Stakeholders' view of evidence for copyright policy
Speakers
Peter Bradwell (Open Rights Group) - hereinafter (PB)
Frances Lowe (Regulatory and Corporate Affairs Director, PRS for Music) - hereinafter (FL)
Andrew Prodger (CEO, BECS) - hereinafter (AP)
Jeremy Silver (Chairman of Musicmetric and Specialist Adviser on Creative Industries to Technology Strategy Board) - hereinafter (JS)
Chair: Prof. Hasan Bakhshi (NESTA, CREAG) - hereinafter (HB)
Questions & Answers:
Lee Edwards (Lecturer, University of Leeds) - hereinafter (Lee Edwards)
Tony Clayton (Chief economist, IPO) - hereinafter (TC)
Will Page (Director, Spotify) - hereinafter (WP)
Tom Hoehn (Visiting Professor, Imperial College) - hereinafter (TH)
(HB) The only rule that we're going to impose on the panel is that the evidence for copyright obviously is somewhat controversial but the focus here is not to debate that evidence, rather to discuss what constitutes valid evidence to copyright policy. What are the assumptions from a stakeholders' perspective that are made about the nature of evidence and that we need to be explicit about if we're going to answer that question? What are the assumptions that we make about copyright policy in answering that question and also, very much inspired by the comments that Linda made in the previous session, from the stakeholders' perspective what policy processes would support the gathering of valid evidence for copyright policy? Peter Bradwell, can you kick off please?
(PB) I am Pete Bradwell. I'm from Open Rights Group and I've been working, since I joined nearly two years ago, on copyright policy, which has taken in the Hargreaves Review and subsequent consultation as well. I've also been working on our copyright enforcement work.
When I was thinking about this I felt like there was an important distinction to keep in my head, which was policy we think that's been made well and policy that we agree with. I sometimes feel that when a policy process is run badly it makes it easier to confuse those two things and makes it easier for those two things to become muddied in the debate. I'm going to talk a little bit about why I think some of the problems with some policy making, particularly in DCMS, make that situation arise. In doing so I'm going to talk not only about the good evidence that we might look for and what constitutes useful, constructive, helpful or transparent evidence but also how policy makers listen to it, deal with it and process it, and the sort of process they run. I'm thinking there of the standards they expect, which we've talked about a little bit already, the analysis and effort they put into gathering evidence and listening to people, the inclusivity of that process and who they listen to, and the values and priorities they have that the policy makers and politicians are bringing to this, and some of the priorities they are placing on different types of evidence. There are lots of examples of where the policy processes have failed to do that and as a consequence that's contributed to increasing the confrontational nature of the debate. It has contributed to a sort of mistrust in the area and contributed to that situation where we do mistake disagreement for bias or incompetence.
Regarding good evidence, it's easy to look at the IPO principles and say 'That's a really good start.' Transparency, I agree, is really important, not only in the data and methodology so that we can scrutinise where figures and opinions have come from, but also who's saying them, why they're saying them and the relationships involved in producing the report. It was alluded to in the previous session. I wouldn't necessarily go along with people are tainted by association and the fact that a particular report was produced by someone with a particular interest makes it useless because at the end of that path lies a situation where you distrust anything produced by anybody that you disagree with. It's just important so that you know where evidence is coming from and you can understand who's saying it and why, as much as ruling it out of contention.
As we look to appreciate more what good evidence looks like I would hope that we don't discard things that aren't hard quantitative analysis. This was something that was talked about in context of the Open Standards Consultation. There is a role for case studies, stories, examples and opinion, which helps point policy makers in the right direction. It helps them understand who is affected by a particular proposal and why, and where to look for more evidence of those perspectives and opinions. I hope we don't lose sight of the value of that qualitative work as well.
Evidence that doesn't meet the highest possible standards of transparency, clarity and verifiability isn't totally useless. It can be indicative. It can help us understand a little bit about what we're looking at but it will obviously not be something that you'd want to base a policy on or base your whole decision-making process on. Unfortunately there are lots of examples in copyright and largely copyright enforcement where those standards haven't really been lived up to. You can look at the Digital Economy Act impact assessments where, for example, the impact of copyright infringement on music was cited from a study as just Jupiter 2007, which might be the most amazing study in the whole world but if you can find it and get it publicly available I'll give you some money because it's difficult. The DCMS admitted to us that this is something they've basically taken on trust that they've just cited in the impact assessment with no real justification or analysis, which isn't an ideal situation.
A similar thing happened with the film policy review that came out of DCMS. I think it was in January this year. I apologise if this seems like I'm criticising DCMS in exclusion. They just seem to have more examples than other departments. They quoted a figure of around £500m for the impact of infringement on the film and television industries, and they cited an organisation that doesn't exist: Ipsos Media CAT. I think they meant Ipsos MediaCT. The figure was wrong I think and it came from a British Video Association study. I met them and talked them through it and it seemed like that figure was actually the impact of infringement on the whole of the copyright industries, rather than just film and television. DCMS managed to quote the wrong organisation, the wrong figure and cite a study that's not publicly available. It might be legitimate for the British Video Association not to publish publicly their research but it falls on DCMS to say that's the case and explain why they think that's a useful figure to use and also to probably use the right figure when they're doing it.
As much as we can talk about the need for good evidence, policy makers have an important role in setting those standards and making sure people understand the standards they have to live up to.
These problems speak to the role of policy makers in gathering evidence and that's really one of the clearest things that I've learnt over the past 18 months. As much as we can talk about the need for good evidence, policy makers have an important role in setting those standards and making sure people understand the standards they have to live up to. This has been talked about already but in the political context the evidence lives in, there is a sort of economy of influence that evidence is published into. We have to recognise that as much as it would be nice if we thought 'Let's identify a problem and get all the best evidence. This tells us the right answer; we'll do that.' Actually, there's a whole other set of influences, political decision-making, status, perceptions of influence and so on that affect these things.
Policy makers have an important role in setting what's valued in that economy of influence and helping people understand when they're going to be listened to, what sort of evidence and contribution is going to have value and how people should try and present their opinions and their evidence to policy makers. That involves setting out the standards they expect, which is something the IPO have started to do with their principles, adhering to them themselves and being really clear about what they expect and when, being open and clear about who they want to hear from and making sure that they're inclusive in listening to a broad range of perspectives, being clear about what their values are and what they're prioritising and why, and spending time analysing the problem that they're trying to deal with properly and clearly. In a field like copyright where, as has been mentioned, there are multiple competing perspectives it's really important that policy makers set that clear agenda through some strong political leadership so that people know that there's an inclusive process going on. The consequences of not doing that is just an increasingly heated, confrontational environment where it's as much about how loud you can shout at each other either directly, through the press or in roundtables, as how robust an evidence base you have behind your position and how good an argument you make.
As someone mentioned that lobbying isn't bad in the sense that you can't expect people with either a particular industrial or political interest not to make their case really forcefully and that's absolutely right they do. It is policy makers' role to make sure that's happening in a clear and robust way and that the way that happens involves analysing the best possible evidence. I place whatever blame can be attached to whatever bad copyright policies have happened in the past more on policy makers than I do to whatever lobbyists have been involved. I include Open Rights Group in a lobbying sense that I don't externalise that activity to other people.
There are going to be many competing perspectives and lots of different kinds of evidence. There's not going to be one dataset - the smoking gun that explains how things are - and you're not going to be able to derive an 'ought' from the 'is'.
We might come onto some more detail in the discussion but I'll finish on some of the limits of evidence. There are going to be many competing perspectives and lots of different kinds of evidence. There's not going to be one dataset - the smoking gun that explains how things are - and you're not going to be able to derive an 'ought' from the 'is', as people say. You're not going to be able to be told what to do from the fact of any one organisation's case. It really falls on the policymakers to take that political leadership on and to set out an inclusive and open process so that the people involved can contribute the evidence they have and they know where it's going to end up and what kind of decisions are going to be taken on the basis of it.
(FL) Thank you very much. My name's Frances Lowe. I'm Regulatory Affairs Director at PRS for Music, which is a music rights collecting society representing 92,000 direct composer and music publisher members and many millions across the world which we license here in the UK. I was going to open with this personal perspective. I've found the policymakers' panel very useful. I am a competition lawyer and therefore I have worked for the last 20 years very closely with economists in analysing the problems and making the case and I make no exception. I now am in house. I represent an industry body and we are there to explain what policy means, what current practice is and what good policy might be in the field of copyright or copyright licensing. For that reason when we come to the question of 'What evidence?' I have always felt that it is a mixture of legal, economic, case history and also the voice of the individual members, and in our case, the individual members of the organisation who rely on us to ensure that their voice is heard well enough.
There have been many studies about collective management and lots of evidence. I would start where Ruth started. The MMC inquiry on Performing Rights was a huge, robust inquiry into collective management, all of its disciplines, governance, transparency and operations. It may not have been the best verdict for PRS but the set of recommendations were implemented and have transformed the model of collective management into what it is now. You've also got recent studies from PPL on two-sided markets in the economics of collective management (cf. Page 2007) and you have PWC (2011) who, for the Hargreaves process, did a really good piece of work for the publishing sector on secondary exploitation and collective management of secondary use of works. There was some really good evidence there.
What I wanted to do was start with a little bit of criticism of process of where we are and then turn to something a bit more constructive. It's easiest for me to talk about this in relation to the Directive on codes of conduct and now the parallel impact assessment on a Directive for management. I also would say in terms of the policy goals we support the policy goals of both those processes, which is to bring transparency and minimum standards to collective management and to ensure that it works, improves and is at its best. But how both sets of policymakers got to that goal has been a very different process and we have been involved in both.
Take the EU process: they have, for several years, issued questionnaires, had hearings, updated their questionnaires and the market research and gone out to consultation. What you have is a 197-page impact assessment, which goes into a lot of detail about how collective management might be impacted by policy change and different options analysis. The IPO process and codes of practice were published with its first consultation on impact assessment, which picked up on the Hargreaves criticism, which was that there was evidence of inefficiencies, a paper on actual reporting and behaviour of a collective society, which merited codes of practice. It would have been valuable to have unbundled what those criticisms were and given the subject of the policy the right of rebuttal and the right of response.
It's important we have trust in the process and that we have a process which is reviewable, particularly when you have been the subject of that review.
Where we are now we have a relatively thin impact assessment (Hargreaves, 2011; Supporting Document EE Economic Impact of Recommendations) which has now been updated and issued with the clauses on collective management orphan works and extended collective licensing for the Enterprise and Regulatory Reform Bill. That impact assessment cites evidence which has been gathered from academics or the consultants BOP on collective management, which collecting societies haven't yet seen. I say nothing. Until we see it, it's impossible to know whether the evidence and input are accurate at this particular stage. It's important we have trust in the process and that we have a process which is reviewable, particularly when you have been the subject of that review.
Today is about asking 'What are the right questions?' I would urge for more setting of the right questions together in debate in stakeholder dialogue. The IPO have a good working group with collecting societies and their licensees together. I would like to see that strengthened with the members of collecting societies who have a really important role to play in explaining why they choose the model they choose. We do want to look at best practice. The EU process has been good and the Australian process of examining collective management has also been extremely good.
We have got an opportunity now, given there is self-regulation and regulation going in parallel, to set the metrics for whether that policy is working and whether it was set right. To do that we actually have to look at why it was put in place, the reasons it was put in place and good data underpinning that. I think that we have got an opportunity to be very constructive now to make sure that policy adopted now can be evaluated going forward and to ensure it's achieved its goals.
(AP) I'm Andy Prodger. I'm the chief executive of BECS, which is the British Collecting Society, which looks after audio-visual performers. We have just over 27,500 performers represented at BECS and their estates. We are somewhat of a strange creature as, within the United Kingdom, unlike France's representing music, audio-visual performers actually don't have any licensing rights within the UK and have very little in the way of copyright. It's interesting, I suppose, why I would be on this panel or have an interest.
In giving my background I'm not an academic and I'm not a lawyer. I was a trade union official for many years and was fortunate enough to represent actors from the late nineties until about five years ago when I was asked to become the chief executive of BECS. I suppose the basis on which I come from, and certainly BECS comes from, is the protection of performers and their rights.
It's interesting, recently looking at a piece of information from the Chartered Institute of Legal Executives (https://www.cilex.org.uk/). They describe employment law as the difference in relation to normal contract law because there is a requirement, because of the unequal nature of the relationship between an employer and an employee, that legislation is required therefore to protect the employee. I suppose to an extent that's where I start from in looking after performers because the most recent Skillset study (https://www.creativeskillset.org/research/) in relation to performers states that the average earning of a performer in the audio-visual industry is less than half the national average and that the average number of weeks a performer works in the industry is about 12 weeks a year.
This year BECS will have distributed just over £12m to audio-visual performers. The average payment per performer, and we paid out to about 17,000 members, was just over £500, with the top figure being £22,500 to an individual performer. Those monies predominantly came from the rights that exist for performers within Europe, private copy levies, communication to public levies, rental and lending levies, cable retransmission monies and some monies - about £2.5m - come through the collective bargaining that the union has managed to achieve within the UK. Just to finish that kind of picture, the picture that I have to deal with when looking at contracts of performers and whether or not I have a right to claim on their behalf, is that a standard clause in an audio-visual performer's contract throughout the world is that all rights that the performer holds now and in the future are invested in the producer in perpetuity in this universe and any universes subsequently discovered. That is a real and daily contract, which performers are asked to sign.
When we look at the question of copyright our view of copyright is perhaps a little wider than some insomuch as, of course, performers don't have copyright. They have neighbouring rights and performance rights, which exist as part of the copyright regime, most of which in this country are exclusive rights, although there are remuneration rights that exist elsewhere.
We've been asked the same questions on numerous occasions over the last few years... and many of our answers remain the same. It's almost like being asked the same question in order for you to be able to get the right answer eventually or the answer that is liked.
In looking at what is evidence I thought Richard's (RP) comment in relation to how do you weigh evidence was quite an interesting question. In trying to provide evidence there is a difficulty in the UK, and almost a scepticism, in relation to how that evidence will be weighed and what the likelihood of the outcome of that evidence will be, particularly, as we mentioned earlier, that in relation to this particular field, we've been asked the same questions on numerous occasions over the last few years with Gowers and Hargreaves, the Digital Economy Act ad infinitum, and many of our answers remain the same. It's almost like being asked the same question in order for you to be able to get the right answer eventually or the answer that is liked. Again, as Richard says, these studies came out of different political departments, not necessarily the one that you would expect them to come out of. As we know, the most recent one followed a now infamous lunch between the Prime Minister and executives at Google, following which I attended a number of roundtables in order to hopefully try and provide some evidence, most of which had Google sponsorship attached to them. You can imagine there was a certain amount of scepticism in relation to what might then come out of the sausage machine at the end. I think that's very unfortunate because the IPO's position is a very positive position. I know the people who work on that evidence absolutely try and do a very pure job on it but you can understand that it is quite difficult sometimes to accept that evidence that you try and provide will be taken in that way. That also leads to why there is so much lobbying because people feel that perhaps other voices have a loudhailer directly into government on certain occasions and therefore there is a requirement to try and balance that.
In relation to what is good evidence our view is very much based on evidence should be factual, clear and transparent but we have difficulties as performers in trying to provide that evidence because much of our evidence is not economic evidence. It is not necessarily even past evidence but evidence as to what are the consequences potentially moving forward. Therefore, I would always ask the question in relation to evidence, how evidence is weighed against impact assessment. Are they the same thing? Are they two things that run hand-in-hand?
I will give you a story - I won't call it evidence - in relation to performers and performers' rights in the UK in the past. Up until 2002 people working in the cinema films in this country did not receive any ongoing secondary-use payments for the use of their work. In television they did. Yesterday an actor who I met on a number of occasions - a lovely man, Clive Dunn - died. He lived in Portugal, had a very nice villa and from the day he worked on Dad's Army as Corporal Jones continued to earn secondary-use payments on all of those performances - contractual payments from the UK and statutory payments from Europe - and had a very nice standard of living, whilst people continued to enjoy the work that he was in, and we still do. In fact, I listened on the radio this morning - Radio 2 - where the DJ was saying that when X Factor is on one side he's watching Dad's Army on the other side.
Take Clive who died at 92 and compare him with an actor, Joan Sims, who died a number of years ago now in poverty, destitute and suffering severe depression, who appeared in ten Carry On films. It was nice of Michael to put up the slide earlier. She did not receive another single penny for the use of that work, despite the fact that in exactly the way as Dad's Army it continues to be enjoyed, and hopefully for generations to come. So did the work that she and others performers did in relation to the fifties and sixties as far as Carry On films are concerned.
What is the social evidence that we can provide from that example in relation to the potential detriment when something doesn't exist? If we look at the current set of copyright evidence, when statements are made that because, for example, there is no private copy levy in the UK as current, therefore introducing a copy regime without compensation would have no detriment. The fact that something doesn't necessarily exist in this country does not necessarily mean that both today and into the future there may not be a detriment as a result of not applying it. On that particular issue BECS does collect private copy levies for British performers whose performances are used abroad and part of the money that we sent out this year will form part of those levies. Is it possible that by introducing a situation without compensation under legislation, which defines that as being fair under the three-step test, that might have a consequence in the private copy regime across Europe and potentially on the monies that British performers can subsequently receive if, after all, our own legislation states that there is no detriment to the performers for the use of their work in private copy?
What is evidence in relation to social evidence is not always available to us looking backwards and sometimes it is difficult to try and identify what we believe is social evidence. For instance, social evidence of fear of what could be the case in circumstances moving forward.
Frances makes the point it is important to ask the right questions. That's vital and it's also vital that the people asking the questions understand what they're asking because I don't think that, both within the UK and within the EU, it has always been the case. Citing examples of that, I've spent a lot of time trying to debate extended collective licensing and the idea behind extended collective licensing in the UK and within Europe and also the question of orphan works and to try and give evidence as such. What I have found is that, in the main, the people who are trying to identify and debate the policy do not have a wide enough view of actually the impact of the rights regime that exists. For example, when orphan works was looked at in Europe specifically, the rights of authors were the rights that were solely identified and there was almost an unwritten assumption that the rights, as they affect authors, would therefore work for everybody else. The same is true in relation to extended collective licensing and I raised a point during one of these meetings where the debate with BIS (Department for Business, innovation and Skills) insofar as extended collective licences was concerned, was talking about a voluntary extended collective licence within the UK in order to open up archives, make available works to the public with fair compensation moving forward.
I asked the question that said if you have an author, that's fine. If you don't know who the author is, where that author is, that author potentially has the right to subsequently come back and withhold their right but there is an ability to move forward and make work available subject to fair compensation and that compensation being collected.
How do you deal with a situation where you've got 200 actors, for example, in a film? You might have, as with the Carry On film, the second spear carrier on the left as a performer who actually doesn't think that the £10 that they receive, which is about how much an actor will receive for their use on the BBC iPlayer, for example, is fair enough and I'm going to withhold my right. What are the chances of the individual production company, who is seeking to exploit and the archives being opened, painting out that individual from the relevant frames - it's not going to happen - or taking the frames out and changing the story? What might work for authors in those circumstances in relation to their rights cannot work in the same way for audio-visual performers per se - and it's not just that - where you will have 200 or 300.
There is actually a programme where that is absolutely true and I will give it as an example, and that is Edward and Mrs Simpson. For those of us who are old enough to remember the TV series Edward and Mrs Simpson it was a very good series with a very big cast. It was based on the life of the abdicating king and Mrs Simpson, which has never seen the light of day again, which is quite surprising given the historical nature of the programme. The reason it has never seen the light of day again is because one actor, amongst a cast of over 200, withheld their right, which they held at the time, to say 'I don't want that programme ever shown on what was identified as the secondary market. I only ever want it shown in relation to terrestrial television.' The cost of terrestrial repeats being so much more than secondary repeats on secondary markets means that programme has not been shown again. The country has missed out, in my view, on what is a fantastic drama giving an educational historical event. For argument's sake, let's say 200 actors - it's actually slightly more. One hundred and ninety-nine of them have missed on the potential payments that they would have received from the further exploitation of that film. The writer and music have missed out.
You cannot deal with rights in exactly the same way for the whole sector in relation to copyright, so when trying to identify the question there has to be recognition that the questions may be different. Just because we are the creative industries, what affects one part of the creative industries and one set of rights in relation to creatives, may not be the same elsewhere. One size does not fit all. I will finish on that and going back to the likes of Joan Sims and Clive Dunn, people do need protection. People do need to earn but at the same time we need to be flexible in how we look at the questions of evidence, both in relation to past and what might be future.
(JS) Jeremy Silver. I'm chairman of a company called Musicmetric, which is a data analytics business. We gather data on recording artists, social media activities, web mentions about them and the degree to which their music or recordings are file shared on bit torrent. We analyse all that data and publish it in the form of various reports and we make some of it openly available and we sell other parts of it to people. We do that for currently 700,000 different recording artists on a global basis. That's the nature of the business. We don't do that for any other reason other than the fact that we're excited by it and we think we can make a living out of it. We don't have any other motivation. That's one of the things that I do. The other thing that I do is I advise the Technology Strategy Board on what their invest policy and programme activity should be for the creative industries.
You can understand from those two things that I tend to have a technological bias to some extent and also a forward-looking view of things and the way in which value might be created and the way in which business might develop. When I look at the copyright world and I have a fairly lengthy history in music and so I've been embroiled in this debate for a long time - too long - one of the things that I'm repeatedly struck by is the fundamental belief that I have, which is that one of the principles of copyright is actually broken. That copyright is based on essentially three things. It's based on integrity of the work, a right to attribution and remuneration and it does that based on the ability to actually prevent people from making a copy of something in order to be able to achieve those things. It's that last one that's broken.
It seems to me that we are in an impossible position. We are in a world of incredible change and in a world which is technologically dominated by systems that are not going to be controlled by individual governments. Those technologies have broken that fundamental piece of copyright. It seems to me that it is in need of fundamental reform but I am not naive enough to believe that fundamental reform is in sight. In fact, I would say there is zero appetite in any government anywhere in this world to try and address those fundamental problems that exist within copyright legislation as it stands. The economic dependency that most of the major economies of the world have on the creative industries is perceived at least as being so significant as never to allow a government to think that it would ever be worthwhile messing with that at such a fundamental level.
Having said and having accepted that, despite what I may feel and believe about it, it is not going to be the case. What is it then that we end up talking about when we think about changing copyright legislation or making reform? The answer, of course, is that it ends up being all about exceptions. Most of the copyright reform that we actually encounter and most of the debate that goes on is not about whether or not copyright is a good thing or bad thing. That's not what's at debate. What's at debate is how do we deal with this incredibly messy situation where all kinds of individual constituencies with very specific and particular circumstances have very particular needs and they need to be addressed in the face of more change that we've seen in the last 50 years than we've seen in the previous 350 years?
What we're experiencing is an economy and a society which is charging down the road at a rate so fast that most of us find it dizzying to think about it, and at the same time we have a legislature whose ability to move is slightly faster than watching grass grow.
What we're experiencing is an economy and a society which is charging down the road at a rate so fast that most of us find it dizzying to think about it, and at the same time we have a legislature whose ability to move is slightly faster than watching grass grow. That is a real challenge for our economies, it's a real challenge for our cultures and it produces incredible tension and division amongst us. And so what we do in response to that is we cast around for solid ground. When the whole world is rocking around you, what you ask for is some evidence, evidence. Now the problem is evidence for what? We are educating our children for jobs that don't exist yet. I chair a company that could not have existed five years ago and in five years' time there will be companies that exist that could not exist today because of the rate of technological change. We're making policy for businesses that don't exist yet. We're making policy for models that no one's yet dreamed up and there's a real problem when we think about that and we talk about evidence.
Because what is evidence? Evidence is something that tells you that something happened and this is the reason why, but we're dealing with stuff that hasn't happened yet, so the evidence may not be the thing that helps us. It may be useful in some respects and it's useful in one very important respect, and that is when we think about economics in this context.
What we're dealing with is what is commonly referred to - someone will tell me who coined this phrase as I don't know - as Tarzan economics (talk by Jim Griffin at Supanova conference 2010: https://knowledge.wharton.upenn.edu/article.cfm?articleid=2452). The notion of Tarzan economics is the one that says 'My business model is hanging from this tree and I'm hanging onto it like mad but I've got to get through this jungle. In order to get through this jungle I'm going to have to move to another economic model, which apparently is one of those lianas over there that's hanging from one of those trees. I don't know which one it is so I'm going to hang onto the one I'm hanging onto for as long as possible until I can make sure that the one over there is actually not going to come away in my hand. If I reach out for the one that's over there and it comes away in my hand I'm going to fall to the jungle floor and get devoured by insects. If I don't hold onto that one and hold onto this one I'm not going to make any progress because guess what? This one's really fraying quite badly too.
Tarzan economics is where incumbent rights owning businesses live on a day-to-day basis and it's ugly. It is a horrible, uncomfortable and scary place to be and I have immense sympathy. I have personal experience of working in that environment. It is not easy at all. It's extremely challenging and the challenges that they feel are also felt by all the individual creators, content originators and rights producers who make up the constituency that sit behind those rights bodies and rights companies.
We have a really complex position and picture. The thing that we do in that situation is try and hold onto this stuff that we think is for real. Here I am being the chairman of a company that produces data that may or may not be of any use to people but the one thing that I can say about it is that it is solid but it isn't a predictor of the future, or at least not yet. It may be that over the next three or four years we have actually managed to gather so much data, we understand the patterns in it and can predict things so well that we can actually use data to be predictive, such that we could use data of that kind to inform future policy making.
The reality though is that we do impact analysis. Why do we do impact analysis? What is impact? Impact is what happens when something very fast moves something that isn't moving at all. That's what impact is and that's why we analyse it because that's what we've got. We've got something that's very static that's facing something that's coming at it at a great deal of speed and we want to know what's going to happen. If we make these changes what will happen if that thing hits? That's fair enough because there's an enormous body of people who are making a living in companies that are based on those incumbent models and they make a living and they make an economic contribution to our society that we can measure, that we value and that we depend on. That liana over there that Tarzan may be trying to reach, nobody knows how much economic contribution it will make. Nobody's got any idea whether that particular economic model or that one over there is going to be the one that in ten, 15 or 20 years' time we all depend upon. In fact, actually, the one thing that we've learnt over the last 20 years is that there isn't a silver bullet. There isn't a single economic model that we can point to for any creative industry type company, any rights owning company, any copyright based company that you can point to and say 'It's that one.' Actually what we've found is that there's a whole load of them and some of them seem to work slightly better than others.
Spotify (www.spotify.com) is a company that gets talked about a lot in this context. We put out some data recently that demonstrated that if you look at the impact of file sharing on the sales performance of a piece of music in relation to Spotify, that Spotify is actually growing digital uptake and that file sharing actually isn't really doing anything to change that at all. In other words, Spotify is making a more positive contribution to the economy than the file sharing is detrimental. What file sharing takes away, Spotify does far more to add. We can go into more detail on that.
The point about it is we see some new models that come forward and attract us but we don't have any certainty. My biggest concern in all of this is when we talk about these things - and I'll try and wrap up - such as impact and data. We have to recognise that we are not really talking about anything that we can predict. Whatever little examples we show are not going to predict the future and we have to actually make a judgement about that. Mostly what we're talking about is damage limitation. How do we, as a legislative economy and society, manage change with the minimal damage to the economy that we can afford? It's these micro-negotiations that actually our experience is all about.
If, perhaps, as policy makers we understand that micro-negotiation may actually have value and be important, that we should set ourselves up to do that, rather than thinking that we're setting ourselves up to make some massive cultural, social and economic reform that's going to change the lives of millions in any significant way as far as copyright's concerned. If we had that realisation and that recognition, which I think most of us probably do have when we sit down and negotiate these things, then that is probably a better outcome. The only question to ask is if you do realise that and you do take that view, is the process we've got the right one or should we be re-examining the process? Thanks.
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Questions & Answers
(NM) There is one thing I would like to say which is policy isn't necessarily undertaken by different bits of government as separately as some of the comments that we've heard make. In particular, the decisions that government makes, government makes collectively so however you get to the point of decision, however you're collecting the evidence, the view is taken by government collectively. I wouldn't personally like to say 'IPO does things this way, DCMS does things this way' to put a degree of ownership over government policy on the government departments whose officials may predominantly be the ones who are responsible for gathering evidence. It's not quite that stark.
(HB) I was struck with Andy's suggestion though - and maybe he can correct me if I've mischaracterised this - that if there's fragmentation it contributes to a lack of trust and that perversely increases the incentive to do more lobbying, which is obviously costly to industry. Comment. You needn't come back to me now. I'm sure this will come up in the afternoon. Were there any other comments either on Jeremy's points about technological uncertainty or anything for that matter?
(Lee Edwards) Lee Edwards from the University of Leeds. It's a very interesting panel. Thank you very much. There were a number of things that came up in it which I thought were fascinating. Morality is in there as well as this notion of uncertainty. One of the points that I'd like to make is that there is actually a lot of certainty around what technology is going to do in the sense that we know that users will be very creative about how they engage with it. So the uncertainty is actually not to do with the technological context, it's more to do with what effect what users do will have on us as industries, which brings up the issue of trust, not so much between lobbyists in the broadest sense and policymakers, but between the industry and its users.
If you look at another dimension of the communication that goes on between industries with an interest in copyright and users themselves, what industries are now doing through their communications campaigns is they're trying to co-opt users to get some kind of sense of moral obligation of the user to recognise their role in industry success, which is presented as this ultimate good that everybody will benefit from.
There's a different conversation going on between industry and the users who engage with their comments. Between industries and policymakers, if you look at the submissions, industries focus their moral arguments on this broader notion of economic good and the fact that these figures that are bandied around about the value of the creative industries produce for the economy, this is where the moral high ground lies as well. It's not purely an economic argument. It's very much a moral argument and the assumption is made that the insects at the bottom of the jungle will, without doubt, destroy us. These things I've found quite moral. You're talking quite economically in legalistic terms, in many ways in technological terms but there is a huge moral dimension to this debate that would anybody have comments on?
(HB) Would anyone like to respond to that? Jeremy.
(JS) I totally agree with that. There's something very reductive if you end up simply talking about these sorts of debates as purely economic arguments. The difficulty is that if the response to uncertainty is increasing reliance on hard fact then things like moral factors, cultural benefit or cultural value become even less easy to pin down and therefore lower in the weighting. That's a challenge for policymakers as well, that somehow we need to be looking at this more at a broader level and have an understanding about what we mean when we talk about cultural well-being and the health of a society. These become almost irrelevant in the horse-trading of the reality of policymaking. I don't know how you bring them back in. What Linda was talking about in terms of the openness of consultation and the idea of having a distributed solution so you get a much bigger set of voices coming through is very powerful and I think has to be the sort of direction we go in. There's still an awful lot of detail to work out about how to make that work and how to really digest what then comes back.
(HB) Frances.
(FL) I wanted to pick up on that question because sometimes we just have to be careful that we ask some very practical questions. I agree with you. It's the users and how they're using existing creative works and reusing and repositioning, which came up through our first presentation on parody. The question is, actually have the questions been asked? Is that use of music being licensed and are the royalties going through the YouTube system back to those who wrote and recorded the music? In many of those cases there is a change of lyrics but 95 per cent of the original work continues to be licensed through an existing commercial situation. Not every situation is new and we should be looking for practical solutions rather than complete policy head-scratching from fundamental principles all the time as well. That's why being given the opportunity to explain what the business of licensing copyright is helps us find some solutions to debate and think about. We have to be in the business of finding solutions to some of the copyright problems in a way that users and creators both win.
(HB) If no one else on the panel wants to pick up on that Tony's got maybe a last question unless someone's got a burning question.
Our approach to trust is to try and build common understanding of what evidence is and what data is useful, given that we don't have an awful lot of it and we have to make it up as we go along. And if we know that we're going to have to make it up as we go along then we need the help of everybody here to create the evidence base.
(TC) I am Tony Clayton, chief economist at the IPO and (having arrived late) I speak without the benefit of having heard anything else that people in government have said. I thought the point you picked up on - trust - and how to assess impact in the context of uncertainty is really important. Those are the problems that we're actually trying to tackle and our approach to trust is to try and build common understanding of what evidence is and what data is useful, given that we don't have an awful lot of it and we have to make it up as we go along. And if we know that we're going to have to make it up as we go along then we need the help of everybody here to create the evidence base. We can't do it as government. It's not there.
I spent the last two days at OECD talking about evidence base for the knowledge economy and this is Tarzan economics in spades. It is not just the creative industries which are subject to Tarzan economics, everything affected by the internet and ICT. The economic tools that we have to run the economy do not capture half of this stuff. It is not just a creative industries problem, it is not just a copyright problem, it is much bigger than that but you are at the cutting edge and we are at the cutting edge of trying to solve the problems.
(WP) I just had two points: one on Jeremy's excellent point about impact assessments in an unknown future. It just made me think about one of the many things as a former government economist I struggled with at the Treasury, which was the discount rate. A discount rate in its simplest context; if a bridge cost £600 to build and generates £200 for the next three years that's negative because cash now is worth more than cash in the future. Now, how do you apply this concept, which the Treasury and government impact assessments have to apply to this unknown future? It's bonkers.
One, post credit crunch how do you justify it when inflation's above rate of interest? You put money in the bank, it loses you money. Pre-credit crunch yes you could argue that. Now it doesn't, but we still get told we have to discount at 6.5 per cent. How do you discount the value of intellectual property over time? Are you honestly telling me that putting your money in the bank as opposed to buying the Beatles catalogue in 1960 would be a wise move? The Beatles catalogue, by the way, will be worth more tomorrow than it is today at an increasing rate than the rate of interest. This is a very simple standard tool of economics that is totally flawed in the unknown future of intellectual property.
Two, on Peter's point about the use of essays, I remember once looking at the value of music exports to the UK economy. The DCMS website had it at about £165m for 2007 (www.culture.gov.uk). I thought 'That's damn low because Frances' organisation [PRS for Music] brings that figure in alone, and this is just the nickels and dimes part of the industry brings in more than that.' PRS brings in way more than what the total value of music exports was in government accounts.
So can you change SIC (Standard Industry Classification) codes? Not in our lifetime. Can you do anything about that? Probably not, but to essays, how about this? A simple essay that just explains a three-piece band called Muse from Devon that sing in English, that for four times in the past eight years have been the highest earning members in SACEM in France. Their tours will employ 30 articulated lorries, lighting rig companies, sound engineers, production teams and hundreds of staff and all this activity is coming back to the UK economy. I would give up with the government stats and impact analyses. Just give me a nice essay that catches a point. Devon's got talent.
(HB) On the point of SIC codes incidentally, there is a ten-yearly process that Jeremy and I are getting our heads around at the moment. We're co-chairing a technical working group for the government and we're very much looking to the industry to feed in thoughts about how those industrial classifications can be changed. If people are interested in that, talk to Jeremy and me afterwards (Hasan.Bakhshi@nesta.org.uk).
(TH) Tom Hoehn, Imperial College. My question follows from what Tony said about the availability of data, or lack of it and the need for data. Martin and Kris presented an interesting study. They could do that because they had access to YouTube data and it had data about how many people accessed that particular YouTube and there was also publication of the charts so you had data. The question to the panel is should there be an obligation on industry bodies and collecting societies to make data available because they do have very good data?
(HB) Would anyone from the panel like to respond to that?
(FL) I'd happily respond. You probably got, from the gist of my presentations, that we welcome primary research and we would love to be approached more often about the research that has been conducted, than less. The opportunity to have collaborated on a parody research would have been useful because our input to government on the copyright consultation explained how monies flow through the system for parody. We've got the opportunity to connect and work together.
(HB) Was that the answer to the question that you asked?
(TH) In the past that has not been the case. It has been very difficult to get data. We can discuss in the afternoon session about the claim for confidentiality: 'This data is confidential. We can't release it.' I see that in other areas, not just in copyright.
Copyright policy is being made in an environment of extreme technological uncertainty for businesses, perhaps even industries that don't yet exist. What contribution can evidence make in this context?
(JS) You're right that there's still a good deal of hesitation about that. For example, there are some databases that contain information about who recorded or composed a particular musical work. Although there are some ways of interrogating an individual record at a time, that isn't actually publicly available, even though you might argue that the name of someone who composed a piece of music should be a matter of public record, but it isn't actually available. In our case, incidentally, we have an open API (application programme interface) and all of the data that we collect is available for non-commercial use on our API (www.musicmetric.com). They can do what they want with it and they do.
(FL) Just to supplement though, there's a cost of answering all the evidence and policy questions and there's a cost of doing research. That's the importance of asking the right questions, so that we spend money on the right research to get to the right answers.
(HB) Thank you. There are certainly a couple of big themes that I took from that. One, certainly from Peter, Frances and Andy's comments, was the issue of trust between policymakers and stakeholders in this area. Are policymakers being consistent in practising what they preach? I don't know if there's anyone from the DCMS in the room but certainly from IPO, if someone wants to respond to that it may be interesting to hear a response to a couple of the examples that Peter and Frances gave.
The second big thing is the one that Jeremy identified, which is that copyright policy is being made in an environment of extreme technological uncertainty for businesses, perhaps even industries that don't yet exist. What contribution can evidence make in this context? Are impact assessments of the types that policymakers do completely redundant or do they need to be adapted? A personal interest of mine is what does this environment of uncertainty mean for the processes of policy, which goes back to the comments that Linda was making in the previous session.
