We’ve got some interesting developments in the copyright policy world from across the pond to report on! Three UK music industry organizations (UK Music, The Musicians’ Union and the British Academy of Songwriters, Composers and Authors) have banded together to seek out a judicial review of some new copyright legislation enacted by the UK government that went into force on October 1. Specifically, their concerns are with the introduction of a private copying exception – something they believe will cost rights holders financially.
What is the copyright update that’s causing the uproar?
Prior to October 1, it was illegal for consumers to download copies of their legally purchased music onto a laptop, smartphone or MP3 player for their own personal use – what is typically referred to as format shifting [The Guardian]. The situation can probably best be described as ‘technically illegal’ since format-shifting is a consumer behaviour that’s particularly ubiquitous, and rights holders were not inclined to proceed with legal action to prevent a fairly commonplace behaviour.
The new legislation, enacted on October 1, effectively makes format-shifting legal – in circumstances where the content in question was legally purchased. This measure was part of several initiatives introduced to “make the UK’s copyright system better suited to the digital age” [UK Intellectual Property Office]. These reforms, which include the introduction of several exceptions for various uses of copyrighted material, were heavily influenced by the findings of the 2011 Hargreaves Report. This report was commissioned by the UK government to evaluate the current intellectual property framework, and determine whether the system needed modernization and what appropriate reforms could be implemented to encourage innovation and growth in the economy [Hargreaves Report].
For the content industries, one of the key findings of the Hargreaves Report was that the UK was under-utilizing the EU-sanctioned exception system – which allows member states to enact exceptions for mainly non-commercial uses of copyrighted materials in specific sectors (like news reporting, criticism, research, archiving, etc.). The Hargreaves Report specifically pointed out that the EU currently allows member states to create private copying exceptions, provided that fair compensation is paid to rights holders [Hargreaves Report].
So, the UK’s newest copyright reform initiative included the introduction of a private copying right exemption.
So, what’s the problem?
The issue of fair compensation to rights holders is the crux of the problem for the music industry, as voiced by UK Music, The Musicians’ Union and the British Academy of Songwriters, Composers and Authors. They do not oppose the existence of a private copying exception in and of itself, stating that the vast majority of rights holders agree with formally allowing consumers to make copies of their legally purchased music for personal use [UK Music]. That fact that the law includes no mechanism to ensure fair compensation for rights holder is the problem.
Their legal action, which involves asking the High Court to examine the Government’s decision to ensure that it was made in a lawful way, is centred around the following argument:
“This is a bad piece of legislation as it incorrectly implements the law by failing to include fair compensation for musicians, composers and rights holders. The private copying exception will damage the musician and composer community. It contravenes Article 5 (2) (b) of the Copyright Directive which includes a requirement that where a member state provides for such a copyright exception – as the UK now has – it must also provide fair compensation for rights holders. It is the compensatory element of a private copying exception that lies at the heart of EU law and underpins common respect for the songwriters, composers and musicians whose work is copied.” [UK Music]
By not following the letter of the law (as defined by the EU’s Copyright Directive) in enacting this exception, Music UK estimates that this private copying exception will cost the industry approximately £58m a year in lost revenues [Financial Times].
It’s worth mentioning that in the rest of the EU member states who have private copying exceptions, respective local governments have instituted compensation schemes for rights holders, normally in the form of levies on the sale of items like blank CDs and cassettes, and more recently, MP3 players and portable devices [Financial Times].
The Government Perspective
The counter-argument from the UK government is that compensation isn’t required because it won’t be causing any financial harm for rights holders. The likely justification for that argument is found in the 2011 Hargreaves Report, which presented the case that this type of exception is very narrow in scope and will have a minimal impact on sales, thus compensation is unnecessary. Furthermore, the UK government has argued publicly that compensation is already factored in at the point of sale – though it’s own research has contradicted this argument, with an analysis commissioned by UK Intellectual Property Office in 2013 stating that it “did not find any evidence in support of a widely-held view that stores are including in their price the permission to copy.” [UK Intellectual Property Office]
It will be interesting to see how this plays out. The desired outcome for the UK music industry, in this case, would be that the law would need to be re-made including the appropriate ‘fair compensation’, as outlined within the EU’s Copyright Director. We’ll keep you informed of the situation as it progresses!