The Real Question for the #DigitalSingleMarket

The Juncker Commission puts a lot of faith in the so-called Digital Single Market to fix jobs and growth in Europe. So much faith, in fact, that one of its vice presidents is dedicated to this mission: Andrus Ansip. Netopia’s coverage of the DSM starts today with an interview with Ansip, where he says that the DSM “could contribute up to €340 billion to Europe’s growth per year” and 3,8 million jobs. What’s not to like? Netopia looks behind these numbers for substance.

The Commission will announce its strategy on May 6th, but today documents were leaked: the strategy communication and the evidence paper. A lot of the DSM conversation is about access to entertainment and culture content online, how copyright rules and licensing needs to be reformed in order to provide for cross-border access (Ansip is famous for talking about Estonian football). Is this a priority for anyone besides homesick Brussels expatriates? Sure, when you travel it would be nice to be able to access the same services you’re used to (and eat the same food, but of course that’s already been sorted out in the old analogue single market). At the same time, territorial licensing, cultural diversity and contractual freedom are some of the mechanisms that make those services and that content possible in the first place, so the risk is that the DSM throws out the proverbial baby with the bathwater. It seems from the leaked docs that the Commission hopes to convince the culture and media industries with tougher enforcement measures, but having a market in the first place is likely even more close to home for the creative businesses. Will the DSM spawn European digital challengers to rival Silicon Valley? Or will it remove remaining obstacles for the internet skyscrapers’ ever-expanding domains? VP Ansip says to Netopia that big players can deal with fragmentation but small players can’t. On the other hand, as one video game developer told this writer the other day “There is safety in fragmentation. Consolidation is death.”

Of course, the classic analogue single market did not spell the end of small business, but real-world services and products are different from digital ones. They don’t move as fast. Exclusivity and scarcity is built-in. Payment is more closely linked to delivery. Instant unlimited replication with perfect copies does not exist in the physical world, but in the digital world it’s standard. The rules are different. Anyone who has ever tried to charge for a digital service knows how hard it is: endless supply (or “long tail”) pushes prices toward zero. Scarcities can only be artificially upheld, but will be challenged by hackers and tech workarounds. The niche monopolies decide the terms of business for all players in the market, naturally with their own interests closest to heart. Online theft is borderless but enforcement is not. All of these are examples of what makes the internet great, but the flipside is that it is notoriously difficult to do business. The only really successful business model is advertising, but that is being eaten by spam and fake ad networks, the dominant players’ upper hand and the fact that the demand of advertisers is not endless. So this is where policy can make a difference. If the Commission really wants to create a digital single market, it should look at the fundamentals: money, ownership, scarcity. The solution may be more in the technology than in the policy. The way the internet fundamentally is designed, every data packet has a destination and content and nothing else. That beautiful simplicity is the greatest success factor. But that also means that anything besides destination and content, such as a price tag, must be added as an afterthought. It means swimming against the tide of the digital ocean (if the reader will forgive the cheesy metaphor). It also means a lot of influence for those who control the technology and infrastructure (cue the net neutrality debates). If the Digital Single Market is to create millions of jobs and billions of Euros, the real question is:

How can we create a digital market where the seller decides the price and the buyer decides whether to take it or leave it?

(Oh, and should you happen to meet Andrus Ansip sometime, don’t mention the geo-blocking. Deep in his heart, he hates geo-blocking.)