France Considers “Culture Tax” on Online Video-Sharing

January 13, 2014

A visitor is seen at the You Tube stand during the annual MIPCOM television programme market in CannesThe French government is considering a requirement that online video-sharing services, such as YouTube, pay a fee described by some as a “culture tax” in support of production of French television and motion picture content.  This issue illustrates the extent to which user-generated online content is affecting the traditional media content development and distribution processes.

Currently, the French government requires all broadcasters, motion picture theaters, and Internet service providers that operate in France to pay a tax.  The proceeds from that tax are used to support the production of new television and motion picture content in France.  This “culture tax” reportedly raises approximately 1.3 billion euros per year.

The French authorities are not considering requiring individual developers and viewers of online user-generated content to pay the tax.  The tax would only be assessed against the online service providers, such as YouTube, that operate the forums in which the content is shared.

French authorities suggest that application of the tax to the online service providers is justified because those service providers are now, in effect, media content providers.  The French tax is currently directed toward all media content providers operating in France, thus the authorities contend that YouTube and the other providers of services supporting user-generated content sharing should pay the tax, as well.

French authorities are also considering expansion of the culture tax.  For example, they are reviewing a proposal to assess a one percent tax on all smartphones, tablets, and other electronic devices sold in France.  The proceeds from that new tax would also be used to support production of new television and motion picture content in France.

Many technology companies oppose expansion of the culture tax to user-generated content and electronic devices.  They express concern that the taxes could impede expansion of digital media content use.

The French actions highlight the evolving nature of digital media content.  As online content, including user-generated content, becomes increasingly widespread and popular, it has an important impact on the traditional media content development and distribution systems.

In effect, France is on the verge of recognizing user-generated content as an additional media content provider, comparable to traditional television and motion picture producers and distributors.  Based on that recognition, French authorities are apparently prepared to tax that content.

It should also be recognized, however, that if the user-generated content made available through online services such as YouTube is considered to be a government recognized form of media, then all legal and regulatory protections available in France to traditional media content providers such as broadcasters and motion picture producers should also be available to the online services that distribute user generated-content.  If user-generated content is viewed to be comparable to television and motion picture content for tax purposes, that content should also receive the same protections and privileges available in France for those traditional forms of media.