Hollywood Vs The Internet: The Sequel


The Australian Federation Against Copyright Theft (AFACT) shattered any hopes the copyright impasse would be bridged without the help of lawyers when it announced it would be seeking leave from the High Court to appeal aspects of a recent Federal Court decision, which exonerated internet service provider iiNet from authorising the copyright infringement of users.

"The Full Federal Court unanimously found that iiNet had the power to prevent the infringements of its users from occurring and that there were reasonable steps it could have taken, including issuing warnings," said AFACT director Neil Gane in a statement last week.

"However two judges of the Full Court went on to find that iiNet had not authorised the infringements of its users and that is what we are appealing," he continued. "We say they did not apply the legal test for authorisation correctly."

In response, iiNet said more legal stoushes were not the solution to the problem of piracy.  CEO Michael Malone added that the two-year legal case had not stopped a single illegal download and further legal appeals would not either. Meloni called on the industry to make their content more readily and cheaply available online in a bid to curb piracy.

In a paper released in March 2011 entitled Encouraging Legitimate Use of Content (pdf)  iiNet argued for the establishment of an independent third-party mediator (possibly a government agency) that would undertake investigations into allegations of infringement and dole out civil punishments upon confirmation. This would remove the awkward, quasi-policing role from ISPs. Users found guilty of multiple infringements would be slapped with fines and demerit points, but they would spared from the termination or suspension of their internet services or criminal charges:

"Hollywood studios spend a massive amount on marketing their product. After successfully creating great demand, it seems irrational to some, that studios then limit availability. It appears to be a contradiction in objectives. The current business model of ‘windowing’ (staggered release dates and queuing distribution channels) creates a frustrated and unsatisfied market; an approach that does not meet with universal acclaim. None of the industries embracing digital distribution use anything like ‘windowing’ or geographic discrimination. Their markets are global, their distribution is largely uniform."

Industry reactions to the model were mixed.

Peak industry body the Communications Alliance described it as a "potential solution that warranted further study" in a statement, while rival ISP Exetel told ZDnet the proposal was "childish", questioning whether a mediator would want to play the role described by iiNet. AFACT has not formally responded to the proposal. "Whatever the solution, we believe it will be more robust and sustainable if it flows from a shared desire from content owners and ISPs to agree arrangements that benefit consumers and all sides of the industry," added Communications Alliance CEO John Stanton in his statement.

Earlier in the month analyst firm Ovum forecast that global digital music revenues would hit more than US$20 billion by 2015, out of which 35 per cent ($7 billion) will be derived from the Asia-Pacific region, driven by strong growth in subscription services. This represents a compounded annual growth rate of more than 28 per cent from 2010 to 2015, and yet Ovum said the music industry was not fully maximising digital music revenues.

"Digital music will experience what might appear to be healthy growth over the next five years, but there is a danger that this could mask the fact that the industry is not maximising revenue potential," said Ovum analyst Mark Little. "There is too much free music available in the digital economy and not just the illegal kind. Free Internet radio such as Pandora or Grooveshark, and ‘freemium’ on-demand music services such as Spotify, are offering free music without maximising advertising or premium subscription revenues for themselves or the industry."

He went on to suggest that one way the music industry could seek to reinvigorate declining downloads is through bundling streaming services with telecommunications — in other words, by working together with ISPs.

Meanwhile, Australians have been pummeled by a barrage of misinformation on the issue of piracy costs to the economy in recent months. Attorney-General Robert McClelland raised eyebrows when he recently quoted from a report widely criticised by technology media in the context of discussing future directions for copyright law in Australia.

The Impact of Internet Piracy on the Australian Economy, commissioned by the Australian Content Industry Group (a group of rights holders and software makers) and written by Sphere Analysis, concluded that in 2010 the movie piracy business cost the Australian economy A$900 million and over 8,300 jobs. The report also said the figure would climb to $5.2 billion by 2016 when the NBN rollout was factored in. The ACIG report has now been revealed to be based on figures in a European study, released by consultant firm Tera that compared internet use in France, Germany, Italy, Spain and the UK and estimated retail loss.

The Pirate Party, which advocates copyright law reform, labeled it a "farce" because it used the averaged figures from these countries and extrapolated them to the Australian market. Emilio Ferrer from Sphere Analysis admitted extrapolating from overseas using Australian data to obtain local figures and projections, but defended the study in a statement on the basis that the countries used "were pretty comparable to Australia".

In another alarming development, website ITnews recently reported that restrictive copyright provisions are currently being hammered out in treaty negotiations between Australia, the US and other regional partners, which are taking place behind closed doors.  A leaked draft of the Trans Pacific Partnership agreement outlined extensive new powers for rights holders which are much harsher than current Australian law, and include a mandate for ISPs to identify internet users, pre-determined figures for damages for rights holders and criminal enforcement.

The Internet Industry of Australia association has argued that one of the most effective ways to reduce piracy is to make the content legally available in a timely fashion, at an attractive price. IIA identified market failure as the crux of the problem during its recent consultation for an industry code of conduct. It agrees with iiNet that content providers have a bigger role to play. As IIA chief Peter Coroneos said, "if users have access to more and better content, when, where and in the form they choose to consume it, and at a realistic price, we’re quite sure the motivation for infringement will decline".


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