British Music Rights (see note 1) represents over 50,000 composers, songwriters, music publishers and their collecting societies.

As recognised in the stakeholder’s consultation, the UK is one of the few countries in the European Union which has not introduced a general exception for private copying coupled with a “blank tape” levy system.  Instead, UK copyright law allows for “private copying” only in a number of specific and limited situations (see note 2). This means that under English law any act of copying that takes place without the authorisation of the right holder is illegal in the absence of an applicable exception.

Current situation
The reality of pursuing private copying infringements presents considerable problems in both legal (identification of the infringer and infringing works, proof of copying and the ensuing litigation) and in public relations terms. Furthermore, effective technological protection “copy control” measures are neither proven or being utilised acceptably. As a result of recent controversies surrounding copy-control measures and the technological limitations, no UK label is currently applying such technology to their commercial releases.

On the other hand, the volume of sales of blank media has increased to an enormous level which has in practice represented immense damage to composers and publishers in the absence of any mechanism for fair compensation. Digital technology enables the unlimited reproduction of perfect clones from one original product. This appears to be an unsustainable “lose-lose” equation where most of the UK population are acting outside the law and creators are not being remunerated for the ever more widespread copying of their works.

It is paramount for Europe’s creative economy that creators are remunerated for  their valued contribution to the take-up and profitability of products and services provided by manufacturers and digital operators - as borne out by the emphasis on promoting access to music in advertisements for broadband, mobile handsets, and hardware.

The UK music industry is currently discussing various approaches to address this situation; we have enclosed our research findings on the technical landscape “The Digital Landscape: Music, Technology and Consumers”, which we believe is useful to inform this review.

Question 1: WHAT ARE COPYRIGHT LEVIES?

A. Do you agree with this description of copyright levies?
B. Are there elements that you consider should be added?

Whilst British Music Rights broadly agrees with the description of copyright levies (please note our response to Question C below) we suggest considering the different acts which constitute private copying in more detail as these may require different solutions.

• Traditional private copying from one physical format such as CD, DVD to another physical format or device (“format-shifting”) which is impossible to monitor and license in the absence of a UK levy system. Rights holders have never been compensated for what is, in effect, an unenforceable right.
• Private copying from online music services to hard drives, devices, physical carriers etc.   In some instances this type of private copying is licensable.  The MCPS/PRS Joint Online Licence issued to legitimate Music Service Providers (MSPs) such as Apple iTunes includes provisions covers (within reason) the making of private copies by the MSP’s customers.  However, in the absence of a legitimate MSP to license (e.g. where private copies are sourced from filesharing networks or pirate sites) under current UK law there is no possibility of securing licensing revenue.

C. Do you believe it efficient that the debtor of the copyright levy is not the party that carries out and controls the private copying?

It is appropriate that the intermediary between the music creator and the consumer is made legally responsible for the digital distribution of music and brought into the official value chain. It is reasonable to suppose that the parties whose business models and revenues (whether from blank media or hardware manufacture, or digital delivery networks) which are sometimes based on and otherwise reliant on the consumers desire to copy protected content should be responsible for remunerating rights holders.  It is unreasonable that Internet Service Providers (ISPs), mobile companies and hardware storage device manufacturers should profit extensively and reap wider value from the authorised as well as unauthorised distribution of music whilst being protected from liability by a series of legal immunities and safe harbours (e.g. Articles 12 to 14 e-Commerce Directive).

Question 2: WHO ADMINISTERS COPYRIGHT LEVIES?

In the absence of a private copying levy system in the UK we have no direct experience with the collection of levies; but as a general observation, an efficient  licensing scheme can only be achieved by some form of collective administration.

Question 3. DISTRIBUTION OF COPYRIGHT LEVIES
B. What conclusion can be drawn from the above Table with respect to the ratio of distribution at national level as opposed to distribution to other Member States?

We believe that any distribution of private copying revenue must be in line with the objectives of the Recommendation on collective cross-border management of copyright and related rights for legitimate online music services (2005/737/EC). 

Question 4. DIGITAL RIGHTS MANAGEMENT AND DIGITAL MUSIC SALES
A. Do you agree with the above assessment on the growth of digital and technologically protected sales?

We broadly agree with the assessment but refer to the figures provided in the (Musically and Spectrum) research commissioned by British Music Rights, which is enclosed.

B. Are there other elements that you consider relevant?
C. in your opinion, which system can provide better remuneration of right holders –licensing models through digital sales or the copyright levy system?

As we have explained above, there are different types of private copying and therefore it is not possible to do a straight comparison between licensing and levy systems.  Whilst licensing may be possible in the digital environment it is not possible to license traditional format-shifting – this is not a viable option where the only party carrying out the restricted act is the consumer.

D. Do you think that the current levy system has an impact on the development of digital sales in Europe?

We have no direct experience in the UK but the development of digital sales seems not to be different in member states operating a private copying levy system and the UK.

Question 5 COPYRIGHT LEVIES AND THE NOTION OF HARM BASED ON PRIVATE
COPYING

A. Do you agree with the above assessment?
B. Do you believe that private copying causes harm to rights holders and if so, how can this harm be reliably quantified?
C. How can harm to rights holders be identified? Have situations been identified or account been taken of instances where no obligation for payment would arise on the basis that there is no harm?

It is erroneous to consider the “fair compensation” provided for in Article 5(2)(b) of the Copyright Directive as direct compensation for economic harm.  It is compensation for the rightsholders’ surrendering their exclusive right to authorise the act of private copying.  Having said that, we would point out that whilst it is difficult to quantify the harm caused by private copying recent research shows that music on mp3 players mainly originates from private copying.

• There have been over 1 billion iTunes sold and 50 million iPods (Source: Apple). This equates to 20 iTunes per iPod. 
• Source of MP3 player content in the UK (Source ICM research, Dec 05)
  - 65% Ripped or copied from own CDs
  - 11% Copied from friends
  - 18% P2P downloads
  - 6% Paid for downloads

This should be seen in context of falling prices for broadband access and increasing storage capacity for mp3 players.

Storage capacity is certainly a major factor for consumers upgrading their MP3/Ipod digital music players in 2006. The MusicAlly research demonstrates a 500% increase in digital music storage requirements amongst music fans in 2006.

Notes

1. British Music Rights is the consensus voice of Britain’s composers and songwriters, music publishers and the UK collecting societies. The members of British Music Rights are the British Academy of Composers and Songwriters, the Music Publishers Association (MPA), the Mechanical-Copyright Protection Society (MCPS) and the Performing Right Society (PRS).
2. For example, the so-called “time-shifting” exception which allows the copying for private and domestic use of broadcast transmissions for viewing at a more convenient time, and exceptions for various fair dealing and educational acts which must be non-commercial in nature.