IMPALA overview of the main public affairs developments in Brussels in 2008

The political prioritisation of the culture industries continues, with the EC’s creation of the first cultural industries stakeholders platform to come up with concrete recommendations to unlock the potential of Europe's cultural industries, especially SMEs.  Another platform has also been created to negotiate solutions to the recurrent issue of private copying. IMPALA is playing a key role as a board member of both platforms and is leading the EC’s working group on SMEs.

The European Commission launched a communication on creative content online aiming to quadruple the market by 2010.  Combined with the results of a consultation and stakeholder platforms this may lead to legislative intervention by the EC.

The French have been very active this year both at national level and during the French Presidency of the EC during the second half of the year.  National level initiatives that would do well to be examined by other countries include the French tax credit and the “three strikes” agreement.  2007 saw the improvement of the French tax credit for music companies by increasing the amount of credit available to 700k euros, with a possible 1.1m euros subject to certain conditions. The costs covered now includes some staff costs. The French language component has been removed as a condition. This is an excellent example of a programme which should be raised at national level in other countries. The Olivennes report became a text for the Creation and Internet law in France.  This included the much reported graduated response (or “3 strikes” system) which is now being examined by a number of countries and has received the support of Commissioner Reding in Brussels. Response in the European Parliament was fierce opposition, including through a controversial amendment in the Telecoms Package, but it now seems that diplomatic negotiations with other Member States will mean that the Parliament’s amendment will be overridden – at least for the time being.

The French Presidency held groundbreaking discussions on independence and SMEs in the cultural field, with participants from music, film, and book publishing, to produce concrete recommendations for the EC and Member States – through the European Independence Declaration.  The declaration advocates: the recognition of cultural small to medium enterprises as a distinct type of business, meriting a specific status, with measures to positively discriminate for those businesses; a higher level of protection for authors' and producers' rights, especially online; access to market for independents through media and retail; new competition rules; limiting excessive mergers among the major entertainment companies; reduction of VAT on cultural products; more investment in the independent cultural sector at national and European levels. The declaration marks yet another high point politically for culture and SMEs.

The French President also highlighted the importance of reconsidering VAT for music as the Commission launched a public consultation to ascertain the views of the public and businesses on the review of the existing legislation on reduced VAT rates.  Any change of VAT rates needs unanimity from all Member States so it is highly important that associations raise this in their work at national level.

The consultation included a list of requests of the new sectors to be added to the future VAT Directive which encompassed: services of producers and organisers of entertainment, shows and similar performance; online music; CD’s (music)/phonograms of musical works and literacy works. 2008 was a lukewarm start to the review before it even began but we hope for a second opportunity in 2009 when the issue will be reviewed again.

Despite the political prioritisation mentioned above the European Commission continues to take decisions at odds with the political rhetoric.  A key example is the Commission’s approval of Sony's buy out of Bertelsmann's share of SonyBMG with no remedies or detailed investigation. As 2008 drew to a close the European Parliament asked the Commission to justify its approach to the SonyBMG case.  Neelie Kroes is due to respond early in 2009.  Also in 2008 the European Court ruled in favour of IMPALA that there is no presumption in favour of approving mergers (very important in regards future concentration in the music market), and asked the lower court to re-assess its previous judgment annulling the Commission's first approval of the Sony-BMG merger decision. 

Outside of the SonyBMG cases Commissioner Kroes opened a consultation into the online market, including for copyrighted content, threatening further action to ensure the market is competitive.  This seems to be part of her bid to come back as Internal Market Commissioner… This was a perfect forum for IMPALA to highlight again the problem of market concentration and the discrimination the independents face in concluding key online deals with the likes of MySpace etc.

Other key competition cases which came to a close were the EC’s investigations into iTunes and CISAC. Collecting societies have now appealed the decision of the Commission in the CISAC case. The EC also decided to take no further action under its Recommendation on collective licensing for online exploitation of music publishing rights, saying that the initiative has already worked.

One issue that will cross over into 2009 is the Copyright Term Extension proposal from the European Commission that is currently being debated in the European Parliament. The initial proposal was to extend copyright term for performers and producers in sound recordings from 50 to 95 years. Two accompanying measures were included in the Commission proposal – the 20% fund for session musicians and the “use it or lose it” provision.  The EC also included the possibility for Member States to apply an exemption for smaller labels. The proposal is experiencing a bumpy ride in both the Parliament and at Member State level.

It would be impossible to talk about 2008 without referring to the Commission’s adoption of the Small Business Act, which is intended to set a new framework that will put SMEs at the forefront of society, improve their access to market and access to finance, skills and innovation, reduce red tape, and mainstream SME policy principles in other policy areas.  To highlight the increasing importance of SMEs politically, the European Investment Bank Group (EIB Group) is strengthening its financial support for Europe’s small and medium-sized enterprises in order to help mitigate the effects of the current credit crisis. The EIB decided to devote € 30bn to SMEs in Europe in 2009 in the form of new loans.

Also, in the framework of the European Agenda of Culture the European Commission began to consider how it would implement the UNESCO convention on cultural diversity through the “mainstreaming” of culture in all EU policies. Through this convention, the principle of fair and equitable access to the means of creating, producing, distributing and disseminating music and other cultural expressions became part of EC law in 2007 – a provision that could prove vital in the battle to get the EC to do something concrete about market access.

2009 is going to be a busy year in Brussels with the ever increasing agenda, and also European Parliament elections and a change of Commission.  A huge amount of time will have to be invested in developing new relationships. Despite the growing importance of the cultural industries and SMEs in European policy making, there is still lots to do. Issues such as reduced VAT on music and the French Tax credit system need to be pushed at national level throughout Europe to help us make an impact and support the independent music companies that drive Europe’s creativity and innovation. You would think 2009 was made for us – it has been officially announced as the European Year of Creativity and Innovation so we need to take advantage and try and pin down some concrete results. The vital work completed in 2008 through the IMPALA Action Plan and the European Declaration of Independence now needs to be implemented!

End


back