To Geo-enable or not to Geo-enable, this is the question

Mark Lichtenhein, Chairman – Sports Rights Owners Coalition

Ever since the advent of the European Union’s Digital Single Market, purists have argued that the same “free movement” principles should apply to digital content as they do to goods, services, capital or EU citizens.

Not satisfied by the provisions of the EU’s 2018 Regulation on unjustified geo-blocking, the geo-blocking of digital audio-visual content has always been firmly in the crosshairs of the purists’ attack, under the understandable but erroneous presumption that audio-visual content is somehow being “blocked” from being accessed in certain territories, in the same way that the trade in certain goods is being restricted.

It is important to recollect that the 2018 Regulation specifically excluded copyrighted audio-visual content and the European Commission’s review of the Regulation in November 2020 did not propose any changes to the Regulation in this regard.

There are many good reasons for not including copyrighted audio-visual content in the Regulation, as highlighted in the Oliver & Ohlbaum Study of 2020. But perhaps most importantly, the market dynamics behind the “geo-blocking” of digital content are, counterintuitively, the exact opposite of blocking. Far from withholding content, geo-blocking is actually used to create or enable content to be viewed in a specific geography.

 In many other areas, “Geo-enabling” is central to the functioning of the EU. Whether through the territorial election of its MEPs, the representation of Member States in the European Council or the principle of subsidiarity, geography matters. Indeed, the whole cultural heritage of Europe is based on its individual regions and nations. As a result, its broadcasters and content distributors are predominantly national or regional in nature and operate in markets that reflect individual cultural demands and expectations.

Because audio-visual content is primarily “wholesaled” to content distributors, rather than retailed directly to individual consumers, content rights owners are dependent on the commercial appeal of their product in a given market.  This is particularly evident when it comes to sport. Sports content is generally licensed to aggregators (such as broadcasters), who build consumer products by carefully selecting culturally-relevant content into packages, tailored to the needs of a particular geographical demographic in a specific language or languages. In addition, they demand territorial exclusive licenses from sports rights owners to ensure that the consumer proposition is economically viable. This content is then geographically “enabled” to be consumed in the market for which it was designed. Without an exclusive license, there would be no workable business model for its distribution.

Unsurprisingly therefore, there is little or no pan-European demand for identical content, and the only pan-European broadcasters are, ironically, not European-owned. Above all, in the case of sport, its competitions have vastly different appeal and value depending on their cultural context, which is why their “geo-enablement” is key to their widest possible distribution.

At a time when the EU is concerned with maximising the distribution of content digitally throughout the single market, it is unfortunate that some policy makers incorrectly see geo-blocking as being the impediment to achieve this. On the contrary, more and more content creators are using geo-enabled digital technology to reach fans in markets where wholesale mechanisms are not commercially viable. For example, many sports do not have fan bases equally distributed across the EU. Consequently, it is sometimes impossible for them to find broadcasters who are even prepared to distribute their content, let alone invest in it, due to the lack of demand in a given territory. Using geo-blocking techniques to target their content into these “dark” markets, many sports, including golf, rugby and cricket, have been able to distribute their content to their respective fan bases at local market prices and in local languages in geographies where there are no broadcasting agreements.

This trend is already accelerating and in future will allow for even more granular content to be targeted at specific sports minorities throughout the EU. It would be a tragedy for the fanbase of all sports if the geo-blocking techniques that are being used to achieve this were disallowed.

Geo-blocking has wrongly come to be seen as the withholding of content from certain territories rather than the positive effect of enabling culturally-specific content to be distributed at relevant market prices in a chosen geography. But geo-enabling and geo-blocking are just the flip sides of the same coin.

Therefore, if the geo-blocking or geo-enabling of audio-visual content were deemed to be unjustified, not only would the future delivery of content into hitherto dark markets not be possible, but the whole business model for the commercial distribution of audio-visual content would collapse.

Destroying the business model of national broadcasters within Europe to the detriment of European consumers is surely not the objective of any constructive EU policy. It can therefore only be hoped that common sense will prevail in the ongoing geo-blocking deliberations and that the European Parliament in particular will not be seduced into the false belief that extending the scope of the Geo-blocking Regulation would lead to the greater availability of audio-visual content. Or, as Shakespeare’s Hamlet might say, “The undiscover’d country from whose bourn no traveller returns”.

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