New Media and the Creative Industries - 2006/7 Report by the House of Commons' Culture, Media and Sport Committee

HTML full report on 'New Media and the Creative Industries'


  • "The ease with which consumers can now access content, copy it and keep it, makes the protection of intellectual property and enforcement of copyright law of far greater importance to the health, and indeed the survival, of our creative industries than ever before. Some have argued that the rights of intellectual property owners should be limited in order to promote the spread of knowledge and creativity. However, we take the view that this is a matter of choice for the creators and that rights owners who wish to retain control over the use and exploitation of their material should be able to do so. We also believe that the level and period of remuneration as well as the future direction of the development of technology are generally best left to the market to determine."
  • "We welcome recent moves by the Government to strengthen intellectual property protection, particularly by at last requiring local trading standards to take enforcement action and by resourcing them to do so. However, we believe that more should be done to send out a strong message that this matter is taken seriously—by increasing the level of damages for infringement and by making it illegal to camcord a film being shown in the cinema, the principal way by which illegal copies are first obtained."
  • "There needs to be greater clarity in the law in order that there is no confusion among consumers about what is and what is not permitted. We therefore agree with Gowers that there should be a limited exemption to allow consumers to copy content which they have purchased for their own private use, in whichever format they choose. In doing so, the law will legitimise what is already an almost universal practice, and we do not accept the argument that a levy should be introduced on hardware or software in compensation. However, we do agree with the music industry that it is unfair that performers do not enjoy the same rights as composers and artists and we therefore believe that the Government should press the European Union to extend the copyright term for sound recordings to at least 70 years, as is the case in many other countries."
  • "The failure of consumers to understand the reasons for observing copyright and to appreciate the damaging consequences of piracy makes enforcement far harder. We congratulate the industry on initiatives to increase awareness through initiatives in schools and elsewhere and call on all those with an interest to make this a priority. In particular, we believe that internet service providers and search businesses, whose growth is driven in large part by the availability of audio visual content, should be doing much more to prevent piracy, for instance by establishing an industry-funded body to address the problem similar to the Internet Watch Foundation."
  • BBC must take a stronger role in copyright awareness and acceptance
  • Supports Govt position against applying the same regulations for non-linear services as presently apply to linear broadcasting.
  • Looking forwards to govt Green paper


"The reproduction and dissemination of creative content has come to new life thanks to recent technological developments"
Inquiry launched in November 2005 with following terms of reference:

  • The impact upon creative industries of recent and future developments in digital convergence and media technology;
  • The effects upon the various creative industries of unauthorised reproduction and dissemination of creative content, particularly using new technology; and what steps can or should be taken—using new technology, statutory protection or other means—to protect creators;
  • The extent to which a regulatory environment should be applied to creative content accessed using non-traditional media platforms; and
  • Where the balance should lie between the rights of creators and the expectations of consumers in the context of the BBC's Creative Archive and other developments.

Much written and oral evidence, with special advice on Broadcasting from (BSkyB's Director of Public Affairs and Chair of BCIDN) Ray Gallagher. The evidence has taken us into many distinct policy areas, including support for the creative industries, regulation of content, policy on allocation of spectrum, and, above all, copyright and the protection of intellectual property.


How do consumers benefit?

Shift to internet as dominant source of media distribution means significantly more choice.

The contribution of the creative industries to the UK economy

  • "The creative industries do more than inform and entertain the general public: they are a major part of the UK economy, generating 7.8% of Gross Value Added in 2003 and possibly 10% of the economy in the near future."
  • Many many facts and figures; many quotes from industry bodies saying how great and how big their industries are

Communications technology and the media: where the UK stands

  • World leaders! Much back-slapping and congratulations about uptake of devices and growth in infrastructure

New media services and genres: a survey

On demand and "time-shifting" services
Television on mobile handsets
BBC new media services

  • Part of role under new Charter is as 'trusted guide' to new technology in broadcasting

User-generated content

  • Actually very well balanced on the concerns / opportunities, by reporting both the 'theft' views of PPL / CRA, and the 'transformative' approach of DACS and CC

Other new services and genres
Future for 'traditional' media

  • New technologies do not kill their predecessors, nor do they even set out to do so; by beating them at certain aspects of their game, they force them to focus on and thereby improve their core-activities.


  • Begins with assertion that 'content is king' - implying its all about the creatives - then moves in the opposite direction to discuss how the few major distributors are winning market share.
  • "In this section, we look briefly at the opportunities for creators to use new media outlets to widen their audience reach and to distribute their products directly to consumers, and at the impact of new media on creators' control over their content."

New outlets

  • Frothing with excitement at democratising potential of home-recording and distribution e.g. "British Music Rights described personal computers as being "latent composition and recording studios"; and the Music Managers' Forum described the opportunities for creators and performers to "do it themselves", bypassing record producers and publishers and selling recordings to the consumer direct from a website."
  • Warns that creatives will also need business / finance skills if they are to take advantage

Creators' control over their content

  • Increasingly tricky to control uses of your works; some see this is an opportunity, with the best example being CC. Nice analysis of the regime and its intention, with a couple examples of criticisms:
    • The Creators' Rights Alliance: the licences "would not work in certain types of industries", arguing that they made it impossible ever to monetise the products covered; and it dismissed the concept as being a product of academics who "do not understand the rest of the world".
    • BPI: reserved judgment on whether CC offers commercial benefits, believing that would be determined by the market. It did, however, warn that some creators, especially those at the beginning of their careers, might sign up to Creative Commons licences without being aware that they applied in perpetuity (thereby permanently limiting the scope for commercial exploitation).
  • Solid recommendation: We believe that Creative Commons licences are a valid option for creators who make a conscious and informed decision to make their work available for re-use. We accept that they can in fact be a useful marketing tool, as long as licensees understand the limitations on future commercial exploitation. Creative Commons licences should not, however, be regarded as the norm; nor should more radical rights-free regimes. Creators are entitled to demand payment for their product and the success of the creative industries depends on their ability to do so.


  • Creative industry relies on intermediaries for the following: financing, bearing upfront costs in commissioning and producing material; marketing and creating brand awareness; broadcasting content; collection of revenue; and distribution.
  • Despite web's potential to directly link creators / consumers, role of intermediaries may be growing. Seems the dominant role will be online media hypermarkets / aggregators.
  • "This section of the report examines how the media industries are reacting to technological change in general; and it examines in more detail two issues of particular concern to broadcasters: the availability of spectrum, and rights for the transmission of programming on new media platforms.

The response of the media industries to new technology

Industry consolidation

Digital distribution

  • Much opportunity for 'long tail' goods (i.e. very limited demand so did not previously justify precious shelf-space)
    • "Whereas an average bookstore might stock 130,000 titles, more than half of Amazon's online book sales came from outside its 130,000 top titles, suggesting that the market for books not available in an average bookstore may be larger than the market for those that are."
  • MMF and CRA argue savings of digital distribution should lead to some reform of the 'scandalous' business models of record companies. In fact, current set-up costs are prohibitive (although savings still expected in future)
  • Royalty levels range from as little as 4% of sale price (3-5p on a 79p download from iTunes) to perhaps 20% of dealer price. MMF argues for 50%.
  • Royalty levels are a commercial matter for negotiation between relevant parties. We acknowledge that, whatever the means of distribution of their product, recording companies incur a major part of their costs in identifying and promoting artists, the majority of which may never provide a return on the investment. As digital distribution increases, costs are bound to fall, as may revenues. We would expect the recording industry to ensure that there is a fair sharing of both risk and profits with creators.
  • Critical of Film Council: As the strategic agency for film in the UK whose aim is to stimulate a competitive, successful and vibrant UK film industry and culture, and with multi-million pound Government funding, the Film Council might have been expected to have commissioned and reported on this area some time ago.

Adopting and developing business models

Business models in the film industry


There is no doubt that commercial broadcasters will come under increasing pressure from fragmentation of audiences and of advertising revenue. We are convinced that there will remain a market for televisual content free at the point of use but the decline in revenues from traditional advertisements may be permanent. We believe that commercial broadcasters will need to adopt a flexible approach and to be willing to diversify. Broadcasters are already recognising the need to tap into the online market themselves and to make use of opportunities presented by the development of technology, e.g. the ability to integrate advertisements into downloads on demand. We also encourage Ofcom to take advantage of the proposed derogation in the Audio Visual Media Services Directive, under which limited use may be made of product placement. We will examine further the implications of the decline in advertising revenues for the provision of public service media content by commercial broadcasters in our forthcoming Report on this issue.

Availability of spectrum

Although we will continue to listen to the arguments, we do not believe that a persuasive case has yet been made to justify reserving spectrum for High Definition Television following digital switchover, and we endorse Ofcom's approach in not favouring any particular technology or application in the framework being drawn up for re-allocation of spectrum under the Digital Dividend Review. However, we do recognise the special case of the programme-making and special events (PMSE) sector which risks losing access to spectrum it has traditionally enjoyed as a result of switch-off and we believe that it is essential that an acceptable solution to their difficulties be found.

The Digital Dividend Review is complex and its outcome will have far-reaching consequences; we accept that Ofcom should not be pressured into taking hasty decisions. But it should bear in mind that delays in reaching decisions in the DDR process create uncertainty for all and can have adverse economic consequences for some.

New media rights for televisual content

The new terms of trade between producers and broadcasters have swung the balance towards producers. Steps to strengthen the ability of content originators to retain greater control over their rights are welcome; but commissioning channels need to be able to derive fair value for the product which they have financed, particularly as the climate for advertising on terrestrial television becomes harsher. While we welcome the fact that agreement has eventually been reached between producers and broadcasters, we expect that a further review of the terms of trade will become necessary once the value of on-demand services to broadcasters' funding models becomes clearer—probably sooner rather than later.

Some of the restrictive practices described to us in evidence as being used by broadcasters when commissioning programming and driving deals on rights for future transmission were, if accurately reported, counter to the spirit of the Communications Act. We believe that they are less likely to occur under the new terms of trade, although Ofcom must remain vigilant.


  • "Despite the ability of creators to access new markets and develop new forms of creative content through new media, the importance of that content in helping to drive the development of new technology and sustain business models does not necessarily translate into economic value for content owners. The chief cause is piracy, and we examine various suggestions for preventing it or at least reducing its scale. We also consider in this section the development of online activities by the BBC and by Google, both of which have been accused of proposing or introducing services which eroded the ability of creative industries and dependent businesses to exploit material."
  • Intellectual property rights underpin the viability of our creative industries, and much of the remainder of this report is about the protection and exploitation of rights to creative content. We have not attempted, however, to undertake a comprehensive survey of copyright legislation. The subject has been addressed in much greater detail in the recent report commissioned by the Treasury from Andrew Gowers.[293] Nonetheless, we believe that it is useful, in order to set in relief the discussions which follow, to record here our preferred perspective on copyright: a means by which people can own what they create and earn a living from their creativity.[294] Whether creators choose to take advantage of intellectual property rights is a decision for them. The Arts Council noted that artists "can be quite pragmatic about copyright law, sometimes licensing the copyright in their works to other distributors; sometimes appropriating other people's work to generate something new; and sometimes giving their work away free for others to reuse".

Piracy: scale and methods

  • Verbatim reports from IP protectionist scaremongers; threatens the economy and our very nation
  • Many scary figures on the size of the problem and also the lost benefits to society (although balanced by recognition that not every pirated copy equates to a lost sale)

Meeting the threat from piracy

Enforcement of existing provisions

  • We welcome the commitment made by the Government to bring into force section 107A of the Copyright, Designs and Patents Act 1988 and to provide £5 million to local government to fund enforcement. These steps are long overdue.

Possible new statutory provisions

  • "The Department for Constitutional Affairs should investigate reports that the award of additional damages for infringement of intellectual property is difficult to secure. The deterrent effect of the present law in this respect is near zero: it should be substantial, as are some of the illicit profits being made."
  • "We therefore recommend that unauthorised copying and commercial distribution of audiovisual content projected onto a cinema screen should be made a criminal offence."
  • We do not believe that the present statutory exemptions from infringement of copyright are providing clarity or confidence for users or for the creative industries, particularly in relation to home copying. 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. We note that the Gowers Review of Intellectual Property recommended a limited private copying exception from the offence of copyright infringement for format shifting. We also note the recent proposal by the Institute for Public Policy Research (ippr) that a private right to copy should be introduced. We recommend that the Government should draw up a new exemption permitting copying within domestic premises for domestic use (including portable devices such as MP3 players, and vehicles owned or used regularly by the household) but not onward transmission of copied material. We also recommend that the Government should consult representatives of the creative industries and of consumers on an ongoing basis to ensure that it can respond appropriately. This will allow it to act more effectively and to establish where the existing regime of exceptions is either vulnerable to abuse, failing to respond to advances in digital technology, or unduly restrictive.
  • We accept that home copying can damage business models. We agree with the conclusion of the Gowers review, however, that levies are a blunt instrument for exacting recompense, and we do not recommend that they should be imposed on either hardware or software.
  • We accept the argument, in principle, that delaying universal access to film through the use of release windows, and holding back rights to broadcast television programming via new media, contributes to a climate in which piracy flourishes. The film and television industries cannot ignore this. However, we recognise that cinema exhibitors have relied on a period of exclusivity of release to sustain their businesses. While this has declined, there will continue to be pressure for further reductions and we believe that in future cinemas will need to rely more and more upon providing a distinct experience and environment. The UK Film Council should support and publicise new approaches by cinemas to retaining and developing their audiences.

Encouraging a legitimate market

  • "Ofcom told us of research which had suggested that over 80% of consumers were aware that there was a distinction between legal and illegal downloads, but that over 50% of 16-24 year olds believed that unlicensed downloading should not be illegal."
  • We recommend that the BBC should amend the slogan for the Creative Archive, if it proceeds beyond the pilot phase, to convey the message to users that content should be respected. The BBC should examine whether more can be done to oblige users of the Creative Archive to read the terms of the licence governing use of the material before downloading and consider what other action it can take to educate consumers about the purpose and importance of copyright law.

Education about copyright

We share the Minister's reservations about adding copyright as a specific item to the core curriculum. However, we believe that a less formal approach would be better and that teachers should be encouraged to promote an understanding of copyright as it becomes relevant, whether in music, creative writing or information technology lessons.

Digital rights management

  • 'We are in no doubt that Digital Rights Management copy control mechanisms have damaged consumer trust and have sometimes provided a very poor deal for consumers. They should not be allowed to operate in defiance of exemptions for unlicensed copying enshrined in UK copyright law. We do not, however, believe that a rush to regulate is the answer, particularly as the technology is still in an early stage of development. DRM systems have value and can, if constantly refined, play a major part in fighting piracy. We agree with evidence that they constitute a way ahead for protection of creative content. We believe that DRM tools could in future allow the sale of digital files at a range of prices to reflect the extent of reproduction permitted.
  • 'We believe that it is a matter for companies to decide the extent to which they wish to impose restrictions on the use of downloads and physical product. However, Digital Rights Management technology must be applied with care, and the impact of any DRM tools, whether designed for copy control or for other purposes, should be made clear to consumers at the time of purchase. It should also be borne in mind that any excessive restriction of consumers' ability to copy and share content, and unwelcome consequences for consumers' use of their own computer hardware, will only dissuade them from using the legitimate market. DRM could, if used carelessly, be an own goal. We welcome the recent evidence that record companies are now choosing to make available content free from DRM for commercial reasons.

Availability of unlicensed content on the internet

  • Internet service providers and search-based businesses have already demonstrated that they accept the principle that access to unlicensed material on websites is undesirable and should be prevented if at all possible. It may be impractical for such businesses to be made legally liable for providing access to certain material, but we believe strongly that the industry should do more to discourage piracy. We are not persuaded that an industry-funded body with a remit to examine claims that unlicensed material is being made available on a website cannot be made to succeed, and we believe that the industry should establish such a body without delay.

Challenges to commercial exploitation

Internet-based news aggregation

we do not find the representations made by the publishing industry about Internet news portals to be convincing. Newspaper websites on the internet are part of a public arena; there is no legal bar to providing an indexing service; and we have yet to be persuaded that the establishment of internet news portals is causing damage to commercial publishing enterprises. We recommend that the onus should remain with firms to opt out of Internet search engine listings rather than opt in.

Digitised libraries and archives

We have not examined this issue fully. However, we note the British Library's principle that "digital is not different" when considering the application of copyright to works held in collections.

BBC Ventures

We have yet to see whether the new arrangements for governance of the BBC will inspire any greater confidence in the commercial sector that the BBC will take account of its privileged position in the market when considering new projects. The onus is on the BBC Trust to acknowledge that there is potential for the BBC's activities to have a damaging impact on the commercial sector and that different elements of its plans have differing impacts, and we believe that the BBC must be scrupulous in addressing all the relevant markets and impacts in its Public Value Tests. It is recognised that the Trust will need to make fine judgements about conducting Public Value Tests from time to time (as well as Ofcom with respect to Market Impact Assessments), but a sensible approach would be, "When in doubt, test. " Public and commercial confidence in self-regulation by the BBC Trust will be boosted by evidence that the Trust will act, as it has done in the case of BBC Jam: we see this as an encouraging sign of real change.


We agree with the approach taken by the Government and by Ofcom in negotiations with other EU Member States and with the European Commission on the draft Audio Visual Media Services Directive. The Government took a pragmatic decision to support the regulation of on-demand broadcast services, although we accept that there is in any case some logic underlying such a policy. It must be recognised, however, that the EU has chosen to extend the scope of new media regulation in ways that may disadvantage it in a globally competitive and increasingly technologically borderless world, and could see some existing businesses as well as start-ups in future choose to operate from more liberal jurisdictions. We believe that any such regulation of on-demand services should be self-regulation, both by the industry and within the home. In line with its duty to promote media literacy, Ofcom, with the assistance of all broadcasters and media regulators, should seek to increase public awareness that the protection of children from harmful content accessed via both new and traditional media will become increasingly a responsibility for parents.


Policy Responsibility in Government

  • Nice breakdown of roles of DCMS / DTI
  • PPL argue for something akin to a Ministry of Creative Industries

Support for Business Development

  • Our investment environment less favourable than USA

We recommend that proposals for policy development in the forthcoming Green Paper on Creative Industries should be accompanied by a strategy for research, to include an assessment of the investment climate for start-up businesses in new media sectors.

Government policy on creative industries

We welcome the intention to publish a Green Paper on the Creative Industries. We believe that it will mark a long overdue recognition of the importance of their role in the UK economy.

Government policy on copyright

  • "Despite the various strategies and the work done by cross-departmental groups, there has been little sign of copyright policy development within Government departments or relevant agencies. One of the Patent Office's objectives is to "promote and support moves to simplify the law on intellectual property and to harmonise international rules and procedures"; yet its most recent Annual Report makes no mention of any steps to develop copyright policy. Indeed, the word is hardly mentioned, and none of the present Agency targets specifically relate to copyright. PPL said that copyright policy-making "had been in a state of malaise for the past few years" and that policy was handled as a subset of patents by officials in the Patent Office "who are remote from the copyright industries, with little ministerial input". We note the statement in the Gowers Review of Intellectual Property that the Patent Office "has been less effective at taking a strategic view of intellectual property policy" and that it had not always been effective in linking intellectual property will other related areas.

Copyright term

  • The copyright term granted to creators of literary, dramatic, musical or artistic works in the UK is 70 years from the end of the calendar year in which the author dies, subject to certain exceptions. The term granted to creators of sound recordings in the UK is 50 years from the end of the calendar year in which the recording is made, again, subject to certain exceptions. In the USA, the copyright term was extended in 1998 to 95 years from release; in Australia, the term has recently been increased from 50 years to 70 years. The MMF argued that the disparity in the UK was anomalous and dated from a time when life expectancy (and the scope for creators to exploit their work during their lifetime) was shorter; and it concluded "there could be no possible justification for the discrimination against performers". PPL told us the shorter term for sound recordings in the UK reduced the value of the recording industry in the UK, decreasing the value of any record company catalogue and consequently the amount that it was able to reinvest in new recordings. We were also told that the longer term available in the USA made it a more attractive base for recording. Many other bodies supported an extension.
  • A different view was put forward by the NCC, which argued that recording companies' business models are generally based upon much shorter periods for generating returns on investment, and that the concept of using returns on recordings to finance future recording investments is giving way to models in which each recording is treated as an independent investment vehicle. The BL cited research suggesting that 98% of works had no commercial value after 50 years. A witness for the NCC said that she did not accept arguments that long copyright terms provided an incentive to create and invest in creation, and she suggested that, while it was legitimate to recoup returns on investment, it was not legitimate for "monopoly rights" to extend to the descendants of original creators. The LACA was also strongly opposed, believing that extension would "massively upset the balance between right holders and users".
  • The 50-year term dates from the Copyright Act 1911 and was confirmed by the EU Directive on Harmonising the Term of Protection of Copyright and Related Rights,[582] implemented by regulations in the UK in 1995. Any increase in the term would need approval by the EU.
  • The Gowers Review undertook an extensive analysis of the argument for extending the term. On economic grounds, the Review concluded that there was little evidence that extension would benefit performers, increase the number of works created or made available, or provide incentives for creativity; and it noted a potentially negative effect on the balance of trade.
  • Gowers' analysis was thorough and in economic terms may be correct. It gives the impression, however, of having been conducted entirely on economic grounds. We strongly believe that copyright represents a moral right of a creator to choose to retain ownership and control of their own intellectual property. We have not heard a convincing reason why a composer and his or her heirs should benefit from a term of copyright which extends for lifetime and beyond, but a performer should not. Under the present term, some 7,000 performers, including session musicians and backing singers will, over the next ten years, lose airplay royalties from recordings they made in the late fifties and sixties. They will also no longer benefit from sales just at a time when the long tail enabled by on-line retailing may be creating a market for their product once again. Given the strength and importance of the creative industries in the UK, it seems extraordinary that the protection of intellectual property rights should be weaker here than in many other countries whose creative industries are less successful. We recommend that the Government should press the European Commission to bring forward proposals for an extension of copyright term for sound recordings to at least 70 years, to provide reasonable certainty that an artist will be able to derive benefit from a recording throughout his or her lifetime.