BPN 1590 Entertaining Europe in the Electronic Age

On January 24th, 2012, Ms Neelie Kroes, Vice-President of the European Commission responsible for the Digital Agenda, addressed the European Parliament Intellectual Property Forum, at the European Parliament in Brussels on the subject of Entertaining Europe in the Electronic Age.

Thank you for inviting me to speak on the opportunities for the creative sector in the online age.

It's an important topic. This sector offers our rich cultural heritage a proud platform; our people an opportunity for self-expression; our economy a much-needed boost.

And the digital era brings vast opportunities: I want the creative sector to make the most out of them. And that's why we just held a consultation on that very topic.

Reviewing the results is proving very interesting. Different actors have different emphasis and perspectives, of course. But few find much merit in sticking to the status quo.

To stay in the game, Europe must adapt. Many actors already see the economies of scale from making it easy to operate across borders. They see the advantage of systems that are more transparent, more streamlined, more direct. They see the benefits for European creators, consumers, and culture.

Of course, many are also concerned about issues of illegal content. And I agree with them that we need to push people away from piracy towards legal content. Sites that knowingly enable massive copyright infringements and make large sums of money at the expense of creators need to be stopped. As regards legislation to combat piracy, I have said on a number of occasions that we should not put in place disproportionate and highly intrusive measures with the potential to disrupt legitimate online activities. Therefore I think the US legislators have done the right thing by making a pause and seeking a better anti-piracy solution than the SOPA and PIPA bills which were on the table.

Closer to home, we urgently need to do much more in our quest for the European Digital Single Market, to generate more growth and jobs, to better reward and recognise creators and to offer a better deal to European consumers.

In the music industry, we already saw the signs of digital transformation a decade ago. The music industry clung on for dear life to a model based on CDs. For as long as they could: for far too long, in fact.

The music industry has learned its lesson, and is embracing the digital age. It took some painful decisions on our side - some at my initiative when I was Commissioner for Competition. But we have seen new licensing models arising, and more and more legal offers. There is still work to be done to facilitate cross border licensing and ensure transparency, but my colleague Michel Barnier is working hard on that.

That is positive: we have provided a better digital offer, and we have shown that people are willing to pay for it. Last year, for the first time since 2004, overall music sales were up: and that was thanks to digital. Digital downloads soared 17% to 3.6 billion, and the number of paying subscribers 65% to over 13 million.

Over here, the same trend is noticeable. In the first half of 2011, in France alone, music downloads generated over three million euros; add in 2 million from ad-supported streaming and over 6 million from subscription services, and you can see several highly viable and significantly growing business models.

What we are seeing at the moment is huge growth and diversity.

First, growth in consumer expectations. They expect an offer that is open rather than limited, "on demand" rather than on a fixed schedule, interactive and targeted rather than passive and controlled. We cannot ignore that: because these days if consumers don't get what they want, they won't be afraid to switch off.

Second, growth in the scope of creative content. It's not just about taking "old media" like music, TV and film and digitising them – although that is in itself lucrative. It's also about new media that didn't even exist before, content which is interactive, social, even user-created. Remember: the more widely we define culture and entertainment, the bigger are the market opportunities, the more unlimited our horizons. We are in an age where one video game alone - Call of Duty: Modern Warfare Three - took more in one weekend than any European film.

And third, growth in the number of ways you can make money, and better reward creators, using content. Possibilities way beyond the old models. Look at Angry Birds: a franchise that sent Rovio Mobile towards a 100 million dollar turnover last year. Enough money to produce The King's Speech 8 times over. That's not bad for a smartphone game largely given away for free.

Ironically, this growth and diversity has brought convergence. As the range of consumer demands, the range of creative works and the range of business models become more diverse, then the ways to operate them have tended to converge.

Once you had to use lots of separate tools: if you wanted to know where to find a business you'd turn to the yellow pages, for general information you'd use an encyclopaedia, for a chat with friends the telephone, for entertainment a game or radio or a book. One by one those have all converged. They have become digital: all those tasks and all those tools have found a natural home on the Internet and digital devices.

Cloud computing is obviously helping this move. In the Cloud era, with just an Internet connection, you can access and provide content: wherever you are, through whatever device best suits you at the time. And all of it legally.

This is a great opportunity for creators and businesses. We see plenty of different business models using Cloud technologies. From pure storage services, to social platforms, to user-created mixing facilities. But they all have one thing in common: you can precisely track and report music usage. So each and every play can be "legal", recognised, and remunerated! Isn't it great news for creators? I really hope Europe will see these great opportunities in the Cloud.

I will do my best to help these opportunities come true. Before the Summer, I intend to present a European Cloud Strategy in which we will assess all possible obstacles for the Cloud to enable a flourishing business for content, both for providers and right-holders.

And in this trend of good news that ICT bring to creators and businesses, let me turn to the next technological step in the audiovisual field: Connected TV.

Within just 2 to 3 years, 90% of the TVs sold in Europe will be connectable to the Internet. Already, half of European consumers use video-on-demand several time per week. While across the Atlantic, Netflix is already the biggest source of net traffic.

And if European consumers make that switch there is a huge potential for them. The potential to combine the best of what they get from existing media, with the best of what they can get from the new. To combine their favourite TV shows with their favourite games and social networks. Material on-demand, not on schedule, from the comfort of your sofa.

These opportunities aren't just for consumers. For device makers, there is a whole new market.

For broadband suppliers, there would be a leap in demand for bandwidth-heavy services, a leap that will seal the business case for investment in high-speed broadband networks.

And for suppliers of content, a chance to target what consumers are demanding – and give them a very attractive alternative to illegal material.

This year, we will be coming forward with a paper on Connected TV. It will consider how Europe can realise the opportunities – and of course, how it can meet challenges too. For example: can we preserve the integrity of broadcasting signals? How would competing but incompatible technical standards affect the viewer experience? How will our traditional rules on advertising, protection of minors and promotion of European works apply? We want to ask these questions, and make sure we are ready to let this market flourish.

We don't have all the answers yet. But I want to find them out: and so we will be talking to stakeholders — users, producers and regulators — so that Europe can truly hook up to the Connected TV ecosystem.

Because we should not lose sight of what we can achieve. We can offer creators a way to make a decent living from their art. We can offer consumers a seamless service, the widest possible choice, the ability to lawfully access whatever they want, however they want, wherever they are in Europe. And in between creators and consumers, we can offer an open space for innovation, so we can respond sustainably to digital realities.

Getting to the future doesn't require one single leap, but baby steps are no longer enough. So let's help the creative sector stride ahead into the digital age.

Thank you.

BPN 1886: EC Commissioner Neelie Kroes on copyright

On November 19, Neelie Kroes, Vice-President of the European Commission, responsible for the Digital Agenda, held a speech at the Forum d'Avignon in the historical city of Avignon in France on the issue of copyright. Besides the text of the speech, video-interviews are available. Who feeds the artist? The creative sector is a unique source for growth, both economic and social. And it's something we do well in Europe. The current winner of the Oscar for Best Picture; the bestselling album in the US this year; 7 out of the last 10 winners of the Nobel Prize for Literature: what do they have in common? They all come from the EU. This is essential to our image abroad, and essential to our economic future. And if we want it to stay this way, we must be able to support those who create art. We must be concerned about the fate of Europe's struggling artists and creators. Art feeds the soul. But who feeds the artist? Often, this debate focuses on copyright, especially enforcing copyright. But this isn't the whole story. For a moment, let's take a step back from the tools, and remember what we are trying to achieve. Legally, we want a well-understood and enforceable framework. Morally, we want dignity, recognition and a stimulating environment for creators. Economically, we want financial reward so that artists can benefit from their hard work and be incentivised to create more. I am an unconditional supporter of these objectives. But let's ask ourselves, is the current copyright system the right and only tool to achieve our objectives? Not really, I'm afraid. We need to keep on fighting against piracy, but legal enforceability is becoming increasingly difficult; the millions of dollars invested trying to enforce copyright have not stemmed piracy. Meanwhile citizens increasingly hear the word copyright and hate what is behind it. Sadly, many see the current system as a tool to punish and withhold, not a tool to recognise and reward. Speaking of economic reward: if that is the aim of our current copyright system, we're failing here too. 1000 euros a month is not much to live off. Often less than the minimum wage. But most artists, and not only the young ones at the early stages of their career, have to do so. Half the fine artists in the UK, half the "professional" authors in Germany, and, I am told, an incredible 97.5% of one of the biggest collecting society's members in Europe, receive less than that paltry payment of 1000 euros a month for their copyright works. Of course, the best-paid in this sector earn a lot, and well done to them. But at the bottom of the pyramid are a whole mass of people who need independent means or a second job just to survive. This is a devastatingly hard way to earn a living. The crisis will only make this worse, as public and private spending on arts, so often seen as discretionary, feels the squeeze. This must be a worry to one of the most valuable and unique sectors in Europe: it is certainly a worry to me. We need to go back to basics and put the artist at the centre, not only of copyright law, but of our whole policy on culture and growth. In times of change, we need creativity, out-of-the-box thinking: creative art to overcome this difficult period and creative business models to monetise the art. And for this we need flexibility in the system, not the straitjacket of a single model. The platforms, channels and business models by which content is produced, distributed and used can be as varied and innovative as the content itself. ICT can help here. In all sorts of sectors, ICT can help artists connect with their audience, directly and cheaply. And it can help audiences find and enjoy material that suits their specific needs, interests and tastes. And ICT can help in other ways too, supporting a system of recognition and reward. A Global Repertoire database to find out what belongs to whom. Tracking technologies, to permit a totally transparent process for artists and intermediaries to find out who is looking at what artwork when and to distribute revenues accordingly. Digitisation, to make artworks available for instant transmission to distant fans. Look at Cloud computing: it presents a totally new way of purchasing, delivering and consuming cultural works - music, books, films - which will certainly raise new questions about how licensing should function in an optimal way. It's not just about technology: smart legislation can help, too. We need to find the right rules, the right model to feed art, and feed artists. We need the legal framework to be flexible. This is my recipe, my commandment, my bumper-sticker to nurture creation. The digital world changes quickly, and if allowed to do so can permit creativity in all stages of the chain. So we shouldn't prescribe a particular model, but set a framework allowing many new models to flourish. In particular, we should make it as easy as possible to license, not obstruct that process while making sure that the system efficiently secures the interests of artists themselves. This is what we are doing at the Commission with our future legislative proposal on collective rights management. But as I said, it's not only about copyright legislation. Take tax, for example. Isn't it just common-sense to think that eBooks should benefit from the same reduced VAT rates as physical books? The legal regime – the EU's own, I admit – makes it illegal to do that. Not just discouraged, but illegal. Personally, I find this very difficult to explain. Thankfully, my colleague Algirdas Semeta is preparing a new strategy on VAT. This subject will certainly be debated. Another example is the audiovisual industry. I know how important "windowing" is for the industry under current business models and I don't want to take decisions for the business, it's not my job. As new ways of watching films develop in the market, binding legislation dictating the sequence and period of release windows seems inflexible – and may make it harder, not easier, to provide and purchase content legally. A system of rewarding art, in all its dimensions, must be flexible and adaptable enough to cope with these new environments. Or else we will kill innovation and damage artists' interests. These are just a few examples of rigid legislation from the pre-digital era. There are many new ideas out there – ideas, for example, like extended collective licensing as practised in Scandinavia, or other ideas that seek to both legitimise and monetise certain uses of works. Are these ideas the right ones to achieve our goals? I don't know. But too often we can't even try them out because of some old set of rules made for a different age – whether it is the Berne Convention, the legislation exceptions and limitations on the VAT Directive or some other current law. So new ideas which could benefit artists are killed before they can show their merit, dead on arrival. This needs to change. I can't set out for you now what the model should be and indeed it's not the kind of model that should be developed from the centre. Rather we need to create a framework in which a model – or indeed several models – can develop organically, flexibly, in ways that support artists. I see how some European stakeholders see with horror the arrival of Netflix, or the expansion of iTunes. We need to react, not to be paralysed by fear. Let's take chances. As Zygmunt Bauman put it, "the function of culture is not to satisfy existing needs, but to create new ones". So that's my answer: it's not all about copyright. It is certainly important, but we need to stop obsessing about that. The life of an artist is tough: the crisis has made it tougher. Let's get back to basics, and deliver a system of recognition and reward that puts artists and creators at its heart. Let's not wait for a financial crisis in the creative sector to happen to finally adopt the right tools to tackle it.

BPN 1583: Dutch digital pioneer Pierre Vinken died

On Friday November 4th, 2011 Dr Pierre Vinken died at the age of 83 years. In most obituaries he will be remembered for bringing Elsevier to a merger with Reed. I would like to remember him as the pioneer of the digitisation of information in the publishing industry.

In my Dutch languagebook  Toen digitale media nog nieuw waren – Pre-internet in de polder (1967-1997) about the Pre-internet period in the Netherlands, more than a page is devoted to his pioneering.

Beside his job as a neuro-surgeon in the Academic Hospital in Leiden, Pierre Vinken worked at Ëxcerpta Medica, an international publishing company of ‘abstracts’ in the medical field. The publishing company had a fixed staff of 54 medical specialists who were responsible for 35 ‘abstract’ magazines and reference works. The editorial staff produced summaries of bio-medical articles and provided key words. In the mid sixties the archive contained more than 1,3 million English language ‘abstracts and a multiple number of key words. Besides the original articles were copied for back-up.

DrPierre Vinken was in 1966 appointed as the managing director of Excerpta Medica. He realised that the production process was hardly efficient. It was the start of developing new and big plans for the magazine portfolio. One point was the expansion of the number of ‘abstract’s’.

A summary was not intended just for one magazine, but usually was published in more than one magazine. In practice this meant that an article was retyped, including key words and again typeset. Vinken also strived after quality and especially in complete consistency of the key words, which were controlled by a thesaurus, called malimet (Master List of Medical Terms). Given these two area, Vinken judged that the complete production process should be computerised. Shrewd as he was, he did not want to have a larger production of magazines and expand his typing room. In fact he wanted more production and less people.

In his job as neuro-surgeon he saw the hospital information system being developed by Dr A.R. Bakker. For him this was the occasion to have a study performed and an inventory of technical specifications made. This was in 1967.  However the system that was sketched, did not exist. So Vinken started to look for a computer expert, which he found in Frans van der Walle, a air plane engineer. He advised him to acquire a computer system of four linked NCR 135 machines. This was the signal to start up a technical company next to Excerpta Medica for developing the software and running the production processes.  Under the name Infonet, the system house started to make shadow production runs in 1968. By 1969 the system was implemented started to realise significant savings, while the portfolio was expanded with magazines for even more smaller niche markets. With the knowledge gained Infonet was able to grow as a software company also working for third parties. In the Netherlands it developed a general encyclopedia system for Het Spectrum, a VNU subsidiary, and the national library system PICA, now sold to OCLC.

Being the first publishing house with such a production system and working in the medical sector, the company was an attractive addition for a scientific publishing house. So by 1972 Excerpta Medica was acquired by Elsevier which was a general publishing company with consumer books and magazines as well as business and scientific information products.  Vinken was accepted to the board of directors and started to sell consumer magazines and books and concentrate on a professional information company. By 1974 Excerpta Medica started to offer its magazines electronically, either by magnetic reel or online services like Dialog and BRS. One of the major feats was the acquisition of Lexis-Nexis in 1994, a launching platform for electronic publishing. Eventually Vinken led Elsevier to a reciprocal merger with the British Reed Company. In 1999 he took leave from Elsevier. The company had become the most important provider of business and scientific information.

Pierre Vinken (right) next to Neelie Kroes, deputy minister for Traffic and Water works, during the launch of the Dutch node of the European network EURONET*DIANE in 1980. (photograph © NBBI Archief)

2008: Year of the fibre breakthrough

Amsterdam got its Christmas present from the European Commission. The municipality of Amsterdam was cleared from unfair state competition in the matter of the fibre project of the Cityring from the complainants the cable operator UPC and cable operators’ association VECAI (which changed its name to NLkabel recently). Amsterdam had never doubted the positive outcome of the EC investigation.


(c) 2007; Houthoff Buruma Solicitors

The Directorate General of Competition, headed by Ms Neelie Kroes, decided to start an investigation, acting on the complaints of UPC and VECAI. The municipality of Amsterdam had invested 6 million euro as equity with private companies in the passive level the proposed Cityring. Amsterdam did the investment in order keep control on an open fibre network. UPC have been closed out of the bidding process early, lodge a complaint of unfair state funding with the DG Competition. The DG started a voluntary and non obligatory investigation. A lot of documents went back and forth, confidential documents had to be cleaned up due to corporate details and draft documents were held up due to court cases. Even a case before the Court in Luxemburg was under consideration. In May the DG Competition was ready to start the final leg of the investigation, which ended in December with a ruling favourable for the municipality of Amsterdam.

The DG Competition looked at three items:
a. does the municipality act as a market conform investor, in other words does the municipality not support the foundation of a company unfairly with state support;
b. Is fibre to the home a achievable business case;
c. And some specific sub-items.

Already in December 2006 UPC and VECAI had the draft text, clearing the municipality of unfair support. UPC decently kept its mouth shut as the investigation was not yet final. Remained left the business case and the specific sub-items. Helped by the timeframe, the business case was not an item any longer either. In the Netherlands FttH initiatives mushroomed: Nuenen, Hillegom, Geldrop-Mierlo, Deventer, Enschede as well as abroad. Besides the projects various companies competed for these projects; in the Netherlands notably Reggeborgh and KPN. Last October, the Amsterdam municipal project manager Dirk van der Woude has published an updated list on Dutch and foreign FttH projects. The last sub-items have been cleared by the municipality of Amsterdam successfully.

So Amsterdam can continue its project to bring fibre to more than 450.000 Amsterdam homes. In the meantime more initiatives spring up, besides the already mentioned one. As ambitious as the Amsterdam Cityring is the living lab Almere project where 70.000 will be connected to fibre before 2010.

From the updated list it is clear that 2008 will be the year of the fibre breakthrough in The Netherlands. Not in the list is yet the Fibre to the Farm (FttF) project, a project where rural areas will be linked up to urban networks. Difficult areas will be bridged by leading cables through trees in woody areas; besides farmers will dig the ducts with tractors instead of calling in a cable laying contractor with urban experience. Also internationally fibre will break through with large urban areas in 2008. Fibre will no longer be in a pilot phase, but will be in a project phase.

Cable projects will have to prove in 2008 that they can reach the same type of speeds by cable. So far UPC has demonstrated speeds of up to 100Mbps, but has not started marketing it. It looks like UPC and other cable operators will have to stick to lower rates over against fibre operators. I look forward to the battlefield in Almere.

The usage of higher speeds will have consequences for content. We have seen the usage of video grow fast. Also the social networks have grown with movies and twitter-like services. But with higher speeds, services will have more freedom to compose services with live video. This will for example be a challenge for newspapers and broadcast services. But it will also have consequences for bloggers. So far the majority of bloggers have worked with text. But I would not be surprised, when we see more bloggers go into audio or video interview blogs.

Blog Posting Number: 964

Tags: FttH, FttF, Fibre to the Home, Fibre to the Farm, Fibre to the Home, Fibre to the Farm, FttH, FttF