Independent Review of IP and Growth

 FOREWORD:

When announcing this Review, the Prime Minister repeated the viewpoint of Google’s founders that the US search giant could never have established itself in the UK because of our copyright framework. It is not, apparently, “as friendly”, as that of North America.

The rather fragile conclusion that a series of “fair use” provisions might give birth to innovative digital products and services was quickly dismissed by many – mostly, ironically, by tech commentators and digital experts. The inconvenient reality that music fans in the UK have access to almost four times as many legitimate and licensed digital music services as their US counterparts hangs heavily in the background.

More than that, our creative talent, perennially impressive, is currently going through something of a purple patch. As I type these words, we have two young British acts – Adele and Mumford & Sons - in the top three of the US album chart. A prestigious achievement built on talent, creativity, support and investment, underpinned by copyright. And that’s in the context of some other fantastic music, released in recent weeks by the likes of PJ Harvey, The Streets, James Blake and Radiohead.

In 2010, British acts commanded 9.8% of all artist album sales in the US. The UK remains, per capita, the largest music consumption market in the world. As a nation we still rank at number two in the global list of net music exporters.

We now have hundreds of digital businesses in the UK who are dependent upon this industry’s capacity to produce some of the most innovative and diverse range of creative music imaginable. It is that quality ‘content’ which consumers demand, and is our business to provide them with it. Without it, the remainder of the value chain ceases to exist.

In terms of growth, in our view, Government should make a priority of other factors, such as investment and access to finance. Ironically, these are the barriers faced by UK tech entrepreneurs, hoping to develop their own intellectual property into a viable business. There is no good case to be made that copyright is a barrier to growth.

For at the base of copyright sits a simple ideal - a global system, within which, that unique moment of flair, insight, brilliance and passion can be justly rewarded regardless of the creator’s status in society. King, pauper, internet giant or aspiring composer, all are equals.

If we are now to live in an age where some might see IP protection as nothing more than an obstacle to growth and innovation, where we are to be exposed to the worst form of binary neo-colonial imperialism, to treat “with special disfavour the work of the spirit and the mind1”, I would be expectant that Professor Hargreaves will recall with a ringing clarity the words of my fellow countryman: “Between my finger and my thumb, The squat pen rests; as snug as a gun”. (© Seamus Heaney)

Feargal Sharkey, CEO UK Music.

EXECUTIVE SUMMARY: This submission offers evidence to support the following points:

1. Government is rightly focused on economic growth. We demonstrate that the UK already enjoys a competitive advantage in its music industry and has significant growth potential. This growth is not assured but is dependent on key variables: access to finance, skills and business support and a fully supportive copyright framework.

2. We wish to highlight that a supportive copyright framework is the most important factor affecting our growth potential, because it underpins the functioning of the entire creative content market.

3. The Call for Evidence starts with the premise that the copyright framework is an inhibitor to growth, and suggests that new exceptions to copyright could open up a greater range of uses of creative content without requiring the permission of (or payment to) copyright owners. This premise unnecessarily and incorrectly pits the growth of the digital technology sector in direct conflict with the growth of the creative content sector. The relationship between creative content producers and digital technology companies is symbiotic and strategies for growth must be predicated on a partnership basis.

4. The rights conferred on creators by copyright law give them the choice as to how or whether their work is exploited, and at what price. Licensing enables copyright owners to grant permissions and set a price for any type of digital exploitation. Licensing is a flexible and adaptable tool, and should always be the route to legitimise new forms of exploitation, or to rectify anomalies (rather than through the courts or through legislation). We provide examples.

5. Digital technology companies that cash in on the appeal of creative content to draw customers and advertisers must secure permissions from copyright owners, just like every other type business in the ‘physical’ world that incorporates such cost factors into their business planning. We urge the Review team to take care to differentiate between inefficiencies in the copyright framework, which should be the focus of this review, and inherent complexities, which arise from all forms of commercial trading not just creative works. Industry is investing considerable resources on initiatives designed to overcome inefficiencies in the framework of licensing to the digital market. We provide details of some of these initiatives.

6. The enforcement of copyright is a second critical factor to achieving growth in the digital market. Our growth projections depend on our sector’s ability to increase revenues from growing the legitimate market, which in turn depends on persuading the majority of those engaged in digital copyright infringement to use legitimate, licensed services. We provide a particular focus on the challenges that small copyright owners have in protecting their rights digitally.

7. The third critical factor to achieving growth is the ability of our sector to attract investment. Our sector has long reported difficulties in accessing finance to aid growth; however, in recent years, these difficulties have intensified and now pose a serious threat to our future. We urge Government to help lubricate the flow of finance, which is a vital element to creating the Silicon Valley-style enterprise culture it seeks. This will help create the right conditions for growth not only for the creative content sector, but for the digital technology sector and all high value sectors of the economy.

8. Government should conduct an impact assessment on any proposed change to copyright legislation to gauge how it would affect the growth prospects of the creative industries.

Click below to read the full submission to this review:

 UK Music Response to Independent Review of IP and Growth 4th March 2011.pdf