Digital Economy Bill (First sitting)

Nigel Adams Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 11th October 2016 Public Bill Committees

[The Chair]

Welcome to the Digital Economy Bill Committee. We will now hear evidence from BT/EE, TalkTalk and Three. Before calling the first person to ask a question, I should like to remind all Committee members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion that the Committee has agreed. We have until 10 am for this session, so I ask Members and witnesses to be as concise and to the point as they can be.

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

Mr Stringer, may I put on the record and bring the Committee’s attention to my declaration of interest? I am a director of two telecommunications companies and a shareholder in both; my wife is a shareholder in those companies as well.

[The Chair]

Q That is now on the record. Does anyone else wish to declare an interest? No. Could the witnesses please introduce themselves for the record?

David Dyson: David Dyson. I am the CEO of Three UK.

Baroness Harding: Dido Harding, chief executive of TalkTalk.

Sean Williams: Sean Williams, chief strategy officer at BT Group.

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[Nigel Adams]

Q Returning to broadcast, I have a question for Daniel which may not come as a surprise, since I alluded to it on Second Reading. If you take out line rental and broadband charges, what is the cheapest way that someone can access a public service broadcasted channel, and how much does it cost on your platform?

Daniel Butler: Sorry, Nigel, if you debundle—?

[Nigel Adams]

The cost of the line rental and broadband charges, what would the charge be?

Daniel Butler: Our basic TV tier does not have a premium. If, as a customer, you get a triple-play bundle with a freeview-like TV service, it is effectively free; there is no added charge for the TV element. We do not sell TV as an individual product, if that is what you are asking.

[Nigel Adams]

Q Yes; it is all bundled in that cost. The reason I allude to it is that, clearly, there is currently no payment made to, effectively, the rights holders. A fair proportion—I would think maybe half—of your content is potentially driven through PSBs. I just wonder why you think that that is a reasonably fair position.

Daniel Butler: We think it is a fair outcome because there are flows of value in both directions—for the pay-TV operators in this market and the PSBs. As part of entering into the public service bargain, the public service broadcasters get a series of regulated benefits. The biggest of those are gifted spectrum and EPG prominence on our platform. EPG prominence guarantees them viewership, which translates into advertising revenue. From them, we get access to content, which is very valuable to our customers—it is much-loved content. That is the UK’s PSB bargain. Ofcom assesses that to be a balanced bargain, it does not think that either side is losing out as a result of that bargain, and the fact that PSBs continue to enter into that bargain reinforces the fact that they see it as sufficiently valuable too.

[The Chair]

I am afraid that brings us to the end of the time allotted for the Committee to ask questions. I thank the witnesses very much on behalf of the Committee for the evidence they have given.

Examination of Witnesses

Pete Moorey and James Legge gave evidence.

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[Matt Hancock]

Q I was seeking clarification on whether you are looking for something more than is in the Bill. You were saying that that is what is in the Bill and it is right that that goes through.

James Legge: Not at this stage.

[Nigel Adams]

Q I suspect that the Bill is not going to be subject to the most detailed discussion around the country. However, as a question to both of you, having had an opportunity to analyse the Bill, if we were all pitching this to our constituents across the country, what do you see as the key benefits for consumers?

Pete Moorey: The telecoms sector needs to catch up with where consumers are. That is part of what the Bill is trying to do: we need to recognise that people increasingly see their mobile phones and broadband as essential items. Yet we know that customer satisfaction is very low and that people are increasingly frustrated about their inability to get a signal or to get the broadband speed they are paying for.

There are critical things in the Bill that will start to bring the telecoms sector kicking and screaming into the 21st century. For me, those elements include switching—I think it is incredible that we do not have provider-led switching in the telecoms sector. Automatic compensation is very important. With water, electricity and gas, if we lose a connection we get a compensation payment, but that is not the case in telecoms. The appeals process, which we have heard a lot about this morning, has had a chilling effect on the regulator’s ability to introduce measures that would both improve competition in the sector and better protect consumers.

The final area, for us, is nuisance calls, which we know are some of the biggest bugbears that people face—they are sick to death with receiving annoying calls and texts. To put the ICO guidance on nuisance calls into statute is another step towards tackling that everyday menace.

James Legge: Yes, I think that switching and compensation are important: it is important to hold the feet of the telecoms companies to the fire. But there is possibly an opportunity in the legislation to empower the consumer. At the moment, we have a sort of opaqueness around data and provision. We do not have address-level data. If I want to decide where I am going to get my mobile or broadband from, I cannot just put in my address and find out that the company that provides the best service is x. I have to sign up to someone. Then I can test the level of my service through their internet connection as a customer.

If there was more transparency, and if people had the information to hand, they would be able to make better choices. The market would also be more competitive for mobile or broadband providers, because if they do not provide the coverage, they will lose customers. It is no good waiting for someone to sign up and then find out that switching is jolly difficult, so customers say, “Well, I’ll just put up with this and complain”. We do that terribly well.

We should be able to say, “No, sorry. You didn’t tell me this. I didn’t have the data. Your service is appalling. I’m switching, and it is easy.” The level of switching at the moment is extremely low. A previous witness suggested that there was general contentment, which is not my experience.

[Calum Kerr]

Q There has been a lot of discussion in this session about fixing mobile coverage. Do you think that the Bill will achieve that? It comes down to licence obligations. If we want to do it, we need to set the right licence obligations. I accept that you are going to get less money.

On the electronic communications code changes, if we want the measures to be about driving more coverage, should we actually just exclude existing sites—you will have a lot of landowners and we will have local government bodies that will lose a lot of money—and say, “Access will change but, in terms of valuations, let’s exclude existing sites; this is about you going to new sites and doing them more cheaply”?

James Legge: I had thought—if I have understood the question correctly—that the Minister indicated previously to the House that it was not going to be retrospective.

Digital Economy Bill (Second sitting)

Nigel Adams Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 11th October 2016 Public Bill Committees

[Nigel Huddleston (Mid Worcestershire) (Con)]

Again for full transparency, prior to becoming an MP I worked for Google, in which I have a small share interest at the moment.

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

As I stated in the earlier session, I am a director and shareholder of two telecommunications businesses, and I believe my wife is also a director and shareholder.

Examination of Witnesses

David Austin and Alan Wardle gave evidence.

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[The Chair]

Just before we move on, shall we see if Mr Wardle also wants to contribute to things that should be in the Bill?

Alan Wardle: On that point, I think it is important for us that there is clarification—and I would agree with David about this—in terms of ensuring that sites that may for instance be commercial but that are not profiting from pornography are covered. Again, Twitter is an example. We know that there are porn stars with Twitter accounts who have lots of people following them and lots of content, so it is important that that is covered.

It is important that the legislation is future-proofed. We are seeing at the NSPCC through Childline that sexual content or pornography are increasingly live-streamed through social media sites, and there is self-generated content, too. It is important that that is covered, as well as the traditional—what you might call commercial—porn. We know from our research at the NSPCC that children often stumble across pornography, or it is sent to them. We think that streamed feeds for over-18s and under-18s should be possible so that sort of content is not available to children. It can still be there for adults, but not for children.

[Nigel Adams]

Q Can you give us your perspective on the scale of the problem of under-18s’ access to this sort of inappropriate content? I guess it is difficult to do a study into it but, through the schools network and education departments, do you have any idea of the scale of the issue?

Alan Wardle: We did research earlier this year with the University of Middlesex into this issue. We asked young people—under 18s—whether they had seen pornography and when. Between the ages of 11 and 18, about half of them had seen pornography. Obviously, when you get to older children—16 and 17-year-old-boys in particular—it was much higher. Some 90% of those 11 to 18-year-olds had seen it by the age of 14. It was striking—I had not expected this—that, of the children who had seen it, about half had searched for it but the other half had stumbled across it through pop-ups or by being sent stuff on social media that they did not want to see.

It is a prevalent problem. If a determined 17-year-old boy wants to see pornography, undoubtedly he will find a way of doing it, but of particular concern to us is when you have got eight, nine or 10-year-old children stumbling across this stuff and being sent things that they find distressing. Through Childline, we are getting an increasing number of calls from children who have seen pornographic content that has upset them.

[Nigel Adams]

Q Has there been any follow-on, in terms of assaults perpetrated by youngsters as a result of being exposed to this?

Alan Wardle: It is interesting to note that there has been an exponential rise in the number of reports of sexual assaults against children in the past three or four years. I think it has gone up by about 84% in the past three years.

[Nigel Adams]

Q By children?

Alan Wardle: Against children. Part of that, we think, is what you might call the Savile effect—since the Savile scandal there has been a much greater awareness of child abuse and children are more likely to come forward, which we think is a good thing. But Chief Constable Simon Bailey, who is the national lead on child protection, believes that a significant proportion of that is due to the internet. Predators are able to cast their net very widely through social networking sites and gaming sites, fishing for vulnerable children to groom and abuse.

We believe that, in developing the code of practice that I talked about earlier, that sort thing needs to be built in to ensure that children are protected from that sort of behaviour in such spaces. The internet is a great thing but, as with everything, it can be used for darker purposes. We think there is increasing evidence—Simon Bailey has said this, and more research needs to be done into the scale of it—that children, as well as seeing adult content, are increasingly being groomed for sex online.

[Nigel Adams]

Q Mr Austin, what constructive conversations and meetings have you had with ISPs thus far, in terms of the potential for blocking those sites—especially the sites generated abroad?

David Austin: We have not had any conversations yet, because we signed the exchange of letters with the Government only last Thursday and it was made public only today that we are taking on this role. We have relationships with ISPs—particularly the mobile network operators, with which we have been working for a number of years to bring forward child protection on mobile devices.

Our plan is to engage with ISPs, search engines, social media—the range of people we think are ancillary service providers under the Bill—over the next few weeks and months to see what we can achieve together. We will also be talking to the adult industry. As we have been regulating pornography in the offline space and, to an extent, in the online space for a number of years, we have good contacts with the adult industry so we will engage with them.

Many companies in the adult industry are prepared to work with us. Playboy, for instance, works with us on a purely voluntary basis online. There is no law obliging it to work with us, but it wants to ensure that all the pornography it provides is fully legal and compliant with British Board of Film Classification standards, and is provided to adults only. We are already working in this space with a number of players.

[Nigel Huddleston]

Q Obviously, the BBFC is very experienced at classifying films according to certain classifications and categories. I am sure it is no easy task, but it is possible to use an objective set of criteria to define what is pornographic or disturbing, or is it subjective? How do you get that balance?

David Austin: The test of whether something is pornographic is a test that we apply every single day, and have done since the 1980s when we first started regulating that content under the Video Recordings Act 1984. The test is whether the primary purpose of the work is to arouse sexually. If it is, it is pornography. We are familiar with that test and use it all the time.

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[Claire Perry]

No, specifically about the part 5 questions.

Renate Samson: Okay. We have not, in our evidence and our concerns, asked for a perfect Bill, although I do not believe there is any harm in trying to make the best piece of legislation we can. The work that we do with the Privacy and Consumer Advisory Group and as part of the open policy making process is about having engagement, to ensure that we are the leading light in data sharing, but also data protection. As Mr Killock has mentioned, we are currently looking at the Data Protection Act 1998. That will probably expire in May 2018, and we will get the general data protection regulation. Right now the measure in question does not even refer to that, or, indeed, to the Investigatory Powers Bill. It refers to the Regulation of Investigatory Powers Act 2000 and the DPA. Also, it will probably fail on a number of the key points of the GDPR, in relation to potential profiling, consent of the individual, and putting the citizen at the heart of data sharing and data protection.

I am not looking for “perfect”, but I think “perfect” is a good place to head towards.

[Nigel Adams]

Q My question is for Mr Killock, with regard to what the Bill is seeking to do in terms of equalisation of copyright offence penalties. I just wondered why your organisation was not in favour of rights holders—the tens of thousands of content creators. Why is your organisation not keen on the idea in the Bill?

Jim Killock: That would be a misrepresentation. We are quite clear in our response. We are worried about the impact of this on people who should not be criminalised and who we thought the Government were not trying to criminalise in this case. Our position is that if the Government are going to extend the sentence and have the same sentence online as offline for criminal copyright infringement—that is to say, 10 years—then they need to be very careful about how the lines are drawn, because the offences are quite different. Offline, in the real world, criminal copyright infringement covers a number of acts. It is all about copying and duplication. Essentially, it is about criminal gangs duplicating DVDs and the like. Online, making that separation is harder, because everything looks like the same act—that is to say, publication. You put something on the internet, it is a publication. So how do you tell who is the criminal and who is the slightly idiotic teenager, or whatever it happens to be? How do you make sure that people who should not be threatened with copyright criminal sentences are not given those threats?

We particularly draw attention to the phenomenon of copyright trolling. For instance, there is a company called Golden Eye International, a pornographer which specialises in sending bulk letters to Sky customers, BT customers and so on, saying, “Please pay us £300 because you downloaded a film that is under copyright.” These are obviously pornographic films and they then wait for people to pay up. They have no specific knowledge that these people are actually the people doing the downloading, all they know is that somebody appears to have downloaded.

[Nigel Adams]

Q Sorry to interrupt, but the idea of the Bill is not to go after people who are downloading content, it is purely for those who are uploading content for commercial gain. That is the whole purpose.

Jim Killock: Unfortunately, that is not how the language of the offence reads. The test in the offence is that somebody is “causing a loss”, which is defined as not paying a licence fee, or is “causing the risk of loss”, about which your guess is as good as mine, but it is essentially the same as making available, because if you have made something available and somebody else can then make a copy, and then infringe copyright further and avoid further licence fees, basically that is a criminal act. So file sharers, whether they are small or large, all appear to be criminal copyright thieves. Similarly, people who are publishing things on websites without licence are also potentially criminalised. Those things can be dealt with much better and more simply through civil courts and civil copyright action. What we are calling for is either to get rid of those things which are attacking individuals and wrongly bringing individuals into scope, or to put thresholds of seriousness around the risk of loss and/or causing loss. Something like, “Serious risk of causing significant loss” would be the way to deal with this. Similarly, “Causing serious loss”.

[Nigel Adams]

Q But if you are knowingly uploading creative content online for commercial gain, to my mind it does not matter whether it is 50 quid or 50,000 quid, you are knowingly stealing someone’s content.

Jim Killock: The commercial gain is not part of this offence. That is what I am saying. The offence is purely to cause loss—in other words, to not pay a licence fee—or to cause risk of loss. There is no “commercial” in it. So you have to put the threshold somewhere. You have an offence for the commercial activities and, separately, individuals who cause risk of loss or fail to pay a licence fee.

[Nigel Adams]

Q What do you think is a reasonable limit? Where would you set the limit?

Jim Killock: In terms of taking someone to court, there is no particular limit. If I cause £20 of damage to somebody where I should have paid it, the small claims court should be available and I should be able to either prosecute someone or be prosecuted in a civil court in the normal way. The question of how much is “serious” is, in all likelihood, something we should probably leave to the discretion of judges. It will not be very easy to fix a particular amount, but I think “serious” is usually the word used.

[Nigel Huddleston]

Q As you have already recognised, this part of the Bill has already been subject to a consultation. There were 282 responses to that consultation, with the majority of them being broadly supportive. You have raised quite a few perfectly valid concerns, but do you accept that there is broad public support for the sharing of data when there is a clear social upside?

Jim Killock: I think we are all clear that data sharing should be enabled. The question is how you do that without it being a completely wide open process. The principle is not something that anyone has ever objected to.

Renate Samson: On the consultation that you referred to, you just told me that there were 282 submissions and that most of them were broadly supportive, but the Government response did not indicate who was supportive and who was not, and I have not seen the submissions on the website to be able to see for myself who was broadly supportive and who was not.

Having been part of the open policy making process, I would say that several people in that room had a large number of concerns. They were not concerns to prevent data sharing, but concerns to ensure that data sharing could happen in the safest way possible, and not just in terms of privacy. That way, not only can Government benefit from it and clear processes can be established in Government, but the citizen can understand why their data are being shared and can then be supportive of it and can trust that their data are going to be looked after. It is about the citizen being able to feel as though their personal data, which are now part of the air we breathe in a connected, digital society—we cannot function without our data—are safe and secure. It is about not only data being private, because there are varying degrees of privacy, particularly when you are sharing, but the Government understanding that.

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[The Chair]

Thank you. We have two more questioners: Nigel Adams followed by Louise Haigh.

[Nigel Adams]

Q Mr Nowak, you alluded earlier to the element of the Bill that you support and referred to musicians. The Bill is trying to bring in measures that would equalise the measures for copyright theft. That is a really good thing to try, and the Musicians Union is very supportive of that measure. Is there anything else that you think would strengthen the Bill in terms of protecting rights holders? We have a huge problem in this country of content creators—rights holders—not getting rewarded because their work is put online illegally. There is quite a bit of work that the tech companies could be doing, but how do you think we could strengthen this area to protect many of your members?

Paul Nowak: I reiterate the points that I made before, but perhaps I can also make an offer. That is certainly an issue on which our Federation of Entertainment Unions—including the Musicians’ Union, the National Union of Journalists, the Broadcasting, Entertainment, Cinematograph and Theatre Union and Equity—would welcome the opportunity for further engagement with the Committee, and we could certainly provide more written information.

First of all, though, we should ensure that online providers are held accountable for any material outside of copyright that they host online. The second point that I made before is that if there is no voluntary, agreed way forward, the Government should be prepared to introduce a code of practice. If you are a musician, the online world and the emerging digital economy clearly throws up all sorts of opportunities, but there is also a real risk. It is not about the creation of a piece of work over three or four minutes; the hours, the days, the weeks that went into the creation of that piece of work could quite easily be dissipated and lost, and somebody else is profiting from the input you have made. It is not an area in which I am an expert, but our entertainment unions would certainly wish to give more evidence.

[Nigel Adams]

Q That is useful. It is not only about musicians; there are also the people who create content, such as authors, artists and writers.

Paul Nowak: For your information, the latest TUC affiliate is the Artists’ Union England, which represents visual artists. We represent people right across the creative industries, including the musicians, the Writers’ Guild of Great Britain, Equity, which represents actors, and, as I say, visual artists. We would be happy to feed in more information directly from those unions.

Digital Economy Bill (Fourth sitting)

Nigel Adams Excerpts

Committee Debate: 4th sitting: House of Commons
Tuesday 18th October 2016 Public Bill Committees

[Thangam Debbonaire]

Thank you, Mr Streeter. I do not have much else to say, but I say to the hon. Lady that I do indeed know her constituency well because one of my sisters was born in Devizes. She mentions 91% and Wiltshire Council’s excellent commitment, but what about the other 9%?

Before I sit down, I refer briefly to what Vodafone’s Paul Morris said in one of the oral evidence sessions last week. He said:

“I do not think that 10 megabits is enough for most small businesses”.––[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 16, Q26.]

If it is not enough—if a telecoms provider acknowledges that it is not enough, and if tech companies in the creative industries and others in my constituency are telling me that it is not enough—I do not understand what would be so wrong with having an annual report to measure how we are doing. I thank you for allowing me the time to make that point, Mr Streeter, and I commend the amendment to the Committee.

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

Before I make a brief remark, I draw the Committee’s attention to my entry in the Register of Members’ Financial Interests.

I fully support the spirit of the amendments and new clause, but I am not entirely sure whether the Committee should support it. Surely it is the Culture, Media and Sport Committee’s job to hold BDUK and the Department to account for their progress. I told you I would be brief, Mr Streeter.

[Matt Hancock]

We have had support of spirit throughout this sitting. The amendments and the new clause are all about reviews of and reports on progress. I have reviewed my broadband this weekend, and I can report that while I was looking at myself discussing the importance of broadband in East Anglia on a local TV programme, I was actually under my desk because my broadband went down. I know how frustrating it is when one’s broadband goes wrong. I am very grateful to the BT engineers who are working to fix it right now. That is my report.

The best comment was made by my hon. Friend the Member for Selby and Ainsty about the Select Committee. Reports and reviews are important, but the Select Committee is there to ensure that Parliament has its say. More than that, as Ofcom carries out its consultations, it will of course report on progress.

I wish to pick up on a few of the comments that were made. The hon. Member for City of Chester, which is a great city and the city of my birth—the Bill is all about connectivity and we have been making all sorts of connections in this sitting—made the argument very strongly for the importance of not only getting better connectivity, but describing it right. I will have no truck with people who say they are providing a fibre solution when, in fact, it is a part-fibre solution. Fibre-to-the-cabinet is not fibre and anybody who says so is taking people for fools. We should talk about fibre when we mean a full fibre connection that goes all the way from the fibre backbone into the premises. Anything short of that is merely part-fibre.

That point demonstrated some of the confusion from Opposition Front Benchers and shows why it is so important to get these things right, instead of just calling for a report when that is already going to happen. The hon. Member for Sheffield, Heeley called for use of G.fast, which is an important interim technology. However, she then said, “and therefore, it is important we have more fibre.” G.fast is not a fibre technology; it is a copper-based technology. While it is important and useful interim technology that will undoubtedly increase speeds, it is not full fibre.

Digital Economy Bill (Seventh sitting)

Nigel Adams Excerpts

Committee Debate: 7th sitting: House of Commons
Tuesday 25th October 2016 Public Bill Committees

Our proposal has a long list of supporters in the industry. We are interested to know whether the Minister thinks it is a good idea, and whether he will consider adopting it. If he is unable to do so, perhaps he will give a much clearer picture of the Government’s intentions and why they believe that the Bill is not the right place to introduce these proper restrictions on the use of new IPTV devices.

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

I rise to speak to new clause 3. It is a pleasure to follow the hon. Gentleman, who knows an immense deal about this area, having been a huge recipient of earnings from rights over the past few years. I am not entirely sure whether all that income was derived from him buying presents for his family, but it is great to see that we genuinely do have talented musicians in this place.

The new clause would create a power that allowed the Secretary of State to consider introducing a code of practice between search engines and rights holders on copyright infringement, which we have heard about. This power could be used only in the absence of a voluntary code between the two parties; it would not automatically create new legislation. Instead, as has been said, it acts as a backstop power if all other attempts to get an agreement between the producers of creative content and those who facilitate access to infringing material fail.

According to the latest estimates from the Department for Culture, Media and Sport, the UK creative industries amount to £87.4 billion in gross value added, and have an export value of £19.8 billion. These are incredibly large sums. Industries such as the music sector contribute immensely to those figures. Last year, five of the top 10 biggest selling artists in the world were British. One in six albums sold globally is from a UK artist. Those are staggering figures, and they demonstrate the appetite for UK music content here and abroad. According to “Measuring Music”, a report developed by UK Music, the industry body, the sector grew by 17% over the past four years and is worth £4.1 billion to the UK economy; it generates exports of £2.2 billion.

Although the UK creative industries are much in demand, copyright infringement remains a significant challenge. It not only has negative economic consequences for our businesses and industries by driving consumers to illegal markets, but seriously undermines the respect for, and value placed on, the creativity and effort that go into producing content—music and films in particular. According to the latest Kantar Media copyright infringement tracker, commissioned by the Intellectual Property Office, 78 million music tracks were accessed illegally between March and May 2016. The same research indicated that 20% of internet users participated in some form of illegal music activity online during that short period. These are very worrying figures, and they remind us that despite the growth in access to legal streaming sites, such as Spotify for music and Netflix for films, piracy remains a significant problem that needs to be tackled.

If we are to ensure a prospering commercial market for UK music that benefits rights holders and creators, it is essential that the main method of discovering music and artists directs consumers to legitimate sources. Search engines are one of the key means by which consumers discover music and artists. However, the prevalence of search results linking to infringing content, particularly on the first few pages of a generated search result, as we heard from the hon. Member for Cardiff West, indicates that more needs to be done. Furthermore, search engines incorporate auto-complete functions that can provide access to terms associated with the discovery of illegal content even before an internet user has finished typing their search terms.

For example, I am sure that you, Mr Streeter, are aware of the artist James Arthur, who was at No. 1 with “Say You Won’t Let Go” until he was knocked off the top spot, as I am sure you are aware, by Little Mix, which caused great excitement in the Adams household. When searching on Google, all I need to do is type in “James Arthur say y”, and I am given an option of clicking “James Arthur ‘Say You Won't Let Go’ download”. This takes me to a series of search results, and the only legitimate link allowing me to access that track legally is at the bottom of the page. It is not acceptable that search engines allow such ease of access to infringing content.

Some searches involve wading through several pages of results before getting to the first legal site. That is clearly wrong. The effectiveness of Google making changes to its algorithms—an infringement solution that that particular search engine advocates—remains to be seen. In reply to a written parliamentary question that I tabled on 2 September, the Government admitted on 26 September that it is “not possible to say exactly how” an algorithm change “equates to changes in infringement”. In response to a separate question, they said that it was “not…possible to analyse the…effectiveness” of measures to decrease auto-complete suggestions that provide access to stream ripping and other illegal converter technologies via search results.

In the 12 months up to September 2015, the British Phonographic Industry—the representative body for the recorded music industry, which does much vital work in the pursuit of anti-piracy measures—submitted almost 66.5 million infringing URLs to search engines for removal from search results. The ability of search engines to link to legitimate websites should be straightforward. For example, pro-music.org identifies legal online services. The site identifies that the UK has over 50 legitimate music websites—28 download, 19 subscription and 14 supported through ad services.

Creating a legitimate marketplace increases industry’s capacity for growth and supports overall economic wellbeing. Consumers also stand to benefit from higher-quality search results, clear signposting to legal content, and reduced exposure to malware, viruses, and other types of deceptive advertising. Studies demonstrate that these risks to internet security are sadly prevalent on infringing sites.

Dealing with copyright infringement requires co-operation; the problem can be addressed through positive initiatives. We have seen success in website blocking and, as we have heard from the hon. Member for Cardiff West, from the “Get it Right from a Genuine Site” campaign. UK Music developed an app, aimed at young people, called Music Inc. in partnership with Aardman Animation and the IPO. It raises awareness by simulating the mechanics of the music industry and showing the impact of copyright infringement on business decision making. The app has attracted over 600,000 users since its launch. We have also seen positive results from activities by advertisers and payment providers, and from the work of the police intellectual property crime unit to take advertising and payment services away from illegal sites.

Recognising the challenges, the Government have facilitated a round-table process so that rights holders, industry bodies such as the BPI, and representatives from search engines can discuss the problems of copyright infringement. This process has yet to result in agreement on how infringing content should be tackled. Rights holders are trying to negotiate a voluntary code of practice. We must take this opportunity to ensure that that happens. A code of practice for search engines would result in the reduced prominence of known infringing websites in search results, through demotion and delisting. Search engines already use such practices with regard to a range of illegal activities. The demotion of illegitimate websites would be attractive, in that verified artist websites would benefit in the same way that licensed retail stores do. This is because they will be promoted in the rankings at the expense of infringing sites.

[Nigel Huddleston (Mid Worcestershire) (Con)]

Is my hon. Friend aware that rankings are vital? For some search terms, up to 90% of clicks can come from the top three results. Certainly more than 90% of people do not look past page 1, so being at the top is vital to clicks and activity.

[Nigel Adams]

My hon. Friend speaks with great knowledge on the subject. That is absolutely vital. Consumers searching are not necessarily aware of which sites are legal and which sites are not, so being in the top few search results is crucial. Much more needs to be done to ensure that genuine sites are recognised when people use search engines.

A code of practice should recognise that its scope includes legitimate artists’ websites where appropriate. The Bill presents an opportunity for the Government to fulfil their manifesto commitment to reduce copyright infringement and ensure that search engines do not link to the worst offending sites. At this stage, there is no specific provision in the Bill to achieve that. Although it is not my intention to push the new clause to a vote, I am keen to hear the Minister’s response, and his ideas about how to ensure that its intentions are delivered.

[The Chair]

It may help the Committee to know that we will not reach votes on new clauses today; that will come at the end of our proceedings, in case anyone is getting terribly excited.

--- Later in debate ---

[Matt Hancock]

First, that was an extremely good and unusually succinct description of the clause. The hon. Gentleman asked about costs; we think that it will reduce costs to business. In terms of the current problems, physically changing the required registration details on products imposes a cost. For instance, some businesses produce labels that must be applied to every single product. Such costs are unnecessary if a single label or web address can be built into the design and the update can then be done digitally rather than physically. It is, after all, illegal to claim that a product is registered when it is not. Therefore, the changes are required by law, and it is far cheaper for everybody if they are made on a website that is referenced on the physical product, rather than on labels, or sometimes labels stuck over labels. I am glad that there is cross-party understanding of and agreement on the clause, and I commend it to the Committee.

Question put and agreed to.

Clause 27 accordingly ordered to stand part of the Bill.

Clause 28

Copyright etc where broadcast retransmitted by cable

[Nigel Adams]

I beg to move amendment 63, in clause 28, page 27, line 31, leave out subsections (3) to (5).

This amendment, together with Amendment 64, are probing amendments to identify a timeframe for the repeal of section 73 of the Copyright, Design and Patents Act 1988 as it is not clear when the repeal will come into force. The amendments would mean that repeal of section 73 of the CPDA would come into force as soon as the Bill receives Royal Assent.

[The Chair]

With this it will be convenient to discuss the following: amendment 189, in clause 28, page 27, line 36, at end insert—

‘(6) The Secretary of State shall—

(a) produce a report on the implication of the repeal of section 73 of the Copyright, Designs and Patent Act 1988, and

(b) undertake a comprehensive consultation on the future of television content distribution and public service broadcasters.”

Amendment 64, in clause 82, page 80, line 2, at end insert—

“(a) section 28;”

This amendment, together with Amendment 63, are probing amendments to identify a timeframe for the repeal of section 73 of the Copyright, Design and Patents Act 1988 as it is not clear when the repeal will come into force. The amendments would mean that repeal of section 73 of the CPDA would come into force as soon as the Bill receives Royal Assent.

Amendment 94, in clause 82, page 80, line 14, at end insert—

“(h) section 28.”

This amendment would mean that repeal of section 73 of the Copyright Designs and Patents Act of 1988 would come into force two months after the Royal Assent of the Bill.

--- Later in debate ---

[Nigel Adams]

These are probing amendments to clauses 82 and 28 in order to establish a timeframe for enacting the provisions in clause 28, which repeals section 73 of the Copyright, Designs and Patents Act 1988. I warmly welcome those provisions, but from the clause as it stands, it is not quite clear when we can expect this important measure to come into force. The amendments would mean, instead, that repeal of section 73 of the 1988 Act would come into force as soon as Royal Assent is granted. That would involve consequential amendments to clause 28 to delete subsections (3) to (5), as Royal Assent would remove the need for them. Otherwise, in the Bill as drafted and as stipulated in clause 82, clause 28 would come into force on whatever day the Secretary of State appoints in regulations made by statutory instrument, which could mean further delay.

As I pointed out on Second Reading, online service providers such as TVCatchup use section 73 to make money from public service broadcaster channels by re-transmitting their content while selling their own advertising around it. That undermines the public service broadcasters’ own online streaming services and on-demand catch-up services, affecting the audience, advertising and sponsorship revenue of commercial PSBs. Furthermore, none of that money is being paid to the public service broadcasters, the underlying talents and the rights holders, and none is flowing back into original UK content production.

I have an important film studio in my constituency, so I take this issue very seriously. We want to see more great productions, such as “Victoria”, which was filmed largely at Church Fenton in my patch. The UK television sector is at the heart of the UK creative industries. It is a vibrant and dynamic sector, providing outstanding world-class content that is the envy of the world. Such programmes are also hugely popular internationally, and the UK is the second-largest exporter of TV in the world as a result. It is therefore vital that we do all we can to help protect investment in the programmes that viewers around the world love. For those reasons, it is important that the provisions in clause 28 to repeal section 73 of the 1988 Act are enacted as soon as possible.

The PSBs first wrote to the Intellectual Property Office asking for a repeal of section 73 eight years ago; since then they have spent a lot of time and money in litigation. Meanwhile, TVCatchup has made millions on the back of the PSB content. The only reliable way to stop that exploitation and ensure that people who make and own the programmes that viewers love gain a return on their investment is to repeal section 73. The public service broadcasters have been in litigation with TVCatchup for many years, and until section 73 is repealed those parasitic websites will be able to profit from the PSB content without any of the payment going back to the public service broadcasters.

Section 73 also allows cable platforms to profit from PSBs that invest in content, which means that the PSBs are effectively subsidising global cable giants. It prevents the commercial PSBs from negotiating with cable platforms for their PSB channels. In a normal situation, they would be able to negotiate freely, as they do for their digital channels such as ITV2 and E4, but section 73 currently prevents that.

Cable platforms make money out of PSB content while still benefiting from a regulatory regime designed for a different era, under which no payments go back to the PSB or any other holders of rights to the content.

[Christian Matheson]

The hon. Gentleman talks about a different era. Does he think that it was right to introduce section 73 at the time, because it allowed cable platforms to develop, but that things have moved on quite a bit since then?

[Nigel Adams]

The hon. Gentleman is yet again spot on. It clearly is of its time. The idea was to try to help a nascent cable industry, and the legislation has done that; we have a healthy TV industry across all broadcast platforms, including cable and satellite. That legislation has done its job.

On pay TV platforms, such as Virgin and Sky, up to 50% of some of our most valuable content, such as drama, is viewed via subscription personal video recorder, from which the pay TV platforms derive substantial benefit. That undermines the commercial PSBs’ ability to secure a return from advertising, because much of their advertising is skipped, and materially reduces as critical opportunities to generate secondary revenue—for instance, from on-demand services or box sets—because libraries of valuable drama content can be built up for free on the PVR. I therefore urge the Government to ensure that repeal of section 73 is delivered at the earliest opportunity. That would mean that those who wish to re-transmit or otherwise use PSB services in the future will have to negotiate to do so, which seems only fair. They should be able to negotiate within the must-offer regime in the Communications Act 2003. That would enable those who create the content to make a return on their investment and continue to make the programmes that viewers love, which are the envy of the world.

There has been extensive consultation on the issue so there is no need for further delay. I will therefore be very grateful if my right hon. Friend the Minister can provide more detail on the timeframe for the repeal of section 73 of the 1988 Act, as included in clause 28.

[Kevin Brennan]

I rise to speak to our amendments 189 and 94. I note the well-informed and cogent points made by the hon. Member for Selby and Ainsty, and I understand why the Government want to repeal section 73 of the Copyright, Designs and Patents Act 1988, as he laid out. Clearly apps such as TVCatchup cannot be allowed to profit from public service broadcasting content without making any sort of contribution to its creation, either by paying for it or in some other way; without agreeing some kind of licence for its use; and without abiding by public service broadcasting standards for its distribution. It is entirely logical to repeal the section and we support the intention to prevent TVCatchup from doing what it does, but the Government need to explain the knock-on effects on the market.

Digital Economy Bill (Eighth sitting)

Nigel Adams Excerpts

Committee Debate: 8th sitting: House of Commons
Tuesday 25th October 2016 Public Bill Committees

[Kevin Brennan (Cardiff West) (Lab)]

I thank the Minister for his warm acclamation of support for my continuing. As he will be aware, any huffing and puffing may influence how long I speak, but perhaps not in the way he hopes. It is a great pleasure to see you back chairing our proceedings this afternoon, Mr Streeter, having done so ably this morning without needing to heed any of the unsolicited advice from the Minister on how to chair a Committee. You did an absolutely superb job, and everyone on the Committee thanks you for that.

When stumps were pulled this morning, we were discussing amendment 189. To remind the Committee, that amendment calls on the Secretary of State to

“produce a report on the implication of the repeal of section 73 of the Copyright, Designs and Patent Act 1988, and…undertake a comprehensive consultation on the future of television content distribution and public service broadcasters.”

We feel that the repeal of section 73 has big potential implications, and we need to know what the Government’s strategic thinking amounts to on those issues. I was talking about how things were 30 years ago with public service broadcasters. They were reserved access to valuable spectrum and given prominence on that spectrum. That created a valuable and well-funded monopoly, whether that was advertising revenue for ITV or money from the licence fee for the BBC. We were going to discuss how every aspect of that original deal is undergoing rapid change, and that is why our amendment is important.

Spectrum is more valuable than ever. In 2015, Ofcom acknowledged that if the spectrum that public service broadcasters use was priced commercially, it would be out of reach for PSBs. Then again, other distribution methods are evolving rapidly. It is perfectly possible to imagine a day when spectrum is not used for direct TV broadcast at all, and that day might not be as far in the future as we might think.

We know that the prominence of public service broadcasters is coming under enormous pressure. Recent moves by Sky have made it very hard to find live TV or public service broadcast content at all, and that is potentially a serious assault on the public service broadcasting compact. Prominence enables scale, and scale has been the commercial and policy basis of our public service broadcasters from the start. It makes them economic and makes the notion of public service broadcasters tangible, so that they are not just widely available, but widely watched. We will return to that topic in our consideration of the next group of amendments, but it is relevant to any report that might be produced through the amendment.

Public service broadcasters are no longer the cash cow monopolies that they arguably once were. We have been in a multi-channel world for a long time, but on-demand viewing is accelerating that change even further. Public service broadcasters are not just competing for viewers with commercial channels, but with different offers from such organisations as Netflix, Amazon and YouTube and from other options, such as gaming. Netflix now outspends the BBC on original content development. It is a significant player in the original content market.

To be clear, I am not necessarily echoing what the Prime Minister said in her speech to the Conservative party conference. She seemed to be trying to channel Sam Cooke by saying, “Change is coming”, many times during her speech, but plenty already has changed, and the pace of that change is accelerating. The Government need to face up to this, and that is why we are suggesting that they should hold a proper review of the interconnected issues of distribution, carriage, content creation, prominence and funding before developing and pursuing a clear and fair strategy for television distribution in general, and public service broadcasting distribution specifically. That is what this amendment seeks to achieve. Without that proper vision for how our public sector service broadcasters will operate in a fast-changing, multi-distribution, multi-channel, globalising world, we worry that not only will they not thrive as public service broadcasters, but that ultimately they may not survive. As I said earlier, we should not allow that to happen, and we certainly should not allow it to happen by accident.

The Minister must make it clear that he wants public service broadcasters to survive. I believe that he does, but he also has to make the Government’s strategy clear in the light of this rapidly changing, complex world. It is to be hoped that he can partly do that in response to the amendments, as well as laying out his views on our suggestion of producing a comprehensive report on the subject.

We are also discussing amendment 94, which is a probing amendment that is intended to tease out a timeline for the repeal of section 73. It relates a little to the amendment that the hon. Member for Selby and Ainsty moved earlier in that it has a similar purpose. We just want to find out what the Government’s thinking is. Our amendment differs from his in that it states that the repeal should come into effect two months after Royal Assent, whereas his amendment states that it should come in immediately after Royal Assent. We will not press amendment 94 to a vote, but we want to hear the Minister’s thoughts and plans in relation to it.

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

The hon. Gentleman may well cover this in his further remarks, but I would be delighted to hear his view on why there should be a two-month delay after Royal Assent.

[Kevin Brennan]

The hon. Gentleman is right to probe me on that. The truth of the matter is that there is a convenient clause to which we could add our amendments, which starts things two months after Royal Assent. As I said, amendment 94 is a probing amendment and I am sure the Minister will tell us all the reasons why it is technically defective. I will not push it to a vote so I am prepared to hear that, but we want to use it as a method of finding out the Government’s position.

Section 73 was originally introduced to encourage the roll-out of cable and to help a fledgling platform compete against terrestrial television by ensuring that cable platforms had access to public service broadcasting content. The Government have agreed that this policy objective was met some time ago, and in July reported that they were

“satisfied that the objective of ensuring that PSB services (as well as other TV services) are available throughout the UK has been met, and therefore section 73 is no longer required to achieve that objective.”

Subsection (3) states:

“The Secretary of State may by regulations make transitional, transitory or saving provision in connection with the coming into force of this section.”

Inasmuch as this generally means that the state will repeal section 73 when it sees fit, there are concerns among some public service broadcasters about understanding more clearly the Government’s intentions in relation to the timetable for that repeal. It would not be such a pressing issue were section 73 merely a harmless hangover and simply moribund. However, as we have heard, it is more than a legal anachronism. It is a loophole through which taxpayers’ money is effectively funnelled into private businesses.

As we have heard, section 73 allows companies, such as TVCatchup and FilmOn, to live stream the content of public service broadcasters and other channels online without permission. In other words, the money the public pay through their licence fee pays for content that is then, in effect, given away for free to companies other than public service broadcasters. Those companies then monetise that public service broadcasting content by placing their own advertising around it.

Public service broadcasters are granted public funding and the other advantages we have talked about on the understanding that, in exchange, they are obliged to air content that works for the public’s benefit, rather than solely for the benefit of commercial interests. Section 73, in effect, allows TVCatchup and FilmOn to benefit from that same public funding, but those companies are clearly not held to the same standards. That amounts not only to the taxpayer unwittingly subsidising those businesses, it effectively directs funds away from PSBs and impacts on their ability to generate legitimate commercial revenues and to reinvest in the wider creative economy. Those live-streaming sites increase public service broadcaster reliance on public money and can fuel a vicious cycle of under-funding.

There is cross-party agreement that that is wrong and has to be put right, which is what the Government are seeking to do, but why do we have to rely on the Secretary of State to

“make transitional, transitory or saving provisions”

for repealing section 73? Is it not the case that broadcasters and the public deserve a more explicit timeframe, for the reasons I have laid out, so that this does not persist for any more time than is absolutely necessary? Not only is that fair, but it would provide more certainty for public service broadcasters and ensure that their investment in UK content is protected. Amendments 63 and 64, which the hon. Member for Selby and Ainsty tabled, would mean the repeal of section 73 immediately after Royal Assent, which offers one way forward. Our probing amendments offer another alternative if the Government need more time.

Public service broadcasters first wrote to the Intellectual Property Office to ask for the repeal of section 73 in 2008. In the meantime, TVCatchup has obviously made millions on the back of PSB content and the European Commission has launched infraction proceedings against the UK Government, on the basis that section 73 denies public service broadcasters their intellectual property rights for their content, which is guaranteed under the 2001 copyright directive. It would also be helpful to know from the Minister how he believes that infraction proceeding plays into our discussion on the amendment, the repeal of section 73, and what role it has to play if the Bill indeed repeals section 73. In short, will the Minister explain why he is not offering a clear timetable for repeal in the Bill?

--- Later in debate ---

[Nigel Adams]

Will the Minister give some indication of the potential timescale of the IPO’s technical consultation?

[Matt Hancock]

It is a four-week consultation and it started yesterday, so it has three weeks and six days to run, if my maths are right.

--- Later in debate ---

[Kevin Brennan]

As I made clear, it is not our intention to put our amendments to a vote at this stage. The debate was extremely interesting, important and useful, despite the Minister’s seeming resentment of having debates that go into the detail of the Bill and despite his remarks about rising early. He should be careful about making such remarks, given that he was late for the first sitting of the Committee.

There is an important issue at stake here: in our proceedings, the Government get their way because they have a majority, but the Opposition have their say. That is the constitutional principle on which we are all here and it is the role that we play. The Minister’s continual grumpiness about that is not helping his cause. I thought it was a useful debate that has revealed and drawn out more clearly some of the Government’s thinking on the timetabling of the repeal of section 73. We are not going to put our amendments to a vote at this stage, but these are matters we might revisit later.

[Nigel Adams]

I very much enjoyed all the contributions, which were incredibly complete, informed and eloquent.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Digital Economy Bill (Eleventh sitting)

Nigel Adams Excerpts

Committee Debate: 11th sitting: House of Commons
Tuesday 1st November 2016 Public Bill Committees

[Thangam Debbonaire]

I thank the Minister for his responses. My understanding is that the implementation of the Modern Slavery Act does not cover this area of work so I will be following that up with the Minister and his colleagues. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 13

Offence to use digital ticket purchasing software to purchase excessive number of tickets

‘(1) A person commits an offence if he or she utilizes digital ticket purchasing software to purchase tickets over and above the number permitted in the condition of sale.

(2) A person commits an offence if he or she knowingly resells or offers to resell a ticket that the person knows, or could reasonably suspect, was obtained using digital ticket purchasing software and was acting in the course of a business.

(3) For the purposes of subsection (2) a person shall be treated as acting in the course of a business if he or she does anything as a result of which he makes a profit or aims to make a profit.

(4) A person guilty of an offence under this section shall be liable on summary conviction to—

(a) imprisonment for a period not exceeding 51 weeks,

(b) a fine not exceeding level 5 on the standard scale, or

(c) both.

(5) In this section—

(a) “digital ticket purchasing software” means any machine, device, computer programme or computer software that, on its own or with human assistance, bypasses security measures or access control systems on a retail ticket purchasing platform that assist in implementing a limit on the number of tickets that can be purchased, to purchase tickets.

(b) “retail ticket purchasing platform” shall mean a retail ticket purchasing website, application, phone system, or other technology platform used to sell tickets.”

(6) Subsections (1) and (2) shall apply in respect of anything done whether in the United Kingdom or elsewhere.’—(Nigel Adams.)

This new clause creates an offence to use digital ticket purchasing software to purchase tickets for an event over and above the number permitted in the condition of sale. It also creates an offence to knowingly resell tickets using such software.

Brought up, and read the First time.

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

I beg to move, That the clause be read a Second time.

The new clause would make it an offence to use digital ticket purchasing software to purchase tickets for an event in excess of the number allowed by the retail ticket purchasing platform. It also creates an offence to knowingly resell tickets bought using such software. This is not a silver bullet. Ticket touting is a huge problem and touts use a variety of methods to obtain tickets. There is also the issue of regulation of secondary resellers. However, the new clause would address one problematic aspect: it would help to get a higher proportion of tickets into the hands of genuine fans on their first attempt.

I have told colleagues repeatedly in this place about my recent experience of trying to purchase tickets for a Green Day concert; I dread to think what a credibility hit I have caused fans by referencing the fact that I am a huge Green Day fan. The experience really did upset me. The primary ticketing website I was using, See Tickets, had been the victim of a computerised attack by organised touts using botnets. That meant that I and other fans lost out, but the tickets were available minutes later at grossly inflated prices on other sites.

The practice occurs every day on an industrial scale in all types of sporting and cultural events. Whenever tickets to popular events go on sale, they are snapped up by professional ticket touts and prices become prohibitive for many genuine fans, often hampering the ability of the artist to fill their venues.

--- Later in debate ---

[Nigel Adams]

I am grateful to the Minister for his response. It was remiss of me not to mention the tremendous work of the hon. Member for Washington and Sunderland West, who chairs the all-party group on secondary ticketing. She does an amazing amount of work on this subject. In fact, I spent a day with her tramping up and down in the middle of 50-odd touts outside Wembley. I know how passionate she is about this issue and I appreciate her support.

My right hon. Friend the Minister has made a brilliant case for action on this problem. I am not at all surprised that he is a Paul Simon fan. At some stage, I will invite the Minister to a rock show. I love Paul Simon as well and I am sure the Minister will have paid several hundreds of pounds to go and see him. It seems outrageous, but the Minister will have a good time. “Catch him while you can” springs to mind.

I would be grateful to know when the Waterson review is likely to appear. The industry has been waiting for this for some time. It is a great piece of work, but I do not think it goes far enough on industrial ticket touting and bots. Can the Minister put on the record when the industry is likely to see the Government’s response to this review?

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

“The sound of silence.”

[Nigel Adams]

Indeed, there is a sound of silence on this particular review response.

I am delighted that the Minister has committed to following up the Secretary of State’s pledge to hold a meeting before Christmas. With something as technical as this, it is crucial to get all the players round the table: primary, secondary ticketing sites, representatives of both the fans and artists and, dare I say it, the Minister could probably do with me there as well.

[Matt Hancock]

On the response to the Waterson report, it will be published in due course. The question is whether it is best to hold back publication until after the work I have just committed to is done, to incorporate fully the views of the fans, artists, the ticket-selling industry and, potentially, even my hon. Friend.

[Nigel Adams]

It would be a sensible move. Perhaps it is not a bad idea to have this round-table and take soundings from the industry before the Government respond to the review; I do not think that the Waterson review goes quite far enough in tackling bots, although there is plenty of good work in there for the Government to consider.

I am happy to withdraw my new clause at this stage, following the Minister’s clear commitment to solve the problem. I am hopeful that the issue will be resolved at some stage during the passage of the Bill. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

[The Chair]

I have done a quick count. I think there are nine new clauses and two new schedules left. I remind hon. Members that we have an hour and 20 minutes before we have to finish.

New Clause 15

Storage of uploaded works

“(1) The Electronic Commerce (EC Directive) Regulations 2002 is amended as follows.

(2) After Regulation 19 (a)(ii) insert—

“(iii) does not play an active role in the storage of information including by optimising the presentation of the uploaded works or promoting them.”.”—(Kevin Brennan.)

This new clause clarifies circumstances when a digital service is deemed an active provider of copyright protected content.

Brought up, and read the First time.

[Kevin Brennan]

I beg to move, That the clause be read a Second time.

I hope that the Minister enjoys his concert next week; I am sure he will be feelin’ groovy. I rise to speak to new clause 15, which is a probing new clause to clarify when a digital service is deemed to be an active provider of copyright-protected content. Taking on board what you have said, Mr Stringer, I will truncate my remarks.

The Electronic Commerce (EC Directive) Regulations 2002, which put into law the EU’s e-commerce directive 2000, include certain exemptions from liability for online services, including copyright-protected works. The fundamental concern from the music industry is that the hosting defence provided by regulation 19 of the 2002 regulations acts as a safe harbour and allows some services, including user-uploaded services such as YouTube, to circumvent the normal rules of licensing.

Those services can use copyright-protected content—a song by Paul Simon or Green Day, for example—to build businesses without fairly remunerating rights holders. In recent years, the music industry has argued that the online content market has developed in such a way that there is now a value gap between rights holders, such as artists, record companies and publishers and so on, and the digital services themselves, such as YouTube.

As evidence of that, the recent report by UK Music, “Measuring Music 2016”, highlighted that user-uploaded service YouTube, the most widely used global streaming platform, increased its payments to music rights holders by 11% in 2015, despite consumption on the service growing by 132%. That is the value gap in a nutshell. Further industry analysis indicates that video streams increased by 88% year on year, but generated only a 0.4% increase in revenues. Nine of the top 10 most watched videos on YouTube are official music videos by artists such as Adele, Psy, Taylor Swift and Justin Bieber.

The inequality ensuing from that safe harbour is not only between those who produce music and those who promote it online; the provisions in new clause 15 have benefits for other sectors that seek to achieve a level playing field in online markets, too. The current legal ambiguity and imbalance has created a distortion in the digital market itself, with services such as YouTube benefiting from those exemptions while other services, such as Apple Music and Spotify, do not. The reality is that many people principally use YouTube to play music. It is nonsense to suppose it is not an active provider of copyright-protected content as those other services are.

There was, and continues to be, a justification for exemptions in some areas for passive hosts, but those must reflect the balance between the rights of rights holders and users. The industry is concerned that existing provisions are not sufficiently defined and as a result are open to deliberate manipulation. New clause 15, which stands in my name and that of my hon. Friend the Member for Sheffield, Heeley, aims to clarify the legislative framework, so that creators and rights holders can secure a fair and proper value for the use of their work by online services in a fair and properly functioning market.

Will the Minister clarify some issues? Many of the matters raised by new clause 15 are being considered by European institutions at this very moment. On 14 September, the day after Second Reading, the European Commission published a draft directive on copyright that seeks to address many of these points. That is a welcome development, and the Minister will probably to refer to it in his response. After the recent referendum put us on the path towards Brexit, many issues have been raised in relation to these proposals. It is highly conceivable that we will be Brexiting at the same time as Europe begins to adopt copyright rules for a digital age.

I would like to ask the Minister a few questions. First, will he assure us that the UK Government remain committed to engaging constructively with the European Union on matters relating to the draft copyright directive, and that they will put the interests of the creative industries at the heart of their representations? Secondly, will he support the positive measures in the draft directive that address the value gap between rights holders—particularly the music industry—and digital services?

Thirdly, and more generally, once article 50 is triggered, how do the UK Government intend to implement legislation agreed in Europe before we Brexit? Finally, what commitments is the Minister prepared to make today to reassure UK creators and rights holders that they will not miss out on any positive measures contained in the draft directive as a result of leaving the European Union?

[Nigel Adams]

I rise briefly to speak to the new clause tabled by the hon. Member for Cardiff West. I understand that it seeks to clarify a rule that already exists. As has been mentioned previously, I chair the all-party parliamentary group on music. Earlier in the year, we held a dinner with representatives from the industry and services such as Spotify and Apple Music. The intention of the dinner was better to understand the growing music-streaming market and what measures are needed to help it flourish further for the benefit of creators, fans and those services. I was taken by the agreement across the room about the existence of a value gap between rights holders and some digital services, and the need to ensure fairness in the way music rights are valued and negotiated.

The Government’s response to the EU’s digital platforms consultation, published at the beginning of the year, stated:

“Clarification of terms used in the Directive would, we believe, help to address these concerns.”

I hope the Minister and the Government remain committed to that view and the intention behind the new clause to clarify existing law.

[Matt Hancock]

As we have debated, the Bill sends a clear message about copyright infringement, not least because we are increasing the penalty for online copyright infringement from two to 10 years. Of course, I know about the concern in the music industry and elsewhere that online intermediaries need to do more to share revenues fairly with creators. That is what this new clause seeks to tackle, and I agree with that concern.

The hon. Member for Cardiff West mentioned the interaction of the Bill with EU law. The change proposed by the new clause is already the position in European Court of Justice case law, and we support that position in the UK. That provides some clarification to the existing position.

Let me answer the specific questions. First, we are heavily engaged in the digital single market negotiations and the discussions ongoing in Europe. While we are a member of the EU, we will continue to do that. The issue of the value gap, which the hon. Gentleman mentioned, is important, and the development of ECJ case law in that direction has been helpful.

That brings me to Brexit because, as the e-commerce directive is EU single-market legislation, we will have to consider what the best future system will be as we exit the European Union. We will have to consider how the e-commerce regulations as a whole should work in the future. That will be part of the debate about leaving the European Union. For the time being, ECJ case law supports the intentions in the new clause, and I would be wary about making piecemeal changes to the regime. I acknowledge the need, through the Brexit negotiations and the process of setting domestic law where there is currently European law, to take into account the important considerations that have been raised.

Digital Economy Bill

Nigel Adams Excerpts

3rd reading: House of Commons & Legislative Grand Committee: House of Commons & Programme motion No. 3: House of Commons & Report stage: House of Commons
Monday 28th November 2016 Commons Chamber

[Kate Green]

Indeed. My hon. Friend makes my second point. The Minister indicated that discussions had taken place with disability organisations. It is vital that the approach to developing on-demand accessible services is undertaken as a co-production, that disabled people and disability groups are right at the heart of the design of these services, and that the Government make progress on this matter.

Finally, I encourage the Minister and his colleagues to think big about whether this is an opportunity to take forward the use of British sign language in broadcast and online on-demand services. There is the opportunity to offer signed services on these channels too, and I hope the Minister might be willing to investigate how far that could be taken in this context.

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

I would like to talk to new clause 31, which is incredibly important, and I am extremely grateful to the hon. Member for Washington and Sunderland West (Mrs Hodgson) for the incredible amount of work she has done on the issue. I would also like to thank the hon. Members for Sheffield, Heeley (Louise Haigh) and for Cardiff West (Kevin Brennan) for allowing the Select Committee to table the new clause.

I would also like to thank the Minister, whose words a few moments ago—that the Government are prepared to take action to outlaw bots, if necessary following the meeting later this week—are incredibly encouraging. I shall be at that meeting, and I am grateful for the invitation—hopefully, I will be allowed my two penn’orth. It is incredibly important that we get all the players involved.

We have heard countless examples of where this racket is going on. In the music business, there is Iron Maiden, The 1975 and Black Sabbath. We have heard about Phil Collins and KT Tunstall. My own example—of trying to buy tickets for Green Day—even made it to Prime Minister’s questions. I am not sure whether the Prime Minister is a fan of Green Day, but I am sure that, if she did go to a concert, she would have the time of her life.

However, the problem also affects all sorts of other marketplaces, including the theatre. Today, my colleagues and I met Sonia Friedman, the producer of “Harry Potter and the Cursed Child”, who told me that 60,000 tickets were released last week, and thousands of those tickets ended up on the secondary market at hugely inflated prices because of bots. That is clearly unacceptable.

To conclude, I hope we can get somewhere following the meeting on Wednesday. We are also keen to see the Government’s response to the Waterson report, and I am sure that their response will follow that meeting. It was interesting to note that, at our Select Committee inquiry, Professor Waterson agreed that action to outlaw ticket bots could be a solution, which is very encouraging.

I thank the Minister and the Secretary of State for arranging the meeting. [Interruption.] It seems that I am being wound up, so hopefully everybody else will get a chance to chip in.

[Margaret Ferrier (Rutherglen and Hamilton West) (SNP)]

I rise to speak on new clause 24, which stands in my name and those of my hon. Friends and other hon. Members.

The charity Electrical Safety First is calling on the Government to legally require online retailers to report to trading standards and/or the police people consistently selling fake electrical products. This is a growing problem, and it is estimated that 64% of fake electrical goods are now being sold online. Much of the current legislation around the sale of counterfeit goods is over 20 years old, and we need to be mindful of the fact that, in this digital age, parts of it simply may not be fit for purpose.

Sales of dodgy electrical goods are rising rather rapidly. Research found that around 2.5 million adults have purchased a counterfeit electrical product in the last 12 months—double the number who reported purchasing a fake in the previous year.

Not all counterfeit electricals may be substandard, but many carry a substantial risk. People may view these fakes as harmless—perhaps in the same way they might consider a counterfeit pair of sunglasses to be—but the fact is that they can prove deadly. These products have the potential to deliver a fatal electric shock.

As well as the safety implications, we need to be mindful of the revenue that sales of these goods generate, which is thought to be worth more than £1.3 billion per year in the UK. A large portion of this—an estimated £900 million—is thought to help to fund organised crime.

Many people who buy fake electrical goods do so without realising it. Unwittingly, they are placing their families, friends and neighbours at risk. Vendors often sell through reputable online marketplaces, so they enjoy an almost implied credibility, further giving customers confidence in their purchases.

I would like to finish by asking the Government to take those points into account so that we can begin addressing this problem and perhaps placing some of the responsibility on the websites that enable this black market trade.

--- Later in debate ---

[Nigel Adams]

I shall speak only briefly on Third Reading. I enjoyed being a member of the Public Bill Committee, which was only the second such Committee that I have served on—[Interruption.] I notice the Whips looking at me, but this is by no means an application to be involved in more any time soon.

The team in the Bill Committee was very constructive, and we have just had an encouraging debate on Report, but I want to touch on one issue that is worth pressing home: ticketing, bots and touts. People have said to me that this is free-market issue—rightly so—but a principle of any truly free market is that there is a willing buyer and a willing seller. We cannot forget the second part of that equation. While some fans might be willing to spend, perhaps through gritted teeth, many thousands of pounds on tickets—dozens of times over the face value—to see a favourite artist, not many artists are willing to sell their tickets to parasitical touts. Touts rob artists of their right to set prices that might be more accessible to their fans. If Adele, for example, wanted to charge £10,000 or £20,000 for a ticket to one of her shows, she would, but she does not. As a seller, that is absolutely her right. We should support a free market in which a seller’s right to make such choices to develop their fan bases is respected.

I was pleased that the Minister committed on Report to act against bots if necessary, following his meeting with the Secretary of State and the industry. I have no doubt that all involved would like to work together as the Bill progresses, and I stand ready to play a small part if possible. The fundamental point is that we have now achieved broad cross-party consensus. Other countries have brought in similar laws to outlaw bots, and now is the time for this House to take action. This is a technical area that is not simple to resolve. While this is not the only measure that will tackle ticketing problems, it has cross-party support, as well as support outside the House, including from ticketing companies, which want action and bots to be outlawed. I look forward to the Minister’s response to the Waterson report and hope that any action that the Government take in the other place will give consumers the confidence that this Government are on everyone’s side, not just the side of a privileged few.