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The European Publishers Council (EPC) is a group of 28 Chairmen and Chief Executives of European media corporations actively involved in multimedia markets spanning newspaper, magazine, Internet and on-line database publishing (a list of members is attached). Many members of the EPC also have interests in private commercial television and radio.

The EPC welcomes the opportunity to contribute to the discussions of the Economic and Social Committee on pluralism and media concentration. Many changes have taken place in the media market since the Commission first published its Green Paper on Pluralism and Media Concentration in December 1993, much of which has been described in the subsequent Commission Green Paper on Convergence.

This Memorandum sets out to provide information to the Members of the Economic and Social Committee about the fundamental changes to the publishing market and the impact of the Internet on business and regulatory models.

Part 1 offers a summary statement.
Part 2 gives an overview of the Internet and Online Publishing.
Part 3 explains why the EPC would not favour EU-wide legislation on pluralism and media concentration.

The EPC believes that it is essential that the current discussions on media concentration take place within the broader context of technological and market convergence. In particular we urge you to take into account the impact of the Internet on traditional mass media markets and the benefits that this has already brought to consumers in terms of media diversity in Europe.

The traditional broadcasting industries were entirely fashioned by legislation. For over half a century the growth (or rather restriction) of competition was solely under Government control. Rooted in an era of spectrum scarcity Governments sought artificially to promote pluralism through public funding of state controlled broadcasters and statutory restrictions on ownership of private television and print media. The present situation with the Internet is substantially different. It is a market largely outside the control of national governments, and it is already highly competitive: it is much more akin to the world of publishing than to that of conventional broadcasting. The new media market and its customers benefit substantially from this new architecture: a wide diversity of suppliers, unrestrained by unfair competition from any dominant player.

We welcome the ECOSOC's recognition of the fact that media companies face new challenges. As both the technologies and markets convergence, publishers face new forms of competition from players not traditionally associated with the publishing market.

These new competitors include state-funded broadcasters, computer software and telecommunications companies as well as new service providers which offer news, information and entertainment services.

The Internet is fast becoming a new and highly competitive global mass media market. It is axiomatic that, in an era of burgeoning diversity, it is no longer appropriate to single out traditional media companies in the private sector - print, radio and television, and subject them to specific types of restriction at national or European level which would hamper their ability to compete in the broader market.

It is essential that competition authorities ensure fair competition in this highly complex market and act to prevent new forms of unfair competition emerging. In particular we would like to highlight the growing dominance of state funded broadcasters on the Internet. The German Government has already acted to limit the scope of activities of their state-funded broadcasters in order not to undermine the commercial market. In the UK, publishers are seeking similar restraint on the BBC (further information available on request).

Competitiveness is of fundamental importance given that European companies must prepare for global competition on a scale never experienced before. We would suggest an enhanced role for competition policy to help regulate converging markets although, in order to take account of the globalisation of the media sector, a careful review of relevant market definitions will be necessary.

Two key themes emerged from the Commission's Green Paper on Convergence which we endorse:

a) that convergence of markets, combined with the cross-border nature of modern communications, has the effect of diminishing the relevance of existing, national, regulatory agencies; and that

b) any new regulatory framework should be limited to what is strictly necessary to achieve clearly identified objectives.

While it is apparent that at the global level there is convergence of a) the physical means of communication (e.g. a satellite or a printing press), b) the physical means of its reception (a television or a computer and c) the content (an article or a television programme), it is also true that at the national or local level that there is rapid divergence and considerable content diversity. This means that regulatory intervention at the global level is inappropriate if not impossible although we would support efforts at the international level to find consensus on regulatory principles.

Part 2 - The Internet and online publishing
The Internet is not a traditional mass medium like radio and television, distributing expensively produced or acquired programme assets to very large audiences. Developing as it has outside government regulation, it is a distribution network of many thousands of suppliers, with an even greater range of products. Much of the content is simple information: much online traffic is devoted to the consumption of information formerly found in printed form. It is interesting to note that online users in the US spend an average of 8.2 hours each week reading newspapers and magazines, but 10.8 hours per week on the Internet. At the moment, online usage in the EU averages around 8 hours per month, but this is set to rise sharply as PC penetration increases. In the US market, where competition has been allowed to develop freely, new media start-ups have been able to compete on equal terms with traditional media companies online.

As with any new technology, there are high risks but also opportunities in offering new services to the public. The investments are substantial, but the potential benefits in the long term are great if the sector is allowed to develop in a fair and open manner. We believe that it is in Europe's interest that a diverse and flourishing market should be encouraged in the provision of new commercial Internet services. This is an area presently led by US companies, but one in which European expertise - allied to the wide range of cultures and traditions - offers considerable scope for development. Of necessity, concomitant revenue streams will be developed - including income from advertising, content, sponsorship and e-commerce. These will be essential to enable the new ventures to compete successfully and flourish.

Distinguishing the online market even further from traditional broadcasting, a key element in its future will be the development of e-commerce, the means for buying and selling goods over the Internet. Further details on market development are available on request.

The online market is growing at some speed.
According to Jupiter Communications, a leading new media research company, Internet penetration in Europe will reach 31% of European households by 2003 (47,292,000 households). Currently European penetration is only around 10% (14,343,000 households). Growth in some EU countries, such as the UK, will be even stronger than the European average. The UK is expected to increase from its current 11% household penetration (2,617,000 households) to 41% penetration by 2003 (9,818,000 households). Jupiter forecasts that this strong growth over the next five years will move the Internet from a marginal activity to a mass market activity.

According to Jupiter Communications, e-commerce is expected to increase in proportion to online usage. The UK and Germany will be Europe's largest online markets followed by France. The consumer Internet market for music, air travel, books, and software in France, UK, and Germany-which was more than $68 million in 1997-will increase to $3.26 billion USD by 2002.


The EPC is opposed to legislation at the European level to regulate media concentration and pluralism for three main reasons.

1. For the reasons set out in detail above, we feel that it is no longer appropriate to single out traditional media companies for sector-specific restriction when the media market is now much broader and complex.

2. An internal market directive will not meet its stated objectives of removing barriers to cross-border investment or stimulating growth in the media sector. On the contrary, we believe media specific legislation to regulate media concentration will discriminate disproportionately against traditional media companies such as publishers.

3. The question of pluralism must be judged and dealt with at the local, i.e. national level against carefully measured public interest objectives.

Our further comments are made against the following background:

- The European Publishers' Council (EPC) has always accepted in good faith that the Commission wanted to initiate EU legislation in the area of media concentration to help, not hinder, the development of European media companies. The EPC represents many of Europe's most successful players in the media sector in Europe and as such has submitted views throughout the pre-legislative, consultative phase with a view to informing the Commission's thinking in this area.

- On the basis that the earlier drafts for a Directive on media concentration have received virtually unanimous opposition from the very companies the Commission has set out to help, we would continue to oppose any initiative to reintroduce proposals for a Directive in this area for the three main reasons above.

- The EPC recognises that a very small number of companies have either not opposed EU intervention or have sought solutions to specific problems which they face at national level through EU harmonisation . This minority opinion does not in our view justify a detailed directive at EU level which would not benefit the majority.

- Instead we would urge the Commission to consider alternative methods of dealing with individual requests for intervention, for example through existing mechanisms for bringing infringement proceedings or scrutiny under EU competition regulation.
Why a directive would not meet its stated objectives of either removing barriers to cross-border investment or improving media diversity:

1. There is no case for an internal market directive because the barriers that exist are commercial (often connected with acquisition and exploitation of rights), cultural and linguistic, not legal. No amount of harmonising legislation would remove these barriers.

2. A very detailed directive is not justified at a time when the Commission is seeking ways to find solutions to the regulatory framework for the whole media and communications scene, including new players in the broader market.

3. Publishers feel a directive that deals only with newspapers, TV and radio unfairly discriminates against these traditional media. Telecommunications companies, software conglomerates, Internet access and service providers and increasingly publicly funded broadcasters all compete with publishers online, none of which would be caught by a media ownership directive, even though their media market share will be increasing year on year. A publisher's share of a joint venture with any of the above would be counted in any calculation for cross-media audience under the terms of a multi-media threshold whereas a non-media company from the telecommunications or computing world could forge an alliance with a TV company without such constraints (subject to clearance by the competition authorities).

4. With the advent of digital technologies, particularly the introduction of digital television, European consumers will be able to receive hundreds of different information and entertainment services from all over the world. Many of these new services will be interactive, changing the face of media as we know it today. The convergence of traditional media companies with new players, new types of electronic services and new forms of delivery will lead to lowered barriers to entry and increased consumer choice without the need for media-specific restrictions on ownership or audience share to promote diversity.

5. A converged multimedia market, with a glut of choice, reduces the need for regulators artificially to promote plurality through media-specific legislation. As pictures travel along telephone wires and television sets are routinely fitted with modems to supply Internet services, a new, more generalised approach to regulation based on competition policy will more appropriate.

6. We recognise that both the telecommunications and media sectors are prone to concentration as successful companies attract more customers and profitable companies attract offers of take-over, merger or joint venture. In such a competitive business environment we welcome vigilant antitrust regulation. Many concentrative joint ventures involving media companies already fall within the Commission's competence and the EPC has always supported the Commission's moves to reduce the thresholds and simplify procedures under the EU Merger Regulation.

7. With dramatic increases in Internet use and the start of digital television the regulatory framework must recognise the natural shift away from centralised regulatory controls which were necessary in days of spectrum scarcity. Plurality will be guaranteed by the unprecedented increases in media sources and content.

8. Self-regulation by content providers will play a major part in content control in the future as global networks proliferate. Voluntary rating systems, together with technical means of protecting and filtering content, will be important contributions to content control without endangering freedom of expression.

European Publishers Council, June 1999

June 1999