C&binet | 28 Oct 2009, 12:23
Rt Hon Lord Mandelson speech to the c&binet forum, 28 October 2009
I’d like to make a couple of basic points today about the creative industries in Britain. First, I want to put down a firm marker on the scale of their contribution to our prosperity in a globalised economy. Second, I want to say something about what we need to do to preserve that strength for the future, especially what we now plan to do to adapt and update our approach to copyright for a very different, interconnected and digital world.
Why the creative industries matter
I’ve been trying to think of the first time that I was really aware of just how seriously Britain’s impact as a creative economy is out of all proportion to its size. I think it was some time in the last decade, probably looking up at Norman Foster’s glass dome for the Reichstag or reflecting on Harry Potter’s decade of global conquest, or maybe it was watching Robbie Williams charm the socks off 15000 Belgians – and at least one Englishman - in Antwerp a few years ago.
Did you know that there is now almost no country on earth where you can’t watch Midsomer Murders? Which means there are a lot of people out there who have a very distorted view of the British homicide rate. Just think of it. We watch The Wire here in Britain. But in West Baltimore they watch Midsomer Murders and say “Sure, it’s pretty, but man it’s dangerous over there!”
The numbers that back up these anecdotal examples – I suspect an underestimate - are genuinely striking. The export earnings of the UK creative industries alone are worth about 16 billion pounds. That’s about 4 per cent of UK exports. They employ almost two million people in our economy.
I’m a big defender of an economy based on making things, which is why I often speak about manufacturing. But in terms of added value in a global economy the difference between making a car or a plane and making a TV show or a video game is largely a meaningless one. Especially when you consider how integral and central to the manufacturing process innovative design is.
The digitalisation of creative industry
But of course the creative industries are undergoing an immense shift, driven above all by the internet and by digital technology. We now have greater unmediated access to cultural goods than ever before, and in formats that make them easier to appropriate and share than ever before. A world where creative content is conceived, published, distributed, advertised and consumed digitally is revolutionary for the users of cultural goods, and revolutionary for the people who produce them.
In some respects it creates huge new opportunities for the creative industries. It means industries have greater ability than ever to reach new customers, to speak to them directly and to tailor creative goods to them, their needs and their tastes.
They are also less geographically bound than they have ever been – the contributors to a creative product, even one produced in hours like a newspaper, no longer even need to be in the same country, let alone the same room. Our most ambitious creative industries are going increasingly to see a world in which English is the preponderant language as their wider market, with the UK as a hinterland and as a launching pad.
This means we are going to have to work even harder to make sure the environment for creative industry here is right. At a very basic level that means making sure we have the digital infrastructure in Britain – which is one of the key questions that the Government’s Digital Britain report addressed.
It’s going to mean making sure that our education system is producing the right skills – both the fundamental intellectual and artistic confidence that is the root of creativity, but also the craft skills that underwrite so much creative endeavour. The technicians and producers and programmers and editors, and even the builders who often literally build the stage on which creative industry takes place.
But the big challenge that the digital economy poses for the creative industries, of course, concerns content producers’ control over their ideas and goods. The creative industries are literally built on the idea that it is legitimate to protect the value of creativity through copyright and intellectual property rights. If they don’t retain that, frankly they don’t have a viable business model left.
The creative sector has faced challenges to protected formats before and it has survived robustly – in spite of some Cassandra-like predictions from inside the industry. Home taping didn’t kill the music industry. Home video didn’t do for movies. But the threat faced today from online infringement, particularly unlawful file-sharing, is of a different scale altogether.
I was shocked to learn that only one of every 20 tracks downloaded in the UK is downloaded legally. One in twenty. You just can’t have sustainable creative industries under the pressure of this kind of theft – and that’s what it is. So I want to be absolutely clear. The British Government’s view is that taking people’s work without due payment is wrong and that, as an economy based on creativity, we cannot sit back and do nothing as this happens.
The trouble is that too many users of digitised cultural goods simply don’t see it that way. When 15 year old intern Matthew Robson reported back to his bosses at Morgan Stanley in the summer on the attitudes of his peers to digital content his key conclusion was pretty much: they want what they want and they don’t really want to pay for it. That was the view of a 15 year old intern at Morgan Stanley. And, of course, on the internet it’s incredibly easy to get just that. The important cultural and ethical sense that it is an issue of right and wrong is eroding before our eyes. This is not just morally unacceptable: it’s also commercially unsustainable for artists, for investors and producers alike.
A new business model
Now, it seems self-evident to me that trying to evolve new business models against these kind of attitudes is very hard, and I take my hat off to those who have tried. Further investment in new business models is important. But the Government also has a responsibility to act. That is why we have decided to intervene and legislate to tackle the problem of file-sharing, and it is why other countries, including France and the United States, are doing the same.
What we will be putting before Parliament is a proportionate measure that will give people ample awareness and opportunity to stop breaking the rules. It will be clear to them that they have been detected, that they are breaking the law and that they risk prosecution. If necessary we have also made it clear that we will go further and make technical measures available, including account suspension. In this case, there will be a proper route of appeal. But it must become clear that the days of consequence-free widespread online infringement are over.
When I reopened this issue back in the summer there was a lot of contentious debate, not surprisingly. But, let me be clear on this point: technical measures will be a last resort and I have no expectation of mass suspensions resulting. If we reach the point of suspension for an individual, they will be informed in advance – having previously received two notifications – and will have the opportunity to appeal. But the threat for persistent individuals is, and has to be, real, or no effective deterrent to breaking the law will be in place.
Neither do we want Internet Service Providers to be unfairly burdened. ISPs and rights holders will share the costs, on the basis of a flat fee that will allow both sides to budget and to plan.
That’s our side of the bargain. The aim here is to give rights holders and others the space to invest in and develop new ways of offering content, in the way that people want it, and at a price that makes sense to buyer and to seller.
But the reality is that the massive demand for easier and cheaper access to books and films and music and other content is not something that we can or should be indifferent to. The market is telling you in no uncertain terms that people want access to copyrighted material on different terms from those the industry currently wants to offer. Every time that demand is ignored, we give free-riders an excuse to keep on taking the stuff through the back door.
I strongly agree that we have to educate people on the value of intellectual property rights. Our new approach will create the launch pad for such an educational campaign. But the only way to re-establish a strong consensus around the fairness and value of copyright is to bring the whole IP regime into the modern world.
A ‘legislate and enforce’ approach to beating piracy can only ever be part of the solution. The best long term solution is there in front of our noses. It’s the market – but it has to be a market in which those who love music and film, for example, can find a deal that makes breaking the law an unnecessary risk. I know how complicated building these networks and services can be, but in that respect, the industry needs to move faster in a much more agile, commercial and market response orientated way to help itself. There are some good, cheap, legal services operating. If I can help by convening discussions or knocking heads together then I want to know.
Andrew Gowers did a fine job of looking at this from a UK perspective in 2006. But we have also recognised the need to approach this from a broader angle, recognising that many of the most important levers for this exist at European and international level.
We announced in Digital Britain that we would be looking at collective licensing and at Orphan Works, and these practical changes will make a real difference, and help make the process of clearing rights less painful without eroding the position of rights holders. However, I am announcing today a Copyright Strategy to take us to the next stage.
In particular, our strategy grasps the nettle of what a fair deal looks like between creators, rights holders, copyright users and citizens. It accepts that there is a case for easier and cheaper access to copyrighted material and that making a reality of this is a key part of the wider bargain of which tougher penalties for illegal file-sharing are but one part. We need to be clear what is and is not allowed. At present, the legal framework – almost universally ignored – disallows all sorts of perfectly sensible private use, like moving songs from computer onto an IPOD. If we are to make clear that rules are to be enforced, then all the rules need to be sensible and they need to be up-to-date.
I think this new approach is particularly relevant in two cases. For pre-commercial use of copyright material – where wider access could help transform it into innovative commercial uses for which the original holder would of course be compensated.
And for non-commercial uses in the home and among friends and families, where there needs to be a whole new approach. Together we are going to have to figure out exactly how we can do this.
No less important, the strategy recognises that we have to do this at the European level and it gives notice that the UK wants to help lead and drive this debate in Europe.
The bottom line for the Government is that the creative industries are and must remain central to a balanced, knowledge economy. They are one of the keys to the recovery now underway and our whole economic future. There is no economy on earth in which the creative industries play such an important part in overall growth and job creation, and that is an immense asset to the UK that we are determined to preserve and strengthen. Anyone who doubts that needs to take a look at the Love and Money exhibition in the Ivory Foyer, here in the Grove, which is a wonderful expo of fifty years of British creative brilliance. Today our collective challenge is to deliver the basis for the next fifty years of creative British endeavour and leadership.
I hope that our approach and the stable, predictable framework being put in place will allow good commercial decisions to be taken for the benefit of everyone including consumers, who we are all here to serve.
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