Copyright Exceptions

 DATE: APRIL 2008

EXECUTIVE SUMMARY

Music right holders represented by the Music Business Group – composers, songwriters, performers, managers, producers, record labels, music publishers and their collecting societies – enable a value chain that directly contributes £6bn per year to the UK economy. It employs an estimated 120,000 people, and substantially enhances the business models of a  huge range of commercial music users.

Copyright is the core mechanism underlying this vast value chain. Any changes to the copyright system must be carefully balanced, so as not to prejudice the success of one of the UK’s largest creative communities.

Enormous value is derived from the transferability of music. Last year alone, over 20 million MP3-capable portable devices were sold in the UK, and over 90% of music on the average MP3 player is music that has been copied.

UK creators and right holders are legally entitled to benefit from this value. At present, this value is enjoyed by both consumers and technology companies while creators and right holders are effectively excluded from any value. This constitutes market failure.

The UK IPO’s current recommendation, an exception to copyright for format shifting without compensation, would enshrine this market failure in national legislation.

Such an exception would place the UK Government at odds with established European policy. This was reiterated as recently as 14th February 2008 by the EU Internal Market Commissioner, Charlie McCreevy: “There can be no question of calling into doubt the entitlement of rights holders to compensation for private copying.”

This was echoed by the UK’s largest academic survey into the music consumption habits of young people, undertaken by the University of Hertfordshire and British Music Rights, where 90% of those who supported a licensing system agreed that creators should be compensated for a private copying exception.

We need to redress the balance which underpins copyright - one that allows consumers to enjoy their music, drives technological innovation, yet recognises music creators’ and right holders’ place in this market. Our proposal creates an easily-implemented, flexible, futureproofed and transparent solution: an exception subject to licence.

Our response is restricted to copying in the offline world – that which does not take place over the internet. It does not seek to legitimise the wholesale copying and sharing of music; instead, it simply ensures that a fraction of the value gained by others, and the injustice suffered by creators and right holders, is reversed.

Licensing is an established and accepted mechanism for exercising copyright – enabling a range of businesses, from hairdressers to broadcasters to digital media, to benefit from music, while at the same time ensuring creators and right holders get paid. The apparatus and mechanisms for distributing such licensing income to creators and right holders are well-established and have been in operation for almost 100 years, namely the

MCPS-PRS Alliance and PPL. An exception subject to licence is a sophisticated and market-responsive solution: the licensee fees will be subject to commercial negotiations.

A licence would result in a non-disruptive and mutually-beneficial outcome: clarification for technology companies, remuneration for the UK’s music community and – most importantly – it would allow consumers to carry on enjoying their music.

This principle is already established and accepted; for example, technology companies pay a commercial licence to use MPEG software for their services. An exception for formatshifting should be based on very clear principles:

• That the initial copy is legitimately owned and retained;

• The copying is done by the owner;

• That it is done for the owner’s private/ domestic use;

• That it is done solely for the use of copying from a physical format;

• That there shall be no onward distribution, communication or exploitation in any way

The European Parliament and Council have clearly mandated in the Copyright Directive their objective that creators and right holders are entitled to fair compensation. Numerous systems already exist throughout Europe based on developing relationships between technology companies, creators and right holders. We propose that a balanced relationship is best achieved in the UK through a licensing scheme.

Precedents for this already exist and operate successfully in the UK. For example, educational recording of broadcasts (ERA scheme) and multiple copying for the visually impaired (MPA’s VIP scheme).

The UK-IPO’s proposal as framed in this consultation would prejudice the interests of creators and right holders and further weaken the potential for creators to develop their future career paths.

To read the full response please click on the link below

The Music Business Group Response to the UK IPO Consultation on Copyright Exceptions.pdf