Friday, November 12, 2010

What are the dangers and benefits of government intervention in copyright and licensing?

Should we be concerned by the news that BT and Talk Talk have been granted a full judicial review of the Digital Economy Act? This review is almost certainly going to further delay the implementation of an act which already feels slow in completing its move from concept to real world application.

No doubt BT and Talk Talk will interpret this latest development as a coup for two companies who are desperate to champion consumer rights and prevent unjustified invasions of privacy. For those on the rightsholders’ side of the debate however, they might also be described as companies hiding behind supposedly moral arguments as a smokescreen for the real aim of avoiding being held accountable in any way for the massive piracy which takes place across their networks.

Thankfully, the judges will concentrate only on the specific points which it has agreed to review – whether the DEA contravenes European laws on privacy and e-commerce, and whether the Labour government allowed the European Commission enough time to properly study the Bill before it was passed in the UK. We suspect that the European argument is not a strong one. Prior attempts on a European level to outlaw three-strikes legislation have been unsuccessful, whilst the successful passing of similar legislation in France might be interpreted as showing that Europe is keen to let its member countries handle its own business on copyright legislation, provided there are no grave threats to freedom or human rights.

More interesting perhaps – and perhaps of more long-term concern for rightsholders are other recent challenges to the whole copyright framework as we know it. The Department for Business, Innovation and Skills has just announced its own intellectual property review, to be led by academic and journalist Professor Ian Hargreaves. As well as considering the DEA, this sets out to examine ‘barriers to new internet-based business models, including the costs of obtaining permissions from existing rights-holders'.

In additional to Hargreaves’ review, the cross-party Culture, Media and Sport Committee is also investigating the Protection of Intellectual Property Rights Online. It also clearly has the DEA in its sights, and intends to assess whether it has captured the right balance between “supporting creative work online and the rights of subscribers and ISPs”. Some feel that this committee is intent on damaging the credibility of the Act and seeks to derail its implementation.

A third questioning of current copyright regime has now come from Europe, where Commissioner for Digital Agenda Neelie Kroes last week declared her dissatisfaction with the current copyright framework. She said that art was bring compromised by the interest of “intermediaries” and that rights holders avoid debate to “protect their vested interests”, leaving a system which is characterised by “corporatist self-interest”. Kroes has clearly and rightly identified the complex licensing framework – especially online – as a barrier to innovation. But does she also realise that many of those “intermediaries” are also the people who pay artists and make their artistic endeavours possible in the first place? We’re not disputing that the licensing picture is over complex– but do we trust the European Commission to sort it out for us? The last time Europe intervened on international licensing by collection societies, digital businesses were left with a new rights clearance system which was fundamentally more complex and difficult to navigate than the old one they sought to improve.

One thing which we certainly won’t be able to avoid is government interest and intervention in copyright. One the one hand this is something to be welcomed – the industry had failed to control issues of online piracy on its own – government intervention became necessary. And it’s right that government also places demands on the industry to improve its own practices in return. When we hear the kind of language used by Kroes however, it gets us worried. It smacks of over simplification and a lack of understanding that the ‘art’ and “intermediaries” are fundamentally entwined, and not necessarily in an unhealthy “corporatist” fashion.

As our copyright laws undergo such thorough examination, we expect we’re going to be hearing an increasing number of calls for the introduction of compulsory licensing. It’s a term which strikes fear into many in the music industry, despite the fact that we already have compulsory licensing in place with regard to music being played on the radio. Should digital services also get free reign to use music, provided they properly recompense rights holders? We can see the sense, in theory. Compulsory licensing is often favoured by those on the artistic side. However, we can’t help but feel that – contrary to what many believe - artists would actually be more likely to lose out than corporations under such a regime. An examination of the collection and payout of performance royalties exposes a system which is still too inefficient and stacked in favour of major rights holders. We’re not convinced the same wouldn’t be true if this regime was applied to online music use. Would monitoring, collection and distribution of royalties be fair and error-free just because the music use is in the digital domain? We doubt this very much.
We’re fully in favour of improving the fluidity and fairness of music licensing. Perhaps if governments could make one intervention, it should be to step in and arbitrate when major rights holders are accused of unreasonably holding back innovation by refusing to license new services. This would be the kind of practical and useful initiative that might bring real benefits. What we fear however is an attempt to wholly redefine licensing based on either utopian thinking, or a misunderstanding of who the “intermediaries” are and what their relationships are to artists and even the consumer. As always, the more nuanced and less extreme the solutions proposed, the more likely they are to provide some practical benefits.