Upheaval in the media and digital industry: The federal government wants to oblige streaming services and both private and public TV broadcasters to invest at least 20 percent of their sales in European productions. This is the provision in the third discussion draft of the “Law for the promotion of European works through direct investment” (Investment Commitment Act, InvestVG), known by the nickname “Lex Netflix”, which is available online at Heise. According to reports, the federal government has agreed on its basic principles.
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A matter is already pending in Parliament Film funding reform. The digital association Bitkom, the private media association Vonet and the European branch of the Motion Picture Association (MPA), which mainly represents Hollywood studios, are mobilizing against “Lex Netflix”. In a letter available online on Heise the three associations say they are opposed to the plan “because of its legal and economic implications”. The Investment Commitment Act is therefore “no guarantee that more production will take place in Germany in the future”. The letter is addressed to State Minister for Culture and Media Claudia Roth of the Green Party, her cabinet colleagues and the state chancellors of the federal states.
“To date, there can be no question of a balance of interests, both in terms of objectives and details,” complains Bitkom & Co. “Rather, it is a one-sided, heavy burden on an important part of the exploitation chain, which is also facing economic challenges.” The government still “does not take sufficient account of the fact that providers of audiovisual media services have different business models and therefore the content they offer must be differentiated in order to ensure diversity and competition”. The letter criticises that the government “apparently paid too little attention to the objections raised by the EU Commission against the German law as well as to the constitutional concerns of the experts appointed by Roth.” Only internationally competitive incentives and an industry solution that takes into account the interests of everyone involved “can quickly and permanently make Germany the attractive production location we all want it to be.”
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According to the draft discussion, TV channels and streaming providers targeting the Federal Republic market must spend 20 percent of their sales on European audiovisual productions. The film funding tax that is still levied is deducted from this (1.8 to 2.5% for streaming providers, 0.15 to 3% for TV). Of the rest, at least seven tenths must flow into the production of or the acquisition of rights to original German-language productions – regardless of who or where they are produced. Productions in the languages of the four recognized autochthonous minorities in Germany are not mentioned in the draft law.
60 percent of the investments must be directed to new productions, 15 percent to films and 70 percent of the funds must be given to independent companies. Finally, various other expenses will count towards the investment obligation: training, access, synchronization, advertising as well as support for scripts and project development. All investments must meet ecological standards, and lenders’ exclusive rights must expire after a maximum of five years. Streaming providers earning less than ten million euros per year in Germany are exempt from the investment obligation (obviously value is not guaranteed).
Producers and cinemas in favour of Netflix levy
Similar obligations or taxes already exist in Switzerland, several EU countries and Canada, but with requirements in the single-digit percentage range, not 20 percent. Italy sets 16 percent for streamers, of which 30 percent can flow to non-Italian European productions. In France, streamers have to spend at least 20 percent of their sales on rights to French productions.
All three associations clearly support the planned introduction of tax-based incentives of up to 30 percent of German manufacturing costs. This model is approved by the entire industry and is “internationally competitive”. It is therefore best to start with this and wait for its effects.
On the other hand, production is alignedassociations of creative people and cinematographers as well as trade unions and the German Film Academy, are all for three measures: “Without a major film funding reform, there is a risk of permanent loss of creativity, technological innovation and jobs in all sectors of the film industry,” warns Production Alliance spokesman Björn Böhning (SPD). “Only an investment commitment and a tax incentive model will ensure that more investment flows into Germany as a film location and lead to more sustainable value creation and ultimately great films and series.”
(DS)
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