Yesterday I spent the day at a very different kind of conference to the ones I usually attend: an EU conference called “One Europe – One Market“where EU commissioners, industry representatives and princesses discussed the future of the common, single market. Well, alright, only one princess, and she left after giving her welcome speech.

I was there as the ears and eyes of DIGITutvalget, the government panel I’m on that is considering obstacles to innovation in digital content and services in Norway, and it was in particular the last part of the conference we were interested in, where the digital single market was discussed. There was a panel discussing the proposed reforms to the EU Data Protection Directive that was released last week, with where the keynote for the panel was Peter Hustinx, the European Data Protection Supervisor himself, and the other panelists were industry representatives from Microsoft, LEGO and IBM. The final panel was about copyright and intellectual property, another hot topic these days, and here the keynote was held by David Sweeney, a lawyer in the music industry, and EU lobbyist. Here the panelists came from Google, Voddler and Telenor. And wow, Telenor’s Kristin Skogen Lund is an amazing speaker! I see she’s been called Norway’s most powerful woman, which sounds about right given she’s the top leader of Telenor and President of NHO (the Confederation of Norwegian Enterprise) and used to run Aftenposten and so on. She had very clear views about copyright clearance, anyway, well formulated and most convincingly presented.

The main issues that were discussed were:

  • Harmonisation. In some cases the single market exists in theory only, as regulations aren’t really  applied  as intended in all EU countries. In other cases the regulations are differently implemented in different countries, so for instance, the Data Protection Directive was implemented in 27 slightly different ways. In practice that means someone in Spain may be nervous about buying a physical or digital item from a seller in another country because consumer protection is unclear, or a seller may not be able to have a product approved for sale in other countries because it’s hard to get approval for the product’s being safe in all countries, or to clear copyright for all countries, despite all the intentions of the single market to make this easy. This issue appeared in every discussion in the conference.
  • Copyright clearance is too difficult and not coordinated. There is no Hollywood, and one thing is clearing rights for all the different countries (hard enough) but it’s often hard simply to figure out who actually holds the rights for a specific film, for instance. Sometimes there are even different rights holders for the film and for the soundtrack. The panel on copyright and IP all agreed that we need a central clearing house for this, but they disagreed on whether this should be voluntarily organized by the industry (Sweeney) or needed to be regulated by governments (Lund). There was also some discussion on why the film industry hasn’t already achieved this, given that, for instance, the music industry to a large extent has succeeded in this. There was also agreement that copyright and public funding of culture needs to be technology neutral, so that we don’t lock our future into the technologies of the present (or past).

I took sparse notes from the non-digital bits of the conference and thorough notes from the last two paragraphs – read on for more gory details.


København 2. februar 2012

The first part of the conference was about the single market in general, and my notes are rather sparse. I took pretty thorough notes from the second part, though, which was about the digital market. Things in [square brackets] are my comments.

MICHEL BARNIER (European Commissioner for Internal Market and Services)
We need to make sure that the internet boosts creativity. Therefore, we must make sure that digital content models are protected from the free-riders. (m.m.)
[Ekspertene på digital opphavsrett fremhevet ikke de skumle free-riders på denne måten.]

MALCOLM HARBOUR (Chairman of the Internal Market Committee of the European Parliament)
If I want to buy something from a Danish company online, from antoher EU country, I often can’t, because
– they won’t accept my credit card, or
– the song’s copyright isn’t cleared for my country
Or if I’m a Danish citizen in another country, I probably can’t listen to Danish television and radio online.
These are examples of the single market not working as intended.

The panelists all point to different examples of this, their main point being:
–> there are many flaws in the single market, primarily due to the lack of harmonization between countries, and because existing regulations are not actually being followed through by individual countries. And yet the single market was described at the start of the conference as “the jewel in the crown” of Europe.

– New products have to comply to different requirements, some are harmonized between single market countries, and others non-harmonized. Also, new requirements can be added from different angles at any time. This makes it very hard to plan new products, to work out what is required.

– When a product is legally sold in one country, it should be possible to sell it in other countries. However, in practice, her company were not able to do this, and has been in a several year long court battle about this.

ULF PEHRSSON (Chairman of BUSINESS-EUROPE Internal Market Committee, Ericsson)
Digital economy is not a sector in itself, it can increase productivity in a range of different sectors. A true digital single market would add 4% to GDP, which is approximately the same growth as predicted by the introduction of the single market itself 20 years ago. How to make this predicted growth possible?
– Harmonization.
Not always best addressed by new regulations, it may be better to improve the use and application of the existing rules.
– Consumer trust will be crucial
– Copyright, interoperability is also key
Europe is falling behind in some areas, not only behind the US but of Asia. Need to improve this and a better functioning single market is important here. Yet the fiirst priority is obviously to get Europe out of the crisis.

MONIQUE GOYENS (Secretary General, BEUC, European Consumer’s Organisation)
People who speak about the digital market today are either old or uninformed, because everything is digital.
Consumer confidence is the issue she keeps returning to. Consumers worry what will happen when something goes wrong. The issue is distance, not simply borders – we find it hard to trust that which is far away irrespective of its being in the same country or not. If you can express a good customer poliicy that is key.

How to build consumer trust? How to build business trust?
A common trust mark showing that an e-commerce site is trustworthy would be good. But for goodness sake not 27 different trust marks.

FACILITATOR: There is no silver bullet. But if you had just one bullet to shoot, what would it be?

Werner Stengg: payment – often no option for paying across borders, and fears about money, different systems.
Sven-Eric Nilsson: consumer trust and companies’ trust, and think global, not just EU
Monique Goyens: consumers should not necessarily have to contribute to economic growth – economic growth should contribute to consumers – (at this, the representatives of the Danish consumer protection agency sitting near me all applauded)
Winjnand Jongen: payments, trust, global and consumer policity are all important, but collaboration is the key thing.

PETER HUSTINX (European Data Protection Supervisor)
1995: EU Data Protection Directive.
A comprehensive reform of EU Data Protection Rules was proposed last week:
These reforms are the main topic of this panel, and as a main author, Hustinx is of course their defender.

Data protection is even more important today than in 1995 when the directive was first introduced. Every step we make online is now recorded. So in addition to the need for harmonization, the need to protect freedom is now extremely strong. Building in privacy by design in order to generate trust is an important challenge.

The digital single market requires strong, effective and persistent data protection across the EU. The current EU Data Protection Directive has problems. Showing its age. Internet, geolocation, mobile applications, cloud computing are all either new or radically more pervasive now.

Having 27 national versions of the same basic principles is a problem, too.
–> unnecessary costs for businesses
–> inefficiency, and a lack of effective protection as well
However, the Lisbon treaty gives a major window for improvement of these rules. [I’m not sure what the Lisbon treaty is?]

JOHN VASSALLO (Microsoft – also on the executive board of Digital Europe)
The five Cs: Complexity, Cost, Customers, Cloud Computing [I’m not actually sure why he mentioned the five Cs, but having written them down they look good, right?]
Having 27 applications of the original EU data protection directive made it difficult for consumers to go online and use services and for businesses to provide services.
As industry, we need to welcome the beginning of the debate – and put forward changes that will make this law doable, adoptable, and being able to be implemented. [He doesn’t specify what those changes might be.]
The cost of abiding by today’s privacy rules costs a small company seven times more than it costs a large company, Vassallo says. So the reformed data protection directive will help small companies.
Parts of the proposal are too prescriptive, but overall Vassallo approves of it.

First Hartz answers the question he assumes we have: why is LEGO here? Because they have an online offering which had 10 million unique visitors a month in 2006, and now has grown to 15 million unique visitors a day from all over the world, so LEGO has a great interest in data protection across borders.
Hartz says: “We live off trust between us and our consumers. We’re used to the physical products where we rely on parents trusting that our products are safe. Online, we see a different reality. Cloud computing, for instance, is new for us – it would be cost-saving, but we have not yet chosen to do it because of the lack of clarity of the rules (and, he muttered, “there other reasons”, though he didn’t go into these). A single harmonized set of rules would make it much easier for LEGO to decide which technologies to move into. Having 27 different applications of the data protection directive makes it very hard to work out legally and practically.

The digital single market is a positive thing, we need harmonisation. Cross-border services and cloud services require harmonisation. It’s global, really, but we need to at least start with Europe. The cloud is by nature global, as it works best when we can share processing power with the Chinese, who need it at different times of the day with us.
There are limitations such as the Danish tender law which says that [what exactly? contracts? accounts?] of Danish companies have to be in Denmark. This makes using the cloud difficult, unless we build national cloud centres, which nobody realy wants.
Another problem is that some things are seen as protectable data in some countries, but not in others (e.g. Spain) [Unfortunately I missed WHAT the specific example was, but Nørregaard described it as less private than photos of our children.]

FACILITATOR: How can we strike a balance between protecting consumers and yet not hinder innovation and new developments, like cloud computing as described by Nørregaard at IBM?

NØRREGÅRD: Privacy by design is key, shouldn’t be an aftersight. Safeguards should be built into the product at a very early stage. The commission says this will be at the core of their approach.
HUSTINX: Technological neutrality. This is not about regulating technology, it is setting up a framework that allocates incentives in such a way that the various parties come to good outcomes. There will be general rules, but incentives are more importnat – for instance the burden of proof. You have to demonstrate that you have done what you are required to do. For example, did you have adequate consent? There are many examples of “unclear consent” online. There will be a proportionality between infringements and fines. Scaleability for SMEs is important.
VASSALLO: Ten years ago Bill Gates first launched the idea of “privacy by design” [I think that’s what Vassallo said]. Privacy by design is fundamental, and not just about the technology itself. It’s important from the idea stage and all the way through.
HARTZ: We agree about privacy by design, and we have a special obligation in dealing with kids who will not read the privacy forms. LEGO has what we think is a good setup where we explain to kids how to get consent from their parents, but had a lot of consumer complaints because parents thought it was too burdensome.

FACILITATOR: How can we ensure the harmonisation really works?

HUSTINX: Don’t underestimate this proposal. It provides for consistent outcomes in all 27 countries, has very strong enforcement powers. You can argue about the level of the fines. There will be big fines, if there is a big case.
VASSALLO: The proposal should have a clearer definition of diligence. What, specifically, is expected of a small company? We need a definition of a diligent company, so that you can be sure that diligent companies will be helped along the way, rather than being scared of a huge fine for a small error.
HUSTINX: This is largely already in the proposal. Everything is scalable, in terms of appropriate fines for small or large offenses.
This proposal also provides a very friendly environment for clouds. Either the data is in Europe and the data protection directive applies. Or its somewhere else, and the directive still applies (?) The controller will require that the providers comply.
NØRREGAARD: That is a valid point. Looking to you for some help. Mentions a few acronyms – BCRs [?] – but data you process for others is not in there, so we need corporate rules for data that is not your own.
VASSALLO: Need to get accountability cleared up front.

Q from audience – what if a company puts data on cloud service outside EU?
–> HUSTINX: EU rules will still apply. Third party country rules may come in addition.

Q from audience (woman from Telenor with Australian accent) What about the upcoming US reforms to data protection, which are based on key of conduct [?] unlike the EU’s proposal. How can these proposals live side by side?
–> HUSTINX: We’re still waiting for US proposals. We expect the US to be inspired by the EU proposal. It would potentially be interesting to come to more global compatibility, but as we make things more uniform in Europe we are also setting a benchmark. [Wonderfully Euro-centric!]
–> VASSALLO: We do have processes for trans-Atlantic cooperation, we should work on going in the same direction so we can have a free flow of data across the Atlantic as needed.

FACILITATOR: Do you have a single message for the ministers’ meeting tonight and tomorrow?

VASSALLO: The public sector must take the lead and show that it trusts this market. If governments trust it, people will trust it.
HARTZ: Yes. Also, don’t forget the global perspective, the internet is global.
NØRREGAARD: Stay technology neutral, and we need a global perspective.
HUSTINX: Strong, effective and consistent protection is essential. Hope they recognise just how important this issue is.


FACILITATOR: Creative industries and culture [missed exact phrase] are 3% of EU’s GDP.
Several revisions of copyright and IP regulations coming up.
How to get the balance right between protecting artists and allowing innovation and free flow of data? Can we achieve a single set of rules? Is that desirable?

DAVID SWEENEY: (Chairman in Sweeney consulting, senior counsel to the [something] music industry)
Secret past: A musician first, but no money, so sadly had to become a lawyer. Finally got paid in the music industry. [laughs, though methinks this might not be so funny]
There’s a lot of negativity about the protection of IP rights online.
If content isn’t made legally available people will get hold of it in other ways. A number of things Sweeney dislikes about the way the music industry makes things available. SOngs expire on iTunes, he can’t access everything on his streaming service when he’s outside of Ireland.

The game industry is a good example: over the last eight years they’ve moved from selling boxes in shops, to online, to mobile games and apps in Facebook. The game industry has evolved a lot, and its growth has been very good as a result, with a 70-80 billion [euro?] turnover worldwide.

There are bstacles to administering and clearing rights within Europe. The record industry has been expert in delivering international rights systems that benefit themselves. IFPI was set up to negotiate a central deal for free circulation of sound recordings in the 1940s. This can be done again.

Sweeney tells a story about how hard it can be to clear rights – he recently tried to clear the rights for a local band who’d done a cover of Daft Punk and someone had put the video on YouTube – but Sweeney himself simply couldn’t get hold of the manager of the band or the record company in order to clear the rights. So rights clearance can be very difficult even for lawyers and certainly for small groups/enterprises.

Consumer demand will create the market. The challenge for the music and content industry is to lead rather than to follow. The games industry has done this, at least to some extent.

FACILITATOR: What probems has the national patchwork of rules created?

The industry has not led the way, so an illegal industry has blossomed up, and has almost taken over some areas. Kodak went bankrupt recently – they actually invented digital photography in the 70s, but were making so much off film that they kept their invention off the shelf. If you don’t lead, someone else will. In the short term, these changes are expensive – especially if you have to change a legacy system, and are competing with new players who don’t have those legacy change costs. But businesses need to see this as an opportunity not a cost. The only sustainable way of fighting piracy is to make legal opportunities so accessible and easy that consumers actually prefer them. Norway and Sweden show that people actually use legal services – for instance Spotify, Voddler.
Governments and regulators need to find the balance between incentives and punishments. If you only put in sanctions and don’t make good alternatives available you’ll have a problem. Denmark and France have put in place very harsh sanctions, but are at the same time making it very difficult for legal systems to make it in the market. Norway and Sweden probably have the strongest use of legal systems, and probably have the least sanctions in Europe. [Is this true? If so a great argument.]

Industry practice tries to use “fake” [my word] scarcity – where for instance Harry Potter films go first to cinema, then DVD, then live tv, then on demand – this may not work in the long run.
It is key that regulations don’t cement old structures as they are changing.
E.g. public support for film-making. How do you fund films that aren’t commercially viable that still need to be made? Sweden, France Portugal and maybe others won’t even consider funding films not for cinema. This should be technology neutral.
Public service television plays an important role in showing us commercial players what you can do online. BBC, Swedish television. This is when Mothander loves public service television, but he hates them when they buy content and claim it exclusively. Exclusivity just paves the way for pirates – legislation should discourage exclusivity.

We don’t know what the future single digital market is.
Digital services today take 9.57 zetabytes of data – and the amount of data is growing at the speed of Moore’s law.
We need rules. Data must be protected, as was discussion by the previous panel, but also data must be monetized. We need technology neutral legislation because we cannot see what future technologies will be.

FACILITATOR: Let’s return to the one stop shop, the one place where we can clear all our rights. Now, how long has the EU patent saga been going on? That’s one of the longest sagas of the EU trying and failing to reach agreement. Is it actually realistic to have a one-stop shop?

SWEENEY: Yes. One-stop shops exist. There’s a single company that clears cable rights for all of Europe, in Geneva. Manufactoring a CD there’s also a one-stop shop. This could be done, if the will was there. Rights holders need to get together and create these one-stop shops.

FACILITATORS: Is there a role for policy makers in this?

SWEENEY: A certain amount can be done involuntarily, but really, you need the cooperation of the rights holders. The way the movie industry works – territory by territory – with established business models, wealthy companies, a lot of key markets, a lot of people – if there was a magic bullet we would have had it before now. At least we’re not concentrating on SOPA today but on the positive sides.

FACILITATOR: So do you agree that policy makers can’t do this? Must be voluntary?

MOTHANDER: Two kinds of [? I missed this]
There is no Hollywood in Europe. If I want to clear a movie in all of Europe I have to ask movie makers in all these countries. It would be wonderful to have a clearing house. The music industry has an indie aggregator, and (Mothander continues) I don’t really understand why the movie industry doesn’t have that. Perhaps because more money is involved.
The other part is the clearing rights for the [….] so they can license a movie from Disney, but have to clear the soundtrack separately from the record company.

LUND: I don’t believe in the total voluntary solution, I think that’s why we’ve gotton nowhere. Need to create a cascading system, and this works in many other systems: we have stock exchanges and clearing houses. The relevant authorities need to set this up, and say that this is the system. Different rights (music, soundtrack, film) should be coordinated. Even just a database showing who holds the rights to what would be an enormous first step. We won’t get there if we base it on voluntary action.

SJÖMAN: I agree with everyone [although Sweeney says a rights clearing house should be voluntarily created by the rights holders and Lund argues it should be government-led]. One problem is that we do not address this from the point of view of innovation. Creators need to be paid. But there must be room for innovation and growth. What deos the present copyright system promote? Does it really promote innovation and growth? We need research on this in each country. If answer is no, we need to change the system.
We need fewer lobbyists and more empirical evidence. [I think he may have been quoting the Hargreaves report here.]

FACILITATOR: What about the irritation factor – having to watch that horrible video at the start of every legal DVD, and when you can’t copy the DVD for legitimate purposes.

ANDERS: Let’s separate burned media from online media. Nothing comes onto pirate sites from an online source, it’s all leaked from DVDs and burned media. Digital rights management works online, but not offline. [Is this true?]

LUND: Digital distribution is taking over, so maybe this will help. Make it consumer centric. But who should set this up?

[and that’s where I had to leave for the airport, a few minutes before the end of the panel.]


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