Proposal for a COUNCIL DECISION adopting a Multiannual Community programme to stimulate the development and use of European digital content on the global networks and to promote linguistic diversity in the Information Society

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. Introduction

Whereas technology has enabled the Internet revolution, services and products based on digital content are playing an increasingly important role in the emerging "new economy". The impact of digital services and products is enormous on the economy and society: it is increasingly becoming visible in many sectors of society ranging from education to retailing. This should be good news for Europe, with its huge content potential and its strong position in traditional content exploitation [1]. However, so far American firms have taken the lead in digital applications. Internet traffic currently originates disproportionately from the United States, where the large majority of web sites are currently based. Most web pages are in English and most of them are hosted in the United States. Of the 100 most visited web sites, 94 are located physically in the United States.

[1] The proposed programme aims at certain aspects of the digital content sector and not at the more traditional areas of content exploitation (e.g. print publishing). This proposal complements the one put forward covering the audiovisual sector (for the Commission's audiovisual policy see the document COM(1999) 657 final, 14.12.1999), MEDIAplus (COM(1999) 658 final).

The window of opportunity for the European content industries, brought about by the transformation of the Internet into a mass medium is still open. This was emphasised by the European Council in Lisbon in March 2000, that agreed the new strategic goal of the Union for the next decade: to become the most competitive and dynamic knowledge based economy. If Europe wants to become as competitive in the new knowledge driven economy as it is now in some of the more traditional segments (e.g. print publishing), it has to act. Markets are still in a developing stage. Within a few years, once market positions will have been established, catching up will be extremely costly, if not impossible. Action has to be taken now to tackle the market barriers that prevent European players to be on a level with their US competitors. Therefore, this document proposes EU action in three crucial areas:

- Stimulating the exploitation of public sector information;

- Enhancing linguistic and cultural customisation;

- Supporting market enablers.

The goal is to help create an environment favourable to business initiatives where European creativity, cultural diversity and technological strengths can be commercially exploited. The Lisbon European Council specifically underlined the importance of the content industries that "create added value by exploiting and networking European cultural diversity" [2]. The political challenge is to unleash the market potential of untapped resources and to turn perceived weaknesses into strengths.

[2] Lisbon European Council, Presidency Conclusions, Lisbon 23-24 March 2000.

The actions proposed in the annexed Council Decision link directly into the eEurope initiative that aims at accelerating the uptake of digital technologies across Europe and ensuring that all Europeans have the necessary skills to use them.

2. The background of the proposal

The proposed programme specifically aims at the development and use of certain categories of European digital content and at promoting linguistic diversity in the Information Society. The notion of digital content is independent of a specific medium or format, reflecting the process of technological convergence of computer, telecommunication and media industries. It can be delivered over a multitude of existing and new delivery channels, including fast growing and emerging services and platforms like mobile internet (e.g. WAP [3], GPRS [4], UMTS [5]).

[3] Wireless Application Protocol.

[4] General Packet Radio Service.

[5] Universal Mobile Telecommunications System.

The present proposal for a programme to stimulate the development of this fast growing and dynamic market segment rests on three main pillars: market studies like the CONDRINET study [6] that analysed the potential of content as a driver of e-commerce; a wide consultation with industry (1998-1999); and the experience of the INFO2000 [7] and MLIS [8] programmes. The interim evaluations of these programmes, carried out by panels of external experts, were positive and made clear recommendations for a follow on programme.

[6] Gemini Consulting, September 1998.

[7] INFO2000 (1996-1999), a programme aimed at stimulating the development and use of multimedia content - Council Decision 96/339/EC of 20 May 1996 (OJ L 129, 30.5.1996, p. 24).

[8] Multilingual Information Society Initiative (1996-1999) - Council Decision 96/664/EC of 21 November 1996 (OJ L 306, 28.11.1996, p. 40).

In addition, the specific proposals for each of the three main action lines of the programme have been shaped through the replies to the Green Paper on Public Sector Information in the Information Society (action line 1), and numerous interactions with representatives from the language industries (action line 2), contacts with business and in particular players in the financial markets (action line 3).

3. The importance of digital content for Europe

Why is digital content so important- What makes the industries that produce, package and distribute professional and consumer information, leisure products and services, worth an effort at European level- It is their impact on the economy and society that makes them crucial. They set the pace of the Information Society, building a bridge between new technologies and users.

3.1. The economic challenge

The size of the overall content sector is estimated [9] at EUR 412 billion, or 5% of the European GDP, ahead of both telecommunications (EUR 221 billion) and the hardware/software (EUR 189 billion) sectors. This translates into some four million Europeans employed in this sector. Content production has given rise to rapid job creation in recent years and can continue to do so. If obstacles to growth are removed, the digital media industries could grow at 20% per year over the next decade, more than twice the traditional creative industries [10]. And it is not just the sheer size of the content industries that makes them interesting, but the quality of the jobs involved. Content creation is labour intensive and requires high skill levels as well as the application of new mixes of skills.

[9] European Information Technology Observatory, 2000. Content data include Media Publishing, Marketing and Advertising sectors. Market size and employment data are confirmed by OECD reports.

[10] Digital Media Alliance, Recommendation for growth, 1998.

Most of the new jobs are created in small emerging companies, adding to the dynamism of the European market place and labour market. Smaller firms are often linked in networks servicing larger supply chains. These knowledge networks will attain an ever increasing importance in the transformation towards a knowledge economy.

Despite the impressive growth figures, additional jobs do not necessarily represent net employment gains. New jobs in the electronic media must be weighed against job reductions in the printing industry. For example, in the UK, jobs in the traditional publishing area have declined from 160,000 in 1990 to 132,000 in 1996 [11]. It is worrying that Europe appears to be stronger in more traditional industries, whereas it has a weaker position in the faster growing segments (Figure 1 [12]).

[11] Creative Industries Task Force, Mapping Document, UK, 1998.

[12] Information as a raw Material for Innovation, Bundesministerium für Bildung, Wissenschaft, Forschung und Technologie, 1998.

Inducing growth throughout the economy. Digital content also has a strong indirect impact on economic growth and employment.

- First, networked services are key to improving competitiveness of businesses in all other sectors. Cost reduction in information exchange both inside a firm and with customers gives the competitive edge in determining the efficiency and productivity of enterprises and administrations worldwide.

- Second, content in general is a key enabler of the Information Society and of economic activity on the global networks. It is an essential driver in the development of electronic commerce because on the networks quality content attracts potential buyers.

- Third, the digital content industries pull other components of the ICT industry along (e.g. networks, equipment and software applications) by creating additional demand for bandwidth and end-user equipment. Sales of hardware supporting Internet service operations (e-mail, web) have shown above average growth rates, in a market worth $13.6 billion in 1999.

3.2. The social impact

The social impact of the Internet revolution and the related need for content products and services is substantial. Some examples:

Skills. Multimedia training can result in more people learning faster, achieving higher levels of skills and retaining more knowledge than traditional instructor led training. It can effectively re-engineer the transfer of knowledge and skills that employees need to execute their jobs. Therefore it can make an important contribution to the employability goals of the European Union [13].

[13] European Council on employment, 20-21 November 1997, Luxembourg.

Culture. In recent years, the new media have proven to be particularly fit to promote Europe's cultural heritage and diversity, involving large groups of citizens in cultural issues. The Internet has the potential to strengthen the European cultural identity while at the same time reinforcing the expressions of Europe's cultural diversity. More European digital content is needed to counterbalance the market penetration of products and services with an American background. Bringing European cultural content to the Internet will reinforce Community actions in the cultural field [14].

[14] Culture 2000 Programme - Council Decision 2000/508/EC of 14 February 2000 (OJ L 63, 10.3.2000, p. 1).

Language diversity. The presence of content in different languages promotes citizens' equal access to the Information Society. It should not be necessary to master the English language to find interesting content on the Internet. In addition the presence of different languages on the World Wide Web helps preserving the linguistic diversity within the European Union. At the same time, the necessity of linguistic and cultural customisation opens export markets for further exploitation by the content industries.

Enlargement. For potential new Member States access to the tools and resources of the Information Society is essential to help develop their economic and social potential. Responsive content industries that provide products and services in local languages will facilitate the participation of the potential new Member States in the Information Society and can facilitate integration into the Union.

4. Highly turbulent markets

The digitisation of content and the explosion of Internet use are setting the pace of the fundamental transformation taking place in the content industries. Reputable players are being challenged and new alliances arise.

The result is a volatile market place, where the speed and size of the changes present a challenge to established players and allow new entrants to get a market share. Given the market barriers present in Europe, it is logical that American players are doing better in this dynamic segment, where a small competitive advantage can make the difference between success and failure.

4.1. Fast expansion of the digital content market

Just a few years ago platforms like CD-ROMs and the Internet were in a pioneering phase, now the market is rapidly expanding. Information is increasingly becoming digital, ready to be published, transmitted and exchanged on the global networks. The switch from analogue to digital broadcasting is gathering pace, and mobile multimedia is taking its first steps. However, in terms of content Europe lags behind the US. The number of European web sites is less than a third the number in the US. In addition, the most frequently visited Web sites by Europeans, are almost all American, the only exceptions being the sites of the Internet service providers.

The number of mobile terminals (GSM, WAP, GPRS, UMTS, etc.) is expected to exceed the number of personal computers within a few years. Most will be Internet enabled, creating additional demand of content to be tailored to these new device types. While Europe lags behind the US in terms of fixed high-bandwidth networks, it plays a lead role in wireless communications.

Demand is also growing fast. Next to a business to business market, a business to consumer market is developing steadily. Internet users in February 2000 are estimated at 275 million (Figure 2 [15], 136 million in the US and Canada and 72 million in Europe). The number of users in the EU has more than quadrupled between 1995 and 2000 and is still growing. In the US, where penetration levels are higher, growth is projected to be slightly more moderate. Nevertheless, in absolute figures, the gap with Europe may even increase. Moreover, in the US, unlike in most European countries, the Internet is increasingly influencing the daily life of many Americans. It is not just a matter of market penetration, but rather a matter of life permeation. The open challenge is to provide the conditions to turn Europe's traditional strengths into new digital services and to set in motion a virtuous cycle of Internet services penetration and customer demand. Localisation of the offer, ease of use, expansion of supply by facilitating access and exploitation of public sector information, a virtuous cycle of investment and growth, and creativity are key to unleashing the potential.

[15] NUA Internet Surveys, http://www.nua.ie.

4.2. Changing industrial structures

The industrial landscape surrounding digital content is expected to change drastically over the next few years. Different factors play a role:

The convergence of technologies [16]. As a result of convergence digital content is no longer restricted by a specific medium or format, but can be produced and distributed in different forms and through different channels. Competition is increasing between sectors that traditionally did not interfere with each other. Established content providers are being challenged from previously unrelated industries, like telecommunications, software companies, etc. While at present, the circuits and economies of production and distribution of different types of content (publishing, audiovisual, etc.) are still distinct, this may change in time.

[16] See: Towards an Information Society approach, Green Paper on the convergence of the telecommunications, media and information technology sectors, and the implications for regulation, COM(1997) 623, 3.12.1997. The analysis presented is backed up by the results of the extensive public consultation which followed the Green Paper, SEC(1998) 1284 final.

Mergers and acquisitions. Large media firms, TV, radio, publishing, music recording, and other companies are reshaping the content supply. Through mergers and acquisitions, they try to differentiate their offer and to push their offerings through different media platforms, combining the ownership of content and the control of the distribution channels (portals etc.).

Globalisation and localisation. Large firms will more and more operate at a global level, in an effort to turn their scale advantage into concrete market results. At the same time there are opportunities for small firms to find market niches and exploit a geographical location or a specialised product.

Targeted policy initiatives can ease the problems that result from the sector's structural transformation and the present market barriers. Their role is to catalyse the transformation and speed up the adaptation phase. The open political challenge is to ease the existing market barriers and to ensure that European players of all sizes are aware of the turbulent nature of the market and have the means to experiment on the converging platforms.

5. Barriers to development and opportunities for Europe

A number of barriers still act as powerful brakes to developments and opportunities for content producers in Europe. With the help of industry consultations three key problems have been identified as barriers to the take off of new business opportunities:

- under-utilisation of public sector information in Europe due to widely divergent rules and practices to access and commercially exploit it. The economic returns from marketable information would be accompanied by the societal effects of increased transparency and democracy in the access of information by the citizens;

- potential of cultural and linguistic customisation to reduce trading barriers between SMEs and their potential customers, facilitate the take-up of cross border commerce, export European cultural values and create a multilingual environment on the global networks;

- insufficient investment and market transparency in Europe. As a result a small percentage of the available risk capital is channelled towards content firms, especially Internet start-ups and SMEs. This in its turn slows down growth and employment creation.

At the same time a number of practical problems persist in relation to the trading of intellectual property rights on digital content. A well functioning rights trading system is essential for the creation of new digital content products that use content resources for which the copyright belongs to other players in the market.

These are primary obstacles or missed opportunities that prevent the economic and social benefits of the network economy being exploited in Europe. Other factors, such as, high telecom prices and uncertainty about Intellectual Property Rights in digital world are perceived as additional obstacles that can slow down the supply of content and take-up of new services. These are, however, already tackled by Commission initiatives of a legal nature, notably by the review of the regulatory framework of electronic communications [17] and the Draft Directive on Copyright in Information Society [18].

[17] Towards a new Framework for Electronic Communications Infrastructure and associated services - The 1999 Communications Review, COM(1999) 539 final, 10.11.1999, COM(2000) 239 final, 26.4.2000.

[18] COM(97) 628 final, 10.12.1997.

Telecoms tariffs. The prices of basic Telecommunication services are still a major barrier to the use of digital services since costs in the EU are still much higher than in the US. The liberalisation of the sector (1st of January 1998 [19]) and the resulting competition has started to bring prices down. However, until the transition to full competition is completed, telecom prices will continue to have a negative impact on the use of the global networks in Europe.

[19] The implementation of this package is closely monitored (e.g. Fifth report on the implementation of the telecommunication regulatory package of 11.11.1999).

Intellectual property rights. During a transition phase a stable legal framework becomes especially important. Still many legal uncertainties surround online content, partly due to historical differences in regulating the different sectors. The global dimension of the Internet and the convergence of technologies prevent the transposition of national or sectoral regimes on the networked activities, without the risk of badly hurting them. The draft directive covers issues related to copyright, including problems posed by the emerging digital world. It aims at ensuring an internal market in copyright with particular focus on new products and services and to achieve meaningful harmonisation whilst safeguarding a fair balance between all rights and interests involved.

5.1. Exploitation of public sector information

The difficulties European content firms encounter in accessing, using and exploiting public sector information constitute another main barrier to their growth potential. Extended commercial use of this information could substantially expand the supply side of the market, providing added value services for the consumers.

At the same time, much of the public sector information is commercially attractive and has the potential to be exploited in the market. New technologies facilitate the collection, storage, processing and retrieval of information. Not only do they allow governments to improve their information management, strengthening the relation with citizens and businesses, but they also allow to exploit data collections commercially, and to turn them into added value digital products and services.

In Europe this potential asset for the information industries is hardly used, missing an opportunity for economic growth and employment. Widely differing national rules and practices make the exploitation at EU level particularly difficult. There is no set of principles common to all the Member States and a wide variety exist in terms of price, delivery, format, copyright, metadata [20], etc. US content firms, on the contrary, can take advantage of the clear rules in this field that are conducive to exploitation, following the Freedom of Information Act. This means that European industry finds itself in a competitive disadvantage vis-à-vis its US competitors.

[20] Metadata are "data about data", designed to help to identify existing information and locate it.

Geographic information (GI) is an example of publicly held information with high potential. The market value of publicly held information in this area is estimated at EUR 10 billion in the 15 Member States [21], with employees in the tens of thousands. For this reason, GI is identified as a primary source of synergy between private and public institutions.

[21] Commission services extrapolation from French data, 1999.

In addition to these systemic difficulties, a number of practical issues make the exploitation of public sector information in Europe problematic. Language diversity is one. The need to translate and the absence of a common terminology puts an extra burden on the European content firms. Accessibility of content via mobile terminals in the coming years will require additional efforts.

In January 1999, the European Commission published a Green Paper on Public Sector Information in the Information Society [22] to open a debate on the lack of access to and exploitation of public sector information. The numerous replies to the Green Paper have stressed the importance of the topic and welcomed the Commission initiative. Different types of follow on actions were proposed in the replies. Amongst these, transnational public - private demonstration projects received broad support. These projects could make an important contribution to demonstrating how existing barriers can be overcome and making the publicly held - and publicly financed - information readily available to citizens and businesses.

[22] COM(1998) 585.

5.2. Linguistic and cultural customisation

Despite the single market and the introduction of the euro, no European firm has immediate access to a market of 370 million customers who speak the same language or share the same habits as consumers. Yet firms are driven by the Internet to outgrow their national market and start exporting. For this reason, linguistic and cultural diversity may be an issue of particular importance for digital content firms. The costs and difficulties due to linguistic differences slow down growth and may hamper the overall development of the European industries linked to digital content.

At present, still about 70% of all content on the Internet is in English. However, some estimates point at this proportion dropping below 50% in the years to come. From a quasi monolingual start (English) the global networks are slowly becoming characterised by the growth of a number of language areas that hardly communicate with each other.

Although linguistic diversity may constitute a hindrance for the European content industries, it could be turned into an opportunity. Localisation, defined as the adaptation of products to the linguistic and cultural needs and the consumers' preferences, can open new markets for SMEs, thus adding to their export potential. This type of customisation pays off and can be an essential part of a successful expansion strategy.

Linguistic and cultural customisation is not only essential for the content firms, but also for other industries that generate large volumes of digital information and do business over the Internet. A targeted localisation strategy can make the difference in future between global success or failure. Strategists see a clear and growing need for localisation as activities move towards electronic commerce.

The linguistic and cultural customisation of information and transactions is not just important from an economic point of view, a simple matter of customers preference, but has also important social implications. Language diversity on the Internet will increase the access to the tools of the Information Society for many European citizens, that, otherwise might have been excluded. Indeed, linguistic customisation of content products for non-English speaking customers may be an effective way to expand Internet use in Europe. The forthcoming enlargement of the Union also underlines the importance of localisation. Access to information services in their mother tongue will help the citizens of the new Member States during the process of their full integration within the Information Society and the EU.

The key question here is how to grasp the opportunities offered by linguistic customisation and to make sure that the content flows between language blocks. This implies the availability of services that can manage and deliver multilingual content. Efforts should be directed to ensure the widest adoption of tools scanning the whole horizon of information delivery, from full translation through summarisation to keyword abstracting. Commercial partnerships between the digital content and the language industries providing the necessary tools and services are essential. This should be complemented by the presence of a solid basic linguistic infrastructure (e.g. lexicons) networked and readily available that can facilitate the customisation work in all phases of the process, whether it be ex-post translation or multilingual authoring.

5.3. Lack of investment in digital content

Capital provision in Europe. The capital market in EU countries supporting risk bearing ventures and projects is developing at a sustained pace. In the last few years activity in Europe has started to accelerate, as reflected in the creation of exit mechanisms that allow venture capitalists to realise their investments like: EASDAQ, AIM, METIM, Nouveau Marché and Neuer Markt. Yet, there are still obstacles present in the market that are particularly evident in the field of digital content in relation to the Internet. The sector is characterised by many start ups and medium sized firms in need to expand beyond their national border. In the highly turbulent market situation, investors are reluctant to provide capital for medium term risk bearing projects and ventures. Traditional investors are faced with the lack of physical goods on which to secure the loans. Moreover the capital provided by the traditional institutions is often in the form of interest bearing loans, not ideal for Internet related investments that may need up to five years before becoming profitable.

In addition there are strong regional differences within Europe in the supply of capital. At the same time, established content companies having the means to finance new ventures from internal resources often prefer investing in safer, more traditional products with guaranteed returns.

This situation leads to a comparative disadvantage with the US, where digital content and Internet developments have been the prime targets of investors in the recent past. Venture capital availability to Internet entrepreneurs in the US is estimated to be around 3-4 times higher than in Europe [23].

[23] eEurope progress report, Lisbon 23 - 24 March 2000.

The public sector can play a role in improving this situation, by increasing the market transparency at a European level (bringing offer and demand together), by helping start-ups to present themselves to potential financiers via conferences and specialised fora. Internet start-ups active in digital content production, packaging and distribution will be the prime beneficiaries of these actions.

6. Priority areas for EU policy: A proposal for action

It is clear that the prime responsibility for developing, investing in, and exporting European Content rests with the digital content industries themselves. However, to tackle the barriers and exploit the opportunities presented in the previous section, the Commission proposes an initiative in support of European digital content on the global networks.

The following action lines are proposed:

(1) Stimulating the exploitation of public sector information;

(2) Enhancing linguistic and cultural customisation;

(3) Supporting market enablers.

The three action lines proposed address specific factors which slow down investment in digital content. They are strongly interrelated and linked. For example, public sector information could be customised to serve multinational communities, the customisation industries will be helped to access to capital, etc.

6.1. Expanding the information supply: stimulating the exploitation of public sector information

The replies to the Green Paper on Public Sector Information have stressed the importance of experiments with concrete public/private partnerships. Therefore, experiments started under the INFO2000 programme should be accelerated and expanded. They will provide examples of 'good practice' of public/private co-operation at European level and highlight the practical difficulties.

In the first place experimental projects will be stimulated bringing together public and private parties to exploit public sector information with a European interest and scope. The preliminary actions started under INFO2000, which supported a limited number of pilot and demonstration projects, generated a large market response, attracting project proposals worth many times the amount available for funding. These experiments will be accelerated and expanded, both in terms of the domains and the geographical coverage, including the candidate countries.

The pilot projects as described above usually cover a limited geographical area within Europe. However the absence of complete data sets at European level constitute one of the barriers to the exploitation of the content potential. Therefore, in addition to the experimental projects, the establishment of European data collections will be stimulated, through financial support to work on pan-European metadata for public sector information and through projects covering a significant number of EU Member States. Interest and commitment of private parties will be decisive for selecting the type of data and the areas to be covered.

Linguistic tools can greatly add to the exploitation of public sector information, usually available in the original language only. Therefore applications of language technology will be promoted among the administrations of Member States and the EU itself. Participation of EU applicant countries in these initiatives will facilitate later integration. Expansion of mobile services is expected also to increase the demand of government information via dedicated, multi-access portals, WAP and voice enabled. Fact finding and strategic studies in this field will complement the co-funded projects.

The actions in this field will make an important contribution to achieving the goals of the "government online" area of the eEurope initiative.

6.2. Tailoring information content: enhancing linguistic and cultural customisation

Supporting linguistic customisation of digital products and services will add to the export potential of European content firms. At the same time it facilitates the participation of all European citizens in the Information Society.

Adequate support for multilingual and cross-cultural information access and exchange is a key enabler for the development of a European mass market for information products and services. The merely technological aspects of this process are well covered within the fifth Framework Programme. RTD activities, however, do not address the fundamental issue of turning technological advances into enhanced business capabilities and market penetration. The programme will sustain actions aiming at the establishment of closer collaboration between the European content and language industries, thus overcoming the linguistic fragmentation of European markets and enhancing the global competitiveness of both sectors. These actions constitute a natural follow-up to the actions carried out under the MLIS programme, adapted to the needs of an increasingly digital and networked environment. Special attention will be given to SMEs and start-ups, and to less widely spoken EU languages and the languages of potential new Member States.

Fostering new partnerships and the adoption of multi-language strategies. The aim is to develop cost effective multi-language solutions and processes, by promoting new forms of partnership between the digital content and the language industries. Private and public-sector content providers and distributors will be stimulated to make their products and services available in a broader range of languages, throughout the design, authoring and publishing chain. IT vendors and telecom operators will be encouraged to provide new tools and digital delivery channels enabling multilingual information access and provision. The providers of language services and utilities will be encouraged to adapt their offerings to meet the needs of an expanding customer base in the content industries.

Mobile information and transaction services tend to be confined at present to somewhat rudimentary information (examples are weather forecasts, tourist information, stock exchange, etc.). More sophisticated multilingual services are expected to be needed once more powerful terminals will be on the market (starting from 2002). The proposed programme will make a significant contribution to these developments.

Strengthening the linguistic infrastructure. The availability of an adequate linguistic infrastructure is an absolute prerequisite for the timely and cost effective creation and exploitation of multilingual content. It is the structural basis for any sustained internationalisation and localisation effort, especially for less widely spoken languages where market forces often prove insufficient. Strengthening the linguistic infrastructure implies establishing an open framework comprising standardised and interoperable multilingual resources encompassing e.g. electronic lexicons, corpora, translation memories and terminology collections. These resources will be pooled together to yield widely accessible repositories which can then be exploited by content providers and distributors, and by suppliers of language services.

The work in this field builds on the results of third and fourth Framework Programme for Research and Development that provided the expertise and the technological tools needed.

6.3. Supporting market enablers: the funding gap and rights trading

A set of ad hoc measures to speed up and support faster and more globally competitive developments in the digital content market completes the programme proposals. The proposed measures address a number of gaps in the market, aiming at giving the conditions required for:

- Bridging the funding gap by facilitating access to risk capital;

- Facilitate the rights clearance process throughout the EU.

Bridging the funding gap. Despite the recent positive market developments and the initiatives taken at European and national level, investments in marketable content are still lagging. Investing in new digital services and products is primarily a matter for the industry. Government support cannot replace the role of the private sector. Efforts should be undertaken to help re-direct the existing flow of capital towards the content sector, in order to bridge the existing investment gap with the US. While investment capital is available and there are good ideas in the content sector, a mismatch is present in the market, reducing the potential number of investments in new start-ups. The purpose here is to facilitate access to risk capital and not to create new funds or mechanisms, but to redress the mismatch between existing financial resources and the use the content sector makes of them. The proposed action will provide a bridge between companies in the digital content area and potential investors.

Rights trading. Rights trading is the basis for creating products mixing text, images and sound. The effectiveness and efficiency of the multimedia rights clearance have a strong and direct impact on the functioning of the content industries. The integration and interoperation of distributed specialised clearance services at European level was stimulated under INFO2000 through feasibility studies, prototype, standards and pilot system development. Further investment is needed to arrive at a consistent European rights clearance approach taking account of the current legal framework and its further development. The focus of future actions will be on extending rights clearance pilots and on specific support measures. Pilot projects will have to cover the enlargement countries, less advanced sectors and specific public sector applications.

7. The link with other Community initiatives

The proposal is an important asset in fulfilling the ambitions of the eEurope initiative, re-enforcing it with concrete tools at a European level. The new programme complements initiatives taken within other EU programmes, amongst others:

Fifth Framework Programme for R&D. There is a strong synergy between actions in the proposed programme and actions in the 5th Framework Programme. None of the market barriers that this proposal addresses, can be dealt with satisfactorily in the IST programme. In addition, the proposed programme is better suited to attract and serve starting and fast-growing companies in the Internet industries, that cannot cope with the procedures and time-frames of the IST-programme. Actions of the IST programme are technology orientated, while the initiatives in the framework of the current proposal are market orientated. This implies, among other things, different target groups (research centres and larger companies in the IST programme, micro and small enterprises in the present proposal) as well as different time-to-market horizons (at least three years for the results of research, six months to immediate in the present case).

The actions in the proposed MEDIA PLUS programme and in the proposed INFO2000/MLIS follow-on are complementary to each other. MEDIA Plus is aimed at the training of audiovisual professionals, and at the development and distribution of European audiovisual works. The proposed programme is aimed at facilitating Europe wide investment in early stage Internet firms, stimulating the exploitation of public sector information, and enhancing linguistic and cultural customisation. There is no overlap between the concrete action-lines proposed in the MEDIA PLUS proposal and the present proposal.

8. Conclusions

Digital content is a key element in establishing a European Information Society. Over the next few years it will have a huge impact on both economic and social life in the EU. Technology and market developments demand timely policy action to create framework conditions for a healthy, competitive information market.

Becoming globally competitive does not mean to simply try and catch up with the present state of the art in other countries. That would leave European firms far behind, since the targets are moving fast. Global market penetration asks for a leap forward in terms of business-models and digital services on offer.

In its role of catalyst, the Commission can set in motion a "snowball" process in the European market place with relatively small incentives. It can bring together venture capitalists and start-ups in the content industries, kick-start the exploitation of public sector information at a European level, and enhance the export chances of European content firms by stimulating linguistic and cultural customisation. If the European Union does not act, Europe may lose an opportunity in this strategic area that is not only important in terms of economic growth and job creation, but also has an enormous cultural impact.

Proposal for a COUNCIL DECISION adopting a Multiannual Community programme to stimulate the development and use of European digital content on the global networks and to promote linguistic diversity in the Information Society

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 157(3) thereof,

Having regard to the proposal from the Commission [24],

[24] OJ C

Having regard to the opinion of the European Parliament [25],

[25] OJ C

Having regard to the opinion of the Economic and Social Committee [26],

[26] OJ C

Having regard to the opinion of the Committee of the Regions [27],

[27] OJ C

Whereas:

(1) The evolution towards an Information Society will influence the life of almost every citizen in the European Union.

(2) Digital content plays a predominant role in this evolution, substantially contributing to economic growth and employment, and enhancing the professional, social and cultural development of the citizens of Europe.

(3) The structures and business environment of the content industries are changing fast.

(4) There are numerous barriers to the full development of the European content industries and markets.

(5) The Bonn ministerial declaration, issued at the conference of 6-8 July 1997 on the role of global networks for the Information Society, devotes special interest to the Internet commercial developments, thus forming the basis for the continuing discussions on Internet content, management issues and electronic commerce.

(6) On 8 December 1999 the Commission adopted the eEurope initiative [28] which was subsequently welcomed by Member States at the Helsinki European Council of 10 and 11 December 1999.

[28] COM(1999) 687.

(7) On 23 and 24 March 2000 the European Council in Lisbon specifically recognised the role of the content industries in creating added value by exploiting and networking European cultural diversity.

(8) Community actions undertaken concerning the content of information should respect the Union's multilingual and multicultural character and encourage initiatives that facilitate access to digital information in the languages of present and candidate countries.

(9) The interim evaluations of the INFO2000 programme established by Council Decision 96/339/EC [29] and the Multilingual Information Society Initiative (MLIS) established by Council Decision 96/664/EC [30] call for a vigorous follow-up of the actions in the area of digital content and linguistic and cultural diversity.

[29] OJ L 129, 30.5.1996, p. 24.

[30] OJ L 306, 28.11.1996, p. 40.

(10) Measures should be taken encouraging participation of SMEs in Information Society developments.

(11) The different rates of development on the provision and use of information services in the present Member States and in the candidate countries deserve special consideration, having regard to the internal cohesion of the Community and the risks associated with a two-tier Information Society.

(12) The Commission has published in January 1999 a Green Paper on Public Sector Information in the Information Society [31], launching a European debate on this topic.

[31] COM(1998) 585.

(13) In accordance with the principles of subsidiarity and proportionality as set out in Article 5 of the Treaty, the objectives of the proposed actions cannot be sufficiently achieved by the Member States due to the transnational character of the issues at stake and can, therefore, by reason of the European scope and effects of the actions be better achieved by the Community. This Decision confines itself to the minimum required in order to achieve those objectives and does not go beyond what is necessary for that purpose.

(14) Any content policy action should be complementary to other ongoing Community initiatives, and be performed in synergy with actions under the fifth Framework Programme for Research and Development, the Framework Programme for Culture, the Media programmes, with Community education actions, SME actions, and with the Structural Funds.

(15) Complementarity and synergy with related Community initiatives and programmes should be ensured by the Commission through appropriate coordination mechanisms.

(16) Progress of this programme should be continuously and systematically monitored with a view to adapting it, where appropriate, to developments in the digital content market. In due course there should be an independent assessment of the progress of the programme so as to provide the background information needed in order to determine the objectives for subsequent content policy actions. At the end of this programme, there should be a final assessment of the results obtained compared with the objectives set out in this Decision.

(17) It may be appropriate to engage in international cooperation activities with international organisations and third countries for the purpose of implementing this programme.

(18) It is necessary to fix the duration of the programme.

(19) In accordance with Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission [32], measures for the implementation of this Decision should be adopted by use of the advisory procedure provided for in Article 3 of Decision 1999/468/EC,

[32] OJ L 184, 17.7.1999, p. 23.

HAS ADOPTED THIS DECISION:

Article 1

A multiannual programme European Digital Content for the Global Networks (hereinafter referred to as "the programme") is hereby adopted.

The programme has the following objectives:

(a) creating favourable conditions for the commercialisation, distribution and use of European digital content on the global networks, thus stimulating economic activity and enhancing employment prospects;

(b) stimulating the use of Europe's content potential, and in particular public sector information;

(c) promoting multilingualism in digital content on the global networks and increasing the export opportunities of European content firms and in particular SMEs through linguistic customisation;

(d) contributing to the professional, social and cultural development of the citizens of the Union and facilitating the economic and social integration of citizens in the candidate countries in the Information Society.

Article 2

In order to attain the objectives referred to in Article 1, the following actions shall be undertaken under the guidance of the Commission, in accordance with the action lines set out in Annex I and the means for implementing the programme set out in Annex III:

(a) stimulating the exploitation of public sector information;

(b) enhancing linguistic and cultural customisation;

(c) supporting market enablers;

(d) support actions.

Article 3

The programme shall cover a period of five years from 1 January 2001 to 31 December 2005.

The annual appropriations shall be authorised by the budgetary authority within the limits of the financial perspective.

An indicative breakdown of expenditure is given in Annex II.

Article 4

1. The Commission shall be responsible for the implementation of the programme and its coordination with other Community programmes. The Commission will draw up a work programme every two years on the basis of this Decision.

2. The Commission shall act in accordance with the procedure referred to in Article 5(2) for the purposes of the following:

(a) adoption of the work programme;

(b) determination of the criteria and content of calls for proposals;

(c) assessment of the projects proposed under calls for proposals for Community funding with an estimated amount of Community contribution that is equal to, or more than EUR 1 000 000;

(d) any departure from the rules set out in Annex III;

(e) acceptance of participation in any project by legal entities from third countries and international organisations other than those mentioned in Article 7(1) and (2).

3. Where the amount of the projects referred to in paragraph 2(c) is less than EUR 1 000 000, the Commission shall merely inform the committee established by Article 5(1) of the projects and of the outcome of their assessment.

The Commission shall regularly inform the committee of progress with the implementation of the programme as a whole.

Article 5

1. The Commission shall be assisted by a committee composed of representatives of the Member States and chaired by the representative of the Commission.

2. Where reference is made to this paragraph, the advisory procedure laid down in Article 3 of Decision 1999/468/EC shall apply, in compliance with Article 7 thereof.

Article 6

1. In order to ensure that Community aid is used efficiently, the Commission shall ensure that actions under this Decision are subject to effective prior appraisal, monitoring and subsequent evaluation.

2. During implementation of projects and after their completion the Commission shall evaluate the manner in which they have been carried out and the impact of their implementation in order to assess whether the original objectives have been achieved.

3. The selected beneficiaries shall submit an annual report to the Commission.

4. After three years and at the end of the programme, the Commission shall submit to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions an evaluation report on the results obtained in implementing the action lines referred to in Article 2. The Commission may present, on the basis of those results, proposals for adjusting the orientation of the programme.

Article 7

1. Participation in the programme may be opened to legal entities established in EFTA States which are members of the European Economic Area (EEA) in accordance with the provisions of the Agreement on the EEA.

2. The programme shall be open to participation of candidate countries on the following basis:

(a) those from Central and Eastern Europe (CEECs), in accordance with the conditions established in the Europe Agreements, in their additional protocols, and in the decisions of the respective Association Councils;

(b) Cyprus, Malta and Turkey, in accordance with bilateral agreements to be concluded.

3. Participation may be opened, in accordance with the procedure referred to in Article 5(2), without financial support by the Community from the programme, to legal entities established in other third countries and to international organisations, where such participation contributes effectively to the implementation of the programme and taking into account the principle of mutual benefit.

Article 8

This Decision is addressed to the Member States.

Done at Brussels,

For the Council

The President

ANNEX I

ACTION LINES

The action lines are a means to implement a European approach to the development of the digital content industries. They will contribute to the strategic objectives of the European Digital Content on the Global Networks programme, that have been defined as follows:

- creating favourable conditions for the commercialisation, distribution and use of European digital content on the global networks, thus stimulating economic activity and enhancing employment prospects;

- stimulating the use of Europe's content potential, and in particular public sector information;

- promoting multilingualism in digital content on the global networks and increasing the export opportunities of European content firms and in particular SMEs through linguistic customisation;

- contributing to the professional, social and cultural development of the citizens of the EU and facilitating the economic and social integration of citizens in the candidate countries in the Information Society.

The different action lines of the new programme are strongly intertwined: e.g. linguistic aspects are essential for the cross-border exploitation of public sector information, facilitating access to capital for Internet start-ups is fundamental for the language industries, etc.

1. Stimulating the exploitation of public sector information

The Green Paper on Public Sector Information in the Information Society, published in January 1999, triggered a discussion at European level on the issues of access to and exploitation of public sector information. This discussion has contributed to the awareness in this field among public and private parties and may be an important basis for improving the exploitation conditions in Europe. At the same time, experiments of public/private partnerships, started under the INFO2000 programme, should be accelerated and expanded. Participation of EU applicant countries in the initiatives of this action line will facilitate future integration. A better management of information (e.g. land registers) in these countries is of vital importance for creating a transparent legal framework as well as the functioning of the internal market after accession.

Within this action line the use of language technology applications will be promoted among the administrations of Member States and the EU institutions.

Experiments in concrete projects

The public sector collects and produces vast amounts of information, much of which is of interest to individuals and businesses, and which can be the raw material for value-added information services produced by the content industries. There are however, many barriers for the transformation of this enormous potential into saleable products and services. Demonstration projects that can be used as examples of good practices and that will allow to identify practical problems in public/private partnerships, will help to redress this situation. These projects will serve as catalysts to further developments in this field.

Preliminary actions have started under the INFO2000 programme, that supported a limited number of pilot and demonstration projects. Given the huge potential of this domain, experiments with public-private partnerships, aimed at the exploitation of public sector information with a European interest will continue.

There will be room within this action line for projects forging links between the content industries and public sector bodies in the candidate countries, increasing the availability of viable information for business and citizens.

Establishment of European digital data collections

The pilot-projects as described above usually cover a limited geographical area within Europe. Nevertheless the absence of complete datasets at European level constitute one of the barriers to the exploitation of the content potential. Therefore, in addition to the experimental projects, the establishment of European data collections will be stimulated, through financial support to work on pan-European metadata for public sector information and through projects covering a significant number EU Member States. Interest and commitment of private parties will be decisive for selecting the type of data and the areas to be covered.

High level group

Without prejudice to the final decision that the Commission will take on the follow-up to the Green paper on public sector information, it is foreseen that a high level group on public sector information is established, consisting of Member States representatives, actors from the information industries, consumers organisations and other representatives of citizens interests. It will not only give guidance to the different initiatives in this field (follow-on to the Green Paper on public sector information in the Information Society, COM(1998) 585), but can also be an important platform for the detection and dissemination of best practices.

2. Enhancing linguistic and cultural customisation

Adequate support for multi-lingual and cross-cultural information access and exchange is a key enabler for the development of a European mass market for information products and services. The merely technological aspects of this process are well covered within the fifth Framework Programme. RTD activities, however, do not address the fundamental issue of turning technological advances into enhanced business capabilities and market penetration. The programme will sustain actions aiming at the establishment of closer collaborations between the European content and language industries, thus overcoming the linguistic fragmentation of European markets and enhancing the global competitiveness of both sectors. These actions constitute a natural follow-up to the actions carried out under the precursor MLIS programme, adapted to the needs of an increasingly digital and networked environment. Special attention will be given to SMEs and start-ups, and to less widely spoken EU languages and the languages of potential new Member States.

Fostering new partnerships and the adoption of multi-language strategies

This sub-line addresses the development of cost effective multi-language solutions and processes, by promoting new forms of partnership between the digital content and the language industries. Private and public-sector content providers and distributors will be stimulated to make their products and services available in a broader range of languages, throughout the design, authoring and publishing chain. IT vendors and telecom operators will be encouraged to provide new tools and digital delivery channels enabling multilingual information access and provision. The providers of language services and utilities will be encouraged to adapt their offerings to meet the needs of an expanding customer base in the content industries.

Strengthening the linguistic infrastructure

The availability of an adequate linguistic infrastructure is an absolute prerequisite for the timely and cost effective creation and exploitation of multilingual content. It is the structural basis for any sustained internationalisation and localisation effort, especially for less widely spoken languages where market forces often prove insufficient. Strengthening the linguistic infrastructure implies establishing an open framework comprising standardised and inter-operable multilingual resources encompassing e.g. electronic lexicons, corpora, translation memories and terminology collections. These resources will be pooled together to yield widely accessible repositories which can then be exploited by content providers and distributors, and by suppliers of language services.

The work in this field builds on the results of FP III and FPIV for RTD, that provided the expertise and the technological tools needed.

3. Supporting market enablers

The dynamics in the content market and the resulting uncertainties for market-players may lead to inertia and underinvestment. Support to access the available forms of investment capital and a means to trade rights online for multimedia production will speed up new initiatives and investments. The actions below are designed to contribute to create the basic conditions.

Bridging the funding gap

Limitations in accessing capital for European Internet start-ups hold back the market opportunities in digital content. This has a negative impact on economic growth and employment. Actions encouraging the flow of capital towards Internet start-ups will be undertaken. The goal is to bring out the full potential of European digital content in terms of creativity, exploitation of the European cultural heritage, business models, e-commerce, research results, innovative applications, mobile multimedia, etc. Actions will complement other Community programmes as well as national initiatives in accordance with the subsidiarity principle.

It is proposed to redress the mismatch between existing financial resources and the use the content sector makes of them. The EC will act to provide a bridge between companies in the digital content area and potential investors. The actions will build on expertise present in business universities and training centres, as well as deployment of distance learning facilities, organising seminars, conferences and fora to encourage the exchange of information and best practice.

Rights trading

Rights trading is the basis for creating products mixing text, images and sound. The effectiveness and efficiency of the multimedia rights clearance have a strong and direct impact on the functioning of the content industries. The integration and interoperation of distributed specialised clearance services at European level was stimulated under INFO2000 through feasibility studies, prototype, standards and pilot system development. Further investment is needed to arrive at a unified European rights clearance approach. The focus of future actions will be on extending rights clearance pilots and on specific support measures. Pilot projects will have to cover the candidate countries, less advanced sectors and specific public sector applications.

4. Support Actions

The programme execution will be supported by actions aiming at the dissemination of the results (e.g. publications, world wide web sites, conferences showcasing projects) as well as strategic operations (e.g. studies and fora) bringing together different parts of the content and languages markets.

A vision of future developments shared by both private and public parties will reduce uncertainties and speed up concrete initiatives and investments. Continuous interaction between market players and public parties will be of increasing importance as a key mechanism to foster the evolution of the vision building process. The observation of developments in the market in close contact with the industry actors in the content and language industries will constitute the information basis needed to update the vision building process, allowing a continuous benchmarking with third countries. Basic data on the sector will be collected. The regular and consistent observation of the converging content and languages market is presently fragmented. Industry led data collection, co-financed by the EU and covering the converging content industries should be established. In the ICT domain this practice is well established through the publication of the annual EITO report.

ANNEX II

INDICATIVE BREAKDOWN OF EXPENDITURE

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ANNEX III

THE MEANS FOR IMPLEMENTING THE PROGRAMME

1. The Commission will implement the programme in accordance with the technical content specified in Annex I.

2. The programme will be executed through indirect actions and wherever possible on a shared-cost basis.

3. The selection of shared-cost projects will normally be based on the calls for proposals procedure published in the Official Journal of the European Communities. The content of the calls for proposals will be defined in close consultation with the relevant experts and according to the procedures referred to in Article 5 of the Decision. The main criterion for supporting projects through calls for proposals will be their potential contribution to achieving the objectives of the programme.

4. Applications for Community support should provide, where appropriate, a financial plan listing all the components of the funding of the projects, including the financial support requested from the Community, and any other requests for or grants of support from other sources.

5. The Commission may also implement other more flexible funding schemes than the call for proposals in order to provide incentives for the creation of partnerships, in particular involving SMEs and organisations in less favoured regions, or for other exploratory activities in different segments of the multimedia content market. These schemes might be operated on a permanent basis.

6. The detailed arrangements for the procedures referred to under point 6 will be implemented after consultation of the committee referred to in Article 4 of this Decision, following the rules of Article 5 of this Decision, in accordance with the Financial Regulations. They will be published in the Official Journal of the European Communities.

7. Projects fully financed by the Commission within the framework of study and services contracts will be implemented through calls for tenders in accordance with the financial provisions in force. Transparency will be achieved by publishing the work programme and circulating it to interested bodies.

8. For the implementation of the programme the Commission will also undertake preparatory, accompanying and support activities designed to achieve the general objectives of the programme and the specific aims of each action line. This includes activities such as: studies and consultancy in support of the programme; preliminary actions in preparation of future activities; measures aimed at facilitating participation in the programme as well as facilitating access to the results produced under the programme; publications and activities for the dissemination, promotion and exploitation of results: brochures, electronic publications (CD-ROMs, DVD, web presence, etc.), participation at exhibitions, preparation of press related material, etc.; analysis of possible socio-economic consequences associated with the programme; and support activities such as spreading the use of digital content standards, and encouraging skills development at European level.

9. All projects receiving financial support under the programme will be required to display an acknowledgement of the support received on the products.

FINANCIAL STATEMENT

1. Title of operation

Multiannual Community programme to stimulate the development and use of European digital content on the global networks and to promote linguistic diversity in the Information Society

2. Budget heading involved

B5-334

B5-334A

3. Legal basis

Article 157(3) of the Treaty establishing the European Community

4. Description of operation

4.1 General objective

The programme pursues the following objectives:

- creating favourable conditions for the commercialisation, distribution and use of European digital content on the global networks, thus stimulating economic activity and enhancing employment prospects;

- stimulating the use of Europe's content potential, and in particular public sector information;

- promoting multilingualism in digital content on the global networks and increasing the export opportunities of European content firms and in particular SMEs through linguistic customisation;

- contributing to the professional, social and cultural development of the citizens of the EU and facilitating the economic and social integration of citizens in the candidate countries in the Information Society.

4.2 Period covered and arrangements for renewal

2001 - 2005

5. Classification of expenditure or revenue

5.1 Non-compulsory expenditure

5.2 Differentiated appropriations

5.3 Type of revenue involved

Any revenue arising from contributions by third parties to the activities under the programme will, where applicable, be re-used pursuant to Article 27(2) of the Financial Regulation.

6. Type of expenditure or revenue

- Studies, workshops, seminars, etc. Transparency will be achieved by publishing the work programme and its circulation to interested bodies.

- Subsidy for joint financing with other sources in the public and/or private sector. The selection of shared-cost projects will normally be based on the procedure of calls for proposals published in the Official Journal of the European Communities.

7. Financial impact

7.1 Method of calculating total cost of operation (relation between individual and total costs)

The appropriations needed to finance the Community's contribution to the execution of the programme is based on past experience (amongst others IMPACT, IMPACT II, INFO 2000 and MLIS and their evaluations) and the nature of the actions proposed for realising the specific objectives defined under point 9.1. These unit costs and activity levels have been considered in determining the amounts indicated in the table under 7.2.

Action line 1: Stimulating the exploitation of public sector information

The overall aim of this action line is to kick-start the commercial exploitation of public sector information at European level.

1.1 Experiments in concrete projects. Experiments with public-private partnerships, aimed at the exploitation of public sector information with a European interest have started under INFO2000. At an average EU contribution of EUR 1.5 million per project a budget of EUR 45 million give the possibility of financing some two to three projects per Member State over the five years of the programme. Projects will be in clusters of around 10 covering 4 to 5 thematic areas.

1.2 Establishment of European digital data collections. The pilot projects above usually cover a limited geographical area within Europe. Nevertheless the absence of complete datasets at European level constitute one of the barriers to the use and exploitation of the content potential. Therefore, in addition to the experimental projects, the establishment of European data collections will be stimulated, through financial support to work on pan-European metadata for public sector information and through projects in specific sectors covering all EU Member States. An example of the latter would be a project linking and harmonising the formats of the repositories of the national mapping agencies. Projects are, by nature, large and expensive. A budget of EUR 30 million would allow - on average - less than one such project per country (at EUR 2.5 million per project).

1.3 High level group. Without prejudice to the final decision that the Commission will take on the follow-up to the Green paper on public sector information, COM(1998) 585), it is foreseen that a high level group on public sector information is established. It will not only give guidance to the different initiatives in this field, but can also be an important platform for the detection and dissemination of best practices. Budget allocation foreseen: EUR 0.5 million.

Total budget requested EUR 75 million

Action line 2: Enhancing linguistic and cultural customisation

Overall aim of this action line is obtaining commercial success and expanded markets for European content firms (and in particular SMEs) through linguistic and cultural customisation and to increase multilingualism on the global networks. Attention will be paid to the languages of the candidate countries.

2.1 Fostering the adoption of language strategies and partnerships. The enhancement of business- and export-opportunities through linguistic customisation and the development of multilingualism on the networks will be stimulated by transnational projects fostering language strategies and partnerships in the digital content industries. This subline is intended to encompass two intertwined series of cost-shared actions:

(1) Projects addressing commercial content players who want to enhance their offerings and penetrate new markets: 75% of the proposed budget or EUR 33 million;

(2) Projects addressing the multilingual exploitation of public sector information (e.g. transnational flows between public authorities and administrations, and utilities), in collaboration with Action Line 2 and other relevant EU instruments: 25% of the available budget or EUR 12 million.

At an average EU contribution of EUR 1.5 million per project, a budget in excess of EUR 45 million would yield 20 - 25 projects over the life span of the programme. It should be noted that the language issues are particularly relevant when taking into account expansion in geographical coverage of the programme.

2.2 Support of language infrastructure. This action aims at improving the infrastructure for linguistic customisation of content on the global networks, comprising high-quality multilingual resources (e.g. lexicons, corpora, translation memories and terminology collections).These resources will be 'pooled' together to build widely accessible repositories connected to and supported by content firms and other related industrial players.

This subline addresses as a matter of priority less widely spoken EU languages, and the languages of accession countries, especially C&EE countries. Specific actions addressing the languages of major EU trade partners (e.g. Mediterranean area, China, Latin America) may be undertaken on a project-by-project basis, where justified in terms of business and export potential. A budget of EUR 10 million - EUR 15 million over five years would allow less than one such project per country/linguistic community (at EUR 1 million per project).

Total budget requested EUR 60 million

Action Line 3: Supporting market enablers

3.1 Bridging the funding gap. The overall aim of this action line is to facilitate the access to capital for Internet start-ups in order to develop new digital content applications and increase the innovative capacity in line with market developments and competition.

Speed up the matching between investors and start-up companies; not funding of start ups. Actions may include the organisations of seminars, conferences, the deployment of distance learning facilities and the exchange of best practises. Activities will have an experimental character, searching for new ways of bringing together ideas and funds.

The budget needed is in the order of EUR 5 million - EUR 6 million over five years.

3.2 Multimedia Rights Trading. The trading of rights between rightholders, producers of new digital services and products and players from other parts of the value chain is getting more and more important. To arrive at European rights trading systems, the INFO2000 pilot projects in this field will be extended. A small number of projects leading to the creation of multimedia clearing rights centres in Europe will be financed (3 - 5 projects). Budget EUR 4 million - EUR 6 million.

Total budget requested EUR 10 million

Action Line 4: Support Actions

The programme execution will be supported by actions aiming at the dissemination of the results (e.g. publications, world wide web sites, conferences, projects showcasing) as well as strategic operations (e.g. studies and fora) bringing together different parts of the content and languages markets. In particular the instruments below form part of the planned support activities.

The observation of developments in the market in close contact with the industry actors in the content and language industries is a natural complement of any market orientated programme. The tools below will be used:

- Strategic studies that pick up emerging market phenomena will be conducted at regular intervals and widely disseminated. Two - three studies over the five years;

- Collecting basic data. The regular observation of the converging content and languages market is presently fragmented;

- Bring together different voices from the different parts of the content spectrum and the language industries;

Total budget requested EUR 5 million

7.2 Itemised breakdown of cost

B5-334 Commitment appropriations EUR million (at current prices)

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7.3 Schedule of commitment and payment appropriations

B5-334 EUR million

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8. Fraud prevention measures

Commission officials, assisted where necessary by independent experts, ensure the correct execution of projects and studies before any payment is made, taking into account contractual obligations and the principles of sound management. In compliance with the Treaty, the Court of Auditors may carry out audits.

After three years, and at the end of the programme, independent experts will compile a report evaluating the programme impact on the marketplace and the results achieved through implementation of the actions.

9. Elements of cost-effectiveness analysis

9.1 Specific and quantified objectives; target population

Specific objectives

The action programme will pursue the general objectives as described under 4.1. However, for each of the action-lines within the programme, more specific objectives will be established in the work programme.

1. Stimulating the exploitation of public sector information

The objectives defined in the work programme could cover:

- the number and quality of the actual products and services based on public sector information that become available;

- the economic activity and the number of jobs that are involved in the new products and services based on public sector information;

- the quality and quantity of the links that are forged between public sector organisations and private content firms;

- improvement of transnational cooperation in the field of public sector information (take-up of best practices throughout Europe);

- improvement of the access to public sector information for citizens throughout Europe;

- improvement of the public sector information infrastructure in the accession countries.

2. Enhancing linguistic and cultural customisation

The objectives defined in the work programme could relate to:

- success and expanded markets for European content firms (and in particular SMEs) through linguistic and cultural customisation;

- increase of content in the languages of the different Member States on the global networks;

- development of the language infrastructure (perception of language industries and digital content industries), and in particular the infrastructure related to languages from the candidate countries;

- economic activity and number of jobs created through the linguistic customisation activities.

3. Supporting market enablers

The quantified objectives could cover:

- the number of starting and fast-growing content firms that are helped in their contacts with venture capitalists;

- the number and quality of the links that are established between the financial institutions and the content firms;

- the economic activity and the number of new jobs created through these links;

- the contribution of the pilot projects in the field of multimedia rights clearing to the development of a European multimedia rights clearing system. The economic activity and the number of jobs involved.

Target population

The target population will consist principally of suppliers of content and language related activities in the information value chain.

However, participants in the projects will be also drawn from other groups amongst others:

- those involved in end-user equipment communications software and hardware and production tools will be invited to participate on the basis of the specific contributions that they can make to the programme;

- industrial sectors using digital content services, enhancing them to modernise working processes;

- public sector institutions will be invited to participate in projects with private parties in view of the exploitation of public sector information.

Within the programme, particular attention will be paid to SMEs and to companies and institutions in the candidate countries.

9.2 Grounds for the operation

The programme constitutes a follow-on to the IMPACT, IMPACT II, INFO 2000 and MLIS programmes, that have been successfully implemented over the last few years. Following the mid term evaluation of INFO2000 and MLIS, a new programme, merging linguistic aspects and the generic stimulation of digital content applications is necessary, given the pace of market developments and the important economic and societal spin-offs of the content-sector. The bundling of actions addressing the content and the linguistic aspects of the Information Society will create significant synergetic effects and justifies expectations of an even higher impact on the market than the previous separate programmes. Indeed, the action lines of the new programme are strongly intertwined: the linguistic aspects are very important for the exploitation of public sector information, raising capital for risk bearing projects is also essential for the language industries, etc.

The management approach will be based on four principles:

1. Projects of substantial size (EUR 2 million - EUR 5 million) with EU contribution of EUR 1 million - EUR 2.5 million.

2. Manageable number of projects per Project Officer (max 15 projects).

3. Projects will be clustered around a limited number of thematic areas. These will be identified decided in consultation with the Member States to maximise synergy (one such area will be Geographic Information).

4. Where possible a substantial simplification of procedures through delegation and simplified cost statement, etc.

The proposals take account of the principle of subsidiarity between the Community and Member States and between public and private sector roles. In line with Article 5 of the Rome Treaty, the programme's activity is only directed at those areas where added value at European level can be found. Synergy between the national and European policy initiatives will be favoured.

To ensure that the actions fit into the global context, specific attention will be given to linking them to recent G7 initiatives and to the relevant activities of international organisations such as the OECD, the WTO, WIPO and the Council of Europe.

9.3 Monitoring and evaluation of the operation

After three years, and on completion of the programme, a report will be drawn up evaluating the results achieved following implementation of the actions. Evaluation will be carried out by independent evaluators. The results of the evaluation will be an important input for possible follow-up actions stimulating the content-industries.

Evaluation will indicate the results of the programme both at the micro-level (number of projects generated by calls for tender, success of projects, spin-off of studies etc.) and the success of the actions in achieving the general objectives of the programme at a more abstract level.

10. Administrative expenditure (Section III, Part A of the budget)

The administrative resources actually mobilised will be determined in the Commission's annual decision on the allocation of resources, taking into account the additional staff and appropriations granted by the budgetary authority.

10.1 Effect on the number of posts

The proposal calls for 21 staff members to manage the implementation of this programme. More specifically, 8 A grades are called to manage the proposed 120 projects, with a workload of around 15 projects each. In addition 6 experts of equivalent A category are requested to ensure that proper clustering of the projects can be achieved via support measures that facilitate the flow of information and results between the projects. This is an essential part of the EU added value of a Community programme and cannot be removed from the implementation aspects of it.

Beyond the staff levels associated with the INFO2000 and MLIS programmes it is estimated that an additional allocation of 5 A, 1 B and 2 C posts is required for the period 2001-2005, to be obtained from internal reallocation of resources.

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10.2 Overall financial impact of human resources

EUR

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(*) Total cost of additional posts for the entire duration of the operation (@ EUR 116 103 per year for A-staff/EUR 58 026 per year for B-staff/EUR 40 806 per year for C-staff/EUR 37 000 per year per END/EUR 625 per day for experts with a maximum of 200 days per year (budget heading A0-7002-Experts)

10.3 Increase in other administrative expenditure as a result of the operation

EUR

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The amounts given must correspond to total expenditure arising from the operation if its duration is predetermined or expenditure for 12 months if it is indefinite.