Music market trends

The UK recorded music market achieved another billion-pound-plus year in 2014, just 1.6% down on 2013. Drilling down on this relatively static headline figure reveals an acceleration in the maturation of the digital market, overtaking physical sales for the first time, albeit by 1%. The number of tracks streamed doubled to a staggering 14.8 billion, with streaming now representing 17% of the market and offsetting the decline in CD sales and the maturing downloads format, both down by 8%. Last year also marked the best-ever year for home-grown talent, with the entire top 10 best-selling albums coming from UK artists.

Meanwhile, the UK live music market continues to go from strength to strength and has outpaced the recorded music market by a considerable degree. Umbrella trade body UK Music's latest published research, which relates to 2013, shows live music revenues at £789 million, compared to £618 million for recorded music and £436 million for music publishing.

Legislative developments

On the statute books, October 1 2014 saw two important changes to the Copyright Act. The anomaly whereby consumers who make private copies of purchased recordings or transfer them between devices are considered to infringe copyright was finally removed with the enactment of an exception for private copying, subject to certain restrictions. Unlike many of its European counterparts, however, the UK government did not see fit to impose a blank media levy to compensate rights holders for this exception. This has in turn led UK Music, the Musician's Union and the British Academy of Songwriters, Composers and Authors to sue the government for failing to provide fair compensation for rights holders in contravention of Article 5(2) of the EU Copyright Directive. The case was heard in the High Court on April 30 2015 and at the time of writing, judgment was still awaited.

The second amendment was a new copyright fair dealing exception for parody (for further details please see "UK parody exception: finding a sense of humour"); it will be interesting to see how this pans out in relation to music. The parody must be noticeably different from the original work and an expression of humour, although ultimately the High Court decides whether a work is humorous. It must also constitute fair dealing, which is usually assessed by reference to how much of the work is taken from the original work and whether the parody is competing with exploitation of the original work. The original writer's moral rights still apply, which prevent any derogatory treatment of the original work – a somewhat tricky issue for legal counsel to advise on.

Case law

In the courts, the music and film industries have continued to obtain website-blocking injunctions against the six major internet service providers (ISPs) to prevent their users from accessing various BitTorrent file-sharing services, including trackers and aggregators. This falls under Section 97A of the Copyright Act, which implemented Article 8(3) of the EU Information Society Directive. The basis of the injunctions is that the ISPs were on notice that the file-sharing services were infringing copyright by communicating infringing works to the public or on the basis of joint tortfeasorship.

The other big case of the year was the Court of Appeal decision in Rihanna's suit to prevent high-street retailer Topshop from selling a tank top carrying a photographic image of her without her permission and hence to maintain the exclusivity of her merchandising rights. Rihanna did not own the copyright in the photograph and as there is no right of publicity in the United Kingdom, she had to proceed under the unfair competition common law tort of passing off. The essential question in this regard is whether the defendant is passing off its goods as the claimant's. Three key elements must be established in a passing-off claim:

  • goodwill in the field of trading activity;
  • misrepresentation – that is, that the public is liable to be confused into thinking that the product is authorised; and
  • damage.

The court was at pains to point out that there is no general right to prevent use of a celebrity's image on a shirt. However, because Rihanna could show goodwill in fashion items – including previous fashion tie-ups with Topshop itself – and because the image used was recognisably from an album cover photo shoot, it was held that the sale of this particular shirt in these particular circumstances and by this particular seller did misrepresent to the consumer that the product was authorised and therefore amounted to passing off. As an interesting aside on costs, around 12,000 shirts were sold at a retail price of £22, making gross revenue of £264,000; whereas Rihanna's legal bill came in at an eye-watering £1.5 million, which - perhaps unsurprisingly - her lawyers are having trouble recovering from the other side.

Newspaper industry privacy scandal

No legal review of the UK media and entertainment industry year would be complete without mention of the continuing extraordinary events in the war between the newspaper industry and privacy claimants, many of whom come from the world of entertainment. After exposure of the phone-hacking scandal through numerous civil claims and the ensuing judicial inquiry into press standards by Justice Leveson – which resulted in a strong recommendation for a new independent regulator underpinned by statute – a new regulatory framework underpinned by royal charter was introduced which the newspapers refused to sign up to; they have instead set up their own new regulator.

Meanwhile, in the July 2014 criminal phone-hacking trial of various News Group executives, the prime minister's own former spin doctor – who had been editor of the News of the World at the time – was found guilty and sentenced to 18 months in prison. All of the civil claims against News Group have been settled before trial, so the first judgment in a civil claim was issued only recently, in the first batch of cases against the Mirror Group. This saw much higher damages awards than expected – the largest being £260,000 to actor Sadie Frost – with the evidence having shown systematic hacking of victims' phones several times every day over a period of several years, resulting in the publication of numerous stories and the destruction of the victims' relationships with those closest to them (whom they could not help but suspect of leaking information, to the point that Frost even insisted that her own mother sign a non-disclosure agreement). This heralds some justice at last, but more is likely to come.

For further information on this topic please contact Gordon Williams at Lee & Thompson by telephone (+44 20 3073 7600) or email (gordonwilliams@leeandthompson.com). The Lee & Thompson website can be accessed at www.leeandthompson.com.

This update is based on a speech delivered to the International Entertainment Lawyers Association at MIDEM on June 6 2015.

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