In relation to digital content, the sector inquiry investigates the presence of territorial restrictions and geo-blocking in the online distribution of digital content. The sector inquiry also examines the prevalent copyright licensing models for online distribution and their possible impact on competition, in particular, with respect to market entry and the possibility of developing new business models or new services.
The focus is on exclusive licensing, which under certain conditions, could raise concerns of input foreclosure and the resulting reduction of competition at the distribution level. Exclusive licensing may also raise concerns about exclusion of actual or potential competing distributors at the distribution level. The issue of access to digital content and potential exclusion of digital content providers is particularly important given the nature of digital content distribution, where offering certain (premium) content may be necessary in order to attract customers.
In order to provide online services that include copyright protected content, a digital content provider must generally obtain a licence from the holders of the copyrights in such content, such as film producers or record labels. Rights in broadcasts of sports events are licensed in a similar way, as in some Member States such broadcasts also benefit from certain protection under the national copyright laws.
The preliminary results of the sector inquiry show that online rights are to a large extent licensed on a national basis. Online rights are often licensed bundled with rights for the distribution of content via other transmission technologies. The territorial scope of online and offline rights is therefore often the same, as offline rights are traditionally licensed on a national basis.
Digital content providers that are distributing content using other transmission technologies than online transmission and that have decided to expand their commercial activities beyond the territory of one Member State only, have often chosen to enter neighbouring countries with the same or similar language. This is also true for online rights when those are licensed for a territory covering more than one Member State.
The replies and licensing agreements submitted by rights holders confirm the conclusions drawn from the analysis of the replies and licensing agreements submitted by digital content providers that online rights are mainly licensed nationally or for a territory covering between two and four Member States.
Online rights are to a lesser extent licensed on a pan-EU level. The replies from both digital content providers and right holders show that this is in particular true for the categories of content that may contain premium content products, such as sports, films and fiction TV.
A majority of the licensing agreements submitted by sports rights holders (48%) covers the territory of one Member State only, and only a minor part of such agreements (8%) provide licenses on a pan-EU basis. These figures confirm the preliminary results of the analysis of the licensing agreements submitted by digital content providers, in the sense that rights in sports are most often licensed on a national basis.
The responses and licensing agreements submitted by hosting online operators show that online rights are to a large extent licensed to them on a national basis, despite the fact that the services provided by these operators often can be accessed and used by users in most of the Member States.
Online rights are licensed mainly on a national basis also to content providers operating on the basis of a subscription-based business model (72 %), such as mobile operators, fixed line cable operators and fixed line PSTN operators. Packagers of own content is another category of distributors that mainly obtain rights on a per Member State basis. These results suggest that rights holders typically tend to license rights on a national basis.