The European Publishers
Council (EPC) is a group of 28 Chairmen and Chief Executives of
European media corporations actively involved in multimedia markets
spanning newspaper, magazine, Internet and on-line database publishing
(a list of members is attached). Many members of the EPC also
have interests in private commercial television and radio.
The EPC welcomes the opportunity to contribute to the discussions
of the Economic and Social Committee on pluralism and media concentration.
Many changes have taken place in the media market since the Commission
first published its Green Paper on Pluralism and Media Concentration
in December 1993, much of which has been described in the subsequent
Commission Green Paper on Convergence.
This Memorandum sets out to provide information to the Members
of the Economic and Social Committee about the fundamental changes
to the publishing market and the impact of the Internet on business
and regulatory models.
Part 1 offers a summary statement.
Part 2 gives an overview of the Internet and Online Publishing.
Part 3 explains why the EPC would not favour EU-wide legislation
on pluralism and media concentration.
PART 1 - SUMMARY STATEMENT BY THE EPC
The EPC believes that it is essential that the current discussions
on media concentration take place within the broader context of
technological and market convergence. In particular we urge you
to take into account the impact of the Internet on traditional
mass media markets and the benefits that this has already brought
to consumers in terms of media diversity in Europe.
The traditional broadcasting industries were entirely fashioned
by legislation. For over half a century the growth (or rather
restriction) of competition was solely under Government control.
Rooted in an era of spectrum scarcity Governments sought artificially
to promote pluralism through public funding of state controlled
broadcasters and statutory restrictions on ownership of private
television and print media. The present situation with the Internet
is substantially different. It is a market largely outside the
control of national governments, and it is already highly competitive:
it is much more akin to the world of publishing than to that of
conventional broadcasting. The new media market and its customers
benefit substantially from this new architecture: a wide diversity
of suppliers, unrestrained by unfair competition from any dominant
player.
We welcome the ECOSOC's recognition of the fact that media companies
face new challenges. As both the technologies and markets convergence,
publishers face new forms of competition from players not traditionally
associated with the publishing market.
These new competitors include state-funded broadcasters, computer
software and telecommunications companies as well as new service
providers which offer news, information and entertainment services.
The Internet is fast becoming a new and highly competitive global
mass media market. It is axiomatic that, in an era of burgeoning
diversity, it is no longer appropriate to single out traditional
media companies in the private sector - print, radio and television,
and subject them to specific types of restriction at national
or European level which would hamper their ability to compete
in the broader market.
It is essential that competition authorities ensure fair competition
in this highly complex market and act to prevent new forms of
unfair competition emerging. In particular we would like to highlight
the growing dominance of state funded broadcasters on the Internet.
The German Government has already acted to limit the scope of
activities of their state-funded broadcasters in order not to
undermine the commercial market. In the UK, publishers are seeking
similar restraint on the BBC (further information available on
request).
Competitiveness is of fundamental importance given that European
companies must prepare for global competition on a scale never
experienced before. We would suggest an enhanced role for competition
policy to help regulate converging markets although, in order
to take account of the globalisation of the media sector, a careful
review of relevant market definitions will be necessary.
Two key themes emerged from the Commission's Green Paper on Convergence
which we endorse:
a) that convergence
of markets, combined with the cross-border nature of modern communications,
has the effect of diminishing the relevance of existing, national,
regulatory agencies; and that
b) any new regulatory framework should be limited to what is strictly
necessary to achieve clearly identified objectives.
While it is apparent that at the global level there is convergence
of a) the physical means of communication (e.g. a satellite or
a printing press), b) the physical means of its reception (a television
or a computer and c) the content (an article or a television programme),
it is also true that at the national or local level that there
is rapid divergence and considerable content diversity. This means
that regulatory intervention at the global level is inappropriate
if not impossible although we would support efforts at the international
level to find consensus on regulatory principles.
Part 2 - The Internet and online publishing
The Internet is not a traditional mass medium like radio and television,
distributing expensively produced or acquired programme assets
to very large audiences. Developing as it has outside government
regulation, it is a distribution network of many thousands of
suppliers, with an even greater range of products. Much of the
content is simple information: much online traffic is devoted
to the consumption of information formerly found in printed form.
It is interesting to note that online users in the US spend an
average of 8.2 hours each week reading newspapers and magazines,
but 10.8 hours per week on the Internet. At the moment, online
usage in the EU averages around 8 hours per month, but this is
set to rise sharply as PC penetration increases. In the US market,
where competition has been allowed to develop freely, new media
start-ups have been able to compete on equal terms with traditional
media companies online.
As with any new technology, there are high risks but also opportunities
in offering new services to the public. The investments are substantial,
but the potential benefits in the long term are great if the sector
is allowed to develop in a fair and open manner. We believe that
it is in Europe's interest that a diverse and flourishing market
should be encouraged in the provision of new commercial Internet
services. This is an area presently led by US companies, but one
in which European expertise - allied to the wide range of cultures
and traditions - offers considerable scope for development. Of
necessity, concomitant revenue streams will be developed - including
income from advertising, content, sponsorship and e-commerce.
These will be essential to enable the new ventures to compete
successfully and flourish.
Distinguishing the online market even further from traditional
broadcasting, a key element in its future will be the development
of e-commerce, the means for buying and selling goods over the
Internet. Further details on market development are available
on request.
The online market is growing at some speed.
According to Jupiter Communications, a leading new media research
company, Internet penetration in Europe will reach 31% of European
households by 2003 (47,292,000 households). Currently European
penetration is only around 10% (14,343,000 households). Growth
in some EU countries, such as the UK, will be even stronger than
the European average. The UK is expected to increase from its
current 11% household penetration (2,617,000 households) to 41%
penetration by 2003 (9,818,000 households). Jupiter forecasts
that this strong growth over the next five years will move the
Internet from a marginal activity to a mass market activity.
According to Jupiter Communications, e-commerce is expected to
increase in proportion to online usage. The UK and Germany will
be Europe's largest online markets followed by France. The consumer
Internet market for music, air travel, books, and software in
France, UK, and Germany-which was more than $68 million in 1997-will
increase to $3.26 billion USD by 2002.
Part 3 - IS THERE A NEED
FOR AN EU DIRECTIVE ON PLURLAISM AND MEDIA CONCENTRATION?
The EPC is opposed to legislation at the European level to regulate
media concentration and pluralism for three main reasons.
1. For the reasons set out in detail above, we feel that it is
no longer appropriate to single out traditional media companies
for sector-specific restriction when the media market is now much
broader and complex.
2. An internal market directive
will not meet its stated objectives of removing barriers to cross-border
investment or stimulating growth in the media sector. On the contrary,
we believe media specific legislation to regulate media concentration
will discriminate disproportionately against traditional media
companies such as publishers.
3. The question of pluralism
must be judged and dealt with at the local, i.e. national level
against carefully measured public interest objectives.
Our further comments are made against the following background:
- The European Publishers' Council (EPC) has always accepted in
good faith that the Commission wanted to initiate EU legislation
in the area of media concentration to help, not hinder, the development
of European media companies. The EPC represents many of Europe's
most successful players in the media sector in Europe and as such
has submitted views throughout the pre-legislative, consultative
phase with a view to informing the Commission's thinking in this
area.
- On the basis that the
earlier drafts for a Directive on media concentration have received
virtually unanimous opposition from the very companies the Commission
has set out to help, we would continue to oppose any initiative
to reintroduce proposals for a Directive in this area for the
three main reasons above.
- The EPC recognises that
a very small number of companies have either not opposed EU intervention
or have sought solutions to specific problems which they face
at national level through EU harmonisation . This minority opinion
does not in our view justify a detailed directive at EU level
which would not benefit the majority.
- Instead we would urge
the Commission to consider alternative methods of dealing with
individual requests for intervention, for example through existing
mechanisms for bringing infringement proceedings or scrutiny under
EU competition regulation.
Why a directive would not meet its stated objectives of either
removing barriers to cross-border investment or improving media
diversity:
1. There is no case for an internal market directive because the
barriers that exist are commercial (often connected with acquisition
and exploitation of rights), cultural and linguistic, not legal.
No amount of harmonising legislation would remove these barriers.
2. A very detailed directive
is not justified at a time when the Commission is seeking ways
to find solutions to the regulatory framework for the whole media
and communications scene, including new players in the broader
market.
3. Publishers feel a directive
that deals only with newspapers, TV and radio unfairly discriminates
against these traditional media. Telecommunications companies,
software conglomerates, Internet access and service providers
and increasingly publicly funded broadcasters all compete with
publishers online, none of which would be caught by a media ownership
directive, even though their media market share will be increasing
year on year. A publisher's share of a joint venture with any
of the above would be counted in any calculation for cross-media
audience under the terms of a multi-media threshold whereas a
non-media company from the telecommunications or computing world
could forge an alliance with a TV company without such constraints
(subject to clearance by the competition authorities).
4. With the advent of digital
technologies, particularly the introduction of digital television,
European consumers will be able to receive hundreds of different
information and entertainment services from all over the world.
Many of these new services will be interactive, changing the face
of media as we know it today. The convergence of traditional media
companies with new players, new types of electronic services and
new forms of delivery will lead to lowered barriers to entry and
increased consumer choice without the need for media-specific
restrictions on ownership or audience share to promote diversity.
5. A converged multimedia
market, with a glut of choice, reduces the need for regulators
artificially to promote plurality through media-specific legislation.
As pictures travel along telephone wires and television sets are
routinely fitted with modems to supply Internet services, a new,
more generalised approach to regulation based on competition policy
will more appropriate.
6. We recognise that both
the telecommunications and media sectors are prone to concentration
as successful companies attract more customers and profitable
companies attract offers of take-over, merger or joint venture.
In such a competitive business environment we welcome vigilant
antitrust regulation. Many concentrative joint ventures involving
media companies already fall within the Commission's competence
and the EPC has always supported the Commission's moves to reduce
the thresholds and simplify procedures under the EU Merger Regulation.
7. With dramatic increases
in Internet use and the start of digital television the regulatory
framework must recognise the natural shift away from centralised
regulatory controls which were necessary in days of spectrum scarcity.
Plurality will be guaranteed by the unprecedented increases in
media sources and content.
8. Self-regulation by content
providers will play a major part in content control in the future
as global networks proliferate. Voluntary rating systems, together
with technical means of protecting and filtering content, will
be important contributions to content control without endangering
freedom of expression.
European Publishers Council,
June 1999
June 1999
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