Examination of Witnesses (Questions 640
- 655)
TUESDAY 7 NOVEMBER 2006
DTI, DCMS
Q640 Chairman: We were told when
we were in China that they had 80 people to cover all of China.
Margaret Hodge: When were you
there?
Q641 Chairman: Earlier this year.
Margaret Hodge: I was told there
were literally thousands. It is interesting. I do not know who
you talked to. I discussed it with a couple of the ministries.
Did you do a similar exercise?
Q642 Chairman: We went to talk to
the National Copyright Association.
Margaret Hodge: They might have
felt that the effort was not sufficient.
Q643 Mr Sanders: We were also told
there is not much of a problem on the mainland. It is all the
islands offshore which are responsible for the piracy.
Margaret Hodge: That is an interesting
reflection. On the question as to why we have not implemented
that particular part of the legislation, the answer is it would
be an additional burden on local authorities and would therefore
need to be funded for local government. It is that which has been
holding us back on the implementation. It is as clear as that.
Beyond that, the Patent Office is working extremely hard across
government with people in the police and people working in standards
and local government to try and be more effective.
Q644 Chairman: Does that mean you
are not going to bring it into force?
Margaret Hodge: It is not for
us. It is an issue for DCLG to ensure that the funding is available
for local authorities.
Q645 Philip Davies: Are you lobbying
DCLG to provide the funding? From your department's perspective,
is it important that they should provide that?
Margaret Hodge: Clearly it is
one of the many things where it would be far better if we were
able to provide it within the current financial constraints. You
too, if you were thinking across government, would have to prioritise
that against other things and not see it as an issue on its own.
It is on the statute book; it can be implemented as and when those
resources become available but it is not the only means through
which we can control and police piracy and those sorts of issues.
Q646 Philip Davies: In terms of what
you said at the start, Shaun, that the important thing was creating
the right climate for these industries, this is something that
they clearly feel is very important in providing the right climate
for their industry in this country. Surely, from your perspective,
it must be a priority to persuade the DCLG to provide this funding?
Mr Woodward: You are making a
perfectly fair point. The question is: is it the right instrument
and the right tool? Will the resources that go into it produce
the outcome that is wanted? It is worth thinking about the time
of inception of the particular section 107A we are talking about.
The kind of thing I just described to the Committee about what
the video games industry was describing to me about the trends
in this would make this whole thing obsolete. If you had a position
in which video games were only available online, you would not
need a trading standards officer. I am not trivialising it in
any shape or form. Having been Security Minister in Northern Ireland
dealing with video piracy and DVDs in areas like Armagh where
you know that historically the profits made from that were used
to fund terrorist organisations, I do not trivialise this industry
for one second. You have to recognise whether or not you are going
to get the outcome that you want. It is interesting, is it not,
to look back on the music industry in relation to this? It is
interesting to reflect on where, five years ago, consumers with
huge demands using the internet, to have access to music, were
downloading music files and it was all illegal. The issue is what
did you need to do. Did you need lots of policemen looking over
people's shoulders at how they were using the internet or did
you need to find a legal way of enabling people to download music
files? It is interesting to note now the success of the legitimate
music file downloading industry which now outstrips the sales
of hard-copy singles by a mile. You are absolutely right to point
to enforcement and of course I am not remotely suggesting that
enforcement is not an important component part. My view is that
what the music industry has shown us is that the way forward is
using technology. The way forward on piracy is to make this a
business which organised crime, for example, does not want to
be in because it is not profitable, partly because of enforcement
but partly because the consumer can get it much more easily than
going out to a market place and getting a ripped off DVD where
the quality may be inferior and you run the risk of being arrested.
The point is that most people, if you offer them a way of being
legal, would choose to do it. That is what the music industry
has shown us. It does not mean to say that downloading that is
illegal does not still go on. Of course it does. The point is
huge revenue streams have now been created legally by the industry
using technology. If you visit Disney, Fox, the major companies
that are producing movies, if you discuss this issue with them,
what is interesting is to sit down with their intellectual property
departments and their technology departments and to now look at
where they are in preparing themselves for dealing with this issue.
I think you have to recognise that probably technology is more
important than enforcement here. That does not trivialise the
role of the trading standards officer but, if you take the view
of some people in the video games industry about how they want
to develop the industry, I am not quite sure what you think a
trading standards officer might be doing in 10 years' time.
Q647 Philip Davies: It is not just
the video games industry of course. We had the Film Council earlier
on this morning who gave a list of things that they would like
to see, such as clamping down on car boot sales and some of the
things that go on there. They called for an introduction of statutory
damages for infringement of copyright. Do you see any merit in
building into that 1988 Act statutory damages for infringement
of copyright?
Margaret Hodge: We can certainly
look at that but we would then have to set up a whole bureaucracy
around implementing that. We have already said to you this morning
quite honestly that looking at the resources required for the
implementation is an issue. We now have this legislation in place,
the Proceeds of Crime Act, where 50% of the proceeds of crimes
can be reinvested in fighting crime. I think there is some mileage
in us examining that across our two departments to see whether
or not we can use those resources to augment the efforts we are
currently making to police intellectual property rights. That
is hopefully a creative way through what is undoubtedly a tight
fiscal environment with limited resources and many demands on
those resources. If we get that right and we can then extend the
bureaucracy and extend the way in which we police it and extend
the crimes and penalties surrounding it all well and good, but
we should not introduce new law until we have the ability to implement
it. We should, as Shaun said, look at alternatives which are more
cost-effective and probably more effective also in their implementation.
Q648 Philip Davies: There is always
a reason not to introduce something for some of the reasons you
have highlighted, but do you accept that some of these creative
industries will only feel that you really do mean what you have
been telling us today when they see some concrete action put in
place?
Mr Woodward: No, I do not accept
that. It does not follow that introducing more regulation is necessarily
the answer. What the creative industries want is effective action.
Again, I point back to the music industry. It was very effective
when a legal way of downloading was created by the industry. Again,
you are being a little disingenuous about what the Film Council
said because, of course, they did not only talk about enforcement,
they talked about the importance of technology. As you know, there
is a big issue which the film industry faces which is that it
does have a solution in its hands in large part, which is it could,
of course, on the day that it makes a film available in a theatre
make it available as a DVD or, indeed, as an internet download.
The very understandable lobby that comes back from that comes
from the movie theatres that very much worry, as I think the Film
Council told you, about the impact that would have on them. You
have to create a balance there. The truth is it is not for government
to legislate that Disney releases Pirates of the Caribbean
3 on a DVD or a download at the same time as it is opening
in Leicester Square at the Odeon. If you really want government
to move into that sphere I think you would find the creative industries
cutting off your head. It does not follow that regulation is the
answer to this. What does follow, I think, is that government
enables a dialogue to take place and this dialogue is not only
a dialogue that has to take place in the UK, and that is why it
was so important, for example, that last week when we visited
with the industry in the USA we talked to them about piracy, because
the government takes the piracy issue very, very seriously. I
do not think it necessarily follows that your solution is to engage
100,000 trading standards officers and 100,000 people to see over
your shoulder every time you go online about what you are doing.
Part of the biggest role here is in education. Media literacy
is absolutely essential here. What we have got to get the public
to recognise is that when they do these things it is a crime.
As I am sure this Committee knows, one in four people in this
country have viewed a pirate DVD. People do not think of it as
a crime, they do not see it as stealing from somebody who has
created some intellectual property. We have got to change that.
One of the things we are looking at in the creative economic programme
and the work across government departments is—most of us
can think about this for a minute—how many of our schools
teach intellectual property in any shape or form.
Chairman: On that specific point I am
going to bring in Alan Keen.
Q649 Alan Keen: Why do we not put
it into the National Curriculum?
Mr Woodward: We are looking properly
at the role of intellectual property in the context of the curriculum,
not just as a small component part but actually getting people
to recognise that.
Margaret Hodge: It depends on
what you do. It is integrated into the curriculum with some GCSEs.
It is not universally available but in some GCSEs it is covered.
Q650 Alan Keen: Are you confident
that it is going to be effective? Will you succeed with the Department
for Education? Are you succeeding now?
Margaret Hodge: It is in those
GCSEs. We have got the Academies emerging. The Creative Academies
will be around and they will have an influence on the curriculum.
We will have the Sector Skills Councils, there are two of those
now in this area, and they will have a role to play both in developing
curriculum ideas and developing particular qualifications which
are appropriate. There is quite a lot happening which will support
the infrastructure to spread knowledge and understanding on IPR
issues.
Q651 Alan Keen: It still sounds very
slow. Can we not do it quickly universally through education?
Why not? It is such a big issue, is it not?
Margaret Hodge: Alan, as an ex-Education
Minister the answer always lies in adding yet another thing to
education through the curriculum and it is not always the answer
in getting our kids to succeed by just adding yet another element
in.
Q652 Alan Keen: You are almost saying
that it is not the answer, whereas—
Margaret Hodge: No, no, no. What
I am saying is put it in appropriately. Put it into the right
GCSEs, make sure that the Sector Skills Councils that have an
interest in this matter pursue it both in setting the curriculum
for the qualifications and in the training they do of teachers,
make sure that we spread the extent of knowledge that we get from
the development of Academies so that can filter through into the
education system. There are other ways of educating people. We
are coming to the end of this session but, just out of interest,
you do not necessarily have to do things through schools. Ofcom
did a very interesting study recently of under-24s and what that
demonstrates is that if you are 16-24 you are far less likely
to be watching telly but you are extremely likely to be in a chat
room on a blog doing that interactive activity. Why on earth do
we not use that sort of understanding of how people spend their
time and where they get their information to ensure that we provide
better understanding of things like intellectual property rights
and what they should do about downloading music, looking at videos,
all those sorts of things? That is a much more productive way
forward. We are always saying add it as another element to education
which, as an ex-Education Minister, I am much more wary of.
Mr Woodward: Again, it goes back
to this idea of it being part of a much more complex partnership.
Your instincts about wanting to get this into schools and into
the curriculum are absolutely right, but equally we could get
every school kid in the country educated around intellectual property
but the partnership needs to take place with the industry too,
the education is not just about the consumer and young people,
it is about everybody, which includes industry. As I was saying
to Disney last week, in a sense they are the victims of their
own success. You produce Pirates of the Caribbean 2 and
there is an audience out there so longing to see what Johnny Depp
does next, what Keira Knightley does next, that they are salivating
at the mouth. It is like going to a lap-dance club and then going
outside and saying to everybody, "Now go home and go back
to the monastery".
Q653 Alan Keen: I have never been
to a lap-dance club, can you explain it to me?
Mr Woodward: I have not been to
a lap-dance club either. What I am suggesting here is the industry
has got to understand that if it creates this kind of saliva of
"We can't wait for the next Pirates of the Caribbean 3",
people will do a lot to get it in their hands. Here is my point
about the music industry: if you create a legal way for them to
get it when it is available, I think most people will take it.
We need to do more with education and media literacy to get some
of those who might be on the edge of doing it, and regrettably
there will always be some who will not for a whole variety of
reasons, and organised crime, so long as that remains a large
window, will take advantage of it. I think one of the biggest
impacts we can make on video piracy and elsewhere is about the
engagement of technology. If we do that, if we get the education
right in terms of media literacy, of everybody recognising it
is illegal, if we create a legal way for them to meet their consumer
demand, I think we will make a big difference. Let us be under
no illusion here, we are not going to end it overnight. There
are plenty of countries that have got much tougher enforcement
regimes than we have and they still have a problem with this issue.
We will make progress. Without raising the expectations too high,
just being realistic, we can make progress. We will not make progress
just by the National Curriculum, we will not make progress just
by technology, but I do think creating a legal way for the consumer
to meet their demand is a big part of the trick and historically
I think there are areas of the creative industries we can learn
from.
Q654 Chairman: We are nearly at the
end but there is one issue I want to touch on before we leave
because I think it is important. Minister, earlier this year I
heard you say very robustly that there was nothing good in the
European Union Audiovisual Media Services Directive at all, but
you were frank in your letter which you sent the European Scrutiny
Committee in saying that our position was not supported, apart
from plucky little Slovakia. Do you think that you are going to
be able to prevent damage to the creative industries if, as appears
almost certain, this Directive goes through?
Mr Woodward: I think we have made
huge progress in the last three or four months. As you know, I
originally looked at this Directive and my view was that it was
very well-intentioned by the Commission. Who could be against
wanting to protect children, which was ostensibly what they were
putting forward as the reason for some of this work in relation
particularly to the extension of scope? As you know, in the spring
of this year the UK had a very strong position in which the UK
resisted any change whatsoever in the new Audiovisual Directive
to the extension of scope. We changed our position, although heroically
the government in Bratislava were with us all the way and they
should be mentioned in despatches, because when we looked at it
my view was that if we already regulated a television programme
as a linear service, a transmitted service, the logic of simply
saying, as we were at that time, "Well, we will not actually
allow regulation if it is a non-linear demand service, an on-demand
service", did not really quite follow because it seemed to
me that so long as you believed there should be regulation of
a television programme, how you get it is not quite the issue.
However, that being said, Chairman, it also seemed to me that
the principle that would allow us to say that, if followed through,
meant you could also say that if something is not a television
programme, however you get it, it does not need to be regulated.
So, for example, the community organisation that forms a website
of kids in a football club that gets some sponsorship and happens
to be a moving image and they get paid 10 quid for it, that should
not be regulated any more than I think the activities of a MySpace
should be. That does not mean to say that Member States should
not have very strong laws of their own to protect minors, to protect
vulnerable groups, but does it need to happen at a state level
in which the European Union prescribes how countries can operate?
My view was no. What we came up with was a formula, and it is
interesting to see how countries have responded to this, in which
we said if it is a television programme, linear or non-linear,
then it can be regulated by the Directive; if it is not a television
programme and not a television-like service then it should stay
outside the regulation. The interesting thing was that we built
huge support around that proposal and if the Finnish Presidency
should decide at the Council of Ministers next week to try and
bring this to some general approach I think we will find that
British model is the model that will now be adopted. We have also
built into that an amendment for media literacy because we believe
it is extremely important that we continue to get Member States
to want to educate their consumers across the pitch on this field.
That has won huge support. On product placement I think that we
are in a reasonable place now. Again, it is important that we
do not close the door on product placement, as some of our European
partners would like, but it is healthy that we retain some scepticism
about product placement. The example that I give people who are
vehemently against it is could you imagine that somehow the UK
conspired to produce a situation in which we said "No product
placement" and then next year the entire team of Friends,
all six of them, decide they are going to make the eleventh series,
and product placement, as you know, in the United States has a
far bigger place in the television industry than it does anywhere
else, and they decide that Central Perk becomes Starbucks, what
are we going to do, say that we are not taking the eleventh series
of Friends? I think General Elections might be lost on
that kind of thing! I think it would be a very brave Conservative
Party that actually campaigned against there being an eleventh
series of Friends, although if you wished to we would invite
that position. I say that because I think we have got to recognise
the market in which we live, which is a global market, and therefore
keeping flexibility is important, keeping self-regulation is important,
being able to move quickly is important. I think the direction
in which the Directive has gone on extension of scope along the
lines I have defined is one that we could live with. On product
placement and the changes to advertising, whilst we would like
more liberalisation there is perhaps enough there. The one issue
that has emerged which interestingly, and worryingly, was not
in the original proposal is around Country of Origin. Country
of Origin, as the Committee knows, is about the Member State offering
jurisdiction in its own Member State and, therefore, if you are
Disney in London, for example, in the UK, your jurisdiction is
here and not in those places in the rest of the European Union
to which you might be broadcasting or offering your service. There
were a number of Member States who got themselves extremely excited
at the prospect of moving from Country of Origin to Country of
Destination. There are some compromises on the table. We are fiercely
resisting the move that is taking place by some Member States
towards Country of Destination. I made that very clear when I
visited all the major media outlets in the United States last
week because from the UK's point of view we are an extremely successful
Member State, being where many of the United States' operations
want to locate precisely because of our very flexible environment
for the creative industries. We are keen to resist any move away
from Country of Origin to Country of Destination.
Q655 Chairman: I am delighted to
hear that because it is fundamental to the whole basis of the
existing Directive that has been very successful for us. Are we
going to be able to protect that position or are we going to find
that we and little Slovakia are the only defenders of this?
Mr Woodward: As you know, there
was extraordinary scepticism in May that we would make any progress
in resisting the extension of scope and I am glad to report to
the Committee that the sceptics were wrong. I think you should
recognise that these are always difficult battles, as I know you
do, and it is important to have the battles but there are some
major partners out there who are very concerned about the movement
on Country of Origin. It is important that we do everything we
can to get those businesses which have come to the UK because
of the current rules to register their protest not only in Brussels
but also at Member State level in other countries as well because,
once again, this is one of those things whereby good intentions
have completely allowed people to lose sight of what the plot
is here. There is huge commercial interest at stake here, not
just for the UK but for the whole of the European Union. What
we have got to do, as we did with the extension of scope, is to
do the painful work of going around country-by-country visiting
government-by-government and getting them to recognise the consequences
of what may on the surface seem like a good intention, although
I do not happen to share that at all on this issue, and get them
to realise the huge commercial downside if they were to move to
Country of Destination. I think we can win that but we have got
to do a lot of work.
Chairman: Minister, on that I wish you
luck. Can I also suggest that you take a copy of the evidence
we received from Google a week ago and circulate it to the other
ministers attending the Council, I think they will find it very
interesting. Thank you very much.
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