Dear reader

I recently took part in a session at the London Book Fair organised by the Publishers Association on 'Creativity, Internet and Politics'. Chaired by the Publisher Association's CEO Richard Mollett, the panel - me, Simon Milner from Facebook and Tony Burke from Unite - answered two questions: what is the single most exciting opportunity and the single greatest concern posed by the development of the digital economy?"

Reading David Cameron's paeans of praise this week to UK small businesses, and with the forthcoming Election in mind, I thought I'd share my answers with you.

Biggest opportunity?

The European Commission is certainly excited about the digital economy's potential. Its recent Factsheet quoted 350b euros of additional growth in the digital economy. In the UK, we have huge talent and skills in the creative industries as well as global demand for English language content and services.

Notwithstanding the dominance of major platforms, I think the single most exciting opportunity in the UK is for authors, artists, performers and small businesses (SMEs) in the creative industries to exploit the potential of the internet, web and mobile products and services.

Why such potential in the SME sector? At the start of 2014, small firms accounted for 99.3% of all private sector businesses in the UK, 47.8% of private sector employment and 33.2% of private sector turnover. Small and medium sized enterprises employed 15.2million people and had a combined turnover of £1.6 trillion. Of all businesses, 62% (3.3.million) were sole proprietorships, 29% (15 million) were companies and 9% (460,000) were partnerships. (source: Dept. for Business Innovation & Skills).

But what makes the new ecosystem for digital works and content is an attractive environment for the SME sector? I think there are five factors which illustrate why.

  • In an intellectual property-centric world, small enterprises with the necessary skills to commercialise creativity through financing, partnering and marketing in an agile way can thrive - think, for instance, of new ways of financing such as crowd funding.
  • The Cloud and collaborative technologies enable small businesses to scale up without large scale internal infrastructure.
  • SME's can engage directly with consumers and be discovered via social media platforms.
  • The new ecosystem is made up of partnerships and collaborations, often between the large platform at one end of the spectrum and individual creators and small businesses at the other end.
  • Small businesses can go direct to consumer via platforms.

None of this is easy, but the opportunities are there to be grasped.

Biggest threat? 

My single biggest concern is that we do not invest enough in developing the infrastructure and skills needed to realise this potential and, instead, look for solutions to non-existent or exaggerated problems and barriers.

The key to unlocking the digital economy's is having the necessary infrastructure and business skills. The greatest needs are in digital marketing, technology, data analysis, financing and the ability to create and implement innovative business models and deals based on intellectual property. Building these skills requires investment in education and training.

Instead, transforming copyright is often presented as the 'magic bullet' to realising the market's potential. That is not to say that some adaptation may be needed provided it is evidence-based. The most frequently cited charges against copyright, at least in the UK and Europe, are:

  • It locks up ideas and so inhibits innovation, creativity and sharing.
  • The 'Fair use' defence in US copyright law, especially the notion of 'transformative use,' has allowed new digital businesses to flourish n the US in ways that European copyright law does not.
  • Copyright law is based on territoriality whereas the Internet is a global medium, and as a consequence is inherently unable to adapt.
  • Copyright is simply to complex in a 'B2C' and 'C2C' world.

Each charge raises a number of complex issues but time and space only allows a 'top line' response to each. In short, I think copyright is 'not guilty on the first three charges but does have a case to answer on the 4th charge.

As regards the first, the 2010 case of Allen vs Bloomsbury & J K Rowling shows that, in the Court's words, "[Copyright] does not extend to clothing information, facts, ideas, theories and themes with exclusive property rights."

On count 2, the differences between the US 'fair use' defence, and, taken as a whole, the various individual copyright exceptions found in European copyright law, are much smaller than may appear. It is true that the first 'fair use' factor, which relates to the purpose and character of the use, including whether the use is 'transformational' in creating something new, does give the US courts flexibility. But to make a fair comparison one must compare that with numerous EU exceptions, including for parody, as well as the extensive rulings of the European Court of Justice on the issue of exceptions.

On count 3, there are books on this subject. Suffice to say that global licensing solutions are perfectly feasible within the existing framework and, in any event, a global copyright law would not, of itself, prevent licensing by territory. Furthermore, legal principles on free movement of  goods and services provide a legal check on copyright.

On count 4, there is a case to answer. Copyright law is complex and the management of copyright, including gaining permissions to re-use, is not easy. But there are ways in which technology can hide copyright's complexity and automate rights management. That  brings us back to the importance of investment in the infrastructure. In that context, the work of the Copyright Hub is important, about which more soon.

From me and my colleagues at Shoosmiths, @shoocreative, enjoy your Bank Holiday weekend.


Laurie Kaye