Select Committee on Culture, Media and Sport Fifth Report


1.We believe that Creative Commons licences are a valid option for creators who make a conscious and informed decision to make their work available for re-use. We accept that they can in fact be a useful marketing tool, as long as licensees understand the limitations on future commercial exploitation. Creative Commons licences should not, however, be regarded as the norm; nor should more radical rights-free regimes. Creators are entitled to demand payment for their product and the success of the creative industries depends on their ability to do so. (Paragraph 60)
2.Royalty levels are a commercial matter for negotiation between relevant parties. We acknowledge that, whatever the means of distribution of their product, recording companies incur a major part of their costs in identifying and promoting artists, the majority of which may never provide a return on the investment. As digital distribution increases, costs are bound to fall, as may revenues. We would expect the recording industry to ensure that there is a fair sharing of both risk and profits with creators. (Paragraph 69)
3.As the strategic agency for film in the UK whose aim is to stimulate a competitive, successful and vibrant UK film industry and culture, and with multi-million pound Government funding, the Film Council might have been expected to have commissioned and reported on this area [the potential for digital platforms to enhance public access to British and specialised films] some time ago. (Paragraph 71)
4.There is no doubt that commercial broadcasters will come under increasing pressure from fragmentation of audiences and of advertising revenue. We are convinced that there will remain a market for televisual content free at the point of use but the decline in revenues from traditional advertisements may be permanent. We believe that commercial broadcasters will need to adopt a flexible approach and to be willing to diversify. Broadcasters are already recognising the need to tap into the online market themselves and to make use of opportunities presented by the development of technology, e.g. the ability to integrate advertisements into downloads on demand. We also encourage Ofcom to take advantage of the proposed derogation in the Audio Visual Media Services Directive, under which limited use may be made of product placement. We will examine further the implications of the decline in advertising revenues for the provision of public service media content by commercial broadcasters in our forthcoming Report on this issue. (Paragraph 94)
5.Although we will continue to listen to the arguments, we do not believe that a persuasive case has yet been made to justify reserving spectrum for High Definition Television following digital switchover, and we endorse Ofcom's approach in not favouring any particular technology or application in the framework being drawn up for re-allocation of spectrum under the Digital Dividend Review. However, we do recognise the special case of the programme-making and special events (PMSE) sector which risks losing access to spectrum it has traditionally enjoyed as a result of switch-off and we believe that it is essential that an acceptable solution to their difficulties be found. (Paragraph 100)
6.The Digital Dividend Review is complex and its outcome will have far-reaching consequences; we accept that Ofcom should not be pressured into taking hasty decisions. But it should bear in mind that delays in reaching decisions in the DDR process create uncertainty for all and can have adverse economic consequences for some. (Paragraph 101)
7.The new terms of trade between producers and broadcasters have swung the balance towards producers. Steps to strengthen the ability of content originators to retain greater control over their rights are welcome; but commissioning channels need to be able to derive fair value for the product which they have financed, particularly as the climate for advertising on terrestrial television becomes harsher. While we welcome the fact that agreement has eventually been reached between producers and broadcasters, we expect that a further review of the terms of trade will become necessary once the value of on-demand services to broadcasters' funding models becomes clearer—probably sooner rather than later. (Paragraph 117)
8.Some of the restrictive practices described to us in evidence as being used by broadcasters when commissioning programming and driving deals on rights for future transmission were, if accurately reported, counter to the spirit of the Communications Act. We believe that they are less likely to occur under the new terms of trade, although Ofcom must remain vigilant. (Paragraph 118)
9.We welcome the commitment made by the Government to bring into force section 107A of the Copyright, Designs and Patents Act 1988 and to provide £5 million to local government to fund enforcement. These steps are long overdue. (Paragraph 132)
10.The Department for Constitutional Affairs should investigate reports that the award of additional damages for infringement of intellectual property is difficult to secure. The deterrent effect of the present law in this respect is near zero: it should be substantial, as are some of the illicit profits being made. (Paragraph 134)
11.We therefore recommend that unauthorised copying and commercial distribution of audiovisual content projected onto a cinema screen should be made a criminal offence. (Paragraph 135)
12.We do not believe that the present statutory exemptions from infringement of copyright are providing clarity or confidence for users or for the creative industries, particularly in relation to home copying. We do not believe that it is satisfactory that consumers should be advised by the industry that they can ignore certain provisions of the existing law and not others, and we believe that this must contribute towards a general lack of understanding and respect for copyright law. (Paragraph 143)
13. We recommend that the Government should draw up a new exemption permitting copying within domestic premises for domestic use (including portable devices such as MP3 players, and vehicles owned or used regularly by the household) but not onward transmission of copied material. We also recommend that the Government should consult representatives of the creative industries and of consumers on an ongoing basis to ensure that it can respond appropriately. This will allow it to act more effectively and to establish where the existing regime of exceptions is either vulnerable to abuse, failing to respond to advances in digital technology, or unduly restrictive. (Paragraph 143)
14.We accept that home copying can damage business models. We agree with the conclusion of the Gowers review, however, that levies are a blunt instrument for exacting recompense, and we do not recommend that they should be imposed on either hardware or software. (Paragraph 146)
15.We accept the argument, in principle, that delaying universal access to film through the use of release windows, and holding back rights to broadcast television programming via new media, contributes to a climate in which piracy flourishes. The film and television industries cannot ignore this. However, we recognise that cinema exhibitors have relied on a period of exclusivity of release to sustain their businesses. While this has declined, there will continue to be pressure for further reductions and we believe that in future cinemas will need to rely more and more upon providing a distinct experience and environment. The UK Film Council should support and publicise new approaches by cinemas to retaining and developing their audiences. (Paragraph 152)
16.We recommend that the BBC should amend the slogan for the Creative Archive, if it proceeds beyond the pilot phase, to convey the message to users that content should be respected. The BBC should examine whether more can be done to oblige users of the Creative Archive to read the terms of the licence governing use of the material before downloading and consider what other action it can take to educate consumers about the purpose and importance of copyright law. (Paragraph 156)
17.We share the Minister's reservations about adding copyright as a specific item to the core curriculum. However, we believe that a less formal approach would be better and that teachers should be encouraged to promote an understanding of copyright as it becomes relevant, whether in music, creative writing or information technology lessons. (Paragraph 158)
18.We are in no doubt that Digital Rights Management copy control mechanisms have damaged consumer trust and have sometimes provided a very poor deal for consumers. They should not be allowed to operate in defiance of exemptions for unlicensed copying enshrined in UK copyright law. We do not, however, believe that a rush to regulate is the answer, particularly as the technology is still in an early stage of development. DRM systems have value and can, if constantly refined, play a major part in fighting piracy. We agree with evidence that they constitute a way ahead for protection of creative content. We believe that DRM tools could in future allow the sale of digital files at a range of prices to reflect the extent of reproduction permitted. (Paragraph 168)
19. We believe that it is a matter for companies to decide the extent to which they wish to impose restrictions on the use of downloads and physical product. However, Digital Rights Management technology must be applied with care, and the impact of any DRM tools, whether designed for copy control or for other purposes, should be made clear to consumers at the time of purchase. It should also be borne in mind that any excessive restriction of consumers' ability to copy and share content, and unwelcome consequences for consumers' use of their own computer hardware, will only dissuade them from using the legitimate market. DRM could, if used carelessly, be an own goal. We welcome the recent evidence that record companies are now choosing to make available content free from DRM for commercial reasons. (Paragraph 169)
20.Internet service providers and search-based businesses have already demonstrated that they accept the principle that access to unlicensed material on websites is undesirable and should be prevented if at all possible. It may be impractical for such businesses to be made legally liable for providing access to certain material, but we believe strongly that the industry should do more to discourage piracy. We are not persuaded that an industry-funded body with a remit to examine claims that unlicensed material is being made available on a website cannot be made to succeed, and we believe that the industry should establish such a body without delay. (Paragraph 175)
21.We do not find the representations made by the publishing industry about Internet news portals to be convincing. Newspaper websites on the Internet are part of a public arena; there is no legal bar to providing an indexing service; and we have yet to be persuaded that the establishment of Internet news portals is causing damage to commercial publishing enterprises. We recommend that the onus should remain with firms to opt out of Internet search engine listings rather than opt in. (Paragraph 181)
22.We have yet to see whether the new arrangements for governance of the BBC will inspire any greater confidence in the commercial sector that the BBC will take account of its privileged position in the market when considering new projects. The onus is on the BBC Trust to acknowledge that there is potential for the BBC's activities to have a damaging impact on the commercial sector and that different elements of its plans have differing impacts, and we believe that the BBC must be scrupulous in addressing all the relevant markets and impacts in its Public Value Tests. It is recognised that the Trust will need to make fine judgements about conducting Public Value Tests from time to time (as well as Ofcom with respect to Market Impact Assessments), but a sensible approach would be, "When in doubt, test. " Public and commercial confidence in self-regulation by the BBC Trust will be boosted by evidence that the Trust will act, as it has done in the case of BBC Jam: we see this as an encouraging sign of real change. (Paragraph 195)
23.We agree with the approach taken by the Government and by Ofcom in negotiations with other EU Member States and with the European Commission on the draft Audio Visual Media Services Directive. The Government took a pragmatic decision to support the regulation of on-demand broadcast services, although we accept that there is in any case some logic underlying such a policy. It must be recognised, however, that the EU has chosen to extend the scope of new media regulation in ways that may disadvantage it in a globally competitive and increasingly technologically borderless world, and could see some existing businesses as well as start-ups in future choose to operate from more liberal jurisdictions. We believe that any such regulation of on-demand services should be self-regulation, both by the industry and within the home. In line with its duty to promote media literacy, Ofcom, with the assistance of all broadcasters and media regulators, should seek to increase public awareness that the protection of children from harmful content accessed via both new and traditional media will become increasingly a responsibility for parents. (Paragraph 211)
24.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. (Paragraph 221)
25.We request that the Government provide this information [on the results of the Creative Economy Task Force launched in 1998, together with actions which have been undertaken in its wake] in its response to this report. (Paragraph 224)
26.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. (Paragraph 225)
27.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. (Paragraph 230)
28.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. (Paragraph 236)

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