Artistic Remuneration for Online Content

James Gray Excerpts

Wednesday 6th July 2016 Westminster Hall

[Mr James Gray (in the Chair)]

Before commencing our first debate, may I remind hon. Members that reference to people in the Public Gallery, no matter how distinguished they may be, is out of order and should not be done during the debate?

[Nigel Adams (Selby and Ainsty) (Con)]

I beg to move,

That this House has considered artistic remuneration for online content.

It is a pleasure to serve under your chairmanship this morning, Mr Gray. I thank my hon. Friends the Members for Somerton and Frome (David Warburton) and for Folkestone and Hythe (Damian Collins) for helping me to secure this important debate.

Everyone is aware that the creative industries are one of this country’s greatest assets. The Government’s own analysis shows that the gross value added of the creative industries in 2014 was in excess of £84 billion, which accounts for around 5.2% of the UK economy. Essentially, they have been a source of growth in recent years, increasing by 6% since 1997, compared with 4.6% for the UK economy as a whole. However, we would be doing the industry a disservice to consider its value in purely economic terms, because its impact is far wider.

Our creative industries are our voice to the world. Very little, if anything, contributes more to the UK brand around the world than our artists, writers and directors.

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[Pete Wishart]

There is very little on which I would disagree with the hon. Lady. We must restructure that relationship, but I caution her and others. The music industry in this country has a successful business model, and we are world leaders. We produce the artists and ensure that they are supported. I have nothing against record labels and the music industry investing in that talent and bringing it on in the usual paternalistic way. That is what happened when I was a recording artist, and the model is still successful. Rights holders should be properly rewarded for their investment in artists.

That brings me to my next point, which is probably the most substantial point in all this. Several Members today have raised the issue of safe harbour, which we have to tackle; of all the things that the Minister takes away from today’s debate, I hope that it will be that one. Safe harbour is a useful innovation, because it has encouraged a number of people who were tempted by piracy and illegal sites to come across to a legal framework where they are able to access some of the content.

The music industry’s suggestion of distinguishing between active and passive safe harbours is a useful one. We all know what a passive safe harbour looks like: that is where people find a store of music, access it and do all the usual things. But when it comes to the manipulation of that music and to designing things in a particular way to try to create some sort of income for it, we get into the realm of an active safe harbour. At that point, royalties should be paid, to ensure that something comes back to rights holders and artists. I very much support copyright being extended to what could be considered as active safe harbours.

I am also attracted to the idea that streaming sites should be treated pretty much as a radio player—we heard about that from the hon. Members for Bristol East (Kerry McCarthy) and for Bristol West (Thangam Debbonaire), and it is a feature that we should be looking at. When I access Spotify, for example, I mainly use the radio services. I still do not see a distinction between listening to the radio in the morning and listening to the radio service on Spotify—I think they should be treated the same.

I am conscious of time and am obviously very keen to hear from the Minister, but I have a couple of things to say about where we find ourselves after the decision we made a couple of weeks ago about the European Union. The fact that we will not have access to the European Union is an absolute and unmitigated disaster for the musicians of this country. We will now be excluded from most of the debates about the digital single market, which is one of the biggest innovations in the placing of content online that we have ever seen in any part of the world. We have now taken ourselves out of that conversation about the structuring of the digital single market. That is a disaster for musicians in this country. I am not going to mince my words about this.

Another issue related to remuneration for artists that we will have to consider carefully is free movement of people in the music sector. One of the great innovations in the music industry in London is that we can draw in so many creative people who have so much to offer our industry—

[Mr James Gray (in the Chair)]

Order. I am reluctant to interrupt the hon. Gentleman, especially using my English rather than Scottish tones, but he really must restrict his remarks to the topic under discussion today, which is remuneration for musicians for online services, rather than the wider issue of the effects of Brexit on the music industry.

[Pete Wishart]

I am grateful for your comments, Mr Gray. I will restrain myself, but we have to acknowledge that at the heart of this there are significant issues and challenges for the remuneration of musicians because of the decision taken. The hon. Member for Bristol East mentioned the right to equitable remuneration. A huge conversation is going on in the European Union to ensure that that is progressed and, again, we are now denied access to that conversation. There are massive issues when it comes to online remuneration of artists. The massive challenge incumbent on the Minister is to see how we design things so that our musicians do not lose out in the online environment, given that we are now in a very difficult set of circumstances for the way our musicians operate.

I finish by reiterating that this issue is really important. Our job—our main function—is to ensure that we set the best parameters in an environment for our musicians to develop and thrive. We have a fantastic product and resource in this country: some of the finest musicians in the world. We have enriched the souls of populations throughout the world with the wonderful works our artists produce and we have to ensure that we do nothing to further disrupt their ability to make that wonderful music. I appeal to the Minister to look at where we are, to ensure we make the right decisions on behalf of our artists and to consider the strong points made by hon. Members today.

[Mr James Gray (in the Chair)]

I call Kelvin Hopkins.

[Mr Vaizey]

Hear, hear.

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[Mr Vaizey]

It is invidious of me to single out individual contributions, but I particularly welcome the contribution of the hon. Member for Bristol West. I did not get the chance to have debates with her while she was briefly the Opposition culture spokesman, but I thank her for her kind remarks about me in one of her speeches when she held that role. In that speech she showed what a huge contribution she would have made to debates on culture as a Front-Bench spokesman, and definitely will make as a Member of this House.

I do not want to be snarky, but I noticed that the spokesman for the official Opposition spoke for around four minutes, whereas the Scottish National party spokesman spoke for 15 minutes. Perhaps we are seeing the shifting sands in the SNP campaign to become the official Opposition, although sometimes brevity is the soul of wit. Before I am ruled out of order, Mr Gray—

[Mr James Gray (in the Chair)]

You are close.

[Mr Vaizey]

Let me get on to the subject in hand.

This is an important debate about a very successful industry. It is important for us to recall just how successful the British music industry is. For example, in 2015, one in six albums purchased around the globe were by British artists. We are the second-largest source of repertoire in the US and one of the biggest music markets in the world, alongside the US, Japan and Germany. Last year, Adele once again released the world’s best-selling album. Interestingly, that was the eighth time in 11 years that the global bestseller has come from the UK. Indeed, five of the world’s top 10 best-selling albums in 2015 were by British artists.

As hon. Members noted during the debate—particularly my hon. Friend the Member for Somerton and Frome, who took us right back to the beginning of music streaming—the digital technology revolution in consumer behaviour, which is disrupting almost everything at varying speeds, has of course disrupted the traditional model for distributing music. In the decade or so that I have covered this brief, both as an Opposition spokesman and as a Minister, I have seen that change take place. Indeed, when I first became a Minister, we inherited the last Labour Government’s proposals to tackle piracy, which involved sending notices to individuals who were breaching copyright. At the time, I was sceptical about how effective that would be.

I do not want to prejudge matters, but I think the strategy we adopted has, to a certain extent, been successful. There has to be a combination of carrot and stick. We were successful—this is actually thanks to the music industry—in using existing fraud legislation in the courts to ensure that the most egregious pirate sites were blocked. Interestingly, because that was existing legislation, it did not provoke the kind of controversy that surrounds almost any attempt to “regulate the internet”. When such a measure was proposed in the United States, it resulted in a lively campaign, with people claiming that it would mean censoring the internet. Why anyone would accuse people who want to take down illegal content of censoring the internet is beyond me, but people somehow feel it is a legitimate point to make.

Alongside using legislation to block websites, the carrot, as it were, has been the rise of legal music services. I was particularly pleased to see the report issued yesterday by the Intellectual Property Office, which showed that the establishment of well-known music streaming services such as Spotify has helped to shift more people towards using legal sites. It is clear from reading the IPO report that we are not nearly out of the woods yet in terms of illegal downloading and listening, with some 7 million people in the UK apparently still accessing illegal content, but it is good that music streaming services have become more mainstream, even to the extent that I now use such a service. Some progress has been made.

Before Baroness Lucy Neville-Rolfe took over the intellectual property portfolio with such enthusiasm, I regularly held round-tables with Google and many others in the industry to discuss how they would help reduce access to illegal sites, with particular attention paid to searches that threw up such sites. I am pleased to say that the Minister in the other House has continued those round-tables. I have a huge degree of sympathy with those who say that Google could and should do more. Indeed, when it came to images of child sexual abuse, we were able to work with Google to ensure that something like 130,000 different search terms would result in a blank search return, so it is clear that Google can do work on its algorithm.

The Google argument is twofold. First, an image of child sexual abuse is clearly illegal and criminal, so Google feels it can act without the intervention of the courts. Secondly, Google likes to say that for material that infringes copyright there can sometimes be a grey area. Nevertheless, there is no doubt that it can do more. It has claimed that it has changed its algorithm, but any of us who go on Google every so often and type in the name of an artist to see what emerges will still see a list of illegal content websites coming up in the results. Google does work with some of the trade associations to ensure that links to illegal sites are taken down. As the hon. Member for Bristol West pointed out, the debate is shifting and Google is starting to take a more proactive attitude on such issues, in partnership with the music industry and artists.

We have also worked with the advertising industry. People put up websites with illegal content not as an act of altruism—if one can call it that when they are stealing somebody else’s property and giving it away—but to make money. We should not forget that. One way the people who run such sites make money is by having advertising on their websites, so we have worked closely with the UK advertising industry to ensure that legitimate advertisers do not see their advertising put on such websites. We lead the world in taking such action.

Before I address some of the substantial issues that have been raised, I should mention the Digital Economy Bill, which recognises the importance of tackling online infringement. We have extended the penalties for online infringement to match the penalties for physical infringement, as the hon. Member for Perth and North Perthshire mentioned, and the Bill will give us a chance to debate many of these issues again. I look forward to some of the brilliant contributions we have heard today being echoed in that debate. In congratulating hon. Members on their contributions earlier, I should have said how impressed I am by how many active musicians there currently are in the House.

On the issue of platforms, when we talk about safe harbour we are referring to the situation that has traditionally existed for the past 15 years. Intermediaries such as YouTube claim that they are passive recipients of content and that it is not necessarily their responsibility to police that content, although they claim that they do so voluntarily but do not have the resources to ensure that such content is not online. They claim simply to be a platform on which people can put their content.

As the hon. Member for Cardiff West said, the safe harbour legislation was introduced to encourage innovation. In many respects, it has been successful. When we debate these issues and look at the negatives, we should also remember the positives. A lot of platforms, and indeed the internet as a whole, have given an extraordinary opportunity to many artists who would potentially have remained undiscovered without them. Before the existence of the internet such artists had only one door to a successful career in the music industry, which was through the record labels. The internet has widened opportunities for artists as well as causing them considerable problems.

Obviously, what sits behind the idea of safe harbour is the e-commerce directive, but that is now quite legitimately a subject for debate, and it is perfectly appropriate for rights holders to argue that the hosting defence is being abused to allow copyright-infringing content to be hosted indiscriminately without their being remunerated. That is why the hosting defence creates a value gap, as it benefits intermediaries without compensating rights holders. The hosting defence also leads to a mismatch in negotiations, giving the whip hand to intermediaries rather than to artists themselves. There are also concerns about the different types of streaming business models, and about whether they provide the correct levels of remuneration to rights holders.

As a Government, we believe that businesses must act in a socially responsible manner. That applies to platforms, which should co-operate in the removal of copyright-infringing material without harming freedom of expression. However, as I said earlier, we must also recognise the role that platforms play in driving innovation.

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[Pete Wishart]

People have suggested that we may be trying to use France and Germany as a proxy for our influence, to achieve our requirements in the digital single market. Is there any truth in that suggestion? If there is, is that not evidence of how we are being further reduced and diminished in our relationship with Europe, such that we expect others to do our bidding on our behalf?

[Mr James Gray (in the Chair)]

I call the Minister to speak with reference to the subject under debate.

[Mr Vaizey]

I am sorry if I gave that impression; that was not the point I was trying to make at all. The point I was trying to make was that countries such as France and Germany clearly have very strong views on the issue, and their voices are heard. The situation pre-Brexit was that the UK, France and Germany had slightly different positions on some of these issues but were all influential voices, and I was engaging quite closely with both the French Government and the German Government about their attitude, as well as with the Commission.

It is my intention, particularly as we remain a member of the European Union for the foreseeable future, that the British voice—the voice of British artists and the voice of the British music industry—is heard in future negotiations. At the moment, however, we are at a relatively early stage when it comes to formulating principles and identifying issues.