Industrial policy for culture

Promoting culture and cultural diversity runs through all of IMPALA’s work.  We advocate for a new industrial policy focusing on the unique strength and diversity of Europe’s cultural and creative sectors. 

Creativity is a vital asset for Europe and its citizens. It is an essential driver of jobs and growth, as well as for cultural diversity, social well-being and Europe’s soft power internationally. These strengths are key elements for building a strong, inclusive and diverse Digital Single Market. 

The covid crisis has underlined that even more and the cultural sectors are now recognised as one of 14 priorities for European recovery.

Cultural and creative sectors account for 4,4% of EU GDP and 12 million full-time jobs, most of which are local and cannot be relocated. They are economically resilient in times of crisis, and have a high percentage of youth employment, with 19.1% aged under 30. Copyright-intensive industries also offer a wage premium of 69%. 

Imagine what more they could achieve with a new approach in Europe?

Individuals and smaller actors are the drivers of these sectors’ success. In music for example, small actors account for 80% of the sector’s jobs, 90% of the added value generated, as well as 80% of investment in new creative works. Natural early adopters, they lead the development of the online market, with copyright as a liberator for the artists they work with. 

Europe’s creativity will never run out. It is essential to build on this local, and not just sustainable, but abundant resource. Creation must be at the heart of Europe’s development – for both creators and citizens. Making Europe the intellectual property capital of the world with a healthy distortion-free licensing environment is key. 

Europe needs ambition and inspiration – a new industrial policy to build on the unique strength and diversity of Europe’s cultural and creative sectors.

Below are examples of measures that an industrial policy would involve. Please also see our specific recommendations regarding crisis and recovery measures on IMPALA’s covid site. 

Developing an EU industrial policy for culture

 

IMPROVING PLURALISM AND DIVERSITY ONLINE AS WELL AS OFFLINE 

Citizens’ appetite for culture and diversity is huge. We need to respond to this through concrete measures to increase pluralism and diversity in traditional and online media, as well as in the supply of creative works. 

The EU could broker a charter for stakeholders to promote diversity and mobility, two vital components of Europe’s Digital Single Market. Let’s measure performance through specific scoreboards. 

We should use the power and uniqueness of Europe’s culture to reconnect with citizens and pursue a strategy along the lines of the EU’s New Narrative for Europe.

  • Broker a stakeholder charter with targets to increase diversity in production, distribution, consumption and access, as well as to improve mobility of artists and repertoire online/offline. 
  • Apply the competition measures referred to below, to boost access to market for smaller music companies.
  • Introduce EU scoreboards to measure performance in terms of diversity and pluralism. 
  • Consult citizens on practical ways to implement change, like the New Narrative for Europe, which acknowledged the importance of cultural diversity, freedom of expression and pluralism for societal development.

GROWING EUROPE’S “MISSING MIDDLE” BY IMPROVING CONDITIONS FOR SMALLER ACTORS 

Innovation, diversity, investment and jobs would be enhanced by levelling the playing field for smaller players. This is all the more true for the EU and other recovery mechanisms that have been put in place to help address the impact of the covid crisis.

We need a new regulatory, competition, social and fiscal environment. 

Europe must grow its “missing middle” by creating the best possible conditions for smaller cultural actors who contribute the most in terms of jobs and innovation, and by opposing further concentration in the cultural markets.

  • Prioritise smaller players in crisis and recovery measures.
  • Design a new regulatory environment, together with a new competition approach, as well as a new social and fiscal status for cultural actors. 
  • Adopt new rules prohibiting unfair trading practices against SMEs. 
  • Prioritise SMEs in the financial measures recommended below. 
  • Oppose further concentration in music (the music market has three majors controlling 80% of the wider market, and 90% to 95% of the top 100 airplay and downloads).

INCREASING INVESTMENT THROUGH A NEW FINANCIAL APPROACH TO CULTURE 

Investment in culture would increase if intangible assets were properly valued, including through revised accounting standards. Fiscal and other incentives such as loan guarantee schemes are also required, along with sector initiatives which share revenues and reward investment in new talent. 

Allowing a reduced VAT on cultural goods and services online and offline, as well as ending double taxation is also crucial, especially given the new “country of destination” VAT rules on digital products. Those benefitting economically from carrying cultural works must contribute financially to their creation.  

  • Work on better valuation of copyright and other intangible assets. 
  • Develop new international accounting standards. 
  • Ensure all countries have at least one fiscal incentive, such as tax credits. 
  • Promote sector schemes which reward investment in new talent (e.g. revenue sharing and other models). 
  • Make sure the innovative loan guarantee instrument in the Creative Europe programme is implemented in a way which is balanced across all cultural sectors. 
  • End VAT discrimination between cultural products. 
  • Apply reduced VAT for all cultural products and services offline and online to end confusion, boost Europe’s digital market and improve access to culture across Europe. 
  • Allocate a fixed percentage of EU budgets the cultural and creative sectors – at least in line with our contribution to GDP. 
  • Examine how those who benefit economically from carrying creative works online should contribute financially to creation.
  • Tackle double taxation and withholding tax problems, which create barriers to the mobility of artists and their works.  

INTRODUCING GREATER FISCAL FAIRNESS

With smaller actors and citizens shouldering the lion’s share of tax, it is time for Europe to take a stance and make minimum fair and direct taxation of online operators and multinationals a reality. 

If we want citizens to re-engage with Europe, this would go a long way. This is also a pre-requisite to achieving a meaningful Digital Single Market.  

  • Enforce minimum, fair, unavoidable and direct taxation for online operators and multinationals, irrespective of their structure.
  • There should be fines for non compliance. 
  • Member states who do not respect the new rules should be restricted in their ability to apply austerity measures to citizens and creative structures. 
  • Prioritise taxation and illegal state aid investigations to stop unfair competition between multinationals and SMEs. 
  • Build on the G20/OECD ‘Base Erosion and Profit Shifting’ project to ensure this issue is fully addressed and the fiscal burden evenly shared.

MAPPING AND MEASURING THE SECTORS AND HOW CREATIVITY WORKS 

A better understanding of the functioning of cultural and creative sectors is needed to deliver the best environment anywhere in the world. 

Revising statistical measures to make sure they properly identify all relevant cultural sectors is also a fundamental part of mapping Europe’s future priorities. 

We need to be able to measure each sector separately and ensure relevant statistical codes do their job. 

  • Revisit statistical measures and introduce new classification codes (e.g. “NACE”) for the statistical analysis of the economic sectors, to enable a more accurate valuation of the sectors’ contribution. 
  • Make sure music is measurable as a distinct sector (currently it is grouped with other sectors). 
  • Map out how the cultural sectors work to establish how to boost their output and diversity. 

REINFORCING THE RIGHTS THAT DRIVE THE DIGITAL MARKET AND GROW EUROPE’S COPYRIGHT CAPITAL 

A strong digital market implies reinforcing the creative “content” that drives it. This means strong creators’ rights, including copyright. An enabler and liberator of creativity and economic growth, copyright is a fundamental right. This also provides security for young people who choose to pursue a creative career. 

Strong copyright is particularly important for smaller actors as they represent the majority of the sector and are the main risk takers. 

Proper remuneration from online intermediaries is vital. We need a healthy licensing environment without market distortions.

All private copying schemes should be kept up to date and cover all devices used to make private copies. Private copying compensation must be paid by those who benefit from the exception. 

Fundamental principles such as freedom of expression, transparency and freedom for creators to decide what happens to their works, including choosing territorial partners, are all crucial. 

  • Reinforce copyright as a fundamental right, a liberator of the creativity that drives the digital market, and the tool that allows creators and their partners to work and earn a living. 
  • Ensure creators and their partners are rewarded for their work all along the value chain, and are able to work out between them what type of cooperation they need to put in place. 
  • Level the playing field for smaller creators to deliver diversity and choice for Europe’s citizens. 
  • Make Europe the strongest rights base anywhere in the world and the best place to set up and run a creative business. 
  • Stop the transfer of creators’ rights to trade to those who are behind calls for weaker copyright. 
  • Refuse calls for more copyright exceptions which cut across licensing, and reaffirm the so-called “3 step test”.
  • Ensure all private copying schemes are kept up to date, include all relevant devices, and are paid by those who benefit from the exception (not by state funds) with remuneration based on local surveys which assess actual private copying.
  • Establish a healthy licensing environment free from distortions. 
  • End abuse of the exemption from liability for online host providers by implementing the 2019 copyright directive which clarifyies that those who build a business around the distribution of “content” need a proper licence and cannot hide behind the so called “safe harbour” exemption.
  • Support sector initiatives which promote a just and transparent value chain, such as WIN’s Fair Digital Deals Declaration by independent labels. 
  • Ensure respect for creators’ freedom of expression and right to determine what happens to their own works, including working with local partners to reach across borders. 
  • Promote awareness of how creators work and why moral and economic rights are important. 
  • Ensure performance revenues are distributed in line with international copyright rules which recognise the principle of reciprocity to boost protection for all. Clarify the 2006 EU Rental and Lending Directive to make sure no EU country is obliged to transfer performance monies to third country jurisdictions without their own domestic right. See also here.

GIVING CITIZENS THE BEST DIGITAL INFRASTRUCTURE IN THE WORLD 

The digital segment of the European music sector has grown far faster than the global average. We must make Europe’s internet infrastructure the best, fastest and most accessible in the world, with the best micro-payment systems so that Europeans can use the internet’s full potential to access culture in all its diversity. Increasing competition between telecom operators would also benefit consumers by bringing prices down. 

  • Increase broadband speed and make Europe a world leader in high-speed mobile broadband. 
  • Improve online security by increasing the availability of secure online cross-border payment methods as well as better micro-payment systems. 
  • Promote improved interoperability of platforms and devices. 
  • Foster true competition between telecom operators to help bring prices down and increase the quality of internet packages offered to consumers. 

REVISITING THE “RULES OF ENGAGEMENT” ONLINE 

How we engage online covers a range of issues, from respecting people’s data, property and privacy, to fair search, to ensuring digital humanism, as well as other vital matters of general interest, such as citizen trust in the online world and security. It also covers issues such as internet governance and generic top-level domain names (such as .music) which must be run by community led initiatives rather than sold off to the highest bidder. Europe must lead these debates. 

Further, artists and creative businesses are born equal. Online operators must follow the principles of non-discrimination and must-carry. Ensuring choice and innovation will also require regulating and unbundling essential facilities, as well as tackling unfair trading practices. 

  • Make sure competition rules are made fit for purpose in the digital market. 
  • Establish a non-discrimination principle applying to search and data, as well as to online music services, to ensure they do not discriminate between large and small repertoire owners. 
  • Set must-carry obligations for music services (obligation to obtain a licence for all repertoire authorised by right holders). 
  • Unbundle dominant players, especially those controlling multiple points in the online ecosystem. 
  • Devise a new rulebook for all online players, including global data monopolies and other essential facilities. 
  • Stop the censorship-style negotiating tactics used by dominant players, such as threats to remove content or block access. 
  • Start a proper debate on achieving digital humanism in Europe and determine which general interest measures are required for meaningful engagement online. 
  • Ensure Europe’s citizens have full control over their own data and property, and of course over their privacy. 
  • Europe should lead the worldwide internet governance debate to deliver a safe and fair online environment. 
  • Support generic top-level domain names run by community led initiatives such as .music and apply basis principles of protecting intellectual property and fair access terms irrespective of size.

EFFECTIVELY TACKLING STRUCTURALLY INFRINGING WEBSITES 

Jobs and revenues would grow significantly if structurally infringing websites were tackled properly. This involves implementing the “follow the money” approach with advertisers, credit card and online payment services, as well as effectively addressing search results. 

Internet service providers (ISPs) should take all reasonable measures to comply with court injunctions to stop access to infringing sites. Cross-border application of rulings should be improved. 

It is also time to review wider internet governance issues such as the balance between anonymity and liability of intermediaries. Europe must lead the world here, as with the rules of engagement online more generally. 

  • Implement the “follow the money” approach to tackle illegal activities making money from creators’ works (advertising, selling behavioural data, subscriptions, etc.). 
  • Oblige all member states to adopt a national “follow the money”plan. 
  • Promote pan-European collaboration between right holders, ISPs, payment providers and advertisers. 
  • Require all search engines to stop listing links to pirate sites in their search results, or at least de-prioritise such links. 
  • Review the balance between anonymity and liability of intermediaries as part of the wider debate on internet governance. 
  • Monitor ISPs to ensure they take all reasonable measures (as upheld by the Court of Justice of the EU) to comply with a court injunction to stop access to infringing sites. 
  • Improve cross-border application of rulings. 

PLACING CULTURE AND DIVERSITY AT THE HEART OF EUROPE’S INTERNATIONAL WORK 

Europe’s lead internationally means we must ensure that trade agreements respect copyright, the specificities of culture and its importance for development.  This includes the principle of reciprocity which is essential to boost

We also need to see concrete implementation in Europe and internationally of the UNESCO Convention principle of fair and equitable access to the means of production, dissemination and distribution of cultural activities, goods and services. 

  • Reinforce the EU’s position on culture and audiovisual matters in all trade negotiations.
  • Convince territories like the USA and Japan to introduce full performance/broadcast rights for performers and labels. 
  • Review how to apply the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions (which is part of EU law). 
  • Implement the principle of fair and equitable access to the means of creation, promotion, production and distribution.

IMPALA – Independent Music Companies Association

Coudenberg 70, 1000, Brussels, BELGIUM

+32 2 503 31 38

info@impalamusic.org