Internet: Online Piracy — Debate

– in the House of Lords at 1:52 pm on 2nd April 2009.

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Moved By Lord Lloyd-Webber

To call attention to the growing impact of online piracy on the future of Britain's creative talent; and to move for Papers.

Photo of Lord Lloyd-Webber Lord Lloyd-Webber Conservative 1:54 pm, 2nd April 2009

My Lords, I have tabled this Motion because I truly believe that this is a crucial moment in the history of Britain's creative heritage. Areas of our cultural industries are under threat. It is imperative that we address these threats and bring all the creative industries' future viability to the forefront of political debate.

You may be wondering why I, someone who makes a living from live theatre, would initiate such a debate. While I am incredibly lucky that my life, my passion and my main source of income—musical theatre—is not affected by the problems afflicting other creative businesses, I see those problems damaging the cultural and economic fabric of the nation, and it worries me.

I was further moved to initiate this debate after a conversation I had a few weeks ago with one of Britain's leading orchestral players. He was agonising about whether to deter one of his children from following in his footsteps. His reason was that the backbone of the livelihood of many professional instrumentalists is film score work. He could foresee a situation in a decade's time when there would be virtually no orchestral film work. Illegal downloading would so decimate the film industry that orchestral recording sessions would be a thing of the past. In this connection I was reminded that three of London's main orchestral recording studios have closed since 2000.

I hope, therefore, that I am speaking here on behalf of my many colleagues whose livelihoods and their children's future livelihoods are being compromised by inaction. I do not come equipped with the answers; frankly, they are way beyond my world of musical theatre. My sole objective is to draw noble Lords' attention to the cataclysmic consequences for all the creative industries if this area remains unregulated.

The economic sustainability of Britain's creative industries is hugely important to this country, culturally and commercially. It is estimated that our creative industries—film, music, literature, games, TV, software, books and printed media—have an economic output of at least £60 billion, equivalent to over 7 per cent of UK GDP.

It is also important—in terms of employment and the hope they give to aspiring, usually young, men and women—that there are businesses in this country that can employ artists and invest in developing their talents.

It is estimated that creative industries directly account for 1 million jobs, with a further 800,000 in related sectors. The interim Digital Britain report notes that,

"the digital economy underpins our whole economy and builds our national competitiveness".

The question that occurs to me is whether, in 10 years' time, Britain will be a place from which, say, the Beatles could have emerged. Will Britain be a fertile environment for all creative talent? Will Britain be a place where music, TV, film, games and publishing companies are sufficiently healthy to invest in British creative talent and take it to the rest of the world? No, not when there are no longer shops selling the physical products and when the internet has become a sort of Somalia of unregulated theft and piracy.

This is as much a battle against mindsets as against anything else. There are many people who like taking things for free from the internet, even though it is not legal. The fact that something is easy, and many people do it, has confused commentators and politicians alike. Content on the internet is a problematic issue for regulators because the matters are technologically and legally extremely complex, and also, in a period running up to an election, politically problematic. But, as we have seen throughout history, and recently in the financial markets, there are dire consequences when people drift down the path of unregulated behaviour.

With the exception of live entertainment, all our creative industries are suffering, but none more so than the music business. It is in the forefront of the battle and the first example of what can happen to an industry whose survival relies on the protection of its intellectual property rights.

The UK recorded music business is a major contributor to Britain's creative economy. I would like to share with noble Lords some astonishing figures to illustrate this. In 2008 the UK recorded music market was valued at £900 million in trade terms. The UK music business punches well above its weight globally. It is a major exporter—four out of the top 10 global selling albums in 2008 were British. It is a major employer creating more than 100,000 jobs, but the market is being decimated by the impact of online copyright infringement. Recorded music revenue in the UK has fallen every year since 2003. In Europe as a whole the recorded music business is 60 per cent the size it was in 2001.

It is estimated that 7.3 million people in the United Kingdom—28 per cent of the online population—are now engaged in illegal peer-to-peer file-sharing, a figure which is projected to rise to 8.7 million by 2012 if action is not taken. This activity erodes the commercial value of the UK's world-renowned music sector. It is calculated that £180 million of losses were directly attributable to online copyright infringement in 2008 alone. The losses for the six-year period from 2007 to 2012 are projected to exceed £1.2 billion. As I am sure noble Lords will appreciate, such levels of loss are unsustainable. It is estimated that online film and music piracy could cost 30,000 UK jobs, and that does not take into account the performers and composers who will lose their livelihood and stop creating as a result. The biggest single cause of the music business's demise, and indeed that of all creative industries, is the carriage of file-sharing services by internet service providers.

Globally only one in 20 tracks which are downloaded from the internet are paid for—that is, a 95 per cent online piracy rate. Innovative business models, of which there are numerous examples which enable consumers to access legally any music they want, have to compete with the free providers, an unfair battle and an unwinnable one. The music business—because of the universal popularity of music, its ease of access and its relatively low bandwidth requirements—will be the first to fall, but other cultural industries will surely follow. Will it be film next?

No one questions that improving the capability and quality of the UK's digital networks is an essential task. The improvement of fixed, cable, mobile and broadcast transmission mechanisms is crucial if the provision of digital services is to keep pace with what users, be they individual consumers or businesses, expect and demand. Our broadband industry is hugely important to Britain and will be the backbone to society as well as to commerce, but what will it deliver?

Given that consumer demand for faster digital networks is largely driven by demand for quality content, in particular creative content—music, films, games, television, journalism, books—I believe that it would be a serious mistake to invest billions of pounds in faster networks without ensuring that there is a sustainable commercial arrangement for those creative works on which these new networks depend. At the moment, no such sustainable commercial arrangements exist. As their businesses increasingly move to digital consumption, the ability of UK creative businesses to continue to invest billions of pounds every year in creating and marketing new high quality content is constantly being eroded.

The railway and roads opened up the first Industrial Revolution. Broadband and the internet are opening up the next one. Our internet service providers deliver excellent facilities that help so many people in so many ways. But we need to remember that one of the principal reasons for their popularity is that they search out information and creative content that people want. If internet service providers continually attract people to illegal sites, as they do now, and not to legitimate sources of content, then they are part of the problem, not part of the solution. These companies make billions in profits. In 2007, just one internet service provider made profits of £5.78 billion. That compares with the recorded music business's turnover in the UK which, as I mentioned, was £900 million. And yet these companies contribute nothing to the creative economies that they feed off and undermine. Forty per cent of their sales come from broadband and IT services, and P2P traffic is believed to account for an astonishing 60 per cent of all traffic on online networks.

Internet service providers can help themselves: they are able to control bandwidth traffic when it suits them. They are not going to change without regulation, otherwise the good players could lose customers to the bad players; but I wonder how long this can be tolerated.

People have got into the habit of talking glibly about "content providers" as if they are some sort of optional part of the process. The great wines of France are not content providers to the glass manufacturing business, and Britain's creative industries are not content providers for broadband. They are the experiences that bring consumers to the internet in the first place and they can only survive in a safe internet world. Lawlessness is not a model for any society and it cannot be a model for our digital future.

The cultural "free lunch" is not free because film, music, printed media and so on cannot be produced, marketed and distributed for nothing. Investment must be rewarded and performers, composers and authors must be paid. Otherwise how can they survive?

It is important to remember as well that pirates are bandwidth hogs who reduce the quality of service and raise costs to legal users. Illegal file-sharing spreads viruses and inappropriate, and unexpected, content for minors. There are even dire predictions that the internet will grind to a halt over the next few years. Dealing with piracy removes that threat.

Through various reviews, notably the Gowers review in December 2006, Creative Britain in February 2008 and the July 2008 consultation on file-sharing, I have been very encouraged by the Government's stated determination to act. The interim Digital Britain report gives life to that commitment and to the prospect of legislative action. However, I wish to raise the question of whether we are giving this crucial issue enough prominence and whether we are creating an outcome that is in the interests of a section of the economy where Britain leads the world and has the precious chance to create new jobs and new world-beating content for the future.

As I said, I do not have the answers. But I do have serious concerns as to whether the actions proposed to date will achieve the Government's aim, stated in July 2008, of reducing unlawful file-sharing by 70 to 80 per cent over two to three years. The Government would appear to be willing the ends but not the means. Proposing to legislate to require ISPs merely to write to infringers and leave rights-holders with the near impossible, deeply expensive and hugely unpopular task of suing those who persist is simply not going to produce the required deterrent effect. Internet service providers need to be made to do more to play their part in tackling infringement taking place on their networks.

It should also concern government because fairly monetising the demand for creative works in digital form represents a key opportunity to generate revenue that can help to repay substantial investment in new digital infrastructure. If the regulatory response is right then massive value can be derived by internet service providers from legal services and there will be an incentive to invest. Notwithstanding government's repeated calls to industry to adopt new business models, government must accept that taking valuable content for free is not a business model. It creates no value. Only if illegal downloading is properly addressed can new business models have the room to breathe and succeed.

As I said, I do not in any way oppose the laudable aim of improving networks. But next-generation networks need to be not just faster but smarter and safer, and they must work better as an ecosystem that allows information and creative businesses to prosper. I thought it crucial that we raise this issue in this House because we are at a point in history when our future will be set, and the world will look carefully at the direction that the UK takes. I look forward to hearing the contribution of noble Lords who follow me in this debate. I beg to move for Papers.

Photo of Lord Birt Lord Birt Crossbench 2:07 pm, 2nd April 2009

My Lords, I applaud the initiative of the noble Lord, Lord Lloyd-Webber, in prompting this debate, and I observe that the House is lucky to have one of the world's great composers in our midst. He made his case powerfully and I shall echo many of his concerns. I declare two relevant interests. I am chairman of EMI's holding company and a director of PayPal (Europe).

The new digital technologies have had a radical and transformational impact on almost every individual organisation and sector, from newspapers to retailers, from the betting industry to finance. The music industry in particular has been profoundly affected. Music can be more easily recorded, distributed, discovered and consumed. As a result, more music is listened to than ever before, but less is paid for.

We must be honest: the music industry has been slower than most to reinvent itself, both to take advantage of new opportunities for discovering talent and for better serving consumers and businesses, and to adjust and respond to unavoidable new realities. Piracy is certainly, therefore, not the only reason for the music industry's travails over the past decade, but it certainly does matter and it certainly should not be tolerated, for, quite simply, it is theft.

Intellectual or creative products available digitally have to be invented, designed, conformed and invested in, just like physical products. Individuals and companies involved in making music are entitled to a fair return for their risk and for their labour. Stealing music in digital form is just as immoral as stealing a CD from Tesco. When high-speed broadband becomes the norm, as the noble Lord, Lord Lloyd-Webber, suggested, it will also be easier and easier to steal high-quality video and film, with potentially severe consequences for the film and television industries more widely.

Crime of all kinds in the online world—not just copyright theft—is burgeoning. Child pornography is multiplying; phishing trickery is rife; sophisticated high-tech online fraud is growing; personal computers are infiltrated remotely to steal personal data; and mass attacks are organised on major online entities and governmental bodies. Governments need to bring order to this lawless environment rapidly if serious damage to society and to the economy is to be avoided and if a moral relativism is not to become entrenched.

Internet service providers—ISPs—control access to the digital highway for content providers and for consumers alike. ISPs have the technical capability of blocking access to unlawful sites and of detecting illegal activity by consumers and by organised criminal networks. ISPs should be regulated and licensed. I can see why, at the moment, any individual ISP is not volunteering to police the internet. It would be costly, it would deter customers, and there would be few rewards for going first. However, if helping to counter every kind of online crime were an obligation on all ISPs, the cost of compliance would become a price of doing business for all providers and no single ISP would be at a competitive disadvantage. I accept that it would be disproportionate as well as expensive to criminalise all copyright theft by individuals, but we have introduced perfectly effective mechanisms for pursuing people who do not pay their TV licences or who park illegally. An internet regulator could enforce an appropriate regime for tackling online crime and place obligations on ISPs to assist it.

Those issues are global but the creative industries in the UK are not just a jewel in our cultural crown but, as the noble Lord, Lord Lloyd-Webber, suggested, a high-performing part of our economy, particularly in London and the south-east, where it is the second sector, after business services, and a vital part of our national wealth-creating capacity and of the tax base for the whole of the UK. It is now time for the Government to be bold and to offer full and proper protection for the music and other content-producing industries in the UK.

Photo of Lord Luke Lord Luke Shadow Minister, Culture, Media & Sport, Shadow Minister, Defence 2:13 pm, 2nd April 2009

My Lords, I thank my noble friend Lord Lloyd-Webber for giving us this opportunity to debate this important issue. As he has so clearly highlighted, Britain's creative industry contributes a remarkable amount to our culture and our economy. To sit back and do nothing while online piracy sucks the profitability out of such a productive sector at any time would clearly be irresponsible, even more so during the current disastrous economic situation. However, I am optimistic that there is an answer, and it lies in empowering the private sector to do what it does best, innovate.

Recent months have seen a new provider burst on to the scene, offering a novel, perfectly legitimate way for people to listen to music that they do not want to buy. I am talking, of course, about Spotify, where in exchange for listening to the occasional advertisement interspersed through the playlist, users have access to an enormous library for free. As networks become faster and more reliable, as portable devices capable of maintaining a cheap and constant link to the internet become more common, services such as this can only become more popular.

Those creating the music have also found ways to reduce their losses. In October 2007, Radiohead released the album "In Rainbows"online, asking only for whatever those downloading it chose to pay. A third of those taking advantage of this offer paid nothing at all but, importantly, two-thirds paid and the average was about £4, chosen, it appears, partly because that is what the public believe an artist generally receives from the sale of a CD through more traditional channels. It clearly ispossible to charge for music despite the availability of a free illegal version.

So perhaps we are not looking at an outbreak of criminality among the online population; perhaps it is merely that the internet has given them the opportunity to move on from an out-of-date system, where large companies take the huge majority of the revenue leaving the creative talent with pennies. People who are not willing to pay £15 pounds to a high-street chain for a CD are apparently willing to pay a proportion of that directly to the artist.

Of course, Radiohead is an established band, with a brand and a fan base of sufficient size to dispense with the support of a record label which a marketing department can provide. But online-only production is not confined to the big names. There is a rash of small independent websites offering online-only music sales from little known bands. The internet represents an enormous opportunity for creative types who are unable to find a record label willing to give them a contract to reach out and find a market for themselves. It is not just music. There are websites available for people to invest in independent films. People can pay to receive blog updates, software improvements, games, anything that anyone with a creative bent is able to develop and put up on the internet.

The interim Digital Britain report correctly identified the danger that oppressive regulation could prevent the development of new business models. A dynamic investment climate must, of course, seek to protect the intellectual property of those who have spent their time and money on their creations but, above all, it must provide a clear base for the industry to innovate. The Government must take the greatest care that their concern for the lost revenue from illegal file-sharing does not cause them to suffocate the solution. The answer is surely not stringent penalties and regulation, as the public will always be one step ahead of those; it is allowing and supporting the development of a better alternative.

S

Lord Luke I salute you. Here we have a peer who is not so gullible as to swallow the highly suspect figures promoted by the entertainment industry through Lord Webber and instead asks the right question.

That question essentially being "Rather than criminalise an entire generation and sue them why not give them what they want - an up to date delivery system of media".

Lord Luke seems to understand that tightening copyright laws ever further is merely an excuse for Big Business to defend an out dated business model rather than adapt a new one that they have less control over.

Common sense at last, even if it is the minority view.

Submitted by Sensible Approach

Photo of Lord Clement-Jones Lord Clement-Jones Spokesperson for Culture, Media and Sport 2:19 pm, 2nd April 2009

My Lords, I congratulate the noble Lord, Lord Lloyd-Webber, on initiating today's debate and on making such a powerful introductory speech. This debate is much more about means than ends. In the context of online copyright piracy or infringement, I am sure that there is general agreement in the House today about our objectives.

As the Gowers report, referred to by a number of noble Lords, which reported in 2006, and the interim Digital Britain report acknowledged, knowledge or creative capital in this country is increasingly important. The creative industries in the UK form a higher proportion of GDP than in the US, Canada, France or Australia. Of course, the creative industries have been growing significantly faster than other sectors in this country.

One of the biggest threats to that growth and, indeed, further investment in creative industries is copyright infringement. All the evidence, referred to by the noble Lord, Lord Lloyd-Webber, is that with higher speeds and greater penetration of broadband, piracy is growing. The loss to rights owners could represent at least half a billion pounds a year in royalties, if the Ipsos figures are correct—they have been referred to in a number of subsequent reports—and the loss is probably split at present between audio-visual and music rights holders. Many people say that that figure is an underestimate.

The Gowers report made a number of recommendations. Even though the monsters of Napster, Grokster and Kazam may have been slain, Napster as long ago as 2001, new threats constantly emerge. Just this week I was reading about the Scribd website, which allows copyright books to be downloaded. On these Benches, we are very strong defenders of intellectual property rights. We have strongly supported the proposition that good copyright protection is vital for the encouragement of creativity. My honourable friend Vince Cable promoted a Private Member's Bill in 2001, which became the Copyright, etc. and Trade Marks (Offences and Enforcement) Act 2002. It increased the maximum penalty for copyright theft to 10 years' imprisonment.

The Gowers report pointed out in 2006, however, that there can be a tension between the data protection obligations of the ISPs and the desirability of protecting the copyright of rights holders. The problem is whether or not we expect ISPs to be policemen. The Gowers report recognised the problem of piracy and suggested matching penalties for digital infringement to those for physical infringement, raising the maximum penalties and enabling fast-track litigation. None of those suggestions has yet been implemented. Subsequently there has been consultation by the Department for Business, Enterprise and Regulatory Reform on tackling illicit file sharing and the recent government response to that consultation. The Creative Britain report was published in February last year. Last July, the memorandum of understanding between the major ISP and rights holders was designed to lead to agreed codes of practice in this area.

More recently, the Digital Britain interim report and the consultation over proposals for a rights agency have seen the light of day. In all of this, although the Government have tried to steer an even course, there is no doubt that views have become very polarised, which makes going forward by consensus extremely difficult. ISPs believe that rights holders are asking them to be copyright policemen, a role which they do not want.

One of the most crucial areas of contention is whether ISPs, once they have given notice to persistent infringers, should be obliged to throttle their broadband service or cut them off. This approach was originally suggested by the Government and is still favoured by President Sarkozy as part of his "three strikes and you're out" policy, involving setting up a new body in France called Hadopi, and by a number of UK rights holders. The French Government are pressing for amendments to the EU telecoms package as a result. I am as sympathetic as anyone to rights holders, but I do not believe that this is the right approach.

I take some comfort from some very prescient words of the noble Lord, Lord Puttnam, in a speech some three years ago. He said:

"In fact some of the anti-piracy policies pursued by different sectoral interests can look remarkably like a continuation of war by other means—hardly an effective strategy for winning the hearts and minds of consumers and citizens".

We should be mindful of that. The BPI and others say that few people believe that the answer lies in suing individual consumers. I agree with that, but a court order should be required to terminate services when inevitably evidence will be somewhat contested in those circumstances.

We broadly agree, therefore, with the Government's stated approach in the rights agency paper and the response to consultation that a voluntary approach through codes of practice would be preferable. In terms of the first compulsory step of notification by the ISP, all the evidence is that a significant number of infringers, some two-thirds, would change their behaviour once they had been written to by their ISP. As an alternative to penalising individuals and legal enforcement against non-persistent infringers, as Gowers and subsequent reports have said, it is clear that investment in education of the public is vital, together with creating alternative lawful distribution channels. The Culture Media and Sport Select Committee report in 2007 on the new media and the creative industries emphatically agreed with that proposition.

At the weekend I saw a superb example at the Science Museum of what is possible. The Intellectual Property Office and Aardman Animations are collaborating on the mounting of an exhibition, A World of Cracking Ideas. This exhibition, to which I took my 11 year-old son, is inspiring, shows some of the great inventions of our time and stimulates children's enthusiasm for innovation and creativity; but it also gets the message across about the need to protect intellectual property. It was interesting to see how the exhibition explained the world of music copyright, including VPL, PPL, PRS, MCPS and so on; it was a noble attempt.

We need to combat the idea that copyright infringement is socially acceptable. Having said that, and that I agree with the overall approach of the Government, we have considerable doubts on these Benches about the rights agency proposed in the recent paper. It proposed that the agency should be industry-run, not run by the Government, and that the basis for funding should be a levy on broadband ISPs and users. But the basis for the operation seems to be somewhat flawed. It will not have statutory powers, even if it is responsible for dispute resolution and developments of the codes of practice. It is meant to have a role in standardisation of practice, but again on a non-statutory basis. Bringing together rights holders and others clearly has a role, but why not simply call it a forum? The notion of a rights agency seems somewhat mistaken. The question is rightly raised in the consultation paper: how will a rights agency achieve sufficient authority? It will be with difficulty. The appeal procedures envisaged in the paper are intended to be non-binding, which again is a problem.

There is also the question of how representative of all the different interests the agency would be. Rightly, consumer groups believe that they should be included; but so, too, should others such as visual artists who have important interests to represent and are often ignored in these debates. Is it not essential if the DRA is to be credible that it is properly representative? Ministers rather grandly claim in the proposals that the DRA will,

"facilitate a change of approach across the whole value chain".

But the bottom line is whether it will reduce infringement and unlawful activity. The proposal is somewhat paradoxical, and I cannot see how the agency could operate without statutory powers.

The educational role of the DRA is valuable, and I am sure that its representative nature will be useful, but at the end of the day, Ofcom will have and retain the power of regulation. A number of noble Lords mentioned the need for new models and innovative ways of exploiting copyright. I take on board the comments of the noble Lord, Lord Lloyd-Webber, in that context, but there need to be alternative distribution channels alongside better enforcement and education. We have heard a few examples. For instance, Nokia's "Comes With Music" service was launched in 2008, followed closely by Sony Ericsson's Play Now service and, as the noble Lord, Lord Luke, mentioned, Spotify, all of which are examples of how a new music service can happen when it is wholly legal and is provided in co-operation with the rights holders.

The different perspectives on online copyright piracy are difficult to reconcile, but generally we believe that the Government are getting the balance right. It is internationally where we think that greater effort should be made. Many rights are infringed by dedicated sites that move into another jurisdiction when challenged, and there are a number of countries that are seen as safe havens for that kind of activity. Such co-operation is needed not just between ISPs, rights holders, consumers and others but between countries. There is little point in having very effective systems here and finding that rights can be infringed at will by downloading from foreign sites. The Government need to engage in international discussion, debate and co-operation on that subject. I look forward to hearing the Minister's reply.

Photo of Lord de Mauley Lord de Mauley Shadow Minister, Business, Enterprise and Regulatory Reform, Shadow Minister, Children, Schools and Families, Shadow Minister, Innovation, Universities and Skills 2:30 pm, 2nd April 2009

My Lords, this is an important subject and I thank my noble friend Lord Lloyd-Webber warmly for raising an issue that he clearly, and rightly, feels strongly about. He spoke so compellingly about it and it needs to be dealt with. Before I speak further, I should disclose an interest as a substantial shareholder in an information technology support company.

I am sure that the Minister will say how much he too is in agreement with my noble friend. After all, there has been a succession of government announcements over the past few years assuring us how seriously they take illegal file-sharing. Unfortunately, none of the announcements, reviews, consultations, issue papers or discussion papers appears as yet to have made a great deal difference, which is particularly why I sympathise so much with my noble friend.

The statistic he gave us that over a quarter of online users illegally share files is startling and disturbing. That the number is growing shows clearly that the Government's approach is just not working, which is not hugely surprising, since the Government's approach has been, as my noble friend said, to avoid doing anything—if one does not count the endless consultations, reviews and papers as activity. That the lack of punitive levels of civil damages means that there is no real deterrent to, for example, online piracy was raised in the Gowers review in November 2006. That was consulted on throughout 2007 and then it dropped into oblivion, never to be heard of again.

The Government's failure to act is worrying in itself but, even worse, their constant talk of soon-to-be-announced decisions on regulatory change and their endless consultations of new legislation have unsurprisingly meant a corresponding lack of movement from the industry, a point made by the noble Lord, Lord Birt.

My noble friend Lord Luke is quite right to look for the most innovative and effective business models in the private sector, a subject of which he showed extensive knowledge. In such a fast changing environment, everything, from users' habits to technology and the source of desired content, changes at a bewildering speed. It is perhaps asking too much to expect the Government or the regulator to keep up, but the Government must not hold out the hope that a new round of EU legislation or a new initiative to re-train police officers will make a significant difference on the ground. They cannot—and since 100 per cent enforcement would mean the criminalisation of nearly a quarter of our population, we should not pretend that that is what we are looking for.

Instead, we must look to the industry to tempt users away from illegal options and to identify and shut down the worst abusers. Of course, none of that is new. Ministers have said much the same thing in various ministerial statements and press releases. But why is not happening?

According to the Government, there is already a groundbreaking memorandum of understanding between ISPs and rights holders to address the question of unlawful file-sharing. Despite that, the Government are consulting on setting up another quango, the rights agency, to which the noble Lord, Lord Clement-Jones, referred, to see what else can be done.

What will the rights agency do that Ofcom cannot already try? What new powers will it have to knock heads together within the industry and enforce any agreement that is made? Even worse, the Government are rumoured to be contemplating imposing a tax—yet another tax—on all internet users. What will the new money be spent on? What initiative is poised, ready to make all the difference, if only the funding can be found? The Government always seem to ask us to judge them by the amount of taxpayers' money they have thrown at a perceived problem. The websites of the government bodies involved all have proud statements about the increased government funding that has been spent over the years on combating online piracy. Is it really a lack of funds that is the problem?

The current difficulties the industry appears to be having in enforcing the memorandum of understanding should not cause us to dismiss self-regulation out of hand as a viable approach. The internet has meant the sudden appearance of many similar and related concerns, all of which are as difficult to solve as each other. We had a debate in this House only a few weeks ago on the dangers facing children using social networking sites, which is another very significant problem and one to which the noble Lord, Lord Birt, referred today.

The impossibility of regulating all content available to minors on sites such as YouTube is similar in many respects to that of identifying and removing all the illegal material available for download. In both situations, the criminals and the victims are frequently based in different countries and under different legal regimes. There is a similarly large grey area where it is difficult to identify the targeted material and to separate legitimate and illegitimate behaviour. There is constant rapid change in both the technology used and the methods of using that technology.

In the debate I have just referred to, attention was drawn to the recent establishment of an agreement between 17 social networking firms to improve voluntarily the protection of minors using their sites. It was made easier to report abuse, allowing legitimate users—still the substantial majority of those online—to help enforcement authorities find those who insist on transgressing. Can the Minister assure us that the tools that have been found effective against one crime are being carried over to others?

Of course, self-regulation can go only so far. Eventually, those seeking to protect their copyright need to rely on clear penalties enforced consistently. There are still many inconsistencies remaining among offences in this country. I know that the Minister is aware of them: there have been, after all, several reviews and consultations on them. Yet, in the past few years, when a criminal justice Bill has passed through this House in every Session, when there have been numerous serious regulatory developments in all sorts of sectors, we have seen nothing to address these inconsistencies.

I urge the Government to concentrate their efforts where they can make a difference. The Government have a wealth of material to work from and must not dither any longer. There are clear and achievable recommendations in the Gowers review, and the later publications, that need to be put into effect.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Parliamentary Under-Secretary (Skills & Apprenticeships), Department for Innovation, Universities and Skills, Lords in Waiting (Skills & Apprenticeships), HM Household, Government Whip, Parliamentary Under-Secretary (Department for Innovation, Universities and Skills) (Skills & Apprenticeships) 2:38 pm, 2nd April 2009

My Lords, I thank the noble Lord, Lord Lloyd-Webber, for allowing us to have the debate. I think that the speeches have been of quality rather than quantity. There have been very informed contributions, and I mean that as a sincere compliment. The noble Lord, Lord Lloyd-Webber, spoke with great insight on the issues relating to digital piracy and its potential impact on creative talent in the UK. The House is very grateful to him for giving us the chance to talk about this important issue this afternoon.

Let me begin by saying that we regard this as an important topic. It is important to me and it is an issue that David Lammy, as Minister for Intellectual Property and Higher Education, holds close to his heart, partly because it is part of his current ministerial brief, but also because he once worked as an intellectual property lawyer, so he brings some expertise to the matter.

I fully share the noble Lord's appreciation of just how important it is to safeguard the creative industries' contribution to this country's well-being. The creative sector accounts for 8.2 per cent of UK GDP. In London alone, one in five jobs is in the creative industries. It is important that we offer all the support that we can, given the thousands of jobs that the industry supports, especially in difficult times such as ours, as the noble Lord, Lord Lloyd-Webber, said.

While figures suggest that sales of music and film are continuing to grow despite the current economic difficulties, we cannot be complacent about problems such as digital piracy. It is estimated that the total loss to the film industry in 2007 was in the region of £486 million. The music industry estimates that its own lost sales were probably around the £165 million mark, and that figure may well be conservative. That is why the problem of digital piracy should matter to all of us.

Clearly, today's debate focuses on the impact of piracy on creative talent within the UK, but it would be remiss of me not to highlight that in some cases piracy is a crime that damages more than our economic or creative capabilities. My fellow Minister, David Lammy, told me how that was particularly brought home to him by a raid that he attended in north-west London in November. In that raid alone, 60,000 counterfeit DVDs were seized, among which were a significant number of obscene, pornographic titles that would not have been granted a certification in the UK in the first place.

I was interested in the range of contributions made by noble Lords. There was recognition, above all, of the complexity of the issue with which we are dealing. That reinforces our approach: good law is good, but proportionate, enforced laws are better. Noble Lords explored the question of achieving both proportion and the ability to enforce legislation. I know that we are not introducing jail terms for online infringement, as some in the industry have called for. However, I think that the measures that we propose will offer an effective deterrent to fraud that stops short of putting even more pressure on already crowded prisons.

Whether we are talking about new or existing law, effective enforcement is clearly the key. We need to be in a position where all government departments and key individuals within the police, trading standards and local authority structures tackle these issues together. That is why we have set up an interministerial group on enforcement, With ministerial and other colleagues, we need to look at how we can effectively raise public awareness and understanding of these issues and at how to remove some of the practical barriers to more effective on-the-ground enforcement.

The best approach is to combine enforcement within the resources available with other types of measures that we have been talking about, as well as public education on the consequences of copyright crime. I was interested in the visit made by the noble Lord, Lord Clement-Jones, to the Science Museum, which is taking a very innovative approach to showing young people that this is not a crime that has no victims.

We are currently exploring the options for establishing a rights agency. It is likely that part of its remit will be to focus on encouraging respect for the creative industries and increasing public awareness of the easiest ways to access legal content. I assure the noble Lord, Lord De Mauley, that we have not made up our minds on this; we are still out to consultation. It is not that we are dithering. This debate has reflected that, first, there is a range of views on how to deal with the problem and, secondly, not only does a complexity currently exist but it is an increasing complexity; it is not something that we can solve nationally. As the noble Lord, Lord Clement-Jones, pointed out, there is a need for international action as well. I do not plead that as an excuse; I just make these points because I think that they are relevant to this debate.

Therefore, the Government have been meeting the industry to discuss the most effective way in which to tackle internet piracy crime—not just piracy but all forms of internet piracy crime. I know that partnership working between organisations such as the Federation Against Copyright Theft, the BPI and the IPO's enforcement unit has been invaluable, and I encourage all other industries to develop the levels of intelligence gathering that these bodies have.

We are also doing our best to support our creative talent, as I am sure the noble Lord, Lord Lloyd-Webber, appreciates. The very nature of the creative arts means that they are dynamic and always changing, developing and innovating. As well as bringing challenges, the digital age has brought tremendous creative potential. I was fascinated by the up-to-date knowledge of the noble Lord, Lord Luke, who mentioned the various services being offered. He identified things such as Spotify and referred to other independents offering online-only music and film. He also gave the interesting and fascinating example of the Radiohead offering, which, in a way, seems to be counterintuitive. However, I think that he demonstrated that, when talking about supporting young people with talent, we have to look at how the things that they do creatively are offered online in a way that perhaps a few years ago we would never have imagined.

We have already made progress. In Creative Britain, we set out a three-year strategy for the creative economy in the UK, backed up by more than £70 million of government funding. We committed to establishing, by 2013, 5,000 creative apprenticeships annually and we funded 10 pilot programmes designed to provide greater access for young people to a range of cultural and creative opportunities through the flagship Find Your Talent programme. Again, we are trying to involve young people in these programmes and are making them aware of the importance of intellectual property rights and content.

In 2008-09, the Technology Strategy Board ran a £10 million R&D programme for the creative industries, investing in more than 90 creative industry SMEs and major innovative collaborative R&D projects. In all, almost 300 UK-based companies and academic institutions will have benefited from this investment. We are also developing a project with the Local Government Association to research and deliver a menu for local infrastructure.

There was much reference in the debate to the memorandum of understanding and the question of how to tackle peer-to-peer file sharing. The Government have worked with both rights holders and ISPs to find an industry-led solution to the problem. We may not all agree on exactly how we should do it but I think that there is some consensus that that route probably gives us the best chance of success. A memorandum of understanding was signed by the six major ISPs and rights holders to get an industry-led solution. We remain committed to the principles set out in the MoU and are working hard to achieve, as agreed, a substantial reduction in illicit peer-to-peer file sharing. Recent legislative proposals on peer-to-peer file sharing will go a long way towards achieving that reduction, with some evidence suggesting that up to 70 per cent of infringing users will desist on receipt of a warning letter. We are looking into options such as the rights agency as one way of continuing the valuable work arising from the memorandum of understanding in a form suitable for today's environment.

I believe that we have provided enough of an outline of how we are tackling digital piracy and other forms of internet piracy crime. Everything that I have covered so far offers better safeguards for nurturing our creative talent and for the profitability of our creative industries and those who work in it. However, the work that we are doing to improve internet piracy enforcement goes much wider than one industry or sector. Our key priorities here must remain to educate consumers on these issues and to work with government departments and front-line enforcement agencies to ensure that they understand how IP issues fit into the wider civil and criminal enforcement landscape.

I have tried to cover most of the points raised. If I have missed any, we will write to noble Lords. Today there has rightly been a rehearsal of the issues surrounding internet service providers. It is a critical area. The debate has highlighted polarised opinion, which the consultation on peer-to-peer file sharing clearly demonstrated. I think that we all agree that there will be no easy answer to this problem. In a way, the noble Lord, Lord Luke, summed it up when he said that we have to be careful that we do not produce oppressive legislation that acts as the enemy of innovation. That would not serve any real purpose or benefit for the creative industry and we do not believe that it would serve the country. We have to proceed cautiously. The answer must surely be to find a course that works, is proportionate and involves rights holders and ISPs. As I have indicated, discussions are under way and experience shows us that joint agreement must be the way. ISPs and industry have a key role in finding a solution to this problem. I thank the noble Lord again for initiating the debate. This is probably the end of the beginning—certainly it will run and run, as they say sometimes of West End shows.

T

"It is estimated that the total loss to the film industry in 2007 was in the region of £486 million. The music industry estimates that its own lost sales were probably around the £165 million mark, and that figure may well be conservative..."

These figures are meaningless. That someone was willing to watch something for free does not imply that they would be willing to pay the current market rate for it.

Submitted by Tom Wright

Photo of Lord Lloyd-Webber Lord Lloyd-Webber Conservative 2:50 pm, 2nd April 2009

My Lords, I thank all noble Lords for speaking. I came here grateful that I work in theatre, which cannot be pirated, and freely admitting that I had no real answers; I just wished to highlight the situation. My noble friend Lord Luke mentioned the interesting case of Radiohead. Many bands now are using recorded music as a means to attract people to their live concerts. Years ago, it was the other way round. I was pleased to hear the noble Lord, Lord Clement-Jones, reaffirming that the House supports intellectual copyright. I looked up the word "copyright" in the Oxford English Dictionary today. The first mention of the word was on 6 May 1735 in your Lordships' House. I was terrified that I was going to read of a noble Lord saying that copyright means that you have a right to copy. On that note, I beg leave to withdraw the Motion.

Motion withdrawn.