Creators' Rights Alliance - Manifesto for creators - 5: You must be able to negotiate
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What is needed - 5

The effect on creators of this inability to negotiate collectively is that companies can impose ‘boilerplate’ contracts that are often remarkably similar across an entire sector, whether it be music publishing or illustration of non-fiction books. They can do this because they can rely on a supply of creators who do not know their rights, do not understand what their rights mean, or simply cannot be bothered to read obscure (or deliberately obscured) contracts.

The changes the CRA seeks can be achieved without the sky falling. Indeed, the issue of Intellectual Property rights has been long been recognised as an anomalous area of competition law in European and other international law. It is accepted that it deserves separate consideration from physical property rights. (In fact, the EU has fully recognised closely parallel arguments for collective bargaining in the case of football – see below.)

IP rights are by their nature protectionist. They help to maintain competition where a premium is put upon quality alongside other competitive considerations, for instance, price. If the UK is to compete globally at the highest level, encouraging competition that drives up the quality of the UK’s output is in the interest of our creative economy. Sadly, current interpretation of the UK’s competition law, as enshrined in the 1998 Competition Act, threatens the prospects of our creative economy competing qualitatively in the long term.

The 1998 Competition Act prohibits “agreements between undertakings, decisions by associations of undertakings or concerted practices” which may either affect trade within the UK or practices which intend to prevent, restrict or distort competition with the UK.

The situation is especially difficult in the UK because of the supremacy of contracts in law. It is based on the legal fiction that you as an individual creator sit down across a table from Rupert Murdoch or Silvio Berlusconi to negotiate as equals, and that you must be prevented from forming a cartel with your competitors just as Rupert and Silvio ought to be prevented from forming a media cartel.

Germany, in contrast, passed a law in 2002 aimed at encouraging creators’ organisations and media organisations to negotiate basic terms agreements – the ‘stick’ being that where there is no agreement either side can go to arbitration, and the ‘carrot’ being that quality is recognised, to the benefit of all. The UK would do well to consider the benefits of this approach.

In the UK, competition law currently works against creators by forbidding them from making any recommendations about prices or from negotiating basic terms. It falsely equates this with the situation in which a cartel of business seeks to impose minimum prices on customers. This is fallacious – there are powerful arguments which put basic terms agreements made on behalf of creators outside the scope of the Competition Act, by virtue of their being inherently pro-competitive. However present thinking applies the detail of the Act indiscriminately, reading it in isolation, without reference to the conditions in the creative sector. This can lead to a narrow interpretation of competition which may, for example, put price competition above considerations of competition in quality.

For instance, the OFT has viewed collective agreements by the British Academy of Composers and Songwriters on behalf of its members as contrary to the terms of the Competition Act. However, it is demonstrable that they can be pro-competitive. Without such agreements, there is an incentive for contracting organisations to use a small pool of lowest-price providers in order to drive down costs, not just in fees, but also in negotiation and legal costs. By contrast, these agreements increase the number of competitors who are active in the market competing to supply musical services and products of the highest quality. It would help if the OFT-imposed restriction were eased for bodies representing sole trader or freelance creators.

The CRA recommends that the body charged with regulating the UK’s competitive environment, the Office of Fair Trading (OFT), needs to work harder to understand the cultural and creative economy when interpreting the Competition Act and to recognise the importance to the creative economy of competition which drives up quality; and further recommends that the OFT recognises the need for collective or representative bodies to negotiate on behalf of freelancers in order to maintain the quality of the UK’s creative output.

Creators need a level negotiating table

Without the ability to work with a body to bargain collectively on their behalf, creators often find themselves in a weak negotiating position. As individuals they are highly vulnerable to exploitative practices. There is a growing need for creators’ services and the IP that they create. If they are merely left to compete individually, the market will fail to arrive at the practices which are most helpful to our culture and economy’s long-term health.

Collective bargaining enables creators to derive a fairer return for their work and thus sustains their contribution to the creative economy. Many CRA-affiliated organisations are involved in the negotiation of codes of best practice between their members and commissioning organisations. These can redress the imbalance of the negotiating position between the individual and the large organisation, reduce the counter-productive tensions that exist in the creative marketplace and so drive up quality.

In one example, in the Guidelines for the Commissioning of music for BBC programmes developed by the Musicians’ Union and British Academy of Composers & Songwriters, clause 8 reads:

“The offer of a commission for the BBC is not dependent on publishing rights being assigned to BBC Worldwide Music. It is recognised that publishing is in the gift of the composer and the composer is under no obligation to assign publishing to BBC Worldwide Music or any publisher”

The Association of Illustrators has entered into discussion with BBC Worldwide, Oxford University Press and Future Publishing about their rights-grab contracts, but no satisfactory conclusions have been reached.

Football kicks off

It is illuminating to compare the negotiating situation in the creative sector with that existing in football – another great industry powered by talented individuals. The EU itself offers advice as to how the needs of sport may lead it to fall outside the scope of competition policy in certain respects. The European Parliament’s Fact Sheet on Media and Sport Policy states:

“Sport comprises two level of activity: on the one hand, the sporting activity itself which fulfils a social, integrating and cultural role to which the competition rules of the Treaty do not theoretically apply. On the other hand, there exists a series of economic activities generated by sporting activities to which the competition rules of the Treaty do apply. The interdependence and particularly the overlap between these two levels render the application of competition rules more complex.”1

As a result the International Federation of Professional Footballers (FIFPro) is currently in discussions with the European Commission. FIFPro state:

“The discussions with the European Commission have also led to an initiative intended to bring about a social dialogue, which should ultimately result in a collective bargaining agreement for European football. The European Commission has assigned FIFPro the task of giving substance to this social dialogue.”2

This precedent from football can be usefully applied to develop the cultural role of creative output and its economic potential. It shows that the underlying intention of EU Competition Policy is to be helpful to each and every business, not indiscriminately restrictive.

In the way that the EU recognises the benefit of FIFPro’s collective negotiation, it has shown that it is amenable to modifying Directives to accommodate these considerations. The CRA therefore recommends that it do so to ensure that creators have a right to negotiate.

 


^ Manifesto: 5: You must be able to negotiate

*  6: You must be able to enforce rights


Notes:

2 See http://www.fifpro.org accessed  04/03/2010

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