Gowers Review

– in Westminster Hall at 4:41 pm on 17th May 2006.

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Photo of Don Foster Don Foster Shadow Secretary of State for Culture, Media and Sport 4:41 pm, 17th May 2006

I thank the Speaker for granting the debate. As hon. Members will know, in December 2005 the Chancellor announced that he was asking Andrew Gowers to head a review of intellectual property rights. I welcome the review and hope that it will propose measures that are fair to both content owners and the public, and that it will be based on solid evidence and research rather than the wild assertions that abound in this topic.

The Gowers review has to consider numerous different issues. It will, I hope, listen to the strong arguments for altering the IP rights on databases. The rules introduced 10 years ago across the European Union appear to grant excessively restrictive copyrights over collections of non-copyrightable material. The 2005 study by the European Commission suggested that the restrictive copyrights had led the European database industry to become less productive than the American database industry, where no such rights exist. There is, I believe, a strong case for change.

The review will also need to consider calls for the updating of the so-called fair dealing exemptions in copyright law, especially in respect of the statutory right to private copying. No such rights exist and that is perhaps the clearest example of a law that is out of touch with the modern world. Only last week, it was reported that 55 per cent. of Britons break the law by copying music that they have purchased on to different devices, such as iPods.

The main topic that I wish to address relates to the calls for the extension of copyright on sound recordings. The debate is often characterised as one between the competing claims of rights holders and those of consumers, but I do not see those rights as opposed and want to propose a way forward that benefits both.

At present, copyright on sound recordings lasts about 50 years. Many bodies, such as British Phonographic Industries Ltd., and individuals, such as Sir Cliff Richard, have called for that 50 years to be extended unconditionally to 95 years. They cite many examples to justify such an extension.

First, they argue that it would harmonise our law with that of the United States where, as a result of the Sonny Bono Copyright Term Extension Act 1998, sound copyright exists for 95 years. After all, UK companies argue, they are valued in part according to the number and length of copyrights held and therefore lose out to US recording companies. Secondly, they argue that revenue streams from back catalogue sales provide the funding for new ventures and to promote new talent: increase the length of copyright, they say, and there will be more money for such new ventures. Thirdly, leading performers, such as Sir Cliff, and session musicians argue that they need the revenues that flow from copyright payments on their old recordings as a sort of pension fund. They are particularly concerned because some of their early recordings may soon go out of copyright. Fourthly, many proponents of an extension see the lapsing of works into the public domain as a danger to their preservation and availability.

The arguments against a blanket extension are also powerful, and should be heard. When the United States extended its copyright, it was said that that was necessary in order to

"Harmonise...US copyright law to that of the European Union, while ensuring fair compensation for American creators who deserve to benefit fully from the exploitation of their works."

So the United States extended its copyright to align with us, and now we have proposals to harmonise with it. There is a danger that constant leapfrogging will extend copyright indefinitely. There are now calls in the United States from, among others, the American Federation of Television and Radio Artists and the American Federation of Musicians, for the liberalisation of sound copyright laws.

Britain has a wonderful music history, but a blanket extension could render much of our musical heritage inaccessible to the public for a very long time. After all, the extension of copyright in the United States does not appear to have guaranteed the re-releasing of old recordings. A study for the Library of Congress found that only 14 per cent. of back catalogue material had ever been reissued. The older that material gets, the less likely it is to be re-released—indeed, less than 2 per cent. of the oldest material is re-released. Thus, those opposing blanket extension here argue that we risk locking Britain's rich cultural music past away so that it is enjoyed by nobody and of value to no one.

Opponents also challenge the idea that back catalogue revenues provide investment for new ventures and to support new artists. Peter Jameson of the BPI argued in TheGuardian on 24 April that such investment had contributed to a boom in new British music, citing artists such as Arctic Monkeys, James Blunt and Kaiser Chiefs. However, Arctic Monkeys are with Domino Records, which was founded in 1993 and rarely re-releases records that predate itself, and James Blunt was signed by the US label Custard Records, which was set up only in 2004 and so has little back catalogue material to release; the same is true of Kaiser Chiefs, who are signed to B-Unique, which was also founded in 2004. Those are hardly good examples of recording companies that rely on significant revenue from the back catalogue profits that would be under threat if we were to stick at the 50-year copyright term.

As for Sir Cliff's campaign for hard-up musicians, copyright was never meant to be a pension fund. More importantly, if old recordings are rarely re-released, there will be little income stream either from the copyright or from airplay revenues. The real problem facing old musicians is that their works are rarely commercially available. The argument that demonises public domain is countered by the evidence that public domain has allowed Britain to be at the forefront of historical music research and has led to a boom in low-cost classical music akin to the boom in low-cost classical literature such as Penguin Classics. Public domain also benefits other musicians, filmmakers and artists who use old recordings in new pieces of work, so it can be a good incentive for new ventures.

The Gowers review will need to find a way forward that takes account of all those claims and counter-claims. I have a proposal that will benefit creators, rights holders, consumers and our culture as a whole: conditional extension, which would allow rights holders to take out a 45-year extension to the existing 50-year copyright term. However, with increased rights accompanying extended copyright would come increased responsibilities.

First, to re-register a rights holder would have to pay a nominal extension fee that, while not prohibitive, would prevent record companies from extending copyright as a formality. It would also encourage commercial re-releasing of back catalogue material to help to offset the fee. Meanwhile, the fee would help to cover the administration costs of the new system.

Secondly, the proposal involves specific provision for compulsory licensing. A rights holder who did not make commercial use of a recording would be required to license the rights to any interested party. The fees payable by the interested party would be based on a fees structure set by a body authorised by the Government for the purpose. Essentially, it means that the rights holder has a "use it or lose it" responsibility. Such an approach would encourage record companies to re-release their back catalogue material, but if they did not do so it would enable niche companies and small businesses to demand the right to re-release recordings themselves. As a result, consumers would benefit, as it would help to ensure that copyright term extension did not restrict the choice of music available to them; indeed, it would lead to greater choice of back catalogue releases.

Thirdly, the caveat for archival responsibility would require that work be held in good archived condition in accordance with prevailing technological standards. Sadly, it seems that in the past back catalogue material has sometimes been damaged or misplaced, especially when companies merge, move or shut down. In one such example, Decca, a major British recording company, was taken over by Polygram in 1979 and all the metal masters of the company's pre-1950s 78 rpm recordings were destroyed. Similar things have happened elsewhere: for example, in the 1960s a United States company, King Records, used all its metal masters as infill for a car park for its new office block. Our proposal would mean that many more recordings would survive and be kept tracked centrally. That would have the added benefit of reducing the number of recordings of so-called orphan works, where copyright ownership is unknown.

Such an archival responsibility should place no significant extra administrative burden on the recording companies. After all, they have to submit detailed information on their records to rights collection societies, such as the Performing Right Society and Phonographic Performances Ltd. The extra burden is in ensuring that an original sound recording is treated as an historical artefact and exercising appropriate curatorial responsibilities to ensure the protection of our cultural heritage.

Those three proposals for conditional extension of copyright to 95 years will, I believe, allow recording companies to be valued in a way that allows them to compete with US companies. It will also help the musicians being championed by Sir Cliff Richard and others, because their older recordings are more likely to be commercially exploited, rather than left to languish in obscurity.

Photo of Michael Connarty Michael Connarty Labour, Linlithgow and East Falkirk

I congratulate Mr. Foster on gaining this debate. As chair of the all- party jazz appreciation group, I would wish to talk to him for longer. It is clear that he does not mix with jazz musicians, because he does not understand the problems of people such as Tommy Whittle from my constituency. Now in his seventies, he still leads a group, but he was mainly known as a sideman and he relies on a constant flow of income from old recordings with the BBC orchestras and other jazz big bands to sustain him and his wife, who was a singer, in theirold age.

I take the point that the hon. Gentleman made about culture. Many people believe that we should focus on the artist, but nothing in what he says about charging companies for an extension would encourage them to re-release. If we do not have an extension to 95 years, other companies may release and not pay the artist who made the original recording. Unless we can square that circle, Tommy Whittle, and others such as Jack Emblow, who has played in many films but has never recorded in a band of his own, and even Kathy Stobart, who played for many years and who won the parliamentary award for services to jazz last year, will receive an income from their recordings after 50 years have passed. We must consider such people, who are not the Cliff Richards of their age; they are not megastars. It is not the big companies that will suffer if the hon. Gentleman's proposal is adopted. It is the people I have mentioned who will not continue to be paid under the extension, and they will therefore receive no money under the copyright law.

Photo of Don Foster Don Foster Shadow Secretary of State for Culture, Media and Sport

I am extremely grateful to the hon. Gentleman for that intervention. He will be aware that about 4,500 musicians have signed up to PPL's demands. However, I support a move that will extend copyright to 95 years. I believe that the measures that I propose will help to ensure an increased re-release of back catalogue material. That, I believe, will help Tommy Whittle. He may be lucky enough to have his material constantly re-released, and he may benefit from that, but as I said, the evidence shows that only a small proportion of material is re-released and in the case of some older material, less than 2 per cent. of the back catalogue is reissued. The measures I am proposing will encourage re-release, while providing the extension to 95 years that those 4,500 musicians request.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

I think that I must declare a registrable interest as a member of the Musicians' Union and PPL, although in the environment in which I trade I do not have a financial interest in the subject of the debate, because our interest in the music copyright—not the dots, but the sound recording—is time-limited to five or 10 years. The interest to the musicians is the key matter. Does my hon. Friend's interesting suggestion take account of technological changes and the fact that much distribution now happens via download?

Photo of Don Foster Don Foster Shadow Secretary of State for Culture, Media and Sport

Indeed it does. I am grateful for my hon. Friend's contribution. He will have noted what I said about the archival responsibility to ensure that material is kept in a condition appropriate to prevailing technologies. There is a requirement to make sure that it is available in the most modern forms.

I believe that the proposals will ensure that individual recording companies can be valued in a way that enables them to compete with US companies, they will help musicians as I have described, and by encouraging the re-release of more material they will give the public more choice. That is better for musicians and record companies, for the economy and for consumers. It is better for all of us because it protects and preserves Britain's rich and varied musical heritage. I hope that the proposals will find favour with the Gowers review.

Photo of Hugo Swire Hugo Swire Chair, Speaker's Advisory Committee on Works of Art, Shadow Secretary of State for Culture, Media and Sport, Shadow Secretary of State for Culture, Media and Sport 4:57 pm, 17th May 2006

I am most grateful to you, Mrs. Anderson, and to Mr. Foster, for allowing me to contribute briefly to the debate, and to the Minister for agreeing to that.

We all agree that sound copyright is important for all media, new and old, and we welcome the Gowers inquiry. Increasingly, we operate in a world where the vital business ingredient is intellectual property, so it is right to pursue ideas about that. I think, however, that the hon. Gentleman has somewhat missed the point given the realities of the digital age, on which I think he has rather missed out. The "use it or lose it" approach may, as he pointed out, have been relevant when companies physically produced records or CDs that then had to be produced and distributed, but we have moved on, and in the digital age of downloading in which we now live, his arguments are somewhat archaic.

In the hon. Gentleman's proposal, which is not particularly liberal and is rather convoluted, there is a danger that performers and record companies will be kept as second-class creators compared with other creators. The principle of copyright and resale rights is long established. I believe that the hon. Gentleman supported the droit de suite artists' resale right that we debated recently, which sits oddly with his comments today.

The point is surely that in future back catalogues will be online, and our idea of a blanket extension will be an encouragement to make that music available. Charging fees will become an incentive to do nothing and a licence for CD burners in China and the developing world to nick recordings.

I know that the hon. Gentleman's office has been besieged by representations on behalf of Sir Cliff Richard. My office has not, as far as I know, received a single representation on his behalf. I do not know what that says about me, Sir Cliff Richard or his fans. No doubt the hon. Gentleman will be asked to recover from the ordeal of the debate in one of Sir Cliff's many villas around the world.

Of course, I have sympathy with the hon. Gentleman's arguments, but I do not agree about the ratcheting up of copyright periods in Europe and the United States. I hope that the Minister agrees that it would be far easier to adopt the proposal we made during the last election, which was that in the interests of the industry—producers, consumers and originators—it would be best to make the case in Europe that the copyright period for music protection should simply be extended from 50 yearsto 75 years.

Photo of John Healey John Healey The Financial Secretary to the Treasury 5:00 pm, 17th May 2006

I congratulate Mr. Foster on securing this debate. Although it is a short Adjournment debate, there is a remarkable level of interest in it, as shown by the interventions of my hon. Friend Michael Connarty, who was unable to stay to the end of the debate, and the hon. Members for Birmingham, Yardley (John Hemming) and for East Devon (Mr. Swire).

My office has not had any representations fromCliff Richard, although I hesitate to mention that because I do not want to tempt fate. If I do receive representations, I shall pass them swiftly to Andrew Gowers who will, I am sure, give them due consideration.

The debate has illustrated not only that there is a high and active level of interest in the subject, but that the issues at stake are extremely complex and the interests and interest groups are many and varied. In considering the issues in depth Andrew Gowers is providing an important service for the Government and the House generally, and we look forward tohis report.

It is important to bear in mind, notwithstanding the focus of the hon. Member for Bath in his opening speech, that intellectual property rights are no longer a narrow niche issue, but are an essential facet of any successful modern economy, particularly as economies are increasingly based on the quality and breadth of knowledge that they contain. Within that broader field, it is important to debate the role of copyright in the 21st century. On the broader front, our UK economy is increasingly driven by knowledge-based, intellectual property-reliant industries. The creative industries alone accounted for 7.8 per cent. of value added in the United Kingdom in 2003 and grew by 6 per cent. per annum between 1997 and 2003, which was twice the rate of growth of the economy as a whole. Overall, the creative industries were worth £11.9 billion in 2004.

In this age of a modern knowledge-based economy, the need to reward creativity while continuing to encourage the free flow of ideas is more important than ever. That is the essential balance that must be struck in policy terms. The intellectual property framework must incentivise innovation while ensuring that the public have access to that innovation. However, the world is changing rapidly—the hon. Member for Birmingham, Yardley alluded to this—and the existing framework is being tested by two trends.

First, globalisation has broken down the boundaries between markets, giving rise to enforcement challenges. Secondly, digitisation has radically altered the way in which knowledge is created, disseminated and shared. Those are the principal reasons why, just before Christmas, the Chancellor invited Andrew Gowers to conduct an independent review of our intellectual property system to ensure that it is fashioned for the purposes that we require of it in this century. I am not sure that I would go as far as the hon. Member for Bath and describe parts of it as being out of touch with the modern world, but it is clear that, depending on what Andrew Gowers recommends, now is the time for a proper review of whether some aspects of it need to be overhauled.

The roots of our concern do not lie only in the changes in the modern economy and the reasonable representations that the Government have received from a number of quarters. In our manifesto at the last election, the Labour party included a commitment to

"modernise copyright and other forms of intellectual property so that they are appropriate for the digital age."

That is the importance of the Gowers review to the Government. The call for evidence for the review prompted more than 500 responses from a wide range of interest groups, as hon. Members might have anticipated. Those carrying out the review are now analysing those responses and undertaking further research before making what we expect to be precise, practical policy recommendations. The review will report in the autumn to the Chancellor and to the Secretaries of State for Trade and Industry and for Culture, Media and Sport. I know that culture, media and sport is a policy area that the hon. Members for Bath and for East Devon follow closely from their respective Front-Bench positions.

Today, the hon. Member for Bath has focused on one of the issues being examined in the review: the term of protection on sound recordings. As he knows, protection is harmonised across the EU and, as such, is to some extent an area of EU competence. I think that the hon. Member for East Devon made that point. Any changes in the length of protection must therefore be made through the Commission.

The Gowers review is independent and was set up to make recommendations to the Government. As the hon. Member for Bath would expect, I am not in a position to anticipate or pre-empt what Gowers might report. The hon. Gentleman said that he hoped the report would be based on solid evidence. The Treasury is supporting the Gowers review, and in the best traditions of the Treasury we will do our best to ensure, as will Andrew Gowers, who is a distinguished journalist, that his recommendations are indeed solidly based on the evidence that he is gathering.

The question of the length of copyright on sound recordings turns on what impact adjusting the length would have on investment, on performers and on other affected interest groups. As the hon. Member for Bath made clear, it is an extremely complex area of debate. There are conflicting needs, claims and counter-claims, which are precisely what Andrew Gowers is considering.

The broader intellectual property system is not one of rewards or, as the hon. Gentleman put it, a pension fund for old musicians. It is one of incentives to invest and innovate; that is its importance to the economy. It must encourage new innovators to create and generate ideas in the knowledge that they will be remunerated for their endeavour. We must ensure that creators continue to be incentivised to contribute and innovate in the future.

It is not only the length of the copyright term that affects the remuneration of artists but the scope of that term. In the EU, while the term is 50 years, artists also receive royalties every time their song is played in a bar, restaurant or hairdresser's. In the US, under the bars and grills exception, few such royalty payments are made. The definition of "public" and therefore the scope of protection of sound recordings is far broader in the EU than in the United States. The Gowers review will consider the impact of changing the length of term not only on artists and their immediate industry buton industries that use sound recordings, such as broadcasting, tourism and internet service providers. It is vital to say again that the intellectual property system stimulates innovation and creates value across the whole economy.

The crux of the debate, as the hon. Gentleman made clear in his speech, is how to strike a balance. Andrew Gowers is considering the areas that the hon. Gentleman touched upon, and I undertake to ensure that he gets a copy of this afternoon's debate. I know that he will take seriously the points that all hon. Members have made as part of his deliberations.

Digitisation and globalisation create challenges and opportunities for our copyright regime. We need to ensure that the UK responds in the right way and the right areas. By doing so, we can sustain the success that our economy enjoys in the globalising and increasingly knowledge-based economy. It is not just the Chancellor and I who are looking forward to the recommendations of the Gowers review; the level of House interest in this short debate this afternoon demonstrates that the recommendations that Andrew Gowers comes up with will be keenly awaited and, I am sure, keenly debated when he publishes them.

I hope that we will be able to return to this debate, because in many parts of the House, there is clearly an interest in doing so. I had expected a contribution representing the views of the Musicians Union, but I did not expect that we would also hear the views of the all-party jazz appreciation group. Clearly, a number of Members with interests in the area will also be looking forward to Andrew Gowers' report when we finally publish it.

Question put and agreed to.

Adjourned accordingly at eleven minutes past Five o'clock.