1. 1 Product Placement and the Audiovisual Media Services Directive Balancing the interests of content providers and users Jean-Eric de Cockborne Head of Unit, Audiovisual and Media Policies Prague, 19 March 2009

2. 2 Product Placement and the Audiovisual Media Services Directive 1.Potentialities of product placement 2.Product placement under TWFD 3.Product placement under AVMSD 4.Transposition 5.Conclusions

3. 3 PP is mostly developed in the US where paid PP grew to $ 3.36 billion in 2006 and was expected to grow to $ 4.38 billion in 2007. TV constitutes the most important part with 71,4% of global spending in PP in 2006. Various forms of PP take place and are rated following certain criteria such as the prominence of the brand and the audience of the programme. PP can also use new technologies such as virtual advertising, which creates benefits for the overall economy, with content adapted to local audiences. PP cannot be skipped, which is an advantage at a time when use of PVR is increasing. 1.Potentialities of Product placement (PP) in Europe

4. 4 Common principles: –Principle of separation: Television advertising and teleshopping shall be readily recognizable as such and kept quite separate from other parts of the programme service by optical and/or acoustic means. –No surreptitious advertising: representation in words or pictures; of goods, services, the name, the trade mark or the activities of a producer of goods or a provider of services; in programmes; intended by the broadcaster to serve advertising (notably if it is done in return for payment or for similar consideration); Which might mislead the public as to its nature. 2.Product placement under former TVWF

5. 5 Varying national interpretations/policies: –In general, remunerated PP was explicitly (UK, IE, SE, FI) or implicitly banned (such as in FR, PT, DE, IT, SE) as a result of the principle of separation and ban on surreptitious advertising. –Remunerated PP was allowed in AT. –In general, unpaid PP (props, prizes) was allowed notably in prize games: FR, DE, UK, BE, PL … 2.Product placement under former TVWF

6. 6 In fact, paid or unpaid PP happened despite the rules or principles notably within the framework of wider packages such as sponsorship agreements where the payment for the placement was not individualised. Problem: The same practices of PP to which the viewers were equally exposed (without knowing about it) were treated differently : Only PP for which the broadcaster was responsible was subject to the ban on surreptitious advertising and the principle of separation. 2.Product placement under former TVWF

7. 7 Applicability of the TVWF rules only to programmes produced by, or on behalf of, broadcasters: i.e. not to films or other programmes purchased by them. Concept of surreptitious advertising –The 2004 interpretative communication clarified that undue prominence reflects the intention to advertise (existence of payment or similar consideration). –But surreptitious advertising also requires the possibility for the public to be mislead. What about open product placement? 2.Product placement under former TVWF

8. 8 PP is an audiovisual commercial communication (Av Com Com): –Images with or without sound; –Designed to promote the goods, services or image of a natural or legal entity pursuing an economic activity; –Accompanying or being included in a programme; –In return for payment or for similar consideration or for self-promotional purposes. PP is defined as: the inclusion or reference to a product, a service or the trade mark thereof so that it is featured within a programme, in return for payment or for similar consideration. 3.PP under the AVMS Directive

9. 9 PP submitted to the rules on audiovisual commercial communications: -Identification; -Ban on surreptitious AV commercial communications and use of subliminal techniques; -Protection of human dignity and non discrimination; -Protection of minors; -Tobacco, cigarettes and medicines; -Codes of conduct regarding inappropriate commercial communications for HFSS foods and drinks. 3.PP under the AVMS Directive

10. 10 By derogation to the general principle of prohibition, product placement (PP) is admissible, unless Member States decide otherwise: –in all programmes (incl. children’s programmes) if it consists of products or services provided for free; –in films and series, sports and light entertainment programmes (excl. children’s programmes) if it consists of or is accompanied by a payment. Wherever allowed, programmes containing PP shall: –not affect the responsibility and editorial independence of the media service provider; –not give undue prominence to the product concerned, or include promotional references; –be appropriately identified at the beginning and the end of the programme and when the programme resumes after a break (possibility of MS’ waiver for acquired programmes). No PP for tobacco products and prescription medicines. 3.PP under the AVMS Directive

11. 11 Undue prominence (UP) in the rules on PP : –does not serve to identify the intent to advertise, but to protect the integrity of the works : avoids for instance excessive practices such as scenes created around a brand UP for practices not identified as PP: –gives an indication of an intent to promote the good or service concerned, as indicated in the 2004 Interpretative communication –relevant notably to assess the character of the appearance of goods and services of non significant value in programmes ( recital 61 specifies that goods or services provided free of charge are only considered as PP if they are of significant value) –therefore, if such products of services are shown with UP, and this is not identified as PP, this can be an indication of surreptitious advertising –there is UP notably where the appearance of the good or the brand is « not warranted on editorial grounds » 3.PP under the AVMS Directive

12. 12 A level playing field for product placement: Rules on undue prominence, identification and special promotional references apply whether the media service providers have produced, commissioned or purchased the programme in which the product placement takes place (possible waiver of identification rules for acquired programmes) Rules apply both to linear and non linear services Rules apply whether PP is made against payment or other consideration (free supply of products or services of significant value) 3.PP under the AVMS Directive

13. 13 Option 1: absence of national measures. -PP will be admissible and regulated following the lines of the Directive (opting out system); -The rules of the Directive will need to be effectively applied. 4.Transposition by Member States

14. 14 Option 2: Limited prohibition Need to clarify and circumscribe the exact prohibition and notify it to the Commission for non linear services (Directive 98/48) Where the prohibition does not extend to all situations covered by the AVMS rules, obligation for the MS to transpose all relevant rules of the Directive for the remaining situations: if AVMSP are only prohibited from using PP in their own programmes, the PP rules of the Directive will need to be transposed and effectively applied to all other programmes, with the possible exception of the identification rule if AVMSP are only prohibited from using PP against payment, the PP rules of the Directive will need to be transposed and effectively applied, except for products or services of non significant value 4.Transposition by Member States

15. 15 Option 3: PP explicitly allowed possibly under stricter rules: Option already chosen by some MS, e.g.: -Romania: alignment on the AVMS rules -Belgium (FR): alignment except for children’s programmes: strict prohibition Stricter rules must comply with the principle of proportionality As in option 2, stricter rules will not apply to programmes from providers under the jurisdiction of other Member States (subject to the safeguard provision in art. 3) 4.Transposition

16. 16 AVMSD rules on PP enhance legal certainty They balance the economic interests of the producers and media service providers with the protection of viewers who benefit from additional guarantees Stricter rules, if any, should remain proportionate and should not jeopardize legal certainty and the level playing field wanted by the legislator Stricter rules cannot be invoked to question the country of origin principle The Commission is closely following the transposition process 5.Conclusions

17. 17 Thank you for your attention! Jean-Eric de Cockborne Head of Unit, Audiovisual and Media Policies European Commission Directorate General for Information Society and Media Always check against official EU Commission documents – no conclusions are to be drawn from this presentation on views and positions of the European Commission Internet site: http://ec.europa.eu/avpolicy/index_en.htm http://ec.europa.eu/avpolicy/index_en.htm