Support for the creative economy

Written evidence submitted by the Creators’ Rights Alliance [SCE 041]

 

The Creators’ Rights Alliance’s (CRA) interest

 

The CRA is an affiliation of organisations representing the interests of over 100,000 original creators in a wide range of fields-including music, illustration, journalism, photography and writing [1] . Most of the 100,000 creators we represent make their living by licensing copyright and performers’ rights in their work.

The majority of that 100,000 are freelance-meaning that they by default own copyright in their work and in general depend for a significant proportion of their income on equitable remuneration for re-uses of that work. Almost all of these are rights-holders, offering media that publish or broadcast their work the licence necessary for that purpose and retaining the right to issue licences for second and subsequent uses, translations, and so on.

The CRA has agreed with consumer interests, notably Consumer Focus, that action must be taken:

ñ to make the personal property rights to be identified as author of one’s work and to defend its integrity automatic, universal and enforceable; and

ñ to level the playing field for negotiation of contracts concerning copyright, whether between a creator and an intermediary such as a publisher or broadcaster; or between a consumer and an intermediary such as a publisher, broadcaster or online service provider.

These are not just matters of concern to professional creators. These changes would be of benefit to every citizen, now that so many people are publishing and broadcasting their own works through social media. But there is a risk of these rights in effect being weakened by proposals in the Enterprise and Regulatory Reform Bill.

We give brief answers to selected questions from the Committee below. We would welcome an invitation to expand upon these in oral evidence.

The Committee’s questions

ñ Barriers to growth in the creative industries-such as difficulties in accessing private finance-and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector;

The barrier to growth with which CRA member organisations are most concerned is the difficulty in sustaining a career as an independent professional creator.

Access to finance is not typically a major issue, except for those who wish to cease being an independent creator and become an intermediary, packaging and distributing the works of others.

First among the barriers to a career as an independent professional creator are the prevalence of works being distributed with insufficient credit, and of onerous contracts being imposed by intermediaries.

Many intermediaries are ogliopsonies-that is, they are each a member of a small group of potential clients to which a particular creator may offer their work. The implications for market distortion are clear.

ñ The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform (ERR) Bill currently before Parliament);

1) Extended collective licensing (ECL)

By far the most significant proposal in the ERR Bill, and that which is perhaps receiving least attention, is that enabling "extended collective licensing" to be introduced by regulation (in the clause currently numbered 68).

As the Creators’ Rights Alliance said in response to the government consultation post-Hargreaves [1] :

There is no point in legislating for proper remuneration through extended collective licensing, or for limitations to copyright bearing a right of remuneration, if publishers and broadcasters can then inform creators that they must sign over all such income, or never work in the industry again. Such offered contracts are commonplace and are documented for example in the regular British Photographic Council surveys [2] .

The CRA insists that steps to level the playing field in negotiations between individual freelance creators and large media corporations are urgently required.

At a minimum, an equitable share of income from new streams such as extended collective licensing must be an unwaivable right of the individual creator. Such an unwaivable right already exists in UK copyright law in the implementation [3] of the EU Rental and Lending Directive [4] .

The uses envisaged for ECL-putting online scanned printed material held in libraries and archives, and making available of film and television archives – amount to lending, unless fees are charged or advertising included in which case they are unequivocally rental.

For clarity we reiterate here our preconditions for the acceptability of extended collective licensing:

1. Enforceable unwaivable moral rights for all creators, including an enforceable prohibition on removing metadata, are brought in at the same time;

2. Only collecting societies democratically controlled by creators in the field may issue either kind of licence;

3. Said collecting societies’ handling of applications for such licences shall be subject to government regulation;

4. Licences are for a fee reflecting the market rate; and

5. Unclaimed monies should be applied to the benefit of authors as a whole, e.g. for training and education.

Another question not asked is whether extended collective licensing should extend to unpublished works.

We repeat for the benefit of the Committee the observation that it has been possible to introduce extended collective licensing in the Nordic countries only because those countries’ legislation includes very strong presumptions of equitable remuneration for the individual creator and enforceable, automatic rights to identification and integrity.

Introducing ECL, not against this background but against that of malpractice prevalent in the UK, is of dubious legality, to say the least, under the Berne Convention and the World Trade Organization TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement.

2) Orphan works

The other proposed Regulations to be authorised by Clause 68, to introduce schemes for the licensing of "orphan works", raises many of the same questions and should, if introduced, be subject to the same conditions.

We welcome the assurances that officials have given in the two meetings so far of the Intellectual Property Office Working Group on ECL and orphan works, particularly the general assurance that the goal of any changes must be to avoid distorting the markets for works by known authors.

These assurances are, however, valid only for the lifetime of the present government: and the powers proposed under Clause 68 would enable future governments to make quite different Regulations-indeed the justification given by senior Intellectual Property Office (IPO) officials for an Act that empowers Ministers to make Regulations in the widest terms is that this would allow rewriting to rectify "errors". It would also allow a future government, perhaps facing even stronger lobbying from very powerful US commercial interests, to make Regulations with quite different intent.

The CRA therefore believes that further safeguards are necessary on the face of the Bill.

At risk of telling the Committee what it already knows, prime among these must be measures to prevent future works being "orphaned" by introducing effective deterrents against removing identifying "metadata" from works.

3) Turning to Clause 66, enabling the extension of exceptions to copyright by regulation, we share the view expressed by John Whittingdale MP in his question at Commons Second Reading of the ERR Bill:

Does the Secretary of State accept that copyright is the legal expression of intellectual property rights, and is not a regulation? Is he aware of the widespread concern among the creative industries about clause 56, which will allow copyright to be amended by statutory instrument without full parliamentary debate? Will he assure the House that the Government will not change copyright in that way without proper parliamentary scrutiny? [5]

The government’s amendment clarifying that this shall extend only to exceptions permitted under the EU InfoSoc Directive [6] is welcome – but far from sufficient.

For one thing, those exceptions are the sum total of all the diverse exceptions that existed under the multifarious laws of individual EC countries. To enact them all in one piece of legislation would be to reduce copyright to a chaotic minimum-and would, we understand, be a breach of specific commitments made during the extensive negotiations on the text of the InfoSoc Directive.

Further, even after this clarification the risk remains that future governments will introduce large "bundles" of changes, further reducing Parliament’s power of scrutiny, which is already more theoretical than practical.

The already-woeful standard of impact assessment would be further undermined by such "bundling". As we said in our response to the government’s consultation on changes proposed post-Hargreaves:

If any of these proposals is proceeded with, then a longer period than three months must be allowed to conduct the empirical research requested. The policy of "evidence-based policymaking"-a phrase with which few could quibble as it stands-turns out to be a privatisation of impact assessment. Unless funds are made available to enable vitally interested but financially constrained parties such as the organisations representing individual creators to commission research from organisations such as the Boston Consulting Group [7] , then we must request four years, that being the time to propose, fund and complete a doctorate thesis, given a following wind and the gods of the Economic and Social Research Council smiling upon one.

We do not believe that the economic case for exceptions has been convincingly made by government in this consultation. In particular government should not assume transfers of value from creators create economic growth, particularly where those transfers go offshore-as to US technology firms-or are merely captured in consumer surplus or lower costs for public or private sector institutions. As an industrial policy the Government, rather than picking winners, is choosing losers in the UK content sectors in the hope of a new, successful economy that exists only in theory. It should do so with great caution.

We are concerned, among other things, about the quality of the Economic Impact assessment used in regard to private copying. The Assessment is inconsistent in its argument and uses assertion rather than evidence in its main conclusions around harm to content owners. It has not, for instance, considered the potential effects on licence income from the levy in Europe that is currently repatriated to UK Music Licensing Companies and would come under question if there were no reciprocal arrangements.

Its initial assessment, i.e. that if there is private copying exception there will be minimal or zero impact on copyright owners, is based not on data or evidence, but on a theoretical discussion paper by Hal Varian, the Chief Economist of Google [8] .

Because of the assumptions underlying the consultation, i.e. an assertion that copyright is a problem, we believe the document has failed adequately to reflect the benefits of the current copyright regime. The consultation lacks an assessment of the benefits to the economy of copyright. As a consequence it often assumes change that weakens right is positive without assessing the costs of such change to copyright owners. [9]

Numerical methods

The most egregious fault is in the impact assessments themselves. Where no estimate of cost or benefit is available, it is not appropriate to take the value as zero: this is a fundamental feature of numerical methods (that is, applied number theory). The appropriate value is Not a Number, "NaN" for short. The practical effect of the distinction between NaN and zero is severe and stems from the rules for operations on this special value: whereas £666M – £0 = £666M, £666M – £NaN = £NaN and the same applies to all arithmetic operations. [10] The great majority of the impact assessment totals should therefore, have been rendered as NaN.

That is to say, in plainer English, that if any calculation contains one or more "don’t know" values, the result of that calculation can only be "don’t know". If a writer’s projected fee for conducting and licensing an interview with a Minister is £400 including expenses, and they don’t know the fare to get to see her, they don’t know their net income from the piece of work, even if they do know everything else. And thus and so even unto macroeconomics...

The Creators’ Rights Alliance proposes that if exceptions to copyright are to be made by Regulation, the only correct procedure is to introduce a separate Regulation for each change to be made. This will allow Parliament to decide whether to approve or to reject each change on its merits, rather than being forced to weigh up a "bundle" which may include several on-balance sensible changes and one that is extremely harmful, or other mixes.

4) Public Lending Right (PLR): The Rental and Lending Directive (2006/115/EC [11] replacing the repealed 92/100/EEC) creates a "rental and lending right" under which authors have the exclusive right, subject to limitations, to authorise or prohibit the rental or lending of their works [Art. 2(1)]. The rental and lending right may be transferred. However, even once the rental and lending right is transferred, the author or performer retains an inalienable and unwaivable right to equitable compensation for the rental and lending of their works.

The PLR scheme provides authors with a modest payment each time one of their books is borrowed from a public library. PLR is designed to balance the social need for free public access to books against an author’s right to be remunerated for the use of their work. PLR is particularly important to authors whose books are sold mainly to libraries and to those whose books are no longer in print but are still being read. Press coverage tends to focus on a few successful authors, yet most struggle to make ends meet. PLR provides a significant and much-valued part of authors’ incomes.

S 43 of the Digital Economy Act 2010 [12] extends PLR to audiobooks and ebooks "lent out" from library premises for a limited time: but these payments have never been implemented. This is patently unjust and we urge that this provision be brought into force and that extra funds be made available to cover PLR payments for such lending.

The amendments in section 43 of in the Digital Economy Act 2010 extend PLR only to audiobook and e-book files downloaded within the library premises, as downloading from outside library premises may constitute "communication to the public" rather than "lending"-though Amazon appears to differ in its presentation of its recently-launched "Kindle Lending Library" [13] .

We urge you to recommend the Government to implement s43 without further delay and, if remote ebook lending from libraries is to be authorised, to ensure equitable remuneration to authors in relation to the resulting "communication to the public." The failure to implement these payments is a clear breach of the Rental and Lending Directive.

ñ Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this;

See our observations on the growing difficulty of supporting oneself as an independent professional creator, above.

Further, we fully endorse the submissions by others that students should be versed in the essentials of creators’ rights well before they reach further or higher education.

Education about the importance of Intellectual Property and the risks of copyright infringement and piracy is essential so that school students-many of whom publish or broadcast more of their own work than do their elders-are empowered students to defend their own rights, honour and reputation.

National Curriculum reforms (which will be consulted on in the New Year) to key creative subjects should ensure that the new Curriculum includes the development of an understanding of the principles of authors’ and performers’ rights, their importance to the individual creator and their role in the economy in relevant subjects at Key Stage 3.

The proposal for an English Baccalaureate (Ebacc), introduced as a performance measure by Secretary of State for Education Michael Gove in 2010, focuses on five subject areas: Maths, English, Sciences, Languages (Ancient and Modern), and Humanities (defined as only History or Geography). It does not include creative subjects.

There are both educational and economic reasons for including both creative subjects and essential features of law and contract relating to them in the English Baccalaureate. The Music Education Council, CBI and Creative Industries Council have all expressed their concerns at the

absence of subjects relevant to creativity and the creative industries.

This omission should be reversed through the introduction of a sixth pillar of creative subjects. This was suggested in the independent review of Cultural Education authored by Darren Henley, Managing Director of Classic FM, on behalf of the Department for Education and the Department for Culture, Media and Sport. This change would help to ensure that these subjects are valued

at all levels.

We repeat that we would welcome an invitation to expand upon any or all of these points in oral evidence.

Creators’ Rights Alliance member organisations:

ñ ABSW Association of British Science Writers

ñ AOI Association of Illustrators

ñ BAPLA British Association of Picture Libraries and Agencies

ñ BASCA British Academy of Songwriters, Composers & Authors

ñ CIOJ Chartered Institute of Journalists

ñ GMG Garden Media Guild

ñ ISM Incorporated Society of Musicians

ñ MU Musicians Union

ñ NUJ National Union of Journalists

ñ PCAM Producers and Composers of Applied Music

ñ PCO Professional Cartoonists’ Organisation

ñ OWPG Outdoor Writers and Photographers Guild

ñ SOA Society of Authors

ñ WGGB Writers Guild of Great Britain

November 2012


[1] See www.creatorsrights.org.uk and the list of member organisations appended below

[1] Creators’ Rights Alliance response to consultation on copyright www.creatorsrights.org.uk/media/consult-2011-copyright-respond-cra.pdf , accessed 2 November 2012

[2] The 2010 survey report is at www.british-photographic-council.org/news/british-photographic-council-industry-survey-shows-true-value-of-creators-copyright and was reported for example in the BJP at www.bjp-online.com/british-journal-of-photography/news/1720931/survey-pro-photographers-worries-changing-market accessed 20 March 2012

[3] The Copyright and Related Rights Regulations 1996: Statutory Instrument 1996 No. 2967 available at www.legislation.gov.uk/uksi/1996/2967/regulation/14/made accessed 20 March 2012

[4] 92/100/EEC has been repealed and replaced by Directive 2006/115/EC, available at http://ec.europa.eu/internal_market/copyright/rental-right/rental-right_en.htm accessed 20 March 2012

[5] www.publications.parliament.uk/pa/cm201213/cmhansrd/cm120611/debtext/120611-0002.htm#12061114000114 accessed 31 October 2012

[6] Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society , http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32001L0029:EN:HTML , accessed 02 November 2012

[7] A reference to a report on the general wonderfulness and economic indispensability of the internet, which turned out to have been commissioned by Google.

[8] “Copying and Copyright” Journal of Economic Perspectives Volume 19, Number 2, Spring 2005. Hal Varian has worked as a consultant to Google since 2002

[9] The preceding four paragraphs are taken, with permission, from an argument developed by the BPI.

[10] Standard for floating-point arithmetic (2008), New York: Institute of Electrical and Electronics Engineers, p 34

[11] Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property , http://eur-lex.europa.eu/LexUriServ/LexUriServ. do?uri=CELEX:32006L0115:EN:HTML, accessed 02 November 2012

[12] www.legislation.gov.uk/ukpga/2010/24/contents, accessed 02 November 2012

[13] www.amazon.com/kindlelendinglibrary, accessed 02 November 2012

Prepared 17th November 2012