Media libraries and YouTube exempt from the geo-blocking ban after all?

Council of the European Union states its position on the portability of digital content

The European Commission is currently preparing measures against geo-blocking in the area of digital content platforms. These include the initiative to enable cross-border access to content such as videos, music or e-books, which users are legally allowed to access in their country of residence (known as portability). We previously reported on the European Commission’s proposed Regulation (see here). The Council of the European Union agreed on a Presidency compromise proposal on 26 May 2016. It provides for major amendments to the principles of the draft but still leaves many questions unanswered.

Key amendments to the proposed Regulation

The Regulation is now intended to be binding only for services provided against payment of money, unlike in the original draft. In that draft, every provider who verified the residence of subscribers was also to be obliged not to use geo-blocking. According to the current draft, YouTube as well as media libraries provided by the public broadcasters would not be obliged to allow cross-border access. While YouTube does not require its users to pay a fee anyway, the Regulation clarifies that the payment of a mandatory fee such as a broadcasting licence fee should not be regarded as a payment of money either. This means that the users of these free services would still have to accept blocks on access from abroad, even if they have set up an account with a provider and it would therefore be possible to verify their country of residence.

Instead, providers of free services are to be given the option of voluntarily complying with the provisions of the Regulation. They would then benefit from the provisions in the Regulation which state that access by subscribers from other European countries would be deemed to occur solely in their Member State of residence under copyright law and any contradicting contractual provision in licensing agreements between the provider and the right holders would be unenforceable. However, the prerequisite for this is that the providers fulfil the obligation stated in the Regulation to verify the country of residence of their subscribers.

The new draft partly clarifies the measures to be used by the provider to verify the subscriber’s country of residence. A conclusive list of measures, such as checking ID cards, bank account details or regular checks on IP addresses, is provided. The provider has to rely on a combination of these, unless a single measure to determine the place of residence is sufficient. A simple declaration by the subscriber that he or she is resident in a particular country is not sufficient. It remains unclear under the present draft Regulation exactly when the measures used by the provider are sufficient to verify the user’s country of residence. What is clarified is only that reasonable means are to be used which do not exceed the extent required for the purpose. Right holders and providers can address this situation either by coming to an agreement on the measures to be used, or by having the right holder authorise access to its content from abroad without performing a verification of the country of residence. In these cases, the agreement between the provider and the subscriber regarding the provision of the online content service would be sufficient.

Especially the latter exception from this duty to verification was controversial. One point of criticism was that platform providers with considerable market power could force right holders to grant authorisation. A request was therefore made to limit the exception to cases in which the content is marketed on a non-exclusive basis to all service providers in the EU.

Clarification still required

Two further flaws of the original draft remain unresolved. For example, there is no agreement on the issue of when a user is merely on a “temporarily present” in another European country, which would entitle this user to access the content to which he or she has subscribed. To avoid overly broad interpretations, some of the delegations of the Permanent Representatives Committee had requested that “the temporary presence ought to be transient and short”. What is also still unresolved is how the provider will manage to distinguish between consumers and entrepreneurs. According to the draft Regulation, portability is only meant to benefit consumers.

Both uncertainties can have serious consequences for providers. If the prerequisites for granting cross-border access are not met, providers risk breaching their licensing agreements with right holders. According to the current draft, this liability risk would be borne solely by the provider.

Conclusion and outlook

During the next steps in the procedure, clear rules should be defined for providers to determine the meaning of “temporarily present” and the consumer status of subscribers. A provision could be included by which the relevant prerequisites are deemed to be fulfilled if verification duties are observed by the provider with regard to the right holder. But first, the European Parliament has to give its opinion on the matter.