On-demand services

IRIS Plus 2015-2: Territoriality and its impact on the financing of audiovisual works

Author: Francisco Javier Cabrera Blázquez, Maja Cappello, Christian Grece, Sophie Valais, European Audiovisual Observatory

Published: 11/09/2015

The legal question of territoriality is at the heart of the discussions at EU level for the audiovisual sector. On the one hand, the territoriality of copyright is being questioned and presented by certain stakeholders as an obstacle to the access to audiovisual works in the Digital Single Market. On the other hand, the concept of territorial jurisdiction, which is enshrined as the country of origin principle in the Audiovisual Media Services Directive (AVMSD), is being challenged at least from two sides: foreign-owned pan-European operators are directing their services towards the EU and EU-based operators have often other member states as their target countries. Based on the country of origin principle, the services provided by these operators are likely to escape the regulatory mechanism of the target countries.

Territoriality will be addressed by two legislative revisions that are on the agenda of the European Commission in the coming months: the review of EU copyright rules and the revision of the AVMSD. These discussions intervene in the midst of a transformation phase for the audiovisual sector due to digital technologies and convergence, where new ways of consumption of audiovisual works are already a reality and major distribution platforms emerge.

These two aspects affect the traditional value chain in this sector and may also impact the production and financing of audiovisual works. In fact, territoriality plays a key role in the financing of the audiovisual sector.

This is first of all true from the perspective of the territoriality of copyright: in this domain, territoriality contributes directly to the financing of, for example, feature films through the pre-sale of rights. But it is also true from the perspective of the AVMSD: several national funding mechanisms involve operators from the broadcasting and distribution sector in the production of audiovisual works. The question is, what to do with services originating from outside the EU or targeting members states different from the country of origin, since territorial jurisdiction cannot be claimed over those services.

This report focuses in parallel on copyright and media regulation, in order to take a closer look at the impact of the two leading concepts of “territoriality of copyright” and “country of origin” on the financing of audiovisual works in the digital single market, offering insights both into business contractual practices and the investment obligations of the different operators of the value chain.

After setting the scene with background information on the European audiovisual sector (chapter 1), this IRIS Plus looks into the international and European (chapter 2) and national legal framework (chapter 3), before exploring the initiatives from the industry (chapter 4), European and national case-law (chapter 5) and the state of play as to future revision processes (chapter 6).

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