Reforming of  copyright in EU and considered policy options
            
            Territoriality and absolute territorial  restrictions in licensing agreements
            Under the “country of origin” principle, a  service provider can use the licence in its country of origin (possibly  obtained from a person holding the rights in that country only) in order to  actively market content outside its country of origin as well. When rights are  territorially fragmented, e.g. when different persons or entities hold the  rights for different Member States, a service provider established in one  Member States may therefore undermine the economic position of right holders in  other Member States. According to the “targeting” approach, this would only be  the case with regard to passive sales (active sales into Member States for  which no licence was obtained would still infringe copyright). As it would also  be difficult to define reliable criteria for determining the place of  establishment, the introduction of a "country of origin" principle  would pose the risk that service providers may establish themselves in  countries that have a weaker legal framework in terms of copyright protection.  This could also prompt rights holders to withdraw their online rights from a  large number of collecting societies, therefore creating a risk of repertoire  disaggregation. This could affect cultural diversity. The "targeting"  approach would not pose such risks.
            Exceptions and other mechanisms to facilitate use
            Option 3b proposes in some cases a scope for  exceptions that could go beyond the minimum necessary to facilitate access and  to reduce transaction costs, going in some cases as far as to enable  non-commercial services to compete with licenced services on the basis of an  exception (rather than on the basis of authorisations, as it the case with  licenced, commercial services). For example, the expansion of the exception to  enable libraries and archives to make available protected content that is  otherwise distributed online by right holders would expand significantly the  opportunities for cultural heritage institutions to make their collections  available to the public. However, the option risks undermining competition by  enabling them to compete on an uneven footing with commercial services,  undermining normal commercial channels, and therefore risking incentives to  create and produce. Similarly, the introduction of a UGC-specific exception,  without safeguards, would deprive rights holders of the possibilities to  licence the use of their works or other subject-matter for the purpose of  creation of derivative works. It risks the emergence of alternative,  non-licenced business models, competing with licenced approaches, and thus  risks long-term incentives to create and produce.
            The entire phasing out of levy schemes as a  result of the diminishing harm caused to right holders in the on-line  environment would be harmful in the short- to medium-term for rights holders and  on cultural diversity. At the same time, this may allow for the development of  new business models, allowing right holders to identify new sources of  revenues.