Annex 6

EUROPEAN COMMISSION
Internal Market and Services DG

Knowledge-based Economy
Enforcement of Intellectual Property Rights

Brussels,
MARKT/D3/JP/jn D(2010) Ares S:

DRAFT SUMMARY

Subject: Stakeholders' dialogue on illegal up- and downloading – 1 July 2010.

Those present

Chair: Margot Fröhlinger DG Internal Market and Services

Stakeholders: Michael Bartholomew ETNO

Fiona Taylor ETNO
Patric Hiselius ETNO
Innocenzo Genna EuroIspa
Andrea D'Incecco EuroIspa
Jaymeen Patel Telefonica
Marta Maresca Telecom Italia
Caterina Bortolini Telecom Italia
Frances Moore IFPI
Olivia Regnier IFPI
Jo Oliver IFPI
Jeremy Banks IFPI
Gabriela Lopes IFPI
Simon Milner BT
Wouter Gekiere EBU
Vicky Hanley-Emilsson ECTA
Chris Marchic MPA
Ted Shapiro MPA
Peter Wilding ACT
Victoriano Darias GESAC
Guenaëlle Collet AEPO-ARTIS
Mathieu Moreuil SROC
Dara MacGreevy ISFE
Simon Little ISFE
Sophie Scrive ENPA
Enrico Turrin FEP
Daphne Yao Virgin Media
Silvie Forbin Vivendi
Monica Arino Ofcom
Johannes Studinger UniEuropa

Commission européenne, B-1049 Bruxelles / Europese Commissie, B-1049 Brussel - Belgium. Telephone: (32-2) 299 11 11.
Commission: Alvydas Stančikas DG Internal Market and Services
Corinna Ulrich DG Internal Market and Services
Joep van der Veer DG Internal Market and Services
Justyna Petsch DG Internal Market and Services
Benoît Lory DG Internal Market and Services
Zuzana Heckova DG Internal Market and Services
Andrea Glorioso DG Information Society and Media
Bernhard Maher DG Information Society and Media
Francesco Pirina DG Health and Consumers
Alexandra Iliopoulou DG Trade

The eighth meeting of the Stakeholders' Dialogue on illegal up- and downloading took
place on the 1st July 2010, under the chair of Mrs. Fröhlinger. The meeting focused on
the economic implications of illegal up- and downloading and reasons for consumers'
behaviour. An inventory of studies on the scale and economic implications of illegal up-
and downloading was presented. This was followed by the presentation of the results of
the follow-up study on the legal framework, regarding the interaction between copyright
enforcement on the Internet and data protection in a number of additional Member
States. The meeting ended with a discussion on different options for a possible follow up
to the Dialogue.

The next meeting will take place on the 10th of September 2010.

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Introduction from the Chair

The Chair welcomed the participants and recalled that the purpose of the meeting was to
discuss and exchange views on the economic implications of illegal up- and downloading
for rightholders, ISPs and the economy as a whole. The Chair noted that an inventory of
studies on economic data had been compiled and sent to the participants. The participants
were invited to provide DG MARKT with any studies that had not been included. The
Chair explained that the variety of studies presenting different and often contradictory
figures and conclusions, had made it impossible to make an overall assessment of the
economic implications. DG MARKT had therefore decided to leave the overall
assessment to the study, which is about to be launched. In this respect, the tender for the
study to assess the overall scope and economic implications of counterfeiting and piracy
had been published, and 10 offers had been received. The overall objective of the study
is to assess existing economic studies and data, to develop a sound methodology for data
collection and analysis and to lay the foundation for future robust and reliable data.
Participants were assured that they would be closely involved in the work of the future
contractor.

Presentations on the economic implication of illegal up- and downloading

IFPI, Gabriela Lopes

IFPI presented the impact of piracy on the EU's economy and on the recording industry
in particular. It focused mainly on the recently published TERA study, explaining that
the industries mostly affected by piracy experienced retail revenue losses of € 10 billion
and annually lost were more than 185.000 jobs. The creative industries could expect
cumulative retail revenue losses of as much as € 240 billion by 2015, resulting in the loss
of 1.2 million jobs. Furthermore, IFPI explained that the methodology used in the study
was not based on the assumption that every infringement resulted in a lost sale, but on a
moderate, conservative ratio of 10%. In reference to the Jupiter research of 2009, IFPI
explained that the majority of consumers engaged in file sharing do not buy music and
that the overall impact of file sharing on music spending is negative. This research found
a clear link between per capita spending on music and P2P penetration, indicating that
the markets with the highest incidence of unauthorised file sharing are those with the
weakest, per capita, spending on music. IFPI also reminded participants that 2009 was
the 8th consecutive year of decline for the music industry. The European music market
had fallen by 41% in value between 2001 and 2009, despite the fact that during the same
period there were 260 online music services licensed in Europe and multiple business
models legally offering music online. In conclusion, IFPI stressed that the main driver is
that pirated content is available free of charge and not the alleged lack of attractive legal
services.

MPA, Ted Shapiro

The MPA explained that P2P traffic has diminished in terms of percentage of overall
internet traffic. The MPA explained that there are also different trends, that reflect a
changing audience. The easier the access to illegal content is, the wider the audience
becomes. MPA explained that illegal sites incur very little or no costs. They avoid taxes
and earn easy money, which is a clear regulatory inequality. Moreover, some of the
illegal sites also earn revenue from advertising. Finally, the MPA showed a comparative
list of site traffic, concluding that illegal sites are constantly getting wealthier.

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SROC, Mathieu Moreuil

SROC explained the particular issues facing the sports sector as a result of piracy. It
stressed that the legitimate revenues earned from sports streaming is often reinvested in
the sports value chain, including grass-root sports, which is of societal interest.

SROC underlined that the sale of broadcast rights represents a major source of revenue
for sports rights owners. However, the most popular sports transmissions use hundreds of
unauthorised streams, offering free and live retransmissions to audiences of over 1
million viewers. This starts to be a real threat to the sector.

SROC explained that live streaming of sporting events is mainly based on two types of
technology: unicast and peer-to-peer. Unicast is content streaming directly from a server
to a viewer, while a peer-to-peer exchange takes place between viewers. SROC informed
participants that the monitoring of a Premier League game from April 2008 revealed an
illicit audience of 238 thousand viewers. Out of these viewers, 13% were from the UK
where legal offers are actually available. SROC concluded that piracy threatens the
sports reinvestment model and subsequently impacts on investment in sports
development at various levels, including investment in talent development, community
programmes etc.

Presentation of a follow up study on Online Copyright Enforcement and Data

Protection

The Internal Market and Services DG presented the results of a follow up study on the
correlation between enforcement of copyright on the Internet and data protection
legislation in three countries, namely the United Kingdom, Poland and the Netherlands.
The results to a large extent confirmed the findings of a previous, similar study from
November 2009 covering Austria, Belgium, France, Germany, Spain and Sweden. Both
studies are available on the website of the Internal Market and Services DG. 1 2

Generally, IP addresses have been found to constitute personal data. Disclosure of users'
identities by ISPs to rightholders is, in general, authorized in the context of criminal
proceedings, but is subject to restrictions relating to data protection in the context of civil
enforcement. The Dutch courts have provided for some guidance in respect of voluntary
disclosure of users' details by ISPs to rightholders (Lycos/Pessers case). In the UK, new
legislation (the Digital Economy Act 2010) has introduced a new set of obligations on
ISPs in relation to copyright infringement aimed particularly at P2P activities and illicit
file sharing.

Ways forward for the Dialogue

The Chair explained possible options, concerning the future of the Dialogue: These were:
• to wrap-up the current Dialogue and consolidate its results in a concise synthesis
report;
• to continue with the Stakeholders' Dialogue and focus on the IPR Enforcement
Directive, in the context of illegal up- and downloading;
• to continue with the Stakeholders' Dialogue and focus on preparing an MoU on
cooperation between rights holders and Internet Service Providers in a limited number
of areas.

1
http://ec.europa.eu/internal_market/iprenforcement/docs/study-online-enforcement_042010_en.pdf
2
http://ec.europa.eu/internal_market/iprenforcement/docs/study-online-enforcement_en.pdf
4
Various stakeholders expressed their views:

ETNO

ETNO confirmed that so far the Dialogue had been a very helpful exercise, which had
helped to broaden the understanding of the various interests and concerns of the
participating stakeholders.

ETNO proposed that before deciding on the future of the Dialogue, it would be useful to
make an evaluation of the process, summarised in a jointly agreed report. This would
make the Dialogue more transparent and make it easier to agree on the modalities of the
next steps.

Concerning the possibility of an MoU, ETNO pointed out that the whole process of
elaborating an MoU needs to be open and transparent and should involve all
stakeholders. ETNO added that an MoU should not include provisions concerning
individual warning letters, technical measures, monitoring of online activities by ISPs,
nor awareness campaigns funded by ISPs only. ETNO reiterated its view that the
participation of the consumers and data protection authorities is needed to ensure
credibility. ETNO stressed that any cooperation should always stay within the boundaries
of the current legal framework.

ETNO indicated that they could consider future work on the online aspects of the IPR
Enforcement Directive, but insisted on transparency. ETNO felt that ISPs should also be
included in the process of the work on the Enforcement Directive, carried out by the
Observatory's legal sub group.

In conclusion, ETNO proposed an additional option, where, first, the participants should
agree on a synthesis report, summarising the work of the Dialogue. Afterwards, it could
be discussed whether to work on an MoU and/or on the Enforcement Directive.

BT

In view of a recent failure of a similar attempt in the UK, BT was critical of the idea of
an MoU. BT suggested that the preferred option would to continue the Dialogue in the
context of the Enforcement Directive and to produce a report summarising the whole
exercise.

EuroISPA

EuroISPA stated that both an MoU and work on the Enforcement Directive could be a
good way forward. Drawing up a synthesis report, summarizing the work of the
Dialogue was also considered a good idea.

EuroISPA underlined that it was important for the work of the Dialogue to invite
representatives of the data protection authorities and consumers. It was also suggested
that participants need to have clear ideas what can be tackled in the MoU. The promotion
of legal offers and awareness campaigns could be suitable issues.

CableEurope

CableEurope shared the positions presented by ETNO and EuroISPA.

MPA

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The MPA stated that the MoU could be a good option. However, before launching work,
the participants should discuss and agree on the topics to be included. The MPA agreed
that a synthesis report would be a good idea as long as it does not become in itself an
issue for debate. Finally, the MPA explained that they would like to continue with the
Dialogue in the context of the Enforcement Directive, in parallel to the work on the MoU
and the synthesis report.

IFPI

IFPI stressed that for the music industry time is extremely important. Therefore, they
would accept the idea of a synthesis report, but suggested that it should be a parallel
exercise to the other areas of work and should not slow down work on an MoU or a
Dialogue on the Enforcement Directive. IFPI supported the suggestions for inclusion in
the MoU, such as public awareness on the economic and cultural importance of
copyright to the digital economy and raising awareness on the existence of legal offers.
However, IFPI stressed that in terms of presentation it had to be clear that there was
already a significant number of legal offers available.

SROC

SROC agreed that there was a need for a clear agreement on what should be included in
an MoU and that it should not be a precondition to the work on the IPR Enforcement
Directive.

ENPA and AEPO-ARTIS

Both supported the creative industry's position and suggested to continue a Dialogue in
the context of the Enforcement Directive, but advocated more focus on specific sectors.

ISFE

ISFE suggested that a public synthesis report may change the dynamics of the Dialogue
and suggested that an internal report could be a solution. ISFE supported the idea of an
MoU and the continuation of the Dialogue in the context of the Enforcement Directive.

EBU

EBU supported the suggested synthesis report, an MoU and the continuation of a
Dialogue in the context of the Enforcement Directive, stressing that the involvement of
representatives from data protection authorities and from consumers is crucial.

FEP

FEP supported the option to work on an MoU and to continue a Dialogue in the context
of the Enforcement Directive.

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Conclusions

Synthesis Report

The Chair summarised the discussion, concluding that there was a strong request from
the ISPs to have an agreed synthesis report, which would be made public. The Chair did
not note any strong objection from rightholders to this proposition, except the concern
that this report could become itself a subject of much debate. The Chair explained that
the report could constitute a synthesis of past meetings and that there should be no
confidential information included. The Chair announced that the Commission's services
would prepare a draft for comments and agreement by the participants. If no agreement
could be reached, it could be converted into a Commission document. The report would
be made public to ensure full transparency.

Dialogue in the context of the Enforcement Directive

Concerning the continuation of the Dialogue in the context of the Enforcement Directive,
the Chair explained that in the Communication on the Digital Agenda, the Commission
has announced to launch a Stakeholders' Dialogue in the context of the revision of the
Enforcement Directive. The existing Dialogue could provide a good basis for this, given
that the group functions well and that participants have developed a good understanding
of each others position and concerns.

The Chair acknowledged the importance of involving representatives of consumers and

of data protection authorities. However, the Chair reminded the participants that BEUC
had been invited many times and had chosen not to accept the invitation. The Chair
underlined that this exercise should be seen by consumers' organisations as an
opportunity to make their views known.

The Chair also indicated that additional internet companies could be invited to the
Dialogue and asked participants for suggestions.

MoU

The Chair concluded that a possible MoU could mainly include public awareness and the
promotion of legal offers. It would not deal with technical measures and cooperation
between ISPs and rightholders would in any event remain within the boundaries of the
existing legal framework.

Observatory legal sub group / Revision of the Enforcement Directive

In reply to ETNO, the Chair also explained that the Legal Subgroup deals with many
issues related to IPR Enforcement which often have nothing to do with illegal up- and
downloading. However, to the extent the Legal Subgroup is going to deal with Internet
related issues, participants of the Stakeholders' Dialogue could be invited to attend the
meetings of the Subgroup.

Therefore, the work of the Dialogue will be complementary to the work of the
Observatory's legislative group, where different experts specialising in legal aspects
relating to IPR litigation are involved.

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Operational conclusions

The Chair announced that the draft Synthesis Report will be drafted and sent to the
participants before the Summer break. The participants should seek to reach an
agreement on it immediately after the Summer break. The Dialogue could then continue
to work on the MoU and the Enforcement Directive. Consumers organisations and
representatives from data protection authorities would be invited, if participants agree.

DG MARKT will also draw up papers outlining the possible scope of an MoU and work
on the IPR Enforcement Directive and present those to the participants as quickly as
possible.

The next meeting will take place on the 10th of September, at which meeting stakeholders
would be invited to discuss the draft Synthesis Report as well as the topics which could
be discussed in relation to the IPR Enforcement Directive and the scope of a possible
MoU.

Distribution: all participants,

Cabinet Barnier, MARKT/D3, representatives from other
Commission DGs