As the representative body of composers, songwriters, music publishers and their collecting societies in the UK, British Music Rights welcomes the final report of the High Level Working Group on DRM (8th July 2004) and its main conclusions as agreed by most of the interested parties involved. It is positive that stakeholders from all sectors are working together in order to offer both commercial users and individual consumers secure and convenient methods to access and/or use material in a legitimate way.

First and foremost, certainty of definition and clarity of what is understood by Digital Rights Management is crucial, not only for the application of technology but also for the underlying political and legal framework. It is therefore of utmost importance that when using the term 'DRM' policy makers and legislators are unambiguous as to the meaning that they attach to this term. In this respect it is useful to consider the legal framework (see note 1) for the protection of so-called 'DRM' which refers to two distinct elements:

• Technological protection measures ('TPM'), securing content and enforcing usage rules - through digital means e.g. encrypting, watermarking
• Rights management information ('RMI'), identifying and describing intellectual property and specifying the rules under which it can be used

Our concern is that in many cases, it is not clear which of these two aspects of Digital Rights Management are being addressed, and we would ask the Commission to ensure that this is clarified each time since different considerations often apply to each.

Market led approach
We agree unequivocally with the conclusion of the High Level Working Group (HLG) that further developments in the area of Digital Rights Management should be left to the market; this is also in line with the approach taken by the Commission so far (see note 2). Legislation introduced at this stage can only be based on a snapshot of a still immature market and is therefore most unlikely to be able to cater for technological progress. Whilst both technological protection measures and rights management information are already being applied in practice (recognising current technological limitations), Digital Rights Management systems will evolve according to user/consumer demand in the new market place. Business models will develop taking into account the ways in which consumers want to access and use music, e.g. whether they want a subscription based, streaming only service or whether they want a pay per use downloading service; DRM systems will assist right holders in setting and enforcing access and usage rules which will support such services.

Use of Digital Rights Management systems
Considering the music market as a whole we agree with the statement in the HLG report that "in the main consumers do not yet have devices equipped to properly make use of the services that are offered through DRM". Whilst positive progress has been made in this area and a number of legitimate music service providers in the online (including mobile) market are now employing TPMs which in turn are being accepted by consumers there remains a large element of the market where such deployment has not been achieved.

Furthermore, it should be noted that technology which is 100% secure may never be achievable. Collecting societies have been involved in the development of DRM for a number of years, either by contributing to that development (as is the case with RMI) or by monitoring measures used by licensees (in respect of TPMs). It is important to note that at this stage DRM has not yet reached a level of security and operation where the collecting societies would be able to recommend or adopt a particular or even a few types of DRM which are able to offer a completely secure environment in which to make material available. Therefore whilst the current position regarding the use of DRMs is encouraging it is not yet at a level to enable rights owners to have sufficient confidence in such measures.

The importance of the use of effective technological protection measures and rights management information, re-enforced by a strong legal framework for their protection, cannot be underestimated in the creation of a safer environment for digital content which will give the music industry greater confidence to make their material available online. In order for such measures to undergo constant development with an aim to ever greater security the protection afforded by the legal framework underpinning those measures needs to be accordingly strong.

Digital Rights Management systems in the context of business models
DRMs, be it in the form of technological protection measures or rights management information, are only part of the response to the challenges faced by the music and recording industry, and they should only be considered in the context of existing and developing business models in the new market place. In this context we refer to the mature thinking of the UK Broadband Stakeholders Group (BSG) on DRM (see note 3) concluding in their 2003 report that "while DRM is an essential part of the overall solution, it is not the single panacea. DRM tools and systems provide powerful functions but they are also dependent on the business and legal environment in which they operate. Essential elements for the effective deployment of DRM systems include interoperability in metadata and rights expression, e-payment systems, business models and the legal framework to support them." The new online market only represents a small section of the music business and business models still have to cater for the traditional business models (the sale of hard copies such as on CDs and DVDs which in the main are not secured by technological protection measures (please see also our statements on private copying and DRM systems).

Enabling function of Digital Rights Management systems
We are very pleased that the HLG acknowledged the enabling function of DRM systems as far as they are effective:

• As technological protection measures, DRM systems help to protect right holders against counterfeiting and piracy if they are making available their material both online and in traditional forms, e.g. CDs. It is in the interest of music creators and publishers that their works are exposed to as wide a public as possible provided of course they receive a fair reward for their creativity and investment. Adequate protection (technological and legal) will assist composers, songwriters and music publishers in contributing to the development of business models balancing the demands of users and consumers in accessing/using music and the interests of right holders to control and license the legitimate use of their works.
• As rights management information, DRM systems will enable right holders to offer commercial users as well as individual consumers access and use of material in a convenient, easy to use way and according to their individual choice, i.e. whether consumers and users prefer streaming or downloading and whether the consumer would want to pay per use or with a monthly subscription etc. Rights management information will translate the actual requirements of users/consumers and right holders respectively in to machine-operated codes and thus be a significant factor in the management of rights in the digital world (e.g. the MPEG-21 RIGHTS EXPRESSION LANGUAGE). From the point of view of the UK collecting societies (MCPS and PRS) DRM systems will provide useful tools to enhance their administrative operations (licensing, reporting, distributing royalties to their members); through their international bodies (see note 4), collecting societies and publishers are actively involved in the development of standards needed to ensure the smooth functioning of rights management information.

Report on Interoperability
We support interoperability not only between different DRM systems (relating to both technological protection measures and rights management information) but also in relation to the hardware capable of reading DRM (e.g. portable MP3 players). Interoperability between different systems and platforms is an indispensable prerequisite for the accessibility and acceptability of DRM systems by rightholders as well as users and consumers.

A close monitoring of the market developments, notably through further consultation of the stakeholders remains essential. It might also be useful to look at the experiences of more mature markets such as Korea, and the experience of the mobile market.

DRM and private copying levies
We support the view "that a system based on existing exclusive rights backed by technologies that ensure a secure environment where such rights can be licensed and enforced" is desirable. However, whilst technological protection measures and rights management information might be applied regarding online music services, the "traditional" copying from one physical (pre-recorded) format such as CD, DVD to another physical format or device is in practical terms incapable of being prevented to any significant degree by existing and future technology since there is always access to an analogue signal (the "analogue hole"). Additionally, there is already a vast number and range of recordings of existing catalogue already in the market place which is not copy-protected.

The UK is one of the few countries in the European Union without an exception for private copying linked with a "blank tape" levy system. Under UK law any act of copying that takes place without the authorisation of the right holder is illegal in the absence of applicable exceptions. The exceptions which relate to private copying in the UK are narrow and relate to specific activities such as research and private study and copying for the purposes of time-shifting. Consequentially, almost all unauthorised acts of private copying constitute an infringement of the right of reproduction protected by copyright. In reality, right holders do not enforce their rights against small-scale infringements largely because they are difficult to trace and it is not economically viable to pursue them. Unremunerated private copying is, however, a major concern for UK composers, songwriters and music publishers, particularly in view of the increasing volume of blank media sales and the increasing availability of devices to produce perfect clones from one original product.

Migration towards legitimate services on the Internet
We welcome the acknowledgement of the HLG report that the development of the online market has been seriously hampered by the proliferation of illegitimate sites and massive online piracy. Whilst the development of an online market is important for the competitiveness of the European market, business models based on the non compliance with copyright laws are certainly not acceptable. Businesses, and in particular SMEs, aiming to provide an online music service are at a competitive disadvantage to illegitimate services since setting up a legitimate service is invariably more complex than basing a service on illegal copies, a fact acknowledged by the HLG paper.

As stated above, we believe that the market will create a balance between the demands of commercial users and individual consumers and the interests of right holders. As acknowledged in the report many factors contribute towards the migration to legitimate services including:

• Public awareness on the value of copyright for European culture, society and economy,
• Availability of DRM systems (mainly as technological protection measures),
• Adequate legal protection across Europe and efficient enforcement in practice,
• Legitimate services/business models based on users/ consumers' demands.

The report also states that an active political commitment is required from the European Commission and its Member States in respect of the protection of content delivered via DRM in the context of the legal framework. We strongly agree with this statement; the Commission and the Member States have an important role to play not only in the implementation of effective legislation but also in ensuring that those rights can be enforced in practice. As has already been noted, developments in this area are constantly evolving and therefore Member States must also evaluate the effectiveness of legal measures as these developments take place. The Commission has an important co-ordinating role in this respect.

We are at the disposal of the Commission to discuss the content of this submission in more detail should this be considered useful.

Notes

1. E.g. Art 6 and 7 of the Copyright Directive (EC 2001/29; and respective articles in the WIPO "Internet" Treaties 1996.

2. C.f. Commission Staff Working paper of 14.02.2002 (SEC (2002)197) and the recent Communication on the Management of Copyright and Related Rights in the Internal Market of 16.04.2004 (COM(2004) 261 final).

3. www.broadbanduk.org/reports/report03_appendix3.pdf

4. CISAC/ BIEM working with the recording industry on the Music Industry Integrated Identifiers Project (MI3P) to establish a metadata framework for recording release and works information to facilitate online licensing and enforcement.