Copyright and Performances (Application to Other Countries) (Amendment) (No. 2) Order 2024
(1 week ago)
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Lord Clement-Jones
That this House regrets that the Copyright and Performances (Application to Other Countries) (Amendment) (No. 2) Order 2024, laid before the House on 13 November 2024 (SI 2024/1124), did not involve consultation on Option 0A, which will result in inequitable treatment of performers on sound recordings based on their nationality.
Lord Clement-Jones (LD)
My Lords, I will start by saying that I am delighted that the Minister is treating this as one of her first engagements back in the House; how flattering to have her here at this time of day for a regret Motion. I also want to put on record my thanks to the Minister, Feryal Clark, who has taken the trouble to engage. Time will tell whether that engagement bears fruit, as we will see.
We on these Benches agree with Equity—the actors’ union—and the Musicians’ Union that this statutory instrument should be withdrawn due to several significant concerns regarding its fairness, its consultation process and its potential impact on performers, particularly those from the United States. The key arguments against the statutory instrument revolve around the implementation of option 0A, which maintains the status quo for producers of sound recordings while extending public performance rights to foreign performers only if their producer is a UK national or based in a country that is a signatory to the Rome convention, thereby excluding performers from countries that are not signatories, such as the United States. This option was not explicitly consulted on, and it creates an inequitable system of remuneration for performers.
The consultation presented four options, numbered 0 to 3, but option 0A emerged after the consultation. The Government have acknowledged that option 0A is a new option. However, the Government’s claim that they carefully considered all views is wrong, as a key policy option was developed and implemented without input from key stakeholders. Impacted organisations were not given an opportunity to formally submit their views on option 0A. As such, this lack of consultation raises concerns about the transparency and fairness of the decision-making process, and in fact undermines it.
As I have mentioned, option 0A creates a system where some foreign performers receive public performance rights based on national treatment, while others, specifically US performers, are denied those rights, based on the principle of material reciprocity. This means that US performers will not receive equitable remuneration for their work in the UK, even though their recordings are being used. US producers will continue to enjoy protection and equitable remuneration in the UK, while US performers on the same recordings are denied these rights. This disparity is difficult to justify and is clearly discriminatory.
It will also extend public performance rights to some additional foreign performers who will qualify through their producer, regardless of whether their nation offers material reciprocity to UK performers. The situation is further complicated by the fact that performers from countries such as Australia and New Zealand, which also do not offer material reciprocity to UK performers, will still receive public performance rights in the UK. This inconsistency makes the policy arbitrary and unjust. The Government’s approach effectively singles out US performers for less favourable treatment.
The Government further justifies their position by arguing that expanding performers’ rights would negatively impact the UK music sector. The Government’s decision to not expand performers’ eligibility is partly based on the argument that UK affiliates of overseas record labels retain a significant proportion of the revenues attributable to foreign rights holders. Specifically, the British Phonographic Industry, BPI, claimed that UK labels retain 30% of the revenues collected in the UK on behalf of foreign affiliates, and that any reduction in revenues for US record labels would mean less money for the UK music sector.
Little evidence for this claim has been made and the Musicians’ Union disputes it, arguing that this paints an “exaggerated, bleak picture”, that the UK and US operations remain financially separate in practice, and that it cannot find any workings in the BPI’s redacted submission to the consultation. This suggests that the Government’s financial justification is based on flawed information, not solid evidence. Smaller independent record companies have, by contrast, expressed that the current situation is unfair and supported option 1, which would expand performers’ eligibility for remuneration.
The Government also claim that denying US performers public performance rights is intended to encourage the US to adopt material reciprocity. However, the revised economic impact assessment acknowledges that this is unlikely to influence US policy. In the view of Equity, a more effective strategy would be to offer US performers rights for a limited term, such as 10 years, and then use that as leverage to negotiate material reciprocity with the US Government. This approach would provide US performers with fair compensation while creating an incentive for the US to reciprocate. The current strategy effectively withholds remuneration from performers as a negotiating tactic, while a more effective strategy will still guarantee that performers get paid for their work.
The Government’s policy is intended to ensure that UK law meets its international obligations under the Rome convention and the WIPO Performances and Phonograms Treaty. However, the implementation of option 0A undermines the spirit of these treaties by creating a system of unequal treatment for performers based on their nationality. Equity believes that all foreign performers in countries that qualify for public protection rights should benefit from the same level of protection. It considers the current approach to be unethical, and we agree. As a matter of principle, performers should be remunerated for their work. This option leaves some performers benefiting from national treatment, ignoring lack of material reciprocity, while US performers are denied remuneration on the basis of material reciprocity.
The Government have stated that the current statutory instrument corresponds closely to option 0, which was the status quo option. However, the Intellectual Property Office itself stated in its revised impact assessment that
“Parliament has passed the CPTPP Act. The CPTPP Act contains measures that will, when it comes into force (expected in December 2024), expand eligibility for performers’ rights generally, in a way that approximates the effects of Option 1. Doing nothing therefore now means allowing the law to change in a way similar to that set out in Option 1, rather than maintaining the effect of existing law”.
Therefore, the Government’s claim that they are maintaining the status quo is actually incorrect, because the status quo is already changing due to the CPTPP Act, which has now come into effect. The Government are claiming to maintain the status quo, but that status quo is already changing due to that legislation.
Equity, SAG-AFTRA, the Musicians’ Union and PPL have all raised concerns regarding the Government’s proposed course of action. This statutory instrument should be withdrawn due to a flawed consultation, the unfair treatment of US performers, the disputed financial claims, its ineffective approach to achieving material reciprocity, the ethical concerns and the contradictions with existing legislation. The Government should reconsider their approach, consult on both option 0A and option 1 and implement a system that provides equitable remuneration for all performers. I beg to move.
The Earl of Clancarty (CB)
My Lords, I support the noble Lord, Lord Clement-Jones, on this regret Motion. I will be brief, not least because the noble Lord has covered the ground so well. I too thank the Minister, Feryal Clark at DSIT, for our meeting with her on Monday on this issue. I also thank Equity for its briefing on this and for alerting us to this concern. I very much welcome the Minister back to her place.
Ultimately, this is about fairness and consistency—or, perhaps more to the point, unfairness and inconsistency —and about mutual benefits, which this Government should strive toward in every area of our dealings with others, not least in the case of the arts and creative industries. I have become a great believer in the word “mutual”. I prefer it now over “reciprocal”, which the public grasp less, I think—they find it too abstract. But we all understand, or have a better chance of understanding, what “mutual benefits” means. For example—forgive me if I digress slightly—a new poll finds that over 80% of the public are in favour of mutual free movement in Europe, because that becomes something that is immediately understandable, while of course some of us have been banging the drum for reciprocity for years and not getting very far. The language we use to describe these things is hugely important.
Baroness Featherstone (LD)
My Lords, I rise in support of the regret Motion of the noble Lord, Lord Clement-Jones. One of the great joys of being British is that we hold high standards and pride ourselves on fair play. We have always traditionally upheld strong intellectual property protections and advocated for fair treatment of performers.
The order should focus on fair compensation for performers and the principle of reciprocity in international copyright law. By removing or limiting payments to certain foreign performers, we risk looking like we are undermining global standards of fair pay for artists and damaging our reputation as a champion of creators’ rights, because the order limits the rights of certain foreign performers to receive equitable remuneration for the public performance and broadcasting of their work in the United Kingdom. This is particularly unfair to artists from countries that are not party, as people have said, to the Rome convention or the WIPO Performances and Phonograms Treaty—WPPT—as they will not have a legal right to remuneration and will now receive little or no payment for their work being commercially exploited in the United Kingdom, whereas other performers will.
I am sure—and I very much hope and expect—that the Government have read Equity’s cogent arguments on this issue, and I hope and trust that they will listen and act on the issues raised. As Equity pointed out, it is also unfair because this option was not consulted on properly, despite the Government’s protestation, and the Government should withdraw the SI and consult again properly on the new option. This order could even provoke retaliatory measures from affected countries. To be frank, given that the United States is now led by a heavyweight—that is the politest term I could muster—who shoots from the hip, this is even more dangerous and could lead to UK performers facing similar restrictions from abroad, and to British performers losing their right to equitable remuneration in key international markets, reducing their global earnings.
This order creates a two-tier system whereby some foreign performers continue receiving payments while others do not, even if their work is commercially successful in the United Kingdom. It undermines the principle that all artists should be fairly compensated for their work, regardless of nationality. As an addendum, if fewer performers are entitled to equitable remuneration, UK collecting societies may collect less overall, which might impact their ability to distribute royalties efficiently and affect the broader musical and entertainment industries.
In conclusion, this order undermines fair pay for performers and risks harming UK artists abroad, and it could even lead to unnecessary international disputes. So, instead of limiting performers’ rights, the UK should lead by example and ensure that all performers are treated equitably, regardless of their nationality.
Lord Markham (Con)
I too welcome the Minister back. As the House will know, there is a long tradition in the creative industries that, before someone has a performance, you wish them the best by saying, “Break a leg”. I feel that that might not be opportune in this case, but I am very pleased to have the Minister back. I will keep my contribution brief, because the points have been well made.
As a former director of ITV and director of a TV production company—none other than that of the noble Lord, Lord Alli, funnily enough—I understand the importance of the creative industry. Of course, it is a massive industry in the UK, contributing some $124 billion a year. I know from personal experience that fundamental to a successful creative industry is a copyright regime that has the confidence of the people, that is seen as fair, that is trusted and that is transparent. I see this almost like four legs of a chair, and the problem is that, if you wobble any of those legs, you undermine all of it.
This is a complex area—I think we all appreciate that—and I appreciate that option 0A came out of an earlier consultation, with people and the civil servants being creative in order to come up with a solution. But my concern is that, by not consulting on option 0A in such a complex area, we can get into unintended consequences. It is only when you really talk to the people at the sharp end that you understand what the true industry impact might be. As the noble Baroness, Lady Featherstone, rightly said, with this having a detrimental impact particularly on US rights owners, we are all aware of the unintended consequences it could have in what is, given all the sanctions, a very volatile situation. So we need to tread very carefully and, given that, it seems eminently sensible for us to consult the industry.
I appreciate that at this stage, regret Motions are normally seen as a bit of a slap on the wrist—I say that as a Minister myself not that long ago—but I ask the Minister to go back to the department and seriously explore whether we can do anything to take on board the view of the experts in this space. Their input is vital, and I hope that we can find a way through this.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, I thank all noble Lords for their warm welcome back. I am sorry that I missed some important debates while I was away, but I assure noble Lords that I watched them vigorously on television—it was absolutely riveting. I am pleased to be back and to hear that noble Lords had a constructive meeting with my colleague Minister Clark on these issues. I too welcome this debate and the opportunity it provides to reassure noble Lords, I hope, about the process that led to the order and the policy it implements. As the noble Lord, Lord Markham, rightly said, this is a complex area, but one in which we have sought to find a fair solution. That has always been the overriding aim of this consultation and of others in the past.
Noble Lords have referred to the background of the consultation process that preceded this legislation, but it is important that I set it out clearly on record. UK copyright law gives performers such as musicians and copyright owners such as record labels the rights to be paid equitable remuneration when their sound recordings are broadcast or played in public. These public performance rights are an important source of revenue for the UK recorded music sector. According to data from the BPI, the UK trade body for record labels, UK recorded music revenue from these sources was £154.5 million in 2023, which equates to more than 10% of total revenues for the recorded music sector.
However, as noble Lords have said, not every country provides equivalent protections for this copyright law. In some countries, performers and record labels—including British performers and British record labels—are not paid when their music is broadcast on the radio or played in public. Whether UK law should provide public performance rights to performers and producers from such countries was the focus of the public consultation run by the Intellectual Property Office in early 2024. A range of evidence and views were submitted in response to that consultation by creators, collective licensing societies, record labels, broadcasters and academics. I stress that the Government carefully considered the views and evidence submitted to the consultation before deciding on a way forward, and that we received a range of views.
The approach implemented by this order largely preserves the effect of the former law—option 0 in the consultation—except for some limited changes. This means that more foreign performers qualify for the right than previously—a change that was made to allow the UK to fulfil its international commitments. The noble Lord, Lord Clement-Jones, asked whether we were in effect maintaining the status quo. This SI largely preserves the effect of the law as it formerly applied at the point that the SI took effect. The SI took effect simultaneously with the changes in the CPTPP Act. The consultation also explicitly noted that the effects of that Act may be modified by this SI.
To come back to the main point, under the law as amended by this order, some foreign performers enjoy these public performance rights only where and to the extent that British performers enjoy equivalent protection under the other country’s law. The Government adopted this approach in light of the evidence submitted at consultation, which indicated that the other options under consideration would have meant substantial costs and disruption to the UK’s creative industries. I am not sure that noble Lords gave enough credence to that argument. For example, granting rights to all foreign performers, regardless of whether the other country provides reciprocal protection to British performers, would mean additional costs to the UK recorded music sector—estimated at £5.9 million per year—with no benefit to UK creators, copyright owners or the public. This could undermine continued investment in new British artists and their music.
I have listened to what people say and I appreciate that some consider it unfair to provide different treatment to performers based on their nationality. However, as I have said, this is a reflection of the treatment accorded to British performers by other countries. If they were to change their law and provide equivalent protection to British performers, then performers from these countries would automatically enjoy these rights under UK law. The Government would be pleased to see all other countries adopt similarly high standards of protection to the UK in this area, to the mutual benefit of performers from the UK and other countries. We continue to pursue that objective where and when we can. I assure noble Lords that these measures were not targeted at the US or any other country in particular. The SI implements the general principles that deliver the best outcome for the UK’s creative industries. I hope we can agree that that ought to be a priority.
I thank all noble Lords who have taken part in this debate. I hope they are in some ways reassured about the Government’s process in making this order, which we believe delivers the best outcome for the UK’s creative industries. I hope noble Lords will reflect on it and that the noble Lord, Lord Clement-Jones, will be content to withdraw his Motion.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for her response. I do not doubt her motives at all; it is just the outcome that we are not happy with. I thank those who have spoken in favour of this regret Motion. The noble Earl, Lord Clancarty, talked about US session musicians, who are an important aspect of this. Clearly, they are being discriminated against if they are working with musicians from countries that are reciprocating and paying our musicians. This seems to be unfairly singling out those session musicians in those circumstances.
My noble friend Lady Featherstone talked about fair play and the risk of US retaliation. The Government may have the right motives, but I do not think they have quite come to terms with what a US Administration might do in this regard.
The noble Lord, Lord Markham, rightly said that any system needs to have the confidence of those who are supposed to benefit from it. I thought that his injunction to tread carefully in these circumstances was very important.
I do not propose to put this Motion to a vote; the SI has already gone through on the negative procedure. However, we are not wholly reassured. I very much hope that the Government will initiative a dialogue with Equity. When I raised with Minister Clark whether they had actually met Equity to discuss this SI, it was interesting that they had not. There are other issues that Equity would, I am sure, very much want to talk about, such as synthesisation of performances, in relation to AI—that is probably another area. It seemed rather extraordinary that a Labour Government had not properly engaged with Equity in the last six months. I very much hope that the Minister will be able to take that back to the department and reinforce the desire to meet with Equity and the Musicians’ Union.
The Government have been unduly influenced by the figures from the BPI. I do not recognise the figures that the Minister maintained about the income which would be forgone if another option had been taken. As I said when I introduced the Motion, those figures are very much disputed by the MU. We have not seen any real workings that prove that that would be the loss of income, but we can argue the toss on that.
I very much hope that the Government will at least take back from this regret Motion that in producing an option at the last minute, however creative it may be—I would not deny that creativity is a useful thing to have in the department—you can be slightly overly creative if you are not consulting on a particular option. I thought it was a neat piece of speechwriting but not necessarily to be desired. It is the kind of thing that would go to judicial review if a commercial organisation was involved in this SI. If this was BT, or another major telecom company, disputing an SI in which an option had not been consulted on, they would take this kind of thing to court. As it happens, this is about artists and unions, so they are not going to do that; they are going to go through the political process. I welcome that, but it nevertheless shows the fragility of the decision that has been taken in this case. I beg leave to withdraw the Motion.