Stop43.org.uk stop confiscation of your property and Human Rights in the UK Enterprise and Regulatory Reform Bill






Digital Copyright Exchange (DCE) Feasibility Study: Call for Evidence

On 22 November 2011 Business Secretary Vince Cable announced the appointment of Richard Hooper to lead a feasibility study on developing a Digital Copyright Exchange (DCE) in the UK.

Stop43 believe that a properly structured DCE would do photographers a lot of good, and hope as many photographers as possible will submit a response.

KEY POINTS


  • A DCE would be a very good thing indeed if it provided a digital market platform for rights owners to participate in voluntarily, a free registry of our work so that it can never be declared orphan, an automated system for tracking infringements, and a one-click opt-out from all forms of Extended Collective Licensing;
  • The IPO’s announcement of Hooper’s appointment states: ‘An exchange could give rights holders the ability to determine the terms on which their works can be made available for others to use. It would also allow consumers to identify rights holders quickly to secure any potential licensing or investment deals.’
  • Nothing in principle ties a DCE either to Orphan Works or ECL. It would be perfectly possible to create a DCE-type platform without legislating for the commercial use of orphan works or extended collective licensing of any work. In fact, a properly structured DCE would negate or invalidate most arguments in favour of commercial use of orphan works and ECL;
  • Hooper’s Terms of Reference oblige him to ignore other copyright recommendations set out in the Government Response, except where these directly impact on the DCE.
Imagine that rather than simply facilitating the theft of photographs found on Google Images, a click on the image thumbnail took a potential user straight to the rights owner or rights manager for direct licensing of that image? This is already possible with the Picscout ImageExchange browser plugin and images registered with Picscout. Try it.

The deadline for submissions is Friday February 10th 2012. The usual combatants in the Copyright Wars can be expected to submit their ‘evidence’, real or concocted, and it is important that Hooper hears from as many rights owners (a.k.a. authors and creators) as possible, so please reply to his Call for Evidence.

THE FEASIBILITY STUDY

The study will address the issues that Hargreaves identified and consider the feasibility of setting up a DCE or something like it. The work will be conducted in two phases:

  • Diagnosis: convening/ discussing with industry partners to explore the issues affecting rights licensing and to create a clear understanding of the problems
  • Options: bringing forward appropriate industry-led solutions with a view to how these could be put into practice
The study will not focus on other copyright recommendations set out in the Government Response, except where these directly impact on DCE.

Phase one has commenced with the Call for Evidence which asks ‘stakeholders’ to respond to two questions:

  • First, whether they agree with the ‘Hargreaves Hypothesis’ - that the current copyright licensing system is not ‘fit for purpose’;
  • Secondly whether they agree with Hooper’s proposed definitions, including the market definition.
THE ‘HARGREAVES HYPOTHESIS’

Hooper has distilled Hargreaves’ hypothesis into the following statement: Copyright licensing, involving rights owners, rights managers, rights users and end users across the different media types, in the three defined copyright markets, is not fit for purpose for the digital age.”

Hooper’s Call for Evidence document goes on to list seven reasons for this hypothesis and a further seven claims (some of which are highly questionable) as to why ‘copyright licensing is not fit for purpose in the digital age’. This forms the basis of his first question.

HOOPER’S DEFINITIONS

His second question is based on his definition of:

  • four categories of rights ‘stakeholders’ (rights owners, rights managers, rights users and end users);
  • six distinct processes which together make up the copyright licensing process;
  • two important distinctions between the licensing of pre-existing and new work; and of licensing work for use by itself, or for incorporation into another work;
  • three distinct copyright markets;
  • nine major media types;
  • and a list of fourteen asserted characteristics (some highly questionable) that together define the digital age and how it differs from the analogue/print age.
COMMENTARY

This is a good and well thought out document full of excellent, useful definitions and categorisations. It's about time such clarity of thought was brought to bear on this process. Nonetheless, some of it is contentious and highly questionable.

Hooper’s definition of four categories of rights ‘stakeholders’ is clear, sensible and realistic. Stop43 are very pleased that Hooper has chosen to distinguish between rights owners, rights managers and rights users. There is a huge amount of public animus directed against what is perceived to be the unfair exploitation of both creators (rights owners) and end users by large corporate rights managers and rights users, some of which is clearly valid. In making this distinction Hooper recognises that it is inaccurate, misleading and unhelpful to tar individual and micro-business rights owners with the ‘corporate rights holders’ brush, and that this distinction better represents the real world of copyright and the production of copyright artefacts.

Hooper’s list of nine distinct major media types also largely makes sense.

His definition of three distinct copyright markets is more problematic. Taken as a broad generalisation across the ‘creative industries’ as a whole it is probably not far from the truth, but individually the markets, usage chains and value chains for different media types have rather different characteristics, and Hooper’s definitions ignore the market distortion and market failure within and across all three of his copyright markets caused by oligopsonistic market bullies. Stop43 have analysed the six distinct photographic markets, examined how digital IP is used, and provided evidence of market distortion and market failure.

The list of fourteen characteristics of the digital age includes some indisputable truths (a digital copy shows little or no degradation from the original, an analogue copy does) along with some risible howlers (disintermediation (squeezing or bypassing the middle man/intermediary)), (the erosion of monopoly status). It is equally possible to argue that rather than creating a diversified ‘long tail’, the digital age has increased intermediation and monopoly status. Hasn’t Hooper heard of Google, Facebook or Getty Images?

Furthermore, the brave new ‘Internet entrepreneurs’ (nontrepreneurs?) and their ‘innovative start-up businesses’ so favoured by this Government as the saviours of the UK economy appear largely to consist of new intermediaries and middlemen; rights users, in other words, rather than rights owners who create primary IP value, the loss-making Last.fm being a typical example. Compare them with Moshi Monsters, one of the UK’s fastest-growing new-technology companies: a classic, creative rights owner founded and grown under current IP laws, and notably not agitating for their relaxation. In this regard Moshi Monsters is like Apple compared with Google. The comparison is instructive: compare their stock prices for the past five years.

IS A DCE THE SOLUTION?

Stop43 believe that alongside improvements in copyright and contract law (strengthened Moral Rights, Fair Contract Law for IP, an IP Ombudsman, and genuinely effective, proportionate and dissuasive legal remedies for infringement) a properly-constructed DCE would certainly be part of the solution, obviously based as it is on our National Cultural Archive concept.

Everything depends upon what it is intended to do and how it is structured, and for an answer to this let us turn to the Government, which in its Response to Hargreaves says that the DCE would need to:

  • Allow prices to be set or negotiated by the rights holder, subject to controls on unfair competition (such as the tariffs currently set by the Copyright Tribunal);
  • Serve as a genuine marketplace independent of sellers and purchasers, for example on the model of independent traders using amazon.co.uk to sell goods, rather than simply being an aggregated rights database;
  • Be open to access by individuals and businesses, free at the point of use, to open standards that mean firms can readily write software to automate access and provide services that rely on information gathered or licences purchased via the DCE, to facilitate the development of businesses in the emerging markets supported by the DCE;
  • Be run on a self funding basis, fees being charged on licensing transactions through the exchange rather than the upload of rights data or search of the database.
There’s no arguing with any of that, and if the DCE really does become a platform which provides all of these facilities and functions, Stop43 believe that it will cause an immediate, direct and major improvement in career, business and trading conditions for rights owners such as photographers.

Of course Hargreaves wanted his DCE primarily to license orphan works at nominal rates, but note that the Government has rejected this proposal. Furthermore, a DCE which operates as Stop43's NCA is intended to, and with which the Government appears to agree, could quite possibly loosen the stranglehold of middlemen and aggregators over the stock photography market, with the result that more of a works’ licence value goes directly to the rights owner, stimulating high-quality production and increasing tax receipts.

Would that be a good thing?

Finally, a reality check. Hargreaves asserts (and Hooper repeats) that 'UK GDP should grow by an extra £2 billion per year by 2020, if barriers in the digital copyright market were reduced.’

That is a nonsensical made-up number, but even so Stop43 expect a properly-structured DCE to generate significant economic growth, with concomitant tax receipts, and that is not to be sneezed at. However, ‘creative accounting’ such as the Dutch Sandwich (1), (2), (3) and sweetheart agreements between HMRC and global corporations appears so far to have deprived the UK Treasury of upwards of £25 billion in tax contributions.

If you were the UK Government, facing another possible economic recession, saddled with an enormous structural deficit, and forced to make hugely unpopular cuts in public spending, in which direction might your energies best be focussed?