Is the biggest barrier to pan-EU content services the EU itself?

To the Brussels mind, content services are a conundrum: why don’t market forces naturally take advantage of the Single Market? The canonical example, see the recent Commission consultation, is why can people exercising their ‘free movement rights’ (i.e. ex-pats or Eurocrats) not get access to services from their ‘home’ country?

At first glance, it is an odd situation as large language-based markets already exist:

  • I can buy physical books, CDs and DVDs in the UK and have them delivered to Belgium without difficulty; and
  • A massive ‘blind-eye’ is turned by the entertainment industry to the grey market for foreign satellite TV subscriptions.

Meanwhile, rights holders appeal to a ‘tradition’ (!) of national licensing, and that they can best maximise profits by working within national regimes. The latter at least is no surprise to the economically literate – consumers vary in wealth and price discrimination is a reasonable aim (if the seller can prevent arbitrage between purchasers).

When I sit on a plane, I can be almost certain that the person next to me has paid a different price for their ticket. No one really thinks twice about it, and the student in seat 26A relies upon the fact that the business woman in 3F will pay 10x more. The former had to show their student pass, and security requirements (conveniently) prevent resale to the executive.

But online we hit two big snags:

  • the price transparency that otherwise makes markets work well, facilitates comparison-based advocacy such as the infamous episode in 2000 that led Amazon to commit never to use price discrimination
  • Brussels feels uncomfortable with price differences in the single market.

The iTunes decision of 2008 classically combined the two phenomena for online content.

The real world examples above suggest that rights holders are, in practise, generally satisfied with the market segmentation possible on the basis of language. What I suspect they really fear is:

  • the ‘politics of benchmarking’, and they know that cross-country comparisons have become the soft-law weapon of choice for the Commission (e.g. car prices).
  • the uncertainty in the consultation document from opening up debate about second-hand markets, which inevitably expand arbitrage opportunities.

Consequently, my recommendation is that political leadership is more important than legislative change:

  • defending price diversity as much cultural differences in the single market; and
  • publicly rejecting the ‘property’ metaphor – information is not the same as e.g. apples. Resale should therefore not be a major policy focus, but the time saved can be used for a fuller review of IP without the rhetorical distortions of the ‘property’ metaphor!

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