After only nine short months, the UK High Court has repealed the Government's Copyright and Rights in Performance (Personal Copies for Private Use) Regulation 2014, deeming it unlawful.
The music industry underestimates how useful piracy can be for increasing awareness of an artist Fabio Alcini
The reversal was seen as a victory for music industry bodies including the Musicians' Union, UK Music, and the British Academy of Songwriters, Composers and Authors (BASCA), who had challenged the regulation since it was passed in October.
The amendment to copyright law had allowed consumers to “rip” CDs and DVDs into digital forms for personal use, and was passed on the grounds that it would cause little or no harm to the musicians and agencies involved. However, the appeal found that this was not the case and it was in fact legalising copyright infringement by allowing format-shifting without compensating the artists for their copyrighted work.
Despite being a step towards greater copyright protection of media, it is questionable whether the prohibition of format-shifting and digitising purchased copyrighted material is enforceable in reality.
The cost of copyright infringement
The music industry claims that the legalisation of format-shifting for personal use has cost it as much as £58 million. While it is impossible to monitor the number of people who took advantage of the law, it cannot be seen solely as a detriment to the artists involved.
At face-value, piracy diminishes the value of record labels, reducing the revenue earned from CD sales and potentially the brand value of an artist if copied CDs are sold on the black market and are of a lower quality than the legitimate product. However, the illegitimate copying of CDs is also an indication of the popularity of an artist and can be useful to the proliferation of a band or artists’ brand, generating increased awareness and adding to their fan base. This in turn generates more demand for merchandise and concert tickets, as well as for festivals and other public events.
As a direct result of widespread piracy and the peer-to-peer file sharing industry, record labels are moving into a full service offering for their clients, enabling them to capture a larger share of the revenue stemming from live performances and merchandising.
Can they claim compensation?
Now that the law has been overturned, the question of compensation has arisen. But Mr Justice Green, who provided the judgment, recommended that the law should not be quashed retrospectively, which would have meant people who had copied content after the law passed had done so illegally. He suggested that this would be an “unattractive proposition”, not to mention almost impossible to quantify and qualify.
Feasibility of enforcement
Prior to the exception allowing people to make copies for personal use, the law was rarely used or enforced. A small number of prosecutions occurred and these were often related to people commercialising copied music and films. So while this reversal claims to be increasing the revenue earned by the music industry, it is difficult to believe that the general public will be deterred from ripping their CDs and DVDs in their privacy of their own homes.
Despite being unable to regain some of the lost revenue over the nine months that format-shifting was legalised, music agencies may be able to get some money back when setting the price of CDs. In fact, this may be something that they already consider when allocating costs. In other European countries a private copying levy is charged on all sales of recordable material, so as to counteract the potential loss of revenue through copying for personal use.
The reversal of the Government’s Copyright and Rights in Performance (Personal Copies for Private Use) Regulation 2014 may in principle be a positive step for music agencies and rights owners, but the impractical nature of its enforcement makes it almost a symbolic law. Copyright law within the UK inevitably requires revision as technology continues to evolve, however it needs to become more robust, enforceable and ultimately protect the ability of rights owners to commercialise their IP. In this case it appears to fall foul of this, and music industry bodies underestimate the role that format-shifting media has upon increasing awareness of an artist's brand and how this can increase their profitability in other aspects of their career.
John Illsley is valuation director at Intangible Business.