Keynote speech to BPI AGM
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
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I was interested to see that the theme for your AGM this year is Music Everywhere, and who can seriously doubt that music is more ubiquitous than ever before.
And this is particularly true of British music at the moment. In March, for the first time in over 25 years, the top three spots in the US album charts being held by UK artists - Adele, Marsha Ambrosius and Mumford and Sons. We have a 12% share of global sales of recorded music, and in its 20th year the Brit School keeps on delivering inspiring new talent. This is a tremendous achievement that reflects the diversity and depth of talent that marks us out on the world stage and should give us enormous optimism for the future.
The music industry has been the canary in the mine in the digital age. Few canaries volunteer for the job, and music was the first content sector to meet the blizzard conditions of the Internet. It is not surprising that the record business have taken time to adapt.
So, inevitably sometimes the focus was wrong. Hindsight makes us all geniuses. Again, as a politician I can sympathise. It’s curious that so many people now say they would have got it right if you believe reports after the event.
I know that the music industry does accept that mistakes were made, and opportunities missed, but I now think it is keenest of all the traditional entertainment sectors to make the future work.
I think that it is very encouraging that there are clear signs from ISPs, search engines and others that they do recognise the central role that music has in driving other business. Consumers will increasingly expect there to be a music offering alongside more prosaic applications. The trick, of course, is to ensure that they also expect to pay a fair price for such a service.
Whatever the history between the music and communications sectors - and there is nothing wrong with a bit of creative tension here - we are already in enlightened self-interest territory. And enlightened self-interest can accomplish surprising things.
But it also cuts both ways. It means that the music industry must embrace a state of continuous change that can be uncomfortable. Most of the people from the industry I have spoken to recognise that, and are up for the challenge.
What I know makes people angry is that radical change has to be undertaken against a background noise of infringement. What more than irks are the apologists for infringement, those who assert that copyright itself is an outmoded conspiracy, designed to put money into the pockets of corporations at the expense of ordinary people and so called “real artists”. Supposedly you can’t be a real artist and make real money.
Such people tend to make a lot of noise, but little of it is constructive. Music, and other creative products, will not survive on user generated content alone. It is important to note that UK composers, performers and producers work hard for what they do and deserve to be rewarded.
Without doubt some talent will emerge from the online cacophony, and some already has. Some future stars may even be lucky enough to be taken under Simon Cowell’s wing, and good luck to them. But let’s not kid ourselves. 99% of the time it takes real investment.
Investment in discovering talent, developing artists, guiding their careers, and making the end result attractive to the public.
Who does that? Well, it’s certainly not online music industry critics. The reason the record industry remains such an important element in the music industry as a whole is that it is they who take the risk in nurturing talent in the hope that they will be one of the successes that pays for the overall effort.
Nobody is pretending that this is done from selfless motives, or that it works well in every individual case - but without it the whole thing becomes a total lottery, and many talented voices would never have been heard against the competing crowd.
Revenues of UK record labels have fallen by a third since 2004. We recognise that as the record industry is squeezed and this investment in the future that is put at risk, help is needed now. It is not to protect the industry as it is now, nor protect vested interests, but to help ensure that it can evolve into the industry that we will still need in the future.
Government has a role here. Not as a cheerleader for any particular sector but as a protector of the creative industries. One of the things the Government is good at, and which it does not take enough credit for, is bringing people together.
Discussions in a neutral venue can lead to more promising commercial negotiations. I am told generally people are more polite when Ministers are there.
We rightly stay well outside anything impinging on competition, but those who have worked with me will know that I love a roundtable, and I know that some of these have been valuable.
Government also has responsibility for setting the legislative framework, and ensuring that it remains both effective and fit for the future.
The BPI has always been very supportive of the Digital Economy Act, and our efforts to implement it, for which I am grateful. This has been a slower process than we might have wished - but legislation often is.
Nevertheless, the road ahead is now clearer, assuming that the continuing efforts of BT and Talk Talk come to nought.
I understand your concern that this happens as fast as possible, with minimal costs, and we do intend to make clear our intentions about the Act before too long.
If it seems this has been a slow process there has been a genuine reason for it. We want to get the road ahead absolutely clear so when the Act is implemented it goes as smoothly as possible.
One thing that I would say to this audience is that in order to ensure that the initial obligations are up and running as soon as possible we need Ofcom to have all the information they need - and that includes rights holder budgets. I know that this may a sensitive point, but the less reason for delay, on all sides, the better.
The initial obligations are designed to reduce unlawful peer-to-peer file-sharing, but this is not the only threat, which is why we set up the working group on site-blocking to which the BPI has actively contributed. That has done some promising work.
And we will publish Ofcom’s report into the workability of sections 17 and 18 of the DEA shortly, and our reaction to it.
I should also say something about the Hargreaves review. The review holds up some challenges and some opportunities for your industry.
The Digital Copyright Exchange could, potentially, be a game-changer. Open, transparent and efficient markets for copyright licensing could help drive new services and outlets, and cut costs for existing ones and rights-holders. That should mean bigger markets and more solid margins. I’m not saying the Digital Copyright Exchange would be easy but Hargreaves paints a vivid picture of the potential benefits. Ian Hargreaves was very clear that the exchange would be viable only if copyright owners saw the benefits.
I don’t want to underestimate the challenges that an exchange would provide, but I do think that the music industry would have a lot to gain and a strong start, given the work already going on to develop good databases of content. So, whatever the Government decides about the exchange, there is an opportunity there for you.
I know that many here will also hold strong views about the recommendations on copyright exceptions. Let’s wait until Government responds to debate that. But we are strongly aware of the need to balance the valid and competing interests, while making sure the UK does not fall behind.
And while we are in the area of copyright, I would just like to add that the Government will continue to support moves in Europe to extend copyright in sound recordings.
To really embrace “music everywhere”, we need to look seriously at the current legal situation. A consumer’s normal and reasonable use of an iPod should not be something we try to discourage or regulate. Make life too difficult for customers and we will just have “music nowhere”, which is not in anyone’s benefit.
We also want to give your industry more support to grow and prosper overseas. To do this the Government will be creating an IP Attache network - starting with China and India in 2011 followed by Eastern Asia and the Americas in 2012. We will be increasing our offering of products and information to business in order to help them protect their IP overseas.
And we will be actively engaging within Europe to influence their approach on key issues, like the new EU Intellectual Property Rights strategy and EU-led international trade negotiations.
But as a general rule industry should never wait for Government. I cannot stress enough that rather than hang about waiting for the next legislative bus, the music industry must grasp all the business opportunities that are emerging.
There are already around 70 online music services in this country, and business is growing strongly, with revenue from subscription services rising by 38% last year. I am delighted that Virgin has announced its deal with Spotify. I hope that will be a game-changer with a major ISP offering a streaming service to its customers. I hope other ISPs will take note and follow Virgin’s example.
I know many of you agree that we must not rely on enforcement alone - that is never going to be enough. ISPs have their role to play in helping their users to find legitimate content. Let’s remember that the majority of people do not infringe, but are looking for ways to hear music in ways that they want to.
And the majority of those that do infringe can be persuaded to stop, if they are not made to feel they are the losers here.
It is also about getting young people into the habit of getting their music legitimately. If you can attract the student to paid-for content, then he is probably your customer for life.
The whole point about music is that it is exciting, and I’m delighted to see the launch of Next BRIT Thing. This came from the idea, conceived by the Prime Minister and Gary Barlow, to create a new music competition for young people.
Music is clearly a great vehicle to engage, enthuse and inspire young people and the Next BRIT Thing will provide a platform to encourage young people to share their music and showcase the best that the UK has to offer.
We’ve been working really closely with Geoff (Taylor), Tony (Wadsworth), Lesley (Douglas) and Nick (Williams) to get it off the ground, and I’d like to take this opportunity to thank you for your help in making it happen too, through access to artists, mentors, judges and prizes. If you’ve not already pledged your support I suggest you have a word with Geoff at some point today to make sure you aren’t the odd one out.
The Next BRIT Thing is a major new nationwide initiative and is a brilliant example of what we can do when government and industry work together.
The UK needs a system that supports open markets, with free competition between services using different devices, giving clarity to rights-holders and consumers, without creating unfair barriers to innovative products and services.
The Government recognises the importance of the music industry and congratulates the British music industry on its success, and appreciates the challenges it is facing. The future of the music industry lies in the judicious mix of protection of intellectual property rights and innovation in the digital age.