Copyright in the digital environment:the DSM strategy and the challenges ahead

Ginevra Bruzzone

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Copyrightinthedigitalenvironment:

theDSMstrategyandthechallengesahead

GinevraBruzzone*

1. Introduction

Internet has led to a radical transformation of thewaymusic, audiovisual contents,news and literary works are produced, distributed and exploited. Content is oftenmadeavailableonlinedirectlybyitsproducers,withnointermediation.Newbusinessmodels and players have emerged, and innovative services challenge the traditionalincomesourcesofindividualsandundertakingsinthecontentindustry.

The spread of illegal contents that can be easily uploaded and thus accessed onlineraises further challenges for the protection of right-holders. Moreover, digitaltechnologiesalloweasycrossborderaccesstocopyright-protectedcontentinsectorstraditionallybasedonterritoriallicensing.

At the same time, in the era of big data, access to text, data and databases isincreasingly important in order to fully exploit the innovation potential of theautomatedcomputationalanalysisofinformationinallsectors,rangingfromtransporttoenergy,fromsecurityandenvironmentalprotectiontohealthservices.

Againstthisbackground,EUpolicymakersarediscussingwhetherandhowthedigitaltransformationmakesthecurrentEUlegalframeworkforcopyrightandrelatedrightsinadequate and in need of reform. Key internal market directives, such as the E-Commerce Directive (2000/31/EC), the Infosoc Directive (2001/29/EC) and the IPRsEnforcement Directive (2004/48/EC) are being reconsidered in this perspective. Arelatedissueiswhetheritismoreappropriatetointervenebymeansoflegislationor,instead,throughalternativemeasures,rangingfromtheuseofEuropeanfundstothepromotion of memoranda of understanding between stakeholders and theencouragementofself-regulationandco-regulationinitiatives.

The debate on the proper boundaries of copyright and how to ensure adequateprotection of right-holders in the Digital Single Market is characterised by strongly

*AssonimeandSchoolofEuropeanEconomy,LUISS,Rome.

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diverging visions and conflicting interests. Thus, identifying some shared viewsmayprovideausefulbenchmarkforpolicymaking.

Firstofall,theultimategoalofpolicyinitiativesshouldbetheestablishmentofalegalframework capable of fostering, bymeansof appropriate incentives to creation andinvestment,thesupplyanddiffusionofcontentsandthedynamicdevelopmentofallsectorsinvolved.Inalllikelihood,suchlegalframeworkwouldalsoensurethegreatestbenefitsforcontentusers.

Afurthernon-controversialviewisthat,withreferencetotheuseanddisseminationofcontentinthedigitalcontext,itisnecessarytobalanceseveralfreedoms,rightsandinterests.

Ashighlightedbythecase-lawoftheEUCourtofJusticeandnationalcourts,oftenthetaskoffindingthebalanceisfulfilledbyjudges,onthebasisoftheexistinglegislation,includingtheEuropeanConventiononHumanRightsandtheCharterofFundamentalRightsoftheEuropeanUnion.Looking,forinstance,atthecase-lawontheliabilityofinternet serviceproviders (ISPs) for infringements related toprotectedcontents, theassessment may require taking into account, at the same time, the freedom ofenterprise,propertyrights,thefreedomofexpressionforthosewhoprovidecontentonInternet,theprotectionofpersonaldata,therightofdefenceandtherightofuserstohaveaccesstothe largestpossibleamountof information.1Withreferencetothefaircompensationforprivatecopying,theneedtoensureright-holders’compensationhas tobebalancedwithother interests,withaviewnot to imposedisproportionatefinancial burdens on individuals who do not benefit from the private copyingexception.2 When dealing with territorial restrictions, in cases such as PremierLeague/Murphy,3 the point of view of consumers in the internal market has to bebalancedagainsttheneedtoensuretheeconomicviabilityofbusinessmodelsfortheproduction and dissemination of contents. In all these areas, the proportionalityprincipleplaysamajorroleintheassessmentbyjudges.

The modernization of the copyright legislative framework also requires taking intoaccountseveralinterestsandlookingatproportionalityasaguidingprinciple.1See,forinstance,CourtofJustice,judgment29January2008,caseC-275/06,Promusicae;judgment24November2011,caseC-70/10,Scarletv.Sabam;judgment16February2012,caseC-360/10,Sabamv.Netlog;judgment19April2012,caseC-461/10,BonnierAudio.2SeeCourtof Justice, judgment9 June2016,caseC-470/14,ontheSpanishsystemand judgment22September2016,caseC-110/15ontheItaliansystem.3CourtofJustice,judgment4October2011,joinedcasesC-403/08andC-429/08.

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Fromapoliticalperspective,thereisacleardemandbyEUcitizensforaneasyonlineaccess to awide variety of contents, also cross-border. In time of disaffection andmistrust for the EU project, meeting such demand, i.e. “solving the market supplyfailure of lawful digital content”,4 would help strengthen EU citizens’ sense ofbelongingtoanintegratedsinglemarketentailingrealbenefitsforconsumers.

Anumberof factorswhichmaybeviewedasaccessbarriers toonlinecontenthavebeen identified, ranging from transaction costs to territorial restrictions,windowing,contentexclusivityandtechnologyspecificlicensingagreements.Fromapublicpolicyperspective, it remains tobeseenwhetherpublic interventionwith respect to thesefeaturesmayimprovethewayinwhichmarketsoperatetothebenefitofconsumers.

Indeed, initiatives aimed at facilitating access to protected content face a crucialconstraint: they shouldnot jeopardize theeconomicviabilityof thebusinessmodelsfor the production and dissemination of contents. As largely acknowledged by allstakeholders,demand fordigital content services isultimatelydrivenbydemand forthecontentoffered.5

Inthisregard,theextremeviewswherebyinaborderlessdigitalworldtheveryideaofprotection of copyright and related rights is obsolete, althoughmaybe intellectuallyappealing,areoflittlepracticaluse.

Moreover, European policy-makers face mounting demands for a legal frameworkcapableofensuring that thedevelopmentof thedigitalmarket isaccompaniedbyafair remuneration of all figures along the value chain (from authors to performers,fromthecontentindustrytoInternetServiceProviders).InthewordsoftheEuropeanCommission,weshouldlookfor‘afairerandsustainablemarketplaceforcreatorsandthepress’. Inthisarea,themainchallengeishowtosupporttheviabilityofbusinessmodelswithout unduly interfering in the distribution of income,whichwould entailtheriskofstiffeninganddistortingtheevolutionofmarkets.

EUpolicymakersmustfindthewaytorespondtothesepoliticaldemands.Inviewoftheabove-mentionedconstraintsandthehugevarietyof interests involved,thetask

4Ericsson,Solving themarketsupply failureof lawfuldigitalcontent,CEPSTaskForceonCopyright intheEUDSM,2012.5 See Commission Staff Working Document accompanying the Commission Final Report on the E-CommerceSectorInquiry,SWD(2017)154final.

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ofmodernizingcopyrightandrelatedrightsintheDigitalSingleMarketturnsouttobeextremelycomplicated.

2. CopyrightintheDSMStrategy

2.1Themicro-strategyforDSMCopyright

Between2010and2012 theEuropeanCommissionproposeda first setofmeasuresforthemodernizationofcopyrightinthedigitalcontext.Difficultiesinreconcilingthedifferent stances, however, led to a stop for a couple of years. The only relevantmeasure adopted in this period is Directive 2014/26/EU, aimed at increasing theefficiency of the collective management of copyright and related rights and atfacilitatingthemulti-territoriallicensingofrightsformusicworksforonlineuseintheinternalmarket.

TheJunckerCommissiondecidedtotryagain: itproposed,withinthebroaderDigitalSingleMarketStrategyofMay2015,amicro-strategyfortheDSMCopyrightaimedatovercomingtheblockofconflictinginterests.6

Looking at the copyright modernization strategy in historical perspective helps tounderstand why it is composed of carefully targeted proposals and why measuresentailing costs for a category of stakeholders are usually accompanied bycomplementarymeasuresentailingbenefitsincompensation.Themicro-strategyalsocontemplatesawideuseofnonlegislativeinstruments.

For instance,theCommissionenvisagesacombinationofuseofEuropeanfundsandregulatory duties (i.e. a 20% minimum share of European contents for on-demandserviceproviders)insupportofEuropeanaudiovisualproductions.7Atthesametime,videoon-demandserviceproviderswillbenefitfromcomplementaryproposalsaimedatstreamliningtheiraccesstoprotectedcontent.8

6 See Commission Communication, Towards a modern, more European copyright framework,COM(2015) 626 final, and Commission Communication, Promoting a fair, efficient and competitiveEuropeancopyright-basedeconomyintheDigitalSingleMarket,COM(2016)592final.7ProposalofaDirectiveonaudiovisualmediaservices,COM(2016)287final,25May2016.8ProposalofaDirectiveoncopyrightintheDigitalSingleMarket,COM(2016)593final,14September2016.

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This paragraph provides an overview of the main features of the EU strategy forcopyright in thedigital context. It considers, in turn, the generalmeasures aimedatfacilitating access to the European cultural heritage and the new harmonizedexceptions, the measures designed specifically to promote cross border access toprotected content and the ones intended to achieve a fair remuneration ofstakeholdersalongthevaluechain.

2.2 AccesstotheEuropeanculturalheritageandthenewexceptions

Starting from the least controversial issues, fornearly adecade theCommissionhasbeen trying to exploit the opportunities provided by digitalization to improve theaccessibilityofEuropeanculturalheritage.

Forworksinpublicdomain,whicharenolongerprotectedbycopyright,since2008anon-profit online platform (Europeana), based on cooperation among Europeanculturalinstitutions,providesfreeonlineaccesstotheworksoftheircollectionswhichhavebeendigitized.

The following step concerned orphan works, whose right holders are no longertraceable by means of reasonable efforts to get a license. For those works that,followingaspecificprocedure,aredeemedtobeorphanworks,Directive2012/28/EUhas introduced a specific harmonized exception at the EU level for copying anddissemination, although the exception applies only to a subset of institutions (e.g.libraries) and works (e.g. single photos are not included), and only for cultural andeducationalpurposes.Theestablishment,attheEUIPO,ofafreelyaccessibledatabaseofallworksconsideredorphanworksintheEUcanbeviewedasafirststeptowardsasystem of registration for copyright.9 Whether the set of works covered by theexceptionshouldbeexpandedandwhetherthesystemshouldallowalsocommercialexploitationofworksarestillopenissues.

Since2011theCommission isalsotryingtopromote largescaledigitizationofworkswhoseright-holdersare identifiablebutwhichareout-of-commerce,withtheaimofeasing access by citizens without disrupting the system of rights. The approachfollowedbytheCommissionconsistsinestablishingaframeworkaimedatfacilitatingvoluntarylicensingagreementsinfavourofculturalinstitutionsforthedigitizationand

9 In the European debate, more advanced projects including the commercial exploitation of orphanworks,basedontheauthorizationofanindependentbody,havealsobeenconsidered.SeeforinstanceHMGovernmentPolicyStatement:consultationonmodernisingcopyright,July2012.

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dissemination of out-of-commerce works (books, magazines, films). The proposal isbasedonanopt-outmechanism;collectivemanagementsocietiesaregivenakeyroleinreducingtransactioncostsandcoordinatingthesystem.

Looking at all these initiatives, when digitization is used to ensure access to non-exploitedworks,theobstaclesrelatedtothemoralandeconomicprotectionofright-holdersarelessprominent,althoughwithobviousdifferencesbetweenworksinpublicdomain, orphan works and out-of-commerce works. Nonetheless, in all three areassubstantialfinancialresourcesareneededforlargescaledigitizationanddisseminationofworkswithconcretebenefitsforusers.Itremainstobeseenhowtheseresourcesshouldbefound,inthepublicsectorand/orengagingtheprivatesector.

For theaudiovisual sector,asearlyas2012 therewasacleardemand for improvingdiscoverability and online availability of Europeanworks, including filmswhich havenotbeenreleasedincinemasorforwhich,inaMemberState,thereisnotanationaldistributor; how to proceed, taking into due account the rights of all the personsinvolved, remainedanopen issue. In the copyright packageof September2016, theEuropeanCommissionfirstofallpushesforauniversalsystemfortheidentificationofaudiovisualworksentailing,withthehelpoftechnology,theinteroperabilityofcurrentstandards,asastartingpointfortheintegrationofexistingdatabases.10Inaddition,itproposestosimplifythelicensingprocessforthemakingavailableofworksonvideo-on-demand platforms.Member States are required to establish independent bodieswith the task of facilitating the negotiation of rights. The logical framework, thus,includescatalogues,licensinghubsandlicensingmechanisms.

Complementary initiatives aimedat facilitating access toworksby European citizensinclude the making available of funds for subtitling and dubbing, as well as thepromotionofsearchtoolsforcontentrecommendation.

The goal to promote access to contents is pursued also by means of the newharmonized exceptions contemplated by the Copyright Directive, which will applythroughouttheEU.Theycover:

Ø the digital use of works and other subject-matters for the purpose ofillustrationforteachingactivities,alsocrossborder;

Ø copies for the preservation of the European cultural heritage by culturalinstitutions,alsofornon-orphanworks.

10Commissioncommunicationof14September2016,COM(2016)592final.

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Ø reproductionsandextractionsmadebyresearchorganisationsinordertocarryout text and data mining of works and other subject matter (includingdatabases) to which they have lawful access for the purposes of scientificresearch.

Theexceptionfortextanddatamining,whichdoesnotprovideforcompensationforright-holders,isparticularlyimportanttospurresearchcarriedoutwiththeassistanceof digital technology and will apply also when research organizations engage intopublic-privatepartnerships.11

2.3 Crossborderaccesstocontents

Since Internet by definition operates across national borders, there is a potentialtension between the traditional approach to copyright, based on protection at thenationallevel,andtheeasinessofcrossborderaccesstocreativecontentsprovidedbydigitaltechnologies.

Bothtechnicalmeasuresandlicensingagreementsfortheonlinedistributionofdigitalcontentareused topreserve the territorialdimension. Inorder tounderstand thesecommercialpracticesfromaneconomicviewpoint,itmustbekeptinmindthatwithintheEUtherearesignificantdifferencesindemandforthevariouscontents,forreasonsranging from language toculturaldiversity, fromdifferent levelsof incometodigitaldivide etc. In this context, it is often rational for right holders and content serviceproviderstoadoptanon-uniformcommercialstrategy,differentiatedacrossMemberStates or groups ofMember States, in order to remunerate their investments. Theissue is especially sensitive in the audiovisual sector, for films, TV series and sportevents.

Therefore, territorial restrictions do not depend only on the national scope ofcopyright:territoriallicensesmightremainevenifaunitaryprotectionofcopyrightatthe EU level, i.e. a single copyright titlewere reached in the future.12 On the other

11 For the purposes of the Copyright Directive, research organisations are defined as universities,researchinstitutesoranyotherorganisationtheprimarygoalofwhichistoconductscientificresearch,alsojointlywiththeprovisionofeducationalservices,onanonforprofitbasisorbyreinvestingalltheprofitsinitsscientificresearchorpursuanttoapublicinterestmissionrecognisedbyaMemberState,insuch a way that access to the results cannot be enjoyed on a preferential basis by an undertakingexercisingadecisiveinfluenceuponsuchorganisation.12CopyrightintheEUDigitalSingleMarket¸ReportoftheCepsDigitalForum(2013).

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hand, the current territoriality of rights does not prevent the granting of multi-territoriallicenses.

Thus,withrespecttoterritorialrestrictions,theEuropean legislatorontheonehandshould ensure easy access to content in an internalmarket perspective and, on theother, shouldnotunduly limit commercialpracticese.g.by imposingaduty tograntpan-Europeanlicenses.Uptonow,Europeanlegislation inthisareahasgoneonlyasfarastopromotemulti-territoriallicensingofrightsfortheonlineuseofmusicworks,withnotop-downobligations.13

WithintheDSMStrategy,theissueofterritorialrestrictionsisaddressedbothfromthepointofviewofcompetitionpolicyandfromaninternalmarketperspective.

As for competition policy, the Commission has carried out a Sector Inquiry into e-commerce with the aim, inter alia, of understanding whether the current licensingpracticesfordigitalcontentintheEUraisecompetitionconcerns.14Thefocusisbothon geographic restrictions and on other features such as the duration of exclusivityclauses,automaticrenewal,bundlingofrights,restrictionsonthetechnologieswhichcan be used by service providers to provide content and by users to obtain accessthereto. In principle, these restrictions may represent barriers to entry for onlinedistributorsofdigitalcontent.

ThepurposeoftheSectorInquirywasreachingabetterunderstandingoftheexistingbusinesspractices,of their reasonsandtheir impactonthemarket,soas toprovidethebasis for aproperapplicationof competition rulesby theEuropeanCommissionand national competition authorities. In particular, in order to ascertain whethercontractual clauses have an actual or potential negative impact on the competitivevariablessuchasprice,quality,varietyandinnovation,tothedetrimentofconsumersitisnecessarytoconsiderthecounterfactualscenario,i.e.consideringhowthemarketwouldworkintheabsenceofthecontestedrestrictions.Traditionally,withreferenceto vertical agreements between suppliers and distributors in the physical world,restrictions to passive sales, i.e. distributors meeting unsolicited requests, areconsidered incompatible with EU competition rules. In transposing the approach tocontent provision in the digital context, some caution is needed, since the ease ofswitching from the single user’s online fruition to the generalized diffusion of the13Directive2014/26/EU.14TheFinalReportontheE-commerceSector Inquirywaspublished inMay2017.SeeCOM(2017)229final.

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content in the webmay easily undermine the sustainability of business models forproducersanddistributorsofcontents.

TheFinalReportofthee-commerceSectorInquiryconfirmsthatlicensingagreementsbetweenright-holdersanddigitalcontentprovidersareoftenbasedonexclusivityandusuallycontaintechnological,temporalandterritorialrestrictions.Inparticular,onlinerightsaretoalargeextentlicensedonanationalbasisorfortheterritoryofalimitednumber of member States which share a common language. This is especiallyprevalent in relation to content types thatmay contain premium products, such assport (60%), films (60%) and fiction TV (56%). In parallel, digital content providersoftenusegeoblockingmeasures,especiallyforTVseries(74%),films(66%)andsportevents(63%).15

TheCommissionacknowledgesthattheselicensingpractices“reflectthedesireofrightholderstoexploitfullytherightstheyhold,andtheneedfordigitalcontentprovidersto remain competitive by offering attractive content that meets consumer demandand reflects culturaldiversitywithin theEuropeanUnion”; contractual restrictions inlicensing agreements are therefore not the exception but the norm in the digitalcontentmarket.

In its policy conclusions, the Commission does not claim that territorial licenses arealways anticompetitive: it states that they may raise concerns of anticompetitiveforeclosurefornewonlinebusinessmodelsandservicesandneworsmallplayers,buttheassessmentoflicensingpracticesundertheEUcompetitionruleshastotakeintoaccountthecharacteristicsofthecontentindustry,thelegalandeconomiccontextofthe licensingpracticeand the characteristicsof the relevantproductandgeographicmarkets. Thus, whether licensing agreements restrict competition needs to beassessedonacasebycasebasis.16

Asforinternalmarketlegislation,astudyof2014,publishedundertheauspicesoftheEuropeanCommission,ontheeconomicanalysisofterritorialrestrictionsforcopyrightin the EU has shown that, compared to the current situation, a general ban onterritorial restrictions would not necessarily result in an improvement of consumer

15COM(2017)229final,paragraphs19-22;58-59;65-66.16Ibidem,paragraphs71-72.

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welfare.17 TheEuropeanParliament, in its resolutionof19 January2016“TowardsaDigital SingleMarket”, has acknowledged that the indiscriminate promotion of pan-European licenses could paradoxically result in a reduction of contents available tousers.

Thus,boththeaudiovisualsectorandmoregenerallyprotectedcontentsareexcludedfrom the scope of application of the proposal of Regulation on geo-blocking, whichimposesadutyofnon-discriminationforservicesaccessibleonline.18

As to cross border access to content, within the DSM Strategy the Commissionproposesonlyspecific,welltargetedmeasureswhich,althoughentailingaweakeningof the territorial nature of copyright, in principle should not have significant sideeffects.Inparticular,thesemeasuresinclude:

• the acknowledgement of the right of consumers to have access to contentserviceswhichtheyhavelawfullyacquiredintheirMemberStateofresidence,when temporarily travelling in another Member State (Regulation2017/1128/EUoncross-borderportabilityofonlinecontentservices);

• asimplifiedclearanceofrightsfortheprovisionofsomeonlineservicesstrictlyancillary to broadcasts (simultaneous online transmission, catch up services),based on the extension of the country of origin principle, already used forcableandsatellitetransmissions,totheprovisionoftheseonlineservices(so-called Sat-Cab Regulation).19 This proposal is meeting strong opposition bycontent providers and commercial broadcasters, who argue that it mightjeopardize the sustainability of strategies based on territorial licensing, inparticular for sport events, TV series and movies, and that it is hardlycompatiblewiththeterritorialnatureofcopyrightintheEU.

Summingup, fromboth the competitionpolicyand the internalmarketperspective,currentEUinitiativesaimedatpromotingeasiercrossborderaccesstoonlinecontentstakeintoaccountthatterritorialrestrictionsinthecurrentlicensingpraticesmayhave

17CRA(2014),StudyontheEconomicAnalysisof theTerritorialityof theMakingAvailableRight in theEU, prepared for the DG Internal Market,http://ec.europa.eu/internal_market/copyright/docs/studies/1403_study1_en.pdf.18COM(2016)289final.19 Proposal of Regulation on certain online transmissions of broadcasting organisations andretransmissionoftelevisionandradioprogrammes,COM(2016)594final.

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economic justifications which should not be overlooked and, thus, remain narrowlycircumscribed.

Atthesametime,itisclearthatthelackofavailabilityoflegalcontents,atthenationallevelor cross-border,mayendup favouringpiracy.Therefore, it is in the interestofrightholdersanddigitalcontentproviderstobroadenthechancesforuserstolegallyenjoyonline contents, alsobymeansof innovative solutions. Spotify andNetflix aresuccessstoriesinthisarea.

2.4 Fairremunerationalongthevaluechain

Asforthepoliticaldemandforafairerandmoresustainablemarketplaceintermsofremuneration of the different players along the value chain, in the Commission’sstrategythreemainlinesofactioncanbeidentified.

The first line of action consists in ensuring a more effective remuneration of right-ownersby reinforcing themeasuresagainst infringementsof rights. To this aim, theCommission encourages self-regulatory initiatives involving, through the follow-the-moneyapproach,providersofonlineadvertising,paymentandshippingservicesintheprevention of infringements on a commercial scale. Under the same perspective,Article13ofthedraftCopyrightDirectiveestablishesnewobligationsononlineserviceproviders that store and provide to the public access to large amounts of contentuploadedbyusers,soastoensurethatright-holdersareinformedoftheuseoftheirworksandenjoytheconcretepossibilitytoenforcetheirrightsonprotectedcontentsby means of authorization or removal. Pursuant to the proposal, service providersshouldtakemeasurestoensurethefunctioningofagreementsconcludedwithright-holders to this aim, and those measures, including the use of effective contentrecognition technologies, should be appropriate and proportionate. It remainscontroversialhow theproposal interactswithArticles14and15of theE-Commercedirective,whichclearlycircumscribetheliabilityof(passive)hostserviceprovidersandexcludeanygeneralfilteringobligation.

ThesecondlineofactionentailstheacknowledgementattheEUlevelofanewrelatedright for press publishers, in case of digital use of their publications. This proposal,whichiscontainedinArticle11ofthedraftCopyrightDirectiveandishotlydebated,doesnotgointothedetailsoftheremunerationmodelbutaimsatstrenghteningthebargaining position of publisherswith respect to the use of their content by onlineserviceproviders.

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The third line of action consists in imposing transparency obligations on thecounterparties of authors and performers on earnings generated by their work. Inparticular, Article 14 of the draft Copyright Directive establishes that authors andperformersshouldreceiveonaregularbasissufficientinformationontheexploitationof their works and performances from those to whom they have licensed ortransferredtheirrights,notablyasregardsmodesofexploitation,revenuesgeneratedand remuneration due. Even in this case, the proposalmerely defines a framework,without interfering with contractual balance. The system requires effectiveidentificationofworksandefficientmonitoringandreportingactivitiesbyallentitiesalongthevaluechain.TheprovisionsofDirective2014/26/EUaimedatincreasingthetransparency and enhancing the efficiency of collecting societies contribute to theestablishmentofsuchframework.3. Thechallengesahead

This overview shows that the difficulty of reconciling opposite interests and theconstraintswhichmustbetaken intoaccounttoavoidundesirableconsequencesforthevariousfiguresalongthevaluechain(fromright-holderstousersofcontent)resultinapiecemeal,incrementalreformofcopyrightintheDigitalSingleMarket.Basically,theDSMStrategywillleadtoatargetedwideningofexceptionsandtheestablishmentofamoretransparentframeworkaimedatreducingtransactioncostsandfacilitatingtheclearanceofrights.

Thosewhoenvisagedabroader,systematicmodernizationofcopyrightattheEUlevelremaindisappointed.Ontheotherhand,atpresentmoreambitiousproposalswouldinalllikelihoodfaceasignificantriskofpoliticalsetback.

The Commission’s Communication “Towards a more modern, more Europeancopyright framework” of December 2015 contained also a long-term vision: itcontemplatedawiderreformaimedatovercomingthenationalscopeofcopyrightinorder to achieve a unitary protection at the EU level, which could match with aEuropeanjurisdiction.20Asalreadyarguedinparagraph2.2,suchsystemwouldstillbecompatiblewithterritorialrestrictionsinthelicensinganduseoftherights;themainconstraint on such commercial strategies would result from the application of EUcompetitionrules.

20COM(2015)626final.

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The Commission is aware that the full harmonization of copyright in the EU, in theformof a single copyright code and a single copyright title,would entail substantialchanges in the way copyright rules work today and a radical reorganization of thesystem,whichwouldrequireanin-depthimpactassessment.

In the meantime, in order to ensure an effective and more uniform application ofcopyright legislation in the Digital Single Market, it seems appropriate that theCommission commits to further promote convergence of national laws, including asregards enforcement, and to proactively adapt the legislative framework – includingharmonizedexceptions–totheevolutionofmarketsandconsumerbehaviour.

Parallel developments in the areas of online music, orphan works and Europeanaudiovisual works suggest that, in the future, standardized systems for theidentificationofworksandinteroperableonlinepublicregisterswillplayacrucialrolefor copyrightprotection indifferent areas. Importantly, these toolsmay significantlyreducetransactioncostsandthusimprovetheoperationofthemarket.

Someproposalsalsosuggestthatthedigitaltransformationshouldbeaccompaniedbya broader modernization of copyright entailing the shift to a generalized duty tolicense, or “compensatory liability regime”,21 for the online use of protectedworks.This approach remains highly controversial. Itwould entail a radical overhaul of theincentives forproducersanddistributorsofcontentand it isdoubtful that theresultwouldbewelfare-enhancing,also in termsofavailabilityof content foronlineusers.Takingboththemoralandtheeconomicdimensionofcopyrightintoaccount,itseemspreferable that any new system based on an enhanced online transparency ofprotectedworks still contemplates, togetherwithanenhanced licensing system, thepossibilityforright-holderstoexcludethirdpartiesfromtheuseoftheirworks.

21See,forinstance,GustavoGhidini(2006),IntellectualPropertyandCompetitionLaw.TheInnovationNexus,EdwardElgarPublishing,andtheliteraturecitedtherein.