Rt Hon David Cameron MP
10 Downing Street
Dear Prime Minister,
Digital Single Market
I am writing to raise my concerns regarding your government’s priorities for the Digital Single Market which you have set out in a paper to Jean Claude Juncker dated 8th January. I am concerned about the effect that the priorities you set out will have on British interests – both consumers using digital services and businesses operating in the copyright and licensing sectors.
The UK has one of the largest creative sectors in Europe and is a hub for many global businesses seeking to access EU and global markets. A report prepared by the British Film Institute in 2012 shows that the combination of facilities, skills, locations and fiscal incentives has enabled our film and television industries to continue to thrive and make an increasingly significant contribution to our economy. As such, we among European nations have much to gain but also the potential to lose if the measures proposed under the Digital Single Market fail to recognise properly the critical importance the current copyright and licensing regime plays in encouraging investment in the creative industries. The role of Government should be to protect and grow this successful industry of which we are rightly proud. We must have proper protection for the valuable content created by British creative industries and our intellectual property regime is the foundation for future investment in the creative industries.
You have identified a number of issues relating to the Digital Single Market in your paper to Jean Claude Juncker, including digital access, copyright and licensing. However you have not addressed a number of points critical to the success of our creative sector and I would urge you quickly to clarify your position on the following issues:
1. Copyright exceptions
In the final section of the paper you state that “the EU should support copyright exceptions to allow research, education, text and data mining to take place across the market”. This implies that you are giving blanket support for the new copyright exceptions. But in December 2013 the Intellectual Property Office said that “the UK strongly believes that any potential future proposal to update European copyright law should be built on a robust evidence base, should be technologically neutral and would need to protect the rights of creators as well as encouraging new businesses and services”. Your paper to Jean Claude Juncker suggests that the UK position has changed in a way which would damage the interests of UK intellectual property. What consultation have you carried out with British companies with an interest in intellectual property about this and what consultations are you planning to carry out in the coming months on this issue? Where is the robust evidence base to support your change in position on copyright?
2. Portability and Cross Border Access to Digital Services
Services such as Netflix, have exploded in popularity over recent years and consumers are demanding more from the services that they are paying for every month. The market for cross border distribution of content is a nascent and fast moving one and the creative industries are launching new business models to satisfy consumer demand. Copyright does not prevent these new business models from being launched, rather it facilitates them where there are sound business reasons to do so.
Having a portability of subscription services, cross border access to content and a common set of cross border consumer rights may be beneficial to consumers in the short term but economic and business drivers such as territorial licensing must also be taken into consideration.
Furthermore, even if a service such as Netflix is able to allow users to access their home account from abroad, it may not necessarily choose to do so. This is often a business decision based on issues such as the need to comply with consumer protection and data privacy. The Government should ensure that EU regulation develops in a way that supports not undermines the development of the commercial business models being developed by the UK’s strong creative industries. What assessments (including economic assessments) have you carried out to measure the impact of this on Britain’s creative industries, and its contracts and consumers?
3. Contractual freedom
Any proposals that could lead to a de facto mandate for compulsory pan-European distribution licensing would undermine the way that many audio-visual projects are financed and impact negatively on the business models for investors in, and distributors of, UK creative content. UK film and television-makers, in particular, depend on selling distribution rights to national distributors before filming starts as a way of financing – this practice is known as territorial pre-sales – and as such, contractual freedom for UK-based companies is essential. The current EU proposals could threaten a major intervention in the market and damage the UK’s creative sector and both the value and volume of intellectual property that it produces and exports. EU-wide co-operation is important in this field but it must also recognise the needs of different industries and territories. What discussions have you had with the industry about contractual freedom within the EU, and what are your estimates of the cost implications of this policy on UK-based firms?
4. Consumer prices
Current EU proposals, particularly around cross-border access, will likely lead to a rise in prices for consumers. The new proposals may dissuade distributors from sharing their products altogether, meaning that British cultural assets will not be exported, and enjoyed by the rest of the European Union. What assessment have you made of the damage to the UK economy as a result of this policy and what discussions have you had with distributors about the impact that this will have on their business model?
5. Timelines for implementation
A further, pressing concern relating to the implementation of the Digital Single Market is the timescale that has been set by the European Commission. In a blog written on 29th January by Andrus Ansip, EU Vice President for the Digital Single Market, the following timeline was set out:
o 24th February - #Digital4EU stakeholder conference which will invite over 400 pan-European stakeholders to hear their views on shaping Europe’s digital future;
o End of March – European Commissioners will take part in a general debate on the Digital Single Market;
o The final Digital Single Market Strategy will be published in May;
o All 28 Member States will discuss the strategy at their meeting in June.
There is a great deal of concern in the sector that this timetable may be too short to address all of the issues at stake. Nor does this timetable take into account the fact that the UK is having an election in May, which at the very least will not give the government sufficient time to carry out consultations and engagement in Europe to shape the debate and act in the best interest of our valuable creative industries. I would urge you to write to Jean Claude Juncker as a matter of urgency to request him to reconsider this timetable.
Enabling the UK’s creative industries to flourish is essential but this requires the right domestic and European Union policies. Under the plans in your paper to Juncker many independent projects in our creative industries sector may not go ahead, damaging the UK industry as a whole and Britain’s reputation internationally.
I am supportive of developing a Digital Single Market within the European Union but this must not be at the expense of our creative industries, particularly many of the SMEs and independent projects that are such an important part of it.
Your paper to Jean Claude Juncker shows a lack of understanding of the issues that the creative industries sector face and I am calling on you to reconsider these decisions as a matter of urgency.
Finally, the position you appear to have adopted is not one that we agree with and is not a cross-party consensus. A Labour Government elected in May would seek urgently to raise with the Commission and Council the matters I have raised here.
Rt Hon Harriet Harman QC MP
Shadow Secretary of State for Culture, Media and Sport