Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Creative Content Online in the Single Market COM(2007) 836 final
Date: 2008-09-18
Institutions: European Economic and Social Committee
Subjects: ESC opinion, Internet, access to information, audiovisual production, dissemination of information, intellectual property, provision of services, single market

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Official Journal of the European Union

C 77/63

establishing standards and new services. This could lead to
changes in economic and scientific power balances at global
level. It is a challenge Europe cannot avoid.

3.5.3
Lastly, the Internet of Things represents a fusion of the
physical and digital, the real and virtual worlds. Smart objects
are fully incorporated into the ambient ubiquitous network,
and will occupy a far greater place than in the humanist

Brussels, 18 September 2008.

participatory Web 2.0, which will be dissolved into and become
part of the wider and larger scale network.

its scale and new content,

Finally, the new network poses problems of governance
3.5.4
in view of
the requirements of
finding hundreds of billions of names and the universal stan-
dards which will need to be used. RFIDs are currently regulated
through private standards and commercial relations with global
EPC, but will this continue to be a practical solution when the
Internet of the future is fully developed?

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

Opinion of the European Economic and Social Committee on the ‘Communication from the
the European Economic and Social
Commission to the European Parliament,

the Council,

Committee and the Committee of the Regions on Creative Content Online in the Single Market’

COM(2007) 836 final

(2009/C 77/16)

On 3 January 2008, the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social
Committee and the Committee of the Regions on Creative Content Online in the Single Market.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 16 July 2008. The rapporteur was
Mr Retureau.

At its 447th plenary session, held on 17 and 18 September 2008 (meeting of 18 September), the European
Economic and Social Committee adopted the following opinion by 115 votes to 1 with 5 abstentions.

1. Conclusions and recommendations

1.1 Consumers' rights:

1.1.1
The EESC endorses the idea of high-level consumer
protection. It consequently looks forward to the publication of
the Guide for consumers and users of
Information Society
services.

1.1.2
following points:

In the EESC's view, this guide should cover at least the

— Determining how consumers' rights apply in the digital
in particular access rights, universal service

environment,
and protection from unfair commercial practices

— Setting quality parameters for online services

— Establishing a simple European online form for notifying

fraudulent activity

— Introducing an online out-of-court dispute

settlement

scheme.

— Ensuring the network's neutrality,

in order

to improve

consumer choice

1.2 Interoperability:

— Guaranteeing the proper protection of personal data, and a
high level of security for the electronic trading environment

— Helping to establish voluntary regulations and trust marks

for e-commerce

The EESC wishes to emphasise that interoperability is a
1.2.1
factor of key economic importance and notes that open stan-
dards are central to achieving interoperability and help to ensure
security and reliability.

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interoperability limits

The continuing lack of

1.2.2
the
European public's access to technology, services and content,
forces them to pay higher prices for equipment and at the same
time limits the choice of such devices and obliges people to use
backdoor approaches, since some of the parties concerned take
advantage of unnecessary technical differences to create mono-
polistic markets.

1.2.3
The EESC considers the concept of Euro-compatible
Digital Rights Management systems (DRM) (1) to be less useful
than it might appear, causing more problems than it solves and
potentially excluding some creators from online distribution;
further, the content market is now global, as demonstrated by
the practice of zoning, which restricts user freedom.

The Committee considers that the almost anarchic taxa-
1.3
tion of all types of digital media or memory devices, which
reveals considerable disparities between Member States, leads to
major market distortions.

The criminal measures and exception procedures imple-
1.4
mented in the Olivennes proposal
in France far exceed the
WTO's requirements, as laid down in the 1994 Marrakesh
agreement. As stated by the Court of Justice in the Promusicae
judgment, the choice of methods used to enforce copyright
must comply with the principle of proportionality and a proper
balance must be struck between rights and freedoms and the
interests at stake.

therefore,

The EESC looks

1.5
to seeing the
forward,
Commission's planned recommendation on creative content
online,
in order to make specific comments on transparency
(labelling) and on new forms of establishing and managing
digital rights at the European level, fostering and contributing to
innovative schemes for distributing creative content online and
researching the most effective means of putting an end to illegal
copies made for commercial purposes and any other form of
piracy.

2. Commission proposal

The main aspects of the Commission communication

2.1
and questions aim to:

— regulate and harmonise and harmonise a European market

for creative content online;

— develop a European copyright and related rights, multi-terri-
tory rights licensing and greater protection for rights relating
to literary and artistic property;

— establish interoperable European DRMs, appropriate to the
media devices concerned, in particular for online content;

— ensure the security of communications and financial settle-
ments, combat piracy and fraud, in order to boost confi-
dence in the digital economy and to foster the growth of
online services;

— the greatest problem on the horizon will undoubtedly
concern private copying, which is the source of considerable
controversy in Europe, because legislation on this issue in
from being
the different EU Member States
harmonised.

far

is

2.2
According to the 41-page Commission staff working
document, which is published separately from the Communica-
tion and is available only in English (2), the cross-border nature
of online communications and the new business models
required by the new technologies mean that EU policies should
aim to promote the fast and efficient implementation of new
business models for the creation and circulation of European
content and knowledge online. In this context, the Commission
has identified as ‘creative content distributed online’: content
and services such as audiovisual media online (film, television,
music and radio), games online, online publishing, educational
content as well as user-generated content,
social
networks, blogs, etc.).

such as

The main aim, already stated in the document entitled
2.3
i2010 (3), is to establish a single European information area. The
problems described in that document still exist and, at the same
time, technological distribution platforms are diversifying and
expanding.

a

recurring

question concerns

2.4 With regard to the problem of confidence in the digital
economy,
interoperability
between hardware, services and platforms and some people
consider that criminalising ‘peer to peer’ (P2P) or BitTorrent file-
exchange systems and imposing draconian measures to protect
intellectual property rights do not foster a climate of confidence.
This holds all the more true because the explosion of user-
generated content, which gives a new dimension to the role
played by those users in the digital economy, has resulted in a
number of challenges for public policy in different areas, such as
confidence and security.

2.5
The use of DRM (digital rights management) is heavily
criticised by consumers' organisations, which consider them to
infringe basic consumer rights. They also imply data-protection
risks and are not easy for users to manage. Some industry repre-
sentatives defend DRM, however, claiming that the interoper-
ability-related problems are caused by the product manufac-
turers and software designers.

2.6
On the global market, national market operators are
confronted with the diversity of languages and the limitations of
certain markets, as well as the disparities in national licensing
rules. The ISPs (Internet service providers) support multi-terri-
tory licences and rules, but other areas of the industry are by
and large opposed to this approach. National
licences would
help to ensure that authors are better remunerated; although a
sizeable number of rights collection agencies operate in more
than one country. Furthermore, music organisations and mobile
operators would like
to be
rights
simplified.

recovery process

the

(2) COM(2007) 836 final, Brussels, 3.1.2008, SEC(2007) 1710 Commis-

sion staff working document.

(1) Digital Rights Management — (a ‘politically correct’ term meaning soft-

(3) ‘i2010 — A European Information Society for growth and employ-

ware or technical devices preventing copying).

ment’ (COM(2005) 229 final).

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2.7
The ISPs are also critical of the differences in systems for
collecting rights for private copying, which are increasingly
burdensome and complex, as well as the amounts involved. The
ISPs also question the benefit of these systems where DRM is
concerned.

this category of content, including the possibilities of listening
directly without being able to record, or arrangements whereby
a certain number of works can be downloaded, or free content
in return for ‘compulsory’ advertising etc.

2.8
The lack of availability of content for online distribution,
market fragmentation and the considerable diversity in the types
of contract for different uses make it difficult to place creations
online rapidly and act as a brake on the development of
services.

2.9
The Commission working document reflects the results
of two consultations and shows the variety of positions held by
the different interests at stake; the Commission would, however,
like to push ahead in the (controversial) areas of multi-territory
licences and a European copyright, increased use of interoper-
able DRM in particular and see the completion of a genuine
European market, which includes the full range of cultures.

The aim is to ensure that the European online content
2.10
market
films, games, etc) grows four-fold
(covering music,
by 2010, with revenues increasing from the 2005 figure of
EUR 1.8 billion to EUR 8.3 billion.

3. Comments

The Committee is fully aware of the fact that the Internet
3.1
allows the digital collection or distribution of goods and services
using methods which infringe the immaterial property rights of
authors and distributors of creative content online, as well as
fraud
the invasion of people's privacy and new forms of
affecting businesses and individuals.

and,

increasingly,

Contemporary music

3.2
audio-visual
works and software of all kinds are the creations most subject
to illegal circulation. This phenomenon became very widespread
during the period when distributors had not proposed any busi-
ness model which took account of the new possibilities for
infringing immaterial property rights. Education on Internet use
by adolescents was also needed, but no institution has taken
this initiative and education of
this nature continues to be
totally inadequate.

The initial reactions were sometimes extreme and some-
3.3
times, more rarely, lax. In general, distributors have introduced
copy-restriction mechanisms (so-called ‘DRMs’), concurrently
with the demand for financial compensation for rights holders
and penal measures which are strong deterrents but, in practice,
inapplicable given the scale of the fraud, except in cases of mass
counterfeiting, principally from Eastern Europe and Asia. A
small number of people have been caught out to serve as a
deterrent, but it has not been possible to assess the real impact
of
independent studies and
realistic data on the damage caused by counterfeiting.

this deterrent given the lack of

However, the Committee expresses some surprise at the
3.4
Commission's proposal
interoperable
to create
DRMs for content distributed online. As regards music, millions
of songs are already available on commercial sites without
DRMs, which are expected to disappear over time. Distribution
companies are designing a variety of distribution systems for

‘European’,

Physical protection mechanisms for mobile media, or
3.5
even terminals, are now viewed as barriers to ‘fair use’ more
than as effective protection against piracy; they can also result in
anti-competitive vertical integration (sites, property coding with
some degree of loss of quality, dedicated players: Apple distribu-
tion systems with AAC coding and iPod or iPhone players). One
common form of protection, particularly for software or games
and a number of online publications, is based on a digital access
key, sent to the purchaser after he has paid for his purchase per
unit or for his subscription for a given period; this system is
reasonably effective and is already widely used.

integrated,

The Committee believes that

interoperable
3.6
digital DRMs are outdated in practice;
it would doubtless be
preferable to study developments in the various sectors of the
online content market, which seem to be conducive to the
protection of copyright and related rights, based in particular on
appropriate codes of conduct and realistic business models (4),
rather than using a European initiative to force a transitory,
rapidly changing situation into a rigid framework.

3.7 With reference to copyright and related rights,
the
existing international agreements and conventions constitute a
legal basis which in principle is common for Member States and
relations with third countries. In practice, however, differences
persist, despite Community law. The proposal for a ‘European
copyright’ for the internal market would also render protection
automatic in all Member States once these rights are recognised
in one of them, and would guarantee uniform protection.

In the age of the Internet and the knowledge society, it is
3.8
that a genuine balance be found between the general
vital
interest and private interests. Fair payment
for authors and
distributors is imperative. Readers or listeners and users must be
able to make reasonable use of legitimately acquired content, in
in educational
the home,
establishments.

in libraries or

teaching

for

3.9
It must be acknowledged that there is a rigorous criminal
law system in a number of countries, protecting copyright and
stipulating exorbitant sanctions against unlicensed individuals,
while private usage and copying rights have been restricted;
however, while police methods imposed on Internet service
in the fight against terrorism, they
providers may be useful
to
appear disproportionate and likely to infringe the right
to
framework unilaterally favourable
privacy

in a

legal

(4) The fact that music is sold on the Internet at the same price as CDs sold
in shops represents excessive profit for manufacturers, which does not
encourage those concerned to look for more realistic models that take
account of the cost price and a reasonable profit margin.

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distributors. Ultimately, this type of legislation may well be chal-
lenged at the European Court of Human Rights in Strasbourg,
which watches over respect for privacy. For its part, the ECJ in
Luxembourg calls on the parties concerned to respect the prin-
ciple of proportionality and strike a balance between the
different rights involved (Promusicae judgment).

3.10
Furthermore, some countries, often the same ones, levy
a tax on all types of digital media, considering them to be tools
for piracy, whatever their intended use. Although this is often
referred to as a ‘tax on private copying’, it generates considerable
revenues, which are often shared out in a far from transparent
manner. This approach, which places any private or fair-use
copying in the same category as an infringement of copyright
and related rights is particularly intolerable for honest ICT users,
that is to say, a very large majority, and for companies which
use them for purposes other than copying pop songs or games.
Such levies should at least be reasonable and proportionate to
the real cost of storing digital units (a percentage of the device's
sale price, divided by its total capacity in Gigabytes, for example,
because considerable distortions have been observed in the
pricing of storage devices.

The rights of the different parties concerned must be
3.11
respected, but so too must the directives in force as well as the
principle of proportionality, as clearly stated by the Court of
Justice in its Promusicae ruling (5).

4. Additional comments by the Committee

4.1
The Committee shares the opinion that interoperability,
which is crucial to free competition, can only be achieved when
consumers are able to use whatever device they choose to read

(5) Judgment of the Court (Grand Chamber) 29 January 2008.

the European Parliament and of

In Case C-275/06,
Reference for a preliminary ruling
The Court (Grand Chamber), rules that:
‘Directive 2000/31/EC of
the
Council of 8 June 2000 on certain legal aspects of information
society services,
in the Internal
in particular electronic commerce,
Market (“Directive on electronic commerce”), Directive 2001/29/EC
of the European Parliament and of the Council of 22 May 2001 on
the harmonisation of certain aspects of copyright and related rights
in the information society, Directive 2004/48/EC of the European
Parliament and of the Council of 29 April 2004 on the enforcement
of
the
intellectual property rights, and Directive 2002/58/EC of
European Parliament and of the Council of 12 July 2002 concerning
the processing of personal data and the protection of privacy in the
electronic communications sector (Directive on privacy and elec-
tronic communications) do not require the Member States to lay
down, in a situation such as that in the main proceedings, an obliga-
tion to communicate personal data in order to ensure effective
protection of copyright in the context of civil proceedings. However,
Community law requires that, when transposing those directives, the
Member States take care to rely on an interpretation of them which
allows a fair balance to be struck between the various fundamental
rights protected by the Community legal order. Further, when imple-
menting the measures transposing those directives, the authorities
and courts of
their
national law in a manner consistent with those directives but also
make sure that they do not rely on an interpretation of them which
would be in conflict with those fundamental rights or with the other
general principles of Community law, such as the principle of
proportionality …’.

the Member States must not only interpret

their content. The only solution to this problem is for content
to be open source encoded and thus universally accessible. All
DRM systems, however, automatically prevent content being
read by any device, hardware or software, that has not been
explicitly authorised by the DRM's publisher. By definition,
DRM rely on the secrecy of their closed formats, the technical
specifications of which are not publicly available. Systems that
are not authorised or certified by the DRM's publisher are thus
excluded from mounting any competition. Further, no open
source DRM yet exists. This solution would require the imple-
mentation of complex cross-licensing systems and a number of
content creators could find themselves excluded from the
market, as a result, for example, of not using DRM. An entire
sector within the sphere of digital content creation, including
scientific institutions and research centres and universities, as
well as free software and content created under alternative
licences could be excluded from any market that only allows
commercial content. This would appear to be incompatible with
the information and knowledge society, of which Europe wishes
to be a pioneer.

4.2
None of these approaches is satisfactory, for example for
the import of works and content from third countries into
Europe or for export from Europe. Any European software-
based DRM scheme would therefore also have to be compatible
with those used in external markets, which are often much
more active in the audio-visual sector. DRM schemes open the
door to anti-competitive attitudes and attempts at vertical inte-
gration in the multimedia sector. A case in point is Apple
iTunes, which uses a proprietary DRM scheme and coding,
which in practice forces users to use an iPod or iPhone player.

If only the API (application programming interface) of a
4.3
software-based DRM scheme
source
programme is revealed, which might be a considerable tempta-
tion for some providers,
there will always be the risk that
genuine interoperability will be impossible.

and not

entire

the

Pirates rapidly find out how to get around or reproduce
4.4
any protection system, to such an extent that content providers
no longer trust DRM schemes and are looking for new commer-
cial distribution models, such as flat-rate subscription, listening
without charge but paying to download,
incorporating adver-
tising, etc. It would be better to trust the market than to pass
hasty and confused legislation, as in France where a succession
of laws has given rise to contradictory interpretations by the
courts. Lobbying by the major record labels (five global ‘majors’
dominate the music industry, and six or seven dominate the
audio-visual sector) has so far been a key factor in inducing
some countries to abandon the right to private copying and
criminalise file sharing between individuals. France's most recent
legislative proposal fell into this trap of excessive regulation.

As the Committee has stated in previous opinions, crim-
4.5
inal
law should only apply to counterfeiting for commercial
purposes (production and distribution, e.g. by criminal organisa-
tions). In some Member States, it is very easy, even on the open
market, to obtain pirated copies of software, music or video
material. A European pirating industry does exist, but most

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copies come from Asia. Priority should be given to targeting
and punishing
commercial
purposes and to developing police and judicial cooperation with
a view to dismantling international criminal networks.

counterfeiting

large-scale

for

4.6 With reference to sharing, particularly between adoles-
cents, priority should be given to launching campaigns to publi-
cise the need for fair payment for authors and producers (parti-
cularly authors, who often receive the smallest share of receipts)
and to promote civic education.

Large-scale file sharing does not necessarily involve files
4.7
protected by copyright.
It may involve the sharing and
publishing of miscellaneous free content (results of scientific
experiments and studies or works submitted for non-restrictive
copying or distribution licences).

However, under the legislative proposal under discussion
4.8
in France,
the entire network would be monitored, with
long-term storage of internet users' personal data. This data
the major record
would be accessible to representatives of
companies. However,
this kind actually were
introduced, access to the data ought to be restricted to public
authorities having obtained an appropriate court order.

if a system of

4.9
The right to private copying would become an exception
subject to heavy restrictions set out in ‘contracts’ drawn up by
content providers, using opaque jargon and incompatible with
the common practice of impulse buying.

In practice only professional creators and distributors
4.10
benefit from this kind of excessive legal protection, and there is
no specific protection for individual producers, unknown artists
or those using alternative licences (there are some fifty types of
licence, including GPL, LGPL and creative commons), although
these licences are governed by copyright and are not necessarily
free of charge. The only recourse available to these rights
holders would be legal action for counterfeiting, which would
create a profound disparity between the legal treatment of major
multinational distributors and that of small companies or
individuals.

The Committee considers that the basic principle of
4.11
legislation must be the protection of bona fide consumers and
fair remuneration for content creators.

is admittedly illegal and must be combated using means appro-
priate to such a large-scale phenomenon. A few ‘deterrent’
convictions and the resulting publicity intended to discourage
certain internet users will not suffice, since statistically the
chances of being caught are minimal and this will not worry,
for example, adolescents who are not aware of the harm they
are doing to their favourite artists.

The long-term storage by ISPs of all

4.13
internet users'
personal data constitutes a major violation of their privacy. Is
such storage absolutely necessary to enforce copyright and
related rights, or is it in fact disproportionate to the objective
pursued? Are these rights so absolute that they require perma-
nent violation of the privacy of all internet users?

This stored data may perhaps be used in the fight
4.14
against terrorism, but internet users must have legal guarantees
of the confidentiality of their internet connections. This could,
however, be waived in the general
interest by an authority
which has obtained a proper warrant, for a specific purpose
limited by the terms of the court order.

4.15
The use of data for information-gathering and analytical
purposes may be authorised under certain conditions, in par-
ticular that of anonymity. On the other hand, cross-referencing
named files, collating named data for profiling with a view to
more efficient advertising, and storing and linking this data with
the list of key words used by search engines, and other practices
which are already current (and which mainly benefit the major
record labels and other large companies), should be prohibited,
as they constitute an invasion of privacy.

Taxes are levied in many countries on all data media,
4.16
whether fixed or mobile,
for the exclusive benefit of rights
owners (especially audio-visual content rights), even on media
not intended for such use. Under this system any user of a
digital medium is seen as a potential pirate. Certain categories of
user should be exempt,
including companies. On the other
hand, broadband access providers, which owe the development
of their networks in part to their potentially illegal use, could be
taxed at a relatively low rate, but linked to the volume of traffic
between individuals, so as to contribute to copyright revenue
and the promotion of new content. Except for collection and
redistribution expenses, States should not pocket the proceeds
of these taxes.

4.12
Restrictions on the use of legally acquired licences and
access to personal data by representatives of the major record
companies are detrimental
to the objectives pursued, since
‘commercial’ counterfeiters will be able to overcome all technical
barriers and cover their tracks on the network. Only (legal or
illegal)
file sharing by internet users with no commercial
purpose will be accessible for monitoring. Much of this sharing

Examples of rights management from Scandinavia,

4.17
in
particular Sweden, should be preferred to the succession of
French laws
and proposals, which are unbalanced and
unconvincing as a way of assisting young artists and small and
medium-sized businesses.

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4.18
After a reasonable period during which exclusive rights
would be guaranteed, a global system could kick in, as is the
practice in Sweden.

technological knowledge and in a manner conducive to social
and economic welfare, and to a balance of
rights and
obligations.’

4.19
During its discussion on the draft directive on protec-
tion of intellectual property rights (IP-LAP: Industrial property,
literary and artistic property and other related or ad hoc rights
recognised and protected in the EU), the Committee called for a
firm but measured approach to the fight against counterfeiting
for commercial purposes.

4.20
For its part, in the Agreement on intellectual property
rights, the WTO warned against abuse by rights owners who
might restrain competition or fail to comply with the general
interest.

4.21
‘Objectives: the protection and enforcement of intellec-
tual property rights should contribute to the promotion of tech-
nological innovation and to the transfer and dissemination of
technology, to the mutual advantage of producers and users of

4.22
‘Principles: … 2. Appropriate measures, provided that
they are consistent with the provisions of this Agreement, may
be needed to prevent the abuse of intellectual property rights by
right holders or the resort to practices which unreasonably
restrain trade or adversely affect the international transfer of
technology’.

4.23
The above comments by the Committee, which are
already contained in the EESC opinion of 29 October 2003 (6)
on the ‘Proposal for a Directive of the European Parliament and
of the Council on measures and procedures to ensure the enfor-
cement of intellectual property rights’ are in keeping with the
TRIPS objectives (Article 7) and their underlying principles
(Article 8(2)): these should be included in the recitals of the
directive, since the possible penalties cannot be entirely disso-
ciated from substantive law, and possible abuses of
IP-LAP
rights by right holders must not be overlooked (7).

Brussels, 18 September 2008.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(6) OJ C 32, 5.2.2004, p. 15.
(7) The TRIPS Agreement, which forms Appendix 1 C of the Agreement
establishing the World Trade Organisation (WTO) signed in Marrakesh
on 15 April 1994 and approved by Council Decision 94/800/EC of
22 December 1994 concerning the conclusion on behalf of the
European Community, as regards matters within its competence, of the
agreements reached in the Uruguay Round multilateral negotiations
(1986-1994) (OJ L 336, p. 1) is entitled ‘Enforcement of Intellectual
Property Rights’. This Part
includes Article 41(1), which states:
‘Members shall ensure that enforcement procedures as specified in this
Part are available under their law so as to permit effective action against
any act of infringement of intellectual property rights covered by this
Agreement, including expeditious remedies to prevent infringements
and remedies which constitute a deterrent to further infringements.
These procedures shall be applied in such a manner as to avoid the crea-
tion of barriers to legitimate trade and to provide for safeguards against
their abuse.’.