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Digital Economy Bill [HL]

My Lords, before making a brief contribution to this debate I declare an interest as a director of the Performing Right Society. I very much welcome the Bill, and it has been heartening to hear some really powerful speeches in favour both of its thrust and of some of the details in it. In particular, I am struck by the idea that in this digital age, this is the first time that we are looking at communication other than just as the BBC, ITV and Channel 4. Yet really, Parliament and the legislators are seeing it as the public have experienced it for a long time now. Very often, we are catching up with the public and in a lot of the details of this Bill we are, indeed, doing just that. I shall restrict my remarks to Clauses 4 to 17 on "Online infringement of copyright", and at this stage I will not really go beyond that. I very much welcome them; the principle is right, and from what I have read so far I think that the detail is right as well. If there is to be an argument against it, I suppose that it will be that this is legislation which should have happened some time ago, but if that accusation is going to be bandied around the Government will certainly not be the only guilty party. Indeed, everybody seems to have been slow to react to changes in this field. That is why, so many years into the digital economy, we are now faced with a really quite serious problem of online piracy. I suspect that as we go through this Bill we shall be talking a lot about some of the difficulties that the digital economy has thrown up. I suppose that is why we are legislating, and I therefore wanted to take the opportunity to say at Second Reading that those things are the small downside of two incredible success stories. First, there is the success story of the digital economy itself, which has quite simply transformed access to information, to creative content and to social networking in a way that we could not have imagined 10 or 15 years ago. Secondly, we are discussing these issues because of the quality of the creative content. Quite simply, no one would bother to download for free lousy content in an infrastructure that was difficult to use. It is because we have a strong digital economy and high-quality creative content that we have the problem. The digital economy is a success story, when you look at it, because of its pace of innovation and its speed in adapting to the wishes of its users, which have made it one of the fastest-growing industries, perhaps, of all time. In 2006, the Performing Right Society licensed 400 providers of online music; in 2009, it is licensing 1,200—an increase of 200 per cent in about four years. I cannot think of another industry so important which has managed to grow at that speed. There is no doubt that, in terms of education and opportunity, the world is far stronger because of it. Often, in these debates, we have spoken as if the digital world sweeps away everything else. We talk about a revolution and, indeed, in many ways it has been one. Yet we constantly make this mistake, when talking of the need for a revolution and welcoming rapid change when it has happened, of forgetting to say what does not change. We forget to say what must remain in place. The principle that a creator should be able to choose whether they get paid for their work or give it away free should be a cornerstone of the digital economy, in the same way that it has been a cornerstone of the creative economy. We have all failed to remind everybody, particularly the youngsters who have grown up in a digital age, that that does not change. It is not part of the revolution that we otherwise welcome. It has indeed been a long-standing practice of musicians to give away their work for free. No one is opposed to that. The important principle is that it is their choice. If not, it is not only theft from the individual, as a number of noble Lords have already said, but foolishly short-sighted. It risks undermining the very talent that will take both the creative and digital economies to the next stage of their development. Of course, as a number of noble Lords have said, copyright in a digital age should have been addressed years ago. When you look at the history, you see that anyone who could have acted or had a vested interest in acting failed to do so. It was almost like the rabbit in the headlights. The big companies—so successful for so many decades—were so slow to adapt to a digital world from an analogue world. There were two things that we failed to do. One was to argue the need for copyright. We sometimes talk as though it is only this generation that does not understand copyright and treats it with such disregard. To tell you the truth, when I was 17 or 18, I am not sure that I thought much about copyright when, in those days, I taped something from a record that was playing. It is not that this is the first generation not to value copyright; it is the first generation that can do it at such high quality. Therefore, it has such an impact on the rest of the economy. Our generation probably did it; we got away with it and the economy got away with it, but it is a different ball game now. Clearly, as a number of noble Lords have already said, there should have been models that safeguarded copyright far earlier than there have been. If we are going to move forward on this, and get the best of the revolution but at the same time preserve the best of what needs to be preserved, four things need to be in place. First, consumers need easy ways to pay for download content. Secondly, new business models need to make sure that rights holders are paid for the work that they create. Thirdly, a legal framework needs to protect consumers and creators, but also provide an environment in which the digital economy can flourish. Fourthly, something that has not been mentioned as much so far this afternoon is the need for an education programme about the value of copyright. None of those things would restrict the creativity or innovation that is important to make sure that the digital economy continues to flourish. I would argue that in three of those four areas, prior to the Bill, progress—although late—has been made. It is now easy to download music legally and pay for it. There is no excuse now for not doing so. iTunes, probably the first online provider of music to be licensed, in 2004, now has 8 million people who download music and pay for it. Perhaps an even greater success story is that of Spotify, which went from a zero start to having 2.7 million users in the six months up to July of this year. Most of them are over 35 years of age and are downloading music for the very first time. People are beginning to use the facility that is there. There is also a business model. In 2002 the Performing Right Society collected £1 million to pay its members for online music services. By 2008 it was collecting £23 million just through online music, and distributing £20 million to its members. There is also an education programme. The Federation Against Copyright Theft has worked long and hard to get a programme, but I know from experience that having a programme does not mean that people learn. It certainly does not mean that people act on it. The problem we have is that the idea that creative content should be freely available is received wisdom for such a large proportion of our population. A whole generation has grown up believing that it is all right to download someone else’s creative work at no cost. Progress is being made but there are challenges. Trying to persuade people to pay for something that was once free is far more difficult than doing it the other way round. Moreover, it is an incredibly complex market to license. It is not the easiest thing to negotiate, monitor and manage the 1,200 online providers that the Performing Right Society licenses. You often hear it said outside—it has not been repeated much here today—that the sector can afford it and that the people who are losing the income can afford to get it elsewhere. Last year, 82 per cent of Performing Right Society members earned less than £1,000 from the music they created. Some 1.5 per cent of them earn above £50,000 a year while fewer than 500 members earn more than £100,000 a year. Those 500 members who can afford to give their work away free online can turn to other income sources such as gigs to earn their income. That is why the Bill—it is, if you like, the digital economy’s fourth plinth—is so important. We have had nothing like this so far, and it is therefore very welcome in adding to the infrastructure. Indeed, it goes some way to completing that infrastructure. We have the strong statement that file-sharing is not acceptable and that we do not live in a society where that is the done thing. The Bill will ensure that legal, online services have time to develop, unhampered by having to compete with illegal free music. It is very difficult to get legal services going when you are competing with people who give them away for free. The Bill is directed at the most serious serial file-sharing offenders, and, according to the legislation, is a last resort. It incorporates in the system education about the process. I believe that it will begin to move us towards a fully functioning online market for the creative industries. We should not ignore people’s complaints about the Bill but no one wants to go beyond the remit or make problems worse rather than better. In Committee and on Report we will have the opportunity to consider that. I very much welcome the principles and detail of the Bill.