On 6 November 2018, the European Council approved a slew of long-awaited changes to the Audiovisual Media Services Directive (“the Directive”), the seminal piece of EU legislation regulating audiovisual media services across the European Union. The revised Directive, which entered into force on 18 December 2018, promotes European content, injects flexibility into existing advertising rules, and regulates video-sharing platforms, among other changes.
This article provides a brief overview of the revisions to the Directive and comments on the practical implications of these changes for media service providers.
Key changes to the AVMS Directive
The Directive ensures that audiovisual content is able to be freely received throughout the EU once regulated in a “home” Member State and, to facilitate this, applies a minimum set of rules which every EU Member State regulator must apply. European legislators regularly review and update the Directive to try to keep pace with technological advancement and modern content consumption preferences. In 2007, the Directive was updated to include not only traditional linear television broadcasting services, but also on-demand programming (e.g., Netflix or Amazon Prime). Now, more than 10 years on from the last major update, the Directive has been revised again to include the following changes:
The scope of the Directive has been extended to cover video-sharing platforms (or VSPs). A VSP is defined as a service (or a “dissociable part” of a service) devoted to providing programmes, user-generated videos or both to the general public, but for which the platform provider does not have editorial responsibility. Examples include not only platforms like YouTube, but also audiovisual content-sharing functions on social media services such as Instagram. From now on, video-sharing platforms will be subject to oversight by local media regulators (e.g., Ofcom in the UK), although so-called “co-regulation” is encouraged. The substantive obligations imposed on VSPs are limited, only touching on the most basic areas of protection of minors, and protection for all citizens from hate speech and incitement of terrorist offences. In these areas, “appropriate measures” must be taken to protect citizens.
Country of origin principle:
The revised Directive seeks to clarify the jurisdiction tests used to determine which Member State regulates each media service provider to reduce the number of instances where regulators dispute jurisdiction, while retaining the basic structure which examines the location of head office and editorial decisions, along with the location of the workforce.
The key clarification is a new definition of the concept of an “editorial decision” as one “which is taken on a regular basis for the purpose of exercising editorial responsibility and linked to the day-to-day operation of the audiovisual media service.” On the other hand, the final Directive did not adopt the Commission's proposal to look at where the "majority" of the relevant workforce is situated, choosing instead to retain the language of the current Directive about a "significant part" of the workforce, but emphasised that it is the members of the workforce who are undertaking “programme-related” activities who are key.
The revised Directive streamlines the cooperation procedures between the Commission and different Member States where disputes about forum-shopping arise for TV broadcasters and on-demand service providers alike. The new rules also provide that each Member State must establish and maintain a register of media service providers in their jurisdiction (if they don’t already do so).
Promotion of European content:
The revised Directive introduces a requirement on on-demand service providers to ensure that at least 30% of their “catalogue” is reserved for European content. The Directive does not explain how to measure this percentage, i.e. whether it is measured by number of titles, aggregate duration or some other metric, but does provide that the Commission will issue guidelines on the calculations.
In addition to the volume quota, the Directive also demands that Member States ensure prominence of European works. In an on-demand environment, the latter is highly controversial and subjective – will having a “European works” genre in a list of genres be enough? Aware of this challenge, the following wording appears in Recital 35: “Prominence involves promoting European works through facilitating access to such works.Prominence can be ensured through various means such as a dedicated section for European works that is accessible from the service homepage, the possibility to search for European works in the search tool available as part of that service, the use of European works in campaigns of that service or a minimum percentage of European works promoted from that service's catalogue, for example by using banners or similar tools.” This is clearly an area ripe for future disputes.
There are mandatory exceptions from the quotas for services with low turnover or low audiences as well as small and micro-enterprises, while Member States are also permitted (but not obliged) to waive the quotas where they would be “impracticable or unjustified by reason of the nature or theme” of the service. This latter exception mirrors the “where practicable” carve-out from the quota rules for linear TV channels.
The most radical part of the Directive is the loosening of the country of original principle to allow for contributions to national content investment funds. Where Member States require service providers based within their jurisdiction to contribute to the production of European works (e.g. by investment in content and/or contribution to national funds), they can also require services based elsewhere, but who target audiences in their territory, to contribute (this became known as the “Netflix tax”). In the course of the legislative process, this power to levy based on country of reception was extended to linear broadcasters as well as on-demand services. Given that country of origin is such a cornerstone of the Directive, there have been widely articulated concerns that once the principle is breached in one area, it might lead to other countries looking for special treatment for their own particular issues of concern. The implementation of this provision will be watched closely, particularly in cases where both the country of origin and the country of reception wish to levy the same channel/on-demand service.
Changes to advertising rules:
The revised Directive will give broadcasters the flexibility to adjust the quantity of their advertising according to the nature of the programming in question. Under the existing Directive, broadcasters were limited to 12 minutes of television advertising in any clock hour. Now, this is to be relaxed, but advertising spots and teleshopping spots remain limited to a maximum of 20% of the total broadcast period across each of two separate periods (06.00 to 18.00 and 18.00 to 00.00) with individual Member States free to continue to impose stricter limits than appear in the Directive on services regulated in that Member State (as Ofcom chooses to do today for UK-regulated broadcasters).
Protection of minors:
The revised AVMS Directive standardises the protections afforded to minors across TV broadcasting and on-demand services. Now, both TV broadcasters and on-demand service providers must ensure that access to programmes that may impair the physical, mental or moral development of minors is restricted. The new rules also slightly increase the requirements to protect children from commercial communications for foods high in fat, sodium and sugars.
Prominence of general interest services
The new Directive will allow Member States to take measures to ensure the appropriate prominence of audiovisual media services of “general interest.” This provision reinforces Recital 38, which states that the Directive is “without prejudice to the ability of Member States to impose obligations to ensure discoverability and accessibility of content of general interest under defined general interest objectives such as media pluralism, freedom of speech and cultural diversity.”
By permitting Member States to give prominence to audiovisual media services of general interest, this will, for example, allow the UK to elevate the ranking of public service channels and on-demand services in the electronic programme guide (or “EPG”), a source of much tension between public service broadcasters and platform operators.
The revisions significantly toughen the existing obligations around accessibility. In particular, the Directive states that Member States should “without undue delay” ensure that both linear and on-demand services are continuously and progressively made more accessible to people with “disabilities” (primarily, but not limited to those with a visual or hearing impairment). Despite some expectations that the new Directive would impose percentage targets for specific types of programming being made available to those with “disabilities,” the revisions instead specify that Member States should ensure that media service providers report on a “regular basis” to the national regulator and in turn national regulators should report to the Commission every 3 or 4 years.
The revised Directive recognises an enhanced role of European Regulators Group for Audiovisual Media Services (or “ERGA”). This role will include providing technical expertise to the Commission to ensure a consistent implementation of the Directive, exchanging experience and best practice on the application of the Directive, cooperating and providing its members with the information necessary for the application of the Directive and giving opinions, when requested by the Commission, on technical and factual aspects of the Directive and any related disputes.
One important role for ERGA is in policing disputes between Member States with regards to the jurisdiction of media service providers. A new provision has been inserted so that where two or more Member States do not agree which has jurisdiction over a media service provider, they shall bring the matter to the Commission’s attention and the Commission may request ERGA to give an opinion on such point.
By enhancing the role of ERGA, the hope is that ERGA will facilitate a more effective dialogue between national regulatory authorities and the Commission, while improving the efficacy with which the Directive is implemented and applied. We expect to see ERGA become a powerful influence on national regulation and on disputes, aspiring to the role which the European Data Protection Board has under GDPR.
Conclusions and commentary
The above changes to the Directive are significant. Given that video now makes up 80% of consumer internet traffic, video-sharing platforms should not be permitted to abdicate responsibility or escape regulation simply because they are unconventional content platforms. Many of the larger VSP providers would argue that they already apply protection measures equivalent to those under the revised Directive and thus, the new requirements on video-sharing platforms may not be as onerous or as novel as they might appear. Nevertheless, now the principle of regulating VSPs has been established, it is easy to see a route to more onerous regulation at the next review of AVMS.
Linear broadcasters had hoped for greater deregulation and remain disappointed that a number of specific additional regulatory burdens still fall on them, so that the notional “level playing field” with on-demand services is still some distance away.
Finally, following the acceptance that levies will fall outside of the country of origin principle, there is great nervousness that further aspects of regulation will in future be subject to the same approach, materially reducing the benefits that the Directive has previously afforded to service providers.
EU Member States have until September 2020 to implement the changes into national law. However, it is worth noting that the position of the UK as regards the AVMS Directive will be less clear assuming that the UK leaves the European Union on 29 March 2019. For more information on broadcasting and video on demand in the case of a No-Deal Brexit, please click here.