The cost of imperfect regulation on digital growth in the EU

Professor Lucy Küng of University of Jönköping started the conference with an opening address that underlined the enormous growth potential of digital markets. But also the huge challenges both Sweden and the EU faces making it possible. There is a great need for all actors, market players as well as politicians and regulators, to work together creating the right framework to make digital innovation and growth possible.
Many speakers stressed the general economic importance of innovation in the ICT sector, and the equally great cost to Europe’s growth of an imperfect regulatory structure.

Simon Hampton of Google highlighted the increasing significance of  ‘big data’ (dramatic increases in the amount and smart analysis of customer data) as a mean to increase productivity in various business sectors.  Indeed, industries making the most of the value of the data they have access to are 6% more productive than their competitors that don’t. An exception for data analytics has also been proposed by Professor Ian Hargreaves for the UK, and Simon proposed Sweden should join with the UK to promote that change in Brussels.

Dr. Martin Hvidt Thelle of Copenhagen Economics presented compelling evidence on the fragmented nature of the European digital market and how this has contributed to Europe’s productivity trailing that of the US since 1997. Harmonised regulation could give a major boost to EU productivity and growth. Notably, Martin identified 100 legal barriers that currently block a digital single market in the EU.

Copyright and the digital future

All speakers acknowledged the positive effects of strong copyright protection. The need to address Internet piracy was also mentioned. But the scope of the debate, and many of the speakers’ contributions, leaned towards the need to adapt market conditions and regulation to fit a digital age and to meet consumer expectations.

Professor Ian Hargreaves of Cardiff University was a leading keynote. In 2010 he was invited by UK Prime Minister David Cameron to conduct a review of the relationship between intellectual property and economic growth. In the report Hargreaves suggested introducing a Digital Copyright Exchange to make it easier and cheaper for rights owners to sell licences and for others to buy them. He proposed new legislation to enable the use of so-called orphan works and that the UK take advantage of the freedom to adopt copyright exceptions.

Hargreaves described how he had tried to define exceptions by looking at the original goals for copyright legislation (i.e. to protect the right of innovators and artists and at the same time make their works available to the public and concluded that this did not cover a right to stop people collecting data).

From a different angle, Simon Hampton discussed the relationship between copyright and venture capital investment. He noted that while Silicon Valley depends on copyright exceptions, Hollywood relies on copyright protection. Simon noted that such exceptions to copyright are not used at the expense of copyright holders and that the exceptions are not a threat to copyright.

The importance of content for the growth of the digital economy and innovation

The fundamental importance of access to attractive content to create growth in the digital economy was underlined by several speakers, particularly some of the panellists debating roadblocks to digital growth, including Georgi Ganev, CMO, Telenor Sweden; Anders Sjöman, VP Communications, Voddler; and Stefan Trampus, Head of Broadband Services, TeliaSonera.

Eva Hamilton, CEO of SVT, also mentioned content also a key to growth. On copyright she stated that it needs to be respected, modernised (through easier rights clearance) but also exercised modestly. One statement that stirred up some debate was her proposition that the collecting societies, whom have a monopoly on rights clearance, need monitoring. As public service television provider, she also underlined the importance of accessibility for all, of extending broadband reach to all citizens, and of an open Internet, free from traffic discrimination.

Linking content and copyright Ulf Pehrsson, Global Head of Government and Industry Relations at Ericsson focused on the market supply failure of lawful digital content. He identified three areas causing the failure; (i) limited availability due to strict windowing rules in the audio-visual industry (ii) technology specificity of copyright/licensing that limits innovation and launch of new digital services (iii) unreasonable transaction costs for rights clearances.  Stefan Trampus proposed to look into; (i) European copyright exchange; (ii) Sharper anti-trust monitoring of Collecting Societies and (iii) Make must-carry legislation in Sweden platform neutral. Georgi Ganev underlined that politicians and regulators need to take a holistic approach balancing between enforcement and measures ensuring better clearance mechanisms both on a national and European level. 

Questions and comments from the floor, as well as the contribution from panellist Elisabet Widlund, CEO of Musiksverige, pointed at the difficulty of migrating legacy business models onto digital distribution platforms. The shift “from analogue dollars to digital cents” is painful for rights holders, distributors, producers and creators. Ganev and Trampus suggested that more flexibility in how operators could charge for content would improve business model options. TeliaSonera added that flexibility for operators to charge not only consumers but also content providers is needed when developing new business models.
 

Event organisers: Jönköping International Business School, IT&Telekomföretagen, Ericsson, Telenor, TeliaSonera, Google, Ernst&Young, and UK Trade and Investment.

For further inquiries please contact: Pär Nygårds at IT&Telekomföretagen.