Cable, Broadcast, Rights Organizations Squabble Over Need for Clearance Reform
AMSTERDAM -- European cable operators tussled with broadcasters and collecting societies here Wed. over claimed inequities in the copyright clearance system. In a contentious session at Cable Congress 07, operators charged the current setup is bad for business, broadcasters swore they would never cede rights to cablecasters, and collective rights management (CRM) groups accused the cable industry of putting profit before intellectual property protections.
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Cablecasters don’t challenge the right of authors and performers to receive royalties, but the system has “inefficiencies” that need correcting, said session chairman Ad van Loon, mgr.-legal & regulatory affairs for Dutch cable association VECAI. A Solon Management Consulting study said the complexity of the collecting society approach packs an economic wallop for cable operators, said Mgr.-Head of Telco Practice Dorothea von Wichert-Nick.
The problems: Rights acquisition is costly and digitization and IPTV further increase its complexity and expense. Cablecasters end up overpaying for bundled rights. Copyright prices often don’t reflect market value. Moreover, von Wichert-Nick said, CRMs abuse their dominant powers by taking a long time to grant clearances, and, because they're monopolies, they have no incentives to reduce operating and management costs.
The study proposed a simplified system in which a cablecaster would either choose a single CRM to handle central licensing or receive all-rights-included packages from broadcasters. Either would spur competition among collecting societies and give rightsowners and consumers freedom of choice, von Wichert-Nick said. They would also cut transaction and negotiation costs -- not to mention the price of opportunities lost to delay -- and force CRMs to reduce operating costs. Everyone -- consumers, broadcasters, CRMs, content creators and cablecasters -- would win, she said.
The all-rights-included solution has a better chance of success than the competition model, said Tilman Lueder, head of unit-copyright & related rights, EC internal market directorate. If a broadcaster handles the clearance for a particular program, it could negotiate cable retransmission, either for its own cablecast or a 3rd party’s, he said. Central licensing, on the other hand, could raise cartel issues, he said.
A centralized system is “one step too far” at this point, said Ton Tuijten, Senior Vp-Gen. Counsel of pan- European cable operator Liberty Global Europe. New CRMs are popping up and warring over who represents particular rightsholders, particularly in central EU countries, he said. “Old” EU states still lack harmonized intellectual property systems, leaving cablecasters to deal with 27 different legal systems. Central licensing won’t be competitive, so operators should look to all-inclusive rights, and platforms, packages from broadcasters.
The Solon study said cable operators are at a disadvantage because they have to clear rights satellite and digital terrestrial TV (DTT) companies don’t, said Christian Hauptmann, deputy gen. counsel for RTL Group, a pan-EU broadcaster. The business of broadcasters is to aggregate product to reach audiences across all relevant transmission modes, he said. Cable operators, who used to be mere infrastructure providers, now offer triple-play services that place them in the same direct relationship with end users that broadcasters have. Satellite and DTT operators, on the pother hand, have service agreements only with broadcasters.
Broadcasters “need to be able to control what others do with our products,” said Hauptmann, and that’s why they've been given a signal protection right. Without broadcasters, cable companies wouldn’t have access to the interesting content that draws subscribers, he said. Broadcasters will never give up their rights in favor of cable operators, he said.
The session was punctuated by occasional outbursts from audience members who accused cable operators of being unfair to CRMs. Cable companies pretend it’s impossible to work with collecting societies because they're slow, complicated and not clear about what rights they represent, AGICOA Legal & Business Mgr. Helmut Koszuszeck told us later. His organization includes film producers Sony, Warner, American indies and others.
AGICOA has concluded long-standing agreements with cable operators in more than 30 countries, Koszuszeck said. European cablecasters are moaning because their monopoly over distribution of TV channels to homes is evaporating under a barrage of competition from telcos, he said. They're trying to cut costs by having broadcasters clear their rights, but broadcasters are more interested in getting their programs to consumers than in insisting on copyright, Koszuszeck said.