The City Livery Company for the
Communications and Content Industries
COPYRIGHT IN THE DIGITAL AGE
Copyright and the UK Economy
An assessment of the economic contribution of the UK core copyright industries to the UK economy
This is the full text and accompanying Prezi presentation of the seminar given by PhD Bursary student Aislinn O’Connell on July 28 2014. The topic covered was an assessment of the economic contribution of the UK core copyright industries to the UK economy.
Aislinn O’Connell, 28 July 2014
Good evening and welcome again to UCL Laws for another seminar, updating you on the progress of my research project.
As usual, I have been continuing to attend a variety of copyright-related events, in London, around the rest of the UK, and just this month I was able to spend a week in Brussels with the European Magazine Media Association, which I felt greatly enhanced my understanding of the issues faced by the print media with regard to copyright in these changeable times. As you may know, there was a Copyright Consultation by the European Union at the beginning of this year, and a response White Paper was leaked in June of this year. The official paper was supposed to be published this month, but it was delayed (or perhaps cancelled) until after the summer break at the earliest. The Commission has published a report on the responses they received to the Consultation, though. As well as this, the UK government introduced new statutory instruments which implement exceptions to UK copyright law. There were originally five, covering research (including TDM), schools, universities and colleges exceptions, disability access, private copying and parody and quotation. The last two of these exceptions – private copying and parody and quotation – disappeared from voting less than a month before their planned implementation. The first three became law on June 1st, and the latter have just made their way through Parliament again, with a planned implementation date of October 1st.
The focus of my seminar tonight will be an estimation of the economic contribution of copyright (and specifically publishing) to the UK economy, and how to compare this with other countries. It is worth noting that it is still a work in progress. There will be time at the end for any questions or comments.
In 2002, the World Intellectual Property Organisation (WIPO) published a set of guidelines outlining their idea of how best to survey the contribution of copyright to the industry of a particular country. This 100-page Guide on Surveying the Economic Contribution of the Copyright-Based Industries is a collection of discussions on previous surveys attempting to achieve the same thing, a legal and economic discussion of copyright, a categorisation of industries which rely on copyright into one of four different types of copyright industries, and a framework and measurement outline for a study following these guidelines.
In the twelve years since the publication of this guide, many countries have published studies which have followed these guidelines, allowing for easy comparison between the copyright industries of different countries. The UK has never been one of these countries, and has not produced such a study.
As time is limited in this seminar, I will not bother go through the basic legal notions or economic fundamentals of copyright, nor the experience gained from previous studies, other than to state that the notion of actually measuring the contribution of copyright to GDP only came into being in the late 20th century – the first complete studies being published in the 1970s, in Canada and Sweden. The UK published two studies, in 1985 and 1993. All the studies (not just the UK ones) showed that the contribution of copyright industries was higher than generally perceived. Many studies attempted to compare internationally, but differences in methodology made this difficult, hence the need for the WIPO guidelines – allowing easier comparison internationally via a centrally-structured shared methodology. The study also lists the types of works protected by copyright, the different rights associated with copyright, as well as stating that copyright is a property right (which could probably be debated, but that is a discussion for another time) and discusses the role copyright law plays in balancing productive efficiency, distributive efficiency and enhancing welfare, growth and development, etc. The discussion is extensive, and well balanced, but perhaps outdated with the advancements in technology and distribution which we have seen in the twelve years since the publication of the guide.
Most reports classify copyright industries in a number of ways, in order to distinguish between those industries which rely entirely on copyright, and those which are not as dependent on copyright. The guidelines categorise copyright industries into core copyright industries, interdependent copyright industries, partial copyright industries, and non-dedicated support industries.
Core copyright industries are those industries which fundamentally to produce copyright materials for ultimate consumption. Given the province of my research, this is the category which would be most relevant here, but it is worth a quick run-down of the other categories in order to gain a fuller picture of the context in which the core copyright industries operate.
Interdependent copyright industries
The interdependent copyright industries, naturally, can only be defined in relation to the core copyright industries. However, the report chooses not to refer to them as non-core, as this would diminish the two-way communication between core and interdependent copyright industries which allows both to thrive. The definition offered by the guide is:
“Interdependent copyright industries are industries that are engaged in production, manufacture and sale of equipment whose function is wholly or primarily to facilitate the creation, production or use of works and other protected subject matter.”
This is then further subdivided into core and partial interdependent copyright industries, with core including manufacture, wholesale and retail of “TV sets, Radios, VCRs, CD Players, DVD Players, Cassette Players, Electronic Game equipment, and other similar equipment; computers and equipment; and musical instruments.” Partial interdependent copyright industries then refer to manufacture, wholesale and retail of “photographic and cinematographic instruments; photocopiers; blank recording material; and paper.”
An interesting side note to this particular classification – although computers are listed as core interdependent, blank recording material is listed as partial interdependent. It would be interesting then to ponder the status of, for instance, computer memory, e.g. external hard drives or USB storage. It could be used as blank recording material, certainly, but is it not also a part of a computer? What is the essential difference between a hard drive which is internal to a computer and one which is external? This is just one small example of the developments in technology which throw up new questions for the guidelines.
Partial copyright industries
The partial copyright industries do just what they say on the tin – they are industries which rest partially on the copyright of their creations. The definition offered in the WIPO guidelines states that:
“[t]he partial copyright industries are industries in which a portion of the activities is related to works and other protected subject matter and may involve creation, production and manufacturing, performance, broadcast, communication and exhibition or distribution and sales.”
The guide also gives a list of industries included in this definition, such as textiles, jewellery, coins, crafts, furniture, household goods, toys, games, architecture, and interior design. The full list given in the guide is designed to be exhaustive – it was chosen not to expand it beyond the industries listed therein.
Non-dedicated support industries
The definition offered by the WIPO guide as to what constitutes the non-dedicated support industries is as follows:
“[t]he non-dedicated support industries are industries in which a portion of the activities is related to facilitating broadcast, communication, distribution or sales of works and other protected subject matter, and whose activities have not been included in the core copyright industries.”
Once again, it is a relatively non-controversial or confusing definition, and includes retails, wholesale, transportation, and telephony and internet. The link is relatively clear – without sales and distribution channels, copyright industries would have far more difficulty even existing, let alone thriving the way they do now.
Core copyright industries
Although I have left the discussion of this section for last, that is not to say that it is the least. Indeed, it is quite the opposite – the core copyright industries, by their very nature, are the most important. The definition is relatively clear –
“The core copyright industries are industries that are wholly engaged in creation, production and manufacturing, performance, broadcast, communication and exhibition, or distribution and sales of works and other protected subject matter.“
The separation of production and distribution, especially for certain industries (e.g. newspapers), would be onerous, and is not recommended. The list of core copyright industries given in the Guide itself is as follows:
a) press and literature;
b) music, theatrical productions, operas;
c) motion picture and video;
d) radio and television;
f) software and databases;
g) visual and graphic arts;
h) advertising services; and
i) copyright collective management societies
Within these eight groups, there are then further classifications which allow us to delve deeper into the nitty-gritty of these groups. As the most relevant group here is press and literature, it is worth including the breakdown here:
a) Press and literature:
• authors, writers, translators;
• news and feature agencies;
• book publishing,
• cards and maps;
• directories and other published materials;
• pre-press, printing, and post-press of books, magazines, newspapers,
• advertising materials;
• wholesale and retail of press and literature (book stores, news stands); and
Content management organisations are also included in their own section. There is no breakdown of these (mostly because, well, how much further can you break it down?). There is, however, a note that it does not include turnover – this is to prevent double counting, as turnover would be accounted for in their relevant sectors.
So far, so sensible. The next step in identifying that relevant data is associating each small sector (e.g. newspaper printing/translation, etc. etc.) with its relevant SIC (standard industrial classification) codes. Because the guide was published in 2002, the codes used in the Guide are the ISIC Revision 3.1 codes. We will come back to this point later.
The guidelines state that three things are frequently measured in copyright studies – size of the copyright-based industries as a percentage of GDP, employment, and foreign trade. The guidelines also give instructions on how to obtain information on GVA (gross value added) of particular sectors, which comprises their contribution to GDP. It also points out that while most data should be available through public accounts, there are sectors and scenarios in which data may have to be obtained by the researcher, through communication with private industry, surveys and other data collection methods.
Overall, the guidelines provided by WIPO are thorough and comprehensive, and outline a solid structure for creating a study which can be compared with other countries without much difficulty. There are some weaknesses associated with them, but there is no doubt that they provide extensive and well-researched guidelines to assess the economic contribution of copyright industries to an economy. They have been used to implement studies in no fewer than 42 separate countries – a broad range of countries against which a UK study could be compared. We will come back to these guidelines a little later in this seminar.
UK Creative Industries Economic Estimates
The UK publication which is most closely analogous to a WIPO Copyright Industries study is the Creative Industries Economic Estimates published by the Department of Culture, Media and Sport in January 2014.
These estimates identify the ‘Creative Industries’ in the UK, according to the government’s 2001 Creative Industries Mapping Document, as “those industries which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property”. It is important to note that this particular definition does not refer solely to copyright, but to wider intellectual property rights, and thus its ambit is wider than the WIPO Guidelines.
The Creative Industries Estimates offer a definition (complete with illustrative diagrams) of what the creative industries are, and how they differ from the creative economy as a whole. Simply put, the creative economy is comprised of those people working in creative industries, and those working in creative jobs in non-creative industries (e.g. self-employed authors, artists, designers, or creative employees working in industries which are not themselves creative). The creative industries are a subset of the creative economy, being those industries where more than a certain proportion of employees are engaged in creative work – i.e. that they have a high degree of ‘creative intensity’. While the industry must have a proportion of creative work in it, the creative industry designation then applies to everyone employed in that industry – i.e. for publishers, it also would include administrative staff, not just authors, editors, etc.
The economic estimates of the DCMS are provided in three different ways – GVA, employment, and exports of services. The eagle-eyed among you may note that these are extremely similar to the three methods suggested by WIPO in their report, if not, indeed, identical to them.
The Creative Industries estimates went a step further than the WIPO estimates – not only did they classify creative industries (using UK SIC 2007), but they also classified what they considered ‘creative occupations’ using SOC (Standard Occupational Classifications) codes, allowing them to create the intersection between creative industries and creative occupations, and gain a greater view of the creative economy as a whole.
As regards industries, DCMS divided them into nine groups (is this sounding familiar?)
Advertising and marketing
Design: product, graphic and fashion design
Film, TV, video, radio and photography
IT, software and computer services
Museums, galleries and libraries
Music, performing and visual arts
Each Group was then further subdivided into their component activities. If we take, once more, the most relevant group (publishing), then we can see that it is broken down as follows:
Publishing of directories and mailing lists
Publishing of newspapers
Publishing of journals and periodicals
Other publishing activities
Translation and interpretation activities
Is this looking oddly familiar to anyone else here? It would not be a stretch of the imagination to say that the data produced by DCMS would be quite easily interchangeable with the recommendations of WIPO.
It’s worth noting also that DCMS is continuing to work with the data in the estimates – they produced a detailed report on their employment figures, which was published in June – it’s hugely interesting, pointing out that one in six jobs in London is in the creative economy, with 2.6 million creative economy jobs in the UK in 2013.
Differences and Similarities between the two studies
Although both the UK framework and the WIPO suggested study framework come from different angles, their general aim is the same – to assess the GVA, employment, and foreign trade of the creative industries (of which the copyright industries are a part). If we consider the general list of categories offered by both studies, the core copyright industries sit neatly within the ambit of the DCMS estimates, with one notable exception – copyright collecting societies. Everything else is included, though they may be split up in to several categories (e.g. film, TV, video, radio and photography maps to motion picture and video, radio and television, and photography).
From this, then, one would assume that is would simply be a case of using the DCMS data to create a WIPO-style survey, with the addition of copyright collective management societies. Not so. The issue one faces on attempting to do just that become immediately apparent. As I mentioned earlier, the WIPO guidelines, written in 2002, give SIC Rev 3.1 codes for the industries they recommend are included in the studies. The DCMS estimates, being far more recent, offer their data under UKSIC codes, which are from 2007. You would think, logically, that it would be relatively easy to update the codes, but not so. They did not remain the same (which makes sense, to be fair, as an updated set of codes with no changes at all would not really be an update). Furthermore, there are some differences between UKSIC codes and ISIC codes, meaning that certain industries are far more difficult to classify.
Nonetheless, it is possible to use the DCMS data in comparison with WIPO studies, while bearing in mind that the data will not be entirely in line with other WIPO studies, and thus any comparison will not be precise, but should be considered a rough comparison.
The reason for wanting to do such a comparison is thus: WIPO releases documents comparing the reports (made in accordance with these guidelines) of 42 different countries, which would give the UK a huge variety of information with which to compare their own results. Such reports are published at regular intervals – the latest was published in 2014, using studies ranging from 2004 up to 2013.
Thus, in comparing results, I will take the sections of the DCMS estimates which equate to WIPO-recommended industries, and combine them to produce a rough estimate of where the UK stands in comparison to other countries whose results are available in the WIPO comparison.
While, of course, it would be preferable to conduct a full study in accordance with the WIPO rules, this would be too time-consuming, and would require more than my expertise.
Thus, if we look at the categories of Advertising and marketing, design, film/TV/video/radio/photography, IT, Publishing, and music, performing and visual arts, and exclude architecture, crafts, museums, galleries and libraries, then we can begin to make some comparisons.
Using DCMS Data to Compare the UK to other countries
There is a wealth of information available from the WIPO comparison document. There are, of course, limitations to the comparisons which can be made for a variety of reasons, including the length of time since the studies were published and the countries which have published studies, but the general trend is worth observing.
The contribution of copyright industries (core, interdependent, partial and service) to the GDP of the 42 countries whose studies are included in the WIPO 2013 document vary from just over 1% to over 11%, with a mean contribution of 5.18% contribution to GDP and 5.32% to employment. In using the figures from the DCMS economic estimates, it is not possible to estimate the entire contribution of the UK to GDP or Employment, because the figures only cover the core copyright industries. However, it is possible to make a conservative estimate that, given the UK has a contribution of almost exactly 5% to both employment and GDP through the core copyright industries alone, when including the other three types of copyright industries, the UK would be a world leader in contributions of the copyright industries.
We can see from the first chart that the contribution of the core copyright industries to GDP and their contribution to employment do not always mesh well together – there are many example here of countries where the difference between the contribution of the core copyright industries to GDP and employment have a difference of two or three per cent. Not so for the UK, where the figures are within .06% of each other. The UK is also very high in terms of contribution to both GDP and employment.
Let’s look at this a little closer.
In terms of contribution to GDP, the UK is third in this list of 43 countries. With an average contribution to GDP of 2.83%, the UK, at 5.04% is more than 1.7 times the average contribution of the countries included here. Of course, it is important to note that not all countries included in the comparison are developed to the same extent as the UK. However, it is notable also that the UK is higher in terms of contribution than several developed countries, including Australia and Canada. As well as this, it is also important to note that this data is collected in terms of proportions of GDP – thus, while the UK has a contribution of 5.04% to Panama’s 5.40%, for the UK, this amounts to some 69.5 billion pounds – and Panama’s contribution equates to less than a million dollars. Similarly, as the US is so much larger than the UK, although they are only one and a half percentage points higher than the UK on the chart, their monetary contribution is some $1.01 trillion – or roughly £595 billion.
While it is important also to recall that not all data in this comparison is from the same year as the UK, and bear in mind what I have just mentioned, that percentages can be misleading, to note that the UK is ranking so highly is encouraging.
If we look now to the third chart, we can see that the UK is once again third of these countries, in terms of contribution to employment this time. This is once more encouraging, especially when we consider that the two countries ranked ahead of the UK are not the same as in contribution to GDP – this means that the UK is strong across the board. In terms of employment contribution, the UK stands at 5.04%, which is again 70% higher than the average between all 42 countries. Of course, this is once more tempered by the fact that the UK has a highly developed economy, and thus would be expected to be at the higher end of the chart. Nonetheless, it is important to have concrete figures with which to back up one’s expectations. The fact that one in twenty jobs in the UK are in the core copyright industries is a thoroughly encouraging one – in real terms, this amounts to just over 1.5 million jobs, out of a total of a little more than 30 million.
The last charts that I will discuss tonight (above) cover the breakdown of different sectors’ contribution to the overall proportion of the contribution to GDP. Unfortunately, the data for this was a little harder to get at, so I have lifted a chart directly from the WIPO comparison document. If we then compare this to a similar chart of UK interests, then we can see that the balance is very different in the UK. A huge proportion of the contribution (almost half) comes from the IT, Software and computer services sector, and publishing is joint third, in contrast to the WIPO chart, where press and literature is the largest sector. Furthermore, publishing as an overall sector between the WIPO studies is two and three quarters the size of publishing in the UK figures. This massive difference could of course be due to difference in the make-up of the figures, and will require further investigation, and a more thorough comparison of data, using matched SIC codes, but nonetheless, it is interesting to be able to make rough comparisons like this. It is also worth noting that the WIPO chart has changed very little from the last comparison document – in 2012 – to the current one, in 2014. One other small point that can be seen from the WIPO chart is that the contribution of the collecting societies is extremely small – only 1%. This factor can be used to bolster the reliability of comparisons discussed tonight. Of course, it will be included in later calculations.
From the data available here today, we can see that it backs up what naturally comes to mind when thinking of the UK in terms of creative and copyright industries – it is a world leader in terms of employment and contribution to GDP. The UK is one of the only net exporters of music in the world, and Anglophone literature and press are more exported and more in demand than almost any other language. It is therefore unsurprising that the UK has a strong contribution to GDP and a large proportion of employment also. There is, of course, far more work to be done in this area before I am finished. In the next few months, I will be focusing more on a breakdown of the contribution in the UK, and focusing on the publishing industry, as well as publishing CMOs. Even with the work in progress, there is no doubt that it is both interesting and helpful to be able to see a graphic representation of the size of the copyright and creative industries, as well as their contributions to the UK economy. It is also helpful to be able to compare the UK’s position with that of other countries, both developed and developing. I would like to thank you for your attention tonight and hope that you have found it as interesting as I did. I also hope that you will see, as I did, that the copyright industries in the UK are flourishing!