House of Lords Communications and Digital Select Committee inquiry “A creative future”
The film and television sector in the UK is enjoying record levels of investment. To help sustain this country’s position as a creative and economic powerhouse in audiovisual content, government and industry must continue to work closely together, particularly in the following areas:
About the MPA
1. The MPA is the international trade association for the major companies that invest-in, produce, distribute and market film and television content in the UK: Walt Disney Studios Motion Pictures, Netflix Studios, LLC, Paramount Pictures Corporation, Sony Pictures Entertainment Inc., Universal City Studios LLC, and Warner Bros. Entertainment Inc.
2. This year, the MPA celebrates its 100th anniversary, and over the past century we have seen the film and television sector establish itself as one of the world’s most technologically innovative, culturally influential and economically impactful industries. MPA members have been at the forefront of this innovation and growth, creating new ways to tell stories and reach audiences. Their creations continue to push technological boundaries, be it in the harnessing and developing of VFX, increasing the sustainability of their productions, or in developing new technologies to protect their content.
3. The UK has been at the heart of that history. Our members have enjoyed a strong presence in British life throughout the past century, producing iconic films such as Disney’s Alice in Wonderland, which premiered in London in 1951, and the James Bond franchise, produced at Pinewood since 1962.
4. Today, MPA’s member companies continue to represent a key part of the UK film and television industry, both as significant inward investors and with a strong permanent presence in this country. Working with local producers, crew, talent and infrastructure, our members continue to help the UK make and export great stories, to be enjoyed by audiences in every corner of the world, ranging from House of the Dragon to The Crown; Rocketman to Harry Potter.
5. We welcome this opportunity to respond to the Communications and Digital Select Committee’s inquiry into ‘A Creative Future’ and to share our views on the future of the UK’s creative industries.
Factors behind the UK’s creative success
6. The UK’s light-touch regulatory regime, strong IP protections, targeted system of film and HETV tax reliefs, diverse and vibrant production ecosystem and highly skilled and productive workforce, have made this country one of the most in-demand places in the world to create new screen content.
7. Recent figures show that the combined total UK spend in film and HETV productions for 2021 to June 2022 was £5.72 billion, the highest figure since records began, with inward investment productions accounting for 83% of that total. Together, the products and services of the film and television sector are important contributors to the success of the UK’s vibrant creative industries, which collectively added more than £115 billion to the UK economy in 2019 and supported more than 2.1 million jobs.
8. The growth in film and HETV production has accompanied the sector’s embrace of new production and distribution technologies. This has delivered major benefits for UK consumers in recent years, who enjoy an unprecedented wealth of high-quality content across multiple channels: in cinemas, online and broadcast. Working with industry, the UK Government has helped realise these opportunities, adapting for change, for example, by this year revising the film and HETV tax reliefs to allow companies greater flexibility in choosing how to distribute their content. Maintaining this highly effective system of tax reliefs will continue to be important: sustaining high levels of production investment in the UK and providing a very positive return on investment for the UK economy.
9. The UK’s film and HETV industry is, today, a global powerhouse, the benefits of which are felt UK- wide, with production expanding in the UK regions, creating jobs, developing skills and providing opportunities for people of all backgrounds to join the industry. With the right nurturing, the industry will continue to grow and retain its significant economic impact and regional reach.
SKILLS AND TALENT
The Future Workforce
10. Having witnessed extraordinary growth in recent years in investment in film and HETV production, the UK expects to see that trend continue. Analysis for the BFI estimates the level of investment in film and HETV production could reach well over £7 billion by 2025. This growth in investment will be accompanied by the need to grow the production workforce, with an estimated 15,000 to 20,000 more people needed in the sector by 2025.
11. This presents an amazing opportunity, but also a challenge which government, industry and other partners must work together to respond to. Already, the UK film and TV sectors are experiencing significant skills shortages in key roles, and the availability of skilled crew could become the biggest constraint on the industry’s ability to grow.
Industry commitment to training, workforce development and inclusion
12. MPA members are funding and engaged in extensive partnerships supporting training and workforce development right across the film and TV sector. These include supporting national training initiatives led by ScreenSkills, the National Film and Television School and Bafta as well as partnerships with specific institutions such as RADA, the London Screen Academy (founded by, among others, the co-chairs of Working Title Films, a member of the NBCUniversal group), and the Production Guild of Great Britain. Between them, MPA member companies support training initiatives in all areas of the film and TV sector, from film accountancy and production management to cutting edge post-production and VFX.
13. MPA members also contribute voluntarily to Skills Funds administered by ScreenSkills. Last year, contributions to the National Film and HETV Skills Fund alone reached record levels, exceeding £8 million. The funds are used to finance important training initiatives such as Trainee Finder, First Break and Make a Move.
14. In order to help drive inclusion and greater diversity across the industry, MPA members are also active partners to organisations such as the Mama Youth Project, Women in Film and TV, the Equal Access Network, Creative Access and the British Black List. MPA members recognise that this is an economic as well as a social imperative for the sector.
15. Despite the wealth of initiatives underway, MPA members recognise that there is still much to be done. The recent BFI Skills Review highlighted the need for government and industry to work closely together to anticipate future skills needs and develop a coherent strategic response. This must start from a comprehensive assessment of current skills gaps and an understanding of future industry needs.
16. A joint commitment from government and industry to systematic engagement at the outset of new policy development is essential to ensure that the approach from government reflects the particular characteristics of the industry, including:
17. As recent years’ experience of the Government’s apprenticeship programme has shown, horizontal approaches to skills and education, which seek to accommodate many sectors, can be problematic for the creative industries to access. This can be a barrier to the establishment of exactly the kind of strong and diverse talent pipeline the sector needs.
18. Several MPA members are also significant contributors to the Government’s Apprenticeship Levy. The creative sector in general has struggled to make best use of the national apprenticeship programme with suggestions that only a quarter of the £75m in levy payments raised per year from creative industries’ companies have been used to fund apprenticeships in the sector.
19. Steps are being taken to address this, particularly with the introduction of Flexi Job and Portable apprenticeships, but the process of change has been painfully slow. MPA members are actively involved in a pilot programme, administered by ScreenSkills and supported by DCMS, designed to test how apprenticeships can be made to work more effectively in a freelance production environment. The learnings from this pilot need to be assessed rapidly by ScreenSkills and Government and reflected in its future approach to apprenticeships in the sector, in order to make them work more effectively and unlock apprenticeship levy funds.
20. If the apprenticeship route can be made to work more effectively for young people wanting to enter the screen sector – unlocking apprenticeship levy funds so that they can be put towards training costs – it will make a significant contribution to overall recruitment and to improving diversity and inclusion across the industry.
21. The industry also needs to continue to access highly skilled international workers, including through the provision of streamlined routes for freelance practitioners, as highlighted by the Creative Industries Policy and Evidence Centre.
22. Other government initiatives in areas such as technical education also need to take account of the particular needs and circumstances of the film and TV sector. The challenges, for example, of supporting T Level students on productions where it is difficult to offer placements for under 18s, or where those not living in or close to a production location or studio may lose out.
23. Here again, government needs to work with industry at the design stage of policy development to ensure that young people wishing to train to work in our sector are not excluded from its opportunities by the way in which horizontal training and qualification programmes are designed.
24. Our main recommendation to the Committee is that industry be involved and listened to in the design phase of future skills planning. This way, we can ensure that resources dedicated by the industry and from government are used to their very best effect to meet the challenges we know are coming, driven largely by the success of the UK in attracting investment and supporting growth in our world beating film and television sector.
ROBUST IP PROTECTIONS
25. Copyright is the bedrock of the success of the UK’s creative industries. It allows creators of all forms of creative content, including audiovisual content, to exploit and generate revenues from that content, allowing a return on investments and subsequent investment in new content, creating jobs and stimulating economic growth. The MPA works globally in partnership with its members to advance policies that support creators, protect content and foster continued investment in a thriving creative economy.
26. Unfortunately, the global proliferation of illegal and infringing content online (digital piracy) has a significant negative impact on creative sector jobs, growth and consumers. This is because piracy not only impedes the evolution of legitimate channels for distribution of content, but also threatens to permanently damage or displace existing and authorised distribution channels, which are unable to compete with infringing business models. The increasingly sophisticated and professionalised online piracy of TV, film and live sports content is also a highly lucrative criminal activity that generates hundreds of millions of pounds every year for offenders.
Avoid any weakening of the UK’s strong IP framework: proposed Text & Data Mining exception
27. A strong copyright framework is a vital tool in combating digital piracy and sustaining investment in the creative industries. It must strike the right balance between the needs of those who invest in, produce and distribute creative content and those who consume it – be that for entertainment, for the purposes of research or education, or companies that seek to license it for commercial purposes.
28. The current UK regime setting out exceptions to copyright is well-regarded internationally for striking that delicate balance and has supported the economic growth of the UK’s world-leading creative industries through decades of technological change, while taking into account the interests of users. Unfortunately, a recent proposal from the Government to amend the UK’s copyright regime through the introduction of a very broad new exception to copyright for text and data mining (TDM) is set to undermine that delicate balance and risks putting the UK in breach of several international treaties.
29. In its recent AI and IP: copyright and patents consultation, the Government presented four options to stakeholders for how to address TDM. The option the Government now proposes to take forward is the one least conducive to maintaining the high level of copyright protection expected and relied upon by UK rightholders. It allows an exception to copyright for TDM for any purpose, commercial or otherwise, and does not allow rightholders to opt out.
30. The audiovisual and wider creative industries are unaware of any evidence to suggest that the current licensing regime to facilitate TDM is failing, or that it does not have the scope to adjust to future technological developments, including TDM for the purposes of training AI. The UK’s creative industries are therefore extremely concerned to see the Government propose an instrument so disproportionate to the issue it is seeking to address without gathering a substantive body of evidence to demonstrate the policy problem exists or first exploring non- regulatory solutions. This, together with the absence of a comprehensive economic impact assessment of the consultation options, appears contrary to the Government’s own framework for making better regulation.
31. Respect for copyright is not a barrier to the development of technologies that draw upon TDM. If anything, the case of TDM tends to prove the opposite: those industries most directly implicated (publishers) have very rapidly developed licensing solutions that can and do facilitate TDM in a manner that respects IP. The breadth of the proposed exception would also severely restrict the audiovisual sector’s ability to innovate through licensing in future.
32. Furthermore, as currently set out, the scope of the proposed TDM exception presents significant questions regarding how the UK creative sector would continue to ensure their content is protected from piracy. Little consideration appears to have been given to the likelihood of pretextual use of a TDM exception to provide legal cover for the creation of large libraries of high- value infringing content that can easily be used for piracy; nor to how copies of protected works would be stored, to what standard, in what format, or for how long.
33. The proposal as currently set out offers no solid safeguards against abuse of content once mined. This is all the more worrying in light of the absence of any limitations on the purpose of the TDM activity or limitation to the beneficiaries of the exception. If these and other key questions cannot be addressed satisfactorily, and genuine safeguards cannot be built in, MPA’s current assessment, on the basis of the information we have, is that the proposed exception would increase our members’ exposure to piracy and create considerable challenges in respect of IP enforcement.
34. Finally, the UK is a party to the Berne Convention, TRIPs and the WIPO Internet Treaties, all of which feature the so-called three-step test. This test establishes that limitations of and exceptions to exclusive rights can only be applied in certain special cases; cannot conflict with the normal exploitation of a work; and cannot unreasonably prejudice the legitimate interests of rightholders. These three conditions are cumulative. Failure to comply with any one of the three conditions results in failure of the test and negates the need to advance to the next step. Expert legal counsel has confirmed MPA’s analysis that the proposed TDM exception would fail on all three counts.13
35. Future UK trade deals will, no doubt, feature the three-step test, meaning that the UK will be in breach of those, too. An important question is whether the UK will be able to negotiate trade deals with strong IP protections when it undermines exclusive rights at home. In a similar vein, it will be more difficult for the UK to put political pressure on its trading partners (and others) to enforce those trade deals and otherwise protect UK works abroad. The strong export record of the UK audio-visual sector and wider creative industries needs safeguarding. It is crucial that countries of destination have in place strong IP law frameworks that are observed and, in the case of non-compliance, enforced.
36. The decision to restrict the potential future growth of key IP-owning industries to support hypothetical new business models that would drain value from the sector would, in our view, be a retrograde step. It would also be inconsistent with the UK’s tradition of sound policymaking, as it is not supported by the available evidence. MPA would urge the Committee to ask the Government to reconsider its decision and instead focus on pursuing positive steps to tackle the biggest threat to the UK’s high-growth, high-export content industries: digital piracy. At a minimum, this proposal should be subject to comprehensive economic impact assessment before any further steps are taken towards legislation.
Improving the UK’s tools for tackling online piracy: “Know Your Business Customer” (KYBC) obligations
37. Technological innovation is not only a permanent feature of the expansion of the film and TV sector, it is also a characteristic of those who wish to make illegal earnings from the hard work of legitimate content creation. The MPA’s experience (and that of other rightholders) of dealing with online infringement in the UK has shown that the growing complexity of investigating and tracing sources of illegal and infringing activity online is making the enforcement of IP rights increasingly difficult.
38. While there are a range of industry and law enforcement-led initiatives being deployed to tackle digital piracy, one of the greatest challenges remains the absence of reliable information on those commercial-scale pirates operating structurally-infringing services who are freely using legitimate business infrastructures, such as online hosting, advertising, payment processing and e-commerce platforms, to deliver illegal film and TV services.
39. Despite extensive use of the tools already available under UK law to attempt to trace the operators of illegal services that trade in pirated content and counterfeit goods, experience shows these efforts are increasingly thwarted by the ability of illegal operators to provide commercial services online under a cloak of anonymity, from anywhere in the world.
40. Even where, after lengthy investigation, online intermediaries supporting illegal services are identified and contacted, investigations often hit a dead end. This challenge has been recognised by Europol, which confirmed in its December 2020 Internet Organised Crime Threat Assessment, that “cybercriminals are […] proving to be highly aware of how to hide their identities and criminal activities from law enforcement or private sector companies.”
41. In MPA’s experience, the problem frequently comes down to the fact that the online intermediaries providing the business infrastructure that enables the operation of the illicit service cannot supply any information that allows for the verification of the illegal service provider. That, or the information they can provide has clearly been stolen, falsified, or is incomplete or otherwise misleading. The ease with which nefarious actors can remain anonymous in their underlying business transactions actively facilitates both digital piracy and potentially other crimes perpetrated online, including acts of digital fraud.
42. MPA would like to see the UK Government taking the lead in addressing online piracy and the resulting risks to consumers by taking action to support rightholder and law-enforcement efforts to improve the transparency of online business interactions. We believe this can be achieved through the introduction and enforcement of a Know Your Business Customer (KYBC) obligation on business infrastructure service providers that requires their commercial business customers to reveal their basic identity information – the kind of information that one would expect any legitimate business selling products or services on the high street to provide.
43. Inspired by UK anti-money laundering regulations, a KYBC obligation would require commercial entities to establish the true identity of their business customers as a precondition for selling, and receiving payment for, digital services. The means to achieve this are already provided for in UK Law under the Electronic Commerce Regulations 2002, but amendment is required to stop bad actors from simply choosing not to comply.
44. In setting out the importance of improving the transparency of online business interactions in tackling both digital piracy and digital fraud we hope the Committee will recommend to Government the further development of KYBC-style solutions and thus support ‘A Creative Future’.
 Film and high-end television programme production in the UK: January – June (H1) 2022, BFI Research and Statistics Unit, July 2022
 The UK Creative Industries: unleashing the power and potential of creativity, Oxford Economics, July 2021
 https://www.gov.uk/government/publications/switch-between-film-tax-relief-and-high-end-tv-relief-during- production/switch-between-film-tax-relief-and-high-end-tv-relief-during-production
 The ScreenSkills Assessment 2021 found that 46% of employers in the sector considered recruitment difficulties as a moderate problem, and 36% saw it as a serious or very serious problem.
 For example, see https://www.screenskills.com/news/channel-5-and-netflix-back-unscripted-tv-skills-fund/, 16 September 2021
 The UK Creative Industries: unleashing the power and potential of creativity, Oxford Economics, July 2021
 Apprenticeship Levy unusable as £55 million a year goes to waste in creative industries, FE News, 25 October 2018
 See, for example, The Creative Industries Policy and Evidence Centre (PEC) representation for the 2021 Spending Review, September 2021
 See The Royal United services Institute’s 2021 “Taking the Profit Out of Intellectual Property Crime: Piracy and Organised Crime” report (accessible here).
 First Step: Given the increasing use of TDM, including for the purpose of “training” AI, there is a strong argument that this is not a “special case”. This is all the more so given the expected future centrality of artificial intelligence “trained” by TDM.
Second Step: With commercial licences for TDM available, the exception clearly conflicts with the normal exploitation of a work. It enters into economic competition with the way in which rightholders derive value from their content. This is clearly already the case for publishers and is not far over the horizon for the wider creative sector. Given the expected increase in the use of TDM in order to obtain vast amounts of data for the purposes of AI training, the exception would undermine the AV sector’s future ability to offer commercial licenses. In other words, the exception at least prospectively displaces licensing that will become commercially normal in the foreseeable future, given the pace of technological developments.
Third Step: No apparent consideration has been given to the balance between rightholders and the beneficiaries of the exception.
 See Europol’s “Internet Organised Crime Threat Assessment 2020” (accessible here).
 The Royal United Services Institute’s (RUSI) 2021 report Taking the profit out of intellectual property crime: piracy and organised crime backed this need for action, underlining that: “new ‘know your business customer’ (KYBC) rules are needed to ensure [online service] providers record and verify the identity of their business customers, denying service to rogue actors and providing law enforcement with crucial information when abuse occurs.”
 See Regulation 6 “General information to be provided by a person providing an information society service” (accessible here).