7 THE ROLE OF GOVERNMENT
212. We observed at the outset of this Report that
many of the challenges posed by the rise of new media are ones
for the market to address and resolve. Most of this Report has
discussed the ways in which the various stakeholderscreators,
distributors, broadcasters and indeed consumershave tackled
those challenges. Many of our recommendations have been directed
towards the various industries or to Ofcom as regulator. Nonetheless,
as we noted at the start, the Government has roles in helping
to ensure (with Ofcom) an open and fair marketplace, and in preserving
a balance between public access to knowledge and ideas and the
ability of commercial entities to exploit full commercial value
from creative products. The last few paragraphs of this Report
discuss those roles.
Policy responsibility in Government
213. DCMS is the sole sponsor of the film, broadcasting,
music and designer fashion industries, and joint sponsor (with
the DTI) of the advertising, computer games, design and publishing
industries. The DTI has specific responsibility for competition,
innovation, consumer policy, the science base and the ICT sector;
and it supports small businesses (through the Small Business Service),
intellectual property (through the Patent Office) and trade.
The Government's stated aim is to ensure that an environment exists
in which the creative industries can prosper and grow, by enabling
access to skills and finance.
214. The nature of DCMS as a Department without responsibility
for core services, very often complementing others, and as a distributor
of funds for public bodies, has in the past led us to question
whether it has the weight within Government to represent its constituent
this case, however, there was comparatively little evidence suggesting
directly that creative industries or broadcasters were poorly
served by DCMS. The Entertainment and Leisure Software Providers
Association (ELSPA), a trade body for the interactive games sector,
told us that it had yet to be persuaded that DCMS was set to play
an active part in promoting and supporting the industry, and it
pointed out that the video games industry (unlike the film industry)
had no Government-funded body to promote it and advocate its interests;
nor, unlike film, did it benefit from tax advantages to stimulate
and support production, even though it argued that it faced similar
problems of leakage of creative talent overseas.
One witness told us that in Korea, which has a vibrant interactive
games industry, the Government had done much more to support the
industry through trade shows, helping to change the public perception
215. Phonographic Performance Ltd suggested that
the Department's approach to the creative industries was "piecemeal"
and that the split in responsibility between DCMS and DTI led
to a lack of focus and understanding, with little input on the
industries' behalf to other Departments, such as the Treasury.
PPL proposed that a new cross-departmental body, perhaps on the
model of UK Trade and Investment,
should be formed to bring together the various arms of Government
and handle jointly the relationship with the creative industries.
216. This is not an inquiry into the creative industries
per se, and we did not discuss PPL's suggestion in detail
with witnesses other than the Government, which did not support
the idea. The Minister for Creative Industries and Tourism accepted
that the creative industries engaged across many government departments,
but he questioned whether a special bureaucracy was necessarily
a solution, saying that what was needed instead was "an awareness
about the opportunities".
We are not able at this point to give a considered view on the
merits of PPL's proposal, given the limited evidence on the subject.
Support for business development
217. Creative industries are in many respects industries
just the same as any other: they need the right climate to prosper;
individual enterprises need to be able to stand or fall on their
merits; and they need business acumen to know how to monetise
the product and generate revenue.
218. The UK is well placed in terms of creative skills:
it has a worldwide reputation.
The position appears particularly strong in the new media sector.
Skillset told us that the proportion of the workforce in interactive
media sectors educated to graduate level was unusually high when
compared to other sectors.
Google told us that universities in the UK were producing "tons
of talent" with "fantastic skillsets that are globally
competitive", adding that it was able to hire "incredibly
talented people" out of universities in the UK.
219. In terms of investment climate, the UK may not
be in such a favourable position. Mr Patrick Bradley, speaking
on behalf of Ingenious Media, a major investor in the new media
sector, said that unless the UK could "get it right",
investment would flow elsewhere, and he warned against complacency.
We note that Silicon Valley in the US has a well-developed ecosystem
of financing for start-up businesses, as well as an on-site infrastructure
of office space, lawyers and accountants specialised in the creative
in the Far East are investing major effort in promoting industries
(interactive games in Korea)
or in seeking to attract creative talent (Singapore).
220. The Government described some of the instruments
used to stimulate technology and innovation, for instance through
Research and Development tax credits and support for overseas
missions for industry experts to gain and disseminate knowledge.
Venture Capital Trusts also play a part; but Ingenious Media told
us that the Government could do more to provide or encourage the
provision of risk capital for businesses which were at a very
early stage and which had no track record to enable them to attract
investment from larger investment funds.
Ingenious Media suggested that the Government might contribute
to public-private initiatives and help to share early stage risk
221. The Government is clearly aware of the difficulties
in securing first stage capital, and it recognises that support
for small and medium-sized enterprises is "crucial",
whether through deregulation, through Regional Development Agencies
or through Business Link.
To some extent, the problem arises from a difference in culture
between the UK and the US: Google noted a greater risk aversion
in the UK because of the fear or stigma of failure.
The Minister of State at the DTI accepted that access to finance
was much easier in the US, where people were more willing to take
risks, and she said that the DTI was monitoring to see "where
there is a failure on market access to finance".
She also encouraged the banking sector to take more risk.
We recommend that proposals for policy development in the forthcoming
Green Paper on Creative Industries should be accompanied by a
strategy for research, to include an assessment of the investment
climate for start-up businesses in new media sectors.
222. We note that the Government brought forward
secondary legislation under the Communications Act 2003 to accommodate
a request both to change the maximum amount of data which can
be carried on a digital radio (DAB) multiplex and to change the
definition of a "digital programme service", in order
to allow television services to be carried on a digital radio
multiplex. Doing so enabled BT to offer enough broadcasting channels
on its Movio service (which offers TV broadcasts to mobile phone
handsets) to make it a commercial proposition. This is one recent
example of how the Communications Act is already proving outdated;
we have no doubt that there will be others and that the Government
and Ofcom will need to monitor the legislative framework to ensure
that it does not stifle technological development.
Government policy on creative industries
223. In June 2005, the then Minister for the Creative
Industries announced an intention to make Britain "the world's
first creative hub",
and the Creative Economy Programme was established to drive forward
that ambition. The Programme has the following aims:
- Developing a strategic vision
for the Creative Industries that can be shared at national, regional
and local level;
- Developing new policy for the Creative Industries,
generating ideas from a wider range of contributors, NDPBs, industry
and other stakeholders;
- Creating better coherence for current policies,
funding programmes and workstreams; and
- Creating new projects between NDPBs and across
224. The Minister for Creative Industries and Tourism
presented the Creative Economy Programme as "a new venture
by government [
] to bring these industries together with
an opportunity of seeing what are the issues that they have in
common that government needs to address".
Although the Programme clearly has value, it is questionable how
"new" it really is, given its resemblance to the Creative
Economy Task Force launched by the then Secretary of State for
Culture, Media and Sport in 1998. No substantive information was
given on the Department's previous initiative, its results and
what actions have or have not been undertaken in its wake since
1998. This must undermine confidence in the latest initiative
and we request that the Government provide this information
in its response to this report.
225. The Government plans to publish a Creative Industries
Green Paper later this year.
The Minister told us that it would examine the role of the creative
industries in the UK economy as well as the challenges (and opportunities)
raised by global competition; and he added that the Green Paper
would allow the industries the opportunity "to see themselves
in the same way that manufacturing and financial services do"
and that "instead of being seen independently as a group
of craft industries operating in the margins of the economy, their
full strength and positions, the opportunities and the challenges
they face, can be embraced collectively".
We welcome the intention to publish a Green Paper on the Creative
Industries. We believe that it will mark a long overdue recognition
of the importance of their role in the UK economy.
Government policy on copyright
226. Turning to copyright, we are not entirely confident
that the Government and responsible agencies have taken a sufficiently
vigorous approach to developing the law on copyright in recent
years. The Government has taken action to bring together
the various stakeholders with an interest in copyright to generate
ideas and inform each other and Government. The Alliance Against
IP Theft told us that it had lobbied very hard for a cross-departmental
approach to counterfeiting and piracy, which had led to the formation
of the Creative Industries Intellectual Property Forum, with representation
from different Government departments and from interested parties.
The Association of Online Publishers described the Forum as having
been important not only in enabling the weaknesses within the
current legal framework to be considered and addressed but also
in securing recognition from the Government of the importance
of helping users and creators to recognise the value of intellectual
property to the health of the creative industries in the UK.
227. We have also noted the work of the Patent Office,
sponsored by the DTI, in publishing an IP Crime Strategy and developing
a National IP Enforcement Strategy, which has in itself led to
the establishment of the IP Crime Group in 2005 to ensure that
criminal activity was dealt with in a co-ordinated way.
228. Despite the various strategies and the work
done by cross-departmental groups, there has been little sign
of copyright policy development within Government departments
or relevant agencies. One of the Patent Office's objectives is
to "promote and support moves to simplify the law on intellectual
property and to harmonise international rules and procedures";
yet its most recent Annual Report makes no mention of any steps
to develop copyright policy. Indeed, the word is hardly mentioned,
and none of the present Agency targets specifically relate to
said that copyright policy-making "had been in a state of
malaise for the past few years" and that policy was handled
as a subset of patents by officials in the Patent Office "who
are remote from the copyright industries, with little ministerial
note the statement in the Gowers Review of Intellectual Property
that the Patent Office "has been less effective at taking
a strategic view of intellectual property policy" and that
it had not always been effective in linking intellectual property
will other related areas.
229. We question the Government's statement in its
memorandum to this inquiry that "we are well placed in terms
of modern copyright legislation that is up to date".
Certainly, we did not detect a widespread appetite for fundamental
reform of existing law: British Music Rights suggested that "tweaking
and clarifying the existing provision" was what was needed,
and others took a similar view.
Yet various inconsistencies and unsatisfactory elements in copyright
law emerged during our inquiry, and the Gowers Review made a number
of recommendations on enforcement which seem to us to be eminently
sensible and which could, with ministerial encouragement, have
been developed and put into action some time ago. We have in mind,
for instance, the proposals on statutory damages and resources
for local authority trading standards officers.
230. PPL believed that the value of copyright to
the economy warranted a dedicated Copyright Office, charged with
promoting the UK's copyright interests.
We await with interest the Government's response to the recommendation
by the Gowers Review that a new Strategic Advisory Board for intellectual
property policy should be established, to strengthen the mechanism
for policy development.
We believe that the Gowers Review of Intellectual Property
was timely. We hope that it will help to galvanise the Government
into action in improving enforcement of copyright law and amending
it where necessary. However, we note that a number have expressed
disappointment at its findings.
231. The Government also stated in its memorandum
that present copyright legislation "strikes the balance between
the need for the right holders to be able to extract economic
value from creativity and the legitimate expectations of others".
Given that representations to this inquiry suggest an equal measure
of dissatisfaction with the law from both sides, the Government
may be correct. We noted above (at paragraph 120) our preferred
perspective on copyright: a means by which people can own what
they create and earn a living from their creativity. We are aware
of the concept that the purpose of intellectual property laws
should be to serve the public interest and to enhance creativity
and innovation, as enshrined in the RSA Adelphi Charter;
but we do not believe that this should mean that consumer interests
should prevail over the rights of creators. This brings us to
our final observations, on copyright term.
232. The copyright term granted to creators of literary,
dramatic, musical or artistic works in the UK is 70 years from
the end of the calendar year in which the author dies, subject
to certain exceptions. The term granted to creators of sound recordings
in the UK is 50 years from the end of the calendar year in which
the recording is made, again, subject to certain exceptions.
In the USA, the copyright term was extended in 1998 to 95 years
from release; in Australia, the term has recently been increased
from 50 years to 70 years.
The Music Managers' Forum argued that the disparity in the UK
was anomalous and dated from a time when life expectancy (and
the scope for creators to exploit their work during their lifetime)
was shorter; and it concluded that "there could be no possible
justification for the discrimination against performers".
Phonographic Performance Ltd told us that the shorter term for
sound recordings in the UK reduced the value of the recording
industry in the UK, decreasing the value of any record company
catalogue and consequently the amount that it was able to reinvest
in new recordings. We were also told that the longer term available
in the USA made it a more attractive base for recording.
Many other bodies supported an extension.
233. A different view was put forward by the National
Consumer Council, which argued that recording companies' business
models are generally based upon much shorter periods for generating
returns on investment, and that the concept of using returns on
recordings to finance future recording investments is giving way
to models in which each recording is treated as an independent
The British Library cited research suggesting that 98% of works
had no commercial value after 50 years.
A witness for the National Consumer Council said that she did
not accept arguments that long copyright terms provided an incentive
to create and invest in creation, and she suggested that, while
it was legitimate to recoup returns on investment, it was not
legitimate for "monopoly rights" to extend to the descendants
of original creators.
The Libraries and Archives Copyright Alliance was also strongly
opposed, believing that extension would "massively upset
the balance between right holders and users".
234. The 50-year term dates from the Copyright Act
1911 and was confirmed by the EU Directive on Harmonising the
Term of Protection of Copyright and Related Rights,
implemented by regulations in the UK in 1995. Any increase in
the term would need approval by the EU.
235. The Gowers Review undertook an extensive analysis
of the argument for extending the term. On economic grounds, the
Review concluded that there was little evidence that extension
would benefit performers, increase the number of works created
or made available, or provide incentives for creativity; and it
noted a potentially negative effect on the balance of trade.
236. Gowers' analysis was thorough and in economic
terms may be correct. It gives the impression, however, of having
been conducted entirely on economic grounds. We strongly
believe that copyright represents a moral right of a creator to
choose to retain ownership and control of their own intellectual
property. We have not heard a convincing reason why a composer
and his or her heirs should benefit from a term of copyright which
extends for lifetime and beyond, but a performer should not. Under
the present term, some 7,000 performers, including session musicians
and backing singers will, over the next ten years, lose airplay
royalties from recordings they made in the late fifties and sixties.
They will also no longer benefit from sales just at a time when
the long tail enabled by on-line retailing may be creating a market
for their product once again. Given the strength and importance
of the creative industries in the UK, it seems extraordinary that
the protection of intellectual property rights should be weaker
here than in many other countries whose creative industries are
less successful. We recommend that the Government should press
the European Commission to bring forward proposals for an extension
of copyright term for sound recordings to at least 70 years, to
provide reasonable certainty that an artist will be able to derive
benefit from a recording throughout his or her lifetime.
531 Ev 288 Back
Q 625 Back
See, for example, Third Report of the Committee, Session 2005-06,
Protecting and Preserving our Heritage, HC 912-I, paragraphs
Ev 217 Back
Mr Livingstone Q 483 Back
Ev 58 and Q 105 Back
A Government body formed from elements of the FCO and the DTI,
with a remit to promote UK trade overseas and encourage inward
investment from abroad. Back
Ev 58 Back
Q 625 Back
Mr Bradley Q 508 Back
Mr Bradley Q 507 Back
Skillset Ev 438 Back
QQ 520 and 522 Back
Q 507 Back
Q 523 Back
Mr Livingstone Q 483 Back
Q 507 Back
Ev 293 Back
Mr Bradley Q 510 Back
QQ 511-2 Back
Q 626 Back
Q 518 Back
QQ 626-7 Back
Q 635 Back
Ev 289 Back
Q 630 Back
HC Deb, 26 January 2007, Col. 2056W Back
Q 625 Back
Q 106 Back
Ev 109 Back
Ev 290 Back
Patent Office Annual Report and Accounts 2005-06, HC 1391, page
Ev 58 Back
Gowers Review, para 6.6 Back
Ev 290 Back
Q 78 Back
Mr Stopps Q 79; Ms Carey Q 96; Ms Cave Q 96; Mr McGonigal Q 97;
BPI Q 155; BSAC QQ 23 and 24 Back
Ev 58 Back
Gowers Review of Intellectual Property, Recommendation 46 Back
Ev 290 Back
A set of principles drawn up in 2005 by a commission of scientists,
artists and legal experts: Ev 436 Back
Sections 12 and 13A of the Copyright. Designs and Patents Act
Ev 70 Back
Ev 27 Back
PPL Ev 59-60 Back
British Equity Collecting Society Ev 344; Equity Ev 369 Back
Ev 22 Back
Ev 350 Back
Q 66 Back
Ev 392 Back
Council Directive 93/98/EEC Back
Gowers Review of Intellectual Property, paras 4.20-4.39 Back