Tag: uk

Copyright and AI Training: The UK Rethinks its Blatant Content Giveaway Scheme—But What Comes Next?

A robot holding a British flag with the text 'GIVE ME YOUR CONTENT FOR FREE' and 'OPT OUT IF YOU CAN' displayed prominently.

Image: Shutterstock (modified)

On March 18 the UK’s Labour government finally confirmed what everyone has known for months, that its preferred policy option of allowing AI developers to freely use copyrighted content to train their AI algorithms unless rightsholders specifically opt out, was a shambles. The government had been backpedalling for a while but the issuance of the Parliamentary-mandated Report on Copyright and Artificial Intelligence, all 125 pages of it, finally drew a line  under all the prevarications. The paper was issued by the two Departments that represent the opposite ends of the spectrum when it comes to the copyright/AI question, the Department for Science, Innovation and Technology and the Department for Culture, Media and Sport. The inconclusive results reflect this duality.

The government’s initial Consultation Paper had proposed four options to deal with the issue of unauthorized use of copyrighted content to train AI platforms;

  • Do nothing (status quo). Copyright and related laws would remain as they are. It would be left to the courts to settle disputes between rightsholders and unauthorized users;
  • Strengthen copyright by requiring licensing in all cases of use of copyrighted content;
  • Legislate a broad text and data mining (TDM) exception to copyright law. (Britain already has a TDM exception but it is limited to non-commercial research purposes);
  • Create a data mining exception with opt-out and transparency measures. Rightsholders would be required to notify when their works were not to be accessed, and AI developers would be required to disclose what works they had used.

The Paper indicated that the last option, Option 3, was the government’s preferred choice. Unfortunately–for the government–fully 97% of the 11,520 respondents to the consultation survey disagreed. To put it another way, only 3% of respondents endorsed the government’s preferred option. (Note to UK government: Wipe egg off face). Rightsholders did not want the onus to be on them to opt-out (given that copyright law is based on the user, subject to fair dealing and other statutory exceptions, needing to obtain permission in advance from a rightsholder), and because opting out is not necessarily easy to do. AI developers objected to the transparency provisions. They preferred Option 2, a broad TDM exception allowing them to help themselves to whatever content they deemed useful for AI training without let or hindrance. The last thing the tech industry wants is to be required to document what content it has appropriated without authorization. To oppose Option 3, rightsholders mounted a widespread and very effective campaign to remind legislators of the value of Britain’s creative industries, both economically and culturally. Everyone from those two noble knights, Sir Elton John and Sir Paul McCartney, to Ed Sheeran, Dua Lipa, Kazuo Ishiguro, Andrew Lloyd Webber, Cat Stevens, Sting, Tom Stoppard, and on and on—maybe everyone who is anyone in the cultural world in Blighty, except Banksy, spoke out. Now the government has thrown up its hands and admitted it got it all wrong. The blatant content giveaway cum confiscation is not going to happen, at least not in the form initially proposed.

The Starmer government’s particular slice of humble pie was worded as follows;

We must take the time needed to get this right. We will not introduce reforms to copyright law until we are confident that they will meet our objectives for the economy and UK citizens. This means protecting the UK’s position as a creative powerhouse, while unlocking the extraordinary potential of AI to grow the economy and improve lives. Any reform must ensure that right holders can be fairly rewarded for the economic value their work creates, and that they are protected against unlawful and unfair use of their work. It must also ensure that AI developers can access high quality content. It is clear through the consultation and our subsequent engagement that there is no consensus on how these objectives should be achieved.

Truer words were never spoken. And there will never be consensus as long as one of the parties is an entitled tech industry that feels it can freely confiscate valuable content produced and owned by others, and which has no qualms about accessing pirate websites to do so. Legal consequences are required to bring it to the negotiating table.

Although we now know the UK government will not forge ahead to adopt the Option 3 opt-out proposal, we still really don’t know what it will do. Amidst all the relief from the creative community that Option 3 has been dropped as the chosen way forward, there is still a sense of unease about what might happen instead. Composer Ed Newton-Rex, one of the leading activists amongst the creators, has voiced his concerns on X. While the government has withdrawn its preference for Option 3, it is still on the table as is the possibility of some other form of TDM exception. He is worried that while there is talk of compensation for rightsholders, permission does not seem to be part of the equation. With the dropping (for now at least) of Option 3, transparency requirements for the tech industry are also once again in doubt.

What will happens next on this issue in the UK? More study, more research, more monitoring of developments. In other words, back to Square One. The one new development coming out of the government’s Report is an acknowledgement that something needs to be done with respect to digital replicas. As described in the Report, this involves the use of AI to replicate or mimic the appearance or voice of individuals. Current copyright is not well adapted to protect against such misuse. The result could be the introduction of a right of personality in the UK.

When it comes to the intersection of copyright and AI development, the UK government is trying to resolve an issue with which many countries are grappling. The question is how to get a slice of the AI investment pie by incentivizing the tech industry without throwing the creative community under the bus. In the US, finding the balance has largely been driven by the courts. The White House has just issued its National Policy Statement on Artificial Intelligence. Among its many policy positions, the Statement indicates this question should continue to be left to the courts to decide, even though the White House believes that unauthorized and uncompensated use of copyrighted material for AI development is fair use under US law. In Australia the government looked at the same issue and in the face of vocal and organized opposition from the creative sector, explicitly ruled out introducing a TDM exception. India tried to find the balance by proposing the establishment of an unworkable compulsory licence regime, a scheme that I described in a recent blog post as the “worst of all worlds”. It was as widely condemned by both creators and tech developers as the UK’s Option 3. Canada, which like Australia does not have a TDM exception in its copyright law but which is being pushed by the tech industry to loosen restrictions in the face of current and anticipated lawsuits, is facing similar questions.

While this may seem to some (like the UK government for example) as an almost intractable problem that will require much more work, study and consultation to resolve, in fact it is not all that difficult. Cultural industries generally are not opposed to the development of AI. In fact, many creators use it to assist their work. But they want to have some say over whether or how their work is being used and want to receive compensation when it is used. It is true that some individuals may wish to have nothing to do with AI and would like to see it go away. That, however, is not going to happen although their right to have their work not used to develop applications that may unfairly compete with the content they produce must be respected. The best outcome is a win/win scenario where creators voluntarily opt in to the AI development process and share in its benefits. This is already happening on an increasingly large scale with respect to commercial licensing deals, with news media outlets, studios, music publishers and book publishers all signing licensing agreements with AI developers. Left out at this stage are most individual authors and artists and small publishers, but voluntary collective licensing can fill the gap. As a recent example, at the recent London Book Fair in March of this year, the first stage of an opt-in collective licensing initiative was launched by Publishers Licensing Service to supplement direct agreements between publishers and AI companies.

The “magic formula”–the win/win solution–which so many countries are finding so hard to unlock is based on three principles, well articulated by Canada’s Coalition for the Diversity of Cultural Expression (CDCE);

1. Authorization (Permission)

2. Licensing (Remuneration)

3. Transparency (Disclosure)

Acceptance of these three cardinal principles by AI developers would cut through what the UK government seems to see as a Gordian Knot. The solution is not all that difficult, but it requires courage to stand up the tech industry’s threat of taking their ball and going elsewhere to play. Let’s hope that as the UK and other governments go back to the drawing board, they use these principles as guideposts to arrive at a solution that, at the end of the day, best serves everyone.

© Hugh Stephens, 2026. All Rights Reserved

The Economics of Copyright: Incentives and Rewards (It’s Important to Get them Right)

Image: Shutterstock

Two years ago, in April 2022, the US Copyright Office (USCO) appointed its first Chief Economist, Dr. Brent Lutes. Many national Intellectual Property Offices have such a position, e.g, UK IPO, IP Australia, EUIPO, and WIPO. (Notably, Canada’s Intellectual Property Office–CIPO–does not). All these positions have broad responsibility for assessing the economics of IP generally, covering patent, trademark, industrial designs as well as copyright. In the US, the Patent and Trademark Office has its own Chief Economist. However, Lutes’ USCO position appears to be the only one related exclusively to assessing the economic impact of copyright. The position sits within the Office of Policy and International Affairs and is composed of a small team of economists, providing the Register of Copyrights, Shira Perlmutter, with policy-relevant research on economic issues related to copyright.

In an interview conducted last month, Lutes talked about the economic goals of copyright in terms of enhancing social welfare. He noted the goal of copyright is to contribute to the welfare of society by promoting access to creative works, now and in the future, through market based behavioural incentives. The goal of the Office of Chief Economist is to gather more information to inform policy making, such as the geographic distribution of copyright activity or the demographic characteristics of creators. As but one example, is racial or ethnic diversity related to creativity? The economic issues surrounding AI and copyright, both pro and con, is another field of research the USCO will be exploring.

In addition to finding the right economic levers to stimulate production of creative works, economic studies of copyright also demonstrate the enormous impact copyright-based industries have on national economic welfare. While the impact can depend on what economic multipliers are used and how direct versus indirect benefits are calculated, there is no question that copyright industries in most economies are very significant as job creators and multipliers. For example, IP Australia in its most recent annual report estimates that cultural and creative activity contributes about 6% of Australian GDP annually, with design, fashion, publishing, broadcasting, electronic and digital media and film being the primary industries involved. In the US the figures are even more impressive. According to the International Intellectual Property Alliance, in 2021 (the last year for which statistics are apparently available), core copyright industries in the US, defined as those industries “whose primary purpose is to create, produce, distribute or exhibit copyright materials”, added $1.8 trillion to US GDP, accounting for 7.76% of the economy. Total copyright industries, a definition that includes industries partially dependent on copyright, such as fabric, jewellery or toys and games, account for another trillion USD, even when only a portion of their total value is included in the copyright calculation.  

The UK Intellectual Property Office published its IP survey in 2022, comparing the role of patents, trademark, registered industrial designs and copyright. While copyright industries were on the low side for exports (£4.7 billion as opposed to patents at £120.6 billion, copyright’s “non-financial value-added output” (IP data is not available for the financial industries, thus the description of “non-financial”) trounced that of patent industries by almost 2:1. As with the US IIPA study, the UK report accounted for the degree to which certain industries depend on copyright, categorizing them as core, interdependent, partial or non-dedicated support industries, adjusting the amount of copyright contribution accordingly. Book publishing, for example, is considered a 100% copyright industry and its value is calculated as such, whereas for an industry such as paper manufacturing, only 25% of the value was included in the calculation of copyright benefits. This methodology followed that of the World Intellectual Property Organization, aka WIPO, which also conducts economic studies as well as assists national authorities with their own. Economists are careful people, not prone to exaggeration, and consistent methodology is important to ensure accurate measurement and reporting.

WIPO worked with the Department of Canadian Heritage to produce a report in 2020 on “The Economic Impact of Canada’s Copyright-Based Industries”. As with other deep dives on the economic benefits of copyright, this study produced similar notable statistics. For example, while many copyright opponents in Canada were deploring the extension of the copyright term of protection in Canada, arguing that the result would be an outflow of royalties to foreign rights-holders because Canada was a net importer of copyrighted materials, the Heritage report established that “Canada has exported more copyright-related services than it has imported, maintaining a trade balance surplus from 2009 ($2.5 billion) to 2019 ($5.6 billion)”. In actual fact, extending the copyright term in Canada brought with it the additional benefit of a reciprocal extended term in many foreign countries for Canadian works, clearly benefiting Canadian rights-holders. The Heritage study went on to document a range of other important outcomes such as employment (over 600,000), contribution to GDP ($95.6 billion) and percentage of GDP (4.9%). All figures are based on 2019 data. No update has been published since. It is just as well that Heritage Canada took the lead in preparing this report since the government department holding lead statutory responsible for copyright in Canada, the mammoth Department of Industry, Science and Economic Development (ISED), unfortunately seems to treat copyright as but a tiny pimple on its elephantine rump.

While the studies cited above highlight the economic contribution that copyright industries make to national economies in terms of jobs and wealth generation, let us not forget the key point that Dr. Lutes underlined regarding the social welfare contribution of copyright through using market-based incentives to promote and encourage creativity and investment in creative outputs. It is hard, if not impossible, to put a dollar amount on the social welfare benefits of creative expression and cultural sovereignty, but they are immense if incalculable. Without copyright, not only would existing content-based industries be unable to thrive and expand, but the formula to encourage new, original content would be missing.

Notwithstanding the importance of a robust copyright framework for both economic and social welfare, creators and content-based copyright industries are facing major challenges today. Some are technological, like the emergence of generative AI; some behavioural, such as a wide tolerance, even acceptance, of piracy and free riding. The struggle against piracy is ongoing and protracted, a cat and mouse game. Free riding is what AI developers are doing on the backs of content creators through unauthorized training of AI models on copyrighted content, with resultant legal challenges. There is also the question of whether wholly AI generated works should be accorded copyright protection. As the Copyright Alliance has observed, the Copyright Clause in the US Constitution is premised on the promotion of the “progress of science and useful arts” by protecting for a limited period of time the writings and discoveries of authors and inventors. Given that premise, it should be self-evident that creator incentivization is not applicable to machines, which do not need nor comprehend economic incentives to create.

Free riding is also what the education sector has been doing in Canada under the specious umbrella of “education fair dealing”, introduced through copyright amendments in 2012 that broadened the scope of fair dealing. Since then, the “education industry” at the public, secondary and post-secondary level has been siphoning off economic value from writers and other creators to the tune to date of over CAD$200 million. Their legalized renunciation of collective reprographic licensing is ostensibly to benefit students but is in fact a transfer of wealth from creators to the bottom line of educational institutions. If a key objective of copyright is to incentivize creation of new content, such as materials used by educational institutions to teach students, then the current interpretation of education fair dealing in Canada upends a key rationale for granting copyright protection in the first place. (As a footnote, I should add that not all arguments in favour of copyright are based solely on economic incentives. There is also the question of natural justice and equity, providing authors with a degree of control over works they have created).

Since court challenges have unfortunately proven ineffective, the remedy for Canada’s education fair dealing fiasco is for the Government of Canada to amend the Copyright Act so that rightsholders are properly compensated when their works are used in Canada. Both the copyright collective in English Canada, Access Copyright and its Québec counterpart, Copibec, recently called for legal clarification of the nature and extent of educational fair dealing.

Thorough documentation of the contribution that copyright makes to economic and social welfare helps substantiate the case for adequate legal frameworks, including combatting piracy and ending copyright free riding. Sound economic data are essential to sound policy making. The initiative of the US Copyright Office to appoint a Chief Economist helps to meet these goals and is to be commended.  Should the Canadian Intellectual Property Office ever create such a position, its first task should be to evaluate the full economic and social costs of the current short-sighted interpretation of fair dealing in Canada’s education sector in terms of its negative long-term impact on creativity and cultural sovereignty in the country.

The Scottish writer Thomas Carlyle may have described economics as the “dismal science”, an oft-quoted remark, but rather than being dismal it is in fact just the opposite; it sheds light on the importance of copyright to maintaining a well-functioning, equitable and culturally rich modern society.

© Hugh Stephens, 2024. All Rights Reserved.