Commission recommends authorising TV product placement

The Commission proposes applying the provisions of the Television without Frontiers (TVWF) Directive to certain internet-based services. At the same time, regulations on advertising and product placement will be partially lifted.

New rules on advertising and product placement

As television goes digital, modern, hard-disk based video recorders are becoming more and more popular. These devices make it easy to skip through advertising breaks in recorded programmes. With some of them, it is even possible to start watching the recording while the programme is still running and, by skipping advertising breaks, to finish watching it at more or less the same time that the broadcast ends. 

The spread of this technology will make advertising less attractive and, as a result, cheaper. The main source of revenue for private TV stations and an important source of income also for many state-funded ones will considerably diminish. 

The Commission thinks that TV stations will need alternative sources of income that cannot be as easily skipped. Product placement – the paid-for placement of goods in movies, shows and even news programmes – could be this source of income. Product placement is currently illegal in most EU member states, but is a major source of income in the US, where almost 3.5 billion dollars were spent on it in 2004. 

The Commission wants to leave the choice to member states whether to authorise product placement, but the proposal says it must be subject to some obligations: The product placement must be made clear in some way at the beginning of the broadcast concerned, the goods may only be placed, not praised, product placement must not take place in programmes for children, and some goods, like tobacco and prescription medicines, may not be placed. 

On traditional advertising, current rules will remain valid, namely that there must not be more than 12 minutes of advertising per hour of broadcasting and that, in films, news programmes and children’s programmes, there must not be more than one advertising block within any 35-minute period. 


Audiovisual media services

The Commission has also included some commercial services on the internet into the scope of the directive, making it effectively an ‘Audiovisual without Frontiers’ directive. This concerns mainly on-demand content such as shows, movies, serials, sports events and news reports, including the advertising therein. It does not concern video clips and animations in news and press websites, nor blogs, video podcasts, picture telephony over the internet and other non-commercial content. 

The obligations for digital “pull”, “on-demand” or”non-linear” are different from those for television, the reason being, among other things, that it cannot be controlled as easily. The obligations are:

  • to respect protection of minors
  • not to incite to hatred
  • to identify the media service provider
  • to identify advertising and other forms of commercial content
  • not to use surrepetitious advertising
  • to respect rules on product placement and sponsoring
  • to respect some restrictions on advertising (e.g. not to advertise alcoholic beverages in programmes for minors)

BEUC, the European consumers' organisation, said the Commission had announced there would be more advertising in future and more hidden advertising in the form of product placement. BEUC Director Jim Murray said that "the Television Without Frontier proposal is an unwanted Christmas present from Commissioner Reding and her colleagues." 

EGTA, the association of television and radio sales houses, said: "Although the Commission seems to acknowledge the need to streamline the existing regulatory framework on advertising, this proposal falls short of expectations and does not address the real challenge of the right of EU citizens to have free access to a wide variety of television programmes. EGTA Secretary General Michel Gregoire said: "Advertising is and will remain the primary source of financing for free-to-air television broadcasters. It is important to design a regulatory framework that will neither damage the present revenue stream nor hinder the development of new forms of advertising otherwise the financing of audiovisual content will be under serious threat in the years to come."

CEPI, the European federation of independent film and television producers, said the Commission had presented "a balanced view of the future needs of the audiovisual sector [...] especially concerning a more flexible and up to date approach to advertising and product placement". However, CEPI Secretary General Bruno Alves said he regretted "some lack of ambition shown by the European Commission in not calling for a more robust approach to the promotion of a competitive independent content production sector in Europe."

The European broadcasting union (EBU) welcomed "the Commission's proposal to extend the scope of the Television Without Frontiers Directive beyond traditional television to all audiovisual media services", saying "it will also enable ''non-linear' (e.g. on-demand) service providers to benefit from the country-of-origin principle, which remains the core of the Directive. This will in turn result in increased legal certainty and a better functioning of the Internal Market."  

On 23 May 2002 the Culture and Audiovisual Affairs Council decided to revise the 1989 ' Television without Frontiers Directive'(89/552/EEC), which was last amended in 1997. The Commission has now presented its proposal for an amended directive, which, it says, is better suited to the age of convergence - the effective melting of different kind of media.

The directive amending the TVWF directive will now be sent to the Parliament and the Council, who will decide on it under the codecision procedure.

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