Copyright the Future

Published 6 February 2009

We hope the anger of groups representing consumers, citizens and information professionals did not escape the notice of the UKIPO at the launch of this consultation in London’s Institute of the Contemporary Arts in December 2008. Those that did not walk out early, expressed serious concerns that the detailed work of the Gowers Review of Intellectual Property was being circumvented in favour of narrow special interests that have the ear of the current administration.

Indeed, when Ministers open speeches glowing with pride at having had the opportunity to jam with the musical stars of their heyday¹, before reneging on an thoroughly interrogated, evidence-based policy position in favour of an option (copyright term extension) that will take millions from consumers pockets to line the bank accounts of the world’s four major record labels, it seems hard not to conclude that this Government has fallen victim to the worst type of special pleading. Before we answer the UKIPO’s “series of questions” on the future of copyright, we would like to take this opportunity to evaluate the results of another, still relatively recent and far more vigorous consultation exercise in this space.

David Lammy boasts that over half of the recommendations made by the Gowers Review of Intellectual Property have been implemented. We are more concerned with which half. Although recommendations that would strengthen the copyright regime, such as the allocation of more resources to Trading Standards, and the unworkable recommendation 39 about enforcing copyright over peer-to-peer filesharing networks, have been pursued with vigour, those recommendations that would introduce flexibility and maintain balance in the current framework appear to have been either ostensibly shelved or actively revoked. We refer to recommendations 8-14 around flexibility of copyright for end users and recommendations 3 and 4 on copyright term extension respectively. The reasons for implementing these recommendations have only grown larger in the intervening years since the Government accepted them, as we outline below.

The Open Rights Group views copyright as a necessary state intervention, which, recognising the low marginal cost of reproduction associated with creative works, creates monopolies limited in time and scope in order to incentivise creators and those who invest in them to carry on their work, in the knowledge that they will have a sufficient window of protection to exploit that work and make good on their investment. Thus we find that copyright, where it balances the interests of society and the economy in having a rich and diverse creative industry, and the interests of society and the economy in having access to works for criticism, review, education, and, ultimately, for posterity, is a tool for social and economic good.

As Andrew Gowers observed when he delivered his review to Government, it is the role of policy-makers to maintain the balance between the public’s interest in access to works, and the creator’s interest in being recognised and remunerated for that work. So long as this role is pursued with dedication, copyright will remain fit for purpose. We therefore suggest that the Government should look closer to home than the copyright framework, if it believes the current legislative environment is not serving the UK’s creative economy as best it should.

Finally, we note that the consultation document makes little reference to the key role of independent research and academic study in framing a copyright law that is fit for purpose. We agree with Ian Fletcher, Chief Executive of UKIPO, that the Gowers Review represented a significant step forward in policy­making by emphasising the importance of a strong economic basis for IP rights:

“…the message is that the IP framework is legal and it’s scientific, but underneath it has a purpose that is economic – it is fundamental”²

We express our concern that the Government should not move away from this approach towards the emotive but ultimately empty arguments of special pleading. We now move on to address specific questions posed.

Does the current system provide the right balance between commercial certainty and the rights of creators and creative artist? Are creative artists sufficiently rewarded/protected through their existing rights?

As a consumer and citizen advocate, we believe that creative artists should be rewarded, however the exact terms of the commercial deals are not ORG’s area of core competence.

However, during our campaigning work (particularly our campaign against the extension of copyright term) certain facts have been brought to our attention. Firstly, it is clear to us that very little of the retail price of, for example, a piece of recorded music goes to the artists who created it. This is because money from the cover price is paid to a large number of players in the value chain before it reaches artists, and also because income from sales that is due to artists is recouped by the record company to cover any advance paid to the artists, as well as marketing and other associated promotional costs.

We have also, during the course of our campaigning work, encountered musicians who are unhappy that they have signed away their rights to record companies who in turn have ceased exploiting those rights. The artist is convinced there is an audience for his work, but the company who owns the right to exploit the work does not see the commercial possibilities, and so sits tight. This infuriates artists as it feels to them like their work has been stolen from them. It compares unfavourably to the situation of authors, whose rights revert to them if their publishing company chooses to no longer stock their book in print.

It is not necessarily the case that the disintermediation precipitated by the rise of the internet will put artists in a more powerful position when negotiating with commercial rightsholders, especially given the substantial market consolidation of intermediaries, particularly in the music industry, that predated the rise of the ‘net.

However, we would state strongly that the copyright framework is not the place to try and correct this situation. Our experience, again particularly around the issue of copyright term extension, suggests that trying to use the copyright framework to ameliorate the situation of artists only serves to create complicated, unwieldy law, which in turn presents a barrier to new entrants to the market in content distribution and creates administrative costs which are inevitably borne by consumers and artists. We would point instead to regulation around contract law, plus social intervention, as more workable strategies to ensure artists are in a good position to negotiate with intermediaries at the beginning of their careers.

The balance of power in contractual relations is recognised in consumer protection law and the rationale for such laws could be reviewed by the government to see if any lessons could be learnt in this area.

Copyright provides artists with a tool to negotiate with in the marketplace – it does not, and cannot comfortably, prevent that marketplace from being full of sharks. Copyright is not a suitable instrument for protecting the weak from the strong.

Is our current system too complex, in particular in relation to the licensing of rights, rights clearance and copyright exceptions? Does the legal enforcement framework work in the digital age?

In ORG’s work on solutions to illicit filesharing online, we’ve come to understand that the emergence of new business models that meet consumer demand for “all you can eat” digital music platforms (so-called “legal p2p”) has been impeded because those with the power to license work for new platforms have been unwilling to negotiate. This points to a wider problem about copyright’s effect on incumbent distributors in times of technological change.

Copyright is a time-limited monopoly right granted to creators of specific types of work. It is granted by the state in order to incentivise creators (and those who invest in them) to produce work by allowing them to assign exclusive control over, for example, who can broadcast, display or distribute that work for a limited time. It does so to mitigate against the reality that creative works have a low marginal cost of reproduction, meaning that, without copyright in place, one creator could invest a significant amount of time and effort in creating a work, only to see free-riders hijack that investment by reproducing the work at a low marginal cost and bagging the profits.

As Gowers so rightly observed, so long as policy-makers maintain the balance between the public’s interest in access to works, and the creator’s interest in being recognised and remunerated for that work, copyright is fit for purpose. Problems arise, however, when new technologies emerge that challenge the business models of incumbent intermediaries. In this sense, illicit peer to peer filesharing is nothing new. The history of the development of communications technology is accompanied by a history of rightsholders and their incumbent investors complaining (with much hyperbole) to legislators that these developments will kill the creative industries, from composer John Phillip Sousa complaining to the US Congress in 1906 that player pianos:

“are going to ruin the artistic development of music in this country…The vocal chord will be eliminated by a process of evolution, as was the tail of man when he came from the ape.”³

…to Jack Valenti, as President of the Motion Picture Association of America, testifying before the US House of Representatives in 1982 that:

“the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone”⁴

With historical perspective, we can see these complaints for what they are – the rallying cries of those unwilling to adapt their business practices to new technology.

Given the benefits that these technologies have since delivered to the global creative industries, it is clear that the solution to new technology is to find business practices that suit it. For understandable reasons, incumbent distributors may be unwilling to move away from tried and tested income streams to new pastures. But just because copyright allows these types of businesses a necessary escape from the free market in one respect, it should not in all respects.

This is not a theoretical concern. From reports last week that Virgin has been forced to pull out of launching a new, legal filesharing offer because of unreasonable demands made by record labels⁵, to the shutting down of internet radio service Pandora at the beginning of last year⁶, again and again consumers have been denied compelling digital age music offers. Why exactly this should be remains known only to those party to confidential commercial negotiations, but the rumours of unreasonable terms demanded by incumbent rightsholders are hard to ignore. We further note that it was not until UK success story Last.fm received substantial backing from an incumbent media operator (CBS), with the substantial legal resources ownership by that company implied, that the service it offered consumers received the approval of rightsholders in the UK.

Too often in times of technological change, legislators mistake business model problems for enforcement problems. Government needs to recognise this unfortunate function of copyright law – that it encourages protectionism among incumbent intermediaries during times of technological change – as a matter of urgency. The timing of Virgin’s announcement – just days before Government was due to announce its conclusions on how to tackle illicit filesharing – should sound alarm bells that Government proposals to intervene to protect their out-of-date business models of industries that refuse to change with the times are part of the problem, not part of the solution. Legislators must be decisive in their intention not to stifle innovation around business practices in the creative industries.

These are points the Open Rights Group has made to Government before, most recently in our submission on enforcement measures to tackle illicit filesharing, which we incorporate here by reference⁷.

Does the current copyright system provide the right incentives to sustain investment and support creativity? Is this true for both creative artists and commercial rights holders? Is this true for physical and online exploitation? Are those who gain value from content paying for it (on fair and reasonable terms)?

As we have pointed out in our preamble to this submission, this consultation ignores the contribution of a healthy, vibrant public domain to the creative industries and to UK culture to an extent we would call shameful given the pioneering work of previous Government reviews into copyright. It also ignores the vital nature of exceptions and limitations to copyright law. Indeed, the consultation appears to privilege the economic interests of rightsholders, rather than the economic interests of society as a whole. This is a seriously misguided approach, given the burden placed on the fledgling knowledge economy to deliver economic growth and prosperity for the UK far into the 21st century.

The social and economic contribution of industries which take advantage of the exceptions and limitations to copyright law – from the education system to the free press – is just as significant as the social and economic contributions of industries who rely on copyright protection. A growing evidence base⁸ exists to suggest that policy-makers would do well to take this contribution into account, if they are to help build a vibrant knowledge economy.

Supporting creativity isn’t just about incentives and protection, it’s also about feeding the creative mulch. Government should make sure it is concentrating on limiting scope and term of copyright – giving people the right exceptions, and keeping the public domain healthy – as much as it should concentrate on incentivisation and protection. Today’s artists have less recent cultural heritage to work with and be inspired by than any generation before them. Creators have historically seen further by standing on the shoulder of giants. Government essentially wants to support those who would rent the view.

The duration of copyright is also an issue. If copyright’s function is to provide a period during which rightsholders enjoy protection that is sufficient to induce them to invest in commercialising the work, then current periods of protection, whether life plus 70 years or 50 years for mechanical recordings, are grossly excessive for the purpose. No publisher (or equivalent) accords any material value to receipts expected after more than 15 years when deciding whether to invest. A shorter period running from first commercialisation would make much better sense (allowing for the fact that unpublished works may not be popular enough to attract publishers for some uncertain period). If existing rights result in protection of grossly unjustified length, then they result in excessive delay before works enter the public domain.

Copyright extension tends to focus on the rightsholder. In balance we should remember that items that enter the public domain are available for use by all citizens of the United Kingdom and that extending copyright actively takes the right to use this material away.

Copyright protection is not a natural right, and arguments from policy-makers that they see a “moral case” for ever longer copyright terms fundamentally misunderstand the function of copyright law. We note that even in jurisdictions which take a less utilitarian approach to copyright protection, such as France, copyrights do end, and for moral reasons as much as economic ones (how long should someone have a monopoly over expression?). We wonder if the Government really believe there would be any value in giving Shakespeare’s estate the right to continue to demand royalties for the use of his work today?

And beyond the economic drivers towards a healthy public domain, and a clear framework of limitations and exceptions, there are also social and cultural drivers.

In the age of digital, networked communication, every citizen is a content creator. During the rapid growth of the networked communications environment, consumers and citizens have contributed significantly to content online. Their motivations have been as diverse as motivations to communicate offline – the web is essentially a conversation between those connected to it, a “theatre of public discourse” where content, often protected by copyright, is manipulated, remixed and re-imagined by a new generation of citizens in order to communicate with each other, and to the world. We draw the Government’s attention to a recent Demos research paper, which concludes that:

“As young people experience greater freedoms online, many are choosing to ‘route around’ political and cultural institutions rather than take them on directly. This poses a profound challenge to decision-makers, but it also creates new opportunities. For democracies starved of legitimacy, it offers hope for a new sphere of democratic expression and participation.”⁹

The study notes that young citizens remixing content online as a tool for expression exist in a precarious space between legality and illegality:

“this is uncharted legal territory for everyone. While corporations can do little to curb the practices of millions of users, particular individuals make a vulnerable target when questions of ownership are in flux. ”¹⁰

We would deliberately separate this problem from the persistent challenges of mass copyright infringement online across, for example, peer-to-peer filesharing systems, and express regret that the two are often conflated. We support Demos’s call for a refreshed approach to copyright that places the health of cultural exchange on an equal footing to economic interests, and embeds people’s rights to transform and use work creatively. We urge the Government to consider the following recommendations ORG made to the European Commission in our response to their recent Green Paper on the Knowledge Economy (which we incorporate here by reference)¹¹:

1. That mandatory minimums for exceptions and limitations to copyright law be set for all European Member States, to include exceptions for criticism and review, education, research and archiving, in respect of the fact that these activities contribute to a healthy knowledge economy and a just society.

2. That mandatory minimums for exceptions and limitations for access for disabled citizens to copyright law be set for all Member States, which mirror similar access rights to, for example, buildings and transport networks, for these citizens in the offline world.

3. That the European Union take measures to ensure that rightsholders may not override these mandatory exceptions using contract law.

4. That no associated compensation be offered to rightsholders in respect of the fact that such exceptions allow for a thriving and sustainable knowledge economy which benefits all, unless significant, specific and actual economic harm be demonstrated which overrides these tangible economic goods.

5. That user-created content be recognised and understood as a potential economic and social good in society, and the law be re-examined at root to allow whatsoever provisions as are necessary to allow citizens and consumers to engage in such activity freed from the precarity currently enshrined in law.

What action, if any, is needed to address issues related to authentication? In considering the rights of creative artists and other rights holders is there a case for differentiation? If so, how might we avoid introducing a further complication in an already complicated world?

In the age of the perfect digital copy, we understand “authentication” to mean “attribution”, and further understand this question to suggest that the Government is considering approaches that hark to the American pre-Berne tradition of copyright registration.

We would welcome a debate on this issue, since compulsory registration has the potential to solve problems surrounding orphan works, at least in the very long term, and could offer clarity about how long copyright terms should be. However, the debate should be approached with caution. As previously noted above, in the age of digital, networked communication, every citizen is a content creator. Moving to a registration model would involve significant investment in education for citizens as to how to assert their rights under any new system.

We further note that in the context of new uses of copyright law such as copyleft and Creative Commons, the automatic granting of rights once a work is fixed in any medium has worked well, and, at least in the case of free and open source software, has led to significant innovation and economic growth.

Endnotes