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Government backs private copying but ignores compensation

The Government will launch a public consultation this autumn on an exemption from copyright law for people who are moving music on to MP3 players. But the plan for a private copying exemption does not address the controversial question of compensation.

The move was recommended by the recent Treasury-commissioned Gowers Report on Intellectual Property, and was also backed by a report by the Parliamentary Select Committee on culture, media and sport.

"The Government will undertake a public consultation this Autumn about making an exception to copyright legislation to allow format-shifting for private use," said the Government's response to the Select Committee's report. "This first consultation will allow us to gauge opinions of both rights holders and copyright users before deciding what legislative amendments are required. A second consultation on the draft legislation will then be carried out."

Users of MP3 players such as the iPod are, the Select Committee said, very often not aware that transferring music from CDs that they own on to MP3 players or their own computers is a breach of copyright law.

"Many users in particular are not aware of what the law actually says and, of those who are, many simply do not care," said the Government response. "We therefore believe that the recommendation which the Gowers report made, to introduce a limited format-shifting exception applicable only for personal use, will help improve the position."

Record companies have said that they will not prosecute users for format shifting, but the Committee said that putting users at the mercy of private companies was not acceptable.

"We do not believe that it is satisfactory that consumers should be advised by the industry that they can ignore certain provisions of the existing law and not others, and we believe that this must contribute towards a general lack of understanding and respect for copyright law," it said in its report, published earlier this year.

The Gowers Report was produced by former Financial Times editor Andrew Gowers and published late last year. It recommended an exemption for private copying that would bring the law into line with extremely widespread behaviour.

Many other European countries balance a private right to copy with a levy on blank media such as compact discs and MP3 players, with the money gathered going to artists. Gowers and the Government have rejected the levy as a method of compensating artists. The Committee endorsed Gowers' description of the levy as "a blunt instrument".

However, the Government does not suggest an alternative form of compensation in its paper.

Struan Robertson, editor of OUT-LAW and a technology lawyer with Pinsent Masons, said this could upset the music industry.

"The Copyright Directive, passed in 2001, gave each Member State an option, to either ban private copying or to allow private, non-commercial copying, 'provided that the rightholders receive fair compensation'," he said. "The UK kept its ban in place. Gowers wanted to change that and suggested a system for fair compensation. Now the Committee wants to change it too, but it has glossed over the compensation challenge."

Gowers suggested that record companies could reflect the cost of copying in the sale price of CDs and downloads. His report stated:

"If rightholders know in advance of a sale of a particular work that limited copying of that work can take place, the economic cost of the right to copy can be included in the sale price. The 'fair compensation' required by the Directive can be included in the normal sale price. This means, however, that any private right to copy cannot be extended retrospectively as copies of works already sold would not include this 'fair compensation'. Therefore, collecting societies may wish to consider making a single block licence available to allow consumers to format shift their back catalogues legitimately."

Though the recommendations of the Gowers report were accepted by the Government, this is the first time that a private right to copy has been explicitly promoted by the Government. But a system of compensation is not discussed.

"Maybe the Committee is waiting for the consultation to address this tricky issue, or maybe hoping that the issue won't get raised at all, though I think it's impossible to ignore," said Robertson. "Fair compensation will surely be controversial, especially Gowers' idea of charging consumers a block licence fee for their back catalogues. If you were asked to cough up, say, £200 for the right to keep all the music that's already on your iPod, music that you've already paid for on CD, would you pay up?"

The Committee response also rejected the idea of pressurising the European Commission into extending the life of copyright for sound recordings. The record industry has been lobbying for an extension from 50 to 70 years for sound recordings.

The Committee agreed and recommended the change, but the Government has said that the Gowers Report and a University of Amsterdam report both said that there were not sufficient grounds for extension.

"Taking account of the findings of these reports, which carefully considered the impact on the economy as a whole, and without further substantive evidence to the contrary, it does not seem appropriate for the Government to press the Commission for action at this stage," it said.

Gowers exclusively revealed to OUT-LAW Radio earlier this year that, far from leaning towards extension, he almost recommended shortening the term of copyright.

"I could have made a case for reducing it based on the economic arguments," he said. "We certainly considered it, and if you look at the report that came from the academics that we commissioned to examine the arguments and examine the evidence they also argued very robustly that 50 years could be arguably more than enough."

"In the end we took the politically prudent course. To be honest, reducing it in any case would be a very big international debate. It would stand very little chance of making headway in Europe," said Gowers.

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