1. Solving the
market supply
failure of
lawful digital
content
TASK FORCE ON COPYRIGHT IN THE EU
DIGITAL SINGLE MARKET

2. Agenda
›EVIDENCE OF
MARKET SUPPLY
FAILURE
›PUBLIC POLICY
ISSUES
›CONCLUSIONS
DIGITAL CONTENT PROMOTION | Public | © Ericsson AB 2012 | 2012-11-12 | Page 2

3. The PROSPECT OF DSM?
Source: http://www.guardian.co.uk/film/2010/feb/17/european-cinemas-boycott-alice-in-wonderland
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4. The prospect of DSM?
Downloaded movie
prices are about 30% to
50% higher than buying
an actual DVD. That's if
you can find the film
online … more than half
of the UK top 50 films of
all time were NOT
available as downloads
Source:
http://www.guardian.co.uk/technology/2011/nov
/22/movie-fans-piracy-online
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5. SWEDEN: Spotify covers 85% of all
released recorded music, Netflix (5%)
and Via-PLAY (12%) of Film released a
Year ago
Theatrical DVD Netflix Via Play Theatrical DVD Netflix Via Play
Release Release Release Release
DIGITAL CONTENT PROMOTION | Public | © Ericsson AB 2012 | 2012-11-12 | Page 5 Source: http://blogg.kritiker.se/sa-bra-utbud-har-netflix-och-viaplay-svart-pa-vitt/

6. The market supply failure
of lawful digital content
Source PWC Global Entertainment Outlook 2012
DIGITAL CONTENT PROMOTION | Public | © Ericsson AB 2012 | 2012-11-12 | Page 6

7. Drivers: On-demand
content
MORE LAWFUL DIGITAL CHOICE
BASE: Core 7 markets (US, UK, Sweden, Germany, Spain, China and Taiwan) (Showing those who consider the service worth paying for)
Source: Ericsson ConsumerLab TV Video Consumer trends 2011, 2012
DIGITAL CONTENT PROMOTION | Public | © Ericsson AB 2012 | 2012-11-12 | Page 7

8. Barriers: On-demand
Content
Source: Ericsson ConsumerLab TV Video Consumer trends 2012
DIGITAL CONTENT PROMOTION | Public | © Ericsson AB 2012 | 2012-11-12 | Page 8

9. Displace “free” with lawful
digital services – address the
root cause of the problem!
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10. economists have researched
and most would agree*
“copyright has a moral hazard effect on
incumbent firms by encouraging them to rely
on enforcement of the law rather than adopt
new technologies and business models to
deal with new technologies"
* Source: Ruth Towse, “what we know, what we don’t know and what policy makers would like us to know about the economics of
copyright” Review of Economic Research on Copyright Issues, 2011, vol. 8(2), pp.101-120.
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11. Agenda
›EVIDENCE OF
MARKET SUPPLY
FAILURE
›PUBLIC POLICY
ISSUES
›CONCLUSIONS
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12. Content ACCESS BARRIERS –
copyright a barrier
› Access barriers are barriers to unhindered consumption of
content, the presence of which often results in the personal
consumption needs of consumers being unmet.
› WIPO identified following access barriers:
– Consumer barriers (affordability)
– Content exclusivity and limited competition
– Deliberate non-availability of content (windowing,
territoriality)
– Policy and regulatory barriers:
› Content regulation
World Intellectual Property Organization, Twentieth Session, Geneva June 21 to 24 2011, or
DIGITAL CONTENT PROMOTION | Public | © Ericsson AB 2012 | 2012-11-12 | Page 12 access: http://www.wipo.int/edocs/mdocs/copyright/en/sccr_20/sccr_20_2_rev.pdf

13. But there are other barriers
too - Film State AID Rules – how
about other Member States ?
› The theatrical release requirement removed in Swedish
Film State Aid Funding Rules
DIGITAL CONTENT PROMOTION | Public | © Ericsson AB 2012 | 2012-11-12 | Page 13 Source: http://www.regeringen.se/content/1/c6/20/16/74/111b3287.pdf

14. Copyright: root causes to
market supply failure
1. Deliberate limited availability of
digital content, facilitated by
copyright
2. Technology specificity of
copyright
3. Unreasonable transaction costs
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15. Increase Availability
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16. FIRST RELEASE WINDOW MUST TOO GO DIGITAL
CLOSING THE ANALOGUE CULUTRAL EXCLUSION
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17. DIMENSIONS OF availability
› Territoriality > Timed availability across
nations
› Territoriality and place shifting > Follow me
› Territoriality and long tail – regional/global
niches
› Time and Timing > windowing and exclusive
licensing
› Time, place and format shifting – at home and
on the go
› Range of choice > depth and width of
catalogue
› A’ la carte > Freedom to choose (my content)
and timing (my time) and screen (my screen)
HOW ABOUT AN “AWATAD” RIGHT ?
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18. Technology
Neutral Copyright
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19. Any screen – remuneration
in digital world
› Remuneration based on actual, identifiable consumption
based on ;
– Download to Own
– On-demand (time limited)
– One time view
› Irrespective of technology
– Transmission Technologies
– Delivery Networks
– Devices
– Screens It is unreasonable to potentially triple
the cost of identical content, over
multiple screens for same user
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20. The Overlap between
reproduction right and right
of communication to public
› A technology specific approach inevitably leads to inconsistencies and
uncertainties as formerly distinct classes of works, rights or media
types converge.
› The consequences of fragmentation of rights are disturbing in the
digital age, as digital technology produces a breakdown and conflation
of technology specific works/rights that were meaningful in the
analogue era.
› The transmission of audiovisual content on the Internet now involves
making reproductions and communications to the public
› These rights are strictly separated in most contracting situations and,
add to the complexity of the system which leads to a gridlock of control
that hinders development and frustrates business.
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21. Ultimately we end up with
the question of exhaustion
› Exhaustion principle applying only to physical media – "original of
a work or copies") incorporating the protected work. Recitals 28 and 29
further explain that "the first sale principle of the original of a work or
copies thereof by the right-holder or with his consent in the Community,
exhausts the right to control the release in the Community of a work
incorporated in a tangible tool".
› This wording limits the principle of exhaustion to tangible goods
only, excluding on-line services and intangible goods that
incorporate digital content
› The paradox of “tangible” exhaustions ; in a legislative measure
such as the EU INFOSOC DIRECTIVE which was devoted to the
online context, the only purpose of market integration was
confined to the offline context.*
* Source: EU Study, Legal Analysis of a Single Market for the Information Society October 2009
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22. Agenda
›EVIDENCE OF
MARKET SUPPLY
FAILURE
›PUBLIC POLICY
ISSUES
›CONCLUSIONS
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23. We think: Key Copyright
reform objectives
Promote open and competitive markets in licensed digital
content that promote service innovation.
With the aim to increase availability of more legitimate
digital content at prices which appeal to consumers.
Decrease technology specificity of copyright, e.g.
exhaustion, exceptions, safe harbor*.
Increase efficiency in licensing by decreasing transaction
costs e.g. administrative complexity.
DIGITAL CONTENT PROMOTION | Public | © Ericsson AB 2012 | 2012-11-12 | Page 23 * Not an issue in the EU and the US