The best ideas never age. It may be almost 800 years since the feudal barons of England created the Magna Carta, but the unequivocal opposition of this remarkable document to the arbitrary exercise of power remains highly relevant to every European. In fact, it has never been more necessary.
The Single Market became a reality in 1993 and is generally accepted to be one of the EU’s greatest achievements. Its main goal is to promote economic liberties by limiting the ability of sovereign member states to restrict the free flow of trade in goods and services and the free movement of capital and labor. However, the Single Market is still a work in progress, and significant limitations remain.
Even in the year 2012, many barriers still block the free flow of lawful cultural and entertainment-oriented digital services across member states’ national borders. The European Commission’s (EC) Digital Agenda for Europe, which consists of 21 action points, has been devised to bring the Single Market into the digital era by removing some of these barriers. Digitization is of course not an end in itself, but a means of contributing to Europe’s economic recovery (adding at least 4% to the EU’s GDP) by driving competitiveness and innovation. It would also generate many consumer benefits, ranging from more choices to better quality and lower prices.
The issue of achieving a vibrant Digital Single Market (DSM) goes beyond the self-interest of the established players within media, entertainment and ICT wishing to protect the status quo. It is about improving the supply-side incentives to invest and innovate in new cultural and entertainment-based creativity, services and high-speed-broadband infrastructure.
The aim of a DSM is equally about shaping better demand-side conditions, whether the demand is for productivity, culture or entertainment-oriented services. While Europe is rightly proud of its rich cultural heritage, there is an obvious and urgent need to boost productivity growth. Productivity will play an even greater role in the future, especially given the current European economic climate. Smart use of ICT technology is fundamental to productivity, which is ultimately not all about raising consumption but rather a social and political imperative, because declining productivity would result in declining living standards.
A vital link between digital productivity and digital creativity is the presence – and the mass adoption, not just mere rollout – of ubiquitous high-speed broadband. High-speed broadband on its own is not enough; demand-side drivers need to be in place. These include economies of scope (expanding digitization of trade in goods and services) and scale (the size of the Single Market); lower transaction costs; personalization of services according to individual preferences; and the establishment of trusted relationships between creators, innovators and end-users.
Another vital but missing link between digital productivity and digital creativity is the availability of consumer-friendly legal alternatives to piracy.
To make matters worse, the creative transition to a digital economy has been misportrayed in the media and in policy circles as being a zero-sum game with only two possible outcomes: the elimination of control, through piracy – sometimes depicted as unlimited and growing consumer demand for entitlements; or the perfection of control, through further strengthening of copyright protection and enforcement to maintain the analog Single Market status quo. It is time to demystify the false zero-sum doctrine and resolve the market supply failure as the adequate path for the DSM.
Digital productivity and digital creativity are closely linked
If the goal is to achieve sustainable, smarter and more inclusive economic growth, a continuous expansion of the digital pan-European trade in goods and services – for instance, e-commerce – is essential. It therefore does not make sense to exempt the creative, cultural and entertainment-oriented markets from the DSM. Exemptions on the basis of national copyright laws and protection of conventional media practice and licensing have a counter-productive effect on the DSM.
Why should digital productivity be vigorously pursued but digital creativity exempted from contributing to sustained, smarter and inclusive economic growth? The simple answer is of course that it should not. Nor does it make sense to continue to pursue a false zero-sum doctrine.
A revision of the current fragmented and digitally restrictive copyright approach in the EU offers a unique opportunity for the EC to set and lead by example. This is an opportunity the DSM cannot afford to miss. Through the Digital Agenda, the EC can update the current state of play in the European digital creative market by tearing down key structural barriers to making lawful digital content widely available within the EU in an appealing, timely and user-friendly way.
The EC needs to address some of the fundamental barriers that hinder the possibility to reap and share the digital productivity and creativity gains that we so greatly need in the EU. It is time to tear down these barriers and solve the failure of the market to supply lawful digital content. This failure is caused largely by three structural barriers:
- Limited availability of lawful digital content through “windowing” (selling and re-selling products over time using various channels for example the film idustry using cinemas, home video, rentals, cable, video on demand, and free to air broadcast) and territoriality
- Technology-specific copyright and licensing conditions limiting or delaying innovation of new services
- Unreasonable transaction costs making digital content unnecessarily more expensive.
The Digital Magna Carta
Tearing down these structural barriers should be the goal and purpose of a Digital Magna Carta. The Digital Magna Carta should introduce a pan-European “digital equivalence” liberty principle that decisively challenges and limits the arbitrary use of monopoly powers by economic rights holders over digital content. It should also form the basis of guiding enforceable EU-wide policy directions. These policy directions must ensure that creative and entertainment-based digital services and related transactions can take place without legislative restrictions by other member states (such as national copyright law), any commercial conduct (such as windowing or other technology-specific licensing terms) over any electronic distribution channel and without the artificial imposition of any additional inequitable requirements or restrictions discriminating the digital choice.
The European Digital Magna Carta should include, but not necessarily be limited to, the following actions:
- Ensuring the principle of technology-neutral licensing by mandating an “anywhere, anytime and any device” exploitation right which is not specific to distribution, technology or device. This right should be combined with remuneration based on actual and identifiable private-sphere consumption, rather than potential consumption and reach.
- Ensuring the principle of technology-neutral exhaustion, or the first-sale principle for creative works extending to digital/electronic formats, thereby prohibiting and abolishing any statutory windowing provisions. Also, abolishing discrimination against legal premium video-on-demand services released in competition with cinema-release windows – for example, mandating a digitally available first-release window option.
- Ensuring a simplified and efficient cross-border licensing and collective rights-management regime for creative works such as TV, film and music.
- Ensuring technology-neutral fair-use/copyright exception provisions that can enable the proliferation of pan-European private “cloud” content such as TV, film, music, e-books and services, thereby ensuring that contract law and technical standards cannot be allowed to override statutory exceptions, such as fair-use regimes or private copy exemptions, in ways that would limit the ability of lawfully acquired content to shift format, place or device within the private sphere.
The Digital Magna Carta should establish a digital equivalence liberty principle that should decisively challenge and limit arbitrary use of the monopoly powers of economic rights holders. Fragmented and digitally restrictive copyright laws and conventions are today exploited by economic rights holders – as opposed to creators – to extract monopoly rents from consumers. To counter this, the Digital Magna Carta should assure fair, reasonable and non-discriminatory terms and conditions for lawful digital exploitation of creative works and facilitate the proliferation of lawful digital creative services across the EU.
It took time for the significance of the original Magna Carta to be fully appreciated. The Digital Magna Carta, on the other hand, needs to be recognized and implemented across Europe as a matter of urgency. Such a document would carry symbolic as well as practical value. It would stand as a visible commitment to completing the integration of European markets. It would symbolize the development of digital equivalence liberty principles not only in the EU but eventually also elsewhere. Above all, it would draw a line between the past – the adherence to the zero-sum doctrine often associated with biased questioning of digital creative transition – and the future, with the commitment to solving the digital market supply failure.
Which policy-maker would not be proud to be associated with such a charter?
Rene Summer is Director Government and Industry Relations, Ericsson Group. His expertise is in media, content, copyright and convergence. He is a member of the Board of Directors of the Internet Industry Association in Australia. (rene.summer@ericsson.com). This article, which first appeared in the Ericsson Business Review, Issue 1 (2012) is a follow up to another article from the Ericsson Business Review on a digital vision for Europe which can be downloaded from the panel opposite.
References:
(1) European Policy Centre 2010, Digital Single Market, http://www.epc.eu/dsm/
(2) McKinsey Global Institute, “Beyond austerity: A path to economic growth and renewal in Europe, October 2010”
(3) Ericsson Business Review issue No.3 2011, “Fighting piracy – the smart way” and http://www.guardian.co.uk/media/2011/nov/28/economist-profits-digital-subscribers and http://www.tennessean.com/article/20111201/OPINION02/111201002/2069/OPINION
(4) IFPI: Digital Music Report 2011.
(5) Josh Lerner: “The Impact of Copyright Policy Changes on Venture Capital Investment in Cloud Computing Companies”
(6) EBU: Modernizing Copyright, http://www.ebu.ch
(7) Economic Impact of Copyright for Cable Operators in Europe, www.cableeurope.eu
(8) EU Study: Legal Analysis of a Single Market for the Information Society. Draft Report October 2009
