Calls to revise the AVMS Directive

While Italy has not yet been hit by Netflix, the impact of this global distributor of audiovisual works was on everybody's mind. First established in Luxembourg and then moved to the Netherlands, Netflix entered the European market from the Nordic countries and the UK and then deployed itself in France, Germany and Belgium last September. While Netflix’ activity in the Nordic countries and in the UK did not create local political turmoil, its arrival in the three other countries has triggered high concerns and hot debates. Why? The answer is very simple: Netflix is hitting the audiovisual policies of the latter group but not the former. You could rightly ask: but are these policies not harmonized and the same for all EU countries due to the AVMS Directive?

The answer is no: the AVMS Directive has not fully harmonized audiovisual policies, in particular in the field of the promotion of European works.

Netflix, like any other EU-established, online distributor of audiovisual works with editorial control of its service, is covered by the AVMS Directive. The main interest of the AVMS Directive for these services is the country of origin principle. It allows them to provide their services across Europe while only respecting the rules of the country where they are established. Country-of-origin is fair when the country of establishment is a real connecting factor which reflects the place of the main activities of an economic operator - as is the case for most broadcasters. But for online operators, in particular global ones from outside Europe, their country of establishment does not really reflect the center of their activities but more a place they choose for fiscal reasons in total disconnection with the countries they target for their activity. The possible adverse effects of country-of-origin can be neutralized when rules are harmonized. It eliminates the interest for economic operators to establish themselves in the country with the least stringent rules. The problem is that the AVMS rules on the promotion of European works by on-demand services are not harmonized. Article 13 only gives examples of ways to promote European works: prominence (which can be implemented in many ways), shares in catalogues, and financial contributions to sector support funds. The countries who make use of these options (in particular by imposing financial contributions) as well as the national competitors to these international services, very much suffer from services targeting their market while being established in a Member State with no such obligation.

The Member States with audiovisual policies which request all operators who distribute audiovisual works to contribute to the economy and cultural diversity of the sector started their campaign for a revision of the European framework last week in Rome. They will take advantage of the refit exercise of the AVMS Directive next year to pressure the Commission to allow derogations to the country of origin principle so that they can impose obligations on all operators active in their market. As the European Commission is less enthusiastic to reform the AVMS Directive than the Copyright Directive, it’s too early to say if there will be AVMS 2 – the sequel, but this is definitely one to be continued…

CD