British Music Rights welcomes the opportunity to comment on the preparation of the DTI Trade and Investment White Paper.

Value of the Music Industry to UK plc

The music industry is a British economic success story contributing approximately £5 billion per annum to the UK economy, employing more than 120,000 people (1). Significantly, £1.3 billion is derived from exports. Another factor, though more difficult to quantify, are the cultural benefits that the British music industry provides: - it widely promotes the UK in an international context and encourages both further creativity in other sectors and facilitates additional inward investment through the encouragement of tourism.

The Importance of Copyright

One of the central policy themes which concerns British Music Rights is appreciation of copyright. Copyright is the key means for rewarding creativity and the foundation for future commercial success and re-sourcing in educational and social initiatives. Furthermore, it is a catalyst for the ongoing development of high quality and diversity in arts and culture for the UK creative industries. Particularly with regard to the UK economy, copyright should not be perceived as a blocking mechanism, but rather as an enabler: giving creators a financial incentive and encouraging others to invest in their creativity.

Music creators and publishers rely on the existence of copyright as an incentive to create music; through earning royalties on those rights individuals earn their salary, and music publishers generate turnover which enables them to reinvest in the development of new musical talents (2). It should also be recognised that many of the companies in the creative sector are SME's and micro-businesses, for example, 90% of music publishers are small businesses.

One key barrier for right holders to exploit their intellectual property is counterfeiting and piracy causing substantial harm to the creative community. UK losses through counterfeiting and piracy are estimated by the Alliance Against Counterfeiting and Piracy (AACP) at £9.7bn annually, which translates into £1.7 billion in lost VAT. We look forward to continued co-operation between right holders and the UK Government.

As a general rule, policymakers must take account of the economic and cultural importance of the creative industries when considering issues such as trade liberalisation. Implicit within this is the understanding that the awareness, respect and the enforcement of intellectual property rights on both a national and international basis are the crucial tools to support the UK creative and information industries.

Trade Liberalisation - Subject to Reciprocity

In principle, British Music Rights is in favour of an open export policy removing trade barriers and ensuring free market access. The British music industry is a net exporter and receives considerable income from the flourishing international use of its works whether in the field of exposure on radio in overseas markets or the commissioning of British writers in Hollywood for films.

However, British Music Rights believes that unilateral liberalisation will not provide the required benefits for British music creators and publishers but will in fact expose the UK to the risk of being swamped by material of somewhat varied quality from abroad. Trade liberalisation must be subject to reciprocity with support given particularly to smaller companies which are primarily affected by adverse trade policy.

Doha Round of WTO Trade

We urge Government to further consult with Intellectual Property right holders on the advancement of the Doha Agenda after the breakdown of the discussions in Cancun. This will ensure an accurate understanding and assessment on the positive impact a strong intellectual property framework can have for the economic and cultural development of developing countries. Ignorance and misapprehension of intellectual property and its purpose will at best create confusion and British Music Rights welcomes the opportunity to engage further in this area. Amendments to TRIPS which relate to industrial rights, such as patents and trademarks (cf. discussions on access to medicines) might have an unintended impact on intellectual property, such as copyright. Copyright rewards creative individuals, commercial investment and the development of creativity.

WTO trade dispute regarding section 110 (5) of the US Copyright Act

Our main international trade concern relates to the Section 110 (5) of the US Copyright Act (introduced by the Fairness in Music Licensing Act in 1998) exempting some 70 per cent of US bars and restaurants from the requirement to pay copyright royalties for public performance of music in their premises. This matter is estimated to cost both British and European music right holders a significant amount of money.

The matter has yet to be resolved and continues to be of great concern for all intellectual property industries. Our central issue is that British composers and publishers are being prevented from exercising their rights in this market which should be guaranteed to them by the WTO TRIPS Agreement. Furthermore, US non-compliance with the WTO ruling also establishes a dangerous precedent not limited to copyright based trade. Therefore, we would like to continue exploring with Government ways to repeal this section.

The background to this issue was that in July 2000 a WTO Panel decided that US Copyright Law is not compliant with TRIPS and ordered the US to amend its legislation. The US has not yet amended its legislation (by repealing section 110 (5)), choosing instead to pay compensation of $1.1 million per year for three years running up to the end of 2004. At the end of December 2004 the period covered by the arbitration will expire and the European Commission and the European member states have an opportunity to raise the issue of compliance once again at WTO level. We urge this matter to be raised by Ministers and officials in bilateral discussions with US Authorities and at other international fora at every possible opportunity.

Developing Countries and Trade Support

British Music Rights believes that the UK Government should encourage and support an adequate intellectual property framework in developing countries. This will not only prevent countries from becoming piracy havens to which illegal operators move to and force out legitimate businesses, but also encourage foreign as well as local inward investment, which will help drive the economy of developing countries. This should be connected with provision of technical assistance to developing countries under Article 67 of TRIPS, based on the view that insufficient attention is being paid to the legitimate development objectives of such countries, while the predominant focus of technical assistance thus far has been on implementing legislation and enforcement mechanisms. The UK Government, together with right holders, could play a crucial rule on both levels by enabling and fostering trade in, and with developing countries, by ensuring their compliance with international obligations in the area of copyright and through the provision of technical assistance and expertise.

The emergence of a solid IPR framework in developed countries has enabled intellectual endeavour and creativity to be harnessed and turned to economic advantage with the result that Intellectual Property based industries now account for a significant proportion of their GDP and also provide much needed employment. This has been affirmed by a study of the copyright industries in the MERCOSUR countries which demonstrated that the share of copyright-related activities in the value added of Uruguay was 6% in 1997, and of Brazil was 6.7% in 1998, accounting in the latter for 1.3 million jobs (3).

We also encourage the UK Government and other EU countries to ratify WIPO treaties.

UK's Role in the Knowledge Economy

The Government's stated aim is to put the UK at the forefront of this global economy. To do this, it must embrace opportunities to create the regulatory and legislative precedents which other countries should aspire to follow. Music creators and publishers in the UK are playing a valuable role at the cutting edge of content creation in the global electronic marketplace. Music is playing a key role in the knowledge economy - accelerating e-commerce to create a digitally literate and entrepreneurial UK and driving new business models for the online environment and the experience and success of our sector provides useful pointers for the other key creative industries, such as literature, film and audio-visual. For further information, see British Music Rights response to the Trade and Industry Select Committee inquiry into the knowledge economy (available on request).

UK Presidency of the EU Presidency of G8

Half way through 2005, the UK will assume the role of Presidency of both the EU and G8, so we would hope that it would be possible to stage a conference on issues related to intellectual property rights that focussed on the key aspects of education, legislation, and enforcement and their relationship to ensuring creativity and economic growth. This will be an ideal opportunity for the Government's proposed cross departmental IP strategy group to explain its progress to date (and forthcoming programme), as well looking towards the implementation of the Enforcement Directive in the EU. British Music Rights and its members support the British Copyright Council's proposed conference which is currently being developed in discussions with appropriate officials.

Skills

The importance of strong skills base is vital to the UK's role in the global economy. British Music Rights believes that if the Government's Skills Strategy is to deliver the objective of enabling the UK to compete successfully in the digital age, then it must also include educational programmes to raise awareness of the importance of copyright and intellectual property rights in nurturing creativity through an entrepreneurial spirit. For further information, see British Music Rights response to the Government's Skills Strategy consultation from last year (available on request).

British Music Rights also welcomes the recent progress towards establishing a Creative and Cultural Industries Sector Skills Council and the recognition that there is an identified need for the music industry to be properly represented in this area to help ensure we build upon the foundation of our UK creative talent for the future.

For more information please contact Scott Walker at British Music Rights.

Notes

1. Further information can be read in a National Music Council report: Counting the Notes which was published in November 2002.
2. In comparison to other industries, the re-investment of profits is relatively high in the music industry.
3. Study on the economic importance of industries and activities protected by copyright and related rights in the MERCOSUR countries and Chile: WIPO and State University of Caminas (2002).