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Creative Industries

Indeed—and others. I did not realise at the time that what I was doing was illegal, and certainly not that it was doing such damage to the music industry. Although the music industry did not like blank tape copying, however, it accepted it, because the results were not particularly high quality and the DJ usually interrupted halfway through, so the recordings were not really a substitute for buying an album. The problem now is that digitisation means that the quality of the music recording, which can be made available in digital format and easily pirated, is no different from that of a CD. Such recordings represent a far greater challenge because the quality has increased so dramatically and because of online distribution. Of course, online distribution is not the only problem; there has always been a problem of physical piracy. Indeed, the day before yesterday, I spent a couple of hours with film piracy unit of the Metropolitan police, whose officers were talking about the continuing problem of pirated DVDs and, to some extent, CDs, which are churned out in garages up and down the country by server towers that can produce 40 or 50 discs at a time. A lot of that is done by Chinese immigrants who have been trafficked into the country and who are then required to repay those who brought them here by undertaking criminal activity, which very often involves piracy. That type of piracy is a challenge, but it is online piracy that is growing rapidly and that poses an even bigger threat. It is obviously important to update the law to take account of that threat. The Select Committee on Culture, Media and Sport has looked at the challenges posed by new media to the creative industries, and we feel that the law is lagging behind. To give a specific example, almost every teenager—indeed, probably the vast majority of the population—owns an iPod, and such devices are becoming the preferred method of listening to music. However, it is still technically a breach of copyright for me to purchase a CD in a shop, take it home and put it on to my iPod, which is plainly ridiculous. The record industry will say, ““Well, of course, we never dreamed that anybody would try to enforce that provision,”” but the fact that copyright law has not taken account of format shifting and the way in which people now listen to music and, increasingly, watch video content, brings the law into disrepute to some extent. It is difficult to tell young people that one bit of copyright law is really important and that they must obey it, but that another bit does not matter too much so they can ignore it. I therefore welcome the discussions that are taking place to put in place a private copying exception. The industry has some concerns about it, and that exception will need to be narrowly drawn, but we need to amend the law so that home use is made legal and acceptable. As the Minister said, the industry will also need to take account of consumer behaviour regarding online distribution when it develops new business models. The record industry was very slow in responding to online distribution. It started off by saying, ““This is awful—it will be the end of the world. We must stop it.”” Latterly, it has accepted that online distribution could create whole new markets and that it is an opportunity, and legal downloads are now growing. We are seeing a gradual shift, whereby more and more music is being made available online very cheaply, and quite often for a single payment that gives access to a huge library of music. That will probably result in a decline in revenue streams, but there is an acceptance of the inevitable and of the fact that it is better to get some revenue than none at all, which is the consequence of illegal distribution. Another consequence of the shift may be that live music performance becomes more important and that it will represent a bigger return for artists, which I would also welcome. The industry is waking up to the problem, but the problem is growing exponentially. In the past four years, the record industry has seen a 20 per cent. drop in its revenues, in large part due to piracy. The Minister mentioned the estimated £480 million loss by the TV and video industry in 2006. One survey in November 2007 revealed that 10 per cent. of the population had either home-copied a DVD or bought a counterfeit DVD, that 16 per cent. had illegally downloaded, streamed or burned discs and that 23 per cent. had borrowed and copied a disc, which, technically, is also illegal.