Spinners, scaremongers and songsters

With the Digital Economy Act up for review, it's important to look back at the history of the controversial bill and potential motives of the key players involved

Andrew Lloyd Webber

Image: CC-AT-SA Flickr: misstraceynolan (Tracey Nolan)

As the vastly unpopular Digital Economy Act 2010 (DEA) is set to undergo a judicial review in 2011, it is crucial to understand how the Act ever came to be in the first place. A key consideration, which cannot be over-emphasised, is the role of the UK music industry. The lobby—in particular the BPI—is often identified with UK pro-rightsholder copyright lobbying; it is therefore unsurprising that the BPI was a major driving force behind the DEA.

Copyright maximalism—to which the BPI and DEA are aligned—wants copyright to be reformed solely to boost the protection given to rightsholders: longer length, wider coverage, reduced exceptions, and harsher penalties (sought at reduced cost to the rightsholder) are hallmarks of the lobby’s typically successful demands.

But the entertainment and publishing industry has not always sought to maximalise the reach of copyright. As late as 2005 the BPI still proposed a limited quid-pro-quo: some new user rights should be created in UK copyright law, in exchange for easier enforcement against pirates; the government agreed, arguing for modernisation and balance in copyright. This was highlighted by Gordon Brown’s reception of the Gowers report in December 2006.

Yet, for reasons unknown, this balanced approach was abandoned by the BPI in 2007. Crucially, the UK government also followed suit, kicking off a policy process that resulted in the DEA.


Changing tunes

Government commissioned a post-Gowers report from the think tank The Work Foundation to look at the value of (existing) copyright industry interests to the (existing) British economy; it was published in July 2007. User rights and the value of “copyleft” (e.g. Creative Commons) approaches to content were not part of the Work Foundation’s remit; furthermore, when the Department for Culture, Media and Sport (DCMS) effectively transposed that report into its own subsequent “Creative Britain: New Talents for the New Economy” paper in February 2008, it also omitted to cover these crucial components. Furthermore, the UK Department for Business, Enterprise and Regulatory Reform (BERR) used the February 2008 Creative Britain report to launch a consultation on a P2P-piracy crackdown in July 2008.

Whether deliberate or negligent, these moves marked the point at which any quid-pro-quo, or official challenge to the maximalist policy agenda, was dropped entirely. By making no concessions or considerations for user rights or copy-left, New Labour’s copyright policy program was, in effect, entirely supportive of maximalism’s aims.

BERR then brokered a largely unfruitful agreement between major UK ISPs and major UK entertainment lobbies (namely the BPI and MPA) for anti-piracy cooperation. Proponents of copyright maximalism then sought ways of convincing the public that draconian protection of their portfolios was necessary.

The government said that a “regulatory imbalance” between digital media and television could be made "fair" again by imposing more regulation on the former. Andy Burnham, Secretary of State for Culture, Media and Sport, asserted: "It is not just about copyright or intellectual property but [things like] taste and decency in the online world. The time will come to say what are the direct interventions [needed, if any]."

In late October 2008, Lord Mandelson, working on the Digital Britain Report, made the unprecedented step of leveraging the developing global financial crisis to once again reinforce the idea that protection of the current major players in the copyright industry was vital to the UK economy. Lord Mandelson stated: "For the present financial and banking crisis, Britain must get through the worst and prepare for the upturn. The digital economy will be central to this. The Digital Britain Report will lead the way."

This was followed shortly by Mr Burnham making a speech to the new "super" lobbying group, UK Music, which was formed to unite music industry lobbying behind a maximalist line. He announced that this is “a time that calls for partnership between government and the music business as a whole: one with rewards for both of us; one with rewards for society as a whole. [...] My job—government’s job—is to preserve the value in the system.”

As the global economic crisis deepened in the closing stages of 2008, other special lobby interest groups joined in by producing highly speculative and flawed studies showing that, for example “unless ways are devised to encourage infringers to legal alternatives, the retail industry risks further job losses along the scale of the 30,000 already lost at Woolworths” and “creative industries employ 400,000 people, and [it is] estimated that piracy costs up to £1.5bn in lost revenue each year" - further nailing home the idea that the traditional "value" in the system can and should be "protected".


A pantomime sets the scene for an Act

On 2 April 2009, Lord Andrew Lloyd Webber launched a House of Lords debate on online piracy. He warned of “cataclysmic consequences for all the creative industries if this area remain[ed] unregulated” and that “children's future livelihoods [were] being compromised by inaction”. Playing to the fear and technological naiveté of the company present, he stated: “Illegal file-sharing spreads viruses and inappropriate, and unexpected, content for minors. There are even dire predictions that the internet will grind to a halt over the next few years. Dealing with piracy removes that threat”. Lord Lloyd Webber’s argument, much like Lord Brit’s “stealing music in digital form is just as immoral as stealing a CD from Tesco", is a fallacious argument which only serves to skew the debate.

In June 2009 the UK Department for Business, Innovation and Skills (BIS) then launched a post-Digital Britain consultation on proposed “technical measures” to interfere with the internet connections of “pirates”. Disconnection was not an option, and BIS announced: “To be absolutely clear - there is no intention to require ISPs to monitor the activity of their customers.”

But two months into the consultation, Lord Mandelson was reported to have met with music industry mogul, billionaire and DreamWorks film studio co-founder, David Geffen, and just two weeks later, on 25 August 2009, BIS interrupted its consultation. “Our thinking has evolved" it announced. “The previous proposals, whilst robust, would take an unacceptable amount of time to complete in a situation that calls for urgent action” and, if given the power to amend UK law himself, “the Secretary of State [Lord Mandelson] can do this much quicker”. Most worryingly, BIS did a U-turn on their position on disconnection: “Some stakeholders have argued strongly that none of those technical measures is powerful enough [...] We are considering the case for adding suspension of accounts into the list of measures that could be imposed.”

Evidence then emerged that the BPI had been the source and author of an amendment accepted in the House of Lords forcing ISPs to block access to entire websites accused of hosting copyright-infringing material.

Incidentally, March 2010 also saw allegations of “bullying” by rightsholders and law firms that had streamlined the enforcement of copyright against ordinary internet subscribers.

At this point, some European and UK trade unions (including the TUC and Unite) supported New Labour’s maximalist efforts. The BPI chimed in, claiming, “we're approaching a tipping point where investment in our talent will dry up due to mass illegal downloading.”

Even so, in the days leading up to the passage of the Bill, the wheels looked like they might be falling off; public criticism of the Bill was tremendous as the Facebook group "Against the Digital Economy Bill" exceeded 25,000 members, and MP Stephen Timms, dubbed “Minister for Digital Britain”, bemused onlookers when he wrote that IP address stood for "Intellectual Property address". Yet, it can be concluded that the government used the exceptional circumstances (impending dissolution of Parliament) to force the Bill through “wash-up” without proper debate and with most MPs away, campaigning in their constituencies. The Digital Economy Bill squeezed into law as New Labour was kicked out of office.


Please return to your seats for the start of Act II

 The maximalist lobby has now shifted its attention internationally. Pushing the Anti-Counterfeiting Trade Agreement was its global summer project, and the Open Rights Group's latest FOI requests show the BPI pushing the new UK government to lobby the European Union on its behalf.

The UK is still waiting to see what will be done with the Digital Economy Act. The Lib Dems have called for its repealBT and TalkTalk have won the right to a judicial review of the Act; Ofcom is struggling to ready a legitimate and fair ‘Initial Obligations Code’ through which the Digital Economy Act is expected to be enforced.

This Act, as ever, remains infuriatingly unpredictable. Stay tuned.

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Comments (10)

  1. Robin:
    Jan 10, 2011 at 01:20 PM

    The music industry in particular, that is the commercial entities not the artists, have only one aim and that is to make more and more money. Yes, they invest in new artists, but only those they are fairly certain will make them lots of money - hence "Pop Idol" and "X-factor", and even then the artists is tied to a contract that would be illegal in any other industry. Frankly, the best thing that could happen to music is for the likes of EMI etc, to go bankrupt.

  2. Mark (Editor) ISPreview UK:
    Jan 10, 2011 at 01:55 PM

    The funny thing is we had a reasonable approach set out in the original 'Digital Britain' report, but then Mandelson came along and demanded a whole load of technically unworkable "solutions"; they did not even give it a chance.

    If they had just stuck with a basic warning system and not even talked about "technical measures" or passing details onto Right Holders without any certainty that the source "evidence" is accurate then the DEA would probably be working by now.

    As it stands we now have an immensely complicated act that didn't receive enough debate and is too aggressive. It assumes guilt, has a weak appeals process and doesn't recognise the difference between a connection owner and an individual user on shared networking. In other words, innocent people will take the blame for something another person may or may not have done.

    On top of all that it's easy to avoid detection in the first place (e.g. proxy servers, VPN or simply don't use P2P).

  3. Miles:
    Jan 10, 2011 at 02:34 PM

    I hate to be the bearer of bad news, but I've just heard via Twitter that BIS have informed TalkTalk that they have no intention of repealing the Act.


  4. Robin:
    Jan 10, 2011 at 03:09 PM

    Sadly, Miles, I'm not surprised. The ConDems are all businessmen. Their only concern is making sure business is happy with them so they will have jobs to go to when the electortate throws them out. If they cared about anyone other than their rich friends, NOTHING that the government has so far done would have been done.

  5. Chris Swan:
    Jan 10, 2011 at 04:55 PM

    Phil - all true, but all too UK centric. What about the 'Typhoid Mary of Three Strikes' (http://is.gd/kuHLc) - the US Trade Representative? ACTA may be the present act on the stage, but DEBill was clearly part of the warm up.

    @Robin - I don't think this can be characterised as business versus consumer. There are plenty of businesses out there that don't make their money out of copyright where the Digital Economy Act stands for nothing but costs and aggravation. That's why I got involved in the Coalition for a digital economy (COADEC) - to give small business a voice in what has otherwise become a lobbying battle fought between the telcos and media companies. Our politicians (of all colours) are more in the thrall of media than they have ever been of business.

  6. Milena Popova:
    Jan 10, 2011 at 06:21 PM

    @Mark: Yes, and somewhere in between a certain Lord Mandelson went on holiday on a certain Mr. David Geffen's yacht. Fancy that.

    @Miles: Last I checked DEA implementation and enforcement wasn't with BIS but with the Hulture, um pardon me, Culture Secretary.

  7. dida:
    Jan 10, 2011 at 11:26 PM

    :Milena Popova
    The DEA implementation is with Vaizy, who is a dcms/bis minister. The responsible secretary of state is the one for business, innovation and skills, ie BIS, that is V. Cable

    1. Milena Popova:
      Jan 11, 2011 at 11:46 AM

      Oops, my bad. For some reason I though Vaizy worked for Hunt. This does, however beg the question whether it hasn't moved recently from Cable to Hunt as part of the move of all telecoms responsibilities as a result of VinceGate.

      1. Jim Killock:
        Jan 12, 2011 at 11:07 AM

        Vaizey is, as I understand it, moving entirely to DCMS as his direct boss, Jeremy Hunt is moving out of BIS as you say. This is certainly problematic, as it places responsibility for the Internet and digital communications within a department with strong links to the entertainment lobby.

  8. leila:
    Jan 11, 2011 at 12:04 AM

    @Chris Swan & @Robin

    I think it is consumer v a certain kind of business. If you are an SME and you compete on innovation to get a customer base, you will be very interested in meeting consumer demand.

    The BPI represents largely big established record companies, who want to protect their profit margins. They got some small members, but they are mostly not independents, ie they are subsidiaries of the big ones. They, like I think most businesses with an established customer base, are more interested in locking consumers in. I think in focusing on maintaining their existing market share, they find it difficult to appreciate new markets or change in the market, which entails a big risk for them to loose their existing market share. In contrast an SME who wants to break into a market will see it as an opportunity, they still got a big risk (one wrong decision with no capital means you go under), but they got no other option than to take that risk.

    The way big record companies, and their shareholders, measure success is in terms of profit margins. In their annual accounts they don’t rave on about having helped to pioneer a new style of music, or developing this or that artist. It is purely about profit, they appreciate Lady Gaga for her ability to sell records and pull live crowds, not as an artist. And they don’t pride themselves in having developed a new market or product, they will only appreciate a new market once it makes some profit (mobile content is a good case in point, it is starting to make money, so all the sudden the big labels are all in favour, while they refused for years to licence mobile content because they thought it would eat away on their existing market).

    Also, the big record labels became so big because they sussed out the physical distribution infrastructure, the manufacturing and the logistics of physical products. Which is difficult, that is why a lot of small record labels outsource the distribution to the big ones. If you take that away as a competitive advantage it must feel very scary for the big labels. They have to build entirely new competencies, and deal with the cost of retiring the old infrastructure and human resources. A lot of the big labels are now hiring digitally literate music industry people, and getting rid of the physical product people. That is a big shift....

This thread has been closed from taking new comments.

By Phil on Jan 10, 2011

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