HC Deb 04 March 2003 vol 400 cc690-708

'OFCOM may, if they think fit, undertake discussions with, and seek agreement from, broadcasters, producers, service providers and telecommunications companies, in order to assist the deterrence of piracy, counterfeiting and the unauthorised digital transference of moving image material; including in such discussions the promotion of common technical standards in order to facilitate deterrence, prevention, and detection.'.—[Mr. Chris Smith.]

Brought up, and read the First time.

Mr. Chris Smith (Islington, South and Finsbury)

That the clause be read a Second time.

At the outset, I remind the House of my declaration in the Register of Members' Interests—I am an adviser to Disney. However, this issue spreads much wider than a single company; it concerns the serious and growing problem of the dangers of piracy, counterfeiting, illegal copying and downloading across the internet of audiovisual material. That is already widespread in relation to music, and the music industry has suffered grievously.

The music industry is extremely important to this country. Our share of music production across the globe is about 16 per cent., and the threat to the music content industry from the illegal downloading of material is serious indeed. A recent poll in the United States found that 62 per cent. of the 18 to 29 age group—nearly two thirds of everyone in that age group—had copied or downloaded music or movies across the internet, and three quarters of those knew that it was illegal when they did so. That shows the extent of the problem that exists in relation to music.

Equipment capable of burning pirated material permanently on to CDs is readily on sale. Of course, that is possible in a narrowband environment with music. However, we are moving into a broadband environment, the development of which makes it possible to download not just music, but moving image material across the internet. Indeed, equipment now available in the shops enables pirated moving image material to be burned permanently into DVD form.

It may be instructive to consider what happened last year. In May 2002, "Spider-Man" and "Star Wars: Episode II" were released in the United States. Within seven days of those movies being released, 9 million attempts were made to download them across the internet from pirated copies that had been recorded at pre-release screenings. It is estimated that probably only about 2 million or 3 million of those 9 million attempts were successful in completely downloading the entire movie because in many cases the technology was not sufficiently sophisticated to enable that to happen, but that indicates the extent of the problem, the desire to download illegally and, as technology improves, the possible threat, particularly to the content industries.

Mr. Simon Thomas (Ceredigion)

The right hon. Gentleman makes a persuasive case about the amount of illegal material available on the web. However, during debates on the Bill in Committee and on Report, hon. Members on both sides of the House, particularly the Government, have made it clear how little control Ofcom will have over the internet. It is not a regulatory body for the internet, which will remain unregulated on the whole. How will the new clause, or any work by Ofcom, tackle that problem, as it involves the expression of free will through a medium with which we cannot interfere?

Mr. Smith

The hon. Gentleman is running ahead of me; I shall come to precisely that point in a moment. I am arguing not for control over the internet by Ofcom or anyone else, but for the ability of Ofcom to draw together all parts of the industry—both the content and the servicing industries—to identify technological solutions to the problem, but I will come to that point in just a moment.

Of course, the content industries suffer particularly from the illegal downloading of material. The obvious point to make is that, if material can be obtained for free across the internet, people are unlikely to pay for it, so less remuneration goes back into providing the content and it is much more difficult to provide content in the first place in the future.

Mr. Allan

I understand the right hon. Gentleman's concerns for the industry—I hope to catch your eye, Mr. Speaker, and to speak at length on the issue later—but it is helpful to say as we are talking about movies that cinemas are doing better than ever and more money is coming into the contents sector than ever. Yes, people are ripping off stuff by downloading it, but we should not pretend that that is the death of the movie industry quite yet.

Mr. Smith

The point that the hon. Gentleman makes is valid at the moment. The problem is that the technology is in an embryonic state at present. It is still quite difficult to download an entire movie across the internet, but that will not be so for all time, especially as broadband becomes much more readily available throughout the country, as we all hope it will. The ability to download moving image material, not just music and speech, will grow. The hon. Gentleman is right as far as things stand at the moment, but considerable potential exists for the problem to grow much more than it has done up to now.

Mr. John Bercow (Buckingham)

I am anxious to establish whether the right hon. Gentleman believes that his proposal is merely necessary, or whether he judges that it is also sufficient. In the light of the concern that he has expressed, and the evolution of technology, does he think that his concerns will be adequately allayed by the passage of new clause 1, or does he believe that the scale of the problem will in due course necessitate an overhaul of copyright design and patent law?

Mr. Smith

The hon. Gentleman will be aware that the European copyright directive is on the table at the moment, and the Minister's Department is actively engaged in developing the legislation that will come before the House in due course about the implementation of that directive. These issues, particularly in the digital environment, are absolutely germane to that work on the development of copyright legislation. My new clause is by no means an entirely sufficient answer to the problem; it is an attempt to raise the issue and to develop some mechanisms for drawing together a cross-industry approach to try to find some answers. I doubt whether we will ever address the issue 100 per cent. If we can move towards that point, however, I will be much happier.

The new clause does not require Ofcom to do anything; it enables Ofcom. If Ofcom, in its judgment of the overall nature of television and film in this country and across the world, decides that it wants to act, under the new clause, it can. Nor does the new clause seek to enable Ofcom to impose anything on any parts of the industry: the telecoms companies, the content providers or any of the service providers. What it enables Ofcom to do is to draw all those parties together into a discussion, and, I hope, into a voluntary agreement to examine what technological standards can be introduced to try to make piracy more difficult. Although technology facilitates the activity, it also provides some of the answers to the problem, through digital signatures, watermarks, tracing the digital origin of material and so on. Those are examples of how technology can come to our assistance in combating piracy, counterfeiting and illegal downloading. To make that possible, we need common standards to be agreed across the industry as a whole. My new clause seeks to enable Ofcom to encourage that to happen.

John Robertson (Glasgow, Anniesland)

My right hon. Friend makes a powerful argument. What would he do about companies that, in effect, make and sell the DVDs and music CDs, but also make the equipment that allows copying to be done? How do we combat that?

Mr. Smith

My hon. Friend makes a valid point. A number of companies are both equipment manufacturers and content providers. I do not think that we can prohibit the manufacture of particular types of equipment. What we can do, however, is remind companies of their responsibilities in this matter. I hope that some of them will listen carefully to what my hon. Friend says.

Michael Fabricant

I am grateful to the right hon. Gentleman for tabling the new clause, which is very important, especially as technology changes. Does he think that all this is a question of hoping to have an effect? Is not the new clause an example of wish over practical application? Does not he think that it is rather wishy-washy? Does he really think that it will change anything?

Mr. Smith

I absolutely think that it has the potential to change things. I do not believe that we bring about change on every occasion by legislating to prohibit or require something. We can bring about change by legislating to encourage things to happen, which is precisely what the new clause seeks to do.

Mr. Bercow

A very Conservative position.

Mr. Smith

In response to the sedentary intervention of the hon. Member for Buckingham (Mr. Bercow), that is not simply the preserve of Conservatism.

1.15 pm
Pete Wishart (North Tayside)

Before the right hon. Gentleman moves on from this point, I want to congratulate him on trying to find a technological solution to the problems of counterfeiting and piracy. I suggest to him that that is a long way from coming, and we will need to go a big distance before it is achieved. Does he have any comments about the general cultural environment in which many young people do not regard this activity as a crime and are happy to be involved in it? Does he think that we must tackle that type of culture, too?

Mr. Smith

The hon. Gentleman is absolutely right. There is a particular problem with the younger age groups, among whom this activity is regarded as an entirely natural phenomenon, even though, as I mentioned, many of them are aware that it is illegal. It is regarded in a way that is similar to the way that some people regard speeding on a motorway: they know that they should not do it, but they do it none the less. It is absolutely essential to change the culture and to get across the message that this is not a pain-free exercise and that doing it to too great an extent will kill the goose that produces the eggs in the first place. I hope that Ofcom and others can play a role in helping to change the culture in the way that the hon. Gentleman has described.

In proposing this new clause, I am seeking to put down a marker or two and I hope that the Government will accept that this serious issue requires a serious approach. We want as much broadband as possible, as rapidly as possible, in this country, but also want our creative industries, particularly the music and moving image industries, to thrive as they have done in the past and can do in the future. This country is very good at those industries, and long may that remain the case. To put those two things together, we need to achieve the best possible technological answers to ensure that those things can happen legitimately and that the digital reception of moving image material can be properly and legitimately done, rather than illegally done through piracy and counterfeiting.

I want the digital environment and the advent of broadband to be an opportunity for the content and creative industries, not a threat. To turn it into an opportunity, we need to make sure that structures and standards are in place to ensure that that can happen. Ofcom can play a role in making sure that that occurs. The new clause seeks to enable Ofcom to play precisely such a role.

Mr. John Whittingdale (M ald on and East Chelmsford)

I start by welcoming the overall thrust of new clause 1, which was moved by the right hon. Member for Islington, South and Finsbury (Mr. Smith). We sought to raise this issue several times in Committee. I moved an amendment to clause 3, on the general duties of Ofcom, the intention of which was not vastly dissimilar to that of the new clause. At that time, I expressed some reservations about Ofcom deciding the direction of technological development. I was glad, therefore, to hear the right hon. Gentleman say that his aim is not to allow Ofcom to impose a standard on the industry or decide between competing technologies. That would not be an appropriate role for Ofcom.

The right hon. Gentleman is right to say that the scale of the problem will have to be made clear to Ofcom. Piracy and illegal copying are not new developments—they have been going on for a long time. Nearly 20 years ago, I was a special adviser in the Minister's Department. At that time, we wondered whether a levy should be imposed on blank tapes in recognition of the fact that the vast majority of them were being purchased to record music off the radio or off vinyl albums; almost all those purchases probably breached copyright. The industry accepted that the practice could not be stopped and a second-best solution was offered—a levy on tapes that would be redistributed to the music industry as compensation for lost sales.

One of the limitations of copying on to blank tapes was that the quality of reproduction was not especially good. In addition, people had to buy an album before copying it. Since that time, there have been a succession of technological developments: the replacement of vinyl albums with compact discs of almost perfect quality; recordable CDs; DVDs; recordable DVDs; movies and music being made available on a massive scale through the internet; and MP3 players, which allow one to take music off the internet quickly and to keep it in a convenient format so that it can be reproduced at almost the original quality. All those developments are a huge threat to the music industry. In due course, they will be a threat to the movie industry, too.

In the past we have wrestled with the problem of illegal copying—piracy—by factories that produce counterfeit CDs in China or other countries. The CDs are then brought to this country and sold in car boot sales and elsewhere. That remains a huge problem.

Mr. Chris Bryant (Rhondda)

The hon. Gentleman may know that the copyright directive, in its post-negotiated form, allows for different countries in the European Union to resolve this issue in different ways—in particular, in respect of video and cassette tapes. The directive allows countries to enforce a levy on blank tapes, but it also says that the levy may be a levy of nothing, because the British Government have insisted that we should maintain the system that allows individuals to copy for their own private use so as to time-shift. When the directive is eventually incorporated into United Kingdom law, would the hon. Gentleman wish us to abandon that tradition or to maintain it?

Mr. Whittingdale

We have moved a long way from the issue of copying on to blank tapes, which is no longer the main problem. I have always regarded the levy as very much a second-best solution. In respect of the current problem, I do not think that a levy is necessarily the solution, and I want to pick up on some of the points made by the right hon. Member for Islington, South and Finsbury on what could provide a solution.

In the previous Session, the House passed a Bill on copyright theft to strengthen the penalties available to tackle illegal copying. All parties supported its passage, but the problem now is finding the resources to enforce it. Local authorities do not necessarily pay enough attention to enforcing the legislation. The industry has raised that matter with the Minister's Department and the Department for Culture, Media and Sport, which may have to get together to come up with a more co-ordinated approach.

The problem has changed from being one of mass reproduction of discs, in factories outside this country, which are imported and sold in car boot sales. The problem is now much more serious, because it goes on in children's bedrooms. Technology now allows young people, in particular, to burn CDs. They do not even have to purchase CDs in the first place; they can download music from the internet using peer-to-peer file sharing programs. That is a quick and simple procedure and it achieves a very high quality.

The root of the problem, to which the right hon. Gentleman referred, is the attitude of young people to the practice. He quoted a survey that shows that a majority of young people are now downloading and copying music and movies, and that the fact that they are in breach of the law does not stop them from doing it. Part of the problem has been the perception that taking music is somehow a right and that the only people who lose out are the big, fat record companies, which can well afford it. To some extent, that perception has grown because of the view that CDs have been priced higher in this country than elsewhere and the view that the record industry has been exploiting consumers. I have never believed that to be true. All the investigations that the Office of Fair Trading and others have conducted have shown that it is not true. However, even if that case was once arguable, it is no longer arguable. The record industry is on its back and one of the main reasons for that is the practice of copying. The really frightening thing is that the situation will get worse.

The right hon. Gentleman referred to an American survey. I understand that the survey concluded that it may now be impossible to save the music industry and that we may have to concentrate instead on trying to protect the film industry, which will be the next to suffer. In some countries, the number of blank CDs sold now exceeds the number of pre-recorded CDs sold. Even in this country, recent figures show that 308 million blank recordable CDs were sold in Britain. The industry estimates that about 128 million of those CDs were used to copy music rather than computer programs—although copying computer programs is not necessarily any better. The figures show the scale of the problem.

John Robertson

Will the hon. Gentleman suggest some answers to the question that I asked my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) about companies that not only make the music and CDs but make recordable CDs and the recording equipment? What should we do with those companies?

Mr. Whittingdale

Sony is probably the best example of a company in that position, and a question does arise about the responsibilities of manufacturers. When DVDs were first launched, regional encryption was used to protect copyright. The intention was that we in this country would purchase region 2 DVDs, and that if we purchased a DVD in the United States it could not be played on equipment purchased in this country. However, Dixons on Victoria street stocks multi-region DVDs—they are everywhere. Manufacturers have produced multi-region DVDs that are designed, I presume, to overcome the protection that the copyright owner has installed.

Mr. Bryant

Someone who perfectly legitimately buys a copy of "The Two Towers" in the United States should have a perfect right to watch it in this country. The attempts to foil the interests of consumers are crazy.

1.30 pm
Mr. Whittingdale

I am sympathetic to the hon. Gentleman's point. I was about to say that the technological solution will always fail. Attempts to counter the problem by trying to build in technological safeguards merely provide a challenge to the hackers and those who seek to get round the safeguards. They will always win. That has happened in a number of cases recently. For example, a court in Norway dealt with the case of someone who was 15 when he developed a computer program to overcome the technology in DVDs that prevents copying. He was taken to court by the copyright owner, but the court upheld his right to do what he wanted with the DVD. That included copying it.

Mr. Allan

For the sake of accuracy, may I make it clear that the person accused in Norway had written the computer program to be able to play his legitimately purchased DVDs on the Linux and not the Windows operating system. That is why the court found in his favour. There was no suggestion that he was copying for resale or anything like that. He merely wanted to watch his DVDs and was smart enough to find a way of doing that.

Mr. Whittingdale

As I understand it, however, the problem was that he made available on the internet the program that he had developed. It was then downloaded by millions of other people who used it not to watch DVDs on a different operating system but to crack the safeguards built into DVDs. That enabled them to copy them, which demonstrates the limitations of technology. Each time that someone develops a new method of trying to safeguard copyright through technology, someone else will find a way round it.

A couple of months ago, I read that the record companies in this country were developing something called Cactus data shield to try to prevent the copying of CDs. That gives rise to the question that the hon. Member for Rhondda (Mr. Bryant) asked. Once people have made a purchase, should they not be allowed to make a copy? I suspect that it will not be long before someone overcomes this technological constraint and finds a way of making copies.

The problem will get worse. At present, one at least has to have an original that has been purchased before one can copy it. The real danger, however, comes from the internet. At present, the copying of music is relatively simple using the normal broadband access that is available in parts of the country if not in others. We shall deal with that issue in the next debate. Even broadband is not capable of providing high-quality movie reproduction, but it is only a matter of time before it will be able to do that.

I visited Dolphin house, which is wired by ntl. It offers much faster access than conventional ADSL technology, and I believe that 2 or 3 megabytes a second are on offer. It is possible to log on to a site that streams DVD quality movies down the fibre direct on to the screen. It would obviously be very simple just to record that, and that constitutes the same threat to the movie industry that is currently destroying the music industry. If the practice of logging in free to sites that offer movies becomes widespread, and if those movies can be downloaded rapidly and simply on to a recordable DVD in a bedroom or an office, that will pose real dangers to the movie industry.

Michael Fabricant

I have been following my hon. Friend's remarks with interest. Does he not realise that even now there is a danger resulting from the digital terrestrial and satellite transmission of movies and from digital audio broadcasting? In theory, there is nothing to prevent someone from burning a DVD of something taken off air with digital quality.

Mr. Whittingdale

That is perfectly true. To some extent, it is a question of the desirability of the films involved. The right hon. Member for Islington, South and Finsbury referred to "Spider-Man" and "Star Wars: Episode II" and it will be some time before they become available on television. Part of the attraction is having a copy on DVD before one's friends have even had a chance to see the film in the cinema. My hon. Friend is right about the threat.

The new clause tabled by the right hon. Member for Islington, South and Finsbury is welcome in that, if nothing else, it allows us to talk about issues that are of huge importance to the industries concerned. I very much hope that Ofcom will at least be aware and take account of these issues in all its consideration of the development of technology and in its regulation of the communications sector in general. However, if an answer exists, I suspect that it does not lie in regulation by Ofcom. I do not think that it even lies in the technological solutions that we have been discussing.

If there is a solution, it is that of the industry exploiting the internet and viewing it as a new opportunity to make material available. It should try to persuade people to purchase products from internet sites rather than accessing them illegally and downloading material without any payment being given to the copyright owner. The way to do that is by providing added value. The music industry is now examining ways of making music available with all sorts of additional bonuses that come with its purchase from an internet site. The same approach could be adopted by the movie industry.

I have seen research from America that shows that a variety of additional items could be attached to the purchase. For example, additional material can be provided about the making of the product or concessions could be offered on theatre tickets. A variety of bonuses and attractions could be provided and they might persuade people that, rather than break the law and deprive copyright owners, artists and performers of the money to which they are entitled, they should go to a legitimate site that makes available the same product for a small payment. That is a market-based solution and the only long-term solution.

I do not decry the attempts of the right hon. Member for Islington, South and Finsbury to raise this issue and to get Ofcom to take account of it. I support those attempts, but the new clause will not solve a problem that will increase in the coming months and years. I suspect that the only answer is for the industry to adapt and to try to use the market opportunities in the way that I have suggested. If it does not do that, its future looks very bleak.

Mr. Bryant

I, too, am delighted that my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) has tabled the new clause, but I am hesitant about supporting it. I am broadly sympathetic to the thrust of the issues that he has raised in relation to piracy and counterfeiting. It must be a major concern to any right-thinking person that acts of theft occur on a daily basis as the result of organised crime. My hon. Friend the Minister for Tourism, Film and Broadcasting has been on a number of busts with the police and other organisations in the past three months, and he has tried to point out that the buying of CDs that have been manufactured deliberately to get round the copyright law is clearly wrong and immoral. However, I do not share the apocalyptic version of the future with which my right hon. Friend and the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) have presented us.

In the debate about piracy, we all too easily forget the role of consumers. As my hon. Friend the Member for Glasgow, Anniesland (John Robertson) pointed out, consumers are bombarded with two messages by the same companies. The first is "Come and buy our wonderful technology, which enables you to tape pieces of music from other sources and put them on to your own CD." The second is that they are engaged in an act of piracy that is wholly illegal and immoral. That presents a difficult problem for consumers. The marketing of some organisations has been downright hypocritical. In fact, when I worked for the BBC in Brussels and I was engaged at some length on the copyright directive, it was almost impossible to find a music or film industry company that was not in some way tied to a business that manufactured some kind of copying machinery or technology.

Pete Wishart

Can the hon. Gentleman not make a distinction between the young person sitting in his bedroom making a copy of a CD for his own use and the mass production of illegally counterfeited and copied products that one sees in marketplaces around the UK?

Mr. Bryant

I am sorry that I am not making myself plain enough, as that is indeed the distinction that I want to draw. It is sometimes not drawn sufficiently clearly in the debate about piracy. My right hon. Friend the Member for Islington, South and Finsbury referred to the 62 per cent. of young people who think that it is perfectly legitimate to download music from the internet without payment. Probably 95 per cent. of the people with whom 1 was at school at the age of 18 copied "Top of the Pops" on to a cassette on a Sunday evening so that they could listen to it at various times during the week. I see hon. Members around the Chamber nodding, including Conservative Members and the hon. Member for Sheffield, Hallam (Mr. Allan)—who as I can remember his constituency will get intoHansard for having engaged in that illegal activity.

There is a real onus on the manufacturers, the record industry and the cinema industry to provide a new revenue stream of their own. It is simply inaccurate to say that a digital copy is a perfect copy, as there are many different qualities of digital copy. The hon. Member for Ceredigion (Mr. Thomas) said that the cinema is nevertheless doing well at the moment, and my right hon. Friend the Member for Islington, South and Finsbury said yes, but that will not be the case in future. I suspect that the cinema will continue to flourish owing to the simple fact that often people go to the cinema not only to see a new film, although that is part of it, but because they have a completely different experience as part of an audience in front of a large screen with digital stereo.

Mr. Chris Smith

My hon. Friend is right that it is likely that people will still want to have a night out in front of a big screen at the cinema. All the evidence of the past 20 years, especially at the time when video technology was developing, confirms that, and I would not argue against it. However, he should bear in mind that the technological ability to download movies will rapidly increase, and we shall have to take that into account.

Mr. Bryant

My right hon. Friend is right. I only wish that the capacity to download into the Rhondda valley was available rather swifter, as we seem to have no prospect of broadband technology for some years to come—2007 is the most likely date at the moment. I worry that we are perpetuating a gap between the information rich and the information poor.

Be that as it may, one of my concerns is this: when I was first elected, one of the first things that I did was to ask the Department of Trade and Industry when the copyright directive would be incorporated into UK law. I was originally told that it would be last March, then last July, then definitely by the end of the year—and it is still not quite ready. Major issues need to be resolved if we are to achieve the balance between the rights of the consumer and the individual and the rights of the industry, including the need for competition and for a strong music and cinema industry.

Some of the issues are recondite, but must none the less be swiftly addressed if we are to stand any chance of halting piracy. They include embedded phonograms, the time-shifting of recordings, and incidental reproductions in the many processes that are involved inside a computer of material that would otherwise be seen as copyright. The many exemptions from copyright that exist in this country—for the blind, for the hard of hearing, for libraries, and for many other public interest reasons—are still important, and we need to get the balance right. That is why the new clause is wrong and, furthermore, relates to the wrong part of the Bill. I simply do not believe that handing over such a power to Ofcom would be the right means of ensuring that there is a proper debate about piracy, that we properly strike the balance between the needs of consumers and the needs of industry—

1.45 pm
Mr. Smith

If my hon. Friend does not think that Ofcom is the right place, where is?

Mr. Bryant

My right hon. Friend pre-empts me, and I know that he is not in favour of pre-emption. I would merely say that the Patent Office, which historically has responded only to complaints and to changes in the law, should have a proactive role, and it is undoubtedly where the power should remain. Of course, different elements of the law are implemented in different ways. The private Member's Bill introduced last year by the hon. Member for Twickenham (Dr. Cable) would have ensured that certain aspects of the matter were dealt with much more robustly. That is why I do not support the new clause.

Mr. Allan

I find myself very much in sympathy with the comments made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale). I remember that a famous battle of Maldon was fought a couple of millennia ago. The hon. Gentleman said that he did not think that hardware copyright protection was the right way forward. It is in that spirit that I rise to speak, because I am concerned that the thrust of the new clause is in that direction—a direction that has been very much advanced in the United States through measures such as the Digital Millennium Copyright Act 1998 and which is causing huge controversy between people in the industry. That is particularly true in relation to the internet, where people in Europe and in the US often represent different points of view.

We discussed "Top of the Pops" in Committee, and it was bound to raise its head on repeated occasions. I am grateful to the right hon. Member for Islington, South and Finsbury (Mr. Smith) for giving us another chance to talk about it. Yes, I freely confess that I was a "Top of the Pops" taper in my youth.[Interruption.] I am asked whether I drank R. White's lemonade. I was not such a slave to advertising.

Taping represented a system of "try before you buy". The important shift that has occurred in the music context is that the trying is taking place but the buying no longer necessarily does so. In the 1970s we would tape "Top of the Pops", and if there were a couple of songs we liked, we went out and bought them. We bought the vinyl because we liked having the record sleeve to touch—that is the added value that the hon. Member for Maldon and East Chelmsford talked about. We have not yet developed a comparable system in the digital world. The problem arises in trying simply to transfer what was done in the analogue world to the digital world. That is why I am sceptical about hardware protection. In the analogue world, one controlled the physical media—vinyl, compact disc or whatever—and had some way of policing them. In the digital world, there are no physical media to control. That creates a raft of problems, and the question is how to address them, not whether they need to be addressed.

There is a particular problem in the audio and music business in that the material can be shifted around and no comparable legitimate channel has yet been established. That is a specific market problem. The industry maintains as its primary distribution channel the traditional retail system whereby CDs cost in the range of £10 to £15, but those prices will not stand in the digital world. It is hard to maintain a system under which, effectively, one has two price ranges for the same material—one of £10 to £15 and another that perhaps reflects the real costs of distribution over the digital system, whereby the record company and the artist can still get the same amount of money, but have transferred the costs to the end consumer and taken out the distribution costs, so that the product sells more in the £3 to £5 range. It is therefore essential to develop that second digital distribution channel.

Mr. Mole

Does the hon. Gentleman agree that we need to shift from the ownership of a particular item of music to micro-billing or micro-payment for the rental of an item on demand, be it a video or music track? The challenge is that video-on-demand trials have not competed economically with the comparable physical space model, the video hire shop. Perhaps he would agree that when a video arrives in broadband form for the first time in the constituency of my hon. Friend the Member for Rhondda (Mr. Bryant), it should be called "A Fish Called Rhondda".

Mr. Allan

I will not follow up that last point.

Mr. Bryant


Mr. Allan

No doubt the hon. Gentleman is about to say that he has never heard that one before.

Different competing models may be successful, and I think we agree on the objectives of finding a successful model.

Mr. Bryant

I just want to say that a fish and chip shop in my constituency is called "A Fish Called Rhondda".

Mr. Allan

I am pleased to hear that.

The hon. Member for Ipswich (Mr. Mole) makes an important point about different competing models. One is the micro-payment at time-of-use model by which the customer pays by usage rather than for obtaining copyright material. I do not think that that is likely to work. The more effective model is to make a reasonable payment to obtain fair use, which is the traditional method. People could then do whatever time, format and space shifting—those are the technical terms—they wanted with the material. For example, they might have an iPod device or a computer for listening to MP3s. That approach is more likely to succeed than micro-payment at the time of use.

Pete Wishart

Surely the problem is lack of regulation of the internet. Records and movies will still be available for free if people place them on the internet. Until we have effective regulation that benefits the companies involved, such ideas and projects will fail.

Mr. Allan

The hon. Gentleman is right to mention the internet. The valid point has been made that by encouraging broadband access we are creating the conditions in which even more piracy can occur. If the Government succeed in meeting their target of millions of broadband users, they will create millions of potential piraters. Who would be liable for that? I fear that the new clause would steer us on the route of making internet service providers responsible for content. I am not convinced that that is right. I would be loth to tell an internet service provider that, as part of its licence condition, it must implement a particular hardware or software copyright protection, just as I would not want the Royal Mail to be prosecuted if people used it to send dodgy pirated videos. In general, the Bill establishes that internet service providers are more like the Royal Mail than a publisher, and that is the correct approach.

The people who should be prosecuted are those who put up the sites. We should go after the publishers of the material, and we can do that under current law. As someone who enjoys music and film, I find it offensive to see people with dodgy videos at car boot sales and people on the street with dodgy CDs. I want to crack down on them. The same is true of abuses of the internet. There is a debate on whether such controls should be extended to other jurisdictions. Certainly, the EU should have a common framework as part of the copyright directive. However, if people are malicious or stupid enough to have a site that says, "Come and get illegal pirated material here", and they have a locus in our jurisdiction, we should go after them under the general law. I do not think that the best way to deal with the problem is to create specific internet law because the legal provisions already exist.

Mr. Whittingdale

Does the hon. Gentleman accept that the use of notice and take down is one of the most effective means to date of dealing with the problem? Under that approach, ISPs are made aware that materials are being downloaded from their servers which are in breach of copyright on a large scale. They then have to take some responsibility by removing the site that is making such material available illegally.

Mr. Allan

Absolutely, and more work could be done on that. There are specific issues for internet service providers, which have a legal responsibility in both directions. The problem is more than a breach of copyright material; it also involves libellous material. ISPs do not want people to use their services to publish such things, but they have a contract with the publisher and do not want to be sued for removing material.

The internet industry is rightly asking for greater legal certainty when it gets a request for notice and take down from a member of the music or film industry who thinks that material is illegal. The industry wants that to happen in a sensible, consistent and standardised way so that it does not get requests from every Tom, Dick or Harry. It also wants to be sure that when it responds, its position is governed by legal certainty so that it is not exposed to action by its customers. We could make considerable advances on that and allow something positive to come out of the debate. Improving the notice and take down procedures on copyright material would be welcomed by all the industries concerned. I do not know anyone in the internet industry who is keen to see their mechanisms abused in that way. They want them to be used sensibly, responsibly and legitimately.

As hon. Members on both sides of the Chamber have said, I hope that we can create a proper market for digital material in which artists and record companies receive fair recompense. By introducing over-elaborate physical protection measures for software or hardware, we may accidentally create a bigger incentive for people to go into the illegitimate market. If people cannot have fair use of their legitimately bought material, they will go for the illegitimate material that they can move between different devices.

I hope that we find a sensible approach. The debate is important in the context of Ofcom because the people whom it will regulate are creating the infrastructure over which the material will move. However, I agree with the hon. Member for Maldon and East Chelmsford that Ofcom does not have a specific role for dictating what material is transmitted across the internet.

Michael Fabricant

This is one of the rare occasions on which my opinion has been swayed by the debate. Although I welcomed the new clause, I was not keen to include it in the Bill. I now think that it should be included, although I hold by the original view that I expressed when I intervened on the right hon. Member for Islington, South and Finsbury (Mr. Smith). The new clause is wishy-washy. Nevertheless, the problem needs to be addressed.

Cable and ADSL are delivering broadband at about 1.5 megabytes per second. My hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) mentioned the Dolphin Square experiment, which is delivering broadband at between 2 and 2.5 megabytes per second. I have no doubt that in years to come we will be discussing the delivery of 5 to 6 megabytes per second. At that speed, it would be the same as digital terrestrial and digital satellite television, which makes even more prescient the point made by the right hon. Member for Islington, South and Finsbury.

People will be able to download entire film productions from the internet. There are grave dangers in trying to define a standard that would provide a block to that. As my hon. Friend the Member for Maldon and East Chelmsford said, 15-year-old hackers will always be able to work out a way to break through that block. The other problem is that the internet allows material to be originated anywhere in the world. We need international agreement because we will have a problem if an internet site originates in, say, the West Indies, where gambling sites are based, or China. The right hon. Member for Islington, South and Finsbury was right to raise the problem. Although people may prefer to go to the cinema, as the hon. Member for Rhondda (Mr. Bryant) pointed out, there will be a disincentive to creativity if people believe that they cannot maximise their return because their copyright can be breached by individuals downloading their material.

2 pm

Mr. Bryant

We are talking about restructuring the business model used by the audiovisual industry, particularly film and music. One of the expectations inherent in the decision to invest in broadband technology throughout the country is that consumers will spend significantly larger sums, perhaps £50, £60 or £70 a month, on audiovisual services. Is not the important thing to make sure that the money that is going to cable and other forms of digital television is getting through to the creators?

Michael Fabricant

Yes, but it is important that the provision of such audiovisual services should involve a legally or morally binding provision. There was a debate in the Chamber way back in 1900 or 1910 about the provision of books to libraries. Members debated the question of whether authors should benefit from the availability of their books in libraries. Of course they should—if everyone read books from libraries and did not buy them there would be no incentive for creativity—there would be no incentive for authors to write or publish books, unless they simply wanted the gratification of seeing their name in print. Thinking about it, that probably satisfies the desires of most authors but, nevertheless, many of them want some income from their work as well.

I maintain that the issue has to be addressed. I was amused when the right hon. Member for Islington, South and Finsbury asked, "If Ofcom is not going to assume that responsibility, who is?" That is a good point. Ofcom, whose functions are defined in the Bill, is the ideal organisation to try to produce standards to ensure that digital piracy does not occur. It is all very well for Ofcom to perform that role, but I must enter a great caveat: if it does so in isolation, it will be pointless, as worldwide agreement is needed—[Laughter.] I do not know why the hon. Member for Rhondda is laughing from a sedentary position, if that is possible. If someone does not take the first step, there will not be worldwide agreement, so Ofcom should assume that role.

Mr. Bryant

One can, indeed, laugh from a sedentary position.

One problem with the new clause as currently worded is that it is an enabling power that Ofcom may choose not to use. Historically, there has been phenomenal difficulty in getting the organisations listed in the new clause to co-operate and work together. Without a robust power and a duty, Ofcom would not stand a chance of getting anywhere. If the international community has to agree as well, that is cloud cuckoo land legislation.

Michael Fabricant

By saying that such legislation is wishy-washy, the hon. Gentleman amplifies the point that I made in an earlier intervention, but someone has to start somewhere. Of course, he is right. He alluded in his speech to the fact that organisations such as Sony produce movies and music on the one hand and the very equipment that can be used to cut DVDs and CDs on the other. I accept that there is a problem but I repeat that someone has to start somewhere. No doubt, there are organisations similar to Ofcom, such as the Federal Communications Commission in the United States, but Britain ought to have a role too.

Mr. Mole

I agree with the hon. Gentleman. One reason why these technologies have become more pervasive is that they are the by-product of worldwide standards groups such as the Moving Picture Experts Group which defines the MPEG standard behind the DVD format and the MP3 music format.

Michael Fabricant

I thank the hon. Gentleman for his intervention.

Going back to the intervention of the hon. Member for Rhondda, of course standards have to be established by the G7 and, beyond that, the World Trade Organisation. The fact that China has joined the WTO is a major achievement, because it was one of the main producers of illegal CDs and DVDs. Some Members may argue, even from the Front Bench, that that is still going on. We do not know whether that is so, but now that China is part of the WTO, at least there is a disincentive against such production and an incentive to obey international copyright law. However, international standards are needed. It is remarkable to hear that there is a peculiar system in which there are regional DVDs. One of the problems with analogue television is that there are different standards. There is SECAM in France—I do not know what that stands for, but many people think that it is "Contrary to the American method". In the United States, there is NTSC, which many people think stands for "Never twice the same colour". In Britain, we have PAL—peace at last. There are different standards. It only costs £190 to go to New York city and buy from Tower Records a DVD that one may not be able to play in the United Kingdom, not because the technology is not standardised but because people have deliberately made a system that is not compatible with other systems.

The problem needs to be addressed, and I congratulate the right hon. Member for Islington, South and Finsbury on tabling the new clause. I am persuaded that, if not in its present form, such a provision ought to be included in the Bill. If the Minister resists its introduction, I hope that a similar provision will be included when the Bill is considered in another place.

Mr. Mole


Michael Fabricant

Before I conclude, I will be generous and give way to the hon. Gentleman.

Mr. Mole

The irony of multi-region DVDs is that most manufacturers will sell a multi-regional DVD player in this country because there was a massive market in pirated software to replace the firmware in DVD players to enable people to play DVDs from other regions.

Michael Fabricant

The hon. Gentleman is quite right. Where there is a will, there is a way, and where there is a 15-year-old hacker, he will hack through it.

Mr. Timms

We have had an interesting discussion. The Government certainly believe that copyright theft over the internet is a serious issue for many rights holders. It is essential that those who invest in creative activity can gain a fair reward from their work, whether in movies and music, as my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) said, or in other parts of the publishing industry. I am grateful to my right hon. Friend for underlining the importance of the matter in new clause 1.

The lead responsibility, as my hon. Friend the Member for Rhondda (Mr. Bryant) said, lies with the Patent Office in consultation with the Department of Trade and Industry and the Department for Culture, Media and Sport. The Patent Office is responsible for intellectual property, including copyright, in the UK. The DTI and DCMS sponsor the affected industries. It is important not to confuse those responsibilities by suggesting that somebody else might share them.

Michael Fabricant

The Minister is surely not suggesting that the DTI and more especially the Patent Office would pull groups of people together to try to agree international standards?

Mr. Timms

I am suggesting that the Patent Office can and does bring together different parts of the industry. Indeed, the Patent Office acts as the chairman for the counterfeiting and piracy forum, which brings together the relevant interests in the public and private sectors to discuss better co-operation and co-ordination against this crime. In the past year, for example, its members have discussed closer working between affected industries and the police hi-tech crime unit. In addition, the proposals that we have made in the context of the UK implementation of the copyright directive include a new criminal offence in copyright law to apply to those who wilfully make copyright material available on the internet without a licence in the course of business proceedings or on a commercial scale. That will assist enforcers seeking to deal with piracy of digital material.

Different approaches are needed to combat illegal private copying on the internet. The proposals for implementation of the copyright directive would strengthen the action to be taken against those who circumvent technical protection measures or provide equipment or services for doing so, which we discussed. Those are particularly important in the internet environment and provide copyright owners with statutory backing to develop their use of the technology. However, the copyright directive does not mandate the use of particular technology; that is an issue for rights holders to decide for themselves. The fact that recent pirate copies of films were reported to have been traced back to unprotected copies given pre-release to academy award judges suggests that the film industry needs to reflect on its own use of appropriate technology.

The recitals in the copyright directive emphasise the importance of all the parties involved—rights holders, intermediaries and equipment manufacturers—reaching voluntary agreements on standards. That must be the right way forward, not least in view of the inherently international character of the net.

Digital rights management is important for the content industries. We are already working with industry on that as part of the work of the broadband stakeholder group. It is aimed to create an inventory of current content management systems, and to spread wider knowledge about likely value chains and the major economic, legal and technical issues at different points in those chains. A framework is to be set up within which to evaluate the various elements of digital rights management. Much work is going on in this area. I hope that my right hon. Friend will be reassured that we are taking the issue seriously.

The hon. Member for Sheffield, Hallam (Mr. Allan) called for better procedures around notice and take-down for internet service providers. He has given us an example of why, the week before last, he was designated "internet hero" at the annual award ceremony of the Internet Service Providers Association. The e-commerce directive, which we have implemented in the UK, provides a defence for internet service providers as mere conduits. Officials are discussing with internet service providers whether there is a need for guidance on notice and take down—the point that the hon. Gentleman made.

I would not favour giving Ofcom a specific remit in this field, as that would have only tangential relevance to its core remits set out in clause 3(1) or to the functions set out in the Bill or in existing legislation that the Bill will transfer to Ofcom. Of course, there is nothing to stop Ofcom conducting the kind of discussion envisaged in the new clause and proposed by my right hon. Friend. I know that those at Ofcom will read with great interest the discussion that we have just had, and what he and others said in the debate. The issue is one to which the Patent Office is fully committed, in consultation with the two Government Departments. I believe that that is the right institutional lead for policy work in this area, and on that basis I hope that my right hon. Friend will withdraw the motion.

Mr. Chris Smith

The debate has been extremely interesting and valuable. Part of my purpose in tabling the new clause was to ensure that the House had a chance to air some of the issues around the developing problem. Every contributor to the debate recognised that the issue is real. There is a serious problem, and as the hon. Member for Lichfield (Michael Fabricant) said, there is potentially a disincentive to creativity if unauthorised downloading of material takes off in a major way.

Various solutions have been proposed by hon. Members in all parts of the House, highlighting the need to change the culture, as young people in particular see unauthorised downloading as a natural activity; the need to get a move on with the implementation of the ELI copyright directive; the need to improve the notice and take down procedures where unauthorised material has been identified; the need to make the legitimate purpose of material more valuable, more desirable, more affordable and more accessible; and the need to make the opportunity to take material legitimately more attractive than the opportunity to take material in an unauthorised way. There may well be some technological answers too, especially if global agreement can be reached. I hope that all the issues raised will be taken into account by the DTI and DCMS, and even by the Patent Office, perhaps.

2.15 pm

That brings me to my final point. I was a little disappointed that the Minister placed such emphasis purely on the role of the Patent Office. One of the reasons for wishing Ofcom to take an interest in this area of activity is that Ofcom has the clout vis-à-vis the parts of the industry concerned. It is Ofcom that will be the regulator of broadcasting and telecommunications. It therefore has considerable muscle to persuade the various parts of the digital landscape to get together and find various means to tackle the problems. Ofcom has that muscle; the Patent Office does not. The Minister says there is nothing to prevent Ofcom taking an interest in this area of activity. I hope Ofcom will take note. As soon as Ofcom is up and running, I hope that it will discuss with the Patent Office how they can work together to develop the lines of attack necessary to make sure that the problem is taken seriously.

With that hope in mind, and with the hope that the matter may be aired in another place, I believe that it will assist the progress of debate if, at this stage, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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