Newspaper and magazine publishers face paying thousands of pounds in fees if they continue using video content on their websites, industry groups have warned.
The dispute follows a decision to transfer regulation of the video-on-demand sector from Ofcom to the Authority for Television On-Demand (ATVOD).
ATVOD has ruled that short video clips on publishers' websites provide a "TV-like" service.
This means publishers must register with ATVOD and pay an annual fee - a ruling strongly opposed by the Professional Publishers Association (PPA) and the Newspaper Society. While last year's annual fee was £2,900, the PPA claims that, depending on company turnover, that figure could rise to as much as £25,000.
PPA chief executive Barry McIlheney said: 'Essentially the disproportionate regulatory fees being charged by ATVOD are damaging innovative digital businesses and putting them at a disadvantage compared to their European counterparts."
A number of publications - including The Sun, News of the World, The Sunday Times and Elle magazine - are appealing the decision, after ATVOD ruled they were in breach of the Communications Act 2003 by failing to notify the watchdog they were operating video on demand services.
The Newspaper Society's political, editorial and regulatory affairs director Santha Rasaiah argues that under the EU's Audiovisual Media Services Directive, newspapers and magazines should be 'expressly excluded'from the regulation.
Rasaiah said: 'Throughout negotiations on the directive and its implementation into UK law, assurances were repeatedly given, including during the course of Parliamentary debate, that publishers' current online activities, including video clips, would not be caught by the new legislation and did not satisfy the definition of TV like on-demand programme services for regulation by Atvod. Rasaiah added: 'It is important that press freedom is not curbed by unintended regulatory creep."
ATVOD chair Ruth Evans claims it 'has no desire or remit to regulate the press – whether online or offline – but we do have a duty to be even-handed and apply the new statutory regulations in a fair and consistent manner. Where video content appears as an integral part of an online version of a newspaper, for example alongside a text based story, then the service falls outside our remit: it is indeed excluded by law. Many services provided by newspapers and magazines fall exactly into this category and can expect to hear nothing from ATVOD."
Commenting on the decision to include The Sun, News of the World, The Sunday Times and Elle magazine under its remit, Evans said 'that is not what happens in these particular services. In each case, a catalogue of 'TV like' programmes is offered as a discrete service, comparable with many others. There are clear differences between these services and online versions of newspapers."
UK newspapers and magazines, and their websites, are currently only regulated by the Press Complaints Commission - a watchdog which is entirely funded and run by the industry itself. Publishers have always fiercely resisted any further moves to create statutory regulation of the press.