Possible Juridical, Industrial and Cultural Consequences

Vahrenwald, Arnold


Possible Juridical, Industrial and Cultural Consequences
ISBN: 978-3-937231-17-4
Veröffentlicht: 2004, 1. Auflage, Einband: Broschur, Seiten 132, Format DIN A5, Gewicht 0.18 kg
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E-cinema offers new perspectives for the distribution of audiovisual content to film theatres. In e-cinema fi lm prints are replaced by the digitised content stored on electronic data carriers or in electronic databases. A trust center ensures the protection of the content against piracy by appropriate means. The e-cinema film theatre is equipped with a digital projector, a server and facilities for the storage of the electronic files, so that any other digital content , including live, can be screened. International standards for e-cinema are developing. In spite of these advantages, the digital revolution on the theatre screen faces impediments: the traditional value chain is upset. Savings through digitisation accrue essentially to distribution. Business models envisage a participation of distributors in exhibitors' costs, but the digitisation does not only facilitate projection, it requires control and management of the content through play-out-service centres to fi ght piracy. Exhibitors may not easily be prepared to concede this control to third parties.

The production, distribution and exhibition of digital content will affect our perception of the fi lmed reality. The consumer is likely to develop a critical distance to screened content. Digital projection of content permits an increased customerisation. Theatres will adapt programs and advertising to the needs of the audience. E-cinema is likely to favour the globalisation of content and culture, but the increased exploitation of screens can also benefit niche content. Cross-border projection will be possible, for example via satellite communication. The rules of the international trade were developed with regard to the distribution of corporeal film prints and broadcasting services. How can these rules be applied to global e-cinema?

The book provides an overview concerning this developing sector of the film business. The author, teaching at MAGICA (Master Europeo in Gestione di Industria Cinematografi ca e Audiovisiva), Rome, is an experienced scientist and legal practitioner on the international level. He may be contacted: info@vahrenwald.com

Wird die Technologie des E-cinema, des E-Kinos, unsere Sehgewohnheiten verändern? Ist die digitale Revolution in diesem Bereich finanzierbar? Welche Implikationen zeichnen sich für den Filmvertrieb und andere audiovisuelle Medien ab? Welche Regeln der Welthandelsorganisation finden Anwendung auf grenzüberschreitendes E-Kino? In der Analyse des Autors zeichnet sich eine Entwicklung ab, die größere industrielle Strukturen im Vertrieb begünstigt und die sich nachteilig für die fragmentierte europäische audiovisuelle Industrie auswirken kann. Doch staatliche Fördermaßnahmen und privatwirtschaftliche Geschäftsmodelle dürfen den Wettbewerb nicht verfälschen und müssen sich an kartellrechtlichen Vorschriften messen lassen. Der Autor untersucht das technologische, wirtschaftliche, juristische und kulturelle Umfeld des E-Kinos und bietet einen umfassenden Überblick seiner Entwicklungstendenzen.

Prof. Ph. D. Arnold Vahrenwald
The author who was born in 1950 in Gehrden, Hanover, studied law at the German universities of Saarbrücken, Heidelberg and Munich. He took his LL.M. at the London University, London School of Economics, and his Ph.D. at the University of Kiev. He is a Professor and taught at the Media Business School, the ECAT, European Consortium for Audiovisual Training, and MAGICA, Master Europeo in Gestione di Industria Cinematografica e Audiovisiva, Rome. He worked as an international civil servant at the European Space Agency, Paris, responsible for intellectual property matters, and as a researcher at the EU Commission‘ s Joint Research Centre in Ispra, Italy. The author has a law firm in Munich, and he is European Secretary of CentreBar.

Contacts: info@centrebar.com

CentreBar is an organisation which was established in 1994 by barristers and economists from London and Munich engaged in the high-tech, entertainment and cultural industries. CentreBar means Copyright, Management of Economics, Communications, Entertainment, Technology and Trademark Bar Association. CentreBar offers a forum for the discussion of those professional subject-matters which are of concern to practitioners and lawyers in European countries and abroad, taking into account that these problems are also caused by implications of different systems of law and economy. The positions assumed by the members are not influenced by the interests of for profit organisations

Internet: www.centrebar.com


Acronyms 9
Introduction 11
1. Aims of E-Cinema 13
1.1. E-Cinema and D-Cinema 13
1.1.1. Quality Levels of E-Cinema 14
High-End E-Cinema (D-Cinema) 14
Low-End E-Cinema 14
1.1.2. E-Cinema Penetration 14
1.1.3. Pros and Cons of E-Cinema 15
1.2. Interests of the Film Industry 16
1.2.1. European Union 16
E-Cinema Projects in the EU 17
E-Screen 17
Orpheus 18
DSN 19
1.2.2. The Motion Picture Association of America 19
1.2.3. E-Cinema in the Film Theatre and Home Cinema 20
1.2.4. Digital Film Festivals 20
1.3. US NATO Digital Cinema User Requirements 20
Overall 21
Content Packaging 21
Distribution 21
Content Protection 21
Encryption 22
Audit Logs 22
Control and Monitoring 22
1.4. Developments in Asia 23
2. Technology 25
2.1. Production and Distribution 25
2.1.1. Pre-Production, Production and Post-Production 25
2.1.2. Compression 26
2.1.3. Encryption and Watermarking 26
2.1.4. Resolution 27
2.1.5. Play-Out-Service Centres 27
Digital Rights Management 28
2.1.6. Laser Display Technology (LDT) 28
2.2. Updating Conventional Footage (Telecining) 29
2.3. Delivery 29
2.3.1. Corporeal Carriers 30
2.3.2. Incorporeal: Cable and Orbital Satellite 31
2.3.3. Incorporeal: ‘Broadcast Server’ or ‘Data Server’ Models 31
2.4. Exhibition and Projection 32
2.4.1. Projectors 32
2.4.2. Storage and Back-End Technology 32
Operating Systems 33
2.4.3. Projectionists 33
2.5. Control of E-Cinema Operations 33
2.5.1. Trust Centres 34
2.5.2. Metadata 34
2.5.3. Piracy 35
2.6. E-Cinema Industry 36
3. Standards 41
3.1. Standards as a Means for the Creation of Trust and Confidence
in the Film Theatre Industry 41
3.2. Organisations Involved in Standardisation 42
3.3. Development of Standards 43
3.3.1. Minimum Requirements Concerning Standardisation 43
3.3.2. Sectors for Standardisation 44
3.3.3. Digital Cinema Mastering and Compression Standards 44
MPEG-2 45
Wavelets 46
K2 46
3.3.4. New Standards 47
Digital Cinema Packaging Specification 1.04 48
DCI Technical Specifications Version 3.0 48
4. Economics of E-Cinema 49
4.1. Costs of Shipping and Projection 50
4.1.1. Shipping 50
4.1.2. Projectors and Related Equipment 50
4.2. Economic Models for E-cinema 51
4.2.1. Financing Schemes 52
4.2.2. Changes of the Distribution Value Chain: Distribution 53
4.2.3. Financing Schemes and Third-Party Players 53
Participation of the Third Party in the Ticket Price and in Savings
of Print Costs 55
Leasing Model and Participation in the Ticket Price 56
Problem: Third Parties’ Involvement as ‘Gatekeepers’ 56
4.3. Risks Involved with E-Cinema 57
4.4. New Services 58
4.4.1. Live Events, Documentaries, Meetings and Conferences 58
Alternative Content 59
4.4.2. Advertising 59
4.4.3. Rolling Stock Advertisements 60
4.4.4. Low Security Concern for Advertisements 61
4.4.5. Advertisers Supporting Programming 61
4.5. Old Jobs and New Jobs 62
4.6. Old Contracts and New Contracts 62
4.6.1. Copyright 62
E-cinema as a New Type of Exploitation? 63
Risk: Narrow Definition of Exhibition Right 64
Delimitation between Exhibition Right and Other Exploitation Rights 65
Exhibitor’s Implied Obligation of Exploitation 65
Examination and Approval of Content 66
4.6.2. Public Law Considerations 66
4.6.3. Acquisition or Lease of Digital Projector 67
Separation of Spheres of Responsibility 67
4.6.4. Software Contracts 67
5. Cultural Implications of E-Cinema 69
5.1. Changes of Production and Consumption 69
5.1.1. Production and Post Production of the Digital Film 70
Computer-Generation of Films and Its Impact on Production 71
5.1.2. Coping with Audiovisual Literacy 71
Impact of (Global) Distribution of Films by E-Cinema 72
5.1.3. Democratisation of E-Cinema Imposes Aesthetic Standards on Content 73
5.2. E-Cinema and the Cultural Diversity 73
5.2.1. Political Tensions Through E-Cinema? 74
5.2.2. Entertainment Industry and Global Trade 74
Entertainment Industry Coalition For Free Trade 75
5.2.3. Cultural Exception and Differences Between GATT and GATS 75
5.2.4. E-Cinema Distribution: Goods or Services? 76
5.2.5. The Modified National Treatment Principle of the GATS 76
5.2.6. Relevant Exemption from the GATS Most-Favoured-Nation Principle 78
5.2.7. “Cultural Exception Clause” Comprehended in GATT and GATS 78
UNESCO: the ‘Cultural Exception Clause’ Is Contained in the GATS 79
Audiovisual Services in the Sense of the GATS 79
Regulations on the Programming of E-Cinemas? 80
5.2.8. “Cultural Exception Clause” and the GATS 2000 81
EU Position During the Uruguay Round of the GATS 81
EU Position During the GATS 2000 82
Audiovisual Services to Be Regulated in an Annex to the GATS? 82
Necessity for Special Audiovisual Services Including E-Cinema? 83
5.2.9. E-Cinema Services and the Application of the “Cultural Exception” in the EU 84
Is E-Cinema an Audiovisual Communication Service in the Sense
of the French Law on the Freedom of Communication? 84
5.3. Modifications of the Value Chain Trough E-Cinema 85
5.3.1. E-Distribution and State Control of Programming 86
5.3.2. EU Antitrust Law concerning Audiovisual Works and Products 87
Agreements in Restraint of Competition 88
Exclusive Distribution Agreements 90
Block Licensing 90
Implications for E-Cinema 91
Abuse of a Dominant Position 93
Merger Control and Vertical Integration in the E-Cinema Industry 93
5.3.3. US Business Plans for E-Cinema and Antitrust Law 95
5.4. Segmentation of the Cinema? 95
5.5. E-Cinema and Home Cinema 96
Annex 1: GATT 97
Article IV 97
Special Provisions Relating to Cinematograph Films 97
Annex 2: GATS 99
Article II 99
Most-Favoured-Nation Treatment 99
Annex on Article II Exemptions 99
Scope 99
Review 99
Termination 100
Lists of the Exemptions from Article II of the GATS 100
Index 117


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