Europe badly needs a single digital market

Right around the world we need to recognise that the economics of content creation and distribution have been transformed. Digital copying comes at virtually no cost, and digital distribution means that successful content can reach billions of global consumers in weeks rather than years; costs and risks are lower, and the potential rewards are higher.

So it seems a paradox that the world is defying economic logic and keeps on lengthening copyright terms. Another paradox is that the EU is creating a tighter licensing market when the rest of the world is opening up.

While the EU’s copyright system sets out a detailed list of what you can do with content, rather than stating general principles, the UK has started a programme of reform that seeks to create the “space to innovate” which the U.S. fair use system allows. In the U.S., the basic principle is that if you’re not competing with the originator of the work or harming that person’s ability to monetise it, you are engaging in “fair use” which allows new innovative uses to grow without restrictive licensing. The UK approach is to create the same freedoms through specific exceptions and limitations to copyright in private format shifting, not for profit text and data mining, parody, records and archives, education and a range of other areas. In every case, the objective is to retain the creative incentives provided by copyright, but remove the blockages to innovation that arise from the fact that most digital processes technically copy content, and under EU law technically infringe copyright.

Industry lobbyists at the EU level maintain that the best way to deal with this is “Licensing for Europe”, which may work well for incumbents but which will tie digital innovators into a complex legal web of permissions. Basically, digital innovators – who build the new services that creators benefit from through faster and cheaper distribution – are strangled at birth by slow and complex licensing systems. That is why Google still relies for much of its innovative development on open source, because that means innovators don’t have to waste time asking people for permission to do things. Speed matters in innovation, and most licensing systems are slow.

EU innovators in digital content markets also face a disadvantage vis-à-vis the U.S., China, India, and Brazil in that regulatory systems in Europe are still mainly national. They have to cope with 28 different licensing, tax and employment regimes, and that benefits those players that have the scale to do this, who are often American. Compared to the single digital market in the U.S., new digital services face higher costs in Europe, with lower rewards. We need a real digital single market so European companies can compete on an equal footing.