Digital Economy Bill

Lord Clement-Jones Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Monday 6th February 2017 Lords Chamber

Moved by

[Lord Clement-Jones]

78: After Clause 29, insert the following new Clause—
“Transparency and fairness obligations
(1) Authors, artists and performers (“creators”) shall receive on a regular basis timely, adequate and sufficient information on the exploitation of their works and performances from those to whom they have licensed or transferred their rights as well as subsequent transferees or licensees, and the information shall include information on modes of exploitation, revenues generated and remuneration due. (2) The obligation in subsection (1) may be met by complying with a code of practice collectively bargained between relevant representative organisations of creators and the representative organisations of those who exploit their works, taking into account the characteristics of each sector for the exploitation of works.(3) Any such code of practice is to provide that each creator is to be entitled to a statement of income generated under such licence or transfer arrangements at regular intervals during each annual accounting period, and provide an explanation as to how the creator’s remuneration has been calculated referencing any contract terms relevant to the calculation.(4) In the event of failure of a transferee or licensee mentioned in subsection (1) to comply with a code of practice, or in the absence of such a code of practice, the creator shall be entitled to apply to the Intellectual Property Enterprise Court for a detailed account of revenues due to the creator generated from the modes of exploitation referred to in subsection (1), and in the event of failure, the Court may award damages in the amount of any shortfall in the total amount due to him.”

[Lord Clement-Jones (LD)]

My Lords, my noble friend Lord Foster of Bath has referred to the draft directive on copyrights on the digital single market. Many authors, writers and artists welcome the provisions to balance the playing field for creators announced in that draft directive and would like to see them incorporated in our domestic law through the Digital Economy Bill. Some of my concerns about the timing of the adoption of the directive mirror exactly those mentioned by my noble Friend, Lord Foster.

The directive proposes in article 14 one particularly important safeguard—namely, transparency: a right to regular, timely, adequate and sufficient information on the exploitation of their works and performances from those to whom they have licensed or transferred their rights, including details of modes of exploitation, revenues generated and remuneration due. This right will apply even if copyright has been assigned and will allow authors and performers to assess how their work has been used.

Some assignees and licensees are exemplary, but by no means all. Authors and performers under these provisions will have a right to detailed and full statements on the uses of and revenues from their work, unless such reporting is disproportionate. That in itself would be an enormous improvement on the present situation, whereby authors and artists often do not know how widely their work is used and have no way to check whether payments made to them are correct. This problem can become more acute in the digital age, when work can be disseminated in many ways and there is no physical stock which can be counted to ensure that accounting is correct.

As for music, subscription streaming is set to become the most significant revenue stream for the recorded music market in the near future. Streaming requires a fundamentally new licensing model from those who control the recording and song—lyrical and musical—copyrights, which the digital service providers wish to exploit. A complex model was developed, and is now utilised by most subscription services. The evolution of this licensing process for streaming music has resulted in a number of transparency issues for artists and songwriters which have not yet been fully addressed—not least, the presence of non-disclosure agreements between the digital service providers and the record labels, distributors, publishers and collective management organisations, which mean that artists and songwriters are not always allowed to know the revenue share and minimum guarantee arrangements that each digital service provider uses to calculate what the copyrights from which they benefit are due each month. There is also a lack of clarity over how labels and publishers apply contract terms that impact on how creator payments are calculated.

The amendment would work in a similar fashion to the proposals in the draft directive, ensure that creators can audit the royalties they receive from streaming and other services, and assess the relative merits of different services and business partners. Licensees and assignees already have systems in place for recording usage and revenues and reporting to creators. These systems are increasingly detailed in the digital age, and could easily be adapted to take account of any increased requirements. According to a medium-sized book publisher, reporting on 600 titles on the basis of spreadsheets takes 80 man hours per year, and the average time required for compiling and sending a report on a title is eight minutes. Simpler cases can be dealt with in two to three minutes, while the more difficult ones can take 10 to 15. The advantages far outweigh any cost and would help to make creative careers more attractive. Greater transparency would give a powerful message to consumers as they are generally more willing to pay for copyright-protected works if they know that fair remuneration would reach the original creators.

The directive itself is now subject to further consideration and review and may take 12 to 18 months, at best, to adopt, and perhaps even longer, as my noble friend indicated. As the Minister, or the Minister’s noble friend, reminded me recently, the Government have published a call for evidence on the copyright proposals. When will they take a definite view on the proposals, including these transparency provisions? The UK has an unparalleled opportunity to create a fairer playing field for creators by incorporating these provisions into the Digital Economy Bill, irrespective of whether we want to or can sign up to the directive. The question is whether it will. I beg to move.

[The Earl of Clancarty (CB)]

My Lords, I fully support the amendment of the noble Lord, Lord Clement-Jones. I do not have much to add to his thorough analysis of the issue other than to say that the right of artists, authors and performers to know what is being done with their work, and to obtain fair remuneration for the exploitation of it, is incontestable. This amendment would, in an effective manner, enshrine that right.

In one sense, information is money. This amendment will doubtless have hidden benefits in that anything that can be of further help to artists, particularly those who are less well off, to survive and thrive, and, perhaps, to become the high earners of the future, is a worthwhile long-term investment and can only be good for the individuals, the creative industries and the UK economy as a whole.

[Baroness Buscombe]

My Lords, I thank the noble Lord, Lord Clement-Jones, for raising this issue. Our creative industries ultimately depend on the efforts of authors, musicians and other creators, and I agree with the principle that they should be fairly remunerated when their works are used. We want to create an environment where the UK’s creative industries can continue to thrive and retain their world-leading edge. The creative content tax reliefs are one of the Government’s flagship policies, and the film tax relief alone supported over £1 billion of expenditure in the UK in 2015-16. The Government are also investing in skills to create a pipeline of future talent. Since 2013, we have made available up to £20 million match funding to the skills investment fund to help employers address priority skills needs in the screen sector. Over the last 18 months, this has supported more than 500 graduate placements.

The amendment would require those organisations exploiting copyright works via licences to provide the relevant creators with regular information on their use and the revenue they generate, and states that this obligation could be met by complying with a code of practice determined at sector level. It would also provide creators with recourse to court if these requirements are not adhered to. The principle of transparency is an important element of well-functioning markets. I am aware that some creators and their representatives find it difficult to access information on the use of their works owing, for example, to difficulties in negotiating suitable contractual terms. I am, however, happy to confirm to your Lordships’ House that the Government are already engaged in discussions to address this issue. The European Commission has made proposals in this area as part of its current draft directive on copyright, and the UK will actively engage in these debates while we remain a member of the European Union. As such, I hope the noble Lord, Lord Clement-Jones, will understand the Government’s wish to allow this process to develop before considering the case for domestic intervention.

I welcome the noble Lord’s recognition in his amendment of the important role that collectively agreed industry standards can play in this space. Creators and publishers alike have highlighted the role that such standards can play in improving transparency and fairness. Examples in the UK include the Publishers Association’s Code of Practice on Author Contracts, and the fair digital deals declaration operated by the Worldwide Independent Network. I believe that it is worth giving careful consideration to the part that these industry-led initiatives can play, and I hope the debate at EU level will be a chance to explore that. With this explanation, and the assurance that these issues are under active consideration, I hope the noble Lord will withdraw his amendment.

[Lord Clement-Jones]

My Lords, I thank the Minister for an extraordinarily well-crafted response—it seemed to throw bouquets in various directions, but I am not quite sure where the petals will fall at the end of the day. It was splendidly positive at the outset, and I felt a speech on industrial policy for the creative industries might be coming on. I thank the noble Earl, Lord Clancarty, for his very supportive contribution.

The Minister talked about transparency being an important element of a well-functioning market and went on to talk about codes of practice, the Government’s active engagement in discussions of elements of the EU draft directive, and so on, but she never actually agreed that the principle of transparency should be incorporated into UK law. Clearly, if the EU directive is passed within the two-year period after notice of Brexit is given, it may well be incorporated into UK law. However, the Minister did not say, “Yes, and moreover, given the call for evidence, we have heard the evidence on transparency and we fully support that element of the directive”. It was rather a case of saying, “Let’s keep talking and actively engaging”, and so on and so forth. I suspend disbelief slightly given that the Minister supported the principle but I am not sure she went so far as to support its incorporation into law. That is a rather different matter. We may well return to this issue on Report. In the meantime, I thank the Minister and beg leave to withdraw the amendment.

Amendment 78 withdrawn.