4.1 In developing the UK’s IP framework to maximise economic growth and innovation, copyright presents our biggest challenge, but also our biggest opportunity. It came as no surprise that copyright was the subject of most responses to the Review’s Call for Evidence.
4.2 It is now clear to everyone that digital technology is transforming copyright, for better and
for worse. Infringement is widespread; understanding of the law is poor; millions of works cannot be digitised for conservation or accessed at all and content industry business models are under strain, prompting companies to look to Government for vigorous enforcement action against consumers and suppliers of “pirate” content.
4.3 In the last two decades, it has sometimes appeared that the very idea of copyright as a protected source of income to creators is under threat, swept away in a philosophical tide which proclaims a world wide web which is open, unmanaged and essentially the domain of free speech and “free” goods. More recently, this narrative has been tempered as some of the world’s biggest companies, such as Microsoft, Apple, Google and Facebook, have successfully deployed business models which depend upon managing the internet. At the time of writing, Apple is the most highly valued technology company in global stock markets and Facebook is establishing itself as a primary marketing medium for consumer facing companies. The further evolution of the internet will depend on the ongoing interchange between the actions of large companies and those of individual users.1
4.4 In the UK, substantial corporate players like BT, BSkyB, Vodafone and TalkTalk have crossed the boundaries which used to separate operators of telecommunications networks and suppliers
of content. Hundreds of smaller UK businesses are successful designers of applications for smart phones made by the likes of Apple, Google, Samsung, Sony and Nokia. Digital has brought huge bene ts to publishers like Pearson and Reed Elsevier. A case study commissioned by the Review on the video on demand market found competition and innovation thriving.2 A recent report on the audio visual industries also cites the high levels of innovation and economic value in that sector.3
4.5 Digital technology is thus enabling UK businesses to serve UK and global markets better, using innovation to raise productivity and exploit new outlets.
Review of Intellectual Property and Growth 26
“Numerous on-demand services have already launched in the UK, and the UK’s non-linear market is
expected to demonstrate strong growth, potentially reaching a tipping point as broadband services
become increasingly available through televisions. We expect this to lead to increased competition,
choice for consumers, and a downward pressure on prices.” PACT (Producers Alliance for Cinema
and Television) submission
“The relationship between creativity and technology is and always has been symbiotic...Technology devices and information networks cannot exist without content; and much of this will be of artistic and cultural excellence. Search engines and video websites would be far less successful were it not for the fact that users are seeking out high quality, professional content (as well as the user generated, amateur works).” Publishers Association submission
“News Corporation, and the content industries in general, are driving much of the innovation online
in the transition to new digital business models which broaden the scope of the legitimate market, offering consumers greater ease of access and more choice whilst asserting and protecting the value of what we have created.” News Corporation Submission
“The relationship between creativity and technology is and always has been symbiotic...Technology devices and information networks cannot exist without content; and much of this will be of artistic and cultural excellence. Search engines and video websites would be far less successful were it not for the fact that users are seeking out high quality, professional content (as well as the user generated, amateur works).” Publishers Association submission
“News Corporation, and the content industries in general, are driving much of the innovation online
in the transition to new digital business models which broaden the scope of the legitimate market, offering consumers greater ease of access and more choice whilst asserting and protecting the value of what we have created.” News Corporation Submission
4.6 In this context, successive UK Governments have nurtured the creative industries, with good
reason. The UK has the largest national creative sector in Europe. It invests over £20bn every year
in creating intangible assets protected by copyright.4 Creative industries, according to Government
gures, account for 5.6 per cent of UK gross value added. The Government’s recent Plan for Growth
noted that the exports of the digital creative industries are third only to those of advanced engineering
and nancial and professional services.5
4.7 Digital technology also enables citizens to arrange consumption of digital content around
their own preferences. Many have become creators and publishers (by posting their own music, video and photos online), or reusers (by making “mash ups” and other derivative works). Today, students arrive at UK university lm courses already pro cient in the video editing skills which ten years ago dominated their learning programmes. These changes open up channels for the development of new services from micro businesses and SMEs, which are potent forces for job creation, not only in world class creative industry centres like London, but also in many UK regional locations. The success of the Scottish video games sector is an important example of the latter.
4.8 The Review agrees with the Plan for Growth when it says that creative industries “rely on a strong Intellectual Property (IP) regime” but also when it adds: “the interests of IP holders need to be balanced against those of potential innovators, protecting incentives to invest in content, without damaging innovation and opportunities for new entrants.”6 Copyright seeks to achieve this by giving creators temporary exclusive rights (life plus 70 years for most works) to their original creations, enabling them to exploit them economically or to license them to others.
4.9 Economists regard copyright as a trade off between the positive effects of the incentives provided to creators and commercialisers of content. 7 The negative effects of establishing monopoly rights for those parties, which have the potential to restrict supply and to in ate transaction costs.
4.7 Digital technology also enables citizens to arrange consumption of digital content around
their own preferences. Many have become creators and publishers (by posting their own music, video and photos online), or reusers (by making “mash ups” and other derivative works). Today, students arrive at UK university lm courses already pro cient in the video editing skills which ten years ago dominated their learning programmes. These changes open up channels for the development of new services from micro businesses and SMEs, which are potent forces for job creation, not only in world class creative industry centres like London, but also in many UK regional locations. The success of the Scottish video games sector is an important example of the latter.
4.8 The Review agrees with the Plan for Growth when it says that creative industries “rely on a strong Intellectual Property (IP) regime” but also when it adds: “the interests of IP holders need to be balanced against those of potential innovators, protecting incentives to invest in content, without damaging innovation and opportunities for new entrants.”6 Copyright seeks to achieve this by giving creators temporary exclusive rights (life plus 70 years for most works) to their original creations, enabling them to exploit them economically or to license them to others.
4.9 Economists regard copyright as a trade off between the positive effects of the incentives provided to creators and commercialisers of content. 7 The negative effects of establishing monopoly rights for those parties, which have the potential to restrict supply and to in ate transaction costs.
Review of Intellectual Property and Growth 27
4.10 In practice, most content rights are acquired and exploited by intermediaries – publishers or
recording companies – and most individual rights holders are rewarded through intermediaries. The
UK system operates chie y through a combination of individually rewarded rights, and a network of
collective rights, where users pay to access broad collections of copyright material, administered by
collecting societies on behalf of the owners of individual parts of the collection.
4.11 Furthermore, copyright is increasingly important to business sectors outside of the creative industries. The exploitation of digital in order to create new and more ef cient services generally relies on transmission, display and analysis of data through copying, which digital technology makes possible almost instantly and on a global scale. The challenge is to respond to the turbulence which this technology has caused for copyright in a way that facilitates the emergence of new businesses, without undermining the basic model of copyright, which has sustained creative businesses for more than three centuries.
4.12 We deal more fully with emerging sectors of the digital economy in Chapter 5 and with enforcement issues in Chapter 8. In this chapter we examine how best to ensure that UK digital markets for copyright works are transparent, contestable and supportive to innovation, so that transaction costs are minimised and investment signals clari ed. The goal is a functioning online licensing market to support delivery of legitimate content to consumers in attractive and competing offerings, through the many available channels (old and new). Realising these opportunities will offer rewards within the UK market, but will also over time support the sale of UK content and services in international markets.
Copyright Licensing
4.13 The economic importance of the UK’s copyright intensive industries makes ef cient markets for copyright licensing strategically important to the UK’s growth prospects. We need the system, and in particular the mechanics of clearing rights, to adapt to serve the market opportunities which digital speeds and volumes make possible. Our recommendations address a range of issues designed to improve licensing procedures.
A Digital Copyright Exchange
4.14 Different sectors have been differently affected by digital. Newspapers have struggled to combine physical and online business models, but there are signs that some are starting to emerge from the worst of this turbulence. Music initially saw lower distribution costs when CDs took market share from vinyl, but the industry then faced a threatened collapse of value, as unauthorised distribution at near zero cost became available through the internet. Publishing faces new challenges as sales of ebooks have overtaken paperback books in the US market.8 Gatherings of publishers worry about the growth of piracy.9 The popularity of tablets like the iPad has created new markets
for magazines, but also at the price of higher piracy levels, as reported to the Review by magazine
publishers. Television, lm and video games have suffered less disruption to date only because broadband speeds and earlier generations of mobile phones were not hospitable to large video les, but this too is rapidly changing, as the internet matures as an audio visual network.
4.11 Furthermore, copyright is increasingly important to business sectors outside of the creative industries. The exploitation of digital in order to create new and more ef cient services generally relies on transmission, display and analysis of data through copying, which digital technology makes possible almost instantly and on a global scale. The challenge is to respond to the turbulence which this technology has caused for copyright in a way that facilitates the emergence of new businesses, without undermining the basic model of copyright, which has sustained creative businesses for more than three centuries.
4.12 We deal more fully with emerging sectors of the digital economy in Chapter 5 and with enforcement issues in Chapter 8. In this chapter we examine how best to ensure that UK digital markets for copyright works are transparent, contestable and supportive to innovation, so that transaction costs are minimised and investment signals clari ed. The goal is a functioning online licensing market to support delivery of legitimate content to consumers in attractive and competing offerings, through the many available channels (old and new). Realising these opportunities will offer rewards within the UK market, but will also over time support the sale of UK content and services in international markets.
Copyright Licensing
4.13 The economic importance of the UK’s copyright intensive industries makes ef cient markets for copyright licensing strategically important to the UK’s growth prospects. We need the system, and in particular the mechanics of clearing rights, to adapt to serve the market opportunities which digital speeds and volumes make possible. Our recommendations address a range of issues designed to improve licensing procedures.
A Digital Copyright Exchange
4.14 Different sectors have been differently affected by digital. Newspapers have struggled to combine physical and online business models, but there are signs that some are starting to emerge from the worst of this turbulence. Music initially saw lower distribution costs when CDs took market share from vinyl, but the industry then faced a threatened collapse of value, as unauthorised distribution at near zero cost became available through the internet. Publishing faces new challenges as sales of ebooks have overtaken paperback books in the US market.8 Gatherings of publishers worry about the growth of piracy.9 The popularity of tablets like the iPad has created new markets
for magazines, but also at the price of higher piracy levels, as reported to the Review by magazine
publishers. Television, lm and video games have suffered less disruption to date only because broadband speeds and earlier generations of mobile phones were not hospitable to large video les, but this too is rapidly changing, as the internet matures as an audio visual network.
Review of Intellectual Property and Growth 28
4.15 These changes bring ever more complex ways of using, aggregating and distributing content,
with attendant increases in complexity of licensing. The sectors affected have responded. The UK
has over 7010 licensed digital music services - more than the US. But this has so far failed to establish
a suf ciently robust UK market in online music sales to satisfy consumers and so push back the
incursion of free services based on copyright infringement.
4.16 There is no simple answer. Recorded music companies seek to establish price levels for digital music tracks that are acceptable to consumers, while also seeking to meet existing (if shrinking) demand for physical formats like CDs. Creators, service providers and consumers all nd it dif cult to assess the relative values of radio, internet streaming and on demand services. One element in the solution may be new mechanisms of enforcement to curb illicit competition; as envisaged in the Digital Economy Act (DEA). Another is to make sure that there is a healthy, contestable market in buying and selling rights, so that companies wishing to sell music content and services to consumers can compete to license rights in the most ef cient and attractive way possible.
4.17 Examples of inef ciency in copyright licensing are not dif cult to nd. The BBC has said that
it took nearly ve years to assemble the rights necessary to launch its popular iPlayer service. Among a group of young technology SMEs the Review met at a meeting at TechHub, half claimed to have
had dif culty licensing others’ IP across all rights. One SME, providing on demand streaming of radio shows and DJ mixes, reported it took about nine months of lobbying music collecting societies to make any headway on licensing. Others said that licensing discussions are inconsistent, with some users offered access to licences and others denied without clear explanation. Some were met with threats of legal action rather than a business discussion about terms. Others reported that it was simply impossible to get the information needed on what terms might be available, since there was no precise clarity about who should be contacted and how to discuss licensing needs.11
4.18 In discussing these issues with those responsible for selling licences, a routine response is that many SMEs are not willing or able to pay prices acceptable to the licensors and/or that their new business models are not viable. These are the judgments that licensors in a free market are entitled to make. But they also indicate the dif culties which arise when a market fails to deliver clear signals about price and other terms of trade as a matter of routine.
4.19 Furthermore, many individual creators and designers, face these challenges from the other side in marketing their works. They would like to operate in a more accessible licensing environment.
4.16 There is no simple answer. Recorded music companies seek to establish price levels for digital music tracks that are acceptable to consumers, while also seeking to meet existing (if shrinking) demand for physical formats like CDs. Creators, service providers and consumers all nd it dif cult to assess the relative values of radio, internet streaming and on demand services. One element in the solution may be new mechanisms of enforcement to curb illicit competition; as envisaged in the Digital Economy Act (DEA). Another is to make sure that there is a healthy, contestable market in buying and selling rights, so that companies wishing to sell music content and services to consumers can compete to license rights in the most ef cient and attractive way possible.
4.17 Examples of inef ciency in copyright licensing are not dif cult to nd. The BBC has said that
it took nearly ve years to assemble the rights necessary to launch its popular iPlayer service. Among a group of young technology SMEs the Review met at a meeting at TechHub, half claimed to have
had dif culty licensing others’ IP across all rights. One SME, providing on demand streaming of radio shows and DJ mixes, reported it took about nine months of lobbying music collecting societies to make any headway on licensing. Others said that licensing discussions are inconsistent, with some users offered access to licences and others denied without clear explanation. Some were met with threats of legal action rather than a business discussion about terms. Others reported that it was simply impossible to get the information needed on what terms might be available, since there was no precise clarity about who should be contacted and how to discuss licensing needs.11
4.18 In discussing these issues with those responsible for selling licences, a routine response is that many SMEs are not willing or able to pay prices acceptable to the licensors and/or that their new business models are not viable. These are the judgments that licensors in a free market are entitled to make. But they also indicate the dif culties which arise when a market fails to deliver clear signals about price and other terms of trade as a matter of routine.
4.19 Furthermore, many individual creators and designers, face these challenges from the other side in marketing their works. They would like to operate in a more accessible licensing environment.
“Clearing rights is a cumbersome and costly exercise, and it can be dif cult to know who owns the
rights to a given piece of content in the rst place. Those problems are exacerbated for new entrants
who want to aggregate content from multiple sources, possibly curating it in novel ways or layering
value-added services on top of it.” Pearson submission
“Obtaining permission from rights-holders can be a costly and onerous process for example, limiting the degree to which protected work can be legally used for innovative new purposes.” CBI submission
“Obtaining permission from rights-holders can be a costly and onerous process for example, limiting the degree to which protected work can be legally used for innovative new purposes.” CBI submission
Review of Intellectual Property and Growth 29
4.20 It is widely acknowledged that the solution to these dif culties lies in the very technologies
that created the problem. Just as digital technologies provide new and exciting ways of using content,
they offer a means of transforming the ef ciency of licensing. As the submission from the European
Publishers Council states: “the answer to the machine is in the machine”.
“The vision for users is that rights licensing becomes a one-click process, with the communication
of permissions and licensing terms taking place automatically. As with the Domain Name System,
in which a series of machine-to-machine interactions connects a user to a webpage in a matter of a second or less, much or all of the complexity can be hidden from the users. This would have a real and meaningful impact on how content is managed online.” News Corporation submission
“Automated Licensing is the Future.” Reed Elsevier submission
“As in every other part of our lives, we need to move away from the traditional people-intensive mechanisms that have characterised the management of copyright and embrace machine-to-machine management of rights and permissions.” European Publishers Council submission
“Remove friction and uncertainty from the licensing process by enabling creators, rights holders and their representatives directly to conclude equitable licensing transactions with users in a quick and simple way.” Stop 43 submission
of permissions and licensing terms taking place automatically. As with the Domain Name System,
in which a series of machine-to-machine interactions connects a user to a webpage in a matter of a second or less, much or all of the complexity can be hidden from the users. This would have a real and meaningful impact on how content is managed online.” News Corporation submission
“Automated Licensing is the Future.” Reed Elsevier submission
“As in every other part of our lives, we need to move away from the traditional people-intensive mechanisms that have characterised the management of copyright and embrace machine-to-machine management of rights and permissions.” European Publishers Council submission
“Remove friction and uncertainty from the licensing process by enabling creators, rights holders and their representatives directly to conclude equitable licensing transactions with users in a quick and simple way.” Stop 43 submission
4.21 Although many of these proponents of modernised licensing are large rms or representative
bodies it is SMEs who have most to gain from more accessible, transparent markets for rights. Much
evidence to the Review reminded us that there are large numbers of small enterprises working within
the copyright intensive industries, from individual photographers and writers to technology start ups.
We have noted elsewhere in the Review the strategic importance of young innovative rms to growth.
When excessive transaction costs arise in digital markets, all players lose, but – because SMEs are
least equipped to cope with transaction costs and complexities – they lose more than most.12 For the
same reason they suffer most from the absence of automatic licensing facilities con gured to make
legitimate use of their own copyright works.
4.22 How could the UK achieve the fast, reliable and secure licensing exchange that so many businesses say they would welcome? How can we ensure that it contains all the necessary features so that digital content markets become satisfactorily contestable; provides clearer signals to potential investors and connects to emerging digital licensing systems in other countries?
4.22 How could the UK achieve the fast, reliable and secure licensing exchange that so many businesses say they would welcome? How can we ensure that it contains all the necessary features so that digital content markets become satisfactorily contestable; provides clearer signals to potential investors and connects to emerging digital licensing systems in other countries?
Review of Intellectual Property and Growth 30
4.23 The key bene ts of such an exchange would be:
For creators:
For creators:
-
improved routes to market;
-
a means to record unmistakeably the ownership of rights, and the terms on which they are
available;
-
clearer understanding of licensing terms and conditions throughout the market and so more
realistic judgments about their own business models;
-
increased options to license an individual creator’s works directly;
-
a defence against rogue “orphaning” of works, through digital ngerprinting (see orphan works
section below);
-
a single point of access to UK collecting societies and eventually to competitor societies in
other territories.
For intermediary rights holders:
-
automated licensing via standard terms if offered by the rights holder;
-
ready identi cation of rights holder’s negotiating agent to facilitate licensing;
-
decreased risk of infringements by providing clarity as to what is licensed and what is not via
terms checkable at the click of a mouse;
-
a more level playing eld for new market entrants and incumbents;
-
a better informed market.
For consumers and other rights users:
-
a place where those seeking to use copyright works can quickly identify the rights holder and
secure a licence, either through automation or via a negotiating agent;
-
more choice, better services and lower prices for consumers from a more open and
contestable market further up the supply chain.
For all:
-
increased transparency in the marketplace as to relative price (though normal business
assumptions would apply to non-disclosure of commercially sensitive terms);
-
facilitation of audit by users and any regulatory authority;
-
reduced transaction costs;
-
rst port of call/ rst tier of education and information for newcomers to copyright issues;
-
low cost resolution of disputes.
Review of Intellectual Property and Growth 31
4.25 As technology has advanced, a number of other sector based or geography based initiatives
have been launched. We are aware of at least half a dozen examples.iiiiIHowever, these initiatives
are disparate, some appear to have lost momentum, and they have not so far produced the common
standards and principles which would realise the potential of digital licensing.
4.26 It is also very likely that some version of this idea will eventually establish itself. The question is not if, but when. At this juncture, the UK Government still has a choice whether to take a lead
and bring about such arrangements by encouraging the relevant players to come together, within an agreed framework of rules, or simply to wait for a suf ciently strong market player or series of players to impose their own rules.
4.27 This choice has been vividly evident during the Review in the shape of the Google Books debate. This deal, negotiated in great detail by Google and parts of the US publishing industry, would have turned Google’s14 unlicensed approach to the mass digitisation of the world’s books into what is, in effect, an online licensing system, complete with stakeholder governance and disputes procedures. However, in March 2011, a US judge rejected it, referring to concerns about the advantageous position the settlement would give Google.15
4.28 During the Review, conversations about the Google Books Agreement tended to divide
people between those who see Google as the likeliest and most ef cient reshaper of global markets
in digital content, because its business model relies upon connecting online consumers with digital content in all media; and those who point with concern to Google’s already very considerable market power, pro ting from delivering access to other companies’ content, whether provided by legitimate services or not. Google’s size and reach in global digital markets has already provoked the attention of EU competition authorities. Google itself may be at a point of recognition that its size requires it to proceed at least to some extent by negotiation and agreement rather than only by bold entrepreneurial strikes which leave courts, regulators and governments gasping to catch up.
4.29 The Review’s judgment is that the Government has a severely time limited opportunity to bring about in the UK the best copyright licensing system in the world. To achieve this will require rm, even inspirational leadership, given the high commercial stakes for a large number of competing rms. The prize is to build on the UK’s current competitive advantage in creative content to become a leader in licensing services for global content markets; in short to make the UK the best place in the world to do business in digital content. It is not fanciful to suggest that such a development would be of comparable importance over time to the UK’s position as the leading service support centre in the European time zone in nancial services.
4.30 It is important to be clear that we are not advocating that Government should itself create this Digital Copyright Exchange. That way lies a nightmare of IT procurement followed by the birth of a white elephant. The task for Government is to use its convening power, to show leadership to achieve an outcome which others have not been able to manage. It will involve bringing together all relevant interests, and nding ways to overcome divergences of interest to secure the bigger prize in a way that takes account of the interests of all. More than a nudge, perhaps, but less than a full arm lock with menaces.
ii Accessible Registries of Rights Information and Orphan Works (Arrow), Automated Content Access Protocol (ACAP),
Global Repertoire Database, Picture Licensing Universal System (Useplus), the ONIX standards for Books, Serials and Licensing Terms, OnLineArt (OLA)
4.26 It is also very likely that some version of this idea will eventually establish itself. The question is not if, but when. At this juncture, the UK Government still has a choice whether to take a lead
and bring about such arrangements by encouraging the relevant players to come together, within an agreed framework of rules, or simply to wait for a suf ciently strong market player or series of players to impose their own rules.
4.27 This choice has been vividly evident during the Review in the shape of the Google Books debate. This deal, negotiated in great detail by Google and parts of the US publishing industry, would have turned Google’s14 unlicensed approach to the mass digitisation of the world’s books into what is, in effect, an online licensing system, complete with stakeholder governance and disputes procedures. However, in March 2011, a US judge rejected it, referring to concerns about the advantageous position the settlement would give Google.15
4.28 During the Review, conversations about the Google Books Agreement tended to divide
people between those who see Google as the likeliest and most ef cient reshaper of global markets
in digital content, because its business model relies upon connecting online consumers with digital content in all media; and those who point with concern to Google’s already very considerable market power, pro ting from delivering access to other companies’ content, whether provided by legitimate services or not. Google’s size and reach in global digital markets has already provoked the attention of EU competition authorities. Google itself may be at a point of recognition that its size requires it to proceed at least to some extent by negotiation and agreement rather than only by bold entrepreneurial strikes which leave courts, regulators and governments gasping to catch up.
4.29 The Review’s judgment is that the Government has a severely time limited opportunity to bring about in the UK the best copyright licensing system in the world. To achieve this will require rm, even inspirational leadership, given the high commercial stakes for a large number of competing rms. The prize is to build on the UK’s current competitive advantage in creative content to become a leader in licensing services for global content markets; in short to make the UK the best place in the world to do business in digital content. It is not fanciful to suggest that such a development would be of comparable importance over time to the UK’s position as the leading service support centre in the European time zone in nancial services.
4.30 It is important to be clear that we are not advocating that Government should itself create this Digital Copyright Exchange. That way lies a nightmare of IT procurement followed by the birth of a white elephant. The task for Government is to use its convening power, to show leadership to achieve an outcome which others have not been able to manage. It will involve bringing together all relevant interests, and nding ways to overcome divergences of interest to secure the bigger prize in a way that takes account of the interests of all. More than a nudge, perhaps, but less than a full arm lock with menaces.
ii Accessible Registries of Rights Information and Orphan Works (Arrow), Automated Content Access Protocol (ACAP),
Global Repertoire Database, Picture Licensing Universal System (Useplus), the ONIX standards for Books, Serials and Licensing Terms, OnLineArt (OLA)
Review of Intellectual Property and Growth 32
Building the Digital Copyright Exchange
4.31 The aim is to establish a network of interoperable databases to provide a common platform for licensing transactions. By developing an open, standardised approach to data it will be possible to:
4.33 Much of the experience and technical expertise required for such a digital copyright exchange already exists in current initiatives and registries, including those referred to above. Content creators, publishers and rights management organisations also have their own internal systems. Some have compared the task to the successful management of domain names on the internet. The initiative should draw on and build on experience of these systems as it creates a standardised approach. The Government should also draw in the expertise of internet service providers (ISPs) and other internet technology companies to help design and build the service.
4.34 But mere Government goodwill and blandishments will not suf ce alone to bring the exchange into existence. Participation should be genuinely voluntary but the Government should also ensure that participation in the Digital Copyright Exchange confers clear bene ts and that there are costs of voluntary exclusion. Incentives the Government should explore include:
4.31 The aim is to establish a network of interoperable databases to provide a common platform for licensing transactions. By developing an open, standardised approach to data it will be possible to:
-
attach copyright conditions and rights information directly to digital content in a uniform
machine readable fashion (so called meta data);
-
license across delivery technologies, to facilitate open competition between services based on
different technologies;
-
adapt to emerging technologies;
-
meet the speci c needs of different sectors while remaining governed by common standards
and principles;
-
bring in licensing for other rights, such as design right (which the Review considers in Chapter
7).
4.33 Much of the experience and technical expertise required for such a digital copyright exchange already exists in current initiatives and registries, including those referred to above. Content creators, publishers and rights management organisations also have their own internal systems. Some have compared the task to the successful management of domain names on the internet. The initiative should draw on and build on experience of these systems as it creates a standardised approach. The Government should also draw in the expertise of internet service providers (ISPs) and other internet technology companies to help design and build the service.
4.34 But mere Government goodwill and blandishments will not suf ce alone to bring the exchange into existence. Participation should be genuinely voluntary but the Government should also ensure that participation in the Digital Copyright Exchange confers clear bene ts and that there are costs of voluntary exclusion. Incentives the Government should explore include:
•
•
•
•
•
•
providing that remedies, for example damages, are greater for infringement of rights to works
available through the licensing exchange than for other works;
making DEA sanctions apply only to infringements involving works available through the exchange;
requiring that an orphan works search requires checking of the licensing exchange as part of a diligent search (see the orphan works discussion below);
giving creators the right to withdraw from future publisher/record companies contracts where the latter are not marketing a creator’s works through the exchange;
putting publicly owned copyright material on the Copyright Exchange at day one and exerting
its in uence on other public bodies to do likewise;
providing funding for the costs of establishing the exchange (including development of IT) –
possibly from IPO reserves;iiiiiiII
The IPO’s reserves stood at £55m at the end of March 2010.
making DEA sanctions apply only to infringements involving works available through the exchange;
requiring that an orphan works search requires checking of the licensing exchange as part of a diligent search (see the orphan works discussion below);
giving creators the right to withdraw from future publisher/record companies contracts where the latter are not marketing a creator’s works through the exchange;
putting publicly owned copyright material on the Copyright Exchange at day one and exerting
its in uence on other public bodies to do likewise;
providing funding for the costs of establishing the exchange (including development of IT) –
possibly from IPO reserves;iiiiiiII
The IPO’s reserves stood at £55m at the end of March 2010.
iii
Review of Intellectual Property and Growth 33
• working with Internet search providers to ensure that sites that are part of the exchange
are agged and highlighted to enable users readily to nd them before they encounter less
legitimate sites.
4.35 In order to achieve the necessary momentum to create the Digital Copyright Exchange, a highly respected gure will be needed to lead its formative stage. The goal should be to establish these new arrangements by the end of 2012.
4.36 With these incentives and a clear time bound process, together with the bene ts outlined above, a point will quickly be reached when the exchange becomes self propelling as the growing numbers of available rights available increases the value of the exchange, leading to still more rights holders joining. It would be relatively straightforward to fund the exchange’s running costs through a small user charge. This, for Government, is what success would look like.
4.37 A successful UK Digital Copyright Exchange, once established, would need light regulatory supervision, based upon a code of practice agreed at the outset. In Chapter 10 we make recommendations intended to equip the IPO better to adapt the IP framework to future developments. The IPO might take responsibility for oversight of the new Digital Copyright Exchange, as part of
its responsibility for copyright policy. An alternative would be to look to Ofcom which already has experience and expertise in issuing and overseeing national and international licensing processes, along with experience and responsibilities in online enforcement. Ofcom also has Competition Act powers, which would enable it to act as an effective rst tier watchdog of competition issues in the growing UK digital rights market.
4.38 It should be added that several submissions to the Call for Evidence and other representations by stakeholders identi ed particular dif culties with transaction processes for licensing music,
whether for digital distribution or for alternative uses such as in computer games. Respondents who identi ed problems include artists, new players in service provision and established international companies. Their complaints include: fragmentation of rights among a multiplicity of rights holders, costs of negotiation, lack of transparency, high up front charges for access to catalogues, marooning of an artist’s work where the publisher chooses to withhold it from the market, and non-disclosure agreements which prevent artists having transparent access to the terms on which they are paid for new services.
4.35 In order to achieve the necessary momentum to create the Digital Copyright Exchange, a highly respected gure will be needed to lead its formative stage. The goal should be to establish these new arrangements by the end of 2012.
4.36 With these incentives and a clear time bound process, together with the bene ts outlined above, a point will quickly be reached when the exchange becomes self propelling as the growing numbers of available rights available increases the value of the exchange, leading to still more rights holders joining. It would be relatively straightforward to fund the exchange’s running costs through a small user charge. This, for Government, is what success would look like.
4.37 A successful UK Digital Copyright Exchange, once established, would need light regulatory supervision, based upon a code of practice agreed at the outset. In Chapter 10 we make recommendations intended to equip the IPO better to adapt the IP framework to future developments. The IPO might take responsibility for oversight of the new Digital Copyright Exchange, as part of
its responsibility for copyright policy. An alternative would be to look to Ofcom which already has experience and expertise in issuing and overseeing national and international licensing processes, along with experience and responsibilities in online enforcement. Ofcom also has Competition Act powers, which would enable it to act as an effective rst tier watchdog of competition issues in the growing UK digital rights market.
4.38 It should be added that several submissions to the Call for Evidence and other representations by stakeholders identi ed particular dif culties with transaction processes for licensing music,
whether for digital distribution or for alternative uses such as in computer games. Respondents who identi ed problems include artists, new players in service provision and established international companies. Their complaints include: fragmentation of rights among a multiplicity of rights holders, costs of negotiation, lack of transparency, high up front charges for access to catalogues, marooning of an artist’s work where the publisher chooses to withhold it from the market, and non-disclosure agreements which prevent artists having transparent access to the terms on which they are paid for new services.
“Mobile now accounts for about 16% of digital music revenues. We have very direct experience,
therefore, of how dif cult, cumbersome, time-consuming and costly it is to create these new services.
Alternative business models based on attractive legitimate services are absolutely necessary in changing customer behaviour. However we are concerned that market structure may be an inhibitor to achieving change. The music sector in particular is very concentrated.” Mobile Broadband Group submission
therefore, of how dif cult, cumbersome, time-consuming and costly it is to create these new services.
Alternative business models based on attractive legitimate services are absolutely necessary in changing customer behaviour. However we are concerned that market structure may be an inhibitor to achieving change. The music sector in particular is very concentrated.” Mobile Broadband Group submission
Review of Intellectual Property and Growth 34
4.39 The particular issues identi ed in the music industry may be in part the result of this being the
rst creative sector to be affected by large scale piracy, and therefore grappling with the new reality
unaided by the example of others. Their existence suggests the music industry has even more than
others to gain from embracing the Digital Copyright Exchange.
A Single EU Market for Content: Cross Border Licensing
4.40 Twenty four years after the inauguration of the EU single market, it is surprising that a rm wishing to source or supply copyright content via a single channel across Europe is unable to do so.16 Licensing frameworks to achieve such transactions exist, but they make it far more dif cult than they should. It is still not possible for a service provider to get a single licence from a collecting society to exercise a right to repertoire in more than one country.
4.41 For rms looking to operate internationally this imposes disproportionate transaction costs, because they need local representatives and must negotiate the many rights systems in other countries, sometimes needing multiple licences from different societies. Where a service aims to launch across the EU, rights holders can also “hold out” if they know they are the last party to sign the agreement, and extract additional rents. Such costs can be excessive, and may lead to less than pan EU coverage, diminishing the market and even jeopardising the service. SMEs in particular would bene t from any reduction in transaction costs. The problem is reported to be acute in music licensing17 but is not con ned to music. Solving this problem offers particular opportunities to the UK because of our strength in the creative industries.
A Single EU Market for Content: Cross Border Licensing
4.40 Twenty four years after the inauguration of the EU single market, it is surprising that a rm wishing to source or supply copyright content via a single channel across Europe is unable to do so.16 Licensing frameworks to achieve such transactions exist, but they make it far more dif cult than they should. It is still not possible for a service provider to get a single licence from a collecting society to exercise a right to repertoire in more than one country.
4.41 For rms looking to operate internationally this imposes disproportionate transaction costs, because they need local representatives and must negotiate the many rights systems in other countries, sometimes needing multiple licences from different societies. Where a service aims to launch across the EU, rights holders can also “hold out” if they know they are the last party to sign the agreement, and extract additional rents. Such costs can be excessive, and may lead to less than pan EU coverage, diminishing the market and even jeopardising the service. SMEs in particular would bene t from any reduction in transaction costs. The problem is reported to be acute in music licensing17 but is not con ned to music. Solving this problem offers particular opportunities to the UK because of our strength in the creative industries.
“The potential to increase revenue from use of British music abroad is very strong but is dependent
on Government support for a favourable environment for licensing and sub-publishing overseas.” UK
Music submission
“A Digital Single Market embracing a pan-European licensing framework based on market principles is
critical to the success and growth of the EU digital music market.” Nokia submission
“... cross-border licensing would overturn the historical model which has traditionally forced creators and commercial users to deal separately with the national collecting societies of each territory in which they seek rights. This obliges content providers to segment their services based on national boundaries – increasingly an inef cient and burdensome way to deliver content over the internet, which is, by its very nature a global phenomenon.” RadioCentre submission
“A Digital Single Market embracing a pan-European licensing framework based on market principles is
critical to the success and growth of the EU digital music market.” Nokia submission
“... cross-border licensing would overturn the historical model which has traditionally forced creators and commercial users to deal separately with the national collecting societies of each territory in which they seek rights. This obliges content providers to segment their services based on national boundaries – increasingly an inef cient and burdensome way to deliver content over the internet, which is, by its very nature a global phenomenon.” RadioCentre submission
4.42 A exible framework for cross border licensing would lift barriers to the development of new
products and services across these markets, and would ultimately enable a UK Digital Copyright
Exchange to cover licensing across the EU. It would provide users and rights holders with a choice
of “one stop shops” for licences, which would guarantee all rights necessary for providing a service,
regardless of label or af liation. Collecting societies would compete, as they do not need to currently,
on overheads, ef ciency and service delivery, with potential bene ts for rights holders, service
providers and consumers. Collecting societies could be required to publish clear, comparable tariffs
for rights, enabling rights owners and users to choose which society to deal with based on the terms
available.
Review of Intellectual Property and Growth 35
4.43 Legal changes are needed at EU level to establish cross border licensing, and there is
appetite for this among the UK’s EU partners. The design of a new EU framework will need to take
account of the needs of particular sectors, including territoriality of pricing. Licences with a national
scope should remain available alongside cross border licences. An effective mechanism will also be
needed for resolving disputes between parties in the markets.
Collecting Societies: Standards and Transparency
4.44 Collecting societies ful l a valuable role in licensing markets, reducing transaction costs by enabling “many to many” licensing. But they can also harm competition because they are in effect natural monopolies. Collecting societies manage what is in some respects (to licensees at least) a regulatory cost, for instance by charging educational institutions to cover acts of copying of works, or by charging workplaces, bars and restaurants for playing music. Licensees do not generally enjoy the protections that are available to consumers when dealing with broadly comparable organisations, for instance utility companies.
4.45 Copyright licensing processes should provide clarity from creator to consumer, underlining the availability of incentives which are the economic rationale for copyright. In many areas collecting societies are responsible for how well that standard is maintained. Members of collecting societies need to have con dence that their interests are managed effectively, responsibly and transparently.
4.46 Potentially harmful effects of these situations will be mitigated if collecting societies are required to operate transparently and to common standards. The Review notes that some collecting societies are developing or have embraced codes of practice, and the British Copyright Council has put forward a set of principles for such codes. Consumer Focus has also suggested principles which these codes should incorporate.
4.47 Furthermore, if a legal mechanism for Extended Collective Licensing (such as we propose below) is created, it will enable some collecting societies to increase their activity in some markets and to act for rights holders who have not given them speci c authorisation. This make it all the more essential that they observe agreed standards of practice and transparency.
Collecting Societies: Standards and Transparency
4.44 Collecting societies ful l a valuable role in licensing markets, reducing transaction costs by enabling “many to many” licensing. But they can also harm competition because they are in effect natural monopolies. Collecting societies manage what is in some respects (to licensees at least) a regulatory cost, for instance by charging educational institutions to cover acts of copying of works, or by charging workplaces, bars and restaurants for playing music. Licensees do not generally enjoy the protections that are available to consumers when dealing with broadly comparable organisations, for instance utility companies.
4.45 Copyright licensing processes should provide clarity from creator to consumer, underlining the availability of incentives which are the economic rationale for copyright. In many areas collecting societies are responsible for how well that standard is maintained. Members of collecting societies need to have con dence that their interests are managed effectively, responsibly and transparently.
4.46 Potentially harmful effects of these situations will be mitigated if collecting societies are required to operate transparently and to common standards. The Review notes that some collecting societies are developing or have embraced codes of practice, and the British Copyright Council has put forward a set of principles for such codes. Consumer Focus has also suggested principles which these codes should incorporate.
4.47 Furthermore, if a legal mechanism for Extended Collective Licensing (such as we propose below) is created, it will enable some collecting societies to increase their activity in some markets and to act for rights holders who have not given them speci c authorisation. This make it all the more essential that they observe agreed standards of practice and transparency.
“Protect innovation and creativity by developing independent and light-touch regulation of collecting
societies which ensures a level playing- eld between existing and new entrants to the marketplace.
Whilst ensuring transparency, accountability and protection for individual rights holders, this will also reassure business customers and offer them legal certainty and assurance of a well-regulated sector.” Design and Artists Copyright Society (DACS) submission
societies which ensures a level playing- eld between existing and new entrants to the marketplace.
Whilst ensuring transparency, accountability and protection for individual rights holders, this will also reassure business customers and offer them legal certainty and assurance of a well-regulated sector.” Design and Artists Copyright Society (DACS) submission
“It would be bene cial to copyright users as a whole for the licensing schemes to be subject to more
stringent controls and regulation. Options for achieving this would be to set up a body to review and oversee licensing practices in the UK or to expand the powers of and accessibility to the Copyright Tribunal, for example by permitting representative actions or by giving it pro-active investigatory powers.” Pinsent Mason report for BECTA
stringent controls and regulation. Options for achieving this would be to set up a body to review and oversee licensing practices in the UK or to expand the powers of and accessibility to the Copyright Tribunal, for example by permitting representative actions or by giving it pro-active investigatory powers.” Pinsent Mason report for BECTA
Review of Intellectual Property and Growth 36
Recommendation: Copyright licensing.
-
In order to boost UK rms’ access to transparent, contestable and global digital markets,
the UK should establish a cross sectoral Digital Copyright Exchange. Government should appoint a senior gure to oversee its design and implementation by the end of 2012. A range of incentives and disincentives will be needed to encourage rights holders and others to take part. Governance should re ect the interests of participants, working to an agreed code of practice.
-
The UK should support moves by the European Commission to establish a framework for
cross border copyright licensing, with clear bene ts to the UK as a major exporter of copyright
works. Collecting societies should be required by law to adopt codes of practice, approved
by the IPO and the UK competition authorities, to ensure that they operate in a way that is
consistent with the further development of ef cient, open markets.
Extended Collective Licensing
4.48 Digital technology permits mass digitisation so that whole collections – such as national libraries, the BBC archive and private collections – may be made available online. But we are effectively prevented from taking this opportunity because of the transaction costs of assembling all the necessary permissions. The proposed Digital Copyright Exchange would alleviate this problem, but there would still be issues with owners of a small number of works in a collection who had not, possibly by oversight or because they are unknown, put those works into the system.
4.48 Digital technology permits mass digitisation so that whole collections – such as national libraries, the BBC archive and private collections – may be made available online. But we are effectively prevented from taking this opportunity because of the transaction costs of assembling all the necessary permissions. The proposed Digital Copyright Exchange would alleviate this problem, but there would still be issues with owners of a small number of works in a collection who had not, possibly by oversight or because they are unknown, put those works into the system.
“As identi ed by the European Commission’s “i2010” and “Digital Agenda” work programmes, much
societal and economic bene t could be derived from digitising and putting online the collections of
national libraries, as well as large archives and museums. Not only is there a strong demand for
access from consumers for such material, (the Europeana service receiving over 13 million hits an
hour at its launch), there is also strong evidence from technology SMEs and large telecommunication
companies such as Orange, presented to the Comité des Sages November 2010 hearing, as to
their demand for more digital content to be made available online in order for them to build new and innovative products and services around the content.” JISC submission
their demand for more digital content to be made available online in order for them to build new and innovative products and services around the content.” JISC submission
4.49 There is an urgent need for an ef cient way to license collections of works in as
straightforward a manner as possible, enabling transaction costs to be kept to a minimum.
4.50 Respondents to the Review, from sectors including music, TV, visual arts and archives, advocate a legal mechanism known as Extended Collective Licensing (ECL), to support mass licensing in speci c areas. Where it has been enabled by national legislation, ECL can permit a copyright licensing body (for example, a collecting society) which already operates on behalf of most of one class of rights holders in a sector (for example, literary authors), to assume the ability to represent in addition the other rights holders in that class who have not explicitly joined up to the organisation.
4.50 Respondents to the Review, from sectors including music, TV, visual arts and archives, advocate a legal mechanism known as Extended Collective Licensing (ECL), to support mass licensing in speci c areas. Where it has been enabled by national legislation, ECL can permit a copyright licensing body (for example, a collecting society) which already operates on behalf of most of one class of rights holders in a sector (for example, literary authors), to assume the ability to represent in addition the other rights holders in that class who have not explicitly joined up to the organisation.
Review of Intellectual Property and Growth 37
“The rights clearance regime needs to address both the need for a more streamlined and expedient
process and the development in recent years of “licensing-light” formulas to give creators and users an
especially exible framework, which is conducive to creative exchange, quotation and other derivative
uses. One possible effective tool in reducing the complexity of rights clearance is extended collective
licensing.” BSAC (British Screen Advisory Council) submission
4.51 The simpli ed regime can be good for users by providing legal certainty, good for creators
because it delivers remuneration, and good for consumers because it extends access to works.
It should not be imposed on a sector as a compulsory measure where there is no call for it, and individual creators should always retain the ability to opt out of ECL arrangements. There are successful precedents elsewhere in Europe.ivivVThe Review supports an extended collective licensing arrangement in the UK.
Orphan Works
4.52 The problem of orphan works – works to which access is effectively barred because the copyright holder cannot be traced – represents the starkest failure of the copyright framework to adapt. The copyright system is locking away millions of works in this category. The British Library points to ndings by the Arrow study of an orphaning rate of 40 per cent in some EU archives.
4.53 As long as this state of affairs continues, archives in old formats (for instance celluloid lm and audio tape) continue to decay, and further delay to digitisation means some will be lost for good. Beyond this cultural negligence, the unnecessary restriction on access involved in orphan works can, when applied to scienti c papers, even affect life saving research, as can be seen from the malaria research example discussed in the next chapter. Action on this issue cannot be deferred any longer.
It should not be imposed on a sector as a compulsory measure where there is no call for it, and individual creators should always retain the ability to opt out of ECL arrangements. There are successful precedents elsewhere in Europe.ivivVThe Review supports an extended collective licensing arrangement in the UK.
Orphan Works
4.52 The problem of orphan works – works to which access is effectively barred because the copyright holder cannot be traced – represents the starkest failure of the copyright framework to adapt. The copyright system is locking away millions of works in this category. The British Library points to ndings by the Arrow study of an orphaning rate of 40 per cent in some EU archives.
4.53 As long as this state of affairs continues, archives in old formats (for instance celluloid lm and audio tape) continue to decay, and further delay to digitisation means some will be lost for good. Beyond this cultural negligence, the unnecessary restriction on access involved in orphan works can, when applied to scienti c papers, even affect life saving research, as can be seen from the malaria research example discussed in the next chapter. Action on this issue cannot be deferred any longer.
During 2005-2007 the British Library undertook a project to digitise over 4,000 hours of sound
recordings and make them available online for researchers. One part of the project involved the digitisation of 220 oral history recordings of jazz musicians and promoters made in the late 1980s. In 2005-6 they pursued all 200 identi able outstanding permissions, but 53 could not be traced. Thirteen had died. The orphan works problem defeated even a relatively simple challenge – a group of works created relatively recently, each involving only two performers – the interviewer and the interviewee.
recordings and make them available online for researchers. One part of the project involved the digitisation of 220 oral history recordings of jazz musicians and promoters made in the late 1980s. In 2005-6 they pursued all 200 identi able outstanding permissions, but 53 could not be traced. Thirteen had died. The orphan works problem defeated even a relatively simple challenge – a group of works created relatively recently, each involving only two performers – the interviewer and the interviewee.
iv ECL has been in operation in the Nordic countries since the 1960s, used initially in broadcasting and now more widely.
KOPINOR, a large umbrella for Norwegian collecting societies has concluded a complex agreement with the Norwegian
National Library for making approximately 50,000 works by Norwegian authors available on the Internet. This took only
two months to complete.
KOPINOR, a large umbrella for Norwegian collecting societies has concluded a complex agreement with the Norwegian
National Library for making approximately 50,000 works by Norwegian authors available on the Internet. This took only
two months to complete.
Review of Intellectual Property and Growth 38
4.54 It is dif cult to put a rm value on unlocking orphan works, but it is complacent to assume
that value is minimal just because the works are not “in print”. The British Film Institute estimates that
if legal provisions enabled it to trade in orphan works it might generate an additional annual gross
income for itself of more than £500,000. It is very possible that some real discoveries are hidden in
these archives and it is certain that new generations of creators will use some of these works in new
ways – just as Romeo and Juliet led to West Side Story and scores of other adaptations – allowing
new economic value to be realised. Opening up orphan works is a move to which there is no national
economic downside.
4.55 These works raise particular dif culties in the context of mass digitisation. Libraries and archives seek to digitise collections, and have the technological capacity to do so and to provide access to them for users, but they are unable to act where rights holders cannot be found for some
of the works, because to digitise those works could be a copyright infringement. The issue is exacerbated in that where rights information is lacking, it is often not even clear whether works are still in copyright or not. There are two distinct situations to consider: mass licensing of collections which include some orphans, and use of individual orphan works.
4.56 As far as mass licensing goes, a number of submissions to the Review, including that of the British Copyright Council, have suggested the use of extended collective licensing on the Nordic model. The Review agrees with that broad approach. A scheme should involve a diligent search of rights registries (to ensure the supposed orphans are not in fact owned and opted out of the collective licensing scheme). Such searches would be made much easier once the Digital Copyright Exchange proposed in this review is functioning. Following diligent search, a licence would be issued. Any fees paid should be held by the collecting society running the ECL scheme until the owner is identi ed, or a reasonable period of time elapses, in which case the monies should be used for social or cultural purposes, or perhaps as a contribution to the running costs of the Digital Copyright Exchange.
4.57 For licensing of individual works, a similar system can be envisaged, but a more tailored approach is possible. That would involve Government granting an authorisation to deal in a speci c work where the copyright owner has not been found or identi ed after a diligent search. Should an owner later come forward, future use of the work from that point would be subject to negotiation, but there would be no liability for past use beyond any licence fee set by Government or its appointed agent.
4.58 The system should also not impose inappropriate costs, particularly on use of materials
which were not created for commercial purposes, or which might be found to be out of copyright if the rights information were available. Therefore, in most cases the fee for use of orphan works would be nominal, recognising that the works involved represent a national treasure trove. We recognise that there will be concerns from some rights holders who fear that a growing resource of almost free to use orphan works could injure markets for other works. This is a good example of a case where wider economic interest outweighs the perceived risk to rights holders.
4.55 These works raise particular dif culties in the context of mass digitisation. Libraries and archives seek to digitise collections, and have the technological capacity to do so and to provide access to them for users, but they are unable to act where rights holders cannot be found for some
of the works, because to digitise those works could be a copyright infringement. The issue is exacerbated in that where rights information is lacking, it is often not even clear whether works are still in copyright or not. There are two distinct situations to consider: mass licensing of collections which include some orphans, and use of individual orphan works.
4.56 As far as mass licensing goes, a number of submissions to the Review, including that of the British Copyright Council, have suggested the use of extended collective licensing on the Nordic model. The Review agrees with that broad approach. A scheme should involve a diligent search of rights registries (to ensure the supposed orphans are not in fact owned and opted out of the collective licensing scheme). Such searches would be made much easier once the Digital Copyright Exchange proposed in this review is functioning. Following diligent search, a licence would be issued. Any fees paid should be held by the collecting society running the ECL scheme until the owner is identi ed, or a reasonable period of time elapses, in which case the monies should be used for social or cultural purposes, or perhaps as a contribution to the running costs of the Digital Copyright Exchange.
4.57 For licensing of individual works, a similar system can be envisaged, but a more tailored approach is possible. That would involve Government granting an authorisation to deal in a speci c work where the copyright owner has not been found or identi ed after a diligent search. Should an owner later come forward, future use of the work from that point would be subject to negotiation, but there would be no liability for past use beyond any licence fee set by Government or its appointed agent.
4.58 The system should also not impose inappropriate costs, particularly on use of materials
which were not created for commercial purposes, or which might be found to be out of copyright if the rights information were available. Therefore, in most cases the fee for use of orphan works would be nominal, recognising that the works involved represent a national treasure trove. We recognise that there will be concerns from some rights holders who fear that a growing resource of almost free to use orphan works could injure markets for other works. This is a good example of a case where wider economic interest outweighs the perceived risk to rights holders.
Review of Intellectual Property and Growth 39
4.59 Tying the orphan works solution into the Digital Copyright Exchange will also provide a
straightforward means of determining whether a search for the rights holder is suf ciently “diligent”
– and should provide rights holders with a further incentive to join the scheme. The Exchange also offers a built in mechanism for dispute resolution, and safeguards against works becoming orphaned as discussed above. We note that the submission from photographers’ representatives Stop 43 puts forward a strong case for the bene ts of a digital metadata registry in preventing works from being unjustly orphaned, and, where they have been, for restoring rights information. The Digital Copyright Exchange could be the authorising body for orphan works.
– and should provide rights holders with a further incentive to join the scheme. The Exchange also offers a built in mechanism for dispute resolution, and safeguards against works becoming orphaned as discussed above. We note that the submission from photographers’ representatives Stop 43 puts forward a strong case for the bene ts of a digital metadata registry in preventing works from being unjustly orphaned, and, where they have been, for restoring rights information. The Digital Copyright Exchange could be the authorising body for orphan works.
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