmes inside and outside Europe;

- encourage the programming of European audiovisual works in European and international events and/or festivals;

- encourage the Europe-wide networking of the national bodies for the promotion of exports of audiovisual programmes;

- support the transnational dissemination of European films at festivals organised inside and outside the European Union;

- strengthen networking between festivals by supporting cooperation projects for the promotion of European films.

4.5 The actions implemented in development, distribution and promotion will have to comply with the Treaty provisions concerning competition, namely the provisions regarding State Aid.

5. The instruments used

To implement the measures under the MEDIA Plus programme, and taking account of the provisions of the Treaty, two instruments are proposed - one for training (Article 150 of the Treaty) and the other for development, distribution and promotion (Article 157 of the Treaty).

The aim of these two instruments is to establish a policy which is in sync with the market and strongly oriented towards optimising the advantages which the European audiovisual content industry can derive for technological developments. To this end, the arrangements for the financial support will be regularly assessed and adjusted.

On the basis of these assessments, the Commission may propose measures additional to these two instruments.

EXPLANATORY MEMORANDUM

Training programme for professionals in the audiovisual content industry

1. Introduction

An opportunity for jobs

The proliferation and diversification of the means of production and distribution are leading to rapid growth in the range of services available and, hence, to an increase in the demand for new audiovisual programmes.

However, if this rapid growth is to be translated into jobs, it needs a dynamic environment and skilled labour for whom vocational training plays a decisive role.

An improvement in the training available for European professionals in the audiovisual industry is thus a sine qua non for strengthening the competitiveness of this sector, in particular in the field in which the new digital technologies are applied.

Industry-oriented training

Apart from the basic training, the rapid changes in the economic environment and the ongoing changes in the new audiovisual technologies call for continuous training which meets the needs of the market. To achieve this, it is essential for the industry itself to be fully associated from design to development of the training programmes, as well as in implementing them.

Reasons for Community action

It is for the public authorities to encourage and support vocational training with a view to medium- and long-term action. The European Council in Luxembourg (20-21 November 1997) stressed that continuous training can play a major role in the employment policies of the Member States.

The importance of training policy in the European Union is recognised by the Treaty (Article 150).

Initial training in the audiovisual industry is the subject of a number of initiatives in each Member State. Action at Community level, subsidiary to the efforts at national level, is justified because of:

- The need to encourage professionals to broaden their experience at European level. This need is all the greater in an environment in which digital technologies are increasingly eliminating national barriers;

- The need to ensure effective and lasting networking of the training centres and the undertakings interested in this type of training at European level.

2. The current situation

The Member States of the European Union have a large number of training schemes for cinema and the audiovisual industry which cover initial training.

These courses are as follows:

- higher-level vocational training establishments providing technical training (production, film directing, sound recording);

- universities and other institutions of higher education providing general training in the field of communication and the media (essentially theoretical).

In the field of continuous vocational training there are also, particularly since the establishment of the MEDIA programme in 1991, a number of centres for specific training in the content industry. However, there are often few bridges between these different centres which, because of their more direct links with the industry, could benefit from networking between Member States and between fields of training.

Levels of training

Initial: Europe has a large number of schools and centres for training in cinema and television. They provide high-quality initial training which frequently does not include a direct initiation into the economic and commercial aspects of the audiovisual market.

Continuous: Continuous training in the audiovisual sector was largely absent in Europe at the start of the 1990s. The MEDIA programme supported the creation of specific activities closely linked to the industry. Such measures are needed to allow professionals, authors, producers and distributors to improve their professional skills within an expanded market. This is all the more necessary in view of the globalisation of the new means of digital dissemination.

Types of training

There are still some gaps in the existing training which make the following measures necessary:

- strengthening training at European level for producers capable of managing a company in economic, financial and legal terms in a world-wide market;

- developing training in distributing, disseminating, promoting and marketing audiovisual content;

- continuing training in script-writing techniques which allow script-writers and producers to widen their potential audience while maintaining their own cultural identity;

- considerably strengthening vocational training at European level in the use of the new technologies for creation, production and distribution.

3. Main lines for action at European level

3.1 Objectives

European Union action must have the general aim of meeting the industry's needs and promoting its competitiveness by developing continuous training for professionals in the audiovisual industry.

This training must be tackled Europe-wide and concentrate on:

- economic, legal and financial management at European level, with a view to allowing European professionals who are already active on the market to benefit most from the global dimension of the market for audiovisual content and encourage them to develop audiovisual content and projects which meet the needs of the market;

- script-writing techniques (cinema, television and multimedia) targeted at a wider audiences, thus meeting the needs of the international market for audiovisual content;

- the use of the new technologies and their application to the production of audiovisual works intended for the European and international markets.

These three areas of training must also take advantage of the opportunities for distance learning and pedagogic innovation offered by the new on-line technologies.

The measures must aim to ensure that collaboration between the various partners concerned by the training (training establishments and centres, undertakings) is strengthened.

The measures must ensure the participation of partners from the professional sector.

When organising a training project, those benefiting from Community support must ensure that the majority of participants are of a nationality different from that of the country where the training is taking place.

The measures must take account of the structural objectives such as the development of SMEs or the development of potential in restricted geographical and linguistic areas.

The Commission will take steps to ensure that the measures proposed are consistent with other Community measures in the field of training, in particular under the Leonardo programme, and with the objectives of the European Structural Funds.

To a lesser extent, the Union must also give priority to developing a number of initial training activities, provided they are drawn up in close cooperation with the industry, show a real European dimension and added value, and cannot be funded from other existing Community programmes such as the Leonardo programme.

3.2 Priority measures:

Distance learning

Promoting the use of the new technologies in organising and imparting training with a view to catering for distance learning.

Distribution professions

Putting the emphasis on training in the distribution, promotion and marketing of European audiovisual works by taking advantage of the opportunities offered by the development of the new digital technologies.

Multimedia professions

Developing continuous training programmes on the use of digital technologies for the on-line and off-line creation and dissemination of audiovisual content. The professions involved are: script-writers, computer graphics experts, Internet programme developers and webmasters.

Networking of the bodies providing the training

If the measures proposed are to have a structural effect, it will be necessary to ensure cooperation and the transnational transfer of know-how between the different partners.

Promoting the importance of work experience

Organisation of work experience in other Member States in addition to the initial training.

Promoting the training of trainers

Organisation of workshops to train the trainers, so as to ensure the permanent recycling of trainers in the light of developments and the needs of the industry, as well as of the new digital technologies.