Who: European Union; European Commission
When: 25 May 2016
Law stated as at: 8 August 2016
On 25 May 2016, the European Commission (“Commission“) adopted the much-anticipated proposal to amend the existing Audiovisual Media Services Directive (the “AVMS Directive“); the key piece of legislation governing the regulation of media services in the European Union.
The proposal is part of the next major wave of ‘Digital Single Market’ initiatives, and attempts to align the AVMS Directive with developments in the consumption of audiovisual content.
In recent years, viewers – particularly younger audiences – have moved from television to the online world. In spite of this trend, the regulatory burden on traditional broadcasters has remained much higher than other media service providers. The Commission’s proposals are therefore intended to address perceived imbalances that can no longer be justified by the consumption habits of European audiences. At the same time, the planned changes attempt to ensure that consumers are sufficiently protected when accessing content online or through on-demand services.
The main elements of the Commission’s proposal are summarised below.
In addition to traditional broadcasts and on-demand video services, “videos of short duration” will now constitute a ‘programme’ for the purposes of the AVMS Directive. This effectively means that the revised rules will apply to ‘video-sharing’ or ‘curator’ services, the most obvious example of which is YouTube.
While the obligations imposed on such services are (for the time being) fairly limited – they only touch on the most basic areas of protection of minors and protection from hate speech – it is significant that the Commission has opted to bring them within the scope of the AVMS Directive at all. At the very least, it leaves the door open for further obligations to potentially be imposed on video-sharing services at a later stage.
Country of origin principle
The existing iteration of the AVMS Directive, implemented in May 2010, is based on the ‘country of origin’ (“COO“) principle, whereby audiovisual media services transmitted by a provider under the jurisdiction of one Member State may operate throughout the EU without incremental regulation. In order to achieve this, the AVMS Directive sets out minimum regulatory obligations which each Member State must implement, thus ensuring a base level of regulation across the European Union.
Under the proposed AVMS Directive, the core COO principle has been maintained but the rules have changed slightly. Going forward, a service provider’s ‘home’ jurisdiction will be the Member State where the majority of its workforce is located, rather than the location of its head office.
For video-sharing services that are not formally established in any Member State, the AVMS Directive will bite if the service provider has any group company located within the EU. Where video-sharing providers have several subsidiaries located in various Member States, the provider can effectively designate in which of those Member States it will be regulated. Critics have suggested that this is likely to incentivise forum shopping, or even encourage offshoring to ensure providers fall outside the scope of the new AVMS Directive altogether.
Criticisms aside, the idea of COO has always been popular with industry players, as it avoids re-versioning costs and other complications associated with transmitting into separate markets. In this respect, maintaining the COO principle is fundamental to the Commission’s overall aims for the ‘Digital Single Market’ initiative.
Rules relating to advertising in the audiovisual sector have also been relaxed, which will generally be welcomed by traditional broadcasters who have long complained that the regulatory environment is skewed in favour of on-demand services.
While the overarching principle of separation of advertising and editorial content remains, the proposed changes to the AVMS Directive will remove the explicit ban on “promotional references” to sponsors as well as the reference to “undue prominence” of placed products.
In terms of ad-break frequency, news programmes and films will be able to schedule an ad break every 20 minutes, rather than every 30 minutes as at present. In addition, the existing cap of 12 minutes of ads per hour will be restructured as an average cap spread across an entire day (from 07:00 to 23:00) – thus allowing for longer ad breaks at peak viewing times.
Bear in mind, however, there is no guarantee that any linear broadcaster will find themselves subject to a more liberal regime as a result of these proposals. Individual Member States remain free to apply stricter rules. For example, the UK currently caps ad breaks at 9 minutes per hour on average, and there is no absolute requirement for the new rules to be followed – as noted above, the AVMS Directive imposes a baseline level of regulation that can be augmented by individual Member States.
Promotion of EU content
The existing AVMS Directive includes a general obligation on Member States to ensure that on-demand services promote EU content, but providers have a broad discretion as to how to meet this obligation.
The new rules will require on-demand services to ensure that at least 20% of their catalogue is made up of European content. Confusingly, the proposal does not explain whether this is to be measured by number of titles, mean duration, etc.). Member States will be permitted to waive the quota requirement where it would be “impracticable or unjustified by reason of the nature or theme [of the on-demand service]” – this might be the case, for example, where the platform is dedicated to American sports.
The proposals also require such platforms to ensure the ‘prominence’ of European content. In the on-demand environment, this requirement is hugely controversial and arguably too subjective – for example, would including a “European” category within a broader list of genres be sufficient, or will on-demand service providers have to drastically restructure their user interfaces in order to comply?
Linear broadcasters will continue to be required to dedicate at least half of their viewing time to European works. As above, this is another area in which traditional broadcast providers consider the deck is stacked against them.
Why this matters:
The Commission’s public consultation on how to make Europe’s audiovisual media landscape fit for purpose in the digital age highlighted concerns over the gap between regulation of linear broadcasting and on-demand services. Although that gap is slowly closing, on-demand services will continue to be subject to lighter touch regulation in most areas than traditional broadcasting.
Similarly, while video-sharing services will now be subject to regulation under the new AVMS Directive, this will be limited to viewer protection measures only.
For many commentators then, the Commission’s proposals are welcome but do not go far enough in many respects.
Finally, one has to question how big an impact the proposals will actually have in practice, given that Member States will remain free (as they always have been) to apply more onerous guidelines in certain areas (for example, advertising limits). It remains to be seen whether the new AVMS Directive will change the approach of particular jurisdictions – the UK, for example, has tended to impose limits in excess of those mandated by European law. If that trend continues, the impact of the new AVMS Directive may not be as pronounced as some will have been hoping.