recent evolution of the european union’s audiovisual...
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Recent Evolution of The European Union’s Audiovisual Policy
By
Harvey B. Feigenbaum
Professor of Political Science and International Affairs
The George Washington University
Washington DC 20052
Prepared for presentation on the panel on Business and Sustainability, International
Conference on Public Policy, Grenoble, France, June 26-28, 2013
Introduction
When it comes to audiovisual policy and the regulation of the media, the conflict
among the EU’s member-states is not so much structural as ideological. The conflicts
over regulatory policy reflect the economic policy philosophies that to varying degrees
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divide Europe: neoliberalism versus dirigisme. Despite the frequently repeated and much
lauded convergence of industrial countries’ policies toward the Right—the “Washington
Consensus” and the World Trade Organization are manifestations of this—preferences
among many EU (and OECD) members for an active state persist. Indeed, they have
intensified since the onset of the financial crisis of 2007-2009.
The problem is that the political winds favoring state activism blow more
strongly at the national level than in the supranational stratosphere of Brussels. Moreover,
these winds do not blow everywhere in Europe. Across many policy areas, Britain and
the Netherlands, and the northern countries more generally, have tended to favor a free-
market approach more than other EU members.1 Given that the decision making structure
of the EU still gives pride of place to the preferences of member-state governments,
largely due to the predominate role of the European Council, these northern preferences
are hardly negligible. While the streamlining of the decision-making structure
established by the Lisbon Treaty makes the organization more supranational by
increasing the role of majority voting in the Council, the expansion of the European
Union to include the former communist countries of Eastern Europe, most
overcompensating for their involuntary subjection to Soviet statism, has weighted the
structure toward neoliberalism. With the enthusiasm normally seen among new converts
to a religion, these countries have increasingly lined up with their “Anglo-Saxon” friends.
When their material subsidies are not in question, they join in the defense of markets. In
fact, the new Eastern members of the EU more frequently ally with the neoliberal
countries in the north, than the economically needy countries in the South (Peel, 2008:
1 A high-level US trade negotiator volunteered this to me in an e-mail.
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11). However, audiovisual policy involves not only issues of economics and technology,
but also of culture. This adds another layer of complication that often shapes the language
and consequences of the texts (Katz, 2005: 9). At risk is the cultural diversity of Europe.
This has both economic and political consequences.
This paper focuses on audiovisual and film policies precisely because the cultural
aspects of the policy raise the salience and divide opinion. Because countries not only
have different policy styles and philosophies, but also are differentially sensitive to the
cultural aspects of audiovisual and film policies, the degrees of conflict between member
states and the EU vary (Vogel, 1986; Gormley & Peters, 1992).
Audiovisual policies normally involve three kinds of issues: Choosing and
enforcing technical standards, regulating the domestic market, and supervising content
(Feigenbaum, 2002). At the EU level they also involve issues of international trade.
Finally, both audiovisual and film industry policies involve tax incentives and subsidies.
Subsidies always raise red flags, but it is the supervision of content that frequently
divides EU members most deeply and implies consequences for European cultural
diversity.
The Problem
The audiovisual media and film industries are economic behemoths that are
thought to have an impact on culture, and are therefore politically sensitive. The main
problem, as far as the EU has been concerned, is how protect and affirm the cultural
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assets of Europe (the dirigistes’ concern), without losing the economic possibilities
afforded by the entertainment industry and now, by new media (the neo-liberals’
concern).
Background
To some extent the differences between the two sides of the debate are defined by
their emphasis on either the cultural or the artistic aspects of audiovisual media. This is,
in historical terms, a somewhat recent debate. Although the impact of the film and
audiovisual industries may be cultural, the early film industry was commercial from its
inception. Europe and America traded intensely and competed vigorously from the end of
the 19th
century onward. The French film giants, Pathé and Gaumont, had initially been
part of the Edison Trust. They had had active branches in the US from the earliest days of
the industry. Before World War I the US imported more films from Europe than it
exported. After the First World War many of the indigenous European film industries
came into their own. The German industry had been founded in response to the
communication and propaganda needs of the military High Command before the Great
War. The new industry, with its Neubabelsburg studio complex, both competed with
Hollywood, and attracted the investment of major Hollywood studios (de Grazia, 2005).
Mussolini created the extensive Cinecittà film-making center outside of Rome; and the
French competed from the Eighth Arrondissement of Paris and eventually from studios in
Boulogne Billancourt and Saint Denis. The British had their own industry, the famous
names of Ealing, Pinewood and Shepperton come to mind, as did most of the countries of
Europe. This vibrant European growth was initially abetted by the advent of sound,
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which, at least briefly, served as a barrier to importation of foreign films. However, the
cumulative effect of the two world wars and the business acumen of Hollywood
eventually established the US as the hegemon of film (Izod, 1988; Feigenbaum, 2007).
American films were lavishly produced, opulently marketed and efficiently
distributed to markets around the world. In most countries, people preferred to watch
Hollywood films to local ones (Feigenbaum, 2007: 382-3). To some extent the
relationship between Hollywood and the world was reciprocal: world markets demanded
Hollywood films, and Hollywood films, as production costs rose, eventually needed
world markets to break even.
Graph 1 shows the top twenty producers of feature films as of 2009, but it is a bit
deceptive. Almost all of these countries produce for local consumption, though
Bollywood (i.e., not all Indian films) are significantly exported, primarily to diaspora
communities, and Nollywood (Nigeria) films, mostly videos, are popular within Africa.
Graph 1
TOP 20 PRODUCERS OF FEATURE FILMS, 2005-2009
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Total numner of films produced
India
Nigeria
United States*
China
Japan
Russia
France
Germany
Spain
Rep. Korea
Italy
United Kingdom
Indonesia
Brazil
Canada
Philippines
Switzerland
China, Hong Kong SAR
Turkey
Mexico
1,400
1,200
1,000
800
600
400
200
0
Source: UNESCO Institute for Statistics: From International Blockbuster to
National Hits, http://www.uis.unesco.org/culture/Documents/ib8-analysis-cinema-
production-2012-en2.pdf, p. 10, taken 14 March 2013
Though the data is somewhat older, Table 1 provides a useful comparison of the
relative levels of production costs in the different regions. The figure for US productions
is understated because the data include the costs of many low budget independent films
and made-for-television films.
Table 1
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Production Scale of Film in Selected Countries (1997)
Unit: Million Euro
The number of
production Total production costs
Production costs per
film
Germany 61 305 5.0
France 163 795 4.9
UK 115 969 8.4
US 673 8,662 12.9
Mexico 9 11 1.2
Argentina 32 48 1.5
Brazil 30 64 2.1
Egypt 55 35 0.6
Japan 278 914 3.3
India 697 300 0.4
China 88 47 0.5
Hong Kong 94 54 0.6
Philippines 210 30 0.1
Singapore 7 2 0.3
Korea 162 44 0.3
Taiwan 27 17 0.6
Australia 34 86 2.5
Data: European Audiovisual Observatory, UNESCO
Reproduced with permission from Byung-il Choi, “Culture as Trade Concern”, International
Studies Review, (December 2002), p. 6.
Graph 2 illustrates the trend in terms of numbers of movies.
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Graph 2
Film Production Trends in Major Regions (1980∼1999)
762
677661673713697
477
356
222
594600555560569
443
249278278289
239
319
320
0
100
200
300
400
500
600
700
800
80 85 90 95 96 97 98 99 00
US
EU-15
JP
Data: European Commission, Statistics on audiovisual services Data 1980-1999, 2001.
Reproduced with permission from Choi, p. 5.
In Graph 2 the line indicating “EU” films produced is somewhat deceiving. This
is not only because the category includes only those movies produced before the EU
enlarged to most of Eastern Europe, but especially because films produced in Europe
were rarely exported beyond their country of origin. In fact, one of the major issues for
European countries is that local films often have trouble finding distribution even within
the country of origin.
Part of the reason for rising production costs in the US was that Hollywood
studios saw lavish productions as a method to compete with television. Faced with the
widespread purchase of televisions after the Second World War, studios, which were
shorn of their theatrical profit centers by the Supreme Court’s Paramount decision in
1948 (U.S. v. Paramount, 1948), sought to use lavish decors and foreign locales as
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method of attracting audiences away from the free entertainment offered by the electronic
box in the living room (Hozic, 2001; Izod).
While this strategy was entirely created in response to the needs of the domestic
American market, the effect was to produce films that not only filled a gap in Europe left
by the wartime hiatus, but ended up with a product that Europeans had not the resources
to match. As a result, US films dominated world film markets everywhere they were
allowed to be shown(Table 2). Only in France, which enforces a quota in its cinemas, do
US films occasionally occupy less than 50% of the market. This is illustrated by Table 3
Table 2
Film Production: The European (EU) Market
feature-length
films1
adm.2
(millions) European film share
(%)4
US film share (%)
1991 471 605 17 73
1992 489 587 17 73
1993 504 666 15 75
1994 444 677 n.d. 74
1995 443 664 n.d. 72
1996 569 709 25 71
1997 560 765 32 66
1998 555 828 22 78
1999 603 810 29 69
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2000 602 844 23 73
2001 627 935 32 65
2002 644 938 28 70
2003 672 890 26 71
2004 3 770 1,006 30 67
2005 815 894 38 60
2006 883 926 33 64
2007 5 806 920 35 63
2008 849 925 33 66
2009 893 980 31 67
2 Estimates.
3 From 2004, Europe of 25.
5 From 2007, Europe of 27.
Updated on the 15/05/11.
Source: Conseil National du Cinema
Table 3
Film Receipts: The French Market
Market share in receipt (%)
French films
American films European films1 other films Total
1980 47.9 36.8 11.7 3.6 100.0
1981 50.7 31.3 14.9 3.2 100.0
1982 53.8 30.6 9.6 5.9 100.0
1983 47.1 35.4 10.7 6.8 100.0
1984 49.7 37.4 10.5 2.4 100.0
1985 44.9 39.4 11.7 3.9 100.0
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1986 44.4 43.0 10.6 2.1 100.0
1987 36.2 43.7 12.0 8.1 100.0
1988 39.6 45.7 10.7 4.0 100.0
1989 33.8 56.6 7.8 1.9 100.0
1990 37.4 56.6 5.3 0.7 100.0
1991 30.1 58.7 9.9 1.3 100.0
1992 35.1 58.3 4.3 2.3 100.0
1993 34.8 57.6 4.1 3.4 100.0
1994 28.3 61.3 8.6 1.9 100.0
1995 35.2 54.0 8.4 2.4 100.0
1996 37.3 54.7 6.0 2.0 100.0
1997 34.6 52.4 10.2 2.9 100.0
1998 27.4 63.8 7.7 1.1 100.0
1999 32.5 54.4 11.1 1.9 100.0
2000 28.1 63.2 6.1 2.6 100.0
2001 41.4 46.6 7.5 4.4 100.0
2002 34.6 50.2 8.4 6.8 100.0
2003 34.6 52.9 5.3 7.3 100.0
2004 38.4 48.3 9.4 3.9 100.0
2005 36.3 46.5 15.5 1.6 100.0
2006 44.6 44.7 8.8 1.9 100.0
2007 36.1 50.2 12.1 1.7 100.0
2008 45.2 44.0 9.1 1.7 100.0
2009 35.5 51.6 9.6 3.3 100.0
2010 33.8 49.9 14.7 1.6 100.0 1 Europe in the continental sense: from the Atlantic Ocean to Ural, except France .
Updated on the 15/05/2011. Source: Conseil National du Cinema
The story for television is a bit different. Audiovisual imports have been a source
of concern for many of the EU member states, but it is worth noting that American
dominance of television export markets was not entirely the same as its dominance of
feature films. The factor here is the proliferation of television channels beginning in the
1980s had been made possible by new technologies such as cable and satellite
(Feigenbaum, 2003). Digital technology greatly increased the number of TV channels
available and crucially, most were financed by advertising (Feigenbaum, 2011). With the
rapid increase in the number of channels France for instance went from three public
channels to over 90 in the period from 1980 to 2000. From 2000 to the present the
number of choices have grown exponentially, and there are now 956 channels (MAVIS
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2013).2
This limited revenues to broadcasters and the latter were forced to fill their
schedules with cheap American reruns. Other countries experienced similar growth and
were confronted by the same incentives. Because American television shows are
amortized over not only the huge domestic market, but also on secondary (re-run) and
international markets, unit costs of American shows are much lower than locally
produced European programming. American shows run from one-fourth to one-tenth the
cost of broadcasting a European show (Feigenbaum, 1996). Thus, the paradoxical result
was that the proliferation of channels led to the domination of European markets by
American shows that Europeans actually did not want to see (International Herald
Tribune, 2005).3 Programmers would accept a reduction in Nielson scores (a measure of
audience size) because American shows were so cheap that the cost savings made up for
the fact that American shows were less popular. This led to American dominance of EU-
US television trade. See Graph 2.
Consequences of American Market Penetration
The issues involved are not merely economic. It is true that Hollywood has
become increasingly dependent on international sales. Costs of production continue to
rise and significant revenue streams have been lost. Theatrical distribution is affected by
2
http://mavise.obs.coe.int/channel?event=listing&query_clauses={%22target_coun
try_id%22:%221%22,%22other_target_country_id%22:true}, taken February 15, 2013. 3 In a comparison of the most watched television shows in Australia, France, Italy, Sweden and the
United States, only in Australia was the most watched show an import. Curiously, once Australia is
excluded only France had an American production in the top ten: the movie Star Wars (International
Herald Tribune, 2005).
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the business cycle in ways that it had not been in earlier downturns. This is because
technology has created so many alternatives to the traditional movie theater that they are
no longer recession-proof in the way they were in earlier downturns. Similarly, the
decline of DVD sales which had in earlier times accounted for as much as 80% of gross
revenues (Epstein 2010), dropped off precipitously. However, even today, though
significantly threatened by piracy, DVDs represent the largest revenue stream ($16
billion in 2009)4 Thus, American film and television producers are keenly interested in
the European market, where piracy is less important and where theatrical and home-
entertainment distribution are crucial to defraying production costs.
The cultural consequences are supported mostly by anecdotal evidence, but they
are no less real. The problem is that there are only 24 hours in a day. To the extent that
Europeans are showing American programming on television, to the extent that
Europeans are going to American movies in their leisure time, American programming
and entertainment is replacing European programming and entertainment. Gradually
people begin to think in terms of American cultural references, rather than national or
European cultural references. There is already significant evidence that this is occurring
(Kuisel, 2003). Examples abound .The accused in French courts address the magistrate as
“vôtre honneur” rather than the appropriate term, “monsieur le juge,” having learned the
former from American cop shows. German law student query their professors as to why
they aren't learning to address juries, not realizing that the German legal system does not
have juries. Similarly, British colleagues have been referring to the categories of the
4 Epstein, http://www.edwardjayepstein.com/Quivering.htm, Taken March 24, 2013.
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political spectrum as running from “liberal” to “conservative,” (King) even though these
terms have very different meaning in Europe, and do not capture the differences between
socialist, communist, reactionary and fascist, options not present on the American
spectrum, and thus not present in American popular culture. As American images replace
local ones, political reference points gradually change. The cultural landscape not only
cedes to American commercial logos, but more importantly, to American political
categories. It is not only national identities which erode, but people’s perceptions of the
complex and nuanced world around them. Europeans are losing contact with their
heritage and have begun to accept a kind of politics more aligned with US traditions than
their own.
EU Policies: From TWF to AVMS
European countries have sought to meet the cultural challenge at the supranational level,
as well as the national and local levels. The most famous EU audiovisual policy is that
which derived from the directive “Television without Frontiers” (TWF) (EEC, 1989; EC
1997). This directive requires member countries to preserve, “where practicable”, at least
51% of prime time television viewing for European programming (10% from
independent European production companies). While countries have seen the phrase
“where practicable” as a loophole in the EU directive, even the highly neo-liberal British
have tended to observe the quotas (see Table 4). Other member countries of the
European Union are more stringent. Paris preserves for European products 60% of
fictional shows (news, sports and games do not count toward the quota), with quota of
40% of prime time reserved for French products. Eventually, the Directive came up for
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renewal and amendment as the Audio Video Media Services Directive, with the ambit of
the directive expanded to include “new media”, especially those that are internet and
satellite based (EC, 2007). There is, in this sector, a long established habit of labeling
media offerings as “services” so as to avoid the application of the GATT (now WTO)
agreements, though not without controversy. From its inception, the GATT (General
Agreement on Tariffs and Trade) had a special dispensation for “cinematographic films”,
though Americans and Europeans disagreed as to whether this covered television (Choi,
2002: 12). These media services as considered by the AVMS directive are meant to
extend the jurisdiction of EU regulation (and regulatory philosophy!) beyond
broadcasting, to include video-on-demand and broadband services (European
Commission, “AVMD – What’s New”, 2008). The language of the AVMS is careful to
note that audiovisual and media servides are both “economic” and “cultural”.
It was in the area of new media that the neo-liberal and dirigiste countries fought
it out. As everything does in the EU, the solution was a compromise. As both satellites
and internet have footprints larger than national borders, the question focused on how
content originating in one country would be treated in another country that might have
more restrictive content regulations. The solution was to adopt the “country of origin”
principle .This means that media providers must adhere to the restrictions of the country
in which they are located, while satellite broadcasters must adhere to the standards of
those countries where there is a satellite up-link (European Commission, 2008). Roughly
this means that, for example, British-based BSKY B, which provides Europeans with
professional sports, mind-numbing American entertainment, and a collection of
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cosmopolitan pornography, need not worry about French local content rules. Not
coincidentally, the British fought hard to include this principle, the French fought against
it.
Graph 3
Graph 3: Estimates of the trade of audiovisual programs between European Union and North
America (1988-2000) - USD Millions
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Source: Andre Lange, “Press Release: The Imbalance of Trade in Films and Televison
Shows Continues to Deteriorate”, European Audio Visual Observatory, Strasbourg, 9
April 2002, http://www.obs.coe.int/about/oea/pr/desequilibre.html, taken 6 May 2008.
Graph 4 helps us understand the strong support for the Television Without
Frontiers Directives. Graph 3 indicates at first glance that the Directives were not terribly
effective. Table 4, however, clarifies this a bit in that it shows the TWF Directives did
allow countries to reduce American programming in prime time, if they so desired. Here
we find that reduction in American programming approximates the liberal versus
“dirigiste” preferences dividing EU member states.
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Graph 4
Imported American, European and other programming broadcast on TV channels
in Western Europe (1997-2001) As a percentage of total hours broadcast
Source: Andre Lange and Susan Newman, EUROPEAN AUDIOVISUAL OBSERVATORY,
Strasbourg, FranceYearbook 2002 - Film, Television, Video and Multimedia in Europe, 2002
Edition,
Vol. 5, "Television Channels - Programme Production and Distribution", pp.128, Press Release of 28
Janurary 2003; http://www.obs.coe.int/about/oea/pr/a02vol5.html, taken 6 May 2008.
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Table 4
Geographical Origin of TV Fiction Programmed by Major Networks (Sample Week 12-18 March
2000)
Domestic US European Other
United
Kingdom
Whole day 47% 43% 0% 10%
Prime Time
only 51% 49% 0% 0%
Germany Whole day 36% 57% 5% 2%
Prime Time
only 56% 44% 0% 0%
France Whole day 25% 56% 15% 5%
Prime Time
only 75% 25% 0% 0%
Italy Whole day 19% 64% 4% 13%
Prime Time
only 43% 51% 6% 0%
Spain Whole day 20% 56% 7% 17%
Prime Time
only 51% 37% 12% 0%
Source: Eurofiction, Press Release, European Cultural Observatory, 9 October 2001
http://www.obs.coe.int/about/oea/pr/pr_eurofiction_bis.html, taken 6 May 2008.
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What these data suggest, despite the arguments of the neo-liberals, is that the
protectionism put in place by the TWF Directives essentially was effective in those
countries that were interested in applying them.
Subsidies
If the main tool for protecting the European cultural space has been television
quotas, the EU strategy in the film market has been to provide subsidies. In the area of
film subsidies the role of the EU is, for the most part, a supplement to national subsidy
programs. Primarily, the EU subsidizes film by way of its MEDIA Plus and MEDIA
2007 programs, with the latest five year program authorized to spend about half a billion
euros (European Commission, “Media”, 2006). While this sounds like a lot of money, it
takes only a little reflection to realize this is less than the equivalent of one Hollywood
movie a year. However, the MEDIA programs are intelligently targeted, focusing on
important aspects of the audiovisual business as training, distribution and marketing
(European Council, 2000).5
Opposition to MEDIA, MEDIA Plus and MEDIA 2007, and the successor
MEDIA programs, has been limited. The neo-liberals are not so much outnumbered as
ignored As Shaun Woodward, UK creative industries minister under the last Labour
5
The European Union also offers a number of subsidy programs aimed at gearing up for digital
entertainmentt: digital content, digital television and radio aids, and retooling for the 16:9 screen ratio for
new, high definition, televisions.
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government complained: “We have a real battle to persuade our partners in the rest of
Europe that we are right (Tryhorn, 2006).” . For most of Britain’s neo-liberal allies, the
issue may not have been so much a disagreement with Britain on substance as on
strategy: cultural policy and film are not the places to make a stand.6 While English
hand-wringing is not uncommon when it comes to the EU, the lack of controversy among
member states is probably easy to understand, the subsidies accorded through the
MEDIA programs are simply too modest to attract the usual critics who worry about
layered bureaucracy, milk lakes and butter mountains.
However, the main non-budgetary constraint for the Commission is still
ideological. While member states are divided about the proper role for state intervention,
the professional economists of the Commission normally are not. Unsurprisingly, the
chief allies of the neo-liberals are the economists working in Berlaymont. As one analyst
put it, “the Commission seems to apply a model of classical economic analysis to the
audiovisual sector, which ignores, to some extent, the problematic of culture and artistic
expression (Herald, 2004: 11).” This attitude did not change with the newer iterations of
media policies after 2007.
In the course of my interviews in Brussels for this study, the main problem in the
film market, from the point of the view of the Commission, was the
compartmentalization of the film market. That is, the main problem from their
perspective was the fact that EU members’ films are not shown in each others’ markets.
Thus for them the problems of the industry could be solved by completion of the single
6 This was the opinion expressed to me in an e mail, of a USTR negotiator in the audiovisual issue
area.
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market for film. The professional economists of the Commission seem unaffected by the
looming presence of the American cultural juggernaut.
Subsidiarity
Audiovisual and film policies are, of course, part of the broader remit of the EU in
the area of culture. Justification for cultural policy at the supranational is found in Article
128 of the Treaty of Rome (later modified as Article 151 in the Treaty of Amsterdam),
This article authorizes the EU to contribute to the “flowering of the cultures of the
Member States.” It is to facilitate cooperation and supplement cultural policies of these
states. As such it has been deemed a “model application of subsidiarity”(Statement by EU
Council official Alan Forest in Sharp, 2006: 16).
Derived historically from the body of Catholic social thought, the principle
maintains that policy-making should be as local as possible. In the general field of
cultural policy this has had many manifestations, and illustrated not least by programs
such as the “European City of Culture.” (established in 1985) which was transformed into
the “European Capital of Culture” program in 1999 (In 2013 the capitals are Marseilles
and Kosice). This is essentially a direct EU subsidy to European cities, which then use
the money to promote cultural activities.
Subsidiarity is especially in evidence in policies focusing on the film industry. In
the area of film production, much of the local subsidies are products of national tax
policies. Most countries, in and out of the EU, have set in place a series of tax
advantages for film-makers. The reason is not hard to understand: film production is not
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only glamorous, but it creates highly paid jobs with few “negative externalities”. That is,
the film industry is wealthy, facilitates the development of human capital and is non-
polluting. Many governments have put in place a series of tax credits, rebates and other
incentives to attract film producers. Britain and Germany have been especially active in
this area and have achieved dramatic results. However, the problem with these policies is
that they have most frequently gone to foreign producers. While the amounts vary from
year to year, Europeans have been less successful than Americans in taking advantage. In
one typical year eighty percent of German film industry tax breaks accrued to Hollywood
firms (O’Brian, 2004).
Such tax expenditures may nevertheless be helpful even if it is a Hollywood
movie being shot in Europe. This is because location shooting of even Hollywood films
maintains the demand for “below the line”7 talent. Their skills remain available for local
production when the Hollywood company leaves. Moreover, European states compete
with American and Australian states to offer tax breaks. However, so far this does not
seem to be a neo-liberal “race to the bottom.” In fact there is something of a dirigiste
element to the competition as New Mexico, Lousiana and Queensland have all built
soundstages with public funds to attract film companies.8 This area of public policy is
oddly reminiscent of the 1989 movie Field of Dreams: “Build it and they will come!
(IMDB, 2009)”
7 Stars, writers, the director and producers, are “above the line” talent. Everyone else involved in
film production is “below the line”.
8 This is a helpful reminder that while the “Anglo-Saxon” countries are considered to be “neo-
liberal”, state or provinicial governments in the US, Australia, and Canada, are often highly interventionist.
For an historical view, see Schonefield (1965).
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Audiovisual policy, however, offers a paradox. In many ways television markets,
if not film markets, are local affairs. In the United States television programming is
organized by “media markets,” some of which are very large (New York, Los Angeles),
while most are quite small (Roanoke, nestled in the Shenandoah Valley of Virginia, is an
example). Programming often varies considerably from market to market. (By contrast
the Motion Picture Association of America considers the US and Canada a single film
market, as is Europe and the Middle East). Similarly, in Germany the Bundeslaender are
crucial to the organization of public television. In Italy there are a profusion of local
channels. The paradox comes in because while television markets are local, television
ownership is multinational. Multinational communications firms that own media
broadcasters are becoming larger, while markets are becoming more concentrated
(McChesney, 1999; Baker, 2007).9 Thus the notion that television markets are local is
something of a mirage. The mix of cultural services (television programs, films) might
vary locally, but, excepting public television, control of production and distribution is
located at the supranational level.
The Consequences of Neoliberal Policy
As I have mentioned, the member states of the EU are conflicted about what to do
about culture. For the champions of quotas and subsidies, the problem is the erosion of
not only national identities, but of a supranational identity, as well. Along with
European integration there has been a self-conscious effort by the EU to construct a
9 There is some controversy on this point, as critics of this position focus on competition from new
media presenting a counterbalance to this concentration.
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European identity (Checkel, 2001; Bennhold, 2005). This new and barely formed
identity is equally at risk.
Moreover, changes in identity affect changes in economic behavior. George
Akerlof and Rachel Kranton have argued that group processes which alter identities, also
affect the utility calculations of individuals (2010: 23-4 and passim.) I believe that group
processes also affect innovation. Cultural diversity is a collective good and anecdotal
evidence suggests that it is a source of economic innovation. When we travel, we
constantly compare our discoveries abroad with what we know at home. The encounter of
different cultures can stimulate us to thinking in new ways. I think examples of the
benefits of exposure to cultural differences abound. One example is Starbucks: a US
entrepreneur married a small chain of coffee shops named for a character in American
literature to Italian coffee culture, and launched what became a $5 billion enterprise
(Vendriger, 2009). In the 1960s the US Postmaster General visited Europe and decided to
adopt the what became the “zip code”, a hybrid style of European mail systems, which
greatly improved the efficiency of mail delivery. Today, in response to Facebook,
German and French entrepreneurs have started social networking sites in their respective
languages, which quite become very profitable (Plamer, 2008).
While it may be argued that none of these innovations would have been possible
had there not been an interchange between regions, it should be noticed that the very
25
success of these innovations also undermines culture diversity. One need only walk into a
Starbucks in Paris or Rome to document this trend. Success leads to proliferation and
imitation. Cultural diversity, it seems, creates the conditions of its own destruction.
Conclusion
The European Union was founded by men who were born in the 19th
century. In
writing the Treaty of Rome, they were looking to solve what had been the pressing
problems of the inter-war period: poisonous nationalism and its consequent economic
manifestation, protectionism. Like Jean Monnet and others, they were repelled by a
vision that these pathologies might recur. Positively, however, they were inspired by
what they perceived to be the continental success of the United States. Their goal was to
push the Old Continent toward the American model.
While not all were federalists, the European founding fathers were convinced that
America’s success lay in its huge, domestic market. It was this market that allowed firms
to grow and to learn techniques that would serve them in the coming global competition
(Chander, 1977). Most importantly, it was the model based on mass production. This
was the manufacturing paradigm of Henry Ford that these men assumed would be
Europe’s destiny (Piore & Sable, 1984; Boyer, 1990).
However, by the time the Single Market was constructed in Europe, Fordism had
run its course in the US and had been replaced by a model dominated by services.
Europe’s decaying manufacturing base seems to be on borrowed time. The sages of
Brussels, like sages elsewhere, look to high technology services as a major part of the
solution to obsolete manufacturing. But does an economy based on services react the
26
same way as one based on manufacturing? Do the bracing winds of competition fan the
flames of productivity, or merely extinguish potential innovations?
Audiovisual services are not only high tech, they have an influence well beyond
the economy. Such services may not be encouraged by using models derived from the era
of smoke-stack industries. The hot-house for orchids may be a better metaphor for the
needs of the new economy, rather than the automobile assembly line. Oddly, the success
of the EU’s liberalism may undermine its future. Policies that work in one economic
environment may be detrimental in another.
Neo-liberals and dirigistes each see the other as obsolete and out-moded. In times
when the whole European experiment seems at risk, a reevaluation of that project seems
in the cards. While cultural issues have normally inhabited the periphery, the implications
for innovation and rebirth should not be ignored. By preserving the past, one preserves
the future.
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