In 2014, Fifth Era surveyed 330 investors in eight countries around the world (Australia, France, Germany, India, Italy, Spain, the UK and the US) in order to assess the degree to which the future legal environment might impact their behavior concerning investing in Digital Content Intermediaries (DCIs). 

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In summary, the most important common themes that were consistently found in all eight countries are:

• Legal Environment. Globally investors view the legal environment as having the most negative impact on their investing activities with 89% of the investors surveyed saying it had a modest or strongly negative impact. A large majority of early stage investors around the world feel that the current legal environment has a more negative impact on their investing than either a weak economy or an increased competitive environment.

• Regulatory Ambiguity. When asked what it was about the legal environment that so concerns investors and impacts their investing behavior, the ambiguity in the current regulatory environment was identified as of significant concern. 88% of worldwide investors surveyed said they are uncomfortable investing in DCIs that offer user generated music and video given an ambiguous regulatory framework.

Given these perspectives regarding the legal environment and regulatory ambiguity, we then asked the investors what specific potential regulations would be of greatest concern.

• Uncertain and Potentially Large Damages. In all eight countries surveyed, early stage investors view the risk of uncertain and potentially large damages as of significant concern as they look to invest in DCIs. 85% agree or strongly agree that this is a major factor in making them uncomfortable about investing in DCIs.

• Secondary Effects of IP Infringement Regulations. The second area of consistent concern worldwide was secondary liability. Here lawmakers genuinely want to help in the fight against copyright infringement. However, focusing mainly on DCIs can have unintended consequences for investment - a danger particularly important for content creators given that DCIs are now driving a significant and growing proportion of revenue for the creative industries. We found that 78% of investors would be deterred from investing in DCI’s that offer user uploaded music or video should new anti-piracy regulations increase the risk that their investments would be exposed to secondary liability in IP infringement cases.

These findings highlight the concern of many lawmakers that unintended consequences might result from potential new internet regulations. Our findings illustrate that there is a risk that potential regulations might greatly curtail or cut off capital from the early stage companies that are driving global innovation, GDP growth and new job formation.