Digital Media developments and predictions for 2016

February 22, 2016

ingridby Ingrid Silver
Partner, Dentons

2015 was an interesting year in the UK media industry and we are already well into the first quarter of what is expected to be a very fascinating and busy 2016. I would like to share with you a number of legal developments which we expect to happen in 2016 and an explanation of what we think these developments will mean for the UK media industry, and more broadly for the digital media sector as a whole.

Advertising Standards: a recording-breaking year for complaints

Expect yet another record-breaking year for the Advertising Standards Authority (ASA), in terms of complaints received from members of the public. Advertisements that infringe ASA codes (the BCAP Code and Cap Code) are being more readily reported on in the mainstream press (rather than just on the ASA website), and, with this increased prominence, both public awareness of the ASA and, therefore, the number of complaints will increase. If, as predicted, the number of complaints rises in 2016, media companies will want to ensure that their campaigns are not subject to ASA review and are not adversely reported on in the mainstream press. Two areas that are attracting a lot of ASA attention at the moment (and with which media companies will need to ensure compliance) are rules surrounding comparative advertising and advertising targeted at children (particularly with regards to “in-app” purchases).

Regulation of On-demand services

As of 1 January 2016, the responsibilities of ATVOD (the UK regulator of television on-demand services, such as ITV Player) have been taken over by the information and communication regulator, Ofcom. ATVOD will no longer exist. The decision to bring regulation of these services back “in house” comes at an interesting time for the regulation of on-demand services. The European Commission has started a review of its Audiovisual Media Services Directive and amongst the issues it will be considering is whether the Directive should reach beyond the TV and “TV like” services that it currently captures. ATVOD found itself constantly dealing with disputes as to whether services were or were not captured by the current definitions and it is likely that Ofcom will need to grapple with these same issues in its newly-expanded role.

Cybersecurity and data protection

Following the highly publicised cyber attacks of 2015 (such as the TalkTalk hacking), this year cybersecurity will continue to dominate not just media companies’ boardrooms, but boardrooms of all organisations. We expect to see an increase in companies: (a) purchasing cyber liability insurance; (b) introducing and testing more robust cybersecurity response plans; and (c) increasing expenditure on technology contracts. With the draft General Data Protection Regulation being published in late 2015, 2016 will be the year that the European Parliament finally passes the regulation. Similar to other industries that hold large amounts of personal data, media companies need to familiarise themselves with the regulation and begin the process of ensuring that their companies are compliant with it before it comes into force (anticipated to be in 2018).

Of more immediate concern to media companies will be how data can be shared with the US in light of the Safe Harbor invalidity decision in late 2015. As companies continue to implement measures (such as by entering into model clauses with data processors in the US) to ensure that their data is transferred to the US in line with EU law, we expect more guidance from the regulators and also potentially a new “Safe Harbor 2.0 decision”, which should provide greater clarity for companies that wish to transfer data across the Atlantic.

Digital single market

The draft cross-border portability regulation, allowing consumers to access content while temporarily present in another EU Member State, will be passed by the European Parliament in 2016. Media companies will be focused on addressing their legal, commercial and technical position in respect of the proposed changes. We expect to see further communications from the European Commission setting out its plans for the modernisation of the EU copyright framework.

There will be a lot of debate about the extent of any further initiatives on cross-border access, and why the principle of territorial licensing remains a valid (and protectable) model. The Commission says it does not want to change the principle of the territoriality of rights and that the industry is against mandatory EU-wide licensing – but there will be concerns about any further initiatives on portability which are too loosely or too widely defined.

Later in the year we expect detail from the Commission about specific legislative proposals. Whilst its aims are laudable – unlocking regulatory barriers to exploitation of digital rights across the EU – many of its proposals are likely to conflict with established business models and exploitation strategies. Of particularly relevance is the extent to which rights holders should be able to license their rights on an individual country-by-country basis in order to account for local tastes and to maximise revenues. These practices are also the subject of legal challenge by the Commission in connection with its investigation under the competition law rules of movies on pay TV, on which a decision can be expected later this year. Outcomes here could impact on the models and strategies used by media companies for the inbound and outbound licensing of content.

Intellectual Property (IP)

IP law’s application to new technologies will continue to remain a key legal concern for media companies, and particularly content owners. In the copyright arena a number of rulings are expected in relation to the important issue of whether and in what circumstances providing hyperlinks to protected content may amount to copyright infringement when communicated to the public. Several cases decided during 2014 and 2015 have considered hyperlinking and its copyright implications. However, none of these cases has dealt directly with the issue of linking to content not initially authorised by the copyright owner. The common-sense approach would suggest that hyperlinking to such content without the permission of the copyright owner should be an infringing act in and of itself. However, taking this approach would affect a vast number of entities providing hyperlinks and would therefore be very difficult to police. Additionally, entities wishing to provide hyperlinks to others’ content would face a heavy diligence burden in establishing in each instance that the rights holder had provided consent to the initial communication. This burden would be on going as, whilst providing the hyperlink, they would need to continue to satisfy themselves that the rights holder had not revoked its consent.

Finally, the court may well decide that the primary infringer is the party against which the rights holder should bring any claims and the provider of the hyperlink should not also be responsible for infringement. The position is simply not clear cut at this stage, making it difficult to predict the court’s outcome. We will watch this space with interest during 2016.

Net neutrality becomes reality throughout the EU, or does it?

A new regulation which takes effect on 30 April will enshrine the principle of net neutrality – that ISPs should enable access to all content on a non-discriminatory basis – in EU law. The new rules declare throttling (slowing down of an internet service by an ISP) and blocking to be illegal. However, this is subject to various exceptions for measures that are in the “public interest” and, more controversially, to enable the provision of “specialised services” – being those that require better-quality access to the network to function properly.

When it comes to applying the new rules, all eyes will be on those who may seek to test their limits, including streaming service providers who have been criticised for taking advantage of similar loopholes in other territories where net neutrality legislation has been implemented. Proponents of net neutrality have noted in particular that any proliferation in loopholes/exceptions will jeopardise innovation and potentially make it more expensive to provide media services to consumers (if it is necessary to pay more to get preferential treatment from ISPs).

The effect of ad-blocking on how we consume content

2015 will be remembered as a victory for “ad-blocking” software with penetration within the UK adult population at about 20%. This increase was due, in no small part, to Apple announcing (in September) that it would allow ad-blocking apps into the “App Store”. 2016 will see publishers use a variety of methods to compete against the uptake of ad-blocking software, including: (a) putting content behind pay walls (whereby users have to pay to access what was previously free ad-funded content); (b) endeavouring to educate readers that ads fund content (The Guardian has already attempted to do so); and (c) preventing users from accessing content while ad-blocking software is enabled on that user’s device (City AM has already started implementing such software on to its desktop site).

Media companies that rely on online advertisements as a major source of revenue will need to monitor the uptake of ad-blocking in 2016 and be prepared to implement measures, such as those listed above, if they see revenues dramatically drop. However, before such action is taken companies would be well advised to ensure that ads placed on their websites are relevant and not unnecessarily intrusive (which are two major reasons why we have seen an increase in ad-blocking software penetration).

Spectrum 5G

Last year saw mobile networks locking horns with the broadcast sector over access to spectrum, each side seeking to demonstrate why it was more deserving of priority access to what has become a scarce resource. Irrespective of the rights and wrongs of this debate, as consumers becoming more and more “data hungry”, Ofcom is having to resort to ever more creative methods to free up spectrum to the mobile networks. One solution it has identified is spectrum currently reserved for usage by the public sector being transferable for commercial access. Shortly it will be auctioning certain portions of spectrum used by the Ministry of Defence. The bands that are set to be released are suitable for 5G and high-speed and high-bandwidth data services.

There will be no cap on the amount of spectrum bidders can buy in the forthcoming auction – Ofcom considers a cap would prevent bidders buying adjacent block which would be required to support very fast download speeds. More substantively, Ofcom will continue to need to make important policy decisions as to how to allocate spectrum. Expect to hear more talk of how best to use technology to employ spectrum more efficiently, whilst at the same time concerns are raised as to the concentration of “spectrum power” in the hands of a small number of providers.

Ingrid Silver leads Dentons’ UKMEA Media and Entertainment group. She has been involved in the Technology, Media and Telecommunications sector for over 20 years and has extensive experience of advising established “blue-chip” corporates and multi-national companies as well as disruptive new market entrants and is an expert in the provision of transactional and regulatory advice to the media sector. Ingrid’s practice deals with all aspects of media ranging from traditional areas such as film and television; advertising and marketing; music; and publishing; to innovative media such as gaming, social media and interactive content. Ingrid’s list of global clients draw upon her in-depth international sector experience and expertise (and her multi-lingual skills), and is noted for the pragmatic and commercial advice she provides clients. Media Law International describe her as “extremely helpful to deal with and ready to go the extra mile for the client”. Most recently, she is ranked in both Chambers UK, 2016 and Legal 500, 2015 and highlighted as “a highly skilled and experienced professional, who engages her clients with utmost dedication and collegiality”. Ingrid is also listed in the Who’s Who Legal, 2015 for Telecoms and Media and was recognised recently in the Expert Guides’ Women in Business Law, 2015 in their Technology, Media and Telecoms expert listings in the UK.

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