Reforming of  copyright in EU and considered policy options
            
            Territoriality and absolute territorial  restrictions in licencing agreements
            A legally binding instrument that prevents the  use of absolute territorial restrictions in copyright licence contracts could  be an important step, achievable in the medium-term, towards the completion of  the Digital Single Market, in particular in sectors where territorial  exclusivity agreements are common (i.e. in the audiovisual sector). While such  an instrument would constitute a limitation to the freedom to conduct a  business and the property rights of the licence provider, this would be  justified provided the provision is carefully calibrated to ensure its adequacy  and proportionality, in view of the Treaty fundamental freedom to provide and  receive services across borders. This option would allow cross-border  competition between distributors, who would be able to enter new markets  through passive sales. Allowing for increased cross-border access could favour  larger companies with a cross-border network, over national network operators.  Increased competition could lead distributors to review their offer and prices  and, in the long term, may have a significant impact on the structure of the  market.
            The inability of right holders to guarantee  absolute territorial exclusivity to distributors may reduce licence fees. This  could be (partially) compensated by the fact that some distributors will  increase their customer base and therefore pay higher licence fees. Because of  the possibility of passive sales, right holders will no longer be able to  price-discriminate effectively between national markets. This option may also  have a significant effect on the financing and production of audiovisual  content. It may also have an effect on cultural diversity. Consumers in  higher-value territories- should prices be subject to equalisation - may  benefit from the more aligned prices coming from cross-border competition,  whereas customers in lower-value territories may have to pay higher prices than  under the status quo.
            These effects could be less pronounced in the  case of services/content catering for local audiences and/or operating in  languages not often used outside a specific Member State, as demand for actual  cross-border access will likely be more limited. The effects will be greater in  the case of service operating in widely spoken languages or providing less  “language sensitive” content (e.g. music).
            Rights in online transmissions
            The application of the principle of exhaustion  to all download-to-own services in the online environment could have the  following impacts. The revenues of right holders could decrease significantly  due to the emergence of a second-market of perfect digital copies. In the  absence of well-working technical protection measures, re-sellers could abuse  the principle of exhaustion via illegally keeping a copy of the re-sold work.  This would have an unpredictable effect among the right holders affecting the  cycle to investment. In theory right holders could increase the price for the first  sale to a certain extent. This may not, however, be easily accepted by  consumers. Distributors may have fewer incentives to innovate as regards  certain aspects of their services; however, the opening of online second-hand  stores would become possible. Consumers would most likely benefit from lower  prices. First, because they could legally acquire second-hand copies and  second, because the existence of a second-market would create pressure to  reduce prices for the first sale as well. They would also be able to legally  dispose of the digital content they have acquired online (e.g. to give it to  heirs or as a gift).
            If either browsing or linking is deemed to  require the right holders’ authorisation, the introduction of a mandatory  exception for these activities would ensure that neither links to protected  content not the browsing of the internet would infringe copyright.
            The bundling  of rights could result in a shift of value among rights holders. Authors of  musical works that form part of the Anglo-American repertoire, for example,  usually transfer their right of reproduction to music publishers, and grant a  mandate to a collective management organisation for the exploitation of the  communication to the public and making available right. Such a splitting of  rights would no longer be possible. Either the publisher or the collecting  society would have to be granted both rights by the authors. At this stage, it  is unclear whether a bundling of rights would rather favour, for example,  collecting societies or publishers, therefore it is difficult to assess its  effects on the distribution of wealth in the value chain.