Q22 Mr Watson: If I could just taken you onto Digital Britain, in one of the finest speeches the prime minister has ever made he used the quote, “a fast internet connection is now seen by most of the public as an essential service, as indispensable as electricity, gas and water”. Given the prime minister’s leadership on this issue and proposals to temporarily cut people off as a result of accusations of illicit file sharing by some sections of the music industry, do you think that those people deserve to prove their innocence in a court of law?
Mr Bradshaw: Yes, absolutely. The suspension to which you refer – which would be as a very last resort for serial and serious infringement – would be subject to a strict two-stage process. It would not just happen on the basis of an accusation as you seem to suggest in your question. Firstly there would need to be court order for any of the technical measures that we are discussing in the consultation document to be implemented. Secondly, there would be a right of appeal to a tier one tribunal. I hope that you would not go away with the impression that innocent teenagers are going to be cut off willy-nilly on the basis of an accusation; that is not our intention or is not the effect of what we will propose when we come to publish the bill.
Q23 Mr Watson: I think that is actually new.
Mr Bradshaw: It is new; I have announced it to you today, Mr Watson.
Q24 Mr Watson: Does that mean that an individual citizen can go to court to oppose an order to cut them off?
Mr Bradshaw: There will be the right of an appeal to a tier one tribunal, yes.
Q25 Mr Watson: Perhaps we can explore what a tier one tribunal is later on. I want to test you a little more on this. Have you estimated the cost of implementing the system to suspend file sharers for industry? If so, can you say what that is?
Mr Bradshaw: I would imagine we would do so in the regulatory impact assessment that we will be publishing alongside the bill. I know you have a strong record of speaking out on one side of this argument – this is not meant pejoratively – but there are very strong arguments on the other side, the cost of doing nothing to the music industry alone in this country is estimated at about £200 million.
Q26 Mr Watson: Whose estimate is that?
Mr Bradshaw: That is the industry’s estimate. It is an estimate that I have not seen challenged by anyone in any serious way. You will be aware that it is not just the film industry that is concerned about illegal file sharing, it is the music industry, it is all of our creative sectors. This is a problem which governments all over the world are grappling with. I welcome having a serious debate about how we ensure that people who create things can make value out of it. What I do not accept is the argument that there should be anarchy on the internet and that anyone should just be allowed to access what they like free of charge. The bottom line is, this is theft and I think we have to be clear about that. Yes, there need to be market solutions and there are some very imaginative and innovative market solutions that are being developed all the time, but if you are suggesting that we do not need to take action to curb this problem I think the impact on that on our creative sector – which is massively important to our economy and which has outgrown our economic growth in general and will provide a lot of the well-paid jobs in the future – will be devastating. I think we do need to get the law right and I hope that you will help us do that if you have the chance to serve on the committee.
Q27 Mr Watson: I will try to do that in any way I can. So the only estimate we have got to the cost to industry is £200 million and that is an industry statistic.
Mr Bradshaw: That is just for the music industry.
Q28 Mr Watson: Has the music industry estimated how much it will cost industry to police the system with the suspension system?
Mr Bradshaw: They may well have done.
Mr Stephens: I am afraid I do not know either but, as the Secretary of State said, that is one of the issues that will be covered in a regulatory impact assessment.
Q29 Mr Watson: Has the Department estimated what the increased income to industry will be as a result of implementing this new regulatory burden?
Mr Bradshaw: The aim is to significantly reduce – I think we give a figure – by 70%. If we do not manage to reduce by 70% the level of illegal file sharing then we would move to the next stage in terms of considering technical measures. One would have to take the estimate of what is currently being lost to our creative industries and cut 70% off that to arrive at the figure you have just described.
Q30 Mr Watson: Would it be possible to give us in writing the estimates that helped you to form the decision to implement this new system?
Mr Bradshaw: Absolutely, I would be delighted to do that. I am not sure whether or not it is something we should do in advance of publishing the regulatory impact assessment or whether it would be best to wait and put it all in there in a comprehensive way or to do both at the same time.
Q31 Mr Watson: Given the prime minister’s excellent earlier quote, do you think there should be a human rights impact assessment on this legislation as well?
Mr Bradshaw: I think there has to be a human rights impact assessment for every piece of legislation.
Q32 Mr Watson: I think that might be new as well; I do not think you have announced that before.
Mr Bradshaw: I do not think it is new that there has to be one for every bill; for it to get through LP it has to have had the sign off on the human rights stuff.
Q33 Mr Watson: With the additional income generated for the industry with this new suspension system – the 70% target you are aiming at which would presumably, in the logic you apply to this, generate extra income to the industry – have you worked out how much the artists would get of that figure?
Mr Bradshaw: That would depend on the contractual arrangements that individual artists have with the rights holders if they are not the rights holders themselves. There is very, very strong support from organisations that represent individual artists and getting the Featured Artists Coalition to agree to a single policy was described to me like herding cats and the fact that they did manage to get to an agreed policy on this I think shows the level of concern among individual artists, even those who – and there will be different views on this – do not agree with all of the detail that they came up which I thought was a very sensible and constructive submission. We will take theirs and all of the other submissions into account before we publish the bill.
Q34 Mr Watson: Have you considered how much the industry is making now through suing people for illicit file sharing at the moment?
Mr Bradshaw: I have not made an estimate of that, no. I do not know whether we would have the figure. I imagine that would be a commercial figure; whether we can get it or not I do not know.
Q35 Mr Watson: Have you estimated how many jobs might be generated through this new system, if any?
Mr Bradshaw: What we have estimated and what I think we have said quite clearly – and I will try to say quite clearly now – is that we do not take any action the impact of the growth of illegal file sharing on our creative sector would be potentially devastating. As a sector it is growing more quickly than the rest of our economy. It has continued to grow through the downturn very, very strongly. It is one of the sectors that the government has identified in its industrial strategy in Building Britain’s Future as one of out future growth sectors on which we want to place greater emphasis and give greater priority. If we do not get the legal framework right, if we do not allow people to create and defend value of what they create then the future employment prospects would be very bleak indeed. That is why this matters so much. We are leading the way on this debate, by the way – other countries are looking at what we are doing – and if we get it right I think it will help us build on our existing strengths in the creative and cultural sectors which will only be very good for jobs and for the economy.
Q36 Mr Watson: Do you agree with the industry lobbyist Geoff Taylor at the BPI who says that there could hardly be more on-line music offerings?
Mr Bradshaw: There could hardly be more?
Q37 Mr Watson: There could hardly be more.
Mr Bradshaw: I am not quite sure what he means by that.
Q38 Mr Watson: He says there is plenty out there and the business models for on-line music are not working.
Mr Bradshaw: I think I acknowledged that by saying that we not only need a legislative framework to tackle illegal file sharing, but we need workable commercial models. At the same time as trying to establish a legal framework that protects rights owners and the value of what they create, it is also important that we work with the industry and IS providers and everybody else to try to help them develop workable commercial solutions. There are a number out there already that are springing up and I suspect the better the legal framework we get the more likely it is that others will spring up.
Q39 Mr Watson: Is it not a surprise to you that ten years into the ubiquity of the internet the industry has not got its act together?
Mr Bradshaw: I think it would be fair to say that the industry has been quite slow at coming to this, but I think there has been considerable acceleration in the last 12 months and indeed every week that goes by we are seeing a greater velocity in that direction which I think is a welcome thing.
Q40 Mr Watson: I do not think there is enough empirical evidence to prove that the decisions you take on suspension will generate more income for the industry, will do anything to stop the proliferation of illicit file sharing, nor will it remunerate artists in the way that the internet possibly could with new business models. What you should be considering is statutory licensing for on-line music rather than spending the resources of a department on trying to once again chase piracy as the industry has tried to do from time immemorial from opposing the invention of the phonograph to the audio tapes of killing music in the ’80s to the invention of CD ROMs and DVD rewritables. The film industry even opposed the VHS video recorder. Do they not have form on trying to ignore new technology and should it not be our job to get them in a room, sort their licensing arrangements out so that new entrepreneurs can enter the market and get the music industry onto an even keel?
Mr Bradshaw: I am grateful for the advice but I do not think it is an either/or. I think we both need to pursue the solutions or the partial solutions you have just described with a legal framework that protects some of the more egregious assaults on rights holders value.