Internet Freeloaders Continue to Win Piracy Battle

For almost as long as there has been an Internet, there has been pirated content and a battle between copyrighted content owners and Internet Service Providers. Content owners furiously demand protection from illegal downloads and complain about the lack of stringent controls.

On the other side one finds protests from civil liberty campaigners who consider or seem to consider that almost any Internet clampdown a violation of the right to information. And above all this one finds what usually amounts to half-hearted government measures that usually result in ensuring that all online piracy initiatives remain relatively ineffective.

Over the last three months, at least three governments -- New Zealand, France, and Spain -- tried but failed to come up with a workable solution. And now it seems that the latest anti-piracy initiative on the part of the UK Government as articulated in Digital Britain Report -- the official broadband and digital content strategy document -- may end up being a damp squib as well.

In its hardest crackdown yet on Internet piracy, UK's latest Digital Britain published on 16th June, proposed that Ofcom -- the independent regulator and competition authority for the UK communications industries -- be given powers to regulate and monitor ISPs. UK has set an ambitious target to reduce online piracy by 70% within a year and has authorized Ofcom with the unprecedented power to "place conditions on ISPs". Ofcom can not only force ISPs in UK to clamp down on illegal downloaders by using technical measures such as bandwidth reduction and protocol blocking. They have also been mandated to notify subscribers identified as infringing copyright and to maintain an anonymous database of repeat infringers.

However, the music industry and ISPs doubt if Digital Britain's proposal will be able to bring any significant reduction in illegal file-sharing. For one, despite the most serious attempt yet by UK, the measures are still not adequate enough say content owners and ISPs; "the proposals can bark but do not have the teeth to bite," they say. And second, rightsholders and ISPs will be reluctant to avoid potential damage to their businesses by appearing to criminalize users.

"For rightsholders, this includes denting content sales, while for ISPs it includes driving up churn as customers switch to rivals. Additionally, from a practical perspective, it is unclear whether a user may avoid prosecution by swapping provider after receiving a notification -- a prospect ISPs will fear, particularly in light of high customer acquisition costs," said Screen Digest, the London-based media industry analysts firm, in its comments.

ISPs too have protested; Tom Alexander, CEO of Orange, said in his reaction to a local publication that Orange would "strongly" oppose any obligation to disconnect or disrupt the broadband service to alleged copyright infringers.

Indeed, judging copyright infringers by ISPs raises myriad legal issues and complexities: after all who is an ISP to judge whether a customers has breached any legal obligation or not? Moreover, determined file-sharers have and will always find a way around technical roadblocks implemented by ISPs.

But an interesting twist to the whole issue of illegal download is that there may be simple way out to check piracy, in the UK at least. According to a study conducted last month for the law firm Wiggin LLP, by Entertainment Media Research - a London-based entertainment research consultancy - if ISPs were forced to regulate access to entertainment content, currently free or extensively pirated content, the average consumer will not only pay to ISP for accessing that content but would also pay more.

The survey investigated consumer response to the scenario that in future all Internet-sourced content might only be available by way of monthly subscription to an ISP for different entertainment packages. It found that consumers are prepared to spend on average £26 per month on digital entertainment content that is currently available for free or is extensively downloaded from unauthorized sites and hence is currently not monetized.

"There's a huge demand for more and more content and there is willingness to pay for it," said Russell Hart, CEO of Entertainment Media Research.

"Only the latest movies can be monetized for TV but for Internet even back catalogues could be monetized," he added. "If ISPs create an environment where consumers cannot access pirated content then they are willing to pay. In other words rather than not watching it they would rather pay and watch."

According to Simon Baggs, partner Wiggin, this may be good news for ISPs because instead of chasing illegal downloaders and getting into legal hassles by trying to nab them, by fundamentally changing the relationship between customer and ISP and offering low cost packages of entertainment ISPs can monetize content rather than offering just crude Internet access.