Tuesday 5 October 2010

CLA Open Meeting 2: "Intellectual Property Will Save the British Economy"

A stud muffin (see report on
James McConnachie, below)
In this, the second of two reports, lawyer and blogger Rebecca Dimaridis, who attended last Wednesday afternoon's Open Meeting, hosted by the Copyright Licensing Agency at The Royal Geographical Society in Kensington, London, tells us what happens at the second session, strikingly entitled "Intellectual Property Will Save the British Economy".
After a half hour tea break Session Two was introduced by BBC broadcaster Peter Day. The panel two consisted of Benjamin Mitra-Kahn from the UK IPO, Louise Starr from CBI, Dr M F Makeen from the School of Oriental and African Studies (SOAS), author James McConnachie and Stevie Spring (CEO, Future Publishing).

Benjamin Mitra-Kahn, Economic Advisor of the UK IPO, began with some slides and statistics, noting that the world is already changing and that in the past 10 years China and India have grown faster than many have wanted them to. Ben says that since the '90s, UK firms have invested much more in IP (ideas), not machines (bricks and mortar). After the meeting, he was kind enough to provide me with his powerpoint presentation, which is attached.

Louise Starr, an Advisor for the CBI, spoke next. She said that IP is the lifeblood of the creative industries and it is important that businesses were in the right business conditions and environment in order to produce. Creative industries cannot compete on cost and are dependent on IP laws. They need copyright framework facilities for the online environment and these need to cover creation, exploitation and protection - not just one or two of these. Issues include educating consumers and recognising the great role that creative industries have.

Dr. Makeen F Makeen, a Senior Lecturer at SOAS, said he planned to show a comparison between the UK, Europe and the US of revenues brought in by creative industries. Dr Makeen noted that, to present a comparison, one needs accurate data -- which he didn't currently have. He was in possession of eight or nine different reports, two of which were from the UK IPO, one from the Chamber of Commerce and one from the DCMS.  Trying to find a common theme, he found that the UK ranked second  in the world for the culture industry (though "culture" has different meanings in the US & Germany). The US was responsible for $890 billion "core" products (??), 6.4% GDP amd 5.6% of the employed workforce. For the UK the total value of "core" culture is EUR €113 billion with 1.6 million people employed, representing 5.4% of the workforce. Germany and France were third and fourth.  There was debate as to which countries was which, but Germany's "core" culture was worth €105 billion.

Dr. Makeen said there are a number of threats to the creative industries:
1. The English language. Why: because the UK always competes with the US - although over the last 30-35 years, Britain has started penetrating the US market.
2. Lack of international boundaries.
3. Users have developed the belief they have the right to have free access to copyright works. There is a need to start educating that this belief is a threat - not only in the UK but all over the world.
4. Newcomers coming to the creative industry - not only China, Brazil, India but Dubai. The next 15-20 years will be the centre of the creative industry
5. Us. We have really been too slow to react to new technology. Reference was made to the Napster being closed down, but then iTunes was allowed to take off.
Despite these threats, there are opportunities, said Dr. Makeen. For example there are at least five or six countries whose economy is doing well, and which have strong historical links with the UK and which the UK is not taking advantage of (e.g. the UAE). There is a market ready and waiting for UK industries. The only problem was how the licences would work.

Next to speak was James McConnachie who, amongst other things, is the author & co-author of several Rough Guides (including the Rough Guide to Sex, which led to the Guardian calling James a "stud muffin" - poor James was very embarrassed when Peter Day announced this). James said that he feels like he is a very small part of the GDP referred to earlier by Ben. In order to share his personal perspective and, being a writer, James told us three stories:
1. Google Books and the possibility of authors works being available for free on the internet. Hearing about this, James searched Google and, lo and behold, found his books. He found it astonishing that he had to tell Google that he didn't want this to happen.
2. Book Reviews. He used to write reviews, for example, in the Sunday Times. He would receive feedback texts from friends, for example "I hated that". Then one day, James realised that he was not receiving texts. His reviews began to be available online for free - which James does not get paid for.
3. Travel Guidebooks - a story of change. James has been approached by people who no longer purchase guidebooks.  Instead they rely on the information found on the internet. James has a very strong opinion that most of the information found on the internet is "crap", being either dated, wrong or highly personal (e.g. Trip Advisor). Yet James is able to be paid by Rough Guides to do things like visit 20 bedrooms in Paris to compare them, check if the English credit card works in various places and various other things. James feels that the quality he gives is because he can be paid for his work. James says that payment for authorship is not only a right, but a guarantee of quality to the reader (does that sound familiar, trade mark people?).
After James' three interesting (and moving, to this author at least) stories was Stevie Spring from Future Publishing. Readers might recall Stevie's comments from the report on Session 1. Stevie said that they are facing massive challenges, not in respect of copyright protection per say, but in respect of the cost to enforce protection for small IP piracy. Future Publishing produces 150 products every month and creates and commissions from hundreds of contributors annually. Future is unable to enforce copyright protection, because it is not affordable. Take for example, Future's T3 magazine (website here) their largest circulated magazine with 23 international licences (70,000 copies sold in the UK). Stevie's recent quick look showed that the magazine is all over file sharing sites, with complete copies (downloadable and readable) being available. There were 51 file sharing sites Stevie found - and just one of those was responsible for an astonishing 9,000 downloads!

Stevie mentioned that Future once used an "army of lawyers" to shut down "Mygazines" (on which free downloads were available - Future's website is http://www.myfavouritemagazines.co.uk/) and the total cost of doing so was US$2 million. This is not small change for a company like Future. If Future is going to protect its revenue streams so it can pay its authors, the enforcement of the laws need to be affordable. Otherwise, Stevie says, the publishing industry will go the same way as the music industry.

Stevie mentioned a truism, and a basic law of marketing - "if I can get an alternative for a lower price (viz. free) then I'm going to do it". Stevie says that Dr. Makeen said that "free" to Joe Public doesn't mean not paid for - "Joe Public" believe they have paid for the material via the broadband connection. Pipeowners and Gatekeepers (e.g. Google, which obtains revenue from Adwords) need to share responsibility. Otherwise we will lose professional production. Profit-based businesses just can't compete with business such as Skype, YouTube and Facebook - which all run on a "Pre-Revenue" model.

James seemed to agree with all this and noted that the music business appears to be giving up on Digital Rights Management. Louise said she was on a similar wavelength in terms of online protection and agreed that it is not sustainable to compete with Pre-Revenue models. Dr. Makeen said he believes the next step might be for authors and copyright owners to agree to a social contract, in which exclusive rights are given up in return for guaranteed remuneration. He also wondered whether a global licensing scheme should be considered, as well as whether the notion of exclusive rights is a myth (because public performance rights cannot be exercised individually and is collected collectively).

Peter Day put a question to the panel as to whether there are protectable rights any more. If so, are they enforceable insofar as they are affordable? Peter noted Stevie's point that enforcement is a lot trickier now. Stevie responded to say that she believes there needs to be a balance between opportunities and threats, and that Future doesn't operate in the "general use" category, but more in the "extreme hobby-ists" category.

Following a comment that rights clearance should be simplified, Louse said care would need to be taken to ensure the process of simplification does not in fact complicate things. Following a further question as to whether 70 year copyright protection is too long, and whether the duration of protection for copyright and patents should be rethought, Louise said that if the market is looking at that, then it would be something CBI would look at.

Around this stage, Peter Day noted that the meeting had run over time and there was no more time for questions. Which meant, whilst furiously scribbling down notes of the meeting (some of which I still can't read!) I had also lost track of time. This meant that I suddenly realised that the question emailed (prior to the meeting) on behalf of the 1709 Copyright Blog, was not answered. The question was:
"On the issue of ‘IP will save the British Economy’, the big question is how. If the rights are well-protected but are in the hands of non-UK owners who choose not to manufacture in the UK but merely license the sale or use of their rights, won’t we see a huge net outflow of funds from the UK through royalties repatriated to other economies and/or tax havens?".
Perhaps some of the participants at the meeting will offer some comments to the question instead.


Crosbie Fitch said...

I was wondering if anyone would notice that wee issue in terms of where the money goes.

Beyond copyright, an Internet 'tax' is obviously even more effective in simply siphoning a nation's revenue into the media corporations' bank vaults.

The government charges 40% on earnings. The media corporations get about 70% of the disposable portion of the rest.

This is why it's obviously more lucrative for the actual producers of culture (not the publishing corporations that pay them peanuts) to sell the work, not the reproduction monopoly arising. And this is more lucrative for the nation, given the populace is no longer charged a 9,900% mark-up on what they would have paid if they'd paid the producer directly.

And the best bit of all is that Emmanuel Nimley doesn't end up doing 6 months in jail for pointing his iPhone at the cinema screen.

The question is, will the MPs sell the country down the river to the media corps for kickbacks, or will it realise how much more prosperous and culturally productive the country would be if it simply abolished the monopolies?

You know well how seductive the former is, so we must conclude that criticism of copyright is soon to be classed as sedition.

The corporations will tax us, but we will get nothing in return, no healthcare, no defence, not even the representation enjoyed by shareholders. We will just kid ourselves that it's all worth the 'content' we pay through the nose to watch, even if we have no liberty to share or build upon it.

Gary Spokes said...

The second CLA session left me aghast at the determination to control the horse after it was long out of the stable; it has already jumped three hedges and living a wonderful life in a new farm!

As Stevie Spring points out, the web is for free stuff once your online provider is paid his rental. Forget the rights and wrongs of this; provide free stuff that demonstrates your products quality and entices to sales of other things. One example is prominent business writers, some provide a wealth of free ideas and works – but – also know they can charge handsomely for imminent offers of speaking engagements. Speaking engagements can’t be replicated, high profile speakers help event organisers sell tickets. Not perfect for all industries but demonstrates a braver approach than trying to protect what can never be fully protected.

I had thought the increase in ticket sales for live music was a breakthrough for artists (big and small) who have lost income due to illegal downloading. Alas, the figures for the rapid annual increase (above inflation) of ticket prices means the fans of quality works are being short changed, Again!

My views are not entirely robust, but, they are a humble attempt to broaden the thinking around what the digital world actually looks like, lessons from the past do not always apply, the new rule book is there to be written – but - with a willingness to embrace new opportunities not just to rely on the old frameworks designed for physical goods.