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Document 52016SC0168

COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2010/13/EU on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services in view of changing market realities

SWD/2016/0168 final - 2016/0151 (COD)

Brussels, 25.5.2016

SWD(2016) 168 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Directive of the European Parliament and of the Council amending Directive 2010/13/EU on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services in view of changing market realities

{COM(2016) 287 final}
{SWD(2016) 169 final}


TABLE OF CONTENT

1.Context

2.What is the problem and why is it a problem?

2.1 Conclusions of the ex-post evaluation of the AVMSD under REFIT    

2.2 Description of the problems and their drivers    

2.2.1 Insufficient protection of minors and consumers in video-sharing platforms    

2.2.2 Lack of a level playing field and internal market weaknesses    

2.2.3. Rules on commercial communications no longer fit for purpose    

2.3 What is the EU dimension of the problem?    

2.4 How would the problem evolve, all things being equal?    

3.Why should the EU act?

4.What should be achieved?

5.What are the various options to achieve the objectives and what are their impacts?

5.1 Options addressing the problem of insufficient minors and consumers protection in video-sharing platforms    

5.2 Options addressing the problem of the lack of a level playing field and internal market weaknesses    

5.2.1 Promotion of European works    

5.2.2 Protection of minors in on-demand services    

5.2.3 Country of origin principle    

5.2.4 Independence of Regulators    

5.3 Option addressing the problem of the rules on commercial communications no longer fit for purpose    

5.4 Discarded option: Prominence of content of general interest    

5.5 Impact of the combination of the preferred options    

6.How would actual impacts be evaluated or monitored?

6.1 Monitoring    

6.2 Evaluation    

ANNEXES……………………………………………………………………..………………..…....58

1.Context

The objective of the Audiovisual Media Services Directive (AVMSD) 1 is to create and ensure the proper functioning of a single European market for audiovisual media services, while contributing to the promotion of cultural diversity, providing an adequate level of consumer protection and safeguarding media pluralism.

The AVMSD is based on the 'country of origin principle' ("COO"). Under COO audiovisual media service providers are subject only to the rules of the Member State where they are established. By abiding by these rules they can freely provide services across the EU. As such, the AVMSD has facilitated the cross-border transmission of TV channels and 'Video On-Demand' (VoD) services. The AVMSD sets some minimum harmonization standards, which implies that Member States are free to enact stricter rules at national level. The AVMSD contains some limited exceptions to the operation of of COO.

The AVMSD applies to television broadcasts and on-demand services if all the following conditions are met (i) providers have editorial responsibility, (ii) providers have as their principal business purpose the provision of programmes to inform, entertain or educate the general public; and (iii) these programmes are comparable, in form and content, to television ("TV-like"). 

The AVMSD does not cover activities that are primarily non-economic.

The overall size of the European audiovisual sector in 2014 was around EUR 105.8 million 2 . It is mainly formed by large companies (for more details on the overall impact of AVMSD on SMEs, see ANNEX 3).

The audiovisual media landscape is changing at a rapid pace due to ever increasing convergence between television and services distributed via the Internet. Consumers increasingly access on-demand content via smart/connected TVs and portable devices. Consumers, in particular the young ones, watch videos, including audiovisual content generated by private users ("UGC"), on the Internet. Traditional broadcasting in the EU remains strong in terms of viewership, advertising revenues, and investment in content (around 30% of revenues). However, new business models are emerging. Broadcasters are extending their activities online and new players offering audiovisual content via the Internet (e.g. on-demand service providers and video-sharing platforms) are getting stronger and competing for the same audiences (for more details see ANNEX 6). However, TV broadcasting, on-demand services and video-sharing platforms are subject to different rules and varying levels of consumer protection.

The Digital Single Market (DSM) strategy 3  calls for a modernisation of the AVMSD to reflect market and technological developments. It requires the Commission to consider whether the scope of the AVMSD should be broadened to encompass new services and players currently excluded. In carrying out this review the Commission should bear in mind the objectives of the Directive, namely the protection of minors, consumers and promotion of European works. The overall vision of the DSM strategy is to create an internal market for digital content and services and ensure that Europe is a leader in the global digital economy.

2.What is the problem and why is it a problem?

2.1 Conclusions of the ex-post evaluation of the AVMSD under REFIT 4

The Impact Assessment has been carried out in parallel to the AVMSD ex post evaluation under the Regulatory Fitness and Performance Programme (REFIT) (see ANNEX 4).

The overall conclusion is that the AVMSD objectives are still relevant. If the Directive were repealed the audiovisual internal market would collapse since providers would no longer benefit from the COO, but would be subject to 28 different regimes and jurisdictions. This would increase their costs and undermine their propensity to provide cross border services, particularly into smaller Member States. Consumers would lose out because they would have less choice.

The REFIT evaluation concluded that there is scope for simplification, specifically of the procedures that support the application of the COO principle (i.e. the criteria determining jurisdiction over providers and the derogation and cooperation procedures limiting freedom of reception and retransmission in specific cases). Some other rules are no longer fit to attain these objectives, primarily due to market developments and changes in viewing patterns. In particular, the REFIT evaluation has shown that there is room for improving and updating the rules on commercial communications.

The REFIT evaluation has identified three main sets of problems:

-Insufficient protection of minors and consumers when consuming videos on video-sharing platforms.

-Lack of a level playing field between traditional broadcasting and on-demand services, and internal market weaknesses stemming from the fact that some of the AVMSD rules are not sufficiently precise.

-Rules on commercial communications no longer fit for purpose

It has also emerged from REFIT that there are different accessibility requirements of audiovisual media services for people with disabilities. In December 2015, the Commission adopted a proposal for a European Accessibility Act 5 , which sets accessibility requirements for a wide range of products and services including audiovisual media services. As such, this Impact Assessment will not address the issue of accessibility.

2.2 Description of the problems and their drivers 6

2.2.1 Insufficient protection of minors and consumers in video-sharing platforms

Video-sharing platforms (like Youtube) host professionally produced videos and UGC. UGC can be violent, gory and pornographic and harmful to children. Children identify video-sharing platforms as mostly linked with violent, pornographic and other harmful content risks 7 . Among the children who link risks to specific platforms, 32% mention video-sharing sites such as YouTube, followed by other websites (29%), social networking sites (13%) and games (10%) 8 .

In the UK, ATVOD 9 found that at least 44 000 primary school children accessed an adult website in one month alone 10 . ATVOD has found that 23 of the top 25 adult websites visited by UK internet users provide instant, free and unrestricted access to hardcore pornographic videos.

Hate speech is also increasingly accessible via video-sharing platforms. Based on data provided by some national law enforcement or other public bodies, the Fundamental Rights Agency reported an increase in anti-Semitic incidents online in numerous Member States 11 . In the same vein, 73% of respondents to an anti-Semitism survey thought that anti-Semitism online had increased over the past five years 12 .

Video-sharing platforms employ tools like Autoplay (switched on by default for all videos in Youtube) which enable direct exposure to potentially harmful content and incitement to hatred 13 . Exposure to harmful content or content inciting to hatred may also be fostered via new technical features such as streaming audiovisual content live on the Internet 14 .

The AVMSD, and its rules on protection of minors and hate speech, do not apply to UGC offered on video-sharing platforms since these platforms often do not control the selection of the content. These platforms are subject to the e-Commerce Directive (ECD) 15 which does not require them as intermediaries to monitor content hosted by them nor to take any other pro-active measure. The ECD, however, requires platforms to remove illegal content if they are notified of such content, for example through a court order. The rationale of this ex-post system called "notice and takedown" lies in the fact that intermediaries cannot in principle technically control the content before it is posted. The e-Commerce Directive is therefore focused on illegal content and does not deal with harmful content.

The main video-sharing platforms do take some pro-active steps to protect minors from such harmful content and consumers from hate speech, but assess content against their own standards, which may differ from those set in the AVMSD.

As a result of this different regulatory treatment consumers and minors are less protected when watching videos on these platforms. For example, the music video "College boy" of the group Indochine, containing graphic images of violent bullying of a school boy, is freely available on YouTube. However, the same video is subject to a watershed on TV in France under the application of the AVMSD 16 . In another case, while YouTube removed a video of a woman being forced by her husband to walk naked in the street 17 for violation of YouTube's Community guidelines, the same video still appears on the website Liveleak.com 18 . By contrast, access to this type of videos is restricted under the AVMSD.

While a number of harmful activities are carried on the Internet, the specificity of video comes from its power to best capture the attention of initially passive users. Thus, seeing violent sexual images, violence or hate speech are online risks that are most likely to be driven by audiovisual images. It must be borne in mind that in 2014, Internet video stood for 64% of total consumer internet traffic. This share is expected to increase up to 80% by 2019 19 . The consumption of videos offered by video-sharing platforms is on the rise 20 . Among minors, video viewing is one of the earliest Internet activities carried out by young children 21 .

In the 2015 public consultation most consumer organisations said that the current rules do not deliver sufficient consumer protection as they do not take into account the increasing importance of video-sharing platforms. Most of the Member States and regulators who called for an extension of the AVMSD rules to video-sharing platforms expressed a similar opinion. This view is also confirmed by ERGA (the European Regulators Group for Audiovisual Media Services) 22 .

The impact of some self-regulatory initiatives in this field has so far been limited in particular in addressing certain types of harmful content, such as gory and violent videos, and hate speech 23 . For example, the initiative You Rate It 24 , the only one providing a rating tool for UGC, has not been taken up by YouTube. When it comes to protection of minors, ERGA 25 acknowledged that self and co-regulation initiatives have an important role to play but said that existing initiatives have to be reinforced. There is no EU-wide code covering these issues. For more information on these initiatives and their limitations see ANNEXES 8 and 18.

Based on available evidence, no consumer protection issues were identified in relation to commercial communications online. In the Public consultation, a consumer organisation and two other stakeholders 26 pointed to a possible lack of transparency as to the advertising nature of certain content on YouTube. This is a matter covered by the Unfair Commercial Practices Directive (UCPD) 27 , which applies to misleading commercial practices. As regards the advertising of tobacco products, the existing prohibition 28 ensures the required consumer protection. In general, self-regulatory advertising codes apply to advertising on all media (including TV, on-demand, print media, radio, and online) 29 . On this basis, Member States' self-regulatory and regulatory bodies are taking ation in this field, whether by issuing guidelines or by decisional practice 30 . As such, there is no need to address this issue in this impact assessment.

2.2.2 Lack of a level playing field and internal market weaknesses

2.2.2.1 Lack of a level playing field

The AVMSD foresees stricter requirements for TV broadcasting than for on-demand audiovisual media services notably in the fields of promotion of European works and protection of minors.

Such a different treatment is no longer justified in view of changing consumer habits. An increasing number of consumers watch video on-demand. In the 28 Member States total on-demand consumer revenues soared from EUR 919 million in 2010 to EUR 2.5 billion in 2014, an increase of 272% and a CAGR in the 5 year period of 28% 31 . In 2014 there were more than 2 563 VoD services in Europe, including catch-up TV services of broadcasters (932 services), branded channels on open platforms 32 (408 services), VoD services providing access to a catalogue of programmes (1 126 services), and news portals (97 services):

Figure 1: Total on-demand Consumer Revenues – EUR (M) by year and country – 2010-2014

Source: IHS

The lighter rules applying to on-demand services undermine protection of minors and cultural diversity and distort competition.

A. Unequal level of contribution to promotion of European works and lack of effectiveness of the rules applying to on-demand services

The AVMSD foresees measures to encourage support to European audiovisual production and distribution. TV broadcasters must reserve a majority of their transmission time for European and/or independent works.

TV broadcasters must, where practicable, reserve a majority proportion of their transmission time to European works and at least 10 % of their transmission time or of their programming budget for European works created by independent producers.

The provisions applying to on-demand services are lighter and more flexible. This results in diverse implementation by Member States (see ANNEX 13) and in video on-demand service providers not contributing significantly to the objective of promoting European works.

The investment of the main TV groups in original programmes in 15 countries amounted to EUR 15.6 billion in 2013 33 , i.e. 24 % of TV broadcasters revenues (EUR 65 billion) 34 . In comparison, on-demand providers made a minimal or even no contribution to the production and the promotion of EU works. They invested EUR 10 million in original content i.e. less than 1% of their total revenues (EUR 1.5 billion) 35 .

As a result, some Member States intend to make on-demand service providers that are not under their jurisdiction contribute financially to European works if they target consumers in their territories. For example, Germany and France intend to apply levies to on-demand services coming from other Member States and targeting German or French audiences 36 . This uncoordinated approach calls into question the operation of the Directive.

Cultural diversity is also undermined by the limited contribution of on-demand services to the promotion of European works objectives.

B. Differing level of protection of minors

The AVMSD foresees that TV broadcasts shall not include seriously harmful programmes (pornography and strong violence) but may include potentially harmful programmes (erotic content and mild violence) provided measures are put in place to prevent children from hearing or seeing them. On-demand service providers are required to take appropriate measures so that minors would not normally hear or see seriously harmful content. No restriction applies to potentially harmful programmes provided in on-demand services.

This difference in treatment is no longer justified since younger consumers watch about half less television than the average consumer 37 . Their average TV viewing in 2014 was 2:03 minutes per day. A key factor is the rapidly growing availability of portable screens like smartphones and tablets used to access on-demand services. In the UK 38 , in 2015, more than four in ten 5-15s (44%) watch on-demand television content, rising to half (51%) of 12-15s. One in five 5-15s (20%) who watch on-demand TV content, watch it daily, with around three in four (73%) watching at least weekly. Much of this is via portable devices.

The above-mentioned different regulatory treatment has led to a competitive disadvantage for TV broadcasting and to a lower level of consumer protection in on-demand services.

2.2.2.2 Threats to the integrity of the audiovisual internal market

A. Complex rules on COO and derogations

The COO principle is the cornerstone of the Directive. It has facilitated the growth and proliferation of audiovisual media providers offering services across borders. At the end of 2013, 5 141 TV channels (no local and windows) were established in the EU. Almost 1 989 of them targeted foreign markets (either EU or extra EU). This share has increased from 28 % in 2009 - year of implementation - to 38 % in 2013 39 . As far as VoD services are concerned, in 2015, on average in Member States, 31 % of the VoD services available are established in another EU country (see Section 2.3) 40 .

A majority of Member States, regulators and industry participating in the 2015 consultation stressed that the COO approach has been effective. It also emerges from the comments made by Member States that there is a continued broad support for the COO principle 41 .

However, the rules underpinning its operation are too complex and difficult to apply. Most Member States and regulators responding to the 2015 Public consultation have experienced problems in determining which Member State has jurisdiction. For example, it can be difficult and time consuming to find in which Member States a satellite up-link is used or to determine the country having jurisdiction when operators have broadcast licenses in more than one Member State. In practice, there have been issues of unclear jurisdiction regarding Greece/UK and Spain/UK. Moreover, in a recent case concerning the restriction of the retransmission of a Russian language channel in Lithuania 42 , the issue as to whether Sweden had jurisdiction over this channel was contentious.

The procedures allowing Member States to exceptionally derogating from the COO are imprecise and uncertain (e.g. they do not specify how the providers' right of defence should be exercised). Different procedures apply to TV broadcasting and on-demand services without there being a justification for such a difference.

In the last years, there has been an increasing number of situations where Member States were reluctant to allow the retransmission of certain broadcasts coming from abroad into their territories and resorted to these procedures. These cases concern several Russian language channels broadcast into Lithuania and Latvia and allegedly containing incitement to hatred. In addition, Sweden considered that certain channels broadcasting from the UK infringed its stricter national rules on alcohol advertising 43 . In other instances, concerns were raised regarding protection of minors 44 .

These ineffective and overly complex procedures pose a threat to the integrity of the internal market and create legal uncertainty and a lack of predictability (see ANNEX 9).

B. No EU requirement on regulatory independence

The independence of audiovisual regulatory bodies is considered to be very relevant for the effective enactment and application of the AVMSD, in particular in the areas of audiovisual commercial communications, jurisdiction and protection of minors and for the preservation of free and pluralistic media. Many respondents to the 2015 public consultation, in particular regulatory authorities, commercial broadcasters as well as NGOs and citizens, mentioned the current problems in relation to the lack of independence of regulatory authorities 45 with a majority of respondents supporting the strengthening of the current rules 46 .

However, the AVMSD does not set any requirement for Member States to have an independent regulatory body. The absence of a formal obligation has contributed to diverse regulatory structures and varying degrees of independence (See Section 5.2.4). Yet, regulatory independence both from political bodies and commercial interests is essential to ensure effective market supervision, proper application of the rules of the Directive and to guarantee media freedom and pluralism.

A captive regulator may treat differently the various players competing on the same market clearly distorting competition. This is why many EU regulatory frameworks in other domains (i.e. telecom, gas, electricity, postal services and personal data protection) mandate regulatory independence (see ANNEX 12). As examples in the audiovisual field, in the context of the Klubrádió case, the company sued the national regulator in Hungary for an economic loss resulting from an alleged unfair treatment which led to a delay in the granting of a license 47 . Liberty Global also lodged a complaint against the Hungarian Media regulator that led to the preliminary ruling by ECJ concluding that the Hungarian Regulator had illegally requested Liberty Global to obtain a license in order to operate in Hungary 48 . The association of commercial broadcasters (ACT) commented on the recent developments in Greece, pointing to the negative impact on the market of a transfer of powers from the Regulator to the Government 49 .

There is also evidence that the independence of audiovisual regulatory authorities has an impact on the providers' willingness to establish in an EU Member State and serve audiences in several Member States 50 .

Moreover, in the audiovisual sector, regulatory authorities lacking independence are not in a position to guarantee media freedom and pluralism. In many countries where independence of national regulatory bodies is weak, challenges to media freedom and pluralism over the last years have been reported 51 . This was the case for Romania in the period from 2007 to 2012, where the Commission identified problems with ensuring media freedoms and with the independence of the audiovisual regulatory body 52 . The same happened in Hungary in 2010, where a number of provisions of a draft law raised concerns related to media pluralism. The Commission 53 , the European Parliament 54 , the OSCE Representative on Freedom of the Media 55 , the Council of Europe 56 and other international bodies and NGOs active in the area of human rights and civil liberties, and Member States have all raised concerns related to both media freedom and the independence of the regulator. The OSCE Representative also recently called for respect of regulator's independence in Latvia following the dismissal of the Regulator chairman 57 .

2.2.3. Rules on commercial communications no longer fit for purpose

The REFIT evaluation confirmed that some of the rules on commercial communications are too rigid in the light of the evolution of the market.

The AVMSD contains rules that apply to all audiovisual media services (e.g. on product placement, sponsorship and alcohol advertising). However, it lays down more rules that apply only to TV broadcasting. They set a maximum of 12 minutes of advertising per hour on television (i.e. 20% per hour), define how often TV films, cinematographic works and news programmes can be interrupted by advertisement, and set the minimum duration of teleshopping windows.

Nowadays, the TV broadcasting specific rules are too rigid in a world where viewers are likely to switch to alternative offers, in particular without advertising. For example, in the USA where there are no minutage limitations, viewers overwhelmed with TV advertising, turned to other video offers (e.g. video on-demand) thereby disciplining the behaviour of TV broadcasters, who were forced to decrease the amount of advertising on their channels 58 . In the EU, most broadcasters consider that the lack of flexibility of the 12 minute and insertion rules and the restrictive character of its exceptions prevent them from maximising their revenues around peak periods. The monitoring of advertising in Member States has indeed shown that this rule is regularly breached in a number of Member States.

The rigidity of the rules on product placement and sponsorship has prevented these advertising formats from delivering their full potential in terms of revenues. Some regulators and Member States confirmed that the rules create legal uncertainty for stakeholders, discouraging them to invest in product placement. As a benchmark, in the US, where there is no material regulation of product placement, this format represents almost 5% of the TV ad spend market. In the UK, it represents a share of only 0.1% 59 .

In their replies to the public consultation, most broadcasters, advertisers and stakeholders from the alcohol sector consider that the AVMSD rules on alcohol advertising work well. They point to the efficiency of most self- and co-regulation developed in this area. However, the public health sector underlines that the rules should be reinforced 60 .

The study to measure minors' exposure to alcohol advertising 61 shows that "on average, a minor in the EU saw 200 alcohol impacts and an adult over 450 during one year (2013)". This means that 1.8% of all advertising seen by minors (under age 18) in 2013 was for alcoholic beverages (as compared to 2.2%. for ads seen by adults). In other words, children are exposed to one impact every two days, and at nearly half the rate of adults.

Member States have been active in this domain in order to protect viewers, and in particular minors, from exposure to alcohol advertising: 24 of them have adopted stricter rules in this area and a number of them have defined the time before which alcohol advertising cannot be broadcast 62 (i.e. watersheds). However, one major pitfall of such watersheds may be a shift of alcohol advertising just after peak time, at a time when minors, although less numerous, are still watching television quite massively. As the study on minors' exposure to alcohol advertising showed, when the time is not well adapted, minors may be exposed quite heavily to alcohol advertising just after the watershed 63 . Moreover, given the divergences among Member States in peak viewing times for minors 64 , when coupled with the COO principle, watersheds appear less efficient. The applicable watershed would be the one at the country of origin, while minors might be still watching TV in the country of destination.

At the same time, the majority of countries have self- or co-regulatory schemes in place. Some of them are very efficient, while for others, there is scope for improvement 65 .

As regards commercial communications for HFSS foods 66 , an evaluation of the Platform for Action on Diet, Physical Activity and Health concluded that stakeholders’ initiatives in the field of marketing and advertising have made good progress. However, their reach could be further strengthened 67 . Marketing of foods and beverages is often a topic of intense discussion during the Platform meetings, and also those of the High Level Group on Nutrition and Physical Activity 68 , with many stakeholders advocating for stricter frameworks (for instance, the High Level Group requested on 28 October 2015 that the WHO Nutrient Profile be used as a basis for dialogue with industry on the issue of food marketing to children). 

2.3 What is the EU dimension of the problem?

The AVMSD is the regulatory framework underpinning the audiovisual single market.

Since the last revision of the Directive in 2007 this market has kept growing. As mentionned in Section 2.2.2.2, at the end of 2013, 38 % of TV channels established in the EU targeted foreign markets and 31 % of the VoD services available in the Member States are established in another Member State. The entry of video-sharing platforms and the corresponding changing viewing patterns and associated risks is a phenomenon, which affect all the Member States.

The upcoming revision of the AVMSD is deemed to comply with both subsidiarity and proportionality by preserving the harmonization approach and cooperation mechanisms allowing Member States to take national specificities into account. The Directive minimum harmonisation approach has contributed to the completion of the internal market, while respecting the subsidiarity principle.

Usually, Member States only adopt stricter or more detailed rules in those areas that are of particular importance to them 69 . This has been the case for protection of minors (see ANNEX 14) and promotion of European works (see ANNEX 13) in on-demand services.

It is proposed to reduce the disparities between the Member States by increasing the level of harmonisation and create more regulatory convergence. In the field of video-sharing platforms full harmonisation is proposed.

2.4 How would the problem evolve, all things being equal?

The market for on-demand and online services will continue to increase and so the potential competitive disadvantage of TV broadcasting and the lower level of consumer protection.

From a static point of view, the TV broadcasting market is still the strongest audiovisual market. In 2013, the linear television revenues in the EU 28 were EUR 83.6 billion 70 . In comparison, the total consumer revenues of VoD and SVoD services amounted to EUR 2.5 billion i.e. 3% of the TV broadcasters' revenues.

However, from a dynamic perspective, the domination of TV broadcast is less obvious. Their growth rate has decreased from an average annual rate of 2.8% from 2009 to 2013, to only 0.3% in 2013 71 . In the meantime, as mentioned in Section 2.2.2.1, the total on demand consumer revenues in the 28 Member States increased by 272 % increase at a compound annual growth rate of 28 %. According to the industry, by 2020, projections suggest that more than 20% of European households will have a specific, paid account with a SVoD provider. As a result of this, the projected turnover of all VoD services in Europe should increase by 15% annually to 2020, reaching EUR 6 billion 72 .

Mobile consumption is deemed to increase in the near future. It is expected that, by the end of 2020, the number of smartphones in Europe will have doubled, reaching 800 million, meaning that more than 70% of mobile subscriptions will be for smartphones 73 . As said above, by 2019 80% of all mobile data traffic worldwide will be from video (compared to 64 % today).

If the status quo were maintained, the problems identified would evolve as follows:

-Consumers, in particular minors, would be increasingly exposed to harmful content and hate speech on video-sharing platforms.

-TV broadcasting would continue to be at an unfair competitive disadvantage to video on-demand services. The differences in regulation would hurt competition and promotion of European works.

-The integrity of the audiovisual internal market would suffer from the unclarity of some of the rules and procedures of the Directive. This would undermine the COO, which is the cornerstone of the AVMSD.

-Regulators in certain countries would continue lacking independence, which would undermine the internal market and media freedom and pluralism.

-Rules on commercial communications would remain inadapted to the market evolution.

3.Why should the EU act?

As indicated above, the DSM Strategy announces the review of the AVMSD with a view to creating an audiovisual media framework fit for purpose for the 21st century.

In the Council Conclusion of 25 November 2014 on European Audiovisual Policy in the Digital Era, the Council invited the Commission to "urgently complete the exercise of the review of the Audiovisual Media Service (AVMS) Directive in the light of the rapid technological and market changes resulting from the digital shift, and on the basis of the outcome of this review submit an appropriate proposal for the revision of this Directive as soon as possible, in respect of the principle of subsidiarity" 74 . 

The EP resolution towards a DSM urges the Commission to revise the AVMSD 75 .

4.What should be achieved?

The goal of the revision is to address the problems identified in Section 2.2:

General objectives

Specific objectives

Enhance consumer and minors protection

Enhance consumer and minors protection, in video sharing platforms

Ensure a level playing field, preserve the integrity of the internal market and enhance legal certainty

Establish more effective and fair rules on promotion of European works

Ensure more effective and fair rules on the protection of minors in on-demand services

Simplify and clarify the procedures to apply the COO rules

Ensure regulatory impartiality across the EU

Simplify the legislative framework

Making more flexible and clear the rules on commercial communications

5.What are the various options to achieve the objectives and what are their impacts?

The present Impact Assessment includes the description of the options and their impacts in the same Section. For a detailed description of all the options presented below, see ANNEX 20.

The options are grouped according to the problem they intend to address:

In the first group (Section 5.1), the options intend to address the insufficient protection of minors and consumers in video-sharing platforms (Section 2.2.1):

In order to partly address the deficit in consumer protection, both Options, A and B, seek to ensure that the AVMSD rules apply to certain new types of audiovisual content, such as short video-clips and stand-alone video sections embedded in other services.

Option A, in addition, requires Member States to encourage video-sharing platforms without editorial responsibility to adopt self-regulatory measures regarding content harmful to minors and inciting to hatred (See Section 5.1.2).

Options B goes beyond this by imposing on Member States an obligation to ensure that video-sharing platforms put in place appropriate measures with a view to protecting minors from harmful content and all viewers from hate speech. Member States would be encouraged to implement this provision via co-regulation (See Section 5.1.3).

In the second group (Section 5.2), the options intend to address the lack of a level playing field and internal market weaknesses (See Section 2.2.2):

When it comes to the uneven level of contribution to the promotion of European works between TV broadcasting and on-demand services, both Options, A and B, seek to achieve a level playing field. Option A does so by giving more flexibility to both TV broadcasting and on-demand services. Option B seeks a better balance between achieving a level playing field and ensuring cultural diversity. It does so by maintaining the status quo for TV broadcasting but reinforcing the rules for on-demand services (See Section 5.2.1.3).

As regards the differing level of protection of minors, Option A strengthens the requirements related to the protection of minors on on-demand services. It also seeks to improve the level of information made available to consumers as regards the harmful nature of content and to simplify the notion of harmful content (See Section 5.2.2.2).

In order to address the complexities of the rules on COO and derogations, Option A seeks to facilitate the identification of the country having jurisdiction over AVMS providers. This is done, on the one hand, by simplifying the rules that determine jurisdiction and, on the other hand, by ensuring transparency among Member States as to which of them has jurisdiction over each provider. Option A also improves the cooperation mechanisms foreseen in cases of exceptions to the COO. The objective is to render the procedures more effective and therefore preserve the COO principle (See Section 5.2.3.2).

As regards the absence of EU requirement on regulatory independence, Option A seeks to increase the level playing field among providers across the EU by ensuring that all EU regulators are independent. It does so by introducing a legal requirement of independence and a minimum set of features that regulators need to meet (See Section 5.2.4.2).

In the third section (Section 5.3), the option intends to address the problem of the rules on commercial communications no longer fit for purpose (See Section 2.2.3):

Option A (See Section 5.3.2) seeks to address the lack of level playing field caused by the regulatory burden on providers when it comes to audiovisual commercial communication (AVCCs) rules while encouraging the development and improvement of codes of conduct to protect minors from alcohol advertising and from inappropriate AVCCs for HFSS foods.

5.1 Options addressing the problem of insufficient minors and consumers protection in video-sharing platforms

5.1.1 Status quo option

The AVMSD does not apply to UGC in video-sharing platforms (e.g. YouTube). Video-sharing platforms are covered by the ECD, which warrants them limited liability for illegal content under certain conditions.

The AVMSD applies to television broadcasts and on-demand audiovisual media services for which providers have editorial responsibility. To be covered by the Directive:

(i) services must have as their principal purpose the provision of programmes to inform, entertain or educate the general public and

(ii) programmes should be comparable, in form and content, to television ("TV-like").

Most recently, the ECJ has clarified the "TV likeness" and "principal purpose" requirements in the "New Media Online GmbH" case 76 .

Economic outcome

Existing costs: Maintaining the status quo would not entail additional compliance costs 77  or administrative 78 costs.

Outcome on the Internal market: As a result of the ECJ judgment in the "New Media Online GmbH" case, short videos can qualify as "TV like". In addition, according to the Court, the AVMSD applies when the audiovisual media content is in content and form independent of the main service offered by a provider (whether it is messaging, UGC, press articles, etc.). This is the case even when the main service is of a different nature, e.g. text, and is not merely an indissociable complement to that activity, in particular as a result of the links between the audiovisual offer and the offer in text form. As a consequence, more on-demand audiovisual media services (e.g. videos of short duration or self-standing video sections in a newspaper website) will be covered by the Directive. This will enhance legal certainty, the level playing field and consumer protection in the Internal Market. For these reasons, any revision of the AVMSD should include the codification of this judgment 79 .

Outcome on competitiveness: Players being covered by the Directive are at a competitive disadvantage compared to video-sharing platforms because the latter are subject to a lighter regulatory regime (the ECD). This was confirmed in the 2015 public consultation where most respondents from the Member States, regulators, and consumer organisations, as well as around half of public service and commercial broadcasters, flagged that the current framework can lead to the lack of a level playing field.

Social outcome

Consumers and minors are not sufficiently protected in video-sharing platforms.

5.1.2 Option A: Self-regulation for protection of minors and consumers on video-sharing platforms

1) The AVMSD scope would be adapted to cover all audiovisual content under the editorial responsibility of a provider including short video clips placed by providers. This would be achieved by removing the "TV like" requirement. In addition, it would be clarified that the AVMSD would also cover other type of content such as stand-alone video sections in newspapers' websites. This would be achieved by codifying the interpretation of the “principal purpose” criterion in the light of the ECJ recent case-law in the case of "New Media Online GmbH".

2) Member States and the Commission would encourage video-sharing platforms to adopt self-regulatory measures to restrict access to content harmful to minors or inciting to hatred.

Video-sharing platforms would be defined as those that exercise a degree of control, short of editorial responsibility, over the presentation of audiovisual content (including UGC), and whose principal business purpose is the provision of audiovisual services 80 . This degree of control would include automatic means (such as tagging and sequencing a large amount of audiovisual content), including algorithms. This would exclude services such as mere hosting, caching, cloud computing, mere conduit, search engines and business services, which are subject to the ECD.

The notions of content harmful to minors and incitement to hatred would be the same as the ones applying to audiovisual media services under the AVMSD.

The Commission would play a facilitating role in encouraging the development of European codes of conduct by providing examples of measures that could be adopted by video-sharing platforms (these could include some of the examples of on-going initiatives mentioned in ANNEX 8 and 18).

The general provisions on self- and co-regulation (Article 4(7)) would be reinforced by indicating new benchmarks for the effectiveness of existing and new codes.

Economic impacts:

Substantive compliance costs: When it comes to encouraging video-sharing platforms to adopt self-regulatory measures, the impact of this Option should not be significant for the large platforms which have already in place community standards/guidelines (see ANNEX 8) along with some voluntary monitoring and reporting systems 81 not only for illegal but also for harmful content (e.g. self-harm). All large video-sharing platforms apply techniques which employ both software and human element to handle "content moderation". This means that normally users flag content deemed inappropriate. User complaints are then processed by an algorithm prior to sending it to a moderation team for verification.

However, if they decide to respond to the Directive call they would have to adapt their terms and conditions to the AVMSD notions of content harmful to minors and incitement to hatred and put in place more effective tools for restricting access to harmful content (particularly violent videos) and curb hate speech.

Administrative costs: Given the purely self-regulatory nature of this option the costs for the public authorities would be limited. To counter incitement to hatred, some Member States are already encouraging self-regulation 82 .

Impacts on the Internal market: The impact on the Internal market would depend on the effectiveness of the self-regulatory measures and the number of players that would decide to adhere to the codes, including eventually EU codes. The risk is that this option may result in a patchy approach with varying levels of protection across the internal market.

Impacts on competitiveness: The codification of the ECJ recent case-law will ensure that stand-alone video sections of a wider service are covered by the AVMSD. The related impact would be limited as it derives from the application of the recent case law of the ECJ. Similarly, while the removal of the "TV-like" criterion implies a formal change in the AVMSD, the wide interpretation provided by the ECJ already has a similar effect in practice. However, this Option would not provide an effective solution to the concerns regarding the level playing field as purely self-regulatory measures, without a regulatory backstop, have proven insufficient in the past (see Section 2.2.1). In addition, despite the ECD requirement to Member States and the Commission to encourage codes of conduct, despite an initial follow-up – which related primarily to codes of conduct related to trust mark schemes and labels – activities related to the promotion of codes of conduct have since then slowed down.

Impact on SMEs: Self-regulation for video-sharing platforms may entail compliance costs for SMEs but only if they decide to adhere to the codes. The Commission has estimated these costs as ranging between 100 000 (incurred for a pilot tool developed to inform parents and children on the content of user generated video) and EUR 320 000 (incurred by a major Danish ISP to conduct parental control, website, education and information). However, much more developed systems of content moderation may imply significantly higher costs. For example, one third of a large platform total employees deal with content moderation 83 .

Social impacts:

When it comes to encouraging self-regulation for video-sharing platforms, the level of consumer protection would improve on large platforms if they decide to adapt and tighten their self-regulatory tools. In smaller platforms, the level of protection may improve considerably but only if they decide to participate. If the Commission manages to carry out its coordination role effectively, this may improve the present situation whereby there are no codes of conduct at EU level. Impact on fundamental rights: As it would rely on voluntary measures, Option A would not guarantee a contribution to the protection of fundamental rights enshrined in the EU Charter, including children's right to protection and care as is necessary for their well-being (Art. 24).

5.1.3 Option B: An obligation of means imposed on video-sharing platforms for protection of minors and hate speech, implemented through co-regulation

1)The "TV like" requirement would be removed and the ECJ recent case-law in the case of "New Media Online GmbH" would be codified as under Option A.

2) Member States would have to ensure that video-sharing platforms put in place appropriate measures to:

-    Protect minors from harmful content; access to which would have to be restricted;

-    Protect all citizens from content containing incitement to hatred.

Video-sharing platforms would be defined as those that exercise a degree of control, short of editorial responsibility, over the presentation of audiovisual content (including UGC), and whose principal business purpose is the provision of audiovisual services 84 . This degree of control would include automatic means (such as tagging and sequencing a large amount of audiovisual content), including algorithms. This would exclude services such as mere hosting, caching, cloud computing, mere conduit, search engines and business services, which are subject to the ECD.

The notions of content harmful to minors and incitement to hatred would be the same as the ones applying to audiovisual media services under the AVMSD. The terms and conditions of the platforms would have to be brought in line if necessary with these notions and other relevant rules of the Directive.

Member States should not impose on providers any general obligation to monitor content ex ante.

Member States would require video-sharing platforms to develop co-regulation providing mechanisms (e.g. age-verification systems, content description, age rating systems) to achieve these objectives. These mechanisms would have to be chosen by the industry which would be subject to an obligation of means (i.e. to use all reasonable means to achieve the desired results). The AVMSD would not mandate adoption of specific technologies or tools. The terms and conditions of the platforms should contain an appropriate reference to these mechanisms.

This would be a maximum harmonization provision under which Member States shall not be able to impose more detailed or stricter rules on video-sharing platforms.

The Commission and ERGA would facilitate exchanges of best practices on co-regulatory systems across the EU. If considered appropriate, the Commission would facilitate the development of EU codes on which ERGA might be requested to give an opinion.

A complaint mechanism for consumers and minors should also be foreseen at national level in case of non-compliance. Any sanction should be proportionate and take into account as mitigating factor the fact that video sharing platforms lack proper editorial responsibility.

For the specific purpose of this provision, a video-sharing platform would be under the jurisdiction of the Member State in which it, its parent company, one of its subsidiaries or an entity within the same group is established within the meaning of Articles 49 to 55 of the Treaty on the Functioning of the European Union.

Economic impacts

Substantive compliance costs: Large video-sharing platforms, pursuant to their corporate policies, already take steps (see ANNEX 8) to protect minors and all users 85 not only from illegal but also from harmful content (e.g. pornography and self-harm). Filtering and fingerprinting 86 mechanisms are widely used by major video-sharing platforms and they could be used also to comply with the new requirements under Option B without having to incur substantial additional costs. For example, there are several age verification systems on the market, which are widely used online by VoD service providers.

Assessing whether content is harmful is generally more complex than assessing whether it is illegal because the notion of harmful content is broader than that of illegal content. It can however be expected that by putting in place mechanisms to protect minors, platforms would gain in brand power.

No precise indications of the costs to implement this provision can be provided. They would depend on the size of the company and on the specific mechanisms that the company will decide to put in place. These mechanisms are also likely to evolve over time due to technology advancements. The costs incurred at present by the industry to enact measures to protect citizens either according to corporate policies or to other arrangements can be used as a benchmark for possible substantive compliance costs. As indicated above, the costs for putting in place rating mechanisms may range between EUR 100 000 and EUR 320 000. More developed systems of content moderation may entail higher costs.

Administrative costs: If the monitoring of video-sharing platforms is done via a complaint based mechanism, the related administrative costs for all EU regulators have been estimated at EUR 600 000 87 .

 

If the Member States decide to put in place co-regulatory mechanisms, figures regarding existing self-regulatory mechanism can be taken as a reference to estimate the associated costs for the industry. For example, the self-regulatory systems in place in the majority of Member States on commercial communications are either funded by membership fees or a levy system from the industry and their cost ranges from EUR 250 000 to EUR 1 million 88 .

Impacts on the Internal market: Option B would prevent fragmentation by introducing a maximum harmonization preventing Member States to impose more detailed or stricter rules on video-sharing platforms.

Impacts on competitiveness: The impacts of the codification of the ECJ recent case-law would be limited as explained in Option A. Option B would improve the conditions of competition between TV broadcasting, video on-demand providers and video-sharing platforms. This option lays down flexible and future-proof rules allowing companies scope for innovation and ensuring the continued relevance of the rules over time. Impacts on SMEs: SMEs platforms that do not have already mechanisms in place to moderate harmful content either proactively or upon notification would incur important compliance costs. The others will have to adapt their standard terms and conditions and become more effective. In particular, SMEs may need to make new investments in filtering and fingerprinting technologies which, on the other hand, major companies have already available. Yet, by putting in place mechanisms to protect minors, SMEs could gain in branding power.

Social impacts:

Option B would help overcome some of the limitations of existing industry-led and self-regulatory initiatives (See Section 2.2.1) and meet the AVMSD objective of protecting consumers, including minors. Option B is likely to address the concerns on the level of protection voiced in the 2015 Public consultation by most of those who called for an extension of the rules, i.e. a majority of Member States and regulators who replied to this question, most consumer organisations and approximately half of all broadcasters who replied. These stakeholders want to apply to additional services (including platforms) at least the rules on protection of minors and hate speech which are seen as a basic level of protection online. On the other hand, a small number of Member States, some regulators as well as the Internet, ICT, the press publishing sector, telecom, cable, satellite and advertising industries believe that the AVMSD rules on material scope ensure sufficient consumer protection also in light of the broader EU regulatory framework. Option B will level up the standard of protection from harmful content in video-sharing platforms with the one applicable to on-demand services 89 (See Section 5.2.2). Moreover, it is likely that any improvement of the level of protection for audiovisual content pursuant to Option B will have a positive spillover effect on other types of content (such as text/comments functionalities accompanying video content). Impacts on fundamental rights: Option B would have a direct positive impact on the protection of fundamental rights enshirned in the EU Charter, such as: human dignity (Article 1); right to the physical and mental integrity of persons (Article 3); non-discrimination (Article 21); children's right to protection and care as is necessary for their well-being (Article 24); general consumer protection (Article 38). Given that Option B provides for a regulatory backstop, it would ultimately be up to the Member States (and not to private operators) to assess the legitimacy of possible decisions to restrict access to content in specific cases.

Given that the Member States are bound by the EU Charter of Fundamental rights 90 when implementing EU law, there would be a guarantee that: any limitation to the exercise of freedom of expression and information as enshrined in Article 11 of the Charter is provided by law; respects the essence of this freedom; is proportionate; and only takes place when it is necessary and genuinely meet the objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others. As a consequence, the fundamental right to conduct a business (Article 16 of the Charter) would be respected.

5.1.4 Comparison of options

Costs and savings

Status quo

Option A

Option B

No administrative costs or

compliance costs

Compliance costs:

Depending on the nature of the mechanisms, the costs can vary from EUR 100 000 for the EU (cost of a user generated rating system) to EUR 3.1 million per year for the EU 91 (cost of a moderation system in a large platform).

Administrative costs : EUR 600 000 per year for all EU Regulators (complaint based mechanism).

Compliance costs: 

-Depending on the nature of the mechanisms, the costs can vary from EUR 100 000 for the EU (cost of a user generated rating system) to EUR 3.1 million per year for the EU (cost of a moderation system in a large platform).

-Cost of co-regulatory structure can vary from EUR 250 000 to EUR 1 million per year and per Member States.

Effectiveness and subsidiarity test

Option B most effectively delivers on the objective of protecting consumers including minors by setting out co-regulation. This would be done at a limited additional cost given the fact that most platforms have already in place similar mechanisms. In a co-regulatory system, the costs are shared between the industry and regulators.

The added value of Option B in terms of consumer protection lies in the obligation of means to protect minors from harmful content on video-sharing platforms. For hate speech, while this is already covered as illegal content by the ECD system of notice and action, Option B would introduce an obligation to adopt proactive measures.

From a political viewpoint, Option B is the one that most effectively strikes a balance between the call from a number of Member States and the European Parliament for enhancing the protection of minors and viewers online and the need to preserve and promote freedom of speech, freedom to conduct a business and the ability for companies to innovate.

EU intervention under this option remains proportionate and is mainly based on co-regulation, allowing for national specificities to be taken into account. Option B it also proportionate as it would leave to the industry leeway to implement a regulatory obligation on a best effort basis.

Option B is the preferred option.

Option

General objective and related impacts

Costs (administrative and compliance)

Effectiveness

Coherence

Feasibility (technical and political)

Preferred option

Safeguard the protection of minors and consumer protection (social impacts)

Status quo

0

Low

Low

High

Low

Option A

+

Low

Low

High

Medium

Option B

+ +

Medium

Medium

Medium

Medium

X

5.2 Options addressing the problem of the lack of a level playing field and internal market weaknesses

5.2.1 Promotion of European works

5.2.1.1 Status quo option

Under the AVMSD, TV broadcasters must, where practicable, reserve a majority proportion of their transmission time to European works and at least 10 % of their transmission time or of their programming budget to European works created by independent producers. An adequate proportion of this quota has to be reserved to "recent" independent works.

On-demand service providers, where practicable, must promote the production of and access to European works. The Directive gives the following examples of how this can be done but leaves the choice of the measures to Member States: i) financial contribution to the production and rights acquisition of European works; ii) a share of European works in the catalogues; and/or iii) prominence of European works in the catalogues.

Economic outcome

Existing costs: Maintaining the status quo would result in no additional compliance or administrative costs for regulatory authorities or media service providers.

As regards existing compliance costs, most commercial broadcasters estimate that compliance with the requirement on the majority proportion of transmission time generates medium/high costs for their business. Some thematic and small channels bear higher costs to comply with quotas 92 . For on-demand services, the costs vary depending on how Member States have implemented Article 13 AVMSD (see ANNEX 13).

The existing administrative costs for regulators to monitor TV broadcasting services have been estimated at 220 000 for all EU Regulators 93 . In the case of monitoring compliance of on-demand services, only some Member States have put in place a legal obligation for on-demand service providers to communicate data on compliance to national regulators. The cost of monitoring has been estimated at 10 000 for all EU Regulators 94 .

TV Broadcasters and on-demand service providers have reported medium to high existing administrative costs in relation to reporting obligations on the promotion of European works. In practice, estimations show that annual administrative costs for all TV broadcasters in the EU are likely to vary among Member States and would approximately amount to EUR 200 000 annually 95 . For all EU on-demand services, administrative costs has been estimated at EUR 110 000 annually 96 .

Outcome Internal market:

TV broadcasters devote widely the majority of qualifying time to European content. In 2012, European works enjoyed an average of 64.1% of the total qualifying transmission hours 97 .

For on-demand services, as the Directive simply gives examples of how on demand services may promote European works, only 19 Member States have imposed obligations and they have done so in varied ways, i.e. through financial contribution, share and/or prominence in their catalogues, contributing to a high level of fragmentation (see ANNEX 13).

Outcome on competitiveness: The different treatment between TV broadcasting and on-demand services has resulted in TV broadcasting services operating under more constraints than on-demand services. Looking at the fast-development of on-demand services 98 in Europe as well as the worldwide medium term growth prospect (see section 2.4), this different treatment can be expected to increase. Ultimately, the existence of larger constrains for TV broadcasting could reduce their flexibility to adapt to the viewers demands therefore undermining their attractiveness and thus their competiveness.

On-demand services also have a greater flexibility and incentives to benefit from the internal market by establishing themselves in a particular country and distribute across Europe 99 . The existence of lower constraints on their editorial policy may have an impact in their choice of establishment, which may reinforce their competitive advantage compared to TV broadcasting services 100 .

The results of the 2015 Public consultation confirm a perceived lack of fair treatment between TV broadcasting and on-demand services: 61% of the contributors who expressed an opinion believe that the current rules are not fair. 4 Member States 101 and 4 national regulators 102 pointed out that the asymmetry in TV broadcasters and on-demand services regulation is unjustified.

In their contributions to the 2015 Public consultation 3 Member States 103 and 5 national regulators 104 supported maintaining the status quo. On the industry side, most on-demand service providers and members of the digital/Internet industry (9 out of 17 contributions) would also prefer to maintain the status quo.

On the contrary, some commercial broadcasters (7 out of 30) called for repealing all current rules on promotion of European works, which would be then only subject to national rules. As for public service broadcasters, the majority (10 out of 16) would favour other options and mainly to reinforce rules on on-demand services.

Social outcome:

The current rules aim to ensure that consumers have access to European content. As mentioned above, the current rule for TV broadcasters resulted in European citizens being exposed to a significant amount of European works. This was particularly important in a context where viewer hours for European works have declined (down from 74 % in 2007 to 69 % in 2010) 105 .

As regards on-demand services, the low level of requirements imposed by some Member States has created gaps in the supply and promotion of European content on those services. Even if, given the size of the on-demand market, this impact is not yet very high, the growth prospect on this market may imply that the negative impact on cultural diversity will be higher in the future.

5.2.1.2 Option A: giving more flexibility to providers in the way they implement the obligations to promote European works

Member States would allow TV broadcasters either to reserve the majority of their broadcasting time to European works or to invest at least 50% 106 of their programming budget in European works. Providers would be obliged to choose at least one option.

In addition, Member States would allow on-demand services to promote European works either through a share of European works, their prominence in the catalogues or through a financial contribution. On-demand service providers would be obliged to choose at least one option. It will be up to Member States to decide on the level of requirement for each measure.

Substantive compliance costs: Option A would generate no additional costs for TV broadcasters who would be able to decide to move from a share of their broadcasting time to direct investment only if they are able to recoup the costs.

For on-demand services, the costs of complying with the new rules are difficult to assess as it will depend on the level of requirements set at national level. In those Member States where a share of European works in catalogues is currently in place, the minimum share of European works in the catalogues varies from 10% to 60% (see ANNEX 13). On average in the EU, the share of EU films in 75 big EU VoD catalogues was 27% in 2015 and 30% in 16 big SVoD catalogues 107 . As regards prominence, there are not such quantitative thresholds in the Member States. Recently, the European Audiovisual Observatory tried to identify the promotional spaces for each of the services of a sample of on-demand service providers in DE, FR, UK 108 . According to this study, "European films were allocated between 21% (in the UK) and 33% (in France) of promotional spots 109 ". As for financial contributions, 9 Member States have included such obligations for on-demand services and they vary from 1% to 12% 110 (see ANNEX 13).

Consequently, this option would create zero or low additional costs for on-demand services established in those Member States where there are obligations in place. On the contrary, on-demand services established in the 10 Member States where there is no obligation would have to face the cost of complying with at least one of the promotion measures (shares, prominence or financial contributions). However, the costs are expected to be limited since on-demand services would opt for the less costly measure.

Administrative costs: The additional administrative costs for regulators when implementing option A as regards TV broadcasting services would be zero. The costs of supervising on-demand services would depend on the choice made by on-demand service providers and on the monitoring system applied by the regulators. In this context it is not possible to estimate precisely the related costs but they are likely to be close to the costs incurred under the status quo.

The additional administrative costs for TV broadcasters, if any, would be marginal as they would have to report on their programming budget instead of reporting on broadcasting time if they decide to invest a share of their programming budget in European works. In countries where such systems are already in place, there would not be any additional costs.

For on-demand services, due to the existing significant differences in national legislation and the variety of implementation measures in force, the monitoring costs for regulators would vary. In the 10 Members States where there are no requirements for on-demand service providers (see ANNEX 13), administrative costs would increase.

Impacts on the Internal market: Option A is unlikely to result in a wider circulation of European works across Europe. It is questionable whether a flexible requirement for on-demand services (in particular, to opt either for a share or prominence of European works in their catalogues) would be effective. A share in the catalogue alone would not necessarily lead to more consumption of European works. Prominence would only make sense if a diverse catalogue would be available in the first place.

Impacts on competitiveness: Option A is not expected to significantly impact TV broadcasting. As mentioned in the status quo option in 2012, European works enjoyed an average of 64.1% of the total qualifying transmission hours. Broadcasters are expected to stick to this requirement they already comply with. Under Option A the impact on competitiveness of on-demand services would be limited since they would choose the less costly measure to fulfil their promotion obligations.

Option A would, based on the way providers choose to implement these measures, address the competitive disadvantages of TV broadcasters compared to on-demand services. In their contributions to the 2015 Public consultation 4 Member States 111 and 4 national regulators 112 pointed out that the asymmetry in TV broadcasting and on-demand services regulation is unjustified and rends the current rules unfair. This view was also supported by 4 of the 9 public broadcasters that commented on the issue of fairness. Impacts on SMEs: More flexibility would have a positive impact on small channels, including eventually SMEs and micro enterprises that would be able to implement the promotion measures most appropriate for their business strategies. In any event, TV broadcasts that are intended for local audiences and do not form part of a national network (which generally are not very large companies) are often exempted (see ANNEX 3).

Social impacts:

Under Option A consumers are not likely to be more exposed to European works than they are today. If TV broadcasters were to choose to invest a proportion of their programming budget in European content, there would be no assurance that it would be shown in peak hours. This would be particularly the case if this proportion is low. For on-demand services, as explained above a choice between a share and prominence of European works in their catalogues is not expected to lead to greater diversity. Impacts on cultural diversity: Given the amount of flexibility given to providers, the impact on access to information and culture (Article 22 of the Charter) would be negligible.

5.2.1.3 Option B: Maintaining the status quo for TV broadcasters and reinforce the rules for on-demand service providers

For TV broadcasters the status quo would be maintained.

For on-demand service providers, Member States should require them to secure at least a 20% share 113 of European works in their catalogue and give prominence to those works. In addition, on-demand service providers would be required to report to the Commission on their compliance with these obligations.

A Member State would be allowed to require a contribution (e.g. levies and/or direct investment in content 114 ) to the production of European content from video on-demand service providers established in other Member States if:

-they target consumers in its territory,

-the contribution applies only to the revenues generated in that Member State and

-these revenues are not already subject to an equivalent contribution in the Member States of establishment.

Member States would be required to introduce exceptions for low audience and thematic on-demand service providers or for small and micro enterprises 115 .

Economic impacts:

Substantive compliance costs: Compliance costs for on-demand services would vary across the Member States. In the 10 Member States where there is no obligation, they would have to face the cost of complying with the obligations to reserve at least 20% share in the catalogue and to ensure prominence.

As indicated above, the average share of EU films in 75 big EU VoD catalogues was 27 % in 2015 and 30% in 16 big SVoD catalogues. However, there are great disparities among catalogues of pan-European on-demand service providers (from almost 0% to to 70%) and among Member States (from an average of less than 10% to an average of almost 60%). Taking into account these disparities, a share of 20% would ensure some level of cultural diversity while avoiding excessive compliance costs for on-demand providers (ANNEX 19). In addition any potential compliance cost would be limited by the fact that usually on-demand services business model is based on revenue sharing. It means that they do not incur any costs related to the acquisition of content upfront. They pay a share of the revenue generated to right holders.

For on-demand service providers targeting other Member States which impose a financial contribution extra-territorially, the cost would vary across the EU. Currently, 9 Member States have financial contributions (i.e. direct contribution to production) in place and only 4 Member States apply levies nationally (i.e. contributions made to a film fund)  116 . All things being equal, we estimate that the costs for Netflix and i-Tunes to roll out their services in the five biggest EU markets would be respectively EUR 5.8 and 8.2 million per year and per provider (see ANNEX 10). This would stand for respectively 2 % and 0.4% of their turnover 117 . However, this compliance costs would translate into investment in content that service providers may be able to recoup. Another estimation where Member States would impose levies extraterritorially would result in costs between EUR 4.7 million (in the lower bound) and EUR 11.7 million (in the upper bound) for all providers of on demand services in the EU 118 .

Administrative costs: Regulators may incur additional costs depending on how Member States have implemented the current AVMSD provisions so far. In France, where on-demand services must comply with requirements in terms of share and prominence of EU works, the cost of monitoring these two obligations has been estimated at EUR 2 000 (see ANNEX 16).

The new requirements on on-demand services will be accompanied with reporting obligations. For providers of on-demand services established in Member States where they are not subject to such obligations, the new requirement would increase their administrative burden. It should be noted, however, that reporting obligations would to some extent foster transparency in the on-demand services' business which would be a pre-requisite for assessing what role those players can play in the financing of content.

In Member States imposing financial contributions extraterritorially, there might be limited additional costs for businesses to declare, pay and audit financial contributions if turnover is used as a fiscal base 119 .

 

In their contributions to the 2015 Public consultation, the majority of the Cinema, Film and TV industry contributions (17 out of 30); all consumers organizations that expressed an opinion (8); all employees organizations and trade unions that expressed an opinion (5); and the majority of right holders (10 out of 16) favor reinforcing current rules for on-demand services. 5 Member States 120 and 3 national regulators 121 call for reinforcing current rules on promotion of European works.

Impacts on the Internal market: The combined obligation for on-demand services to reserve a share for European works in on-demand services catalogues and to give prominence to those works would reduce the current fragmentation resulting from the very diverse approaches adopted by Member States (see ANNEX 13).

As regards the possibility for Member States to impose financial contributions services providers may have to comply with different legislations. The level of fragmentation would depend on the number of Member States implementing financial contributions as well as on the number of service providers potentially concerned 122 . Allowing flexibility for Member States to impose financial contributions is considered as a justified and balanced way to limit forum shopping practices without undermining the COO principle and the objectives of the DSM.

Impacts on competitiveness: For on-demand services established in the 15 Members States where there is already either an obligatory share of European works or prominence requirements in place, option B would lead to more level playing field. The flexibility for Members States to impose financial contributions on on-demand service providers located outside their territory would result in a more level playing field between on-demand services competing on the same market. According to many of the contributions to the 2015 Public consultation the strict application of the COO principle and the fragmentation on the transposition of Article 13 may have led to "forum shopping" practices (i.e. on-demand services establishing themselves in Member States with light regulation on promotion of European works). This has in turn created competition distortions and has undermined the effectiveness of the current rules 123 . This is the position of 5 Member States 124 and 1 national regulator 125 ; a few public broadcasters (4); some members of the Cinema, Film and TV industry (5); and the majority of telecom operators and right holders who expressed and opinion (5 out of 9 and 5 out of 7, respectively). Impacts on SMEs: Option B would have a limited impact on small on demand players, including SMEs. As detailed in ANNEX 3, the audiovisual sector is highly concentrated and small on demand service providers would benefit from exemptions.

Social impacts:

The combination of share and prominence obligations on on-demand services would lead to consumers of on-demand services being more exposed to European works than they are today 126 . In 2013, the Belgian CSA analysed two major VoD catalogues: out of the top 50 works, 19 were EU works of which all but 3 had been promoted 127 . The imposition of financial contributions would have a positive impact on the creation of European audiovisual content as on-demand services providers may be required to increase their current contribution to content creation. 

The imposition of financial contributions extraterritorially may have a negative impact on the provision of cross-border on-demand services in some territories where some providers - most probably smaller ones - may not be able to recoup the financial contributions and the related administrative costs. Option B would have a positive impact on small independent producers. Impacts on cultural diversity: The imposition of mandatory obligations on on-demand services providers would have a positive impact on cultural diversity (Article 22 of the EU Charter of Fundamental Rights) as on-demand services providers may be required to increase their current contribution to content creation.

5.2.1.4 Discarded option: introduction of sub-quotas for non-national European works

82% of the respondents (that is, 104 out of 126 of the contributions across different categories of stakeholders) to the public consultation who expressed an opinion on this issue are interested in watching more content produced in another Member State.

However, there was very limited support to increase diversity by introducing sub-quotas for non-national European works. Indeed out of the 25.8% of respondents from various categories of stakeholders which chose the option to reinforce the rules on the promotion of EU works, only a very marginal part – one Member State, one regulator and two content distributors – supported the introduction of these sub-quotas.

In addition, there is no evidence that the industry would be able to recoup the cost of adapting their offer to the new sub-quotas in the absence of audience 128 . Some Member States have flagged their opposition to this approach 129 . This could even reinforce the existing deficit of competitiveness of TV broadcasters vis-à-vis on demand services.

This option has therefore not been impact assessed.

5.2.1.5 Comparison of options

Costs and savings

Status quo

Option A

Option B

Compliance costs: nc

Administrative costs:

-Regulators: for monitoring TV broadcasting services: EUR 220 000 per year for all EU Regulators and for monitoring on-demand services: EUR 10 000 per year for all EU Regulators.

-Service providers: cost of reporting is EUR 200 000 for all EU TV broadcasting services per year and EUR 110 000 for all EU on-demand services per year.

Compliance costs: nc

Administrative costs:

-Regulators: for monitoring TV broadcasting services: around EUR 220 000 per year for all EU Regulators. The cost of supervising on-demand services is not possible to estimate precisely but is likely to be close to status quo.

-Service providers: cost of reporting would be EUR 200 000 for all EU TV broadcasting services and EUR 110 000 for all EU on-demand services.

Compliance costs: 

-Costs related to the application of contributions extra territorially: between EUR 5.8 and 8.2 million per year for one major EU provider. For levies only costs can vary between EUR 4.7 and 11.7 million per year for all EU providers.

The cost of complying with the 20% share is deemed to be limited as on-demnad services business models are based on revenue sharing. The cost of complying with prominence requirements is not quantifiable.

Administrative costs:

-Regulators: for monitoring TV broadcasting services: EUR 220 000 per year for all EU Regulators. The cost of monitoring on demand services in the Member States with the highest requirements is EUR 2 000 per year.

-Service providers: cost of reporting is EUR 200 000 for all EU TV broadcasting services. Cost of reporting for on-demand services would be higher than status quo but not quantifiable.

Effectiveness and subsidiarity test

The status quo for TV broadcasters proposed under option B has proven to be efficient to promote cultural diversity while preserving their capacity to innovate.

By reinforcing the mandatory character related to the share and prominence of European works in catalogue, option B will ensure that Member States take measures. In turn this would increase the level of harmonisation while still leaving flexibility to Member States. This would entail limited administrative and compliance costs.

The most significant costs result from option B and the possibility to apply financial contribution extra-territorially. However, financial contributions to audiovisual content creation are very close to cultural policy, which is a subsidiarity field. Option B seeks to bring this prerogative back to Member States, as intervention at EU level had not resulted in increased harmonization. This option is therefore in full compliance with the subsidiarity principle. In addition, allowing Member States imposing financial contributions on on-demand service providers where their turnover is generated is the most efficient way to secure the contribution of those services to cultural diversity while increasing the level playing field in each national market.

Option B is the preferred option.

Options

General objectives and related impacts

Costs (administrative and compliance)

Effectiveness

Coherence

Feasability (technical and political)

Preferred option

Establish the conditions to ensure competitiveness (impacts on the competitiveness)

Support European cultural diversity (social impacts)

Status quo

0

0

Medium

Low

High

Medium

Option A

+

- -

Low

Medium

High

Medium

Option B

+

+ +

Medium

High

Medium

High

X

5.2.2 Protection of minors in on-demand services

5.2.2.1 Status quo option

TV broadcasts must not include seriously harmful programmes (pornography and strong violence). They may include potentially harmful programmes (erotic content and mild violence), but should do it in a way which prevents minors from hearing or seeing them. On-demand service providers are also required to take appropriate measures so that minors would not normally hear or see seriously harmful content. There are no restrictions for potentially harmful content for on-demand services.

Economic outcome:

Existing costs: Maintaining the status quo would result in no additional administrative or compliance costs for regulatory authorities or media service providers. Existing administrative costs incurred by the regulators in most Member States relate to monitoring and enforcing compliance with these requirements. For TV broadcasting, this is done on the basis of complaints or on a systematic recording of all television programmes 130 . For on-demand services, the majority of regulators do not regularly monitor compliance with the rules. Most of them act on the basis of complaints. Some regulators monitor these rules through spot checks. The cost for reviewing and enforcing the provisions on the protection of minors amounts to approximately up to EUR 800 000 per year per regulator 131 .

Compliance costs for providers (this includes telecom, cable, satellite, broadcasters and on-demand services) can be divided into two categories: i) direct costs, such as the costs of classifying audiovisual content as harmful to minors (i.e. the costs of applying for a rating as well as the time spent managing the process) or of implementing technical control measures and ii) indirect costs e.g. lost revenues which would otherwise be obtained in the absence of classification.

For TV broadcasting, the majority of Member States impose the use of techniques based on the time at which the content is transmitted, i.e. watershed-based restrictions 132 . As regards on-demand services, the majority of Member States require the use of technical measures to ensure that minors will not see or hear harmful material. The use of a PIN access code is one of the most common measures 133 .

Direct costs are difficult to estimate as they are usually absorbed by the provider. Both Pay TV and on-demand service providers reported significant costs for the provision of technical solutions to control the access and to provide information on harmful content. Costs related to control measures increase in relation to the number of new devices on the market such as tablets, smartphones or HDMI keys, which usually require ad hoc developments and investments. A German service provider reported a cost for age verification mechanisms for 16 + on TV platforms of EUR 1.25 million yearly. It also reports a cost for a strict post-ID system for adult content of EUR 1.1 million in total for the period 2010-2015. In the public consultation, some TV broadcasters reported a range of direct and/or indirect costs from EUR 100 000 to EUR 2 million per year at EU level for a pan-European audiovisual group. However, these costs cover measures that are not necessarily required by the AVMSD.

Some indirect costs can emerge when classifying content as potentially harmful to minors, as it can narrow the targeted audience and have an impact on the number of transactions and subscriptions (VoD and SVoD) or on the attractiveness of the programmes for advertisers (catch-up TV). In principle, indirect costs for on-demand services could be expected to be lower, because the access to potentially harmful content is not restricted by the AVMSD. However, a majority of Member States have adopted stricter measures and require some form of protection 134 (e.g. PIN codes, content filtering) for potentially harmful content 135 .

Outcome on the Internal market: The lack of full harmonisation of the concept of harmful content and the lack of a harmonised age rating system has not been a reason not to provide cross border access given its limited cost.

 

Outcome on competitiveness: Because of the different levels of requirements of the AVMSD, TV broadcasting is under more constraints than on-demand services. This situation creates an undue competitive advantage for on-demand services, in particular with respect to Pay TV operators, with which they share similarities.

The results of the public consultation indicate that, with the exception of some telecom operators and on-demand service providers, the majority of the respondents believe that this distinction is no longer relevant, effective or fair. Conversely, a high number of TV commercial broadcasters consider this distinction still relevant. However, some Pay TV operators consider the distinction as no longer relevant.

Social outcome:

The changes in viewing patterns, especially of younger generations, highlighted in Section 2.2.2.1 B and the growing convergence between TV broadcasting and on-demand services has led to a situation where minors are less protected online than watching the same content on TV.

5.2.2.2 Option A: increasing the level of protection of minors for on-demand audiovisual media services, simplify the notion of harmful content and encouraging of EU co-regulation on content descriptors.

The rules on protection of minors applicable to on-demand audiovisual media services would be strengthened by requiring them to restrict access to any kind of "harmful content" (gratuitous violence, pornography erotic and mildly violent content) 136 . The same rule would apply to TV broadacsters.

The most harmful content, such as gratuitous violence and pornography, shall be subject to the strictest measures providing a high degree of control, such as age verification pin codes or even by a "by default" mechanism that would not make this type of content available except when activated by an adult.

In addition Member States would have to ensure that all audiovisual media service providers provide sufficient information to consumers about the possible harmful nature of the content in programmes by means of co-regulatory systems  137 . 

The Commission and ERGA would facilitate exchanges of best practices on co-regulatory systems across the EU. If considered appropriate, the Commission would facilitate the development of EU codes on which ERGA might be requested to give an opinion.

The general provisions on self- and co-regulation (Article 4(7)) would be reinforced by indicating new benchmarks for the effectiveness of the existing and new codes.

Economic impacts

Substantive compliance costs: On-demand service providers would need to assess and classify all offered programmes to see whether they fall within the scope of "potentially harmful" programmes. There are on average 5 764 titles available in VoD catalogues 138 . A broadcaster reported a EUR 550 000 cost per year to implement classification and ratings for TV broadcasting and on-demand services, and a on-demand operator a one shot cost of EUR 1.1 million cost for launching from scratch in a new country based on a catalogue of 5 000 titles 139 . There could be also additional compliance costs as regards technical control mechanisms. However, these compliance costs would be mitigated as at national level, Member States already require some form of protection (e.g. PIN codes, content filtering) for seriously harmful content 140 and most of them also for "potentially harmful" content. Programming the most harmful content would be a business decision that TV broadcasters will take if they are able to recoup the underlying investment.

Audiovisual media service providers would have to comply with the new information requirements. The associated costs would be mitigated in those Member States where similar mechanisms, such as age rating, are in place (see ANNEX 14). The studies available provide information on the costs of rating content according to different age groups, but no specific information on the cost of describing the harmful nature of the content. However, age rating costs detailed in the above paragraph can be used as benchmark as, once the content is classified and labelled (as in the majority of the Member States), the additional cost of providing a description of the content is minimal.

Most Member States use rating systems (all except Denmark, Estonia, Italy and Sweden) and in most countries five age groups are defined. Although the age groups may vary, the different classifications are all generally based on similar criteria: presence of discrimination, drugs, imitative behavior, coarse language, nudity, sex, threatening content and violence.

Only in two countries, Finland and the Netherlands, the system is a combination of legally binding age rating and content descriptors indicating different categories of content (violence, sex, anxiety, drug in Finland; violence, fear, sex, discrimination, drug and alcohol abuse, coarse language in Netherlands).

Despite the costs incurred, some media service providers reported, in the 2015 Public consultation and the data gathering on costs and benefits 141 , that a reliable system for the protection of minors can create a competitive advantage. Being identified as a family-friendly provider can be a strong marketing argument and contributes to the positive branding of the operator. Indeed according to BBFC, 86% of parents in the UK would encourage/ensure their children to watch online channels with clear age ratings.

Administrative costs: There would be additional administrative costs for regulators for monitoring compliance with the new rules by providers of on-demand services, in particular in the 9 countries where there are no stricter rules in place (see ANNEX 14). Regulators already supervise the implementation of appropriate measures by on-demand services to protect minors from seriously harmful content. They would need to go beyond and verify that those measures are applied to potentially harmful programmes.

Depending on the compliance procedures in place at national level, a single category of harmful content may imply an increase in the number of checks and/or of complaints to deal with. For example, a voluntary self-monitoring body in a Member State reported a cost of EUR 126 000 for handling complaints (2 612) in 2014 142 . For on-demand service providers, there would be some administrative costs in relation to a potential increase of complaints due to the wider scope of application of the provision on the protection of minors.

Regulators and media service providers would face administrative costs related to the implementation of the information requirements, via co-regulation, in those Member States where similar mechanisms are not in place. The administrative costs related to the implementation of co-regulation will depend on the approach adopted. In an ambitious scenario, this could imply setting up a system based on the creation of a specific organisation, rules and processes. The PEGI 143 system can give an idea of the administrative costs linked to such an approach at EU level 144 .

Impacts on the Internal market: simplifying the definition of harmful content could result in the most harmful content (for example, but not limited to, hardcore pornography) being consistently subject to effective access controls, across the EU 145 .

Requiring information on content would also have a positive impact on the internal market by providing more harmonization across Member States and TV broadcasting and on-demand services.

This would be facilitated by the Commission and ERGA intervention.

Impacts on competitiveness: Harmonising the level of requirements between TV broadcasting, in particular pay TV services 146 , and on demand services will increase the level playing field. In the frame of the data gathering on costs and benefits, pay TV reported high costs for the provision of technical solutions to control the access and provide information on harmful content. Two of them complained about the lower set of restrictions applied to on demand services while both type of services provide similar technical measures to restrict the access to harmful content.

For on-demand services, the extension of the existing requirements to potentially harmful content is likely to have an impact in terms of their revenues in particular in the countries where there are no stricter rules in place. Less content would be accessible to their widest possible audience. On-demand service providers may therefore incur a loss of revenues be it in terms of number of transactions and subscription (VoD and SVoD) or of advertising (catch up TV). Impacts on SMEs: Option A may generate additional costs for SMEs providers.

Social impacts:

In a context where children consume significant quantities of on-demand content (see Section 2.2.2.1 B), Option A would ensure a higher level of protection. Several surveys have found that consumers expect seamless protection in online video services 147 . This is why in the majority of Member States, industry has already adopted self-regulatory measures to protect minors also from potentially harmful content even in the cases where no regulatory measures are in place regarding this type of content. The possibility for TV brodacsters services to broadcast the most harmful content wil be mitigated by the fact that this content shall be subject to the strictest measures, such as encryption and PIN codes. In some Member States erotic content which would most probably be considered as pornographic in other Member States is subject to encryption and PIN codes without posing a threat to the protection of minors. In addition new generation of devices such as Smart TV will add a second possible layer of protection 148 . Against this backdrop, the majority of ERGA-members supported the idea that the most harmful content could be allowed on TV broadcasting services, provided an adequate access control mechanism is in place 149 .

Requirements on the provision of information would have a positive impact on consumer protection by ensuring transparency on the potential harm of content. Impacts on fundamental rights: Option A may be perceived as an undue limitation to the right of freedom of expression and access to information on on-demand services. Yet it still remains more limited than for TV broadcasters. Moreover, by way of analogy, in the context of Article 3 of the AVMSD, the legislator made an express choice in Directive 2010/13/EU to limit the freedom of expression of audiovisual media services in two specific circumstances, namely for the protection of minors and the incitement to hatred based on race, sex, religion or nationality 150 . Setting requirements on content information would have a limited impact on freedom of expression as it does not imply age rating but only transparency measures.

5.2.2.3 Comparison of options

Costs and savings

Status quo

Option A

Administrative costs: EUR 800 000 per year and per regulator (FR, DE, IT).

Compliance costs: costs can range from EUR 100 000 to a maximum of EUR 2 million at EU level per year and per TV broadcasting service. The costs provided by TV broadcasters cover measures that are not implemented as a direct result of the AVMSD. The costs directly resulting from the AVMSD would be lower.

Administrative costs: not substantial

Maximum compliance costs: Cost of self-regulatory schemes for content information up to EUR 2 million per year for the EU (proxy= budget of two entities in charge of the classification of media content is EUR 2 million).

For most on-demand services the costs would be limited as some Member States require some form of protection (e.g. PIN codes, content filtering) for "potentially harmful" content 151 .

Effectiveness and subsidiarity test

Option A would tackle the current deficit of fair treatment between TV broadcasters and on-demand services and would improve the level playing field.

Option A would also have a positive impact on the internal market through an increased level of availability of information at a limited cost (co-regulatory mechanisms). This approach through co-regulation would also be more effective in terms of protection of minors and would be achieved without impinging on Member States subsidiarity and in line with the minimum level of harmonisation feature of the AVMSD.

Option A is the preferred option.

Options

General objectives and related impacts

Costs (administrative and compliance)

Effectiveness

Coherence

Feasability (technical and political)

Preferred option

Establish the conditions to ensure competitiveness (impacts on the competitiveness)

Safeguard the protection of minors and consumer protection (social impacts)

Status quo

0

0

Low

Low

High

Medium

Option A

+ +

+ +

Medium

Medium

High

Medium

X

5.2.3 Country of origin principle

5.2.3.1 Status quo option

The AVMSD is based on the COO. In order to determine which Member State has jurisdiction over an audiovisual media service provider, the AVMSD focuses on a number of criteria (place where editorial decisions are taken, head office, etc.).

The AVMSD foresees limited derogations (derogation procedure) to the COO principle. For TV broadcasting, derogations should be based on grounds of incitement to hatred or protection of minors. For on-demand services, there are more grounds, including public policy, public security (including the safeguarding of national security and defence) the protection of public health and the protection of consumers. An emergency procedure is foreseen only for on demand services. For situations where there might be circumvention of the stricter rules of another Member State a procedure is in place (circumvention procedure).

The above-mentioned procedures will be hereafter collectively referred to as "cooperation procedures".

Economic outcome:

Existing costs: Maintaining the status quo would result in no additional costs. The COO avoids regulatory inefficiencies which would result from subjecting one service to multiple jurisdictions. Media service providers incur low compliance costs as a consequence of being subject to the legislation of the country of establishment only.

However, given the complexity of the current rules, some Regulators have recently been subject to a heavy administrative burden. For example, in a recent Lithuanian case (ANNEX 9), extensive consultations and written exchanges between the Swedish and the Lithuanian regulators took place. Those exchanges could be equaled to a workload of 50-100 hours shared by the two regulators.

The increased use of the complex cooperation procedures 152 has led to costs to regulators and to the Commission. As a benchmark, the Lithuanian case referred to above represented a workload of roughly 400 hours over three months for the case handler, and a total additional workload of approximately 200 hours for supervisors and other Commission services involved 153 . Based on recent experience, it would seem reasonable to reckon the number of cases with up to 5 per year.

Outcome Internal market: In spite of the broad support for the COO principle 154 , Member States acknowledge a need for addressing actual problems in the application of the principle. In particular, they refer to the complexity of the jurisdiction criteria and the ineffectiveness of the cooperation procedures (see ANNEX 9). Maintaining the status quo would mean leaving these application issues unaddressed which would fuel opposition to the COO principle as such. A minority of Member States plead for limited departures to a country of destination principle.

Outcome on competitiveness: The COO principle provides legal certainty by subjecting media service providers in the EU to the legislation of one Member State only. By keeping administrative and compliance costs for providers low and allowing for economies of scale, the COO principle in turn facilitates investment in the media sector 155 . The complexity of jurisdiction rules and derogation procedures can undermine the positive impact of the COO principle on the competitiveness of media service providers.

Social outcome:

The COO ensures diversity and has fostered the availability of content by facilitating the cross border provision of audiovisual programmes. This is particularly true in smaller markets where service providers would otherwise not be interested in rolling out their services and incurring the cost of compliance with a specific legislation. In some cases, the number of services provided from other Member States is higher than the number of domestic services 156 .

While the COO might potentially lead to different degrees of consumer protection, consumers have only exceptionally complained about the application of the COO principle 157 . This can be explained by the fact that consumers are protected by the consumer protection rules of the Directive. The Directive moreover foresees cooperation procedures in case services from other Member States infringe common key values (derogation/circumvention procedure - see ANNEX 9). For instance the derogation procedure allows Member States to take measures against incitement to hatred and infringement of the protection of minors rules on TV broadcasting. However, to the extent that the cooperation procedures are ineffective, this could affect the level of protection of consumers, including minors.

5.2.3.2 Option A: Simplifying and improving the jurisdiction rules and the cooperation procedures

This option would entail (i) simplifying the criteria to determine jurisdiction; (ii) ensuring transparency and legal certainty via the implementation of a database of service providers under Member States jurisdiction; and (iii) revising the cooperation procedures to make them more effective.

In case of disagreement over which Member State has jurisdiction (in particular when applying the cooperation procedures foreseen by the Directive), the Commission would settle the matter after requesting an opinion from ERGA.

The same derogation procedure and grounds for derogating from the COO principle would apply to TV broadcasting and on-demand services (i.e. incitement to hatred, protection of minors and public security). The urgency procedure currently available for on-demand services only would also apply to TV broadcasting services. The cooperation procedure would clarify the right to be heard of audiovisual media service providers in relation to measures restricting their freedom to broadcast.

Economic impacts:

Substantive compliance costs: Option A would generate no additional compliance costs.

Administrative costs: This option is likely to contribute to an easier application of the Directive and hence reduce the current administrative costs.

Operating a database of all existing providers and sharing relevant information (e.g. where the majority of the workforce is established) would entail administrative costs for regulators. The database could be built on the existing MAVISE database 158 and fed through contributions from the Member States, through their independent regulators. One full time equivalent could be necessary to maintain the database 159 . The costs of setting up the necessary infrastructure to receive relevant information from the Member States would be offset if the existing MAVISE database were to be used.

There would be administrative costs for ERGA which would have to be able to give opinions on conflicts of jurisdiction 160 . Part of those costs would be borne by the Commission, including the organisation of the meetings, travel and subsistence costs. National regulators would bear the cost of working time spent by national officials when working for ERGA. It is difficult to anticipate the number of jurisdictional disputes which would require settlement if the current lack of transparency regarding jurisdiction, in particular in relation to on-demand service providers, would be remedied by an up to date database.

At the same time, operating a database and empowering ERGA to provide opinions on jurisdiction, together with the simplification of jurisdiction rules, are expected to lead to cost savings. These cost savings would stem from the easier and more reliable identification of the COO which means that complex and time-consuming negotiations between regulators regarding jurisdiction (including on the factual circumstances on which jurisdiction is based) can be minimised. In the absence of relevant data, these cost savings are difficult to quantify.

Cost savings are also expected for audiovisual media service providers. As far as they are concerned, they would benefit from greater legal certainty resulting from a simplification of jurisdiction rules. They would equally benefit from greater transparency and thus a greater predictability of regulators' decisions on jurisdiction.

Compared to the status quo option, option A would add one ground of derogation for TV broadcasting and remove a number of grounds for on-demand services. Option A therefore would be a measured response to Member State concerns 161 . The alignment of the derogation procedure for TV broadcasting and on-demand services would lead to a simpler application which could result in cost savings for Member States and regulators. There is no available data allowing for a reliable quantification of those savings. The procedural safeguards, in particular the codification of the rights of defence of the providers concerned, would contribute to legal certainty and would ensure that providers can effectively present their views. They could therefore bring down providers' legal costs triggered by taking legal action against decisions of national regulators.

Impacts on the Internal market: Option A would increase legal certainty and transparency. The alignment of the grounds of derogation would create a more level playing field without restricting free circulation of services across borders. It should be noted that regarding incitement to hatred and protection of minors, the threshold is very high (manifest, serious and grave infringement). Moreover, the Court of Justice has consistently interpreted the notion of "public security" narrowly and strictly 162 . Option A would thus have a positive impact on the functioning of the internal market.

Impacts on competitiveness: Option A would have positive effect on competitiveness, given the increased legal certainty. Impacts on SMEs: Clarification of jurisdiction rules and increased transparency would have a negligible impact on SMEs given that the obligation is imposed on Member States. However, there could be an indirect negative impact on SMEs if Member States decided to increase the level of notification or identification requirements in order to establish jurisdiction.

Social impacts:

Simplifying and improving the jurisdiction rules and cooperation procedures would allow for a better application of the COO. The accrued legal certainty would avoid situations where Member States decline jurisdiction over audiovisual media service providers in spite of jurisdictional links with them. This option would result in a more effective application of the Directive, including the rules on the protection of minors. Aligning the grounds of derogation could lead to an increased level of consumer protection in TV broadcasting. Nothing would change for on-demand services since the derogation grounds which would be scrapped off have not been invoked or applied. Impacts on fundamental rights: Simplifying jurisdiction rules and ensuring transparency would have no impact on fundamental rights although an increase in transparency has an indirect impact on the fundamental right of information. Improving the cooperation procedures would have a positive impact on the rights of the defence and indirectly on the freedom to conduct a business.

5.2.3.3 Discarded option: extension of the AVMSD to audiovisual media services established in third countries

In the public consultation, a significant number of Member States and regulators refer to the absence of a level playing field and distortions of competition 163 . This would result from the fact that foreign providers targeting EU audiences are currently not covered by the scope of the AVMSD. It must be borne in mind that Member States are already allowed to apply the provisions of the Directive to foreign providers targeting consumers in their territory. This notwithstanding, the majority of contributors 164 to the public consultation also argued that an extension of the rules on the geographical scope to certain foreign providers is necessary.

Despite these results, no significant negative impacts of the current rules could be identified. Leading foreign providers of on-demand services (Netflix, iTunes, Amazon EU Sarl) have set up subsidiaries in the EU. Indeed, only 50 paying VoD services (including different linguistic versions of the same provider) established in the United States target one or more Member States 165 . Given the lack of transparency of the VoD market, the exact market share of these foreign providers is not known. However, at present there seems to be only one important player, i.e. Google Play, with no establishment in the EU 166 . It follows that there is a lack of evidence as to the existence of a real problem.

In addition, the extension of the geographical scope would be difficult to enforce. Member States can already apply the provisions of the Directive to foreign providers targeting consumers in their territory. However, there is no evidence that they have made use of this possibility. By contrast, if foreign providers were to be required to register/appoint a representative, this obligation would have to be monitored and enforced. If the registration/appointment of a representative turns out not to be sufficiently effective and real (e.g. a letterbox company), the rules would have to be enforced in a third country which could be complicated. Firstly, by analogy to international cooperation in the field of competition, enforcement by the Commission in a third country may require bilateral international agreements ("dedicated agreements") or AVSMD provisions included in general agreements (e.g. Trade Agreements). However, this is likely to be complicated as providers located in the US constitute the major part of the market share of foreign providers targeting the EU and audiovisual services remain excluded from the ongoing TTIP negotiations. Secondly, any decision from a regulator imposing a fine or seeking a change in the behaviour of a service provider would be difficult to enforce as there would normally be no assets in the EU. In case a foreign provider targets more than one Member State, the need for coordination between regulators so as to avoid conflicts of jurisdiction would trigger further administrative costs.

Extending the geographical scope would thus be disproportionate and would not represent a clear added value.

5.2.3.4 Comparison of the options

Costs and savings

Status quo

Option A

Administrative costs: staff costs related to case handling EUR 18 000 per case for the Commission and EUR 3 000 for the Regulators involved in the case.

Compliance costs: 0

Administrative costs:

-Costs of ERGA opinions: nc

-Around EUR 51 630 to run the MAVISE database for the EU 

Cost savings: not quantifiable

Compliance costs: 0

Effectiveness and subsidiarity test

Options A would facilitate the identification of the country of origin and therefore improve the functioning of the internal market with cost savings for the regulators, the Commission and audiovisual media service providers.

Option A would increase the protection of consumers and allows quick intervention in case of public security threats. In addition, option A would reply to a strong political demand to allow Member States to do so. The approval by the Commission would nevertheless act as a safeguard against any possible misuse of this possibility mitigating potential impacts on the internal market.

The cooperation procedures have the objective of allowing for subsidiarity considerations and national specificities in the application of the COO principle. Improving their functioning is therefore contributing to further abide by the subsidiarity principle.

Option A is the preferred option.

Options

General objectives and related impacts

Costs (administrative and compliance)

Effectiveness

Coherence

Feasibility (technical and political)

Preferred option

Internal market (impacts on the internal market)

Establish the conditions to ensure competitiveness (impacts on the competitiveness)

Status quo

0

0

Low

Medium

High

Low

Option A

+ +

+

Low

High

High

High

X

5.2.4 Independence of Regulators

5.2.4.1 Status quo option:

The AVMSD does not impose an obligation on Member States to create or maintain an independent regulatory body. Member States are only required to take appropriate measures to provide each other and the Commission with the information necessary for the purposes of establishing jurisdiction and applying the cooperation mechanisms.

Economic outcome:

Existing costs: Maintaining the status quo would not entail substantive compliance costs for audiovisual media service providers or additional administrative and enforcement costs for regulatory authorities.

The existing costs deriving from setting up an independent authority are not as such, a legal consequence of the AVMSD which does not impose such an obligation. In any case, the Member State's regulatory structures needed to implement the AVMSD at national level have resulted in moderate to high administrative costs. The average staff dedicated per channel monitored by regulators across the EU has been estimated at 0.56 person 167 .

Outcome Internal market: When regulatory bodies are not efficient or lack independence, this has a direct impact on the effective transposition and application of EU legislation and consequently on the functioning of the internal market. The Council of Europe Recommendation (2000)23 168 on the independence and functions of regulatory authorities for the broadcasting sector as well as a number of studies and reports 169 , consider that the following set of criteria would ensure an effective and independent implementation of legislation:

i) independence from third parties or from external influence;

ii) transparent decision-making processes and accountability to relevant stakeholders;

iii) open and transparent procedures for the nomination, appointment and removal of Board Members;

iv) knowledge and expertise of human resources;

v) financial 170 , operational and decision making autonomy;

vi) effective enforcement powers;

vii)  the possibility only for judicial power to review the regulatory bodies' decisions.

The situation of national regulatory bodies in the light of these criteria is as follows:

-5 national regulatory authorities 171 are not fully separated from ministerial bodies or government.

-4 Member States do not have any transparency provisions 172 and 2 Member States 173 do not require regulators to motivate their decisions.

-A number of countries do not follow sufficiently open and transparent procedures for the nomination, appointment and removal of board members 174 . 6 countries lack rules on conflict of interest for appointments 175 . There are no rules against conflict of interest with government 176 in 6 countries, and 9 do not have rules on conflict of interest with Parliament and political parties 177 . 5 countries neither have rules on the possible conflict of interest with industry (5) 178 . In 5 countries, no specific rules exist to protect Board members against arbitrary dismissal (5) 179 .

-Some commercial broadcasters pointed out to a lack of the requisite knowledge and expertise by the staff of several audiovisual regulators in the 2015 public consultation.

-Large budgetary 180  differences exist between national regulatory authorities across the EU. The regulatory bodies of 10 countries have less than EUR 1 million of budget per year. However, this amount can be much higher in other countries 181 . The same can be said as regards staffing 182 . In this context, the RADAR study also concluded that the level of staff has been considered to be problematic for several regulators 183 . A more qualitative assessment by ERGA gave a close conclusion 184 . As regards decision making process, the regulatory powers of some regulators are limited by the power of other bodies to overturn their decisions as well as by the power of other bodies to give instructions 185 to regulators.

-5 regulators report that they do not have powers to enforce their decisions autonomously 186 .

Failure to fully align to each of these criteria does not necessarily imply a lack of independence. However, they provide a formal framework to ensure the highest possible level of independence and hence better ensure an efficient implementation of the AVMSD.

Some commercial broadcasters replying to the 2015 public consultation mentioned recent decisions by several regulators which, according to them, were problematic for their own independence. They affected negatively Public Service Broadcasters (PSB), commercial broadcasters and sometimes all players 187 .

The absence of independence can undermine the predictability of regulation which, according to service providers, is a necessary condition for them to establish and serve audiences in other Member States 188 .

Outcome on competitiveness: The independence of regulatory authorities both from political bodies and from commercial interests is essential to ensure an objective supervision of markets 189 . A lack of independence can result in an unfair treatment between players competing on the same market and have a negative economic impact on service providers (see Section 2.2.2.2 B).

Social outcome:

The current rules aim to ensure the effective implementation of the AVMSD in cross-border cases where cooperation between the regulatory authorities is required. In this sense, they provide the general public with the assurance that the audiovisual rules, protecting their interests, are observed. However, since the way regulatory authorities function can differ significantly from one Member State to the other, it can translate into different levels of user protection across the EU. In markets with weak regulators, consumer rights risk not to be sufficiently protected 190 .

Moreover, regulatory authorities lacking independence are not in a position to guarantee media freedom and pluralism 191 (see Section 2.2.2.2 B).

5.2.4.2 Option A: The AVMSD would require Member States to have an independent regulatory authority and set a number of requirements to support their independence and effectiveness. ERGA coordination and advisory role would be reinforced and embedded in the AVMSD

The AVMSD would set minimum mandatory requirements for regulatory bodies. Such requirements could include: i) independence from third parties; ii) transparent decision-making processes and accountability to relevant stakeholders; iii) open and transparent procedures for the removal of Board Members; iv) knowledge and expertise of human resources; v) financial 192 , operational and decision making autonomy; vi) effective enforcement powers; vii) the possibility only for judicial power to review the NRAs’ decisions.

These are based on the Council of Europe Recommendation (2000)23  193 , a number of studies and reports (see Section 5.2.4.1) and the requirements set by EU law in other legislative frameworks (see ANNEX 12)

The AVMSD would also require that the regulators have competences in all the areas covered by the AVMSD. They should exercise these competences impartially and transparently and in accordance with the AVMSD objectives (media pluralism, cultural diversity, consumer protection, internal market, distortion of competition).

This option shall not prevent supervision in accordance with national constitutional law.

The role of ERGA, currently set by a Commission Decision 194 , would be embedded in the AVMSD and include new tasks deriving from the review of the Directive (see Sections 5.1.3, 5.2.2 and 5.2.3). This would not imply the creation of an Agency. Existing financing mechanisms would be maintained.

Economic impacts:

Substantive compliance costs would not increase.

Administrative costs: Option A would entail moderate to high administrative costs for Member States, depending on whether their regulatory authorities already fulfill the criteria of independence and effectiveness, especially the criteria on adequate financial and human resources. For some Member States, this would imply administrative costs related to adapting the legislation and, if necessary, the structure of the Regulator, its staff and budget. The maximum increase in staff costs has been estimated at 200 full time equivalents for the most understaffed regulators 195 . However, the reliability of this forecast is limited given that the independence and efficiency of a regulatory authority derives from a complex combination of the requirements mentioned in the status quo.

Impacts on the Internal market: Option A would contribute to raising the level of regulatory independence in the audiovisual sector. This in turn would enhance the effectiveness of the AVMSD transposition across the EU in particular in the areas of audiovisual commercial communications, jurisdiction and protection of minors 196 . Moreover, by indicating the minimum requirements for independence, option A would achieve a higher level of harmonisation as regards the structures of regulatory authorities. This view is shared by 74 out of 86 respondents to the 2013 consultation and by most of the commercial TV broadcasters who replied to the 2015 public consultation. By strengthening ERGA's role, there would be more exchanges among regulators on the implementation of the AVMSD. This would bring closer Member States' positions as regards the interpretation and application of the AVMSD. This would indirectly increase the level of harmonization in the application of the AVMSD.

Impacts on competitiveness: The introduction of proper independence requirements applicable across all the EU countries would contribute to guaranteeing legal certainty and a level playing field for all market players in the EU 197 . Representatives of service providers that serve more than one Member State argued that the willingness to establish in a Member State and serve audiences in several Member States is mostly determined by the high quality and consistency of regulation, and by the independence of regulators 198 . The formalisation of ERGA would enhance cooperation between the regulatory authorities in the EU and thus enhance legal certainty and level playing field between audiovisual media service providers 199 . The replies to the 2015 public consultation by some of the broadcasters 200 indicate that the existence and opinions/statements of ERGA are highly valued. Impacts on SMEs: An increase of legal certainty and a level playing field for all market players in the EU and would have a positive impact on SMEs.

Social impacts:

Due to the improved effectiveness of the AVMSD transposition, option A is likely to increase viewers' protection in the audiovisual sector. It could also contribute to attracting more players to offer services in specific markets, contributing thereby to an increased content choice for consumers. The reinforcement of ERGA would enhance the existing cooperation between regulatory authorities. This would have a positive impact on the cross-border protection of consumers for example in case of cross-border infringement cases. Impacts on fundamental rights: Option A should contribute to ensuring freedom of expression and information. This view is shared by the majority of the Member States and regulators who believe that audiovisual regulatory bodies have a key role to play in safeguarding free and pluralistic media throughout Europe. In order for them to be able to undertake this role properly and without unwarranted interference, it is vital that they are independent 201 .

5.2.4.3 Comparison of options

Costs and savings

Status quo

Option A

Administrative costs: 0.56 person per channel monitored by regulators across the EU

Administrative costs: not available. A rough possibly overestimated extrapolation results in a maximum increase of 200-250 FTEs for the very understaffed Regulators. Although this figure cannot be taken in isolation from other independence requirements.

Effectiveness and subsidiarity test

Options A contributes to a thorough implementation of the AVMSD while ensuring media freedom and pluralism. The budget of the most understaffed Regulators would increase.

Option A would give enforcement powers to the Commission. It would therefore be effective in achieving the objective of ensuring regulatory independence and hence improve the internal market.

As shown in the last review of the AVMSD, option A is likely to be politically challenging. While it is widely supported by the industry and civil society, a number of Member States consider that option A would impinge on the subsidiarity principle.

Option A foresees minimum requirements and remains proportional since it clarifies that Member States would maintain their prerogatives to ensure regulators' accountability in accordance with their national constitutional law.

Option A is the preferred option.

Options

General objectives and related impacts

Costs (administrative and compliance)

Effectiveness

Coherence

Feasability (technical and political)

Preferred option

Internal market (impacts on the internal market)

Establish the conditions to ensure competitiveness (impacts on the competitiveness)

Status quo

0

0

Low

Low

High

Medium

Option A

+ + +

+ + +

Medium

High

High

Low

X

5.3 Option addressing the problem of the rules on commercial communications no longer fit for purpose

5.3.1 Status quo option:

The AVMSD contains rules on commercial communications that apply to all audiovisual media services. These are the rules on the use of sponsorship and product placement and on certain qualitative aspects of commercial communications 202 .

The AVMSD also lays down more detailed rules that apply only to television broadcasting. They set a maximum of 12 minutes of advertising per hour on television (i.e. 20% per hour), define how often TV films, cinematographic works and news programmes can be interrupted by advertisement, set the minimum duration of teleshopping windows and set some requirements on the content of alcohol advertising spots.

Economic outcome

Existing costs: Maintaining the status quo would result in no additional administrative or compliance costs.

According to regulators, the existing requirements have resulted in administrative costs up to EUR 1.2 million per year per regulatory authority 203 .

In the majority of Member States, self- and co-regulation systems are in place in the field of advertising in general. These systems are either funded by membership fees or by a levy system from the industry and their cost ranges from EUR 250 000 to EUR 1 million 204 .

Outcome Internal market: The minimum harmonisation provided by the AVMSD has resulted in fragmentation and has not brought legal certainty in the areas of sponsorship, self-promotion and product placement. For sponsorship announcements and product placement, the main issue concerns the interpretation of the concepts of "potential undue promotional character" 205 and "undue prominence" 206 . For self-promotion, the difficulty lies in applying this notion to assess whether it should be included in the 20% rule. This problem can be particularly acute for anouncements related to programmes of other entities belonging to same media group, which are not strictly speaking considered in the notion of self-promotion.

Outcome on competitiveness: At a moment where online advertising is overtaking TV advertising as the preferred media for advertisers, TV broadcasting is subject to rules that are no longer justified (see Section 2.2.3 and ANNEX 6).

In their replies to the 2015 public consultation, advertisers, some broadcasters and several Member States and regulators claim that there is no level playing field between TV broadcasting and other media services, and in particular between TV broadcasters and on-demand service providers. However, a few broadcasters, mainly from the UK, prefer the status quo option.

Social outcome:

Consumer organisations (including those from the health sector) recognise the relevance of the rules but think that they are neither fair nor effective. Consumer organisations underline that the level of consumer protection should not be lowered 207 . Even if new offers in the market have progressively given consumers the opportunity to switch to services without advertising (see Section 2.2.3), they still have some concerns about excessive advertising on TV 208 . They also consider that self- and co-regulation systems take too long to review complaints while advertising campaigns are fast-paced.

Advertising revenues directly contribute to (commercial) TV broadcasters' capacity to invest in audiovisual content. A decrease of TV advertising revenues linked to the limitations imposed by the current regulation will have a negative impact on creative industries and cultural diversity.

5.3.2 Option A: Making the AVCC rules more flexible

For both TV broadcasters and on-demand services, sponsorship rules would be made more flexible by focusing on the principles of editorial independence, transparency (clear indication that the programme has been sponsored) and no sponsorship for banned products such as tobacco. Similarly, product placement would be explicitly allowed and the rules would be relaxed by deleting the "undue prominence" criterion and focusing on the principles of editorial independence, transparency (clear indication that the programme contains product placement) and no product placement for banned products (such as tobacco or medicines on prescription). The prohibition of product placement in children's programmes would remain.

For TV broadcasters, films could be interrupted more often (once for each period of 20 minutes) except for children's programmes for which the current rule would remain. Isolated spots would be allowed.

As regards quantitative limitations for advertising, TV broadcasters would be allowed more flexibility by transforming the 20 % per hour limitation into a daily limitation.

More types of commercial messages would be excluded from the advertising limit (e.g. cross-promotion including announcements for programmes of other broadcasters or other media within the same media group).

As regards qualitative rules, the status quo would remain 209 . Regarding the provisions on AVCCs for alcohol (Article 9(1)e)) and HFSS foods accompanying or included in programmes with a significant children's audience (Article 9(2)), self- and co-regulation would be encouraged, also at EU level if necessary. Member States would be encouraged to ensure that self- and co-regulatory codes are effectively used to reduce the exposure of children to audiovisual commercial communications of alcoholic beverages and of HFSS foods. The Commission and ERGA would facilitate exchanges of best practices on co-regulatory systems across the EU. If considered appropriate, the Commission would facilitate the development of EU codes on which ERGA might be requested to give an opinion.

The general provisions on self- and co-regulation (Article 4(7)) would be reinforced with new benchmarks for the effectiveness of the existing and new codes.

Economic impacts:

Substantive compliance costs: The incremental costs for TV broadcasting and on-demand service providers of the new provisions would be zero 210 .

Administrative costs: There would not be any incremental administrative cost for regulators. Currently, regulators' monitoring and enforcement activities with respect to the 20% limitation amount to up to EUR 1 million 211 . As regards product placement and sponsorship rules, these costs amount respectively up to EUR 2.2 million and EUR 2.1 million per year at EU level 212 .

As an important share of these costs derive from the application of subjective criteria, such as the undue prominence of product placement, regulators will certainly lower their current costs. It is however not possible to quantify precisely these cost savings.

For HFSS foods advertising, codes of conduct are already in place in all Member States except two. Similarly, for alcohol advertising, codes exist in most Member States. Developing codes at Union level would imply limited additional costs as they would be mostly absorbed by the current existing structures 213 .

Impacts on the Internal market: Option A would address the issue of fragmentation brought by the lack of certainty about the interpretation of some of the AVMSD concepts in the areas of sponsorship, product placement and self-promotion. This being said, the AVMSD is a minimum harmonisation Directive. Member States remain free to adopt stricter and more detailed rules for providers under their jurisdiction. Several Member States indeed have stricter rules already in place as regards quantitative rules, mostly on PSB channels 214 . It is therefore possible that some Member States would maintain stricter rules in this field.

11 of the Member States that replied to this question support more flexibility but to various degrees. Some refer in particular to sponsorship and product placement rules 215 . Other call also for a deletion of the 20% limitation 216 .

Impacts on competitiveness: Most broadcasters agree that product placement and sponsorship rules should be clarified and simplified. A simplified set of rules on product placement could result in an increase of approximately 10% to 15% of product placement revenues  217 , or in a 4% increase of total advertising revenues in the EU (i.e. potentially additional revenue of EUR 1.2 million) 218 . Allowing more flexibility in sponsorship rules would allow broadcasters to generate from 15% to 50% of additional sponsorship revenues 219 . This could result in more than EUR 441 million increase of total TV advertising spend in the EU (i.e. around 1.5% of current total TV advertising market value) 220 . It must in any case be noted that it is difficult to foresee whether advertisers would increase their advertising budgets or spend their existing budget differently.

Most broadcasters consider that the insertion rules are no longer relevant or effective. Some argue that because of these rules, schedules are not built around viewers' comfort or advertisers' demand, which is counter-productive. According to the industry, by making the interruption rules more flexible, revenues could increase between 1 and 10 % 221 . The only other estimate available is based on the scenario of abolishing interruption rules. In this case, the overall potential revenue gains could amount to 1.35% of advertising revenues coming from cinematographic works and news programmes. This is however a conservative estimate since the parameters for calculation do not take into account different target groups, time slots etc. 222

If isolated spots were allowed, this would allow for a better optimisation of broadcasters' advertising inventory.

As regards the 20% limitation, the impact of introducing more flexibility would differ depending on the characteristics of each advertising market 223 and on the extent to which Member States would apply the new rules or maintain the status quo in this area. In the most flexible option of transforming the 20% per hour limitation into a daily limitation, broadcasters would be allowed to broadcast as much advertising as they want during peak times i.e. when they can best maximise their revenues (live shows, major events etc.). They could thus optimise their advertising schedules and viewers flow.

A shift to a daily limit could generate between a 2% and 15% increase of revenues 224 . For example, over the last six months of 2015 225 , the gross price of a 30-second advertising spot during prime time on TF1 was EUR 67 330. It is estimated that during important events or programmes, European broadcasters could increase their advertising pressure by a few minutes, from 12 minutes to 14-15 minutes 226 , taking into account European viewers' lesser propensity to stand long advertising breaks. This would mean an increase of around 2,5 minutes of advertising, i.e. 5 more advertising spots of 30 seconds, which, all things being equal, could translate for a channel such as TF1 in an increased revenue of 336 650 EUR i.e. theoretically EUR 122 million annually i.e. 10 % of the turnover of the channel in 2014 227 . However, the potential benefits of more flexibility need to be balanced with the fact that the scarcity of advertising spots, in particular at peak time, has a positive impact on their value. The exact effects on market players will largely depend on the elasticity of demand in each market. By introducing flexibility, broadcasters would be able to take business decisions adapted to the reality of each market in order to balance advertising demand, advertising spot prices and viewers' comfort. However, since an increase of the overall advertising volume might trigger a decrease of the advertising price 228 , it is expected that broadcasters will not unduly increase the advertising pressure.

The impact of excluding cross-promotion from the 20% limitation would depend on each media service provider’s business model. In general, the exclusion would mainly benefit broadcasters who are part of larger integrated media groups.

Most commercial broadcasters advocate more flexible advertising rules. However, a few broadcasters (mainly from the UK) deem that rules should remain in their current form in order to keep the advertising market stable. They are supported by some Member States 229 .

The printed press industry claims that more opportunities to advertise on TV could imply changes in advertisers' media mix, which may be to their detriment 230 . However, it should be noted that despite the current limitation, newspaper print advertising in Europe has dropped by 23.1 % between 2010 and 2014 and by 5 % between 2013 and 2014 231 . This drop is due to a number of factors, in particular to advertising moving online and to other services. The impact woukd be limited as it mainly allows broadcasters to better distribute advertising spots during the day.

Possible codes of conduct at EU level on alcohol and HFSS food advertising would complement activities at national level and are not expected to decrease advertising revenues for EU TV broadcasters 232 significantly.

Impacts on SMEs: There will be no significant impact on SMEs (See ANNEX 3).

Social impacts:

Overall, viewers would be potentially exposed to more advertising during peak time. Due to a relaxation of the interruption rules, there could be more frequent and longer advertising breaks. This may thus affect the integrity of cinematographic works. Several right holders' associations have underlined this in their contributions to the public consultation 233 .

However, market developments have led to an increased amount of offerings to which viewers can easily switch, in particular to advertising-free subscription video-on-demand services. This tendency has been clearly observed in the US market 234 where, despite the fact that there are no limitations as to the amount of advertising, broadcasters recently use self-restraint in fear of losing audiences.

The deletion of a criterion such as "undue prominence" for product placement would expose viewers to more commercial messages in programmes 235 .

This being said, if broadcasters manage to retain the value of advertising spots by marginally increasing their number around value-generating programmes at peak-time, an increase in advertising revenues would increase the capacity of TV broadcasters to invest in audiovisual content. This would have a positive impact on the availability of content for consumers and would be beneficial to EU producers, especially when coupled with requirements on investment in European works, including the 8 000 EU independent producers with positive consequences for employment. Impacts on fundamental rights: Due to an increased capacity to invest in audiovisual content, more flexibility in advertising rules would contribute to reinforcing freedom of expression and information (Article 10 of the Charter). The possibility to broadcast TV advertising with fewer constraints would contribute as well as to the freedom to conduct a business (Article 16).

5.3.3 Comparison of options

Costs and savings

Status quo

Option A

Maximum administrative costs: EUR 1.2 million per Regulators, per year

Compliance costs: nc

Maximum savings on administrative costs:

­   20% limitation: EUR 1 million per year for the EU

­   Product placement: EUR 2.2 million per year for the EU

­   Sponsorship: EUR 2.1 million per year for the EU

Additional Compliance costs: 0

Maximum economic benefits:

­   Flexibility of 12 minute rule: EUR 122 million per year for one major TV broadcaster

­   Flexibility product placement: EUR 2.2 million for the EU

­   Flexibility sponsorship: EUR 2.1 million for the EU

Effectiveness and subsidiarity test

Option A would increase the competitiveness of TV broadcasters and increase their benefits. TV broadcasters will probably increase the amount of advertising at peak time only to a limited extent so as to avoid any major fall in the prices of advertising slots.

By giving additional flexibility in this field and maintaining the possibility for Member States to adopt stricter measures, this option is proportionate and fully compliant with the subsidiarity principle.

Options

General objective and related impacts

Costs (administrative and compliance)

Effectiveness

Coherence

Feasability (technical and political)

Preferred option

Establish the conditions to ensure competitiveness (impacts on the competitiveness)

Status quo

0

High

Medium

Medium

Medium

Option A

+ + +

Low

Medium

Medium

Medium

X

5.4 Discarded option: Prominence of content of general interest

The prominence of content of general interest has been identified as an issue in the frame of the public consultation. However, the option of including any related provision in the AVMSD has been discarded at an early stage as no clear consensus on how this issue should be tackled has emerged 236 .

Most recent market and technological developments (new distribution channels, the proliferation of audiovisual content, etc.) have generated calls to reflect on whether rules would be required to facilitate prominence of content of general interest, i.e. ensuring its findability/discoverability.

The provision of general interest content constitutes the core element of the mission of public service broadcasters in Member States 237 . It also has a potential impact on commercial broadcasters operating (partly or fully) under defined general interest objectives such as media pluralism, freedom of speech and cultural diversity.

Beyond the specific aspect of promotion of access to European works 238 , the AVMSD contains no general provision ensuring prominence of content considered by Member States as being of general interest. As far as linear broadcasting services provided via electronic communication networks or services are concerned, some Member States provide e.g. for requirements regarding the order of channel listings.

Article 6(4) of the Access Directive 2002/19/EC merely refers to but does not regulate ("without prejudice") the ability of Member States to impose obligations in relation to the presentational aspect of electronic programme guides (EPGs) 239 and similar listing and navigation facilities. The Access Directive does not mention any particular requirement or limitation in this sense, and in any event applies only to the extent that electronic programme guides display linear broadcasting channels provided via electronic communication networks or services and information about such channels.

Even if not stated by any legal instruments, Member States have the possibility under national legislation to introduce prominence obligations on online service providers. Such interventions are subject to the Treaty, including competition rules, the freedom of establishment and the freedom to provide services.

Currently, some platforms reach commercial agreements with content providers including public service broadcasters concerning the prominence of their content.

The added value of action at EU level would be to set up and harmonise the limits to what the Member States can do in regard of prominence of general interest content 240 .

Such limitation could be conceived along the lines of current limitations for must-carry-obligations under Article 31 of the Universal Service Directive (USD) 241 where MS may only impose "proportionate obligations on undertakings under their jurisdiction, in the interest of legitimate public policy considerations, but such obligations should only be imposed where they are necessary to meet general interest objectives clearly defined by Member States in conformity with Union [Community] law and should be proportionate, transparent and subject to periodical review…" 242  

However, in order to be effective, the inclusion of such provision in the AVMSD would require a major adjustment in terms of its scope 243 . The AVMSD would need to apply beyond television broadcasts and specific on-demand audiovisual media services to encompass players aggregating programmes of different media service providers on interfaces allowing users to search, find, organise and select individual elements of audiovisual content for viewing and/or recording. Such players could include transmission networks, content platforms 244 , service providers, ISPs/software producers and manufacturers. For many of these providers, the only applicable rule of the Directive would be the one on access to general interest content (i.e. device manufacturers). 

Moreover, introducing a provision in the AVMSD would entail that transmission networks, content platforms, service providers or manufacturers would apply the rules of the country where they are established.

In the case of a player established in one Member State rolling out its services in other Member States, the content available in the targeted country would have to abide by the provision on prominence of content of general interest from that country.  In a context where OTT services are developing at a rapid pace and have a great flexibility for establishing themselves in a particular country while distributing services across Europe, the effectiveness of such a provision would be very low. Indeed the notion and the scope of general interest applied in one Member State would be defined according to the standards of another Member State.

Therefore, the AVMSD is not the right legal instrument to deal with this issue.

5.5 Impact of the combination of the preferred options

There are multiple potential combinations of the different options. The combination of the preferred options is deemed to strike the best balance between the need to introduce flexibility with respect to the current level of regulation and ensuring adequate consumer protection:

Options

General objectives and related impacts

Costs (administrative and compliance)

Effectiveness

Coherence

Feasibility (technical and political)

Internal market (impacts on the internal market)

Establish the conditions to ensure competitiveness (impacts on the competitiveness)

Safeguard the protection of minors and consumer protection (social impacts)

Support European cultural diversity (social impacts)

Strengthen access to information and media pluralism (social impacts)

5.1 Insufficient minors and consumers protection in video-sharing platforms

Option B

N/A

N/A

+ +

N/A

N/A

Medium

Medium

Medium

Medium

5.2.1 Promotion of European works

Option B

N/A

+

N/A

+ +

N/A

Medium

High

Medium

High

5.2.2 Protection of minors in on-demand services

Option A

N/A

+ +

+ +

N/A

N/A

Medium

Medium

High

Medium

5.2.3 Country of origin principle

Option A

++

+

N/A

N/A

N/A

Low

High

High

High

5.2.4 Independence of Regulators

Option A

+ + +

+ + +

N/A

N/A

N/A

Medium

High

High

Low

5.3 Rules on commercial communications no longer fit for purpose

Option A

N/A

+ + +

N/A

N/A

N/A

Low

Medium

Medium

Medium

On the one hand, the industry will benefit from more flexible quantitative rules on commercial communications. The increased efficiency of the country of origin principle and the requirements for the independence of Regulators would improve the business environment in which audiovisual players operate.

On the other hand, consumers will be guaranteed a high level of protection through the limited extension of the AVMSD to video-sharing platforms and the reinforcement of the requirements applicable to on-demand services in terms of the protection of minors. Consumers will also benefit from a greater access to European works in on-demand services.

On the one hand, the set of preferred option comes with simplification and cost savings in the area of commercial communications and for the application of the COO. On the other hand the substantial societal benefits resulting from the increase in consumer protection leads to additional costs:

Prefered options

Additionnal costs

Costs savings

5.1 Insufficient minors and consumers protection in video-sharing platforms

Regulators: EUR 600 000 per year for all EU Regulators (complaint based mechanism).

Video-sharing platforms: costs of mechnisms to protect minors from harmful content and citizens from incitement to hatred vary from EUR 100 000 for the EU (cost of a user generated rating system) to EUR 3.1 million per year for the EU (cost of a moderation system in a large platform). These costs would be mitigated by the fact that major platforms have already put in place such mechanisms.

Video-sharing platforms: cost of co-regulatory structure varies from EUR 250 000 to EUR 1 million per year and per Member States

5.2.1 Promotion of European works

On-demand service providers: costs related to the application of contributions extra territorially: can vary between EUR 5.8 and 8.2 million per year for major EU providers. For levies only costs can vary between EUR 4.7 and 11.7 million per year for all EU providers.

Regulators: The cost of monitoring on demand services in the Member States with the highest requirements is EUR 2 000 per year.

5.2.2 Protection of minors in on-demand services

TV broadacsters and on-demand services: cost of self-regulatory schemes for content information can be up to EUR 2 million per year for the EU (proxy= budget of two entities in charge of the classification of media content is EUR 2 million).

5.2.3 Country of origin principle

Regulators: costs of ERGA opinions is difficult of quantify and the cost of running the MAVISE database would be EUR 50 000 per year.

Regulators: expected savings resulting from the facilitation of the identification of the country of origin.

5.2.4 Independence of Regulators

Regulators: The cost is not available. A rough possibly overestimated extrapolation results in a maximum increase of 200-250 FTEs for the more understaffed Regulators.

5.3 Rules on commercial communications no longer fit for purpose

Regulators: savings can be up to 5.3 milion per year for the EU.

TV broadcatsers: economic benefit resulting from the flexibility of the 12 minutes rule can go up to EUR 122 million for one TV braodacsters. Economic benefits related to product placement and sponsorhip can go up to 4.3 million per year for the EU.

All options take into account, when appropriate, the need of flexibility for the industry by considering possible implementation via self and/or co-regulation (scope of application, information on harmful content).

Most of the options complement each other. For example, independence of regulators will be of the utmost importance if Members States decide to entrust them with the application of the new rules regarding video-sharing platforms. Also the potential increase in audiovisual media service providers' revenues deriving from the greater flexibility of quantitative rules on advertising will release a potential for an increased contribution to the production of European works.

The combination of options achieves a more level playing field between the different players in the audiovisual media market. This is for instance realized by leveling up certain requirements for on-demand services and video-sharing platforms in relation to the protection of consumer or promotion of European works while providing more flexibility to TV broadcasting services on certain rules on commercial communications.

6.How would actual impacts be evaluated or monitored?

6.1 Monitoring

Monitoring of the implementation will continue to be assured by the European Commission on the basis of:

-Application reports by the Commission, on the Directive as a whole no later than four years after the adoption of the Directive and every three years thereafter;

-Reports on the application of the provisions related to the promotion of European works every 2 years (for TV broadcasting and on-demand services);

-Monitoring of the implementation of the provisions on video-sharing platforms on the basis of an independent study carried out after the transposition;

-Monitoring of the implementation of the provision on content descriptors for protection of minors.

The following list of impact indicators could be used to monitor progress towards meeting the general objectives:

General objectives

Potential indicators

Baseline

Potential sources of information

Enhanced consumer and minors protection

Number of complaints related to harmful/hate speech on video sharing platforms handled by MS appointed authority

0 (2015)

Ad hoc studies

Internal market

Turnover in the audio-visual sector in the EU

Number of TV broadcasting services in the EU

Number and on-demand services

Share of cross border provision of TV broadcasting services

Share of cross border provision of on-demand services

Number of derogation/circumvention procedure opened/closed

Number of on demand services established outside the EU and targeting the EU

Average TV viewing time in the EU

Video viewing time

TV broadcasters advertising revenues

Online advertising revenues

Advertising revenues from online video

Share of European works on TV broadcasting services

Viewing time for European works on TV broadcasting

 

Share of EU works in VoD catalogues

Share of EU films promoted on on-demand services

Share of turnover invested by TV broadcasting services in EU original content

Share of turnover invested by on-demand services in European/independent works

Average staff of NRAs per channel

Number of ERGA opinions

Number of EU codes conduct

EUR 105.8 billion (2014)

5 141 (2013)

2 563 (2014)

38% (2013)

31% (2014)

0 (2015) and 2 (2015)

50 in the US (2015)

3h43

N/A 245

EUR 28 billion (2013)

EUR 27 billion (2014)

EUR 2.2 billion (2015)

64.1% (2012)

69% (2010)

27%/30% (75 VoD catalogues and 16 SVoD catalogues – october 2015)

33% (2015 in DE, FR and UK)

19% (2013)

0.6%

0.56

3 (2015)

0 (2015)

EAO report on the development of the

European market for on-demand audiovisual services and EAO Yearbook

IHS database

ComScore database

Nielsen

ERGA

Report from the MS

Ad hoc studies

6.2 Evaluation

No later than 10 years after adoption, the Commission shall submit to the European Parliament and the Council an ex post evaluation, accompanied where appropriate by proposals for its review, in order to measure the impact of the Directive and its added value.

The evaluation report will include an assessment of whether the operational objectives of the revised Directive have been reached. A particular focus will be cast on the application of the provision on video sharing platforms; "protection of minors" and MS implementation of the coreguationl and/or self regulation principles. The evaluation report will be made public.



Table of Contents

ANNEX 1 - Procedural information

ANNEX 2 - Stakeholder consultation

ANNEX 3 – Business structure in the audiovisual market

ANNEX 4 – REFIT evaluation

ANNEX 5 – EXECUTIVE SUMMARY of the “Study on the effectiveness of self-and co-regulation in the context of implementing the AVMS Directive” (SMART 2014/0054)

ANNEX 6 - Main developments affecting the EU market for audiovisual media services

ANNEX 7 - Comparative table of services that may be qualified as AVMS – EPRA Survey for 35th EPRA Plenary (31 May – 1 June 2012) updated in 2015 in the ERGA sub-group on material jurisdiction

ANNEX 8 - Extracts of Community guidelines (as of 10/01/2016) of a sample of Internet platforms whose services do not fall within the AVMSD scope and existing interventions by internet platforms to protect consumers from hate speech and minors from harmful content

ANNEX 9 – Details of the provisions and implementation of the country of origin principle

ANNEX 10 - Cost of the country of destination – promotion of European works in the 5 biggest markets for on-demand services

ANNEX 11 – Compliance of National Regulators with INDIREG criteria on independence

ANNEX 12 – Criteria of independence of NRAs

ANNEX 13 – Implementation of the provisions on the promotion of EU works at national level

ANNEX 14 – Implementation of the provisions on the protection of minors at national level (from the 2015 EAO Iris bonus "comparative tables on the protection of minors in audiovisual media services)

ANNEX 15 – Implementation of the provisions on commercial communications at national level

ANNEX 16 – Detailed estimates of some costs related to the promotion of EU works

ANNEX 17 - Second Report on the application of Articles 16 and 17 of Directive 2010/13/EU for the period 2011-2012

ANNEX 18 - European Commission's non-regulatory initiatives on a safer Internet for minors

ANNEX 19 – Calculation of the 20% share of European Works

ANNEX 20 – Detailed description of the options

ANNEX 21 – Glossary (LAST ANNEX)

ANNEX 1 - Procedural information

Lead DG: DG Communications Networks, Content and Technology

Agenda planning: 2015/CNECT/006

Organisation and timing: The IA was carried out between May 2015 and January 2016. The IA draws from evidence gathered prior to and during this period.

In October 2015, the Commission published an inception impact assessment 246 .

The IA has been prepared by Unit G.1 "Converging Media and Content" of the European Commission, DG Communications Networks, Content and Technology. It was carried out in close cooperation with other Commission DGs in the context of the Inter-Service Steering Group on the AVMSD evaluation and review convened by the General Secretariat of the European Commission. The following DGs participated to the Steering group: DG CNECT, DG COMP, DG JUST, DG GROW, DG TRADE, DG EAC, DG SANCO, DG RTD, DG NEAR together with the Secretariat-General and the Legal Service.

Five meetings [possibly to be completed] took place respectively on 12 March, 20 May, 25 November 2015, 14 January and 15 April 2016.

1.Consultation of the Regulatory Scrutiny Board.

The recommendations of the RSB

Changes in the IA report

1st opinion of the RSB

The problem statement was revised and framed along the lines of the Digital Single Market initiative.

The Section on the material scope of application has been clarified, including by better explaining what is referred to by "video-sharing platforms".

The provision on accessibility has been removed and a clear reference to the European Accessibility Act has been added. The interaction with the E-commerce Directive has been clarified.

(2) Refine the problems and provide better-structured evidence. The problem description should be consolidated and supported with relevant evidence, currently spread throughout the whole document. The report should introduce a hierarchy of problems – with those related to the implementation of the Country of Origin principle being key – and better identify some of them, e.g. the problem related to the uneven playing field in advertising and the promotion of European works or the independence of regulators. For the latter, the problem should be more rooted in the internal market basis and supported with more explicit evidence (e.g. court rulings, ERGA opinions etc.). The issues related to accessibility of audio-visual content should be discarded at an early stage as they are being tackled by the Accessibility Act initiative. The problem drivers should include the fact that some of the current tools (e.g. rules on product placement) are outdated or not effective. The issue of independence of the national regulators should be introduced clearly in the problem definition to better justify its inclusion in the options.

The problem statement was backed up with more evidence, where available. This was to a great extent done by moving evidence from the status quo analysis to the problem statement.

The problem definition has been re-structured along the three main issues:

1.Insufficient protection of minors and consumers in video-sharing platforms.

2.Lack of a level playing field and internal market weaknesses.

3.Rules on commercial communications no longer fit for purpose.

 

The provision on accessibility has been removed and a clear reference to the European Accessibility Act has been added.

The issue of independence of the national regulators has been clarified in the problem definition.

(3) Better define the options, strengthen the analysis of their impacts and improve their comparison. The presentation of options should be improved, following from the clarified problem definition. The differences between the options should be expressed more pronouncedly, allowing for a more conscious analysis of impacts which should be coherent with the existing evidence. For instance, the report should clarify how the proposed non-regulatory regime is expected to work in practice and how effective it is likely to be, given the alleged malfunctioning of the current soft-law solutions. The feasibility of the options should also be analysed, building on experience (e.g. the only partial implementation of current obligations on European content). The comparison of options should consolidate the various cost-estimates to enable a more explicit balancing of costs and benefits, thus sanctioning the choice of the preferred options. As the review of the AVSMSD is a REFIT initiative, the simplification and burden reduction elements should be brought out and cost-savings quantified as far as possible – and where this is not the case, explained why.

Redundant options have been eliminated in order to focus on the essential.

Tables consolidating the various costs have been added at the end of each set of options.

2nd opinion of the RSB

Further clarify the context and the scope of the initiative. The scope of the initiative has been clarified on the one hand by limiting the on-line extension of the Directive to video-sharing platforms only and excluding upfront problems dealt with by other legislative initiatives. On the other hand, the scope is less clear as regards the removal of the debateable 'TV-like' criterion and the previously planned extension of rules on commercial communications to video-sharing platforms. The removal of the "TV-like" requirement and the associated codification of the 21 Oct 2015 ECJ judgement should not be part of the baseline, but re-introduced in the options. The reasons for not considering anymore the extension to commercial communications should be clearly spelled out. The report also misses an analysis of the international aspect of the revision as regards the consequences of shifting coverage for some services from the e-Commerce Directive to the AVMSD in the context of e.g. TTIP negotiations (obligation to protect internet service providers from liability with respect to transmission or storage of information).

Even if mainly based on the codification on a recent ECJ judgement, it is now again calrified that the proposal will include the removal of the "TV like" requirement.

The reasons for not considering anymore the extension of some of the rules on commercial communications to video-sharing platforms have been be spelled out: the Unfair Commercial Practices Directive (UCPD) 247 applies to all misleading commercial practices. As regards commercial communications for tobacco products in video-sharing platforms, the existing prohibition in Directive 2003/33/EC of the European Parliament and of the Council of 26 May 2003 on the approximation of the laws, regulations and administrative provisions of the Member States relating to the advertising and sponsorship of tobacco products ensures the required consumer protection. Advertising self-regulatory codes also apply in general indiscriminately to advertisements on all media (including TV and on-demand, print, radio, and online). In addition, there have been recent developments in some Member States, where regulatory authorities have issued guidelines on these matters.

Strengthen the links with the evaluation results. The streamlined problem description left behind some of the issues identified in the evaluation: this applies to the contentious 'TV-like' requirement for assessing the applicability of the AVMSD and consumer protection issues linked to the advertising of HFSS foods and alcohol.

The impacts of "TV like" requirement have been brought back in the options.

Strengthening the rules on alcohol television advertising has been limited to a re-enforcement of self-co regulation, given that there is not sufficient evidence available to warrant the need to go further.

The encouragement to develop codes of conduct to protect minors from inappropriate AVCCs for HFSS foods has been spelled out.

Better specify the options and enhance the analysis of their impacts. The proposed options have been rationalised in line with the revised problem definition. However, they have also been changed in substance, omitting several important issues identified in the evaluation study (see above). As regards the soft-law option aiming at protection of minors in the on-line environment, the report should reassess its effectiveness given the reported uncertain results of the existing schemes and further analyse the latent fragmentation risks resulting from potentially 28 different national regimes. Some quantified options (such as the requirement to secure a 20% share of European works in Video-on-Demand Providers' catalogues could be explained)

The lack of effectiveness of the soft-law option aiming at protection of minors in the on-line environment has been better explained. The assessment of the impact on the internal market clarifies that by introducing a maximum harmonization preventing Member States to impose more detailed or stricter rules on video-sharing platforms.

The choice of a 20% share of European works in Video-on-Demand Providers' catalogues has been explained in ANNEX 19.

Stress the REFIT aspects of the initiative. Improvements have been made to the presentation of costs/cost savings of the options, nevertheless the comparisons should be done against the baseline options and – as this is a REFIT initiative – the overall costs/cost savings should be summarised and simplification/burden reduction aspects should be brought out. The scale used to assess the overall impact should be explained: the costs of the preferred options to promote European content and for the protection of minors for VoD and platforms are qualified as "medium" while anecdotal evidence and stakeholders views point to significant costs (promotion of European content, extension of protection of minors provisions to VoD).

A table summarizing additional costs and costs savings has been added at the end of the IA.

The assessment of the costs of the preferred options to promote European content has been backed up by providing more details on VoD providers' business model (revenue sharing).

It has been highlighted that the costs for the protection of minors of the preferred option for VoD providers would be limited as many Member States have already set higher requirements. Moreover, the option dealing with addressing the lack of level playing field as regards protection of minors has been reinforced by proposing a full alignement.

2.Evidence used. The Commission gathered qualitative and quantitative evidence from various sources. The following elements constituted the evidence base:

REFIT analysis (see ANNEX 4)

Stakeholder consultations (see ANNEX 2). 

The findings of the Commission's monitoring of the AVMSD pursuant to Article 33 248 of the Directive (1st Application report for the years 2009-2010 249 ; 2nd Application report on the AVMSD 250 for the years 2011-2013; reports on Articles 16 and 17 251 ).

Policy recommendations from other EU institutions, namely the EP 252 , the Council 253 , the European Economic and Social Committee 254 and the Committee of the Regions 255 .

Data gathering on AVMSD cost and benefits 256 . The survey was developed in the form of a questionnaire by a Task force of Member States' audiovisual regulators convened in the spring of 2015 by the European Commission. The questionnaire was submitted to Member States' regulators within the European Regulators Group for Audiovisual Media Services (ERGA 257 ), as well as to the industry in relevant sectors and to consumer organisations. The questionnaire was sent in May/June 2015. The deadline for replies was 30 September 2015. The questionnaire asked what have been the benefits and downsides of certain AVMSD rules possibly accompanied by quantitative evidence in terms of annual revenues/direct and indirect costs of compliance. It covered rules on:

1.    Commercial communications

2.    European works

3.    Protection of minors

4.    The country of origin principle

The reference period for the quantitative questions was 2010 to 2014, inclusive.

The survey gathered a total of 107 replies with 40 coming from commercial broadcasters (38 %), 20 public broadcasters (19 %), 18 VoD providers (17 %), 12 from national associations focusing on the protection of minors (12 %), 10 from national associations representing independent producers (10 %), 4 from consumer association (4 %). One association representing broadcasters and one representing sales houses also participated. The stakeholders who replied are established in 19 Member States.

Studies and opinions of the European Regulators Group for Audiovisual Media Services (ERGA). In its 2015 Work Programme, ERGA committed to deliver analyses and reports on 4 main topics: the independence of audiovisual regulatory authorities; material jurisdiction in a convergent audiovisual world; protecting minors in a converged environment; tackling the issue of territorial jurisdiction in the EU context. Each topic was dealt with by sub-groups comprising ERGA members. The first three reports were adopted via written procedure (in line with Article 11 of the ERGA Rules of Procedure) in December 2015. The report on territorial jurisdiction will be adopted in the course of 2016.

Publicly-tendered studies 258  on alcohol advertising exposure, independence of audiovisual regulators, self- and co-regulation and standardisation:

­Study on Alcohol advertising exposure, to assess whether rules on audiovisual commercial communication for alcoholic beverages have afforded minors the level of protection required 259 .

­Study on the independence of audiovisual regulators, updating a previous study on independence of regulatory authorities. It will update on recent changes and developments in Member States and candidate countries as regards the independence and efficient functioning of the audiovisual media services regulatory bodies. The draft final report was delivered to the Commission in October 2015 and published 260 on 8 December 2015.

­Study on Self-regulation that will review existing self-regulation approaches in a range of Member States and aim at providing information about relevant evidence of existing schemes and their effectiveness. The Final report is due in Q2 2016.

­Study on standardisation that aims at collecting data regarding the complete standards landscape in the area of TV sets with added Internet connectivity. Furthermore, it will also cover national and industry specification requirements and the cost of adapting them. It should also provide an overview of the reasons for applying diverging standards and give an outline of research needs that exist in the sectors with a view to overcoming fragmentation challenges. The Final report is due in Q2 2016.

4 Studies on survey and data gathering to support the impact assessment of a possible new legislative proposal concerning the AVMSD commissioned in the context of Framework Contract EAC-22-201 261 . These studies cover the following areas: commercial communication, protection of minors, cultural diversity and media freedom/public interest and access for persons with disabilities. The draft final reports of the study will be provided to the Commission in Q2 2016.

Two reports of the European Audiovisual Observatory (EAO) ("Study on data and information on the costs and benefits of the Audiovisual Media Service Directive (AVMSD)" 262 and "on-demand markets in the European Union – 2014 and 2015 developments" 263 ) provided in the context of Framework Contract PN/2011-27/A6. These two reports focus on

-Measurement of audiences

-Online advertising in the EU

-The EU Subscription video-on-demand market in 2014

-The visibility of films in on-demand services

-proportion of European fiction works on a sample of TV channels

-on-demand audiovisual services including their revenues and investment in orginal programming

-linear audiovisual services including their revenues and investment in orginal programming

Desk research and literature review done in-house by DG CONNECT and by the contractors. The main sources used are:

MAVISE 264

Number of linear and non-linear service providers.

IRIS Merlin 265

Changes in media legislation in MS.

Eurostat

General social and economic statistics.

EPRA database 266

Annual reports of national regulators.

National legislation in MS, synthesis, analytical reports.

EU infringement cases 267

Data on infringement cases related to AVMSD.

Freedom of press index

Data on media freedom.

AVMSDatabase 268

National legislation transposing specific AVMSD Articles

National audiovisual services databases 269

Data on market share of audiovisual service providers

3.External expertise. The Commission drew from external expertise in particular in the context of the studies mentioned above.

4.Consultation strategy/process and stakeholders consulted.

The Commission has engaged extensively with all relevant stakeholders in a view of assessing the state of the audiovisual media market, and to determine how to improve conditions for establishing a Digital Single Market. Stakeholders were consulted in the following occasions:

In 2013, the Commission published the Green Paper 270 "Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values" and invited stakeholders to share their views on the changing media landscape and borderless Internet in particular on market conditions, interoperability and infrastructure, and implications for EU rules. The outcomes of the Green Paper are reflected in the feedback document and executive summary of the replies published by the Commission in September 2014 271 .

In 2013, the Commission launched a Public consultation 272 on the independence of audiovisual regulatory bodies. The Commission sought the views of stakeholders on the need to strengthen cooperation between regulatory authorities and reinforce their independence.

A Public consultation on "Directive 2010/13/EU on Audiovisual Media Services (AVMSD) - A media framework for the 21st century" was launched on 6 July and ran until 30 September 2015. The public consultation, available in the 24 official languages of the EU, sought inputs on the functioning and impact of the AVMSD to date (feeding into the evaluation of the Directive) and on policy options for its future. 273  

Data gathering on AVMSD costs and benefits sent to Member States regulators within the ERGA as well as to industry and consumer organisations.

Policy exchanges and opinions of the Member States representatives gathered in the Contact Committee set up via the AVMSD 274 .

Discussions with Member States audiovisual regulators within the ERGA 275 .

Interviews with relevant stakeholders held in the context of the studies on alcohol advertising exposure, independence of audiovisual regulators, self- and co-regulation and standardisation as well as in the context of the Impact Assessment studies.

Structured dialogue with representatives of the affected industry (SMEs and large organisations) and consumers (“Media talks”). In the Media Talks, the Commission discussed specific domains of the AVMSD with relevant stakeholders. Media Talks took place in June and September 2015, as well as regularly throughout 2013 and 2014.

Recommendations, reports and policy discussions with other EU institutions, namely the European Parliament 276 , the Council 277 , the European Economic and Social Committee 278 and the Committee of the Regions 279 .

The consultation strategy followed a participatory and circular approach and strived for triangulation. In the consultation process public events were combined with more targeted consultations to achieve the required breadth and depth of stakeholder inputs.

While the 2013 public consultations were of a broader nature, the questions in the 2015 Public consultation were more focused on possible changes to the AVMSD. However, all main options were considered, in order to enable the Commission to either confirm or contradict previous findings. The questions took into account concerns or views expressed in previous occasions as well as the state of the art in the market and in viewing patterns.

A circular approach was followed as much as possible. For example, meetings of the Contact Committee, ERGA and Media talks with stakeholders were held ahead of the launch of the Public consultation. After the Public consultation deadline, the Contact Committee discussed the Public consultation in two occasions. The data gathered from the sources above were analysed respectively: in house, by external contractors, and in cooperation with other Commission DGs.

Moreover, stakeholders were consulted in multiple occasions by different parties, for example, by the Commission via the Public consultation, by relevant national regulators via the ERGA questionnaire and by external contractors in the context of the studies. This circular approach enabled a satisfactory triangulation of data, i.e. its reliability has been confirmed via findings coming from other sources. Also, whenever the same stakeholder provided information in different contexts, the Commission compared these pieces of information so as to assure their coherence and reliability.



ANNEX 2 - Stakeholder consultation

SYNOPSIS REPORT

Report on the Contributions to the Public Consultation on Directive 2010/13/EU on Audiovisual Media Services (AVMSD) - A media framework for the 21st century

06 July-30 September 2015

I.INTRODUCTION

The Public Consultation 280 on Directive 2010/13/EU on Audiovisual Media Services 281 (AVMSD) - A media framework for the 21st century, took place from 06/07/2015 to 30/09/2015.

The public consultation is part of the evaluation of the AVMSD under the Regulatory Fitness and Performance Programme (REFIT) of the Commission's Better Regulation Framework. Its objective was to gather evidence and views on the functioning of the AVMSD on policy options for its revision, announced in 2016 by the EU Digital Single Market strategy.

The AVMSD has paved the way towards a single European market for audiovisual media services. It has harmonised the audiovisual rules of the Member States and facilitated the provision of audiovisual media services across the EU on the basis of the country of origin principle.

Since 2007, when the regulatory framework was revised for the last time, the audiovisual media landscape has changed significantly due to media convergence. The review of the AVMSD is featured in the Commission Work Programme for 2015, as part of the Regulatory Fitness and Performance Programme (REFIT). In its Communication on a Digital Single Market Strategy for Europe 282 , the Commission announced that the AVMSD would be revised in 2016. The Commission identified the following issues to be considered in the evaluation and review of the AVMSD:

1.Ensuring a level playing field for audiovisual media services;

2.Providing for an optimal level of consumer protection;

3.User protection and prohibition of hate speech and discrimination;

4.Promoting European audiovisual content;

5.Strengthening the single market;

6.Strengthening media freedom and pluralism, access to information and accessibility to content for people with disabilities.

II.    EXECUTIVE SUMMARY

1. Main conclusions from the summary and analysis of contributions in each of the consultation sections (including potential distinction(s) among stakeholder groups)

The main elements that have been observed overall, across stakeholders' categories when it comes to Policy options for the future:

Convergence of views across stakeholders regarding the need for possible changes of the rules on the scope of application of the Directive, as well as on the independence of national regulators.

Support across stakeholders for maintaining the status quo as regards the country of origin principle; must-carry/findability; accessibility for persons with disabilities; major events for society, short news reports and right of reply.

No clear consensus among stakeholders on commercial communications, protection of minors and promotion of European works.    

2. Summary analysis of trends identified across different consultation sections (including potential distinction(s) among stakeholder groups and potential linkage between answers across topics).

Some general trends were observed in the replies received. There is a call from a fair share of representatives of the broadcasting sector to ensure a level playing field either by regulating new services and/or warranting more flexibility of existing rules. Consumer organisations' call for strengthening the AVMSD rules aimed at protecting viewers, particularly vulnerable ones. The internet, telecom and ICT industries call for refraining from new regulation, in order to preserve innovation. The content industry calls for strengthening the rules aimed at promoting European works, across all audiovisual media services.

III.    OVERVIEW OF RESPONDENTS TO THE PUBLIC CONSULTATION

The Public consultation drew a total of 438 replies. 376 replies were given by organisations whereas 62 replies were given by individuals.

The central governments of BG, CZ, CY, HR, HU and MT did not participate to the Public consultation.

Breakdown of respondents per stakeholder category 283  

Survey Category

Number of Respondents

%

Commercial broadcasters & thematic channels

27

6%

European-level representative platform or association

47

11%

Free and pay VOD operators

4

1%

Individual

62

14%

IPTV, ISPs, cable operators including telcos

15

3%

National administration

32

7%

National regulator

20

5%

National representative association

76

17%

Non-governmental organisation

79

18%

Public service broadcasters

14

3%

Regional authority

4

1%

Research body/academia

4

1%

Small or medium-sized business

6

1%

Other

48

11%

Micro-business

0

0%

Pay TV aggregators

0

0%

Press or other

0

0%

TOTAL

438

Breakdown of respondents per country

Country

Number of Respondents

Austria

23

Belgium

29

Bulgaria

2

Croatia

1

Czech Republic

9

Denmark

7

Estonia

3

Finland

19

France

25

Germany

32

Greece

2

Hungary

6

Iceland

1

Ireland

4

Italy

24

Latvia

5

Lithuania

4

Luxembourg

1

Netherlands

11

Norway

4

Poland

20

Portugal

8

Romania

7

Slovakia

4

Slovenia

2

Spain

24

Sweden

14

Switzerland

2

United Kingdom

49

Pan-European

49

Other

47

Not all respondents replied to all questions. In particular, the sections of the PC dedicated to Events of major importance for society; Short news reports; and Right of reply gathered a considerably lower number of replies than the other sections of the PC.

IV.    Consultation topics

1.Ensuring a level playing field for audiovisual media services

1.1Services to which the AVMSD applies

While a majority of stakeholders across sector consider the rules still relevant, a majority of them consider the rules not to be fair. Stakeholders are split when it comes to the effectiveness of the rules.

As regards options for the future, 5 Member States and 1 regulator support maintaining the status quo. 2 MS and 5 regulators support the adoption of guidance at EU level. 1 MS calls for amending the ECD.

13 MS and 9 regulators (11 if we include also EFTA regulators) call for extending the scope of application of the AVMSD to new type of services (services that are not "TV-like" and/or services that are not under the editorial responsibility of a provider).

Public service and commercial broadcasters overall call for removing the "TV-like" requirement. A fair share of them calls for extending the scope of application beyond services that are under the editorial responsibility of a provider. The others call for maintaining the status quo.

Internet companies, cable, satellite, telecoms, press and publishing sector, advertisers and one NGO promoting fundamental rights call for maintaining the status quo.

Consumer organisations advocate for an extension of the AVMSD scope beyond "TV-like" and services under the editorial responsibility of a provider.

The views of citizens are equally split amongst those calling for maintaining the status quo and those calling for an extension of the scope of application of the rules.

Main conclusion: The option of extending the scope of application of the AVMSD is the one that proportionately gathered the largest share of support from stakeholders. There is however no unitary pattern as to what an extension would entail. Some parts of the industry are particularly vocal in calling for maintaining the status quo.

1.2Geographical scope of the AVMSD

Concerning the geographical scope of the AVMSD, views are split. Even though most of the stakeholders consider the current regulation still relevant, its effectiveness and fairness are debated.

5 Member States and 5 regulators are in favour of maintaining the status quo. 9 Member States and 12 regulators support an extension of the geographical scope to third country providers targeting EU audiences, underlining the importance of creating a level playing field. Of those in favour of an extension, 4 Member States and 8 regulators support linking the extension of the geographical scope to providers' significant market presence in the EU.

Public Service Broadcasters are mainly open to consider an extension of the geographical scope to taken into account today's digital and online environment. Commercial broadcasters are equally open to an extension but only if the Commission has evidence of problems with the current approach.

The majority of advertising companies supports maintaining the status quo. According to them, an extension of the geographical scope would be difficult to enforce.

NGOs and consumer organisations raised concerns regarding a perceived lack of level playing field resulting from the current approach. At the same time, a few organisations pinpointed to the fact that an extension of the geographical scope would increase the legal burdens and multiply the regulatory requirements, negatively affecting the EU audiovisual market. A number of ICT, Digital and Internet companies support maintaining the status quo because they reckon that changes in the geographical scope will potentially pose threats to media pluralism and innovation, making the European market less attractive and less competitive.

The satellite industry supports maintaining the status quo and points out that the Directive already applies to third-country service providers using a satellite uplink situated in or appertaining to a Member State. As a result, they claim that the AVMSD covers a very wide scope of European and non-European channels.

Main conclusion: The majority of respondents across stakeholders' categories favour the need for possible changes of the geographical scope but there is no consensus as to how to go about an extension.

2.Providing for an optimal level of consumer protection (Commercial communications)

Although the majority of respondents across stakeholders' categories consider that the existing rules are still relevant, their effectiveness and fairness is very much debated.

Among Member States, none is in favour of maintaining the status quo while 7 regulators support this option. 8 Member States and 2 regulators are in favour of more flexibility in general while some others (7 Member States and 5 regulators) would like to reinforce rules to protect vulnerable viewers, especially in the areas of alcohol and fatty foods. 10 Member States and 6 regulators also favour other options, going in different directions (either keeping some of the current rules while clarifying and simplifying other provisions, or introducing rules on signal integrity, or further extending some of the current rules to on-demand services or other online services).

Public service broadcasters mainly favour another option, with some calling for simplification and clarification, for the extension of the rules on audiovisual commercial communications to other players and for rules on signal integrity. Commercial broadcasters are mainly calling for more flexibility, especially on the quantitative advertising rules (12-minute advertising limitation, interruption rule, rule on isolated spots) and on sponsorship and product placement rules. Yet, a few broadcasters would prefer maintaining the status quo.

Advertisers favour either the status quo or more flexibility while the food and drink industry favours the status quo, especially on alcohol advertising and fatty food advertising. They consider that the current framework, complemented by self- and co-regulation, functions properly. Consumer organisations (representing viewers and the public health sector) favour tighter rules to protect vulnerable consumers, in particular on alcohol and fatty food advertising (e.g. via watersheds, stricter rules on product placement and sponsorship for these products or even a possible ban). Internet, telecoms and cable operators call for maintaining the status quo or for more flexibility in general. Among citizens, the views are varied and are also almost equally split between the different options.

Main conclusion: No clear consensus emerged amongst respondents across stakeholders categories when it comes to the preferred policy option on commercial communications. The respondents' views are almost equally split between the four options. However, those options are not necessarily mutually exclusive and could be combined to a certain extent.

3.User protection and prohibition of hate speech and discrimination

3.1 General viewers' protection under the AVMSD

As regards protection of minors and the current distinction between the rules applicable broadcasting and on-demand, views are split. 8 Member States consider that the distinction between broadcasting and on-demand content provision is not anymore relevant, effective and fair. 6 Member States have expressed the view that it is still relevant. The majority of Regulators (10) consider these rules to be no longer relevant. 7 Regulators believe that these rules are still relevant.

When it comes to the question of the effectiveness of the AVMSD in protecting children, the majority of Member States (7) and Regulators (8) who replied consider that the AVMSD has not been effective in protecting minors.

9 MS and 12 regulators did not provide an opinion on the AVMSD rules on incitement to hatred. 2 MS consider the AVMSD rules on incitement to hatred still relevant, effective and fair. 4 MS consider that further grounds for prohibition of incitement to hatred should be introduced in the Directive. The following are mentioned: incitation to violence; sexual orientation; religion; marital status; political beliefs; language; state of health; disability; physical or genetic characteristic; social status; nationality; gender. 1 MS also calls for aligning those grounds to Article 9 of the EU Charter of Fundamental rights. 4 MS consider that the rules for suspension under Article 3 should be reviewed in order to strengthen the protection from content inciting to hatred. 1 MS suggested that a revision of the directive should give consumers the right to know who the ultimate beneficiaries of audiovisual media services are i.e. who is trying to influence their decisions.

2 regulators believe that hate speech should be dealt with on all platforms. 1 regulator calls for aligning the grounds to Article 9 of the EU Charter of Fundamental rights. Another regulator opposes modifications to the AVMSD while another one suggests introducing transparency as regards the beneficiaries of audiovisual media services.

Most industry stakeholders (public service and commercial broadcasters, telecom operators, VOD providers, Internet and ICT) and consumer organisations did not express an opinion regarding the existing rules on incitement to hatred.

3.2 Protection of minors

No Member States and only 1 Regulator are in favour of maintaining the status quo. 4 Member States and 10 regulators favour more self- and co-regulation. 7 MS and 14 Regulators are in favour of more harmonisation, although their comments to do follow a unitary pattern (they refer to either harmonisation of classification, or common definitions/clarifications of key-concepts). 8 Member States and 9 Regulators call for removing the distinction between linear and on-demand services (levelling up). 6 Member States and 6 regulators call for extending the AVMSD rules on protection of minors to other online content.

A limited number of Member States and 7 regulators also favour other options or a combination of various options. They however follow different directions. They refer to: ensuring a higher level protection of minors when it comes to their exposure to pornographic, racist or anti-Semitic content; matching the regulation for linear and non-linear services by levelling up the rules; and continue working with industry to encourage self-regulation for other platforms; applying the rules on protection of minors to all audiovisual media services including those not under editorial responsibility by means of graduated protection; removing the distinction between broadcast and on-demand services and allow a more graduated approach to potentially harmful content.

Commercial broadcasters mainly favour self and co-regulatory measures (8) and the extension of the scope of the AVMSD (7). Amongst Public Service Broadcasters, some (8) favour self and co-regulatory measures, others (7) call for extending the scope of the AVMSD, or (7 ) suggest (standalone or combined) other options.

Internet companies, Telecoms, VoD mainly advocate for maintaining the status quo or favour complementing the AVMSD with self- and co-regulatory measures.

Consumer organisations (representing minors) favour further harmonisation and call for an extension of the AVMSD to Internet platforms.

Views expressed by citizens vary and equally split among the options with no clear trend.

Main conclusion: No clear consensus emerged amongst respondents across stakeholders categories when it comes to the preferred policy option on protection of minors.

4. Promoting European audiovisual content

Some Member States (4) and regulators (6) support maintaining the status quo. They all agree that current regulation for the promotion of EU works is sufficient and should not be amended. Other Member States (7) and National regulators (6) call for introducing more flexibility for Member States and service providers in their choice or implementation of the measures on the promotion of European works to adapt to their respective markets. Several Member States (6) and a few National regulators (3) call for reinforcing existing rules. Most of them support, in particular, strengthening regulation on non-linear services by clarifying and harmonizing provisions under Article 13 in order to avoid distortions of competition among players. Finally, some Member States (5) and National regulators (3) suggest other options. Some of them favour more flexibility in regulation while others call for reinforcing current rules and exploring solutions focused on the supply side.

Public service broadcasters generally back other options, namely to adapt rules for on-demand services to reflect recent changes in the audiovisual market. Some commercial broadcasters call for more flexibility while other favour repealing the rules as they believe the current market of European works is already successful.

The digital/Internet industry and VOD operators support maintaining the status quo. On the contrary, the Cinema, Film and TV industry primarily favours reinforcing the existing rules and some call for the imposition of financial contribution on on-demand services.

Telecom operators call in general for more flexibility and support measures based more on marked dynamics rather than on quota systems. The majority of right holders support reinforcing the rules and most of them believe measures mentioned on Article 13 should be made mandatory.

Views expressed by citizens are also split among the options with no clear trend.

Main conclusion: There is no clear consensus amongst respondents across stakeholders' categories as regards policy options on promotion of European works.

5. Strengthening the single market

The majority of respondents across stakeholders' categories consider that the current approach is still relevant, but there are doubts about its effectiveness (in particular as regards the functioning of the cooperation procedures) and fairness.

12 Member States and 15 Regulators support maintaining the country of origin principle accompanied by stronger cooperation practices and/or simplified jurisdiction criteria. A further 4 Member States express principled support for the country of origin principle. 5 Member States and 5 Regulators ask for moving to a different approach whereby providers would have to comply with some rules (e.g. on protection of European works) of the countries where they deliver their services. 4 Member States and 4 Regulators favour other options.

Public services broadcasters mainly call for maintaining the country of origin principle together with strengthening existing cooperation practices/revising the rules on cooperation and derogation mechanisms. To a lesser extent they ask for additional safeguards to avoid undermining the effectiveness of national rules. Commercial broadcasters mostly call for maintaining the status quo, while showing some support for stronger cooperation practices/mechanisms and simplified jurisdiction criteria. The satellite industry supports the country of origin principle and calls for strengthening existing cooperation practices/revising the rules on cooperation and derogation mechanisms.

Advertisers favour maintaining the status quo and, to a lesser extent, ask for strengthening existing cooperation practises. Internet, telecoms and cable operators mainly call for maintaining the status quo or other options. Consumer organisations (representing viewers and the public health sector) mostly argue for (limited) departures from the country of origin principle towards a country of destination principle. Citizens mainly favour maintaining the status quo together with revising the rules on cooperation and derogation mechanisms and simplifying the jurisdiction rules.

Main conclusion: Regarding the set of questions on strengthening the internal market, there is strong support for maintaining the country of origin principle across various stakeholders categories.

6. Strengthening media freedom and pluralism, access to information and accessibility to content for people with disabilities

6.1 Independence of regulators

Most of those who replied to this question considered that the current provisions of the Directive are relevant and fair but not effective. Consequently, the majority of respondents across stakeholders' categories supported the reinforcement of the AVMSD rules on independence of the audiovisual regulatory bodies. Those respondents favored either laying down an obligation to ensure the independence of audiovisual regulatory bodies or providing for a set of criteria that regulators need to meet to ensure their independence. The latter option gathered a slightly larger support.

5 Member States and 6 regulators considered that the provisions in the Directive are relevant, effective and fair, while 6 Member States and 7 regulators pointed out that Article 30 AVMSD is not effective. A majority of public service broadcasters considered that the rules are relevant, effective and fair. A large majority of commercial broadcasters considers that the rules of the Directive are relevant but only a small minority of them considers that they are relevant, effective and fair.

4 Member States and 6 regulators called for maintaining the status quo. 6 Member States and 9 regulators from 6 Member States supported the option to impose an obligation on the independence of regulatory authorities. 6 Member States and 9 regulatory authorities from 7 Member States supported laying down minimum mandatory requirements for regulatory authorities. 2 Member States and 1 regulator supported other options.

Most public service broadcasters called for maintaining the status quo. Most commercial broadcasters called for strengthening of the current rules (by laying down in the AVMSD an obligation of the independence of regulatory authorities (9) and laying down criteria of independence (13)).  

VOD operator, digital and Internet companies generally called for maintaining the status quo, although some called for strengthening the rules. Cinema, film and TV producers, consumer organisations and NGO promoting fundamental rights mostly called for strengthening the current rules. Most of the citizens who replied to this question favoured reinforcing the rules.

Main conclusions: The majority of respondents across stakeholders' categories supported the reinforcement of the AVMSD rules on independence of the audiovisual regulatory bodies.

6.2 Must Carry/Findability (Prominence of content of general interest)

A large majority of Member States (20) and regulators (15) who replied called for maintaining the status quo. 4 Member States and 9 regulators call for introducing a provision on prominence of content of general interest in the AVMSD.

Public service broadcasters advocate for including a rule on discoverability of content of general interest in the AVMSD. Commercial broadcasters mainly call for a broader coverage of "content of public interest" than provided by public service broadcasters. Telecom providers generally call for maintaining the status quo and oppose new rules on findability at EU or at national level.

The Internet sector calls for maintaining the status quo, stressing that Internet platforms are not gatekeepers and that users retain control over the content they access. The press calls for ensuring a level playing field - for instance by ensuring non-discrimination on platforms - via an intervention outside the AVMSD. Amongst citizens, views vary.

Main conclusions: As regards findability, the option of maintaining the status quo is the one that proportionately gathered the largest share of support from stakeholders, followed by the one of introducing findability rules in the AVMSD. The remaining options received a fair share of support from stakeholders. Those options are however not necessarily mutually exclusive and could be combined.

6.3Accessibility for people with disabilities

A majority of respondents across stakeholders' categories expressed the view that the current rules are effective in providing fair access to audiovisual content to persons with hearing and vision disabilities.

As regards options for the way forward, while the Member States were split as regards maintaining the status quo (6) or laying down in the AVMSD requirements for accessibility (6), the majority of regulators who replied (6) called for laying down in the AVMSD requirements for accessibility. 2 regulators favoured maintaining the status quo. 1 Member State and 7 regulators called for self-/co-regulatory measures in this field.

Public service broadcasters and commercial broadcasters called for maintaining the status quo. Disability and consumer organisations, as well as the ICT and Internet industry called for harmonising accessibility requirements at the EU level.

Main conclusions: Most respondents across stakeholders' categories opted for maintaining the status quo, while around a quarter of respondents called for strengthening the rules.

6.4Events of major importance for society

An overwhelming majority of respondents across stakeholders' categories consider that the current rules are still relevant, effective and fair.

As regards the way forward, a majority of Member States (7) and regulators (18) who replied call for maintaining the status quo.

Whereas a slight majority of the public service broadcasters (11) who replied supports maintaining the status quo, 7 of them chose other option.

A majority of those commercial broadcasters, cable operators and VOD operators supports maintaining the status quo. A minority share of the industry calls for abolishing the system of lists. Others call for simplifying the notification procedure. Some others call for requiring the Member States to draw up lists.

A number of health-related NGOs and national agencies calls for addressing problems related to alcohol advertising, as the AVMSD allows sport events listed as "of major importance" to be sponsored by alcohol producers.

Main conclusions: A majority of respondents across stakeholders' categories call for maintaining the status quo as regards events of major importance for society.

6.5Short news reports

A majority of respondents across stakeholders' categories find the current rules to be relevant, effective and fair.

A majority of the Member States (11) and regulators (12) who replied called for maintaining the status quo.

Public broadcasters (8) were mainly in favour of the status quo. A majority of the commercial broadcasters (20) who replied to this question called for maintaining the status quo. Some commercial broadcasters however call for removing the current rules.

Whereas the Internet, telecoms and cable operators primarily did not take a position on this issues, those who replied called for maintaining the status quo.

Those stakeholders supporting other option called for either: extending the rules to on-demand audiovisual media services; harmonising the rules at EU level; or clarifying certain aspects of the existing rules.

Main conclusions: A majority of respondents across stakeholders' categories call for maintaining the status quo as regards short news reports.

6.6 Right of reply

The majority of respondents across stakeholders' categories consider that the current rules are still relevant, effective and fair.

8 Member States and 9 regulators (11 regulators, if EFTA countries are considered) are in favour of maintaining the status quo. 2 Member States and 6 Regulators called for extending the scope of the rules to on-demand audiovisual media services and online intermediaries.

Whereas a slight majority of Public service broadcasters called for maintaining the status quo, a number of them are in favour of extending the scope of the rules to non-linear services, in line with Council of Europe Recommendation (2004)161 on the right of reply in the new media environment. A large majority of commercial broadcasters call for maintaining the status quo.

Telecom operators, cinema, print and publishers stakeholders are in favour of maintaining the status quo. 

Whereas a majority of NGOs called for maintaining the status quo, a few of them advocated for an extension of the right of reply to on-demand audiovisual media services. Citizens mainly favour maintaining the status quo, although a few of them indicate difficulties with pursuing complaints.

Main conclusions: A majority of respondents across stakeholders' categories call for maintaining the status quo as regards the right of reply.



ANNEX 3 – Business structure in the audiovisual market

The audiovisual sector mainly comprises large companies:

-The turnover of the 50 leading European television group was EUR 87 bn in 2014 e.g. more than 80 % of the EU audiovisual market (EUR 105.8 bn) 284 . The rest of the audiovisual sector is made of US groups and a myriad of local TV channels. As regards on-demand services more specifically, there are mostly subsidiaries of big audiovisual groups.

-Similarly, it is more common to find that the majority of the workforce works for large companies. This is the case in 12 Member States out of the 16 for which employment data are available. In those countries, large companies account for an absolute majority (more than half) of the workforce. Large companies in France employed upwards of 7 out of 10 people (71.5 %) within the programming and broadcasting activities workforce in 2010, while the share of large companies in the total workforce peaked at 78.5 % in Germany. Upwards of 80 % of the value added generated in Spain, Poland, Italy, France, Romania and the United Kingdom was attributed to large companies, their share of sectoral value added peaking in the United Kingdom (90.8 %). 285

The AVMSD foresees exemptions for small broadcasting services when it comes to rules that do not directly relate to the protection of the vulnerable. Under Article 26 AVMSD, Member States have adopted exemptions of the quantitative rules on commercial communications (interruption and minutage rules) on television broadcasts intended solely for the national territory. Under Article 18, requirements on the promotion of EU works do not apply to television broadcasts that are intended for local audiences and do not form part of a national network. The exemptions of the requirements on the promotion of European works for small broadcasting services are implemented in the frame of Guidelines issued by the Contact Committee.

Given the highly concentrated structure of the audiovisual market and the fact that small operators are normally exempted from the rules with the highest economic impact, the effect of the AVMSD on SMEs is deemed to be small. The preferred option foresees that that Member States would be required to waive the requirements on the promotion of EU works for low audience and thematic on-demand service providers or for small and micro enterprises.

ANNEX 4 – REFIT evaluation

1.Introduction

Purpose of the evaluation

This Staff Working Document (SWD) provides the results of the ex post evaluation under the Regulatory Fitness and Performance Programme (REFIT) 286 of the Audiovisual Media Services Directive (hereinafter "AVMSD").

In line with the "Better Regulation" requirements 287 , the evaluation assesses the effectiveness, efficiency, relevance, coherence and EU added-value of the AVMSD, and pinpoints areas where there is potential for simplification, without undermining the objectives of the Directive.

The Commission Communication “A Digital Single Market Strategy for Europe 288 ” announces that the Commission will examine the functioning of the rules currently in force and will review the AVMSD in 2016 289 .

Pursuant to this commitment, this evaluation has been carried out in parallel to the Impact Assessment on policy options for the future of the AVMSD. The conclusions of this evaluation will – where relevant – feed into that Impact Assessment.

This evaluation also provides the necessary evidence base for meeting the reporting obligations set out in Article 33 of the AVMSD and Articles 16 and 17 (Reports on the promotion of European Works)  290 .

Scope of the evaluation

The evaluation focuses on the objectives, domains and measures set out in the AVMSD. National transposition measures are not part of the scope of this evaluation.

This evaluation covers the period from December 2007, when the Directive resulting from the last revision entered into force (requiring the Member States to transpose the rules at national level by December 2009), to December 2015. The period between 1989, when the Television without Frontiers Directive 291 entered into force, and 2007 is not covered by this evaluation.

2.Background

2.1 Situation prior to Directive

The EU regulatory framework in this domain is in place since 1989 and was originally only applicable to broadcast services. The rationale behind the adoption of a regulatory framework for television broadcasting services at EU level served two primary and interconnected objectives:

(1) Facilitate the free movement of television broadcasting services within the internal market;

(2) Ensure the protection of fundamental public interest objectives, through minimum harmonisation of existing regulations.

In addition, the regulatory framework contributed to the fulfilment of wider complementary cultural, social, and economic aims while contributing to the protection of fundamental rights and pluralism.

The regulatory framework was amended twice (respectively in 1997 292 and 2007) to adapt to technological and market developments. The Directive currently in force is the result of the 2007 revision and its subsequent codification in 2010.

The last review of the regulatory framework in 2007 aimed to modernise and simplify the rules for broadcasting services and introduce minimum rules for on-demand audiovisual media services. The Commission aimed at adopting future-proof rules, as it expected that the revised Directive would regulate the internal market for broadcasting and other audiovisual media services approximately over the years 2009-2016 293 .

2.2 Baseline

At the time the last revision was proposed in 2005 294 , the Commission observed that the 1997 Directive had been overtaken by technological and market developments and had to some extent become outdated. This was reflected in the Impact Assessment 295 accompanying the 2005 legislative proposal.

In 1989, non-national satellite commercial television was in its infancy and ICT-based fixed-line methods of service provision were not ready for the market. In 13 of the new Member States (following the 1994 and 2004 enlargements) there were no commercial channels available nationally. By 1997, trans-frontier satellite commercial television was a common phenomenon and terrestrial commercial television held a greater share of viewing than public service broadcasters in most Member States. In 2005, trans-frontier satellite commercial television had become as popular as or even more popular than local terrestrial broadcasting (with cable systems re-transmitting both).

This evolution was accompanied by exponential changes in channel capacity, increased market penetration of multichannel homes and an increasing number of platforms. Cable and satellite television multiplied the number of available pan-European channels. This enhanced the choice available to consumers, including children. Children increasingly controlled their own viewing with risks of harm, as age verification procedures and filtering were in place only in a minority of channels and households.

In light of these developments, the revision of the Directive aimed at the following objectives.

1)Taking full advantage of the internal market for new services

Removing obstacles to free movement of audiovisual media services in the internal market

In 2005, 23 out of 25 Member States had in force national laws applicable to on-demand services for a number of AVMSD domains (particularly advertising and protection of minors 296 ) with often diverging requirements 297 . This had potentially negative impacts on the internal market and on business competitiveness. The Commission considered that laying down minimum rules for these services at EU level would have provided legal certainty and allowed businesses to benefit from the AVMSD Country Of Origin (COO) principle 298 . According to COO, which already applied to broadcasting services since the regulatory framework was first in force, audiovisual media service providers have to abide only by the rules of the Member State with jurisdiction over them but can operate in all Member States. This does not prevent Member States from establishing higher standards at national level. However, a receiving Member State with stricter rules than those laid down by the AVMSD cannot restrict the reception of services from another Member State on the basis of those stricter rules. Exceptions apply in specific circumstances defined in the AVMSD.

Other services, such as video-sharing platforms that did not exercise editorial responsibility over the content or websites where the audiovisual content was secondary to the main service, were deliberately left out of the scope of application of the AVMSD rules. The objective was to enable Internet services to further develop in the EU.

Level playing field for audiovisual media service providers

The Commission observed that on-demand audiovisual media services were offering identical or similar content as traditional television without being subject to the same regulatory treatment 299 . According to the 2005 Impact Assessment, maintaining the status quo would have aggravated unjustifiable differences in the regulatory treatment between the various forms of distribution of identical or similar content based on the delivery modes. At the same time, on-demand services were deemed to deserve lighter touch regulation than broadcasting services as users enjoy a higher degree of choice and control over the content and of the time of viewing than on traditional TV.

2)Ensuring minimum harmonisation of rules in support of certain public interests

It was deemed necessary to regulate on-demand audiovisual media services at EU level for clearly defined public interest domains including protection of minors, human dignity and safeguard of essential public interests in the area of commercial communications.

3)Contributing to cultural diversity

As the promotion of European works was considered essential to contribute to cultural diversity it was deemed necessary to adopt EU rules in this domain for on-demand services.

4)Better regulation by reducing unnecessary regulatory burden

New advertising techniques created opportunities for commercial communications in broadcasting services, enabling them to better compete with on-demand services. Product placement had the potential to generate substantial additional resources for providers. The regulatory framework had to be aligned to this new context, namely via more flexibility with respect to the rules for broadcasting services. This called for allowing (in certain circumstances) product placement and introducing more flexibility to the quantitative rules.

5)Facilitating access to information within the internal market

In the field of broadcasting services, the Commission identified a problem in the absence of EU-level rules guaranteeing access to short extracts of events of high interest to the public. Actual or potential uncoordinated national rules were putting the internal market at risk.

In addition to the above considerations, the 2007 revision aimed at maintaining the general and specific objectives of the regulatory framework related to the internal market as well as cultural and social goals which were deemed to be still valid for the future.

Since the 2007 revision, there have been significant changes in the market and viewing patterns (Annex 3 provides the detailed figures and sources):

TV viewing is still the prevalent mode of consumption of audiovisual content but younger consumers, in particular, increasingly watch content on-demand and online.

Audiovisual content is offered as part of a large number of services. Not all such services are in the scope of the AVMSD rules. For example, services hosting audiovisual content in the form of user generated content (UGC) are excluded.

Consumers often watch audiovisual content offered in innovative and namely shorter formats (e.g. short video clips), particularly on-demand and more in general online. Between 2013 and 2015, the number of minutes spent on a video online has decreased in 6 Member States 300 . The decrease in those Member States ranged from -5% to -36% 301 .Online advertising is set to overtake TV advertising.

There are uneven rules regarding contribution to content financing between broadcasters, on-demand service providers and new online market players.

2.3 Description of the Directive and of its objectives

The AVMSD pursues the general objective to create an internal market for audiovisual media services guaranteeing free circulation of services, a level playing field and conditions of fair competition whilst ensuring at the same time a high level of protection of objectives of general interest, inter alia the protection of minors and human dignity as well as promoting the rights of persons with disabilities.

The AVMSD also pursues a number of specific objectives: protect consumers/viewers including human dignity and the physical, mental and moral development of minors; ensure cultural diversity by promoting European audiovisual production and distribution; promote media pluralism, freedom of expression and information; and foster business competitiveness.

As mentioned in section 2.1, the Directive is based on the Country Of Origin principle (COO)

As the AVMSD has a bearing on the market as well as on values and citizens' rights, it provides minimum harmonisation rules. It does not impinge on the competence of Member States to define stricter requirements according to national circumstances and traditions (e.g. rules regarding content harmful to minors).

Intervention logic – 2007 revision

3.Evaluation questions

Pursuant to the Commission Better Regulation Framework, the AVMSD has been evaluated against the following criteria: relevance, EU added value, effectiveness, efficiency and coherence. The evaluation addresses specifically the following questions:

Relevance: In a converging media environment, to what extent have the AVMSD rules proved relevant to the needs of the EU audiovisual market and to consumers/viewers?

Effectiveness: To what extent have the general and specific objectives of the AVMSD been met? If not, what factors hindered their achievement?

EU added value: What is the additional value resulting from the AVMSD, compared to what could be achieved by MS at national and/or regional level? To what extent do the issues addressed by the AVMSD require action at EU level?

Efficiency: Did the AVMSD deliver good value for money, including for SMEs? Could the general and specific objectives have been achieved at a lower cost? Is there scope for streamlining and/or simplifying the procedures laid down in the AVMSD?

Coherence: How well does the AVMSD work together with other EU regulatory and policy initiatives? To what extent does the AVMSD take into account potential interactions or conflicts with other EU initiatives?

The questions listed above are answered throughout the report.

This evaluation covers the Directive in its entirety. It is structured around the main domains harmonised by the AVMSD, as each domain pursues one or more AVMSD objectives.

The link with the general and specific objectives is as follows:

Under the general objective:

The rules on material and geographical scope of application and on Country Of Origin (COO). (Chapter 6.1, 6.2 and 6.3).

Under the specific objectives:

Protection of consumers/viewers is pursued mainly by the rules on protection of minors, the ban on incitement to hatred, the rules on commercial communications, the provisions encouraging the use of self and co-regulation, and the right of reply (see sections 6.4; 6.5; 6.6; 6.10; 6.11).

Cultural diversity and the promotion of European audiovisual production and distribution are pursued by the rules on promotion of European works (see section 6.7).

The promotion of media pluralism, freedom of expression and access to information are pursued by the rule on cooperation amongst Member States in particular via independent regulators, the provision encouraging accessibility of services to persons with a visual or hearing disability, the rules on events of major importance for society and short news reports (see sections 6.8; 6.9; 6.10).

The system of graduated regulation pursues the overall objective of fostering business competitiveness with a lighter touch regulation for on-demand services and stricter and more detailed rules for broadcast services on grounds that the user has more control and choice in on-demand services. The system applies to the rules on protection of minors, commercial communications, promotion of European works, right to information (short news reports and events of major importance for society) and right of reply. This matter is therefore considered across a number of sections: 6.4, 6.6, 6.7, 6.10, 6.11.

Under each "domain subchapter", the five evaluation criteria are being assessed, thereby allowing for a granular analysis and for drawing – if appropriate - different conclusions for each different AVMSD domains.

4.Method

The REFIT evaluation has been carried out on the basis of data collected from different sources. A more detailed insight is provided in Annex 1.

The evaluation took place between March and December 2015 and drew from the following main data sources:

Stakeholder consultations:

oThree public consultations: 2013 Green Paper Public consultation on media convergence 302 ; 2013 Public consultation on independence of audiovisual regulators 303 and 2015 Public consultation on the AVMSD 304  (the synopsis report is in Annex 2);

oPolicy discussions with Member States in the framework of the Contact Committee 305 meetings;

oDiscussions with regulators within the European Regulators Group for Audiovisual Media Services (ERGA) 306 leading to the adoption by ERGA of specific recommendations on the material and geographical scope of the AVMSD, protection of minors (also based on an "inventory paper") and the independence of regulators 307 ;

oStructured dialogues with representatives of the affected industry and consumers (“Media talks 308 ”).

Recommendations, reports and policy discussions with other EU institutions, namely the European Parliament 309 , the Council 310 , the European Economic and Social Committee 311 and the Committee of the Regions 312 .

Data gathered on the AVMSD costs and benefits via a questionnaire sent to Member States' regulators within ERGA and to industry 313 .

Evidence gathered through publicly-tendered studies 314  on alcohol advertising exposure, independence of audiovisual regulators, self- and co-regulation and standardisation.

Commission's monitoring of the AVMSD pursuant to Article 33 315 of the Directive (1st Application report for the years 2009-2010 316 ; 2nd Application report on the AVMSD 317 for the years 2011-2013; Articles 16 and 17 318 ).

   

Literature review (e.g. reports of the European Audiovisual Observatory 319 (EAO)) followed by an analysis carried out in-house by the European Commission Directorate General (DG) for Communications Networks, Content and Technology (DG CONNECT) in close cooperation with other Commission DGs in the context of the Inter-Service Steering Group on the AVMSD evaluation and review convened by the General Secretariat of the European Commission.

Time-wise, the data gathering was characterised by continuity. The Commission acknowledged the need to assess the state of play in terms of market and societal developments in 2012, following the 1st AVMSD Application report for the years 2009-2010. The Commission started stakeholder consultations in the Contact Committee, in ERGA and via the "Media talks". Two Public consultations were launched in 2013 (see above) and a third, more targeted one, in 2015. The reporting obligations according to the Directive also were the opportunity to gather data and information on the state of implementation over time. The Commission’s questionnaires in this context were drafted taking into account the main needs that could be identified at that stage in terms of data.

Method-wise, the data gathering followed a participatory and circular approach and strived for triangulation. While the 2013 public consultations were of a broader nature, the questions in the 2015 Public consultation were more focused on possible changes to the AVMSD. However, all main options were considered, in order to enable the Commission to either confirm or contradict previous findings. The questions took into account concerns or views expressed in previous occasions as well as the state of the art in the market and in viewing patterns.

The questions in the ERGA questionnaire were developed by a Task force of Member States' audiovisual regulators and focused on the practical aspects of the AVMSD application. Regulators took into account the difficulty to measure the costs and benefits of the AVMSD in certain fields.

The data provided by the EAO were tailored to the needs of this evaluation and were delivered pursuant to an evaluation-specific contract with the Commission.

A circular approach was followed as much as possible. For example, meetings of the Contact Committee, ERGA and Media talks with stakeholders were held ahead of the launch of the Public consultation. After the Public consultation deadline, the Contact Committee discussed the Public consultation in two occasions. The data gathered from the sources above were analysed respectively: in house, by external contractors, and in cooperation with other Commission DGs.

Moreover, stakeholders were consulted in multiple occasions by different parties, for example, by the Commission via the Public consultation, by relevant national regulators via the ERGA questionnaire and by external contractors in the context of the studies. This circular approach enabled a satisfactory triangulation of data, i.e. its reliability has been confirmed via findings coming from other sources. Also, whenever the same stakeholder provided information in different contexts, the Commission compared these pieces of information so as to assure their coherence and reliability.

The evaluation process was assisted by a Steering Group composed of the representatives of selected Directorates General (DGs) including DG CNECT, DG COMP, DG JUST, DG GROW, DG TRADE, DG EAC, DG SANCO, DG RTD, DG NEAR together with the Secretariat-General and the Legal Service.

The Steering Group steered and monitored the progress of the exercise, ensuring the necessary quality, impartiality and usefulness of the evaluation. Being composed of members from different functions and having the necessary mix of knowledge and experience, the Steering Group brought together a range of different perspectives and provided the necessary input, in particular where the evaluation touched different policy areas.

Limitations – robustness of findings

The data collection and analysis carried out has a number of intrinsic limitations, whose impact was mitigated to a maximum possible extent:

Measuring the effectiveness of the AVMSD rules that aim to protect values (e.g. human dignity and the physical, mental and moral development of minors) is by definition a challenging exercise whose results should be interpreted with caution;

Despite being prompted in a number of occasions by the Commission, the national regulators and the contractors carrying out publicly tendered studies for this purpose, the industry has been reluctant or unable to deliver precise quantitative data on the compliance costs stemming from the AVMSD; given that legislation in this domain has been in place for a long time, it has been revised twice and codified once, and in some cases national legislation was already in place, it is hard for business to assess what costs and lost revenues stem from the Directive;

When the industry did provide data, this was in some cases covered by business confidentiality. When possible, the Commission presented this data in aggregated or anonymised format. When this was not possible, data was taken into account in the evaluation but not provided (this is indicated when applicable);

The EU audiovisual sector is primarily made of large companies and data on the specific impact of the AVMSD on SMEs is not available, also in light of the considerations made above. Accordingly, when the evaluation refers to the impact on the AVMSD rules on business, particularly on business competitiveness, this should be intended as referring in most cases to large companies;

Some data simply does not exist because stakeholders do not generate or gather it. This is the case, for example, for figures on the number of viewers and on viewing patterns in on-demand audiovisual media services and in other services offering audiovisual content;

The evaluation takes into account that the economic and cultural landscape as well as the state of development of the audiovisual media market differ significantly amongst the Member States;

Given the multiplicity of the tools used to consult relevant parties, the results obtained are of different nature. While the 2015 Public consultation proposed a number of questions to stakeholders, the discussions within ERGA went more in-depth on some issues, as regulators had a platform for regular and organised discussions;

The evaluation takes into account the inherent limitations of the findings of Public consultations. Firstly, as in all surveys, the answers received reflect the views of a sample of relevant stakeholders and not those of the entire population who has a stake in this domain. Secondly, stakeholders' views convey an individual rather than a holistic perspective.

Based on the elements above, this evaluation has been carried out on the basis of the best available data. Whenever reliable quantitative data is lacking, this is indicated as appropriate and possibly counter balanced with qualitative data and considerations.

5.Implementation state of play (results)

The implementation of the AVMSD by the Member States is monitored by the European Commission on the basis of Article 33 320 of the Directive. Article 33 AVMSD requires the Member States to report to the Commission and the Commission to report to Parliament and Council on the state of play of the Directive every three years at the latest.

Current state of play

Following the last revision, the Member States were required to transpose the AVMSD at national level by 2009. Whereas to date all Member States have notified full transposition measures, issues of protracted implementation did occur. By the end of 2011, full transposition was notified to the Commission only from 20 Member States 321 .

In 2005, the EU audiovisual market was rapidly changing, also due to the development of the Internet. In 2004, Internet penetration had stabilized at about 65% by household, with mobile phone penetration at about 85%. In 2005, the EU enjoyed better domestic broadband penetration than the United States, with wider 3G deployment.

This evolution, together with the demand for premium content and the continuous search for new sources of revenue, had enabled the development of IPTV and other Internet-based methods of delivery. The need for new revenues was one of the sources of the emergence of triple-play: the convergence of broadband, telephony, and video. However, in 2005, there were still obstacles to IPTV growth, such as a lack of consumer awareness and acceptance of IPTV as a viable alternative to incumbent channels of delivery and the strong market position and economies of scale of the incumbents. As a result, in 2005, audiovisual revenues linked to the development of Internet were still limited.

As already mentioned, in 2005, transfrontier satellite commercial television was as popular as or even more popular than local terrestrial broadcasting (with cable systems re-transmitting both). This evolution was accompanied by exponential change in channel capacity, especially via digital cable and satellite, increased market penetration of multichannel homes (using sports and feature film premium content), and an increasing number of platforms. Consumer choice increased. Cable and satellite television multiplied the number of pan-European channels available.

Video on Demand (VoD) was making inroads into the audiovisual market, whether delivered by cable, fibre or Digital Subscriber Line (DSL). However, in 2005, VoD still generated limited revenues (ca. US 60 million). As regards advertising markets in 2005, television and the Internet were gaining ground, both within Europe and on a global scale.

In 2014, the overall size of the European audiovisual sector was around EUR 105.8 million 322 . This implies an increase of 0.9% as compared to 2010. This increase primarily comes from on-demand audiovisual media services, whereas physical video registered a significant decrease.

The EU audiovisual sector mainly comprises large companies which account for an absolute majority (more than half) of the workforce in 10 of these. For example, large enterprises in France employed upwards of 7 out of 10 people (71.5 %) within the programming and broadcasting activities workforce in 2010, while the share of large enterprises in the total workforce peaked at 78.5 % in Germany. Upwards of 80 % of the value added generated in Spain, Poland, Italy, France, Romania and the United Kingdom was attributed to large enterprises, their share of sectoral value added peaking in the United Kingdom (90.8 %) 323 .

By contrast, in the relatively small EU Member States of Estonia, Lithuania, Luxembourg and Slovenia, small and medium-sized enterprises (SMEs) employed the whole of the programming and broadcasting activities workforce in 2010. In those Member States it was, however, more common to find that the majority of the workforce was engaged by large enterprises 324 .

As already remarked, in light of the composition of the EU audiovisual market and the lack of data regarding specifically SMEs, references to the impact on the AVMSD rules on business, and particularly on business competitiveness, contained in this evaluation should be intended as concerning in most cases large companies.

At the end of 2013, 5 141 TV channels (excluding local channels and windows 325 ) were established in the EU. Almost 1989 of them (about 38% of the total established channels) targeted foreign markets (either EU or extra EU). This share has increased from 28% in 2009 - year of implementation - to 38% in 2013 326 . On average, 31% of the VoD services available in the Member States are established in another EU country 327 .

The market for on-demand and online services is on the rise. In 2014, there were more than 2 563 VoD services in Europe, including catch-up TV services offered by broadcasters (932 services), branded channels on open platforms (408 services), VoD services providing access to a catalogue of programs (1 126 services) and news portals (97 services) 328 .

From a static viewpoint, the TV broadcasting market is still the strongest part of the audiovisual market.

In 2013, revenues from linear television in the EU28 were EUR 83.6 bn. In comparison, total consumer revenues of VoD services amounted to EUR 2.5 bn i.e. 3% of the TV broadcasters' revenues. However, from a dynamic perspective, the domination of TV broadcast is less obvious. Their growth rate has decreased from an average annual rate of 2.8% from 2009 to 2013, to only 0.3% in 2013 329 .

In the EU28, total on-demand consumer revenues soared from EUR 919 million in 2010 to EUR 2.5 billion in 2014, an increase of 272% and a compound annual growth rate (CAGR) in the 5 year period of 28% 330 .

As regards television viewing time, the observed trend of stability between 2012 and 2014 (between 03:44 and 03:43) may hide an effective decrease in viewing time for live TV to the benefit of catch up services 331 . It should be noted that television audience measurement increasingly goes beyond the tracking of live viewing to include time-shifted viewing. In most countries, viewing is tracked during 6 or 7 days after the live transmission.

As regards viewing time online and on-demand, mobile consumption is projected to increase in the near future. The number of smartphones in Europe is expected to double by 2020, reaching 800 million. This will mean that more than 70% of mobile subscriptions will be for smartphones 332 . It must be borne in mind that in 2014, Internet video stood for 64% of total consumer internet traffic. This share is expected to increase up to 80% by 2019 333 . The consumption of videos offered by video-sharing platforms is on the rise 334 .

According to the industry, by 2020, projections suggest that more than 20% of European households will have a specific, paid account with a SVoD provider. As a result of this, the projected turnover of all VoD services in Europe should increase by 15% annually to 2020, reaching EUR 6 billion 335 .When looking at online video advertising revenue, it is expected to grow in Europe by more than 75% between 2015 and 2018 up to EUR 4.1 bn with Google and Facebook representing 50 % of the market 336 . 

The 1st Application report for the years 2009-2010 concluded that the AVMSD had overall struck the right balance amongst the objectives pursued and well served the interests of citizens and businesses. The report nonetheless 1) flagged issues around consumer protection (particularly protection of minors) in audiovisual commercial communications and 2) called for assessing whether the AVMSD still attains its consumer protection objectives in a converging media world.

The 2nd Application report for the years 2011-2013 is published as Annex 7 of this evaluation report. The report demonstrates the AVMSD's effectiveness in ensuring the development and free circulation of audiovisual media services in the EU. The report however flags the following issues: 1) complexities in determining jurisdiction and for applying procedures limiting freedom of reception and retransmission in specific case; 2) diversity in the approaches undertaken by Member States to promote European works on VoD services, putting the effectiveness of the procedures supporting the COO principle to the test in this specific field; and 3) concerns around the application of rules for certain types of commercial communications.

In the field of promotion of European works in broadcasting services, Member States shall provide the Commission every 2 years a report on the application of this Article 16 and Article 17 – promotion of European works in broadcasting services. The Member States have up to now complied with this reporting obligation. The Commission shall inform the other Member States and the European Parliament of the reports, which shall be accompanied, where appropriate, by an opinion. The latest of these Commission reports is published as an Annex to this evaluation report (Annex 8). This report shows that the provisions of Articles 16 and 17 AVMSD have been overall correctly implemented by Member States. The current rules on promotion of European works have led to strong shares of transmission of European works, independent productions and recent independent productions. The 64.1% average of European works achieved in 2011 and 2012, well above the obligatory majority proportion set out in Article 16, reflects a generally sound application of this provision throughout the EU. Member States also met comfortably the requirement regarding the share of independent productions set down in Article 17. With 33.1% in 2011 and 34.1% in 2012 the average of independent productions was significantly above the required 10% laid down by Article 17. At the same time, the share of independent productions differs significantly among Member States. The EU average share of recent independent productions was 60.6% in 2011 and 61.1% in 2012.

However, the report also shows some shortcomings. It identifies the main reasons for non-compliance reported by Member States. An often repeated argument was the difficulty for small and specialized channels to comply with the obligatory shares. Additionally, monitoring methods of compliance vary greatly among Member States and not all Member States have put in place verification systems of the data provided by broadcasters.

On promotion of European works in on-demand services, Member States were required to report to the Commission no later than 19 December 2011, and every 4 years thereafter, on the implementation of Article 13(1) – measures to promote European works in on-demand services. Member States have up to now complied with this flexible provision, while considering that there is a general lack of data regarding shares of European works in on-demand catalogues. Also on the basis of this information the Commission shall report to the European Parliament and to the Council. In addition to this report, the Commission more recently proactively analysed and reported 337 on the diverse approaches taken across the Member States on promotion of European works in on-demand services.

Although the AVMSD does not impose an obligation regarding the independence of audiovisual regulatory bodies, the Commission regularly monitored the state of play as regards the independence of national regulatory bodies, through independent studies - first the INDIREG study of 2011 338 and then its update – the RADAR study of 2015 339 .

6.Answers to the evaluation questions

6.1 Material scope of application

The AVMSD applies 340 to television broadcasts and to on-demand audiovisual media services for which providers have editorial responsibility. To be covered by the Directive:

(i)  services must have as their principal purpose the provision of programmes to inform, entertain or educate the general public; and

(ii) programmes should be comparable, in form and content, to television ("TV-like"). 

 

Relevance of the current rules

The rules defining the AVMSD's scope of application are overall relevant. The 2007 revision brought new on-demand audiovisual media services into the AVMSD scope and as such aligned the Directive to the market developments emerging at that time. In the 2015 Public consultation, a majority of respondents belonging to various stakeholders' categories stated that the rules are still relevant. However, some aspects of the definition of “audiovisual media services", which were relevant during the first years of application of the Directive after the 2007 revision, are no longer fully relevant in light of recent market and legal developments:

The Directive applies to 341 programmes "the form and content of which are comparable to the form and content of television broadcasting" which has primarily meant an exclusion of short clips. Audiovisual content is however increasingly offered in innovative (shorter) formats (e.g. short video clips) online. As said above, while the number of videos viewed tends to increase, the time spent on one given video tends to decrease 342 . Most recently, the ECJ 343 clarified that videos that are short in length can qualify as audiovisual media service under the AVMSD (when the content offered competes for the same audience as television broadcasting). A majority of respondents belonging to various stakeholders' categories also affirmed in the 2015 Public consultation that the "TV-like" criterion has become outdated.

The Directive does not apply to audiovisual material offered by services whose "principal purpose" is not to provide programmes, to inform, educate or entertain, to the general public. However, services such as newspapers' video sections 344 or social media and messaging apps hosting professional video content are increasingly present on the market. Also, the consumption of online news videos is on the rise - not necessarily on newspapers' websites but also on social media 345 and this often coincides with a fall in audiences for traditional TV bulletins 346 . In 2014, the number of children who read or watched news online almost tripled as compared to 2010 347 . Most recently, the ECJ 348 clarified that the AVMSD applies when the audiovisual media content is in content and form independent of the main service offered by a provider (whether it is messaging,  audiovisual content generated by private users i.e. "user generated content" (UGC), press articles, etc.). This is the case even when the main service is of a different nature, e.g. text, and is not merely an indissociable complement to that activity, in particular as a result of the links between the audiovisual offer and the offer in text form.

In light of this, the rules defining the AVMSD's scope of application are overall relevant, although most recent developments call for further reflection.

Effectiveness

The inclusion in the scope of on-demand services along with traditional broadcasting services in the context of the 2007 revision provided a minimum level of consumer protection on these services. In this light, the AVMSD rules on material scope have proven to be effective in an environment where consumption of TV content was primarily taking place on traditional TV or via on-demand services.

Furthermore, by excluding from the application of the rules audiovisual material that is: i) merely incidental to other type of content; and ii) that is not under the editorial responsibility of a provider, the Directive (also in conjunction with the EU eCommerce Directive) contributed to avoid overregulation of online services. This fulfilled the objective to foster the online market and unlock the potential of convergence of different types of media content.

However, the most recent developments in the market, technology and viewing patterns put into question the effectiveness of the rules on material scope to ensure a level playing field and an appropriate level of viewers' protection.

Specifically, the following developments led to a perceived uneven playing field and a lack of consumer protection:

Audiovisual content is increasingly offered by players who are not regulated under the AVMSD: as said above, in 2014, around 2 563 Internet-based, OTT and VOD television providers were established in the EU. Video sharing platforms 349 and social media increasingly include in their offers audiovisual material (be it UGC, advertising or original content). These services often fall outside the scope of the AVMSD either because the providers do not control the selection and organisation of the content 350 or because their principal purpose is not to offer audiovisual content.

Viewing patterns, including those of children, are changing. While TV viewing is still strong, EU audiences increasingly watch and share audiovisual content online 351 including on social media 352 . Consumer spending on digital video and this trend is related to the increasing popularity of connected TV and the soar in mobile usage 353 . In the UK, the amount of people watching short online clips has almost doubled over the period 2007 to 2014 (21% to 39%, the highest increase being among 35-44s with 28 percentage points increase). The popularity of multi-platform online video services, such as YouTube, as an information source has been evident in recent years – 32% of internet users now cite it as an important (very or fairly) source for information, rising to 46% of 16-24 year olds 354 . In the EU, 92% of Europeans in the 15-24 age group use the Internet on a daily basis (or almost daily), compared with 80% of 25-39 year-olds and 65% of 40-54 year-olds. In 2013, the share of internet users who participated in social networking was 89 % for 16-24 year olds compared with 27 % for 55-74 year olds 355 .

When it comes to minors, video viewing is one of the earliest Internet activities carried out by young children. For example in the UK children aged 12-15 spend more time online than watching television (17.2 vs. 15.7 hours per week) 356 . Watching video clips is the second prevalent online activity amongst minors aged 4-17, after listening music and watching films and cartoons 357 . Services such as YouTube are widely popular among children 358 . Connected devices such as mobile phones, tablets and games consoles are increasingly used by minors, often without adult supervision 359 . More than half of YouTube views come from mobile devices 360 .

In all Member States, young viewers watch on average 50% less television than the average viewer. The difference between time spent by the general audience and by young viewers has increased over 2011-2014 361 .

A majority of Member States, regulators, consumer organisations and a fair share of broadcasters who replied to the 2015 Public consultation, cite these developments when underlining that the rules on material scope do not ensure a level playing field for audiovisual media services. On the other hand, a small number of MS, some regulators as well as the Internet, ICT, the press publishing sector, telecom, cable, satellite and advertising industries believe that the AVMSD rules have fostered the free circulation of audiovisual media services within the EU, created a level playing field and opportunities for new entrants to reach the consumers.

As to the effectiveness of the rules on consumer protection, there are a number of concerns:

When it comes to audiovisual media content under the editorial responsibility of a service provider, there are gaps in the level of protection guaranteed across the EU. Some Member States have excluded from the scope of application of the AVMSD some programmes due to their short duration and editing style 362 . In other cases, online versions of newspapers were not deemed to constitute an audiovisual media service 363 .

As regards services without the editorial responsibility of the UGC, which is not subject to the AVMSD rules, despite initiatives being undertaken, there are concerns regarding the protection of minors, incitement to hatred and the protection of viewers on advertising.  

The EU has undertaken a number of non-regulatory initiatives (e.g. self-regulation and funding) to protect minors online (see Annex 9 for more details). Moreover, the largest video-sharing platforms use software and human intervention with a view to protecting viewers from hate speech and protection of minors from harmful content. However, the criteria for content deemed "inappropriate" (a term most commonly used by video-sharing platforms) are defined by the platforms themselves, in their terms of service/Community guidelines 364 . Examples of initiatives that are being undertaken include:

1.Moderation of content already posted on the platforms based on flagging by the users. Users flag content, which is deemed inappropriate according to the terms of service; an algorithm sorts out the complaints prior to sending to a moderation team for verification; if deemed inappropriate, the content is removed.

2.Age verification. For example, to access certain YouTube paid content, users need to authenticate themselves. This requires them to have an active user account, declaring to be 13+.

3.Video fingerprinting technologies, identifying and preventing the same or similar content from being re-uploaded;

4.Systems allowing the users to give feedback on the content.

5.Parental controls offered by the platforms or devices.

While today some video-sharing platforms on a voluntary basis take steps to protect minors, they verify content against their own standards, which may differ from those set in the AVMSD.

For example, the music video "College boy" of the group Indochine, containing graphic images of violent bullying of a school boy, is freely available on YouTube. However, the same video is subject to a watershed in France in application of the AVMSD 365 . In another case, while YouTube removed a video of a woman being forced by her husband to walk naked in the street 366 for violation of YouTube's Community guidelines, the same video still appears on the website Liveleak.com 367 .

In this context, chances that minors are exposed to harmful content exist.

Children identify video-sharing platforms as mostly linked with violent, pornographic and other harmful content risks 368 . Among the children who link risks to specific platforms, 32% mention video-sharing sites such as YouTube, followed by other websites (29%), social networking sites (13%) and games (10%) 369 .

In the UK, ATVOD 370 found that at least 44 000 primary school children accessed an adult website in one month alone 371 . ATVOD has found that 23 of the top 25 adult websites visited by UK internet users provide instant, free and unrestricted access to hardcore pornographic videos.

Video-sharing platforms employ tools like Autoplay which enable direct exposure to potentially harmful content 372 . Potential exposure to harmful content or content inciting to hatred may also be fostered by new social media features such as live streaming 373 .

A majority of Member States, regulators, consumer organisations as well as a fair share of public service and commercial broadcasters who replied to the 2015 Public consultation and the ERGA recommendations on material scope 374 cite these developments when underlining that the rules on material scope do not ensure a sufficient level of consumer protection. On the other hand, a small number of Member States, some regulators as well as the Internet, ICT, the press publishing sector, telecom, cable, satellite and advertising industries believe that the AVMSD rules guarantee a satisfactory level of consumer protection.

In conclusion, whereas the AVMSD rules on material scope have proven to be effective over the first years from the revision, their effectiveness has by now diminished in light of the most recent developments in the market and viewing patterns.

Impacts on the Internal market:

There is fragmentation in the internal market due to diverging interpretations by Member States as to what is an on-demand service. The Member States have leeway in interpreting the definitions and this may lead to different results also in light of market developments. Diverging interpretations at national level concern specifically the following criteria:

-"Principal purpose", with similar services being considered subject to the AVMSD in some countries but not in others 375 .

-"TV-likeness", also being subject to diverging interpretations 376 .

The lack of uniform interpretation of the rules on material scope across the EU is also perceived by most regulators and broadcasters as well as by a number of Member States as shown in the 2015 Public consultation. This fragmentation has led to shortcomings in the level of legal certainty and coherence across the Union, prompting a Member State to seek clarification from the ECJ on some aspects of the AVMSD scope of application criteria in the New Media Online case, mentioned above.

EU added value

The 2007 revision has contributed to increase the level of harmonisation in a context of diverging national legislation applicable to on-demand audiovisual media services. However, as highlighted in the 2nd Application report on the AVMSD, the EU added value of the rules on material scope is reduced by complexities around the application of the AVMSD definitions to on-demand services (see the Effectiveness sub-section). As a conclusion, the EU added value of the rules lays in the harmonisation they provided, although some problems were observed with the interpretation of the definitions of the services falling within the material scope of the Directive.

Efficiency

The last revision of the AVMSD brought additional administrative 377 and compliance 378 costs due to the inclusion of on-demand services in the scope of application. Those costs are indicated in the Efficiency sub-sections in sections 6.4; 6.5; 6.6; 6.7, that focus on specific AVMSD domains.

For both broadcasters and on-demand audiovisual media services, EU-level harmonisation and the application of the COO principle ensure legal certainty and thus cost savings (see section 6.3 on COO).

As indicated by three media service providers in the 2015 Public consultation and in the ERGA questionnaire, being subject to the AVMSD rules in particular on protection of minors may give a competitive advantage to operators. Being identified as family-friendly contributes to the positive branding of an operator. This was confirmed by the British Board of Film Classification (BBFC) which reported that 86% of parents in the UK would encourage or make sure that their children watch online channels with clear age ratings 379 .

At the same time, the current exclusion of services offering audiovisual content has the potential to put those who are currently in the scope (both broadcast and on-demand services) at a competitive disadvantage. This was corroborated by the contributions of a significant number of stakeholders across sectors in the context of the 2015 Public consultation on the AVMSD.

Coherence

The AVMSD qualifies as lex specialis vis-à-vis the e-Commerce Directive (ECD) 380 and is without prejudice to the ECD system of limited liability 381 . The AVMSD rules defining the scope of application for on-demand audiovisual media services are hence coherent with the ECD, including the rules limiting liability for illegal activities for information society services acting as intermediaries 382 set out in the ECD. The ECD and AVMSD adopt a similar approach. According to both Directives, operators are not required to abide by rules regarding information and/or content over which they have no control – provided that the conditions set out in the law are met.

6.2. Geographical scope

The AVMDS applies 383 to audiovisual media services transmitted by service providers under the jurisdiction of a Member State. The AVMSD lays down specific criteria to determine whether a service falls under a Member State's jurisdiction. These criteria take into account, for instance, where the place of the head office is located, where editorial decisions are taken or where a significant part of the workforce operates. As a subsidiary jurisdiction criterion, the AVMSD refers to the Member State where a satellite up-link is situated or where satellite capacity is used. If an audiovisual media service provider falls under the jurisdiction of a third country, the AVMSD and its rules do not apply. Member States remain free to take whatever measures they deem appropriate with regard to audiovisual media services which do not fall within the AVMSD geographical scope, provided these measures comply with Union law and the international obligations of the Union 384 .

Relevance of the current rules

In the 2015 Public consultation on the AVMSD, a majority 385 of respondents belonging to different categories of stakeholders groups flagged that the relevance of the AVMSD rules on geographical scope has been put to the test by technology and market developments. Those respondents argue that the Internet allows services to target viewers in the EU without having an establishment in the Union and thus to bypass EU regulation. 

These concerns notwithstanding, the number of services targeting the EU from third countries is currently very small. According to the EAO, about 50 paying VoD services (this number includes different linguistic versions of the same service) established in the United States target one or more Member States 386 . In addition, most leading foreign providers of on-demand services (Netflix, iTunes, Amazon) have all set up subsidiaries in the EU and are therefore subject to the AVMSD. This confirms that the AVMSD rules are still relevant.

In light of the above, the current rules defining the geographical scope continue to be relevant.

Effectiveness

In the 2015 Public consultation, a majority of respondents belonging to various categories (in particular Member States, regulators, Public service broadcasters and consumer organisations) highlighted that, due to the exclusion of foreign providers, the current rules on geographical scope do not ensure a level playing field and are not sufficiently effective in terms of consumer protection 387 . On the other hand, ICT, digital, Internet companies and satellite operators who replied to the 2015 Public consultation do not see issues regarding the effectiveness of the AVMSD rules on geographical scope.

In the context of the 2nd Application report on the AVMSD, two Member States reported cases where on-demand services provided from outside the EU offered adult content without the necessary safeguards for protecting minors 388 . Also, given that an important satellite operator is established on its territory, one Member State reported several issues about incitement to hatred and respect of human dignity with channels from third countries since 2012. However, given that these channels use a satellite up-link/satellite capacity in a Member State, they would be covered by the AVMSD.

The Internet undoubtedly makes it easier to deliver audiovisual content at global scale. The number and geographical spread of providers targeting EU viewers without being established in the EU may therefore grow over time 389 . However, the currently very small number of services targeting the EU from third countries does not suggest the existence of a problem regarding the effectiveness of the current rules. In view of the size of the problems reported, seeking to address them by changing the geographical scope would be disproportionate. In this regard it should be noted that, already under the current rules, Member States, if they so wish, can apply their national rules to providers established abroad.

In light of the above, it can be concluded that the AVMSD rules on geographical scope are still effective in ensuring a level playing field and sufficient consumer protection.

EU added value

The AVMSD rules on geographical scope have proven their worth as gate-keeper of the internal market to determine what audiovisual media services fall within the jurisdiction of an EU Member State and as such can benefit from the COO principle. This was confirmed by a majority of contributors to the 2015 Public consultation, across various stakeholder groups, who acknowledged the benefits of the rules on geographical scope for the internal market.

Efficiency

The costs of enforcing legislation on operators who have no EU establishment and do not even use a satellite up-link/capacity in the EU would be high, while most of the relevant players are already established in the EU. Imposing on all Member States the obligation to enforce the AVMSD rules to players whose impact on the market has so far not been significant is likely to result in a negative cost-benefit ratio. If foreign providers were to be required to register/appoint a representative, this obligation would have to be monitored and enforced. If the registration/appointment of a representative were to turn out not to be sufficiently effective and real (e.g. a letterbox company), the rules would have to be enforced in a third country which could be complex. Firstly, by analogy to international cooperation in the field of competition, enforcement by the Commission in a third country may require bilateral international agreements ("dedicated agreements") or AVSMD provisions included in general agreements (e.g. Trade Agreements). However, this is likely to be complicated as providers located in the US constitute the major part of the market share of foreign providers targeting the EU. Secondly, any decision from a regulator imposing a fine or seeking a change in the behaviour of a service provider would be difficult to enforce as there would normally be no assets in the EU. In case a foreign provider targets more than one Member State, the need for coordination between regulators so as to avoid conflicts of jurisdiction would trigger further administrative costs. This is in particular the case when considering that the current rules allow Member States, if they so wish, to apply their national rules to providers established abroad.

In conclusion, and although quantitative data is not available, it can be reasonably assumed that the rules have been cost-efficient from the elements outlined above.

Coherence

As highlighted by a number of contributors to the 2015 Public consultation on the AVMSD, the rules on the geographical scope – in their essential role to promote the smooth functioning of the internal market – are part of the logic of completing the Digital Single Market.

This confirms that the current AVMSD rules on geographical scope are coherent with other EU initiatives and activities. This includes the ECD.

It should be noted, however, that the EU General Data Protection Regulation on which a political agreement was reached in December 2015 and which will most likely come into application in 2018, will apply to the processing of personal data of data subjects residing in the EU by controllers not established in the EU. The underlying logic is that Union data protection rules should still apply in relation to data of EU residents, even if data is processed outside the Union. Some contributors to the 2015 Public consultation on the AVMSD mentioned that a similar logic, according to which consumer protection is ensured whenever the consumer is targeted regardless of geographical location of the service, would be best-suited to the AVMSD. However, given the very small numbers of providers of audiovisual media services targeting one or more Member States without being established in the EU, the situation differs from the field of data protection.

6.3 Country of origin

According to the COO principle, a provider under the jurisdiction of a Member State must only comply with the rules of that Member State, while being able to provide its services in any other Member States. 390

Member States may restrict the reception and the retransmission of services freely circulating within the EU only in limited cases and following the procedure laid down in the AVMSD. 391 For broadcasting, restrictions are limited to cases of incitement to hatred and infringement of the rules on protection of minors. For on-demand services, restriction grounds include the protection of public health and public security. The relevant procedure includes a first cooperation phase where the Member State concerned contacts the transmitting Member State to try to reach an amicable settlement.

Member States may adopt stricter or more detailed rules in any of the fields coordinated by the AVMSD. However, a receiving Member State with higher standard levels cannot restrict the reception of services from another Member State which complies with the AVMSD requirements as transposed in the national law of the Member State of jurisdiction. If a Member State has chosen to do so and encounters issues with a television broadcast mostly or wholly directed towards its territory, it can use the circumvention procedure. 392 That procedure entitles the receiving Member States to adopt appropriate measures against the broadcaster concerned provided, among other things, that the broadcaster in question has established itself in the Member State of jurisdiction in order to avoid stricter rules which would otherwise be applicable to it.

Relevance of the current rules

The 2nd AVMSD Application report 393 and the majority of respondents to the 2015 Public consultation from all participating stakeholders' categories show that the COO principle is of continued relevance. The COO principle is critical for the internal market as it provides legal certainty and fosters investments, media pluralism and availability of content.

EffectivenessAt the end of 2013, 5141 TV channels (no local and windows 394 ) were established in the EU. Almost 1989 of them (about 38% of the total established channels) targeted foreign markets (either EU or extra EU). This share has increased from 28% in 2009 - year of implementation - to 38% in 2013 395 . As far as VoD services are concerned, in the Member States, on average 31 % of the VoD services available, are established in another EU country.

The above mentioned figures show that the COO principle has accompanied the increase in the cross border provision of audiovisual media services. . It has also had a positive impact on cultural diversity and on the availability of content 396 in particular in smaller markets According to the industry, in the 10 smallest markets (by population), 75% or more of services are available via non-domestic licenses supported by the COO principle 397 . This was confirmed by an overwhelming majority of respondents from all stakeholder categories in the 2015 Public consultation.

The effects of the COO principle derive from the attribution of jurisdiction to one Member State only which thereby avoids regulatory inefficiencies resulting from subjecting one service to multiple jurisdictions. This limits the costs borne by service providers to one country. This also may facilitate investment in the media sector 398 . This was confirmed by the majority of respondents across various categories (majority of Member States, public service broadcasters, commercial broadcasters, satellite operators and representatives of the internet industry) in the 2015 Public consultation.

However, some problems in the application of jurisdiction criteria and of the derogation/ circumvention procedures have contributed to reducing the effectiveness of the COO principle. This recently prompted the Commission to provide to Member States clarifications 399 regarding the application of the derogation and circumvention procedures.

Some Member States have indeed experienced problems in the transposition into national law of the jurisdiction criteria. Issues related, for instance, to the subsidiary jurisdiction criteria based on using a satellite up-link/satellite capacity in a Member State or the transposition of the rule that services intended exclusively for reception in third countries are not covered by the AVMSD. The application of the jurisdiction criteria revealed uncertainties and disagreements between Member States on jurisdiction over a Russian language channel in the context of the application of the derogation procedure 400 . Similar jurisdiction issues arose in an earlier decision of the Commission regarding notifications of serious infringements of the rules on protection of minors 401 . In the 2015 Public consultation, the difficulty to identify the service providers was quoted as source of problems related to the application of jurisdiction criteria.

Regarding the derogation procedure, certain Member States experienced difficulties in the transposition into national law of permissible derogations from the freedom of reception and retransmission regarding the substance and/or the procedure. There have also been problems regarding the application of the derogation procedure, notably in the cases of alleged hate speech on Russian language channels retransmitted in Latvia and Lithuania 402 , with concerns on the respect of procedural requirements. The absence of an urgency derogation mechanism for TV broadcasts, as opposed to the urgency procedure in place for on-demand services has been raised in the 2015 Public consultation. A Presidency discussion paper prepared by the Latvian Presidency underlines that, unlike for on-demand services, the AVMSD does not allow for a quick reaction in emergency situations for television broadcasting. 403 According to the outcome of the Education, Youth, Culture and Sport the meeting on 18/19 May 2015, "the procedure to be followed by member states when they are the target of unacceptable content coming from another member state should be streamlined and accelerated, in particular in certain cases of services of non-EU origin licensed in one member state yet targeting the audience of another member state. Effective cooperation among audiovisual regulatory authorities is crucial in this respect." 404

Except for one case, the circumvention procedure has not been used in practice 405 . The only case notified to the Commission concerned alcohol advertising in Sweden 406 and is mentioned in the 2nd Application report on the AVMSD. The case highlighted certain procedural problems.

The effectiveness of the COO principle is linked to the degree of harmonisation between national laws. Particularly for rules on the promotion of European works (section 6.7), there are significant divergences in national transpositions. The concerns of 3 Member States to ensure that service providers active on given national markets contribute their fair share to the support of local cultural production are also reflected in the levy schemes adopted (but not applied to date) in Germany and France which subject certain foreign VoD providers targeting their respective markets to a levy obligation. Both Member States have notified their schemes as state aid to the Commission. The Commission's assessment is ongoing 407 .

EU added value

The EU added-value of the COO principle was confirmed by a majority of stakeholders from various categories (and specifically an overwhelming majority of Member States and industry players) in the 2015 Public consultation. According to most stakeholders, the main advantage of COO principle lies in the legal certainty it provides as it requires providers to abide by the legislation of the country of establishment only. This in turn facilitates investment in the media sector and fosters diversity and consumer choice as well as media pluralism.

Efficiency

The rules underpinning the operation of the COO principle are too complex and result in a difficult application of the Directive and hence an unnecessary administrative burden. This view was confirmed by many respondents to the 2015 Public consultation, who, for example, see scope for rendering the cooperation and circumvention procedures simpler and less time-consuming.

Example: In 2015, Lithuania notified to the Commission measures to restrict the retransmission of a Russian language channel, broadcast from Sweden, on the basis of instances of incitement to hatred. This case triggered extensive consultations and written exchanges between the Swedish and the Lithuanian Regulators in order to ascertain which Member States has jurisdiction over the channel.

This situation can in part be attributed to the imprecision and complexity of the procedures supporting the COO principle (ANNEX 7). The exchanges mentioned above could be equaled to a workload of 50-100 hours shared by the two regulators. As a benchmark, this case represented a workload of roughly 400 hours over three months for the case-handler, and a total additional workload of approximately 200 hours for supervisors and other Commission services involved 408 .

In light of the above, it can be concluded that the application of the COO principle could benefit from simplified and more precise rule and procedures.

Coherence

The COO principle is coherent with the internal market logic of the EU treaties as it ensures the free provision of audiovisual media services across the EU. It is equally coherent with the EU Digital Single market initiatives 409 . In addition, it is coherent with the ECD, including as regards the grounds for derogation from the freedom to provide services 410 .

6.4 Protection of minors

The AVMSD requires Member States to ensure that audiovisual media services do not contain any incitement to hatred based on race, sex, religion or nationality. On protection of minors, TV broadcasts shall not include seriously harmful programmes (pornography and strong violence) but may include potentially harmful programmes (erotic content and mild violence) if children will not normally hear or see them 411 .

For on-demand, service providers are required to take appropriate measures so that minors would not normally hear or see seriously harmful content. There are no restrictions for potentially harmful content 412 .

Relevance of the current rules

The existing framework does not match the most recent developments in the market and in children's viewing patters that were highlighted in the Effectiveness sub-section under section 6.1 on Material scope 413 . In light of this, the AVMSD rules, while being relevant during the first years of application of the Directive, seem no longer fully relevant in light of the increasing exposure of minors to audiovisual media content online, whether covered by the AVMSD (but subject to a lower level of protection) or outside its scope.

Moreover, when it comes to on-demand audiovisual media services, the majority of Member States have adopted stricter measures than those required by the AVMSD (see Annex 5). This puts to the test the relevance of the AVMSD rules on protection of minors in on-demand audiovisual media services. 4 Member States forbid seriously impairing content on VoD services (while the AVMSD only requires restrictions). 16 Member States mandate varying forms of protection (e.g. PIN codes, content filtering) for content for which the AVMSD does not require restrictions (i.e. content which is likely to impair the development of minors). VOD providers have flagged this issue in the 2015 Public consultation.

As also highlighted in the ERGA report on protection of minors 414 , certain concepts and rating systems for both broadcast and on-demand services are not harmonised at EU level 415 . This is the case for: the age threshold for a person to be considered a "minor"; while for "content likely to impair" there are similarities across the Member States, the concept of "content likely to seriously impair" is not even translated in formal definitions in the Member States and is assessed on a case-by-case basis; content categories (e.g. violence; sex; offensive language) are not harmonised at EU level; although labelling and rating content are widespread, there are different classification systems for audiovisual products at national level 416 .

In the 2015 Public consultation, stakeholders (both Member States and industry) affirmed that minimum harmonisation and flexibility on protection of minors should be maintained as it ensures that national sensitivities towards harmful content can be taken into account.

Effectiveness

Clear-cut conclusions on the effectiveness of the Directive's rules on protection of minors applicable to on-demand services are difficult to draw as most Member States do not proactively monitor compliance but act primarily upon complaints and only few of them carry out on-the-spot checks 417 .

Whereas in the 2015 Public consultation a fair share of respondents from various stakeholder categories (with the exclusion of consumer organisations) declared the rules to be effective, there are indications that the AVMSD has not been entirely effective when it comes to protection of minors in on-demand services.

Firstly, developments in the market and viewing patterns diminish the effectiveness of the rules on protection of minors, as highlighted in section 6.1 under material scope.

A majority of Member States, regulators and unanimously by consumer organisations in the 2015 Public consultation 418 stated that the AVMSD rules are not effective in protecting minors because they do not apply to all online content, including video-sharing platforms.

A deficit of effectiveness of the rules may also occur due to the lighter regulatory treatment given to on-demand services, as expressed by most Member States, regulators, Public service and commercial broadcasters in the 2015 Public consultation and by ERGA in its recommendations on protection of minors. Those stakeholders believe that by not requiring sufficient protection in on-demand services 419 , the AVMSD is ineffective.

An additional factor that might reduce the effectiveness of the Directive is, as already mentioned, the fact that most Member States do not proactively monitor compliance with the rules. As a consequence, the Member States may not be aware of or disregard relevant developments that may inform future policies.

EU added value

The EU added-value of the rules primarily lies in:

The minimum level of protection provided by broadcasting and on-demand services across the Union. The 2007 revision in particular brought harmonisation (and hence legal certainty) in a context where there were dissimilar rules on protection of minors in place for on-demand services in a large number of Member States 420 .

The respect of the subsidiarity principle in warranting flexibility to Member States to tailor national laws to cultural and historical specificities and to certain national challenges.

Efficiency

It is difficult to draw clear conclusions on the cost-benefit ratio of the rules, given that 1) costs may vary depending on the level of protection required by national laws; 2) clear and comparable data on the costs incurred by the providers are lacking and 3) as mentioned in section 4 under Limitations-Robustness of findings, qualitative elements are very prominent in the assessment of the impact of rules on consumer protection. Moreover, it is possible to identify scope for cost-efficiency also when looking not only at legal obligations but also at the possibility to leverage self and co-regulation arrangements.

The rule strictly restricts minors' access to any kind of harmful content and compliance costs 421 for broadcasters did not increase since the last revision in 2007, as those providers were already subject to this rule.

In on-demand services, the level of protection is lower than on TV broadcasting. This lower standard is no longer justified since younger consumers watch about half less television than the average consumer 422 . Lower requirement does not imply lower costs as on-demand services have in any case incurred costs to implement technical solutions to control access and ensure transparency regarding seriously harmful content across a high volume of diverse devices (e.g. tablets, smartphones or HDMI keys, which usually require ad hoc development and investments). Against this backdrop, the rule applied to on-demand services has been less cost-efficient than the rule applied to TV broadcasting services.

In addition, the differential regulatory treatment between on-demand services and traditional broadcasting under the AVMSD, may give the former a competitive advantage, in particular vis-à-vis Pay TV services, with which they share similarities 423 .

Finally, as indicated by three media service providers in the 2015 Public consultation and in the ERGA questionnaire, being subject to the AVMSD rules on protection of minors may give a competitive advantage to operators. Being identified as family-friendly contributes to the positive branding of an operator. This was confirmed by the British Board of Film Classification (BBFC) which reported that 86% of parents in the UK would encourage or make sure that their children watch online channels with clear age ratings 424 .

Coherence

The provisions of the AVMS Directive on protection of minors are coherent with other EU-level initiatives aiming at ensuring a level of protection of children in media services, in particular the Recommendation 2006/952/EC of the European Parliament and of the Council of 20 December 2006 on the protection of minors and human dignity, the Communication- European Strategy for a Better Internet for Children of 2012, and the self-regulatory initiative "CEO coalition to make the Internet a better place for kids". The AVMSD rules on protection of minors are also compatible with the UN Convention on the Rights of the Child (UNCRC) that was ratified by all the EU Member States. The AVMSD rules area also coherent and complement self-regulatory initiatives such as codes of conduct on minors' protection at national level in 9 Member States or other self-regulatory systems in 12 Member States.

6.5 Ban on hate speech

Article 6 AVMSD requires Member States to "ensure by appropriate means that audiovisual content provided by media service providers under their jurisdiction do not contain any incitement to hatred based on race, sex, religion or nationality".

Relevance

The AVMSD rules are relevant to the purposes of protecting consumers and human dignity. Those respondents (4 Member States and industry representatives) to the 2015 Public consultation who specifically expressed an opinion on the matter 425 confirmed the continued relevance of the rules. However, 4 Member States 426 indicated that the list of grounds under which hate speech is banned in Article 6 is excessively limited 427 .

In light of the public consultation and in the absence of any significant implementation issues, the rule on hate speech seems relevant.

Effectiveness

The effectiveness of Article 6 could be affected by the divergence of national rules. However, to date, there have been a limited number of cross-border cases regarding hate speech on TV broadcasting 428 . For on-demand services, it is hard to draw conclusions as not all Member States collect quantitative data in this domain. Where data has been collected, no cases of cross-border relevance were reported 429 . In this light, it can be concluded that the AVMSD rules have been effective, and that the divergence of national rules did not substantially affect the effectiveness of the Directive given that there were no cross-border cases.

EU added value

In 5 Member States 430 , the grounds for prohibiting hate speech match precisely those of Article 6, i.e. hate speech only on grounds of race, sex, religion or nationality. In the other 23 Member States, further grounds are foreseen. In particular, most Member States prohibit also hate speech based on sexual orientation 431 and disability 432 . The EU added value of the rule lies in the provision of a minimum guarantee against incitement to hatred based on race, sex, religion or nationality. It also provides the grounds for the EU to act. In addition, the derogation procedure, an important corollary of the COO principle (see section 6.3) that allows Member States to temporarily restrict the freedom of reception, builds on the grounds for prohibition of incitement to hatred as harmonised via Article 6.

Efficiency

The costs of monitoring hate speech in AVMSD essentially stems from the application of national law. The AVMSD as such does not imply any additional administrative or compliance cost while delivering the minimum guarantee mentioned above.

Coherence

The AVMSD rules are coherent with a number of international instruments including the Charter of the United Nations (Article 51), the Convention for the Protection of Human Rights and Fundamental Freedoms, the Additional Protocol to the Convention on Cybercrime, concerning the criminalisation of acts of a racist and xenophobic nature committed through computer systems.

Article 6 is however not fully coherent with Article 21 433 of the EU Charter of Fundamental rights, which prohibits discrimination under broader set of grounds that those for which hate speech is prohibited in audiovisual media services.

Article 6 is neither fully coherent with the grounds 434 laid down in the Framework Decision on combating hate crime 2009/913/JHA on combatting certain forms and expressions of racism and xenophobia by means of criminal law.

6.6 Commercial communications

The AVMSD contains rules applying to all audiovisual media services. These concern sponsorship 435 and product placement 436 as well as alcohol 437 and tobacco 438 advertising.

The AVMSD also lays down detailed rules applying only to television broadcasting. These set a maximum of 12 minutes of advertising per hour 439 for traditional broadcasting (so-called "12-minutes rule"), define how often TV films, cinematographic works and news programmes can be interrupted by advertisement 440 and set the minimum duration of teleshopping windows 441 .

Relevance of the current rules

The rules on audiovisual commercial communications contribute 442 to the overarching AVMSD objectives of supporting the internal market and ensuring consumer protection.

The relevance of the AVMSD rules restricting advertising for alcohol and fatty foods 443 (qualitative rules) remains unquestioned 444 by all stakeholders.

However, in the frame of the 2015 Public consultation the majority of TV broadcasters questionned the AVMSD quantitative rules (e.g. the 12 minutes/hour cap on advertising) and other rules such as those on product placement, sponsorship and self-promotion.

It also appears that in recent years, quantitative rules appear to be less relevant due to media convergence with users watching content on TV as well as mobile devices. In addition, viewers are more likely to switch to alternative offers, in particular without advertising. For example, in the USA where there are no minutage limitations, viewers overwhelmed with TV advertising, turned to other video offers (e.g. video on-demand) thereby disciplining the behaviour of TV broadcasters, who were forced to decrease the amount of advertising on their channels 445 .

Moreover, television advertising in the EU has been shrinking in 2013 as compared to 2012 446 , while the total size of online advertising market in the EU in 2013 increased by 11.6% compared to 2012. The Internet is likely to become the main advertising platform within the next two years, given its rapid development (+8,4% vs. 2012) and its market share in 2013 (27,4%) 447 . In Europe, online display advertising is the most dynamic form of advertising with video ads accounting for 16% of online advertising 448 .

In 2013, advertising on TV broadcasting represented 33% of TV broadcasters' revenues 449 . While those revenues increased by a 1.3% CAGR for the period 2009-2013, TV broadcasters experienced a decrease of 0.5 % in 2013.

In the meantime, the total size of the online advertising market in the EU in 2013 has increased by 11.6% compared to 2012. Online is the second medium in Europe for ad spends, just behind TV advertising, though it surpassed TV advertising in 2014 in a number of Member States 450 . However, within the total advertising market the share of advertising revenue for on-demand services covered by the AVMSD remains modest. For example free-to-view UK online TV services such as ITV Player and All 4 generated just GBP 240 million in advertising in 2014, equivalent to 5.6% of the total TV advertising and sponsorship market in the UK. In France, the revenues from advertising on catch-up TV services amounted to EUR 80 million in 2014 451 which represents 0.7% of the revenues generated by French TV broadcasters in 2013 452 .

However, to fully grasp the potential of this market, audiovisual services that are outside the scope of the AVMSD should be taken into account. According to the European Audiovisual Observatory, online video advertising revenues are expected to grow up to EUR 4.1 billion by 2018 with a market share of almost 60% for Facebook and YouTube. Advertising in those services is however not subject to the AVMSD rules.

Effectiveness

The effectiveness of the quantitative rules on the free circulation of services within the internal market is hampered by the fragmentation and gold plating of national rules. 

Firstly, for sponsorship announcements and product placement, national interpretations diverge on the notion of "potential undue promotional character" and of "undue prominence" 453 . Also, it is particularly complex to distinguish self-promotion from advertising when calculating the 12-minute limitation which also creates divergence between national laws.

When it comes to the 12-minute limitation 454 , at present, 13 Member States have stricter rules though those rules apply in most cases (10 Member States) to public service broadcasters' channels. The ceiling 455 of the 12-minutes rule was regularly exceeded in a number of Member States. This is primarily due to divergent national interpretations of various notions as mentioned above 456 . Consumers still have concerns about excessive advertising on TV 457 .

 

As to the effectiveness of qualitative rules, 24 Member States have adopted stricter rules for alcohol advertising (involving channels, advertised products or time slots) 458 . 2 Member States prohibit alcohol advertising on TV channels, while 22 others limit/ban specific content in the advertising (e.g. no advertising for spirits), channels (e.g. no alcohol advertising on public service broadcasting) or timeslots (period of the day during which no alcohol advertising can be broadcast).

The Commission's publicly procured study on minors' exposure to alcohol advertising 459 shows that on average, during one year (2013), a child in the EU saw 200 alcohol impacts 460 and an adult over 450 on television. A number of consumer organisations in favour of volume restrictions 461 highlight in the 2015 Public consultation that when specific protection measures are in place in an adequate form, they can have a beneficial impact. For example, in the Netherlands, where alcohol advertising cannot be broadcast between 06:00 and 21:00, the average number of impacts for alcohol advertising seen by minors aged 4-14 during peak hour 462 was lower than those in Germany, the UK or the Czech Republic 463 which do not apply watersheds. However, one pitfall of such scheduling limitations may be a shift of alcohol advertising just after peak time, at a time when minors, although less numerous, are still watching television quite massively. As the study on minors' exposure to alcohol advertising showed, when the time is not well adapted, minors may be exposed quite heavily to alcohol advertising just after the watershed 464 . Moreover, the analysis of a sample of commercial communications revealed that advertising frequently associates alcohol with sociability and depict drinking with humorous tone. However, although the study showed that 25% of the analysed advertisements could contain one of the elements described in the AVMSD, the study also highlighted that the advertisements were focused on associations that are possible to create within a few seconds (for example by portraying drinking among young, trendy people) but without creating causal links between the product and its effects, to which the AVMSD refers. As regards on-demand and online services, preventive measures have been put in place by the industry, although minors have the perception to have been exposed to alcohol advertising.

In the 2015 Public consultation, consumer organisations 465 pointed to the blurring lines between broadcast and on-demand services; to the voluntary character of some rules 466 and the lengthy procedures to review complaints in self-regulation arrangements; the focus on restricting the content of alcohol advertising rather than on restricting the volume of advertisement 467 ; the links between alcohol advertising and sponsorship in sport events. Stakeholders in different industries 468 also ascribe the ineffectiveness of the rules to the fragmentation due to divergent national legislations.

Moreover, as also affirmed by 6 Member States, 4 regulators and by most broadcasters 469 in the 2015 Public consultation, some of the AVMSD rules do not ensure a level playing field in times of media convergence and in light of the shift of advertising revenues online. Media services compete for the same advertising market but are not all subject to the same regulatory constraints (some because they are on-demand services subject to lighter AVMSD rules than broadcasting, others because they are not regulated by the AVMSD). The consequences of this differential treatment are even more remarkable when millennials are targeted 470 .

EU added value

The AVMSD rules on commercial communications harmonise some concepts (for example, the definition of advertising spots) and introduce minimum rules. This facilitated the circulation of audiovisual media services across the Union. For example, product placement used to be forbidden in the Television Without Frontiers Directive and was liberalised in the revision of the AVMSD in 2007. As a result, product placement is now allowed in all Member States within the limitations of the current Directive and with only limited stricter rules 471 . This brought legal certainty as to the possibility for programmes which include product placement to circulate across the EU. This confirms the EU added value of the rules.

Efficiency

As regards quantitative rules, while they generated administrative costs for regulators (up to EUR 1.2 million per year for one regulatory authority as regards all audiovisual commercial communication-related activities and overall up to EUR 1 million for all EU regulators as regards the quantitative rules very specifically 472 ) and compliance costs for broadcasters 473 , their effectiveness appeared to be sub-optimal.

While an objective of the last reform was to liberalise product placement, previously not allowed, the current AVMSD restrictions for product placement have not allowed this advertising format to unleash its full potential in terms of revenues. Some regulators and Member States 474 confirmed that the rules have led to legal uncertainty for stakeholders, discouraging them to invest in product placement. As a benchmark, in the US market, where there is no material regulation of product placement, this format represents almost 5% of the TV ad spend market. In the UK, it represents a share of only 0.1% 475 . If product placement rules were simpler, product placement revenues could see a 10%-15% increase 476 . Indeed, most broadcasters, in their replies to the 2015 Public consultation, agreed that product placement rules should be clarified and simplified.

As regards the hourly limitation, most broadcasters consider that the scarce flexibility of the 12-minutes rule and its exceptions prevent them from maximising revenues around peak periods 477 . As mentioned above, this limitation is regularly overpassed. According to a large commercial broadcaster, further liberalisation of insertion rules holds a potential of up to 68% additional revenue (rough estimate). Most members of the association of television and radio sales houses estimate that more relaxed rules would generate a 1%-10% revenues increase. A large UK commercial broadcaster estimates a total loss of £3.3million in one year on their main channel as a consequence of the rules.

As regards sponsorship, more flexible rules could result in an increase in revenues up from 15% to 50%, according to some members of the audiovisual advertising sales houses (EGTA). Most broadcasters, in their replies to the 2015 Public consultation, agreed that sponsorship rules should be clarified and simplified.

It can thus be concluded that quantitative rules do not have a positive cost-benefit ratio. Costs stemming from some quantitative rules could be lower if rules were simpler or more flexible.

Also, at a moment where online advertising is overtaking TV advertising as the preferred media for advertisers, TV broadcasters are subject to stricter rules. In their replies to the 2015 Public consultation, advertisers, some broadcasters and several Member States claimed there is no level playing field between TV broadcasters and other media services, and in particular between TV broadcasters and on-demand service providers. This is even more relevant in those fields where these services compete for the same advertising market, i.e. when it comes to attracting the attention of millennials. 478  On the other hand, a few broadcasters, mainly from the UK, see the benefits of the status quo.

When it comes to qualitative rules, the costs have not been raised as an issue in the Public consultation mostly because the protection of the most vulnerable consumers cannot be questioned.

Coherence

There is a general coherence amongst existing EU rules in the field of audiovisual commercial communications. If an online service does not fall under the definition of an on-demand audiovisual media service under the AVMSD, it will be regulated under the ECD 479 as an information society service. Outside the domains covered by the AVMSD that regulate specific aspects of unfair commercial practices, the Unfair Commercial practices Directive 480 (UCPD) applies. The AVMSD is complementary to the ECD and the UCPD. The AVMSD is also in complementarity with the numerous self- and co-regulatory initiatives in the field of advertising at Member States and EU level. Most of these initiatives build on the AVMSD but also go beyond its remit (e.g. they address online marketing beyond audiovisual commercial communications).

6.7 Promotion of European works

TV broadcasters must, where practicable, reserve to European works a majority of their transmission time and at least 10 % of their transmission time or of their programming budget for European works created by producers who are independent of broadcasters. 481  

On-demand services providers, where practicable, must promote the production of and access to European works. However, the Directive gives examples of how this can be done in practice, leaving the choice of measures to Member States. The examples mentioned in the Directive are: i) financial contribution to the production and rights acquisition of European works; ii) a share in the catalogues and/or ii) prominence of European works in the catalogues. 482 Member States have chosen very different ways for implementation ranging from relatively loose requirements to a complex set of obligations sometimes combining all three mentioned examples (see Effectiveness sub-section).

Relevance of the current rules

The AVMSD rules on promotion of European works are still relevant in light of the rapid growth of the on-demand and the Internet industry which boosts availability and opens up new ways of accessing content 483 .

However, in the 2015 Public consultation on the AVMSD, some media and entertainment services, telecom operators, commercial broadcaster and operators from the digital and internet related industry while acknowledging the relevance of the rules, expressed the opinion that it should be primarily the demand by the audiences, rather than legal obligations, that should guide commercial broadcasters (as opposed to public service broadcasters who have to fulfil a public service mandate) when taking decisions on content offerings.

Effectiveness

For TV broadcasting, the First and Second Report on the application of rules on promotion of European works confirm that the majority of service providers comfortably fill the required quota for European works and independent works. Compliance with the AVMSD rules resulted in driving up the proportion of European works that were transmitted. In 2007, European works stood for 62.4 % of TV broadcasting service transmission time 484 .In 2011 and 2012 the average transmission time dedicated to European works by all reported channels was 64.1% 485 .

As regards quotas for independent productions, the EU-average proportion by all reported channels in all Member States was 33.1% in 2011 and 34.1% in 2012 while the EU-average compliance rates amounted to 80% for 2011 and 82% for 2012 486 .

As mentioned above, the current rules for TV broadcasters have resulted in European citizens being exposed to European works, on average 64.1 % of the average transmission time. This was particularly important in a context where viewer hours for European works have declined (down from 74 % in 2007 to 69 % in 2010) 487 .

For on-demand services, the effectiveness of the AVMSD rules on promotion of European works is reduced by a number of factors:

-The AVMSD does not impose clearly defined obligations on the promotion of European works in on–demand services. This has led to significantly diverging approaches and thus fragmentation in the level of obligations imposed across Member States 488 . Annex 4 provides an overview of the diverse national approaches adopted. Fragmentation and lack of data regarding shares of European works in on-demand catalogues 489 (14 Member States do not require providers to share these figures) hampers the circulation of services across the Union. It also created gaps in the supply and promotion of European content on those services.

-Whereas in some Member States on-demand services are required to either fill a mandatory share or give prominence to European works in their catalogues 490 , on-demand providers' investments in content production are lower than those of broadcasters 491 and on-demand catalogues may contain a lower share of European works than broadcasters' programmes do 492 .

-Some VoD service providers are established in one Member State but mainly target a different Member State 493 because they often choose to establish themselves in countries with the most favourable regulatory treatment ("forum shopping"). Thus on-demand providers do not contribute to the promotion obligations (particularly investment in creative production and distribution) in the Member States they target, when different from their country of establishment. This is the case for Be-Fr, FR and IT.

The differences in the rule applied to TV broadcasting and on-demand services have led to an unequal level of contribution to promotion of European works. The investment of the main TV groups in original programmes in 15 countries amounted to EUR 15.6 billion 494  in 2013, i.e. 24% of TV broadcasters revenues (EUR 65 billion) 495 while on-demand providers made a minimal or even no contribution to the production and the promotion of EU works. They invested EUR 10 million in original content i.e. less than 1% of their total revenues (EUR 1.5 billion) 496 .

In light of the above, it can be concluded that the rules on the promotion of European works for TV broadcasting services have contributed to the development of a European audiovisual industry. The rule applied to on-demand services may have not been as effective.

Moreover, the differential regulatory treatment between broadcasting and on-demand services might create undue competitive advantages/disadvantages for operators. On the one hand, fast developing on-demand services 497 are subject to light touch regulation and, due to the lower constraints on their editorial policies, are able to engage in "forum shopping". On the other hand, TV broadcasters do not enjoy as much flexibility – in a context of declining viewing hours for European fiction – which puts at risk their attractiveness and competitiveness. The results of the 2015 Public consultation confirmed a perceived lack of fair treatment between TV broadcasters and on-demand services in this regard: 61% of the contributors in this context (from Member States and industry) who expressed an opinion believe that the current rules are not fair.

EU added value

The AVMSD harmonises concepts such as the definition of "European work" 498 and the obligations to be met by TV broadcasters 499 as regards promotion of European works and independent productions. It should also be considered that the obligation to promote European works "where practicable", that was meant to ensure flexibility in the modulation of measures, has resulted in practice in exemptions and remarkable differences in the national transposition of the rules. The minimum harmonisation overall confirms the EU added value of the rules.

Efficiency

For TV broadcasting, administrative costs mainly depend on the system put in place by national regulators to monitor compliance 500 and on the number of channels operating in the Member State. For compliance costs in particular for commercial broadcasters 501 can be high as compared to producing and/or acquiring European content from other Member States than foreign content from third countries 502 . The Second Report on the application of Articles 16 and 17 (Annex 6) shows that small and thematic channels could face additional difficulties in fulfilling mandatory quotas. However, it should be noted that, according to Article 18 the obligations on Articles 16 and 17 do not apply to television broadcasts that are intended for local audiences and do not form part of a national network. As regards channels with a low audience share (below 0.3%), national authorities can grant these channels individual exemptions from the reporting obligation.

For on-demand services, compliance costs depend on national implementation. Whereas monitoring the application of the rules may be particularly costly 503 and reporting obligations for providers may be medium-high 504 , this does not necessarily translate in (an increased) availability of or investments on European content (see sub-section on Effectiveness).

Coherence

The rules are coherent with the MEDIA sub-programme of Creative Europe, which aims to support European film and other audiovisual industries. To this end, MEDIA provides funding for the development, promotion and distribution of European works in Europe and beyond. The AVMSD rules are also coherent with the EURIMAGES initiative of the Council of Europe, promoting the European audiovisual industry by providing financial support to European co-productions (feature films, animations and documentaries). In doing so, EURIMAGES encourages cooperation between professionals in different European countries.

The AVMSD rules on promotion of European works are also coherent with the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions which establishes a series of rights and obligations, both at national and international level, with a view to protecting and promoting cultural diversity. The AVMSD rules also underpin where appropriate Cultural Cooperation Protocols to trade agreements with EU partners as a mean to implement the above-mentioned UNESCO Convention. These Protocols warrant preferential treatment to co-produced audiovisual works by extending to them the classification as European works for the purposes of the AVMSD. This is done under conditions which are defined in the Protocols themselves and reflect the modulation of this mechanism according to differing situations and characteristics in terms of development of audiovisual industries and cultural exchanges with the countries concerned 505 .

The upcoming reform of the EU copyright rules will also take into account objectives related to the availability and promotion of European works. The Communication on Copyright adopted by the Commission on 9 December 2015 highlights that legal offers of European works online, including European audiovisual works 506 , have yet to realise their full potential. The Copyright reform aims to ensure wide availability of creative content across the EU and make sure that EU copyright rules continue to provide a high level of protection for rights holders while striking a good balance with other public policy goals such as ensuring cultural diversity in terms of wider access to a variety of cultural works across the EU.

6.8 Independence of regulators and cooperation amongst regulators

According to Article 30 AVMSD, Member States shall take appropriate measures to provide each other and the Commission with the information necessary for the application of the Directive, in particular in particular through their competent independent regulatory bodies. Article 30 of the AVMSD does not lay down any obligation for Member States to ensure neither the creation nor the independence of national regulators. However, it considers that independent regulators play a role in the cooperation amongst Member States for an effective application of the AVMSD. Also, according to the EU treaties and relevant case law 507 , Member States should adopt national laws enabling the impartial application of the objectives of EU law.

Relevance of the current rules

In the 2015 Public consultation, an overwhelming majority of respondents across various stakeholder categories 508 confirmed the relevance of having independent, well-resourced and suitably empowered regulators. The majority of respondents to the 2013 Public consultation on independence of regulators 509 expressed the same opinion. In the ERGA recommendations on independence of regulators, a vast majority of audiovisual regulators across the EU consider independence to be a pre-requisite for carrying out their role. This shows that, by not laying down requirements for independence of regulators, the currently rules are not relevant.

The current rules are also not relevant to the AVMSD objective to preserve free and pluralistic media and the functioning of the democratic systems in the EU and in the Member States. This was affirmed by public service broadcasters and human rights/media freedom NGOs in the 2015 Public consultation and in the 2013 Public consultation on independence of regulators.

In light of the above, there is scope for improving the relevance of the current AVMSD rules on independence of regulators to ensure an effective transposition and application of the Directive.

Effectiveness

There are structural weaknesses in a number of audiovisual regulators across the EU, combined with very diverse regulatory structures and potentially varying degrees of independence.

Since the adoption of the AVMSD, all Member States have progressively created a regulatory authority for the implementation of the AVMSD 510 . While most regulators fulfil what are considered the main criteria for independence 511 , important features for regulatory independence are missing in a number of Member States 512 . The Council of Europe Recommendation (2000)23 513 on the independence and functions of regulatory authorities for the broadcasting sector as well as a number of studies and reports 514 , consider that the following set of criteria would ensure an effective and independent implementation of legislation:

i) independence from third parties or from  external influence;

ii) transparent decision-making processes and accountability to relevant stakeholders;

iii) open and transparent procedures for the nomination, appointment and removal of Board Members;

iv) knowledge and expertise of human resources;

v) financial 515 , operational and decision making autonomy;

vi) effective enforcement powers;

vii)  the possibility only for judicial power to review the regulatory bodies' decisions.

Failure to fully align with each of these criteria does not necessarily imply a lack of independence. However, they provide a formal framework to ensure the highest possible level of independence. At present, the situation across the EU is as follows:

-As regards (i), 5 national regulatory authorities 516 are not fully separated from ministerial bodies or government.

-As regards (ii), 4 Member States do not have any transparency provisions at the moment 517 and 2 Member States 518 do not require regulators to motivate their decisions.

-As regards (iii), a number of countries do not follow the procedures considered to guarantee the independence of the regulators. 519 As regards rules on conflict of interest for appointments, no such rules exist in 6 countries 520 , there are no rules against conflict of interest with government 521 in 6 countries, and 9 do not have rules on conflict of interest with Parliament and political parties. 522 A small number of countries neither have rules on the possible conflict of interest with industry (5) 523 . In a few countries, no specific rules exist to protect Board members against arbitrary dismissal (5). 524

-As regards (iv), some commercial broadcasters pointed out to a lack of the requisite knowledge and expertise by the staff of several audiovisual regulators in the 2015 public consultation.

-As regards (v), large budgetary 525  differences exist between national regulatory authorities across the EU. The regulatory bodies of 10 countries have less than EUR 1 million of budget per year. However, this amount can be much higher in other countries 526 . The same can be said as regards staffing 527 . In this context, the RADAR study also concluded that the level of staff has been considered to be problematic for several regulators 528 . A more qualitative assessment by ERGA gave a close conclusion 529 . As regards decision making process, the regulatory powers of some regulators are limited by the power of other bodies to overturn their decisions as well as by the power of other bodies to give instructions 530 to regulators.

-As regards (vi), five regulators report that they do not have powers to enforce their decisions autonomously 531 .

-As regards (vii), no particular issue has been identified 532 .

The negative impact of these factors on the achievement of various AVMSD objectives has been observed in several respects:

Some commercial broadcasters replying to the 2015 public consultation mentioned the recent examples of decisions by several regulators, which seemed to be problematic for their own independence and which affected negatively Public Service Broadcasters (PSB), commercial broadcasters and sometimes all players 533 .

The lack of specific requirements in Article 30 was evident in the Pre-accession negotiation process, as the Commission could not rely on a binding legal instrument to require the independence of newly created audiovisual regulators 534 . The Commission’s Country Reports pointed to problems with conflict of interest and the political nature of the nomination and appointment procedures in Bulgaria 535 and Romania 536 .

The shortcomings of Article 30 AVMSD were pointed out by an independent study commissioned by the Commission, the INDIREG Study on "Indicators for independence and efficient functioning of audiovisual media services regulatory bodies"(2011). The Final Report showed that in some EU countries the legal framework does not guarantee an independent exercise of powers by the regulators; in other EU countries regulators are only formally independent but this is not the case in practice. The study found that compliance with legal requirements is often not sufficient to deliver on objectives. There are subtle and indirect ways to exert influence on regulators, especially for governments, and these are difficult to measure 537 .The final Report of the most recent RADAR study of 2015 (updating the 2011 INDIREG Study) confirms the findings of the 2011 study.

In 2013, the Final Report of the High Level Group on Media Freedom and Pluralism 538 highlighted the shortcomings of Article 30. The report recommended, inter alia, that regulators should be independent and appointments should be made in a transparent manner, with all appropriate checks and balances. As a follow-up, the Commission launched in the same year the Public consultation on the independence of regulators.

In the 2015 Public consultation, a large majority of regulators, Member States, commercial broadcasters, digital and telecom operators and representatives of consumers considered the rules of the Directive not to be effective. 539 The respondents to the 2013 public consultation on independence of regulators noted that lack of independence could cause problems in particular in the domains of audiovisual commercial communications, jurisdiction and protection of minors. 540

Since the way regulatory authorities function can differ significantly from one Member State to the other, it can translate into different levels of user protection across the EU. In markets with weak regulators, consumer rights risk not to be sufficiently protected 541 .

Moreover, regulatory authorities lacking independence are not in a position to guarantee media freedom and pluralism 542 . In many countries where independence of national regulatory bodies is weak, challenges to media freedom and pluralism over the last years have been reported 543 . This was the case for Romania in the period from 2007 to 2012, where the Commission identified problems with ensuring media freedoms and with the independence of the audiovisual regulatory body 544 . The same happened in Hungary in 2010, where a number of provisions of a draft law raised concerns related to media pluralism. The Commission 545 , the European Parliament 546 , the OSCE Representative on Freedom of the Media 547 , the Council of Europe 548 and other international bodies and NGOs active in the area of human rights and civil liberties, and Member States have also all raised concerns related to both media freedom and the independence of the regulator. The recent amendment to the media law in Poland (The Broadcasting Act of 1992) could lead to the limitation of the powers of the Media Regulatory Authority. As such, it might raise issues related to media pluralism and to the independence of public service broadcasting in the country, which in turn may affect the independence of audiovisual regulators.

In this light, Article 30 does not provide sufficient safeguards to ensure an effective coherent application of the AVMSD across the European Union.

EU added value

As the AVMSD does not contain any formal obligation for Member States to create an independent regulatory body if one does not exist already nor does it indicate any characteristics for such body. Neither does the AVMSD set any requirement for Member States to have an independent regulatory body.

The absence of a formal obligation has contributed to diverse regulatory structures and varying degrees of independence. Yet, regulatory independence both from political bodies and commercial interests is essential to ensure effective internal market supervision, proper application of the rules of the Directive and guarantee media freedom and pluralism. In many countries where independence of national regulatory bodies is weak, challenges to media freedom and pluralism over the last years have been reported 549 . This was the case for Romania in the period from 2007 to 2012, where the Commission identified problems with ensuring media freedoms and with the independence of the audiovisual regulatory body 550 . The same happened in Hungary in 2010, where a number of provisions of a draft law raised concerns related to media pluralism. The Commission 551 , the European Parliament 552 , the OSCE Representative on Freedom of the Media 553 , the Council of Europe 554 and other international bodies and NGOs active in the area of human rights and civil liberties, and Member States have all raised concerns related to both media freedom and the independence of the regulator. The OSCE Representative also recently called for respect of regulator's independence in Latvia following the dismissal of the Regulator chairman 555 .

A captive regulator may treat differently the various players competing on the same market clearly distorting competition. There is also evidence that the independence of audiovisual regulatory authorities has an impact on the providers' willingness to establish in an EU Member State and serve audiences in several Member States 556 .

As a result, the lack of independence of the Regulators may undermine the functioning of the audiovisual internal market.

On these grounds, it can be affirmed that Article 30 AVMSD does not have in general EU added value.

It should however be considered that Article 30 did play a role in facilitating the setting up of the ERGA in 2014. ERGA has facilitated cooperation among existing independent regulators and the Commission on cross-border issues.

Efficiency

The efficiency of Article 30 AVMSD as regards independent regulators cannot be assessed given the absence of a specific obligation.

However, it should be noted that the independence of regulatory authorities both from political bodies and from commercial interests is essential to ensure an objective supervision of markets 557 . A lack of independence can result in an unfair treatment between players competing on the same market and have a negative economic impact on service providers. . This is why many EU regulatory frameworks in other domains (i.e. telecom, gas, electricity, postal services and personal data protection) mandate regulatory independence.

As an example, in the context of the Klubrádió case, the company sued the national regulator in Hungary for economic loss resulting from an alleged unfair treatment which led to a deal in the granting of a license 558 . A number of EU based companies also lodged complaints with the European Commission against Hungary and the Hungarian converged regulatory authority - Media and Infocommunications Authority (NMHH). Liberty Global also lodged a complaint against the Hungarian Media regulator that led to the preliminary ruling by ECJ 559 .

There is also evidence that independence of audiovisual regulatory authorities has an impact on the providers' willingness to establish in an EU Member State and serve audiences in several Member States 560 .

Coherence

Existing EU legislation in a number of domains (i.e. telecom, energy and postal regulatory frameworks, personal data protection) mandate the Member States to ensure the independence of national competent authorities (see the considerations under the section on Relevance). For example, the EU Framework Directive for electronic communications requires the Member States to ensure that regulators act independently and do not seek or take instructions from any other body in relation to the exercise of certain key regulatory tasks assigned to them. Only appeal bodies may suspend or overturn decisions by national regulatory authorities, and the head of a national regulatory authority and other members of the collegiate body fulfilling that function may be dismissed only if they no longer fulfil the conditions required for the performance of their duties laid down in advance in national law. This shows that the AVMSD is not coherent with existing EU frameworks in other domains.

The lack of coherence of the AVMSD with EU legislation in other domains was also pointed out by the Centre for Media Pluralism and Media Freedom which noted that the lack of harmonisation in the audiovisual domain is "particularly blatant compared to electronic communications framework that regulates issues which are closely related and complementary to those in the AVMSD". It further stresses that in times of convergence, it could be both valuable and reasonable to consider the establishment of the same requirements for audiovisual regulatory authorities as foreseen for the electronic communications regulators, particularly as in some Member States electronic communications and audiovisual media services are already under the supervision of the same regulator.

The AVMSD provisions are not coherent either with a number of relevant international instruments endorsing the principle of independence of regulators. This is the case for, amongst others, the Council of Europe’s Committee of Ministers’ Recommendation (2000)23 561 on the independence and functions of regulatory authorities for the broadcasting sector; the Declaration of the Committee of Ministers on protecting the role of the media in democracy in the context of media concentration 562 ; and Resolution No. 2 of the 7th European Ministerial Conference on Mass Media Policy 563 on cultural diversity and media pluralism in times of globalisation. Notably, the Council of Europe Recommendation (2000) 23 unequivocally states: “The rules governing regulatory authorities for the broadcasting sector, especially their membership, are key elements of their independence. Therefore, they should be defined so as to protect them against any interference, in particular by political forces and economic interests”.

6.9 Accessibility for persons with disabilities

Article 7 AVMSD requires Member States to encourage audiovisual media service providers to gradually provide for accessibility services for hearing and visually-impaired viewers.

Relevance of the current rules

All the respondents to the Public consultation of 2015 shared the opinion that accessibility of audiovisual content by all viewers, including those with visual and hearing disability, must be guaranteed. This confirms the relevance of Article 7 AVMSD.

Effectiveness

As indicated in the 2nd Application report on the AVMSD, the proportion of audiovisual media services accessible to people with visual or hearing disabilities has increased in some Member States since the 1st Application report on the AVMSD of May 2012. For example, the level of subtitling services has increased since 2010 (reporting period for the 1st Application Report), either due to the regulatory action by the Member States 564 or voluntary commitments by the audiovisual media service providers 565 . Voluntary codes for broadcasting services have been introduced in 7 Member States 566  and for on-demand in 5 567 .

Commercial broadcasting channels however lag behind as compared to public service broadcasters, which are subject to stricter rules in many countries. The average share of programmes broadcast in the Member States with subtitles by the two main public channels reached in 2012 between 56% and 61%, respectively, while the share for the two main commercial broadcasters amounts to only 44% and 48% respectively. 568

There is divergence in the conditions of accessibility for consumers leading thus to a fragmentation across the European Union. While subtitles are available in most Member States, the amount of content subtitled varies considerably between countries (from almost all programmes in the UK or France to only specific ones, such as news, in Lithuania).

The availability of access services for the visually impaired is much lower. The average volumes broadcasted with audio description range between 4% and 11%. Some Member States such as the Netherlands or Finland do not provide any audio description, while other Member States such as Slovakia (from 7 to 10 % of overall programmes) and UK (15 to 24 %) do. 569 The provision of sign language interpretation is the least available access service. On average it is below 5% of the overall programmes across all countries covered by the Commission's study of November 2013, on assessing and promoting e-accessibility. Member States such as Portugal or the UK perform better in this regard (between 7 and 16 % and 5 to 7 % respectively) than the majority, including some that according that study do not provide any signing (e.g. Germany or Luxembourg). 570 Overall, persons affected by disabilities still face significant barriers when accessing audiovisual content in the EU. 571

In the 2015 Public consultation, viewers and regulators 572 expressed dissatisfaction resulting from the fact that some programmes are only accessible on linear broadcast but not on-demand. A majority of regulators and many Member States, as well as commercial broadcasters, disability groups and manufacturers also considered that the rules are not sufficient to ensure accessibility. They argue that in the absence of a legal obligation, the EU cannot achieve a barrier-free access to audiovisual media content for all citizens. On the other hand, about half of the Member States believe that the AVMSD is effective for it leaves the flexibility required by the heterogeneity of the national markets and the challenges faced in each Member State.

Finally, evidence 573 shows that specific obligations in legislation and/or by the regulators deliver better results in terms of provisions of accessibility services. This is confirmed by the view point expressed by manufacturers in the 2015 public consultation. They reported that, despite their best efforts, the overall accessibility depends on the accessibility of other parts of that ecosystem, i.e. audiovisual content.

In light of the above, it can be concluded that the AVMSD had an incentive effect for Member States to take action to increase the accessibility to audiovisual media services across the EU.

EU added value

In the absence of mandatory EU-level accessibility rules, there are considerable variations across Member States in terms of the extent to which different types of accessibility measures are in place for TV broadcasting services, as well as in the proportion of programming covered.

Almost all Member States 574 have introduced statutory rules requiring providers to adopt measures to facilitate accessibility. While some Member States have very detailed statutory 575 or self- or co-regulatory rules 576 , others have only very general provisions. Some limit the accessibility obligation to public service broadcasters (included in the public service contracts) 577 . In some Member States, an accessibility obligation is included in the broadcasters' licenses for the provision of broadcasting services. 578 As regards on-demand services, only 2 countries (Belgium and Greece) impose targets on the share of accessibility services 579 .

The current rules also allow for the development of co- or self-regulatory schemes which often complement national rules.

Furthermore, as confirmed in the 1st and 2nd Application Report on the AVMSD, the fact that the Commission monitors and reports on the state of the art in this domain constitutes an incentive to take action both for Member States and broadcasters.

In light of the above, it can be concluded that Article 7 laid the ground at EU level for an action of the Member States to increase the accessibility to audiovisual media services.

Efficiency

The efficiency of Article 7 cannot be assessed given that it sets out no obligations and as such there are no costs directly linked to it.

It is worth highlighting that accessibility is overall guaranteed despite the absence of legal obligations in the AVMSD. Some Member States 580  argue that if more stringent rules on accessibility were in place, this would create obstacles for compliance by Member States and commercial broadcasters.

However, the lack of EU-level harmonisation has led to an uneven treatment for TV broadcasters and on-demand service providers. In most Member States, the latter are not subject to accessibility requirements and even content that was available with assistive services on TV is no longer accompanied by those assistive services when accessed as a catch-up service 581 .

At Member State level, national law has generated varying degrees of compliance costs. For TV broadcasting, the yearly costs of providing accessibility services represent less than 0.1 % of large broadcasters' revenues. 582 To the same extent, for TV channels of major broadcasters, the additional production costs of subtitles usually make up less than 1% of the production budget for the programme itself. However, for niche channels using archive and third-party programming, or for broadcasters in small countries, costs may reach 25-30% of the channel’s production budget. For many television broadcasters, live programming accounts for an increasing proportion of overall output 583 .

The costs for on-demand services are similar to those incurred by TV broadcasting services. When using subtitling, audio description and signing originally created for broadcasting services, on-demand services incur costs related to adapting the services for their platforms 584 .

Coherence

The AVMSD is coherent with EU activities aimed at promoting the active inclusion and full participation of disabled people in society, in line with the EU human rights' approach to disability issues. As such, the AVMSD rules are coherent with the European Commission's European Disability Strategy 2010-2020 585 that builds on the UN Convention on the Rights of People with Disabilities (UNCRPD), and takes into account the lessons learnt from the European Disability Action plan 2004-2010 586 . As such, the AVMSD is coherent with EU initiatives promoting the active inclusion and full participation of disabled persons in society, in line with the EU human rights approach to disability issues.

The AVMSD is also coherent and complementary to other EU-level initiatives that aim at the inclusion of people with disabilities, in particular the proposal for a Directive on the accessibility of the public sector bodies' websites (DG CNECT). The AVMSD may not be fully coherent with the final outcomes of the proposal for a Directive on the harmonisation of the laws of the Member States relating to accessibility requirements of goods and services – the European Accessibility Act (DG EMPL)  587 . This proposal also covers audiovisual services. It provides an information requirement about the functioning of the service and about its accessibility characteristics and facilities as well as the general requirement of "including functions, practices, policies and procedures and alterations in the operation of the service targeted to address the needs of persons with functional limitations". If the proposal for a European Accessibility Act were to be finally adopted by the co-legislators in its present form, it would mean that audiovisual media services would be subject to stricter rules than those currently set out in the AVMSD. As a result, the rules laid down in the AVMSD would become irrelevant.

The AVMSD is coherent with the UN convention on the Rights of Persons with disabilities (UNCRPD) that was ratified by all EU Member States. The AVMSD rules are also coherent and complement national initiatives such as quotas of accessible programmes to be filled by providers or with state aid measures mentioned in the Effectiveness sub-section.

6.10 Events of major importance for society and short news reports

The AVMSD leaves to the Member States the prerogative to prohibit the exclusive broadcasting of events which they deem to be of major importance for society, where such broadcasts would deprive a substantial proportion of the public of the possibility to follow those events on free-to-air television 588 . The AVMSD mentions the football World Cup and the European football championship as examples of such events 589 . When a Member State notifies a list of events of major importance, the AVMSD requires the Commission to assess its compatibility with EU law. If deemed compatible, the list will benefit from 'mutual recognition'.

The 2nd Application report on the AVMSD mentions the adoption of a positive decision 590 on the list of events of major importance for society proposed by Italy in December 2011. In 2014, the Commission approved the Polish list. In 2015, the Danish list was approved.

According to a recent judgement by the Court of Justice, the Commission should only review what effect a Member State's designation of events as being of major importance has on the freedoms and rights recognised under EU law and if it exceeds those which are intrinsically linked to such a designation 591 .

To warrant the public's access to information on events of high interest, Member States must ensure that any broadcaster established in the Union gives access to short extracts of such events to the public which are transmitted on an exclusive basis. According to the AVMSD, Member States shall define the modalities and conditions for the provisions of such short news reports. 592 In so doing, Member States can also provide for compensation arrangements but compensation shall not exceed the additional costs incurred in providing access. In reply to a request for a preliminary ruling, the Court of Justice held that this limitation is in line with the Charter of Fundamental Rights, in particular the right to property. Although it restricts the freedom to conduct a business, such restriction is justified and in line with the principle of proportionality 593 .

Relevance of the current rules

Most respondents across all stakeholder categories in the 2015 Public consultation on the AVMSD stated that the rules are relevant.

However, for events of major importance for society, some commercial broadcasters have indicated that the system of lists is outdated as nowadays the market has the instruments to address the public's demand for major events. In light of the above, it can be concluded that the AVMSD rules are still relevant.

Effectiveness

Most respondents across all stakeholders categories (including most Member States and regulators) in the 2015 Public consultation on the AVMSD stated that the rules on events of major importance for society have been effective.


In the frame of the 2015 Public Consultation, one regulator, consumer associations, telecom and ICT industry flagged some elements reducing the effectiveness of the Directive: According to them, the notion of "events of major importance for the society" is not clear enough and consequently seems to be stretched and overused by national authorities in charge of creating the lists; the rules are less effective in times of media convergence as they do not apply to "new" services (mentioned by some Member States and public service broadcasters). Also, according to several consumer organisations, the rules do not support the specific AVMSD objectives related to consumer protection as they allow sport events listed as "of major importance" to be sponsored by alcohol producers.

The rules on short news reports have proven to be effective to date. Whereas there have been some issues with the transposition of the definition of the source of short news and the lack of time limits, these issues were addressed and solved with the Member States concerned and did not highlight problems with the effectiveness of the rules as such. This was confirmed by a majority of respondents across all stakeholder categories in the 2015 Public consultation.

In light of the above, the AVMSD rules on events of major importance for society and short news reports have proven to be overall effective for sustaining media pluralism and right of information.

EU added value

The AVMSD restricts broadcasters' freedom to conclude exclusive deals that would prevent citizens from accessing information and events of major importance for society. By warranting EU-wide mutual recognition to national decisions in this domain, the AVMSD has delivered EU added value.

The AVMSD requires Member States to ensure that any broadcaster established in the Union has access, on a fair, reasonable and non-discriminatory basis, to events of high interest to the public for the purposes of short news reports. The AVMSD rules thus constitute an important corollary to the free circulation of audiovisual media services offered by providers under the jurisdiction of Member States. This confirms the European added value of the rules.

Efficiency

In the framework of the Public consultation, stakeholders did not flag any lack of proportionality between the cost resulting from the application of the provision of events of major importance for society and the objective to ensure access to these events.

However, Public service broadcasters indicated that there is scope for simplification and speeding up of the notification procedure. Also, one Member States and a few public service broadcasters indicated that the rules create unequal market conditions amongst operators active in different Member States as the lists cannot be enforced against exclusive right holders outside the relevant territory.

For short news reports, in the 2015 Public consultation, some commercial broadcasters mentioned that there is scope for de-regulation as broadcasters already have access to short news reports under self-regulatory and contractual arrangements.

Coherence

The designation of events of major importance for society does not give rise to issues of coherence with other EU initiatives and activities. The AVMSD functions in a complementary framework with Member States' decisions on the designation of events of major importance for society.

The right to short news reports does not give rise to issues of coherence with other EU initiatives and activities. The AVMSD functions in a complementary framework with Member States' legislation regarding the modalities of exercising that right, including compensation arrangements, the maximum length of short extracts and time limits regarding their transmission.

6.11 Right of reply

Article 28 of the AVMSD warrants a "right of reply" that applies to television broadcasting (on-demand audiovisual media services are excluded from the application of this rule). Any natural or legal person, regardless of nationality, whose legitimate interests, in particular reputation and good name, have been damaged by an assertion of incorrect facts in a television programme must have a right of reply or equivalent remedies.

Relevance of the current rules

Most respondents across all stakeholders' categories in the context of the 2015 Public consultation on the AVMSD stated that the AVMSD rules are relevant. This confirms that the rules on the right of reply are still relevant.

Effectiveness

Most respondents across all stakeholders' categories in the 2015 Public consultation on the AVMSD perceive the AVMSD rules to be effective. A number of stakeholders however, called for extending the rules to cover all audiovisual media services in order for the rules to be truly effective. The implementation of the provision has never given rise to any situation where the achievement of objectives was challenged. In light of the above, it can be concluded that the rules on the right of reply are perceived to be effective.

EU added Value

By providing a common level of protection in television broadcasting, the AVMSD has brought a clear EU added value. It should however be considered that, in the 2015 Public consultation on the AVMSD, public service and commercial broadcasters highlighted that there is a case for extending the AVMSD rules on the right of reply to all audiovisual media services, to ensure alignment with national trends (which have followed soft law – see below under Complementarity - and applied the rules beyond television broadcasting) and hence better harmonisation.

Efficiency

Despite the Public consultation and the studies supporting the REFIT evaluation, it has not been possible to conclude on the efficiency of the right of reply. However, neither the results of the 2015 Public consultation nor other elements suggest that there are more cost-effective options to ensure a right of reply in television broadcasting.

Coherence

The rules on the right of reply are coherent with soft law measures in this field, in particular the 2006 Council and Parliament Recommendation on the Protection of Minors and on the Right of Reply 594 (which is also coherent with the Recommendation of the Council of Europe (2004) 161 on the right of reply in the new media).  The Recommendation is a "soft law" measure calling on the Member States to ensure the right of reply online or equivalent remedies. In including the right of reply in online media, the 2006 Recommendation extended the scope of a pre-existing 1998 Recommendation 595 .

6.12 Self/co-regulatory initiatives in the context of the AVMSD

The AVMSD encourages Member States to use self and co-regulation in the fields coordinated by the Directive, and particularly in the field of commercial communications in children's programmes 596 .

Relevance of the current rules

A large number of respondents from Member States, broadcasters, the Internet sector and consumer organisations to the AVMSD Public consultation 2015 and to the 2013 Green Paper on media convergence stated that the self and co-regulatory initiatives encouraged in the AVMSD are of continued relevance to ensure an appropriate level of consumer protection, in particular in the fields of audiovisual commercial communications, protection of minors and accessibility of audiovisual content. This confirms the relevance of the AVMSD rules encouraging the use of self and co-regulation.

Effectiveness

At present, the domains where self-and co-regulation is most frequently used at national level are audiovisual commercial communication (in particular addressed to children and concerning audiovisual commercial communications of alcohol and HFSS foods), protection of minors and accessibility of audiovisual content. While the majority of countries have self- or co-regulatory schemes in place for audiovisual commercial communications, in the field of the protection of minors from harmful audiovisual content, statutory regulation prevails. The majority of codes lacks specified targets and objectives which makes their proper evaluation difficult. Where monitoring processes are in place they are often not formalised and implemented systematically. Complaints are often used as an indicator to measure the performance of a self- or co-regulatory scheme; however they form a relatively ambiguous indicator. The existence of a legislative backstop is an important success factor in promoting compliance with a self- or co-regulatory code. Graduated sanctions which maintain an element of proportionality are usually considered to be an effective approach in enforcing a scheme 597 .

Already at the time of the last revision in 2007, Member States had put in place self and co-regulatory regimes in the fields covered by the Directive, such as for protection of minors. This saw a spur following the entry into force of the Directive as testified by the 1st Application report on the AVMSD, which mentioned that in all but two Member States self- or co-regulatory schemes existed, or encouragement provisions had been directly included in the media legislation. The 2nd AVMSD Application report mentions that since the previous Application report, four additional Member States 598 adopted new self-/co-regulation systems, mostly in the field of protection of minors (in particular in on-demand services) and accessibility.

In the field of alcohol advertising, a comparison of the 1st and the 2nd Application report on the AVMSD shows that the number of media services and Member States involved in self-regulation of marketing and advertising of alcoholic beverages 599 increased substantially from 2007 to 2010 and remained stable from 2010 to 2014.

Codes of conduct on audiovisual commercial communications of food and beverages high in fat, salt and sugars (HFSS) to children codes are already in place in all Member States but two. The 2nd AVMSD Application report mentions that as compared to the 1st Application report most Member States did neither update the current codes nor develop new codes of conduct 600 . There are still a number of Member States where there are no relevant measures in place 601 or the existing legislation only encourages the developments of such codes 602 . In many cases the existing codes do not specifically address audiovisual commercial communications of HFSS food products addressed to children (e.g. SK, CZ) but in general to the advertising of food products or focus on the promotion of a healthy diet. Only in eight cases codes have been updated or new codes were set up since the last Application Report. In two Member States, new legislation or co-regulatory measures are at a drafting stage (HR, MT). In two other Member States, new self-regulation is being developed (CY, FI).

According to estimates from the WHO’s Childhood Obesity Surveillance Initiative (COSI), around 1 in 3 children in the EU aged 6-9 years old were overweight or obese in 2010. This is a worrying increase compared to 2008, when estimates were 1 in 4 603 . This situation derives from varied behavioural risk factors including minors' exposure to food advertisements and other marketing tactics. An evaluation of the Platform for Action on Diet, Physical Activity and Health concluded that stakeholders’ initiatives in the field of marketing and advertising showed good progress, but that their impact could be further strengthened 604 .

As regards protection of minors, many Member States have in place codes of conduct on minors' protection 605 or other self-regulatory systems 606 .

As regards hate speech, self-regulatory arrangements are in place in a number of Member States (AT, BE, DE, EL, HU, IT, NL, PL, FI, DK) 607 whereas there is no information on the use of co-regulation.

The results of the 2015 Public consultation have provided some indications as to the effectiveness of these arrangements in various fields covered by the Directive 608 .

As regards commercial communications, in the majority of Member States, co-regulatory systems are in place.

Some commercial broadcasters, advertisers, the food and drink industry, the Internet, telecom ICT sector indicated that self and co-regulatory initiatives are an effective tool to be further promoted. However, consumer organisations and public health agencies in the Member States believe that the self- and co-regulation has not been effective in particular when it comes to alcohol advertising and advertising targeting children, in light of blurring lines between broadcast and on-demand services and the voluntary character of self-regulatory mechanisms. Also, self- and co-regulation systems are deemed to have excessively lengthy procedures to review complaints.

When it comes to protection of minors, self and co-regulation appears to be an effective tool given the satisfactory take up in the Member States (see above) and the fact that both the ERGA 609 and a large number of stakeholders from various sectors (broadcasters, the Internet and ICT industry, commercial broadcasters, consumer organisations) see this as an effective complement to regulation. ERGA also stressed the importance of self and co-regulation in filling regulatory gaps (i.e. to ensure protection in online services that are not in the AVMSD scope). ERGA has highlighted best practices in co-regulation, such as the shared responsibility between the Dutch Media Authority and NICAM (the Netherlands Institute for the Classification of Audiovisual Media 610 ). Most VOD service providers established in the Netherlands have voluntarily adapted the NICAM classification system to their services.

As regards services not covered by the AVMSD, video-sharing platforms have in place self-regulatory tools to protect users from illegal or harmful content. They have in place community guidelines which prohibit racism, calls to violence, or other forms of abusive and discriminatory content. Any user can report, or flag, content for review and possible removal. Guidelines are updated over time. Amongst the latest updates is Facebook's ban of content "praising terrorists 611 " or Twitter's ban of indirect threats of violence in addition to direct threats. Video-sharing platforms devote substantial resources to "moderating" UGC content (one third of total Facebook employees are in charge of content moderation and YouTube also relies on the support of a network of external organisations 612 ).  Activists have demonstrated that Facebook enacts different standards for content moderation i.e. nudity images are removed more quickly than incitement to violence 613 . YouTube primarily relies on the number of complaints received to review content 614 and this has shortcomings 615 . The Council of Europe reported that community guidelines are ineffective against hate speech 616 .

EU added value

Encouraging Member States to use self and co-regulation warrant that Member States take action in fields like advertising of HFSS foods to children which are not regulated at EU level. In addition self and co-regulation are in line with the EU better regulation agenda (for further details, see the sub-section on Coherence).

Efficiency

It is not possible to assess efficiency as such given that there is no obligation to the use self and co-regulation in the AVMSD. The efficiency of self and co-regulatory systems primarily depends on the way they are designed. The Member States and the industry have the flexibility to design and run self and co-regulatory mechanisms in the way they see it mostly cost-effective and adapted to the market and other circumstances. Indeed, in the 2015 Public consultation, most broadcasters, advertisers as well as the food and drinks sector emphasised the efficiency of self and co regulation in the commercial communications domain.

One quantitative reference that can be given to estimate the costs of administering a co-regulatory scheme is the cost of running the UK co-regulator for on-demand services AT VOD, which is estimated to be 3000 p/a per service provider affiliated. AT VOD itself, in its contribution to the 2015 Public consultation, highlighted the efficiency of co-regulatory systems.

As indicated in the 2nd AVMSD Application report, the majority of regulators exercise monitoring activities only in co-regulatory schemes. In the case of self-regulation, they rely on monitoring by relevant self-regulatory bodies, only few of which report to the regulator in cases of non-compliance. In those Member States where statutory rules were adopted, the monitoring and enforcement activities are carried out regularly by the regulatory bodies.

Based on information regarding self-regulatory initiatives on protection of minors, costs may range between 100 000 Euros (incurred by incurred for a pilot tool developed to inform parents and children on the content of user generated video) and 320 000 Euros (incurred by a major Danish ISP to conduct parental control, website, education and information).

The co-regulatory systems in place for commercial communications in the majority of Member States are either funded by membership fees or a levy system from the industry and their cost ranges from EUR 250 000 to EUR 1 000 000. For HFSS advertising, the self-regulation organisations' secretariats budget currently range from small (with just one to five members of staff and a budget up to EUR 250 000) to large (up to over 100 members of staff with budgets up to and over EUR 1 000 000) and cover the whole advertising field. SROs' secretariats mainly receive the complaints, gather any necessary information about the complainant and evidence of the advertiser in order to prepare the case for jury. These SROs are either funded by membership fees (18 of them) or a levy system (5) from the industry.  617

Coherence

The 2001 White Paper on European Governance 618 recognised the need to develop and improve self- and co-regulation in order to better achieve EU policy objectives. The 2003 Inter-institutional Agreement on better law making 619 defined these two forms of soft law. The importance of soft-law as alternative means of regulation was further recognised in the Commission Communication on Better regulation for Growth and Jobs in the European Union 620 which made it compulsory to consider it as an option in all impact assessments.

In this light, policies supporting self- and co-regulation are coherent with other EU initiatives that are part of the Better Regulation Agenda as well as with existing statutory and self/co-regulatory rules in the domains coordinated by the Directive.

6.Conclusions

The evaluation found that while the AVMSD objectives are still relevant, some of its rules are no longer fit to attain these objectives, primarily due to market developments and changes in viewing patterns.

The AVMSD, namely via its COO approach has been perceived to be an effective regulatory framework by most stakeholders. It seems to have accompanied the development and free circulation of audiovisual media services across the Union. The COO principle has brought legal certainty by subjecting media service providers in the EU to the legislation of one Member State only. By allowing for economies of scale, the COO principle in turn facilitates investment in the media sector 621 . These considerations are valid for both traditional TV broadcasting services and on-demand services. With the last revision, on-demand audiovisual media services have become subject to a harmonised set of rules at EU level and to a single jurisdiction as opposed to multiple, possible diverging, rules and jurisdictions in the EU.

The AVMSD has been partially effective in ensuring a satisfactory and coherent level of consumer protection. While in the first years following its latest revision in 2007, the minimum harmonisation achieved via the AVMSD has allowed the Member States to craft legislation taking into account their cultural and historical sensitivities and addressing the specific challenges they face, there are today a number of concerns as to the effectiveness of the rules on consumer protection.

As a result of changes in viewing patterns, with audiovisual services being increasingly consumed on-demand and online, consumers, in particularly the younger ones, are less protected.

Firstly, all viewers and particularly minors are less protected (specifically from content harmful to them) when watching audiovisual content on video-sharing platforms which are not covered by the AVMSD. Secondly, the lighter rules applicable to on-demand services have resulted in a lower level of cultural diversity in relation to on-demand services. Thirdly, the fragmentation resulting from minimum harmonisation has impaired consumer protection in some domains such as accessibility of services to hearing and visually impaired viewers.

The evaluation also found that self and co-regulatory arrangements may effectively complement the AVMSD in ensuring consumer protection. However, a proper monitoring mechanism and a regulatory backstop are needed.

From a level playing field viewpoint, the Internet services that are not regulated in the AVMSD but are increasingly competing with those regulated in the AVMSD are at a competitive advantage. The competitiveness of broadcasters is undermined by the fact that on-demand services are subject to lighter touch rules. This is particularly evident in the fields of commercial communication and promotion of European works.

The evaluation found that while the AVMSD has enhanced cultural diversity by supporting the promotion, visibility and distribution of European works in the EU, there is scope for enhancing cultural diversity in on-demand services as compared to broadcasting services.

The AVMSD rules, notably through its rules on broadcasting events of major importance for society and short news reports, has contributed to media freedom and pluralism. However, these values may be in danger given the differences in independence and effectiveness of national regulators across the EU. The AVMSD does not require Member States to have in place independent regulators. Yet, regulatory independence both from political bodies and commercial interests is essential to guarantee media freedom and pluralism. In many countries where independence of national regulatory bodies is weak, challenges to media freedom and pluralism over the last years have been reported 622 . This may hamper the effective application of the AVMSD and have a negative impact on pluralism, media freedom and the level playing field.

The increase in the level of harmonisation brought by the AVMSD has contributed to the general and specific objectives of the Directive. Indeed, when the AVMSD objectives were not attained in full, this was in many cases due to fragmentation across the EU caused by insufficient harmonisation. Particularly in light of an increasingly transnational audiovisual media services market, and with the advent of the online world, the issues addressed by the AVMSD require action at EU level.

The AVMSD has to some extent proven to be an efficient regulatory framework. In the context of the REFIT programme, the evaluation identified potential for removing unnecessary regulatory burden and provide simplification specifically of the procedures that support the application of the COO principle (i.e. the criteria determining jurisdiction and the derogation and cooperation procedures limiting freedom of reception and retransmission in specific cases) and the rules on commercial communications applicable to broadcasting services.

The country of origin principle guarantees legal certainty for providers and avoids additional costs linked to compliance with several legislations.. The AVMSD also created to some extent a virtuous circle of business opportunities. For example, by protecting the consumer and taking steps to promote EU works, providers have gained competitiveness or contributed to the competiveness of other industries (e.g. the content industry). Self and co-regulation also proved to be convenient and flexible means to implement the AVMSD rules.

The evaluation also found that the AVMSD is coherent with the general principles of EU law and with other EU legislation and policies. The lack of requirements on the independence of regulators is at odds with the rules in other domains, such as in Telecoms or energy.

Lastly, based on the fact that the quantitative evidence which led to the conclusions on effectiveness and efficiency is limited, the evaluation also found is that an effective system for monitoring the application of the Directive is lacking and it should put in place in the future.

7.Annexes

1.Procedural information concerning the process to prepare the evaluation including stakeholders consultations

2.Synopsis report on the results of the 2015 Public consultation on the AVMSD

3.Figures on market developments and viewing patterns

4.Implementation of the provisions on the promotion of EU works at national level.

5.Implementation of the provisions on protection of minors at national level

6.Implementation of the provisions on commercial communications at national level

7.2nd Application report of the AVMSD

8.Report on Articles 16 and 17 AVMSD (Reports on the promotion of European Works)

9.European Commission's non-regulatory initiatives on a safer Internet for minors

10.Analysis of the results of the data gathering questionnaire to ERGA

11. Effectiveness of self and co-regulation in the context of the implementation of the AVMSD

ANNEX 5 – Executive summary of the “Study on the effectiveness of self-and co-regulation in the context of implementing the AVMS Directive” (SMART 2014/0054)

Objective of the study

This study on the “Effectiveness of self- and co-regulation in the context of implementing the Audiovisual Media Services Directive” has been prepared for the Directorate General for Communications Networks, Content and Technology (DG Connect), of the European Commission. The study has been carried out by Panteia and VVA Europe Valdani, Vicari & Associati, in close cooperation with experts from the European Network for Social and Economic Research (ENSR).

The Audiovisual Media Services Directive (AVMS Directive) aims broadly speaking, to ensure the free circulation of audiovisual services in the Internal Market. As demonstrated by Article 4(7), the AVMS Directive encourages the development of self- and co-regulatory schemes to implement some of its provisions.

Article 4(7) of the AVMS Directive provides that "Member States shall encourage co-regulation and/or self-regulatory regimes at national level in the fields coordinated by this Directive to the extent permitted by their legal systems. These regimes shall be such that they are broadly accepted by the main stakeholders in the Member States concerned and provide for effective enforcement".

The objectives of this study are to provide the Commission with:

1.A general description of the existing self- and co-regulatory structures in the EU Member States, in the selected areas, coordinated by the AVMS Directive.

2.An analysis of the effectiveness of the self- and co-regulatory systems in place and their acceptance by the stakeholders, based on the Principles for Better Self- and Co-regulation.

3.Identification of best practice examples of self- and co-regulation systems in the two selected areas.

The two selected areas are 1) the protection of minors from harmful audiovisual content, and 2) audiovisual commercial communications, in both television broadcasting and in on-demand audiovisual media.

The overall analytical approach adopted was to carry out the assessments by evaluating the schemes using the Principles for Better Self and Co-Regulation 623 , as well as additional enforcement stage criteria regarding complaints resolution and enforcements mechanisms. Criteria for best practices were then used to identify four examples of good practices. The main criteria on which the best practices were selected are effectiveness and stakeholder acceptance.

The information for this study is based on desk research and in-depth interviews with relevant stakeholders at the Member State level. In addition, a large number of European stakeholders from consumer and civil society groups, industry and media associations, media corporations, and interest groups related to regulating audiovisual media, were interviewed.



Overview of self- and co-regulatory schemes

The following tables provide an overview of the self- and co-regulatory schemes identified which focus on regulating audiovisual commercial communications and those which focus on protecting minors from harmful audiovisual content.

In table 1 the self- and co-regulatory schemes which have a primary focus on the protection of children from harmful audiovisual content in both television broadcasting and in on-demand audiovisual media services are presented.

Table 2 presents the self- or co-regulation schemes with a primary focus on commercial communication in both television broadcasting and in on-demand audiovisual media services. This overview also includes codes with focus on advertising towards children, as well as alcohol advertising. Some of the schemes with a primary focus on commercial communications contain a general code and several more specific sub-codes which focus on, for instance, specific products such as alcoholic beverages, tobacco products and certain food products. These sub-codes have not been collected and assessed separately, but as part of the main scheme.

In the Member States that are not included in this table, no relevant self- and co-regulation schemes were identified.

table 1    Self- or Co-regulation schemes with primary focus on protection of minors from harmful audiovisual content in both television broadcasting and in on-demand audiovisual media services

Country

Name Scheme

Germany

Voluntary Self-Monitoring Television

(Freiwillige Selbstkontrolle Fernsehen (FSF))

Italy

Code TV and Minors

(Codice TV e Minori)

Netherlands

Viewing Guide

(Kijkwijzer)

Poland

Code of Good Practice on the Protection of Minors in On-demand Audiovisual Media Services

(Kodeks dobrych praktyk w sprawie szczególowych zasad ochrony maloletnich w audiowizualnych uslugach medialnych na zadanie)

Portugal

Classification of TV programmes

(Classificação de Programas de Televisão (RTP, SIC, TVI))

Agreement on the representation of violence in television

(Acordo sobre a Representação da Violência na Televisão)

Romania

Deontological Code

(Cod Deontologic)

Spain

Code of self-regulation for audiovisual contents and minors

(Codigo de Autorregulacion de contenidos televisivos e infancia)

Note: Due to different definitions of self- and co regulation schemes and different study focus, the schemes identified in this study may vary from other studies.


table 2    Self- or Co-regulation schemes with primary focus on commercial communication in both television broadcasting and in on-demand audiovisual media services

Country

Name scheme

Austria

Advertising Industry Ethics Code

(Ethik-Kodex der Werbewirtschaft)

Annex to the Advertising Industry Ethics Code: Code of conduct of the Austrian broadcaster regarding inappropriate audiovisual commercial communication in connection with children’s programmes and food

(Anhang zum Ethik-Kodex der Werbewirtschaft: Verhaltenskodex der österreichischen Rundfunkveranstalter hinsichtlich unangebrachter audiovisueller kommerzieller Kommunikation in Zusammenhang mit Kindersendungen und Lebensmittel)

Annex to the Advertising Industry Ethics Code: Communication Code of the Austrian Brewing Industry

(Anhang zum Ethik-Kodex der Werbewirtschaft: Kommunikationskodex der österreichischen Brauwirtschaft)

Self-commitment declaration: Resignation of private broadcasters to broadcast commercials interrupting children’s programmes

(Selbstverpflichtungserklärung: Verzicht von Privatsendern auf Unterbrecherwerbung in Kinderprogrammen)

Belgium

Advertising Code of the Advertising Council

(Reclamecode van de Raad voor de Reclame; Code de la publicité du Conseil pour la Publicité)

The Belgium Pledge

Bulgaria

National Ethics Standards For Advertising And Commercial Communication In Bulgaria

(НАЦИОНАЛНИ ЕТИЧНИ ПРАВИЛА ЗА РЕКЛАМА И ТЪРГОВСКА КОМУНИКАЦИЯ В Р БЪЛГАРИЯ)

Croatia

HURA's Advertising Code

(HURA Kodeks oglašavanja i tržišnog komuniciranja)

Cyprus

Cyprus Code of Communication Ethics

(Κυπριακός Κώδικας Δεοντολογίας Επικοινωνίας)

Czech Republic

The Code of Advertising Practice

(Kodex reklamy)

Denmark

Code of Practice for Marketing of Alcoholic Beverages

(Norm for markedsføring af alkoholholdige drikkevarer)

The Code of Responsible Food Marketing Communication

(Kodeks for fødevarereklamer)

Estonia

Responsible commercial communication policy in children’s programmes

(Vastutustundlik reklaamipoliitika lastesaadetes)

Finland

Ethical Code of the Council of Ethics in Advertising

(Mainonnan eettinen neuvosto)

France

Rules of the ARPP

(Règles de l’ARPP)

Germany

Code of conduct of the German Advertising Standards Council

(Verhaltensregeln des Deutsches Werberat)

Greece

Hellenic Advertising Communication Code

(ΕΛΛΗΝΙΚΟΥ ΚΩΔΙΚΑ ΔΙΑΦΗΜΙΣΗΣ – ΕΠΙΚΟΙΝΩΝΙΑΣ (ΕΚΔ-Ε))

Self-Regulation for Commercial Communication of the Hellenic Association of Brewers

(ΕΛΛΗΝΙΚΗΣ ΕΝΩΣΗΣ ΖΥΘΟΠΟΙΩΝ)

Statement of Principles and Self-Regulation Plan

(Δήλωση αυτοδέσμευσης Μελών)

Hungary

The Hungarian Code of Advertising Ethics

(Magyar Reklámetikai Kódex)

Ireland

ODAS Code of Conduct

Code of Standards for Advertising and Marketing Communications in Ireland

Italy

Code of Marketing Communication Self-Regulation Italy

(Codice di atodisciplina della communcazione commerciale)

Lithuania

Lithuanian Ethics Code of Advertising

(Lietuvos reklamos etikos kodeksas)

Luxembourg

Deontological Code of Advertising in Luxembourg

(Code de déontologie de la publicité au Luxembourg)

Netherlands

Dutch Advertising Code

(Reclamecode)

Poland

Television Broadcasters’ Agreement on the rules of distributing Advertisements and Sponsor Recommendations regarding foodstuffs or beverages containing ingredients whose presence in excess amounts in the daily diet is not recommended

(Porozumienie nadawców w sprawie zasad rozpowszechniania Reklam i Wskazan sponsorskich dotyczacych artykulów spozywczych lub napojów zawierajacych skladniki, których obecnosc w nadmiernych ilosciach w codziennej diecie jest niewskazana)

Code of Ethics in Advertising

(Kodeks Etyki Reklamy)

Portugal

ICAP conduct code

(Código de conduta do ICAP)

Romania

The Code of Advertising Practice

(Codul de practica in publicitate)

Slovak Republic

The Ethics Code of Advertising Practice

(Etický kodex reklamnej praxe)

Slovenia

Slovenian Code of Advertising Practice (SCAP)

(Slovenski oglaševalski kodeks)

Spain

AUTOCONTROL Advertising Code of Conduct

(Código De Conducta Publicitaria de AUTOCONTROL)

Sweden

The Swedish Advertising Ombudsman

(Reklamombudsmannen (RO))

United Kingdom

Broadcast Committee of Advertising Practice Code (BCAP Code)

The Committee of Advertising Practice Code (CAP code)

Note: Some of the schemes with the primary focus on commercial communication contain a general code and several sub-codes which focus on specific products such as alcoholic beverages, tobacco products and certain food products. These sub-codes have not been collected and assessed separately, but as part of the main scheme.

One of the first general observations made was that in general there is much more statutory regulation in place and consequently less self- or co-regulation for the protection of minors from harmful content audiovisual media. Protecting children across sectors is an important policy objective, and in the audiovisual media sector this observation is supported by the higher levels of governmental regulation. The vast majority of countries have self –or co-regulatory schemes in place for audiovisual commercial communications. The advertising codes of conduct differ in the level of detail in their rules and in their emphasis.

Assessing the self- and co-regulatory schemes

Based on the assessments carried out for the self- and co-regulatory schemes in place in the EU Member States, a criterion based analysis was carried out. The key results from this analysis are summarised below. The analysis follows the Principles of Better Self- and Co-Regulation which examines criteria regarding the conception and the implementation of schemes respectively, as well as the three additional enforcement stage criteria. These criteria are complaints resolution mechanisms, the outcomes of these complaints resolution mechanisms, and the sanctions used to enforce compliance with schemes.

Conception

Participants

Principles for Better Self- and Co- Regulation definition:

Except in cases where the competitive nature of an initiative makes this inappropriate, participants should represent as many as possible of potential useful actors in the field concerned, notably those having capacity to contribute to success.

Good approaches for this criterion centre on a balanced representation of stakeholders. Ideally therefore consumer and civil society groups should be included in the conception of a self- or co-regulatory scheme along with the relevant industry and regulatory stakeholders.

The data collected for this study demonstrates that in most cases, the relevant private and business sectors were well represented. Media and broadcasting companies and advertising companies alike were almost always involved, with regulators also being present in many cases. However, the findings show that consumer and civil society groups were often not represented in the development of the majority of the schemes.

Openness

Principles for Better Self- and Co- Regulation definition:

Envisaged actions should be prepared openly.

The preparatory phase should include the involvement of any interested parties: public authorities, enterprises, legislators, regulators and civil society. Public authorities should be ready to convene, moderate or observe, as most helps the process and is deemed appropriate.

The initial blueprint, or "concept agreement", for any action should be multi-stakeholder and developed in a concerted and collaborative way involving open exchange between interested parties. (some text omitted from overview).

The definition for “openness” recommends an open and transparent approach to developing a self- or co-regulatory scheme. All participants should be involved and in a collaborative way.

There were rarely cases where participating stakeholders felt excluded or that information was being withheld (for whatever reason) during the development stage. While the end product, the final self- or co-regulatory scheme, was usually available online, or at least to signatories of the scheme, documentation of the development process was rarely available. Although there were some exceptions to this, the predominant approach in developing self- and co-regulatory schemes was that the group of stakeholders involved was relatively closed.

Good Faith

Principles for Better Self- and Co- Regulation definition:

Participants of different sizes and types have different contributing capacities. The different capabilities of participants, including the situation of SMEs, and smaller non-profit organisations, should be taken into account when designing the envisaged action.

Participants should bring to the preparatory process all information available to them that can contribute to a full analysis of the situation. Similarly, in launching an action, participants should ensure that their activities outside the action's scope are coherent with the aim of the action.

Both in developing and in executing self- and co-regulatory actions, participants are expected to commit real effort to success. They retain the possibility to withdraw, should the action fail to reach the agreed objectives.

Good faith as a criterion is based on the idea that participants make real efforts to commit to the scheme, according to their varying capabilities in a manner coherent with the goals of the scheme.

In practice, discovering whether real effort or commitment was made by the participants involved was somewhat difficult as the exact capacities of each stakeholder involved was not known. In some cases this was because schemes have been in existence for some time already (decades in many cases), and the details of the development of a scheme were not recalled. However, in general, based on the data collected there was no indication that the stakeholders involved felt disrespected or not taken seriously.

Objectives

Principles for Better Self- and Co- Regulation definition:

The objectives of the action should be set out clearly and unambiguously. They should start from well-defined baselines, both for the issue on which change is being pursued and for the commitments that participants have made. They should include targets and indicators allowing an evaluation of the impact of the action undertaken.

In most cases a general policy goal or objective was provided as the guiding principle for a scheme. The objectives criterion however indicates that SMART formulated objectives should be developed, including targets and indicators to monitor and evaluate the performance. In few cases were objectives developed with specifically developed targets and indicators.

Legal compliance

Principles for Better Self- and Co- Regulation definition:

Initiatives should be designed in compliance with applicable law and fundamental rights as enshrined in EU and national law. Participants are encouraged to have recourse to existing guidance provided by public authorities. In case of doubts, an assessment clarifying, inter alia, impact and complementarity with the acquis and with the Charter of Fundamental Rights should be conducted.

Legal compliance according to the definition above is upheld in the vast majority of the schemes. In most cases, the national regulatory approach is in compliance with European and national legal frameworks, and a large number of schemes are based on or connected with a specific law.

Implementation

Iterative improvements

Principles for Better Self- and Co- Regulation definition:

Successful actions will usually aim for a prompt start, with accountability and an iterative process of "learning by doing". A sustained interaction between all participants is required. Unless the action covers a short time-span, annual progress checks should be made, against the chosen objectives and indicators, as well as any available broader background data.

A number of schemes do not have any systems for iterative improvements in place. This lack of a systematic process for implementing improvements is in part related to the system of monitoring and evaluation in place for a scheme. Monitoring and evaluation provide feedback on the performance of a scheme.

Despite iterative processes not being universally implemented, this is not to say that they are lacking entirely. A common trend amongst those schemes with a system for making improvements is the use of consumer complaints as an indicator for compliance, as well as for identifying key areas of non-compliance. Other approaches include regular meetings with stakeholders to discuss the performance of a scheme and areas that are not regulated properly in the scheme. Although in many cases there are processes for identifying improvements or new areas of focus, these were not always carried out systematically or made explicit.

Monitoring

Principles for Better Self- and Co- Regulation definition:

Monitoring must be conducted in a way that is sufficiently open and autonomous to command respect from all interested parties. Each participant shall monitor its performance against the agreed targets and indicators. Monitoring results are shared by each actor for discussion with the participants as a whole, and are made public. A monitoring framework or template will be commonly agreed. The results of the monitoring will be aggregated where possible. This should be done in a way that is transparent and objective.

The requirements sketched above for an appropriate monitoring system, according to the Principles for Better Self- and Co-Regulation, were in most cases not implemented fully in the schemes identified. There is often no system in place which specifically monitors the scheme objectives, and indicators and targets are often missing. However, in most cases the schemes do have a form of monitoring in place, usually based on a complaints system. Complaints are often taken as the main indicator for the achievement of a scheme’s objective(s).

Evaluation

Principles for Better Self- and Co- Regulation definition:

Evaluation will allow participants to assess whether the action may be concluded, improved or replaced. The participants regularly and collectively assess performance not only against output commitments, but also as to impact. This should identify any short-fall in expected collective impact, any scope to improve the efficiency or effectiveness of the action, and any other desirable improvements.

Few evaluation systems were in place which undertook regular assessments of the scheme, its performance, possible areas for improvement, as well as its broader impact. The fact that such formalised evaluation mechanisms are not common appears to be related in part to the lack of explicit and operationalised objectives with appropriate indicators and targets. The lack of a formal evaluation of a scheme also has other causes; in some cases there simply was not enough budget available for an evaluation. In other cases the schemes were designed and implemented some time ago, before the need for systematic evaluations was a prevalent part of policy making, or because the culture of evaluation is less established in a country.

Resolving disagreements

Principles for Better Self- and Co- Regulation definition:

Disagreements inevitably arise involving either participants or others. As part of the iterative process of improvement, such disputes should receive timely attention, with a view to resolving them. These procedures may be confidential.

In addition, complaints by non-participants should be submitted to a panel of independent assessors which consist of majority of non-participants. The outcome of their work is made public. Non-compliance should be subject to a graduated scale of sanctions, with exclusion included and without prejudice to any consequences of non-compliance under the terms of the Unfair Commercial Practices Directive.

In most of the schemes, there is a system for resolving disagreements, specifically a complaints resolution system. Systems for resolving complaints from participants in the scheme were not always present or formalised. In those cases with more formalised systems for resolving disagreements the basic process for handling complaints is the same for external (consumer) and internal (participant) complaints. In the schemes where a complaints systems for non-participants is in place, there is also usually an adjudicating body in place for assessing and ruling on complaints. The composition of these adjudicating bodies is quite varied. Industry representatives tend to be present in the large majority of these bodies, with varying representation of regulators, legislators, independent experts, or consumer or civil society actors.

Financing

Principles for Better Self- and Co- Regulation definition:

Participants to the action will provide the means necessary to fulfil the commitments. Public funders or others may in addition support the participation of civil society organisations lacking fully adequate means themselves to play their appropriate role. Such financial support should be made publicly known.

In many cases membership fees are the main source of financing. Some schemes receive government support. Offering services to participants of schemes for payment is also a source of financing for a number of self- and co-regulatory schemes. The provision of a copy advice for an advertisement for instance, can be an extra source of finance, as can the classification of a programme according to a classification system. Sanctions can also form a source of finance. A practice which is considered to be quite effective when financing schemes on commercial communications is the use of industry wide fees for participating advertisers and media companies. A proportionality element in determining the level of fees to be paid ensures fair contributions from the participants of the scheme.

Additional enforcement stage assessment criteria

Besides the Principles for Better Self- and Co-Regulation, additional enforcement stage criteria were used when assessing the self- and co-regulatory schemes. These criteria concern complaints resolution mechanisms, outcomes of complaints resolution, and sanctions.

Complaints resolution mechanisms

Consumer complaints resolution mechanisms are examined based on several aspects. These include the number of complaints received and their resolution and, ideally, the promptness of the compliance decisions made.

The information collected on the self- and co-regulatory schemes show that complaints are not always recorded with the same level of detail. In some cases, complaints resolution mechanisms are simply not a priority to implement more fully. This could be because compliance with the rules in place are generally high and no real need is felt to implement a complaints resolution system, or because only a few complaints are received. The number of complaints received is something of an ambiguous indicator; the reasons for the low number of complaints could be a favourable indication of high compliance but also an indication of low knowledge of the scheme amongst the public.

In most cases, complaints received are recorded and the number of complaints resolved is recorded as well. In many cases the information regarding complaints did not go into further detail beyond what was received and resolved; information on the sector or product group concerned, the nature or basis of the complaint, and the nature of the outcome or decision is not always recorded.

Outcomes of complaints mechanisms

This criterion examines the outcomes of the complaints resolution mechanisms. The understanding adopted here centres on the satisfaction with the complaints procedure, and whether the procedure contributes to better overall compliance with the rules of the self- or co-regulatory scheme in place.

The satisfaction with the complaints procedure is not often measured specifically. In those cases, the rate of resolution (number of complaints received versus number of complaints solved) is sometimes used as an indicator for the performance of the complaints resolution mechanism. In a similar vein, in some schemes the number of appeals made against an adjudicating body’s decision is used as an indicator of the outcome of the complaints system. The number of appeals is thought to provide insight into the level of satisfaction with the system.

An important point regarding complaints and satisfaction is that complaints made are first judged for their suitability. If the complaint does not have a good foundation, is missing information, or concerns something which does not breach the scheme in place, then no action is taken against and advertiser or broadcaster. From the perception of a complainant this can feel unsatisfactory. When examining statistics on complaints and satisfaction with their resolution, the number of complaints received, those which are accepted, and those which are ultimately resolved should all be considered.

Though dismissing a complaint due to lack of foundation could lead to an unsatisfied feeling for the complainant, sharing the response of the adjudicating body concerning the complaint can be very useful. By providing both parties involved in a complaint procedure with the reasoning for the decision, both parties can understand the reasoning behind the decision and this can improve consumer satisfaction. In the case of consumers this means that in many cases, consumers feel heard and not as though their complaints have fallen on deaf ears.

Sanctions

For this criterion, the presence and nature of sanctions and their enforcement are examined. Graduated sanctions which maintain an element of proportionality with the breach in compliance are usually considered to be an effective approach in enforcing a scheme. However, the nature of sanctions which are deemed appropriate by the industry and civil communities are quite culturally determined. The element of proportionality concerning breaches in compliance and the sanctions for these breaches is important here.

The types of sanctions which can be applied include the request for an adjustment of the audiovisual content or advertisement, naming, shaming and faming, exclusion from membership from a scheme or association, sanctions or fines, the withdrawal of the audiovisual content or suspension of the advertisement, or notifying public authorities to implement further judicial sanctions. In most cases, especially in schemes with less collaboration between private and public organisations, naming, shaming and faming are common enforcement instruments. This is largely due to the importance of reputation and a good public image; undermining this can be very damaging to a company or broadcaster.

Best practices selected

Based on the criteria of stakeholder acceptance and effectiveness respectively, four best practices are selected for this study. The practices selected scored well during the assessment on the criteria for stakeholder acceptance and effectiveness; however within this selection, two scored especially well on the former and two scored especially well on the latter criterion. A representative collection of best practices was sought which structured the protection of minors from harmful audiovisual content and those which regulated audiovisual commercial communications. The best practices are presented in table 3 below.

table 3    Best practices selected

Strong in overall Effectiveness

Strong in Stakeholder Acceptance

Scheme regulating audiovisual commercial communications

The Committee of Advertising Practice Code (CAP code), United Kingdom

National Ethics Standards for Advertising and Commercial Communication, Bulgaria

Scheme on protecting minors from harmful audiovisual content

Code of self-regulation for audiovisual contents and minors, Spain

Kijkwijzer, Netherlands

The Committee of Advertising Practice Code (CAP code), United Kingdom

The Office of Communications (Ofcom) together with the private self-regulator for advertising communication, the Advertising Standards Authority (ASA), are the main initiators of the establishment of the Committee of Advertising Practice (CAP) Code. The objectives of the scheme are ultimately to make every advertisement shown in the UK responsible in order to protect consumers, notably children, and to improve the quality and trust in the advertising industry. The CAP is part of the ASA, which regularly revises its targets, and has quantitative and qualitative indicators in place to monitor the scheme’s performance.

Every quarter, the ASA reports on its performance indicators to Ofcom. In addition, the ASA and the CAP publish an annual statement regarding the progress made towards achieving its objectives and targets. Complaints are generally handled by the ASA, which has produced a set of specific procedures governing the process. The ASA Council serves as an independent jury that is solely responsible for deciding if the Advertising Codes have been breached. There are several sanctions which can be employed by the ASA in different types of breaches with the CAP Code.

Code of self-regulation for audiovisual contents and minors, Spain

The scheme is initiated by the Ministry of Industry, Tourism and Trade with four major television networks. The aim of scheme is to promote further control over television contents and particularly to avoid harmful content reaching children. The development of the scheme involved public authorities, industries, consumers and civil society groups. The scheme participants are the companies which produce television contents, and professionals of the information technology sector. The Code constitutes a classification system based on different age groups and programme contents. The Code includes a process for monitoring the application, where representative organisations of youth and children, of parents and educators, and of consumers and users are involved through the monitoring bodies. Although regular evaluations are carried out of the number of complaints received, the evaluations do not appear to cover progress of the scheme achieving its policy goals or its objectives. There are two monitoring organisations. The first is the Self-Regulation Committee (SRC) consisting of representatives from television networks. This body receives complaints from consumers and members alike and makes a ruling on the complaint. The second is the Joint Monitoring Commission (JMC) which then checks the complaint and ruling made by the SRC and in case of a breach, contact the SRC.

National Ethics Standards for Advertising and Commercial Communication, Bulgaria

The Code for National Ethics Standards for Advertising and Commercial Communication (henceforth, the Code), was initiated by the National Council for Self-regulation (NCSR). The Code is intended to promote responsibility and good practices in advertising and marketing communications in Bulgaria. The Code was developed in 2009 based on the ICC’s Consolidated Code of Advertising and Marketing Practices. It took the specifics of the advertising industry in Bulgaria into account, as well as recommendations from the advertisers, advertising agencies and media service providers. The content of the Code was consulted on with all relevant state authorities, including the state Council of Electronic Media (CEM) and the State agency for child protection (SACP).

The Committee for Post-Monitoring (CPM) is responsible for the monitoring. It has two main functions, monitoring the execution of the decisions issued by the Ethical Committee (EtC) or the Appeal Committee (AC), and monitoring advertising and commercial communications. According to the NCSR statutes, the decisions of the EtC or the AC are binding for the NCSR members.

Kijkwijzer, Netherlands

The Kijkwijzer is a code developed by the advertising industry in the Netherlands. The Kijkwijzer is a classification system for programmes on television. The Institute for the Classification of Audiovisual Media (NICAM) is the code owner of the Kijkwijzer. The objective is to promote the provision of information regarding the potential harmfulness of audiovisual products towards young people. It aims to do so by regulating the audiovisual sector itself by means of a classification system for programmes. NICAM itself also performs regular quality assessments of compliance with the rules. In addition, it regularly tests consumer perception and the use of the Kijkwijzer. The Media Authority (Commissariaat voor de Media) uses the results for the yearly evaluation of NICAM. The results of these evaluations are included in a letter to the government. These letters are also published on the website of the Media Authority. NICAM and the Kijkwijzer are evaluated every year by the Media Authority.

ANNEX 6 - Main developments affecting the EU market for audiovisual media services

The overall size of the European audiovisual sector in 2014 was around EUR 105.790 million 624 . This implies an increase of 0.9% as compared to 2010. This increase primarily comes from on-demand audiovisual media services, whereas physical video registered a significant decrease.

The market is evolving. Connected Smart TVs in 21 EU markets 625 have moved from about 5 million installed devices at the end of 2011 to more than 39 million in 2014 and are foreseen to reach the level of almost 118 million in 2018 626 . In the same markets, the overall number of connected devices increased from 590 million in 2011 to 935 million in 2014 and is expected to reach almost 1,3 billion in 2018 627 . 

Audiovisual content is increasingly offered by new players. The number of Internet-based, OTT and VoD television providers targeting EU viewers has increased. In 2014, almost 2 563 VoD services were established in Europe, including catch-up TV services of broadcasters (932 services), branded channels on open platforms (408 services), VoD services providing access to a catalogue of programs (1 126 services) and news portals (97 services). The UK is the Member State hosting the largest number of VoD services (about 515), followed by France (412) and Germany (274) 628 .

Providers of video streaming services, including from third countries, have entered the market. Sometimes, they fall outside the EU jurisdiction because they are established abroad or because they offer new services that fall outside the definition of audiovisual media services laid down in the AVMSD. Internet platforms and social media (Facebook, Snapchat, Twitter) are increasingly offering, along other types of content, audiovisual material either uploaded by the users (User-Generated-Content, UGC), by themselves or by advertisers. This type of audiovisual content falls outside the scope of the AVMSD because it is not editorial (for UGC) or because, despite being editorial, it is offered by a platform whose principal purpose is not to offer audiovisual services. 47% of Europeans now use them at least once a week, i.e. +3 percentage points versus autumn 2013 and +12 versus autumn 2011. Almost a third of Europeans use social networks every day or almost every day (32%, +2 versus autumn 2013 and +12 versus autumn 2011). 2014 eurobarometer three-quarters of Europeans in the 15-24 age group use social networks every day or almost every day (75%), compared with 50% of 25-39 year-olds, 27% of 40-54 yearolds and 8% of those aged 55 or over; The daily or near-daily use of online social networks is particularly widespread in Denmark (55%), Sweden (53%) and the Netherlands (48%). It is less prevalent in Poland (24%), Germany (24%) and the Czech Republic (24%).

While TV viewing is still strong, viewers - particularly minors - increasingly consume content online.

The average TV viewing time for the whole EU population in 2013 was 223 minutes per day 629 . However, viewing habits differ widely among Member States. In some countries, like Austria, Finland and Sweden these numbers are lower: 2:42, 2:56 and 2:33 minutes per day respectively. In countries like Romania, Portugal and Hungary the viewing time reaches 5:42, 4:56 and 4:49 minutes per day respectively.

Since 2012, television viewing has reached a plateau in average in the European Union. As time-shifted television viewing has been increasingly included in television audience measurement, this stability implies that live television viewing has declined 630 .

Europeans predominantly watch television on a TV set (94% at least once a week, -1 percentage point). Although Europeans are far less likely to watch television over the Internet, this practice continues to gain ground: 20% of Europeans watch television online at least once a week (+2% versus autumn 2013 and +3% versus the EB78 report of autumn 2012). Europeans in the 15-24 age group are the most likely to watch television via the Internet: 40% do so at least once a week. We note that the proportion of respondent who watch television via the Internet decreases gradually with age: 26% of 25-39 year-olds, 18% of 40-54 year-olds and 8% of those in the 55-plus age group watch television via the Internet at least once a week. Watching television via the Internet is particularly widespread in Sweden (48% do so at least once a week) and Finland (39%), but less so in Bulgaria (11%), Greece (12%) and Portugal (12%) 631 .

Television is the most frequently used source of European political news by all age groups, but respondents in the 55+ age group are the most frequent users of this medium (83%);

Audiovisual content consumption is increasingly moving online: According to IHS research firm, total on demand consumer revenues in the 28 European countries soared from EUR 919 million in 2010 to EUR 2.5 billion in 2014, an of 272% increase and a Compound Annual Growth Rate (CAGR) in the 5 year period of 28% 632 .

A recent Eurobarometer 633  report shows that as of August 2015 59% of EU internet users had accessed or downloaded audiovisual content at least once in the past 12 months, in particular the young (80%). 30% of them had paid for that content.

Younger viewers 634 watch about half less than television than the aver-age viewer:. Their average TV viewing in 2014 was 2:03 minutes per day. Also in this case, viewing patterns differ from country to country: in Slovenia, Finland and Sweden, for the age group 15-24, the viewing time is at 1:24, 1:17, 1:12 minutes per day, respectively. In Romania, Portugal and Hungary it remains at rather high levels: 3:34, 3:45 and 2:44 minutes per day, respectively. A key factor behind the decline of TV viewing on TV sets is the rapidly growing population of portable screens like smartphones and tablets.

Video viewing is now one of the earliest Internet activities carried out by young children. For example, YouTube is the second favourite site for children under 5 in the UK (Childwise, 2012).

According to the preliminary draft study report [not yet published] on "The exposure of minors to alcohol advertising on linear and non-linear audio-visual media services and other online services", amongst minors aged 4-17, watching video clips is the second-most prevalent online activity (reported by 61% of the surveyed) after listening music and watching films and cartoons.

99% of minors surveyed responded that YouTube is the online service they use the most to watch video clips while Netflix is the second most commonly used service among these age groups for that purpose (40.2% and 30.7% of minors in 14-17 and 9-13 age groups respectively indicated that they visit this online service).

Audiovisual content is increasingly offered in innovative (namely shorter) formats. Mobile video traffic grew to 55% by the end of 2014 635 . It is estimated that nearly 3/4 of the world’s mobile data traffic will be video by 2019 636 . Presently, 400 hours of video are uploaded to YouTube every minute (see 2.1.2).

Also, according to the EAO Study on measurement of fragmented European audiences, while the number of videos viewed tend to increase, the time spent on one given video tend to slightly decrease in certain countries (for example, the number of minutes spent on a video has decreased in all countries from a sample analysed by ComScore, from -5% in the Netherlands, to -36% in Italy.)

Online advertising is increasingly prominent and is set to overtake TV advertising. While TV remains the preferred media for advertising (32% of the market), the Internet is likely to become the main advertising platform within the next two years, given its rapid development (+8,4% vs. 2012) and the market share already captured in 2013 (27,4%) 637 .

In 2014, Internet advertising spend was higher than TV advertising spend in a number of EU countries: CZ, DE, DK, NL, SE, UK.

According to the EAO Study on online advertising in the EU 638 , the total size of the online advertising market in the EU in 2013 was €27.2 billion, an increase of 11.6% compared to the total of €23.2 billion in 2013. On the other hand, television advertising in the EU lost in 2013 more than EUR 300 million out of EUR 27.748 million overall investments (-1,1% vs. 2012) 639 .

According to the EAO, online drives the advertising market: the global European advertising market modestly grew of 1.4% in 2014. Without online ad spend, the market would have decreased by -2.4%.

In Europe, online display advertising is the most dynamic form of advertising (+14,9% investments 2013/2012) and captured 33,8% (about EUR 9,2 billion) of all online advertising in 2013. Video ads account for 16% of online advertising.

There are asymmetries in content offerings and financing. The emergence of new players, primarily offering services on-demand, paired with viewers increasingly moving online, has an impact on content offerings and financing.

The year 2014 witnessed the closing of local/regional channels in the EU (-14,1% in 2014 vs. 2013). However, national and international TV channels (targeting other Member States and/or third countries) continued to develop (+7,4% vs. 2013).

EU TV channels are increasingly internationally oriented: in 2013, 1 989 TV channels established in the EU targeted other Member States and third countries (+ 24,6% vs. 2012) and represented 42% of the total national and international channels established in the EU (19,3% in 2012) 640 .

Within this transnational market though, the established EU broadcasting market is increasingly facing competition of on-demand providers, some of which are not established in the EU.

Netflix and Amazon Prime, increasingly prominent in the EU market also at the expenses of established European broadcasters, invest in original content. However that is not necessarily European content.

Netflix expects to invest nearly $5bn on acquired and original content in 2016 with a progressively increasing trend over the next years. In 2015 Netflix is expected to debut at least 48 originals. They also announced series shot in the EU, like Marseille or The Crown. This latter is however a marketing effort that is not related to contribution to the production of European content. Amazon announced that it will invest more than $100 million in the third quarter of 2015 to produce original content globally.

EU broadcasters counterbalance this trend. In 2009, they invested around 1 / 3 of their revenues in EU quality content. In that year, out of the EUR 34,5 billion programme spend in the EU by broadcasters approximately EUR 15,6 billion was spent on acquiring rights, EUR 5,8 billion on sports rights and EUR 9,8 billion on film and TV acquisitions.

ANNEX 7 - Comparative table of services that may be qualified as AVMS – EPRA Survey for 35th EPRA Plenary (31 May – 1 June 2012) updated in 2015 in the ERGA sub-group on material jurisdiction

The table below has been provided to give respondents update a comparative table included in the comparative document prepared for Plenary Session 1 - New Media & Regulation: Towards a Paradigm Shift? New Services and Scope: “What’s in, what’s out Revisited” 641  at the 35th EPRA Plenary in Portoroz on 31 May – 1 June 2012.

The table compared responses to the following question, included in a survey among EPRA’s members to prepare for the plenary session. Please state which services your NRA would TEND to qualify as an AVMS – provide all 7 cumulative criteria of Art. 1.1 (a) of the AVMS Directive are fulfilled.

Please fill out the third and fourth columns with yes or no answers.

Answer

Country (2012)

Please state whether this would tend to be classified as an AVMS in your

country (2015)

Has there been any change since 2012 (Yes/No)

VOD

AT, BA, BE–VRM, BE-CSA, BG, CH, CY, CZ,

DE, DK, FI, HR, HU, IT, LT, LU,

LV, ME, MK, MT, NL, NO, PT, RO, SE, SI,

SK

Yes

No

Catch-up TV

AT, BA, BE-VRM, BE-CSA ES–CAC, CY, DE,

DK, FI, HR, HU, IT, LU, ME, MK, NL, NO,

MT, PT, RO, SI, SK

Yes

No

OTT-TV /connected TV applications

AT, BE-CSA, CY, FI, LU, NL, SI

Yes

No

Professional channels on UGC platforms

AT, BE-CSA, FI, IT, NL, SI

Yes

No

Newspaper websites with searchable video section -

if not merely complementary to the articles

AT, BE-CSA, CZ, DK, FI, LU, LT, ME, NL,

NO, SE, SI

Yes

No

Network personal video recorder services (NPVR)

HU, LU, NO, SK

No

No

Electronic Program Guides (EPG)

CY, HU, LT, LU, ME, PT, RO

No

No

Download to own (DTO) services

BE-CSA, CY, CZ, HU, LU, NL, NO, SK

No

No

Download to rent (DTR) services

BE-CSA, CY, CZ, HU, IT, NL, NO, SK

No

No



ANNEX 8 - Extracts of Community guidelines (as of 10/01/2016) of a sample of Internet platforms whose services do not fall within the AVMSD scope and existing interventions by internet platforms to protect consumers from hate speech and minors from harmful content

1. Extracts of Community guidelines (as of 10/01/2016) of a sample of Internet platforms whose services do not fall within the AVMSD scope

YouTube 642  

Facebook 643

Twitter 644  

Instagram 645

Minimum age to use the service

Children under 13 years are not permitted to set up a YouTube account. Below are the minimum age requirements to own a Google Account:

•United States: 13 or older

•Spain: 14 or older

•South Korea: 14 or older

•Netherlands: 16 or older

•All other countries: 13 or older

Facebook requires everyone to be at least 13 years old before they can create an account (in some jurisdictions, this age limit may be higher).

Twitter's services are not directed to persons under 13.

Via age screening, brands and others to determine online whether a follower meets a minimum age requirement, in a way that is consistent with relevant industry or legal guidelines. This makes it easier for advertisers and others with content not suitable for minors (e.g. alcohol advertisers) to advertise on Twitter.

Instagram requires everyone to be at least 13 years old to use the Service.

Handling of content that may be harmful to minors

Age-restricted content

Some videos don't violate our policies, but may not be appropriate for all audiences. In these cases, minors or logged out users may not be able to view the content.

When evaluating whether content is appropriate for all ages, here are some of the things we consider:

•Vulgar language

•Violence and disturbing imagery

•Nudity and sexually suggestive content

•Portrayal of harmful or dangerous activities

What we consider when age-restricting depictions of graphic or violent content

Whether the video shows scenes containing physical attacks where the injury sustained is bloody or gory.

Whether the video shows the graphic aftermath of a violent act.

Whether the shots of violence or gore are the focal point of the video.

Whether the violence contained in the video is realistic when posted in a dramatic context.

Other factors include:

The length of time an image appears in the video

Fleeting vs. prolonged exposure especially relative to the overall length of the video.

The camera angle and focus

The relative clarity of the images in the video

The video thumbnail

Child endangerment. YouTube has a zero-tolerance policy for sexual content involving minors. Uploading, commenting, or engaging in any type of activity that sexualizes minors will immediately result in an account suspension.

Nudity or sexual content. Sexually explicit content like pornography is not allowed. Videos containing fetish content will be removed or age-restricted depending on the severity of the act in question. In most cases, violent, graphic, or humiliating fetishes are not allowed to be shown on YouTube. A video that contains nudity or other sexual content may be allowed if the primary purpose is educational, documentary, scientific, or artistic, and it isn’t gratuitously graphic. For example, a documentary on breast cancer would be appropriate, but posting clips out of context from the same documentary might not be. Remember that providing context in the title and description will help us and your viewers determine the primary purpose of the video.

Real depictions of graphic or violent content. Increasingly, YouTube is becoming an outlet for citizen journalists, documentarians and other users to publish accounts of what is happening in their daily lives. It is inevitable that some of these videos will contain content that is violent or graphic in nature.

If the violence shown in your video is particularly graphic, please make sure to post as much information as possible in the title and metadata to help viewers understand what they are seeing. Providing documentary or educational context can help the viewer, and our reviewers, understand why they may be seeing the disturbing content.

It’s not okay to post violent or gory content that’s primarily intended to be shocking, sensational or disrespectful. If a video is particularly graphic or disturbing, it should be balanced with additional context and information. For instance, a citizen journalist who captures footage of protesters being beaten and uploads it with relevant information (date, location, context, etc) would likely be allowed. However, posting the same footage without contextual or educational information may be considered gratuitous and may be removed from the site.

Dramatized depictions of graphic or violent content. Some people post videos that contain dramatized depictions of violence. Much like movies and TV, graphic or disturbing content that contains a certain level of violence or gore is not suitable for minors and will be age-restricted.

Harmful or dangerous content. While it might not seem fair to say you can’t show something because of what viewers might do in response, we draw the line at content that intends to incite violence or encourage dangerous or illegal activities that have an inherent risk of serious physical harm or death.

Videos that we consider to encourage dangerous or illegal activities include instructional bomb making, choking games, hard drug use, or other acts where serious injury may result. A video that depicts dangerous acts may be allowed if the primary purpose is educational, documentary, scientific, or artistic (EDSA), and it isn’t gratuitously graphic. For example, a news piece on the dangers of choking games would be appropriate, but posting clips out of context from the same documentary might not be.

Videos that incite others to commit acts of violence are strictly prohibited from YouTube. If your video asks others to commit an act of violence or threatens people with serious acts of violence, it will be removed from the site.

We are very sensitive to any harmful or dangerous content that involves minors. If your video shows a minor participating in a harmful or dangerous activity, do not post it. In the interest of protecting minors, we may age-restrict videos containing adults participating in activities that have a high risk of injury or death.

Nudity. People sometimes share content containing nudity for reasons such as awareness campaigns or artistic projects. We restrict the display of nudity because some audiences within our global community may be sensitive to this type of content – particularly because of their cultural background or age. In order to treat people fairly and respond to reports quickly, it is essential that we have policies in place that our global teams can apply uniformly and easily when reviewing content. As a result, our policies can sometimes be more blunt than we would like and restrict content shared for legitimate purposes. We are always working to get better at evaluating this content and enforcing our standards. We remove photographs of people displaying genitals or focusing in on fully exposed buttocks. We also restrict some images of female breasts if they include the nipple, but we always allow photos of women actively engaged in breastfeeding or showing breasts with post-mastectomy scarring. We also allow photographs of paintings, sculptures and other art that depicts nude figures. Restrictions on the display of both nudity and sexual activity also apply to digitally created content unless the content is posted for educational, humorous or satirical purposes. Explicit images of sexual intercourse are prohibited. Descriptions of sexual acts that go into vivid detail may also be removed.

Violence and Graphic Content. Facebook has long been a place where people share their experiences and raise awareness about important issues. Sometimes, those experiences and issues involve violence and graphic images of public interest or concern, such as human rights abuses or acts of terrorism. In many instances, when people share this type of content, they are condemning it or raising awareness about it. We remove graphic images when they are shared for sadistic pleasure or to celebrate or glorify violence.

When people share anything on Facebook, we expect that they will share it responsibly, including carefully choosing who will see that content. We also ask that people warn their audience about what they are about to see if it includes graphic violence.

Bullying and Harassment.

We don’t tolerate bullying or harassment. We allow you to speak freely on matters and people of public interest, but remove content that appears to purposefully target private individuals with the intention of degrading or shaming them. This content includes, but is not limited to:

Pages that identify and shame private individuals; images altered to degrade private individuals; photos or videos of physical bullying posted to shame the victim; sharing personal information to blackmail or harass people and repeatedly targeting other people with unwanted friend requests or messages. We define private individuals as people who have neither gained news attention nor the interest of the public, by way of their actions or public profession.

Sexual Violence and Exploitation. We remove content that threatens or promotes sexual violence or exploitation. This includes the sexual exploitation of minors and sexual assault. To protect victims and survivors, we also remove photographs or videos depicting incidents of sexual violence and images shared in revenge or without permission from the people in the images. Our definition of sexual exploitation includes solicitation of sexual material, any sexual content involving minors, threats to share intimate images and offers of sexual services. Where appropriate, we refer this content to law enforcement. Offers of sexual services include prostitution, escort services, sexual massages and filmed sexual activity.

We do not tolerate child sexual exploitation on Twitter. When we are made aware of links to images of or content promoting child sexual exploitation they will be removed from the site without further notice and reported to The National Center for Missing & Exploited Children ("NCMEC"); we permanently suspend accounts promoting or containing updates with links to child sexual exploitation.

Violent threats (direct or indirect). Users may not make threats of violence or promote violence, including threatening or promoting terrorism. Users also may not make threats or promote violence against a person or group on the basis of race, ethnicity, national origin, religion, sexual orientation, gender, gender identity, age, or disability.

Abuse and harassment. Users may not engage in targeted abuse or harassment. Some of the factors that we take into account when determining what conduct is considered to be targeted abuse or harassment are:

•if a primary purpose of the reported account is to send abusive messages to others;

•if the reported behavior is one-sided or includes threats;

•if the reported user is inciting others to harass another user; and

•if the reported user is sending harassing messages to a user from multiple accounts.

You may not post violent, nude, partially nude, discriminatory, unlawful, infringing, hateful, pornographic or sexually suggestive photos or other content via the Service.

GENERAL NUDITY 646

Post photos and videos that are appropriate for a diverse audience.

We know that there are times when people might want to share nude images that are artistic or creative in nature, but for a variety of reasons, we don’t allow nudity on Instagram. This includes photos, videos, and some digitally-created content that show sexual intercourse, genitals, and close-ups of fully-nude buttocks. It also includes some photos of female nipples, but photos of post-mastectomy scarring and women actively breastfeeding are allowed. Nudity in photos of paintings and sculptures is OK, too.

NUDITY OF CHILDREN

People like to share photos or videos of their children. For safety reasons, there are times when we may remove images that show nude or partially-nude children. Even when this content is shared with good intentions, it could be used by others in unanticipated ways.

Instagram is not a place to support or praise terrorism, organized crime, or hate groups. Offering sexual services, buying or selling firearms and illegal or prescription drugs (even if it’s legal in your region) is also not allowed. Remember to always follow the law when offering to sell or buy other regulated goods. Accounts promoting online gambling, online real money games of skill or online lotteries must get our prior written permission before using any of our products.

We have zero tolerance when it comes to sharing sexual content involving minors or threatening to post intimate images of others.

Handling of hate speech content

We encourage free speech and try to defend your right to express unpopular points of view, but we don't permit hate speech. Hate speech refers to content that promotes violence or hatred against individuals or groups based on certain attributes, such as:

•race or ethnic origin

•religion

•disability

•gender

•age

•veteran status

•sexual orientation/gender identity

There is a fine line between what is and what is not considered to be hate speech. For instance, it is generally okay to criticize a nation-state, but not okay to post malicious hateful comments about a group of people solely based on their race.

Content Related to Terrorism. YouTube strictly prohibits content intended to recruit for terrorist organizations, incite violence, celebrate terrorist attacks or otherwise promote acts of terrorism. We also do not permit foreign terrorist organizations to use YouTube. Content intended to document events connected to terrorist acts or news reporting on terrorist activities may be allowed on the site with sufficient context and intent. However, graphic or controversial footage may be subject to age-restrictions or a warning screen.

Facebook removes hate speech, which includes content that directly attacks people based on their: race, ethnicity, national origin, religious affiliation, sexual orientation, sex, gender or gender identity, or serious disabilities or diseases. Organisations and people dedicated to promoting hatred against these protected groups are not allowed a presence on Facebook. As with all of our standards, we rely on our community to report this content to us. People can use Facebook to challenge ideas, institutions and practices. Such discussion can promote debate and greater understanding. Sometimes people share content containing someone else's hate speech for the purpose of raising awareness or educating others about that hate speech. When this is the case, we expect people to clearly indicate their purpose, which helps us better understand why they shared that content. We allow humour, satire or social commentary related to these topics, and we believe that when people use their authentic identity, they are more responsible when they share this kind of commentary. For that reason, we ask that Page owners associate their name and Facebook Profile with any content that is insensitive, even if that content does not violate our policies. As always, we urge people to be conscious of their audience when sharing this type of content.

Dangerous Organisations. What types of organisations we prohibit on Facebook.

We don't allow any organisations that are engaged in the following to have a presence on Facebook:

•terrorist activity, or

•organised criminal activity.

We also remove content that expresses support for groups that are involved in the violent or criminal behaviour mentioned above. Supporting or praising leaders of those same organisations, or condoning their violent activities, is not allowed. We welcome broad discussion and social commentary on these general subjects, but ask that people show sensitivity towards victims of violence and discrimination.

Criminal Activity. We prohibit the use of Facebook to facilitate or organise criminal activity that causes physical harm to people, businesses or animals, or financial damage to people or businesses. We work with the police when we believe that there is a genuine risk of physical harm or direct threats to public safety. We also prohibit you from celebrating any crimes that you've committed. We do, however, allow people to debate or advocate for the legality of criminal activities, as well as address them in a humorous or satirical way.

Hateful conduct. You may not promote violence against or directly attack or threaten other people on the basis of race, ethnicity, national origin, sexual orientation, gender, gender identity, religious affiliation, age, disability, or disease. We also do not allow accounts whose primary purpose is inciting harm towards others on the basis of these categories. 

You must not defame, stalk, bully, abuse, harass, threaten, impersonate or intimidate people or entities and you must not post private or confidential information via the Service

Serious threats of harm to public and personal safety aren't allowed. This includes specific threats of physical harm as well as threats of theft, vandalism, and other financial harm. We carefully review reports of threats and consider many things when determining whether a threat is credible 647

Encouraging or urging people to embrace self-injury is counter to this environment of support, and we’ll remove it or disable accounts if it’s reported to us. We may also remove content identifying victims or survivors of self-injury if the content targets them for attack or humor.

Reporting tools

Flagging content. We rely on YouTube community members to flag content that they find inappropriate. YouTube staff review flagged videos 24 hours a day, seven days a week, and videos that violate our Community Guidelines are removed from YouTube. Videos that may not be appropriate for all younger audiences are age-restricted.

Flagged videos are not automatically taken down by the flagging system. If a video doesn't violate our guidelines, no amount of flagging will change that, and the video will stay on the site. You might not like everything you see on YouTube. Some of the content might offend you. If you think it's inappropriate, locate the flagging feature on the video and submit it for review by our YouTube staff.

Our staff reviews flagged videos 24 hours a day, 7 days a week to determine whether they violate our Community Guidelines. When they do, we remove them. Sometimes a video doesn't violate our guidelines, but might not be appropriate for everyone. These videos may get age-restricted. Accounts are penalized for Community Guidelines violations, and serious or repeated violations can lead to account termination. If an account is terminated, that person won't be allowed to create any new accounts.

When we remove content for violating our Community Guidelines, the uploader will typically receive a Community Guidelines strike.

If you receive a Community Guidelines strike, you’ll receive a notification via email and in your Channel Settings with information about why your content was removed (e.g. for sexual content or violence). If you feel that content was removed without just cause, you can appeal the strike on your account.

We understand that users make mistakes, and don’t intend to violate our policies. That’s why strikes don’t last forever -- if you don’t receive another strike for six months, your initial strike will expire. If you receive a strike, make sure to review the reason your content was removed to learn from your mistake. A bit more information about what happens with each strike you receive:

•First Strike: The first strike on an account is considered a warning.

•Second Strike: If your account receives two strikes within a six month period, you won’t be able to post new content to YouTube for two weeks. If there are no further issues, full privileges are restored automatically after the two week period.

•Third Strike: If an account receives a third Community Guidelines strike before the first strike has expired, the account will be terminated.

Sometimes content is removed for other reasons, for example: the safety of the person who posted a video, a first-party privacy complaint, court order, or other non-malicious issue. In these cases the uploader will not receive a strike and the account will not be penalized.

Reporting abuse: If you see something on Facebook that you believe violates our terms, please report it to us. Governments also sometimes ask us to remove content that violates local laws but does not violate our Community Standards. If after careful legal review we find that the content is illegal under local law, then we may make it unavailable only in the relevant country or territory.

Please bear the following in mind:

• We may take action whenever something violates the Community Standards.

• We may ask Page owners to associate their name and Facebook Profile with a Page that contains cruel and insensitive content, even if that content does not violate our policies.

• Reporting something doesn't guarantee that it will be removed because it may not violate our policies.

• Our content reviewers will look to you for information about why a post may violate our policies. If you report content, please tell us why the content should be removed (e.g. is it nudity or hate speech?) so that we can send it to the right person for review.

• Our review decisions may occasionally change after receiving additional context about specific posts or after seeing new, violating content appearing on a Page or Facebook Profile.

• The number of reports does not impact whether something will be removed. We never remove content simply because it has been reported a number of times.

• The consequences for violating our Community Standards vary depending on the severity of the violation and the person's history on Facebook. For instance, we may warn someone for a first violation, but if we continue to see further violations we may restrict a person's ability to post on Facebook or ban the person from Facebook.

Not all disagreeable or disturbing content violates our Community Standards. For this reason, we offer you the ability to customise and control what you see by unfollowing, blocking and hiding the posts, people, Pages and applications you don't want to see – and we encourage you to use these controls to better personalise your experience. People also often resolve issues they have about a piece of content by simply getting in touch with the person who posted it. We've created tools for you to communicate directly with other people when you're unhappy with posts, photos or other content you see on Facebook.

What should I do if I see images on Facebook of a child being physically abused?

You can report directly from an individual Tweet or profile for certain violations, including: spam, abusive or harmful content, inappropriate ads, self-harm, impersonation, child sexual exploitation, pornography,

Once you have submitted your report, we will review the reported account and/or Tweets. If we determine that the account and/or Tweets are in violation of our policies, we will take action (ranging from warning the user to permanently suspending the account).

Each of us is an important part of the Instagram community. If you see something that you think may violate our guidelines, please help us by using our built-in reporting option . We have a global team that reviews these reports and works as quickly as possible to remove content that doesn’t meet our guidelines. Even if you or someone you know doesn’t have an Instagram account, you can still file a report .

You may find content you don’t like, but doesn’t violate the Community Guidelines. If that happens, you can unfollow or block the person who posted it. If there's something you don't like in a comment on one of your posts, you can delete that comment .

We may work with law enforcement, including when we believe that there’s risk of physical harm or threat to public safety.

Accounts termination

Reasons accounts are terminated:

•Repeated violations of the Community Guidelines or Terms of Service

•A single case of severe abuse (such as predatory behavior or spam)

•Accounts dedicated to a policy violation (hate speech, harassment, impersonation, etc)

When an account violates our abusive behavior policy, the actions we take against that account depend on the severity of the violation. We may ask users to verify or provide information, delete specific Tweets, or we may suspend or lock the account temporarily or permanently.

Violation of these Terms of Use may, in Instagram's sole discretion, result in termination of your Instagram account. You understand and agree that Instagram cannot and will not be responsible for the Content posted on the Service and you use the Service at your own risk. If you violate the letter or spirit of these Terms of Use, or otherwise create risk or possible legal exposure for Instagram, we can stop providing all or part of the Service to you.

We reserve the right to modify or terminate the Service or your access to the Service for any reason, without notice, at any time, and without liability to you.

If we terminate your access to the Service or you use the form detailed above to deactivate your account, your photos, comments, likes, friendships, and all other data will no longer be accessible through your account (e.g., users will not be able to navigate to your username and view your photos), but those materials and data may persist and appear within the Service (e.g., if your Content has been reshared by others.

We may, but have no obligation to, remove, edit, block, and/or monitor Content or accounts containing Content that we determine in our sole discretion violates these Terms of Use.

Ads policy

All advertisements on YouTube must conform to our Community Guidelines, Technical Guidelines, and Advertising Policies described in this section and be appropriate for a general audience of YouTube users aged 13 or older. 648

All advertisements sold in the YouTube Kids app must comply with the additional advertising policies 649 .

Except for the First Watch ad products, YouTube allows alcohol advertising that promotes the branding and sale of alcohol with some restrictions (described in more detail below). Campaigns may only target countries where these ads are permissible under applicable laws and regulations and all ads must comply with local restrictions. 650

All Pharmaceutical campaigns or programs must adhere to the AdWords policies around the advertisement or sale of prescription drugs in the country where the ad is targeted. All pharmaceutical ads must be clearly branded under the manufacturer's name and must comply with all regulatory and legal guidelines applicable to the advertiser.

Pages promoting the private sale of regulated goods or services (including firearms, alcohol, tobacco, or adult products) must restrict access to a minimum age of 18.

Pages that promote or facilitate online gambling, games of skill or lotteries, including online casino, sports books, bingo, or poker, are only allowed in specific countries with prior authorization from Facebook.

Pages must not promote the sale of prescription pharmaceuticals. Pages for online pharmacies may be permitted with prior approval from Facebook. 651

Twitter restricts the promotion of online and offline sale of alcohol and general awareness of alcohol brands. These restrictions are based on the specific product or service being promoted, as well as the country that the campaign is targeting.

To determine the policy for your product or service and the country or countries you wish to target, see the country-specific information below. Unless listed below, the promotion of alcohol content is prohibited.

Any advertisement for alcohol content that is allowed under the country-specific information below must in addition:

not target minors or encourage, suggest, or entice underage drinking

not use characters, sports-persons, celebrities, or images/icons appealing to minors

not use minors or pregnant women as models in advertising

not imply that drinking in excess is good, or that alcohol has therapeutic, relaxing or stimulative properties

not imply that alcohol has health benefits, can improve sexual, social, athletic or professional performance or standing

not mislead or confuse users into thinking alcoholic beverages are soft drinks or candy

not associate drinking with activities that are potentially dangerous, require significant care, skill, etc. (e.g., driving a motor vehicle), or are antisocial or illegal (e.g., illegal drugs)

not depict people under the influence of alcohol

not emphasize a product’s alcoholic strength (promoting a product as having low or no alcohol content is acceptable)

Twitter prohibits the promotion of drugs and drug paraphernalia globally

Twitter prohibits the promotion of tobacco brands and the online and offline sale of tobacco and tobacco accessories globally.

Twitter prohibits the promotion of hate content, sensitive topics, and violence globally.

This policy applies, but is not limited, to:

• Hate speech or advocacy against an individual, organization or protected group based on race, ethnicity, national origin, color, religion, disability, age, sex, sexual orientation, gender identity, veteran status or other protected status.Violence or threats of violence against people or animals

 

• Glorification of self-harm or related content

 

• Organizations or individuals associated with promoting hate, criminal, or terrorist-related content

 

• Inflammatory content which is likely to evoke a strong negative reaction or cause harm.

 

•Offensive, vulgar, abusive or obscene content

This policy generally does not prohibit:

•News and information that calls attention to hate, sensitive topics, or violence, but does not advocate for it

•Commentary about products, services, companies, or brands, including potentially negative commentary

There may be links from the Service, or from communications you receive from the Service, to third-party web sites or features. There may also be links to third-party web sites or features in images or comments within the Service. The Service also includes third-party content that we do not control, maintain or endorse. Functionality on the Service may also permit interactions between the Service and a third-party web site or feature, including applications that connect the Service or your profile on the Service with a third-party web site or feature

(…)

You expressly acknowledge and agree that Instagram is in no way responsible or liable for any such third-party services or features.

Some of the Service is supported by advertising revenue and may display advertisements and promotions, and you hereby agree that Instagram may place such advertising and promotions on the Service or on, about, or in conjunction with your Content. The manner, mode and extent of such advertising and promotions are subject to change without specific notice to you.

You acknowledge that we may not always identify paid services, sponsored content, or commercial communications as such.

Applicable law

The Terms, and your relationship with YouTube under the Terms, shall be governed by:

Austria: Austrian law

Belgium: English law
Bulgaria: English law

Croatia: internal laws of the State of California (
excluding provisions relating to conflict of laws)
Republic of Cyprus: ???

Czech Republic: Czech law

Denmark: English law

Estonia: English law

Finland: Finnish law

France: French law

Germany: English law

Greece: English law

Hungary: English law

Ireland: Irish law

Italy: Italian law

Latvia: English law

Lithuania: English law

Luxembourg: English law

Malta: ???

Netherlands: Dutch law

Poland: Polish law

Portugal: English law

Romania: Romanian law

Slovakia: Slovakian law

Slovenia: internal laws of the State of California (excluding provisions relating to conflict of laws)
Spain: Spanish law

Sweden: Swedish law

United Kingdom:
English law

The laws of the State of California will govern this Statement, as well as any claim that might arise between you and us, without regard to conflict of law provisions.

These Terms and any action related thereto will be governed by the laws of the State of California without regard to or application of its conflict of law provisions or your state or country of residence.

If you are a federal, state, or local government entity in the United States using the Services in your official capacity and legally unable to accept the controlling law, jurisdiction or venue clauses above, then those clauses do not apply to you. For such U.S. federal government entities, these Terms and any action related thereto will be governed by the laws of the United States of America (without reference to conflict of laws) and, in the absence of federal law and to the extent permitted under federal law, the laws of the State of California (excluding choice of law).

These Terms of Use are governed by and construed in accordance with the laws of the State of California, without giving effect to any principles of conflicts of law AND WILL SPECIFICALLY NOT BE GOVERNED BY THE UNITED NATIONS CONVENTIONS ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS, IF OTHERWISE APPLICABLE

Jurisdiction

You and YouTube agree to submit to the exclusive jurisdiction of the courts of:

Austria: courts of Austria

Belgium: courts of England

Bulgaria: courts of England

Croatia: competent court in the Santa Clara county, California
Republic of Cyprus: ???

Czech Republic: Czech courts

Denmark: Danish courts

Estonia: courts of England

Finland: courts of Finland

France: courts of France

Germany: courts of England

Greece: courts of England

Hungary: courts of England

Ireland: courts of Ireland

Italy: courts of Italy

Latvia: courts of England

Lithuania: courts of England

Luxembourg: courts of the UK

Malta: ???

Netherlands: courts of Amsterdam

Poland: courts of Poland

Portugal: courts of England

Romania: courts of Romania

Slovakia: courts of Slovakia

Slovenia: competent court in the Santa Clara county, California

Spain: competent court (not specified)

Sweden: courts of Sweden

United Kingdom:

Courts of England

to resolve any legal matter arising from the Terms. Notwithstanding this, you agree that YouTube shall still be allowed to apply for injunctive remedies (or other equivalent types of urgent legal remedy) in any jurisdiction.

Analysis

The applicable law and jurisdiction problem is quite diverse within the YouTube company.

In general, Member States' national laws and courts jurisdiction apply.

For 12 countries listed below, the applicable law is the one of England with the jurisdiction of English courts:

Belgium

Bulgaria

Denmark (English law with the jurisdiction of Danish courts)

Estonia

Germany

Greece

Hungary

Latvia

Lithuania

Luxembourg (the only country stating that the UK courts have the jurisdiction, not only the English ones)

Portugal

United Kingdom

Moreover, 2 of the Member States' (Croatia and Slovenia) Youtube Terms and Conditions are governed by the law of California State (with the jurisdiction of relevant courts of California).

You will resolve any claim, cause of action or dispute (claim) you have with us arising out of or relating to this Statement or Facebook exclusively in the U.S. District Court for the Northern District of California or a state court located in San Mateo County, and you agree to submit to the personal jurisdiction of such courts for the purpose of litigating all such claims.

All claims, legal proceedings or litigation arising in connection with the Services will be brought solely in the federal or state courts located in San Francisco County, California, United States, and you consent to the jurisdiction of and venue in such courts and waive any objection as to inconvenient forum.

ARBITRATION NOTICE: EXCEPT IF YOU OPT-OUT AND EXCEPT FOR CERTAIN TYPES OF DISPUTES DESCRIBED IN THE ARBITRATION SECTION BELOW, YOU AGREE THAT DISPUTES BETWEEN YOU AND INSTAGRAM WILL BE RESOLVED BY BINDING, INDIVIDUAL ARBITRATION AND YOU WAIVE YOUR RIGHT TO PARTICIPATE IN A CLASS ACTION LAWSUIT OR CLASS-WIDE ARBITRATION

Except if you opt-out or for disputes relating to: (1) your or Instagram's intellectual property (such as trademarks, trade dress, domain names, trade secrets, copyrights and patents); (2) violations of the API Terms; or (3) violations of provisions 13 or 15 of the Basic Terms, above ("Excluded Disputes"), you agree that all disputes between you and Instagram (whether or not such dispute involves a third party) with regard to your relationship with Instagram, including without limitation disputes related to these Terms of Use, your use of the Service, and/or rights of privacy and/or publicity, will be resolved by binding, individual arbitration under the American Arbitration Association's rules for arbitration of consumer-related disputes and you and Instagram hereby expressly waive trial by jury

As an alternative, you may bring your claim in your local "small claims" court, if permitted by that small claims court's rules.

Judgment on the award rendered by the arbitrator may be entered in any court having competent jurisdiction. Any provision of applicable law notwithstanding, the arbitrator will not have authority to award damages, remedies or awards that conflict with these Terms of Use.

2. Existing interventions by internet platforms to protect consumers from hate speech and minors from harmful content

The largest Internet platforms (e.g. video sharing platforms like YouTube) use software and human intervention with a view to protecting viewers from hate speech and minors from harmful content. The criteria against which content is deemed "inappropriate" (as in the jargon most commonly used by Internet platforms) are defined by the platforms themselves, in their terms of service/Community guidelines as described above. Examples of initiatives that are being undertaken are:

1.    Moderation of content already posted on the platforms based on flagging by the users. Users flag content, which is deemed inappropriate according to the terms of service; an algorithm sorts out the complaints prior to sending to a moderation team for verification; if deemed inappropriate, the content is removed. However, there are shortcomings.

First of all, the large number of videos uploaded each day 652 makes content moderation a complex exercise.

Secondly, when it comes to minors, the EU Kids Online report to the European Commission on the "CEO Coalition for a Better Internet for children" states that children rarely use reporting buttons.

Thirdly, activists have proven that YouTube verifies as a priority content which receives a larger number of complaints received 653 . This has shortcomings as regards the level of protection afforded to individual consumers.

Lastly, as also reported in the ERGA inventory paper on protection of minors, the filtering systems that are applied to conduct content moderation might not be optimized 654 .

2.    Age verification. For example, to access certain YouTube paid content, users need to authenticate themselves. This requires them to have an active user account, declaring to be 13+. However, it seems that age restrictions are only partially effective for UGC 655 .

3.    Video fingerprinting technologies, identifying and preventing the same or similar content from being re-uploaded.

4.    Systems allowing the users to give feedback on the content (e.g. YouRateIt, piloted by Mediaset. However, YouRateIt has not been taken up by YouTube).

5.    Parental controls offered by the platforms or devices. However, there are figures showing that not all parents take a proactive role. ERGA Inventory paper on protection of minors states that "in a converging media environment […] it seems virtually impossible for parents to be aware of the provenance of any content, especially to have the knowledge in terms of all the relevant technical solutions available". EU Kids online research has shown that 40% of parents are unaware of their child’s exposure to sexual images online. In the UK, OFCOM found that just 12% of parents of 5-15y said they use YouTube’s safety mode, while 73% said they were not aware of this tool. In Germany, according to the recent KIM study 656 examining the media usage of 6 to 13 year olds, only 14% of parents has installed protection tools on devices used by their children.

To conclude, current initiatives are either not specifically related to audiovisual content by online platforms or are on a stand-alone basis insufficient as demonstrated above.

ANNEX 9 – Details of the provisions and implementation of the country of origin principle

Member State jurisdiction

Jurisdiction can be based on the providers' (i) establishment in a Member State or (ii) use of a satellite up-link/satellite capacity situated in/appertaining to a Member State.

Establishment:

The Directive foresees that a provider is established in the Member State where it has its head office and editorial decisions are taken.

If these two places do not coincide, the provider shall be deemed to be established in the Member State where a significant part of its workforce operates.

If a significant part of its workforce operates in both Member States, the provider is deemed to be established in the Member State where its head office is located.

If a significant part of its workforce operates in neither of these Member States, the provider is deemed to be established in the Member State where it first began its activity, provided that it maintains a stable and effective link with the economy of that Member State.

If a provider has its head office in a Member State but decisions on the audiovisual media service are taken in a third country, or the other way round, it shall be deemed to be established in the Member State, provided that a significant part of the workforce operates there.

Use of a satellite up-link/satellite capacity:

Providers are deemed to be under the jurisdiction of a Member State if they use a satellite up-link situated in that Member State. If they do not use a satellite up-link in a Member State, they will still be under the jurisdiction of a Member State if they use satellite capacity appertaining to that Member State.

Permissible restrictions of the reception and retransmission of services freely circulating within the EU

Regarding broadcasting, any such restrictions are limited to cases of incitement to hatred and infringement of the provisions on protection of minors. For on-demand services, there is a longer list of grounds justifying restrictions. This list includes public policy, public security, including the safeguarding of national security and defence, the protection of public health and the protection of consumers. The relevant procedure includes a first cooperation phase where the Member State concerned contacts the transmitting Member State to try to produce an amicable settlement. If no amicable settlement has been produced and the receiving Member State decides to restrict the freedom of reception, it needs to notify the measures taken to the Commission. The Commission then has to take a decision whether the notified measures are compatible with Union law. This is the so-called "derogation procedure".

Member States may adopt stricter or more detailed rules in an area coordinated by the Directive. If a Member State has chosen to do so and encounters issues with a television broadcast mostly or wholly directed towards its territory, it can use the 'circumvention procedure'. That procedure entitles the receiving Member States to adopt appropriate measures against the broadcaster concerned, provided, among other things, that the broadcaster in question has established itself in the Member State of jurisdiction in order to avoid stricter rules which would otherwise be applicable to it. Before a receiving Member State may adopt restrictive measures to counter circumvention, it needs to notify the sending Member State and the Commission of its intention to do so. The Commission then needs to take a decision whether the notified measures are compatible with Union law. This is the so-called "circumvention procedure".

Application of derogation procedure

In 2015, Lithuania notified to the Commission measures to restrict the retransmission of a Russian language channel, broadcast from Sweden, on the basis of instances of incitement to hatred. The Directive is silent as regards the procedure to be followed at national level and does not provide many details about the procedure before the Commission. This prompted the need for Lithuania to readopt a national decision and send a supplementary notification to the Commission. In July 2015, the Commission decided that the notified measures are compatible with EU law. 657  

The Lithuanian case also brought to the fore uncertainties and disagreements with Sweden about what Member State had jurisdiction over the Russian language channel. Similar jurisdiction issues have arisen in the Commission's earlier decisions on notifications regarding serious infringements of the provisions on protection of minors (Eurotica Rendez-Vous Television, Extasi TV).

These difficulties in applying the derogation procedure prompted the Commission services in August 2015 to provide the members of the AVMSD Contact Committee and ERGA with clarifications on that procedure. Some months later, similar procedural difficulties arose in the context of a new notification. 658 In view of these issues, the Commission services have drafted a more comprehensive document regarding the application of the derogation procedure as well as the circumvention procedure. This document will be presented to and discussed by the Contact Committee at its December 2015 meeting.

Application of circumvention procedure

The 2nd Application report on the AVMSD reports a circumvention case regarding alcohol advertising in Sweden. In December 2014, Sweden notified the Commission of envisaged measures (fines) in relation to two broadcasters broadcasting to Sweden from the UK for alleged circumvention of stricter Swedish rules on alcohol advertising. Sweden subsequently withdrew the notification. Procedural issues also arose in this case. In particular, the notification lacked full details describing the procedure at national level in order to adopt restrictive measures 659 . Again, the notification raised the issue whether the broadcasters' right to be heard had been respected.

Derogation procedure under the eCommerce Directive

The derogation provision concerning non-linear services is modelled on a similar provision in the eCommerce Directive which contains the same grounds of derogations as the AVMSD. It emerges from the Staff Working Document accompanying the 2012 Communication on eCommerce 660 that, contrary to what might have been expected, the derogation appears to have been used very rarely. Thus, in the last decade, the Commission services have received only 30 notifications, mainly dealing with measures to protect consumers. The Commission never declared a measure incompatible with EU law. Since 2013 relevant notifications under the eCommerce Directive are submitted through IMI (Internal Market Information System), which is an interface connecting national administration with the Commission and among themselves. Since then the number of notifications appears to have increased slightly.

The Court of Justice has held that the principles contained in the derogation procedure in the eCommerce Directive must be interpreted in the same manner as those governing the Internal Market freedom provisions of the Treaty. 661 The same considerations would in all probability also apply to the AVMSD. Hence, the grounds of derogation would need to be interpreted restrictively.

Simplification of jurisdiction rules

The jurisdictional criteria would continue to focus on the place of the head office and editorial decisions. If these places do not coincide, the Member State having jurisdiction could be determined by reference to where the majority of the workforce (instead of currently a "significant part of the workforce") is located. This would make reference to further complex subsidiary jurisdiction criteria superfluous, with establishment in a Member State remaining as a fall-back if jurisdiction cannot be determined by other means.



ANNEX 10 - Cost of the country of destination – promotion of European works in the 5 biggest markets for on-demand services

Objective:

Determine the additional cost for a VoD provider to comply with the financial contributions with a view to promoting in the 5 biggest EU markets (Germany, France, UK, Spain and Italy).

Background:

According to the country of origin principle, a provider under the jurisdiction of a Member State will only have to comply with the rules of that Member State, while being able to roll out its services in other Member States.

Moving to the country of destination principle for the financial contribution related to the promotion of European works, would mean that providers would need to comply with each and everything related national legislations of countries where their services are available.

Scope:

The calculation would cover only 5 big markets which according to the EAO represent 70 % of the on demand services market 662 .

Methodology:

Data available and hypothesis:

The first difficulty for calculating the costs of moving to the country of destination for financial contributions is that reliable information on the market share of on demand services in each of the 5 big markets is missing. The only information available found in this regard was found via google search and is the share of those services in Germany: 38.9 % for Amazon, 11,3 % for Itunes, 11,3 % for Maxdome, 10,8 % for Google Play, 8 % for Netflix, 4,4 % for Unitymedia, 3,1 % for Videoload and 2,3 % for Whatchever 663 . For recollection and according to the MAVISE Database, Amazon is established in Germany and Google Play is deemed to be established in the US.

For this calculation, Itunes and Netflix will be used as examples for estimating the costs.

The requirements in the 5 big markets as regards financial contributions are as follows:

DE: There is a general financial obligation of between 1.8% and 2.3% of the turnover. For this calculation the higher option i.e. 2.3 % was used.

FR: On demand services shall promote European works by financially contributing to the development of European cinematographic and audovisual works by reserving at least 12% to 26% (depending on the kind of service) of their net revenues. In this calculation 15 % have been used as an average. As for Germany, there is a general financial obligation of 2 % of the turnover.

UK: No measure

IT: On demand services shall promote European works by reserving a 20% share for European works in their catalogues (5% during a transition period of 4 years) OR by contributing financially with a 5% of their revenues (2% during a transition period of 4 years) to the production or right acquisition of European works. A strong assumption is that Itunes (VoD) and Netflix (SVoD) would be asked to contribute financially.

ES: On demand services shall financially contribute to the funding of audiovisual content with at least 5% of their turnover.

Calculation:

Based on the above rules and figures, the costs were estimated according to the following calculation:

DE

Turnover

Itunes

35,6

Netflix

25,2

Levy

Itunes

0,8

Netflix

0,6

FR

Turnover

Itunes

37,3

Netflix

26,4

Financial contribution - investment

Levy

Total

Itunes

5,6

0,7

6,3

Netflix

4,0

0,5

4,5

UK

No levy or financial contribution

IT

Turnover

Itunes

13,3

Netflix

9,4

Financial contribution - investment

Itunes

0,7

Netflix

0,5