[pp.int.general] the copyright empire strikes back (2 articles from FT.com)

[Alex Foti]

Lobbying leads to harder stance on net piracy

By Tim Bradshaw and Salamander Davoudi

Published: August 26 2009 03:00 | Last updated: August 26 2009 03:00

Lord Mandelson, the business secretary, yesterday hardened the
government's attack on online piracy . The move came after lobbying by
the film and music industry over concerns that the digital economy
bill provides an in-suf-ficient deterrent.

The government took the unusual step of adding to an ongoing
consultation a proposal to suspend the broadband accounts of repeat
offenders.

The Digital Britain report , published in June when Lord Carter was
communications minister, had proposed that internet service providers
write letters to those accused of infringing copyright. Repeat
offenders could be taken to court.

If this had not reduced file-sharing by 70 per cent after a year, the
report proposed, Ofcom would be given "backstop" powers to compel ISPs
to block sites or slow down offenders' broadband connections.

Rights holders, who lose millions of pounds in revenues to piracy
every year, feared it could take at least two years before tougher
measures were introduced.

"Since the issue of the consultation, some stakeholders have argued
strongly that none of those technical measures is powerful enough to
have a significant deterrent effect on infringing behaviour," said the
government.

Under the new proposals , Ofcom could be given ex-panded powers
immediately. Suspension would be a "very serious sanction" that
"should be regarded as very much a last resort", the government said.
Access to online public services and other essential sites could still
be allowed.

The final decision on these "technical measures" will now rest with
Lord Mandelson rather than with Ofcom. Although Ofcom will advise the
business secretary, he would be free to "take into account other,
wider factors and other sources of information" before taking a
decision, the government said, allowing the authorities to move "much
quicker" than the regulator acting alone.

Senior film and music executives including Lucian Grainge, head of
Universal Music International, have met Lord Mandelson to discuss the
proposed filesharing legislation.

Tom Watson, the Labour MP who resigned in June as minister for digital
engagement, said the proposals were "silly". He wrote on his blog that
he was "disappointed" by the new plans "as it would lead to
accusations that the government had been captured by the big lobby
operations of powerful rights holders".

Rights holders welcomed the news. "The solution to the piracy problem
must be effective, proportionate and dissuasive," said the BPI, which
represents the music industry. But ISPs and consumer groups said
suspending internet accounts was "disproportionate".

Charles Dunstone, chief executive of Carphone Warehouse, an ISP, said:
"I don't think you should remove the right of people to the supply of
a service on the say-so of a third party."


Claws and effect

By Maija Palmer, Salamander Davoudi, Tim Bradshaw and Jim,Pickard in
London and Joseph Menn in San Francisco

Published: August 29 2009 03:00 | Last updated: August 29 2009 03:00

Convicted pirates in 18thcentury Britain were hanged at the edge of
the sea at low tide and left until three tides had washed over their
corpses.

Today's digital pirates face somewhat less draconian measures, but
proposals this week by the UK government to cut off internet access
from those suspected of illegally downloading copyrighted material
have created a stir. The move represents a big shift in stance,
sending a message that a much more punitive line is in prospect.

Back in June the government had outlined a more gradual plan, under
which internet service providers would write to those accused of
infringing copyright. If these measures did not work within a year,
Ofcom, the communications regulator, would be given powers to cut off
internet access. Now it appears the government is unwilling to wait to
see if the "softly-softly" approach works, and wants the power to
disconnect brought in immediately.

The shifting of policy is relevant to the more than 1.5bn internet
users worldwide, who increasingly access music and films online. The
legality of sharing music or video files over the internet remains a
grey area, where many people are deliberately, and manyothers
unwittingly, falling foul of the law. More than 7m people in the UK
alone are estimated to be using illegal filesharing sites.

But after 10 years of persistent lobbying, the music and film
industries finally appear to have won a powerful ally in government.
Lord Mandelson, the UK business secretary, is leading the push on
filesharing regulation. Senior music industry figures, such as Lucian
Grainge, head of Universal Music International, have been influential
in mobilising Westminster to act. He is one of the government's
creative ambassadors. He is also on the creative industries group of
the opposition Conservative party, which opinion polls suggest will
win the next general election.

There is a growing sense that music and film industry executives are
starting to attract the attention of policymakers around the world - a
sense reflected in the speculation over the meeting between Lord
Mandelson and David Geffen, the Hollywood media mogul and outspoken
critic of online file sharing, on holiday in Corfu this month. Lord
Mandelson's office says they did not discuss the subject.

President Nicolas Sarkozy - married to Carla Bruni, a singer - gave
strong personal backing to a proposed French internet copyright law
that would have included a "three strikes and you are out" provision
to cut off internet access for suspected pirates.

A similar law is under discussion in New Zealand. Taiwan, South Korea
and Italy have already brought in tough penalties for file sharing.
Sweden brought in a law this year allowing the disconnection of
persistent illegal downloaders. Early studiesindicate that the
practice dropped 40 per cent in the first month after the law came in.

The fact that the film, as well as the music industry, is losing out
to pirates may also be influencing government policy. The threat was
made clear this year, when the launch of 20th Century Fox's Wolverine
was sabotaged by the circulation of an illegal copy on the internet a
month before the film reached cinemas.

"The film industry has been lobbying very hard. They are much bigger
than the music industry and they have more to lose. It is far cheaper
to produce an album than to produce a film," says Gregor Pryor,
partner at Reed Smith, the law firm.

It could, however, be economic realism, as much as the charm of music
moguls, that has spurred politicians into action. "It may be a
realisation that in the UK we are a postindustrial nation and the only
competitive edge we have is our intellectual property," says Iain
Connor, partner at law firm Pinsent Masons. "UK plc is having its
resources drained."

"The UK manufacturing base is gone," agrees Cliff Fluet, partner at
Lewis Silkin. "Look where we make all our money. Formats are big
business. Look at [talent entrepreneur] Simon Cowell. If we don't have
protection then we have nothing left."

The creative industries contribute £112.5bn ($183.2bn, €127.5bn) in
revenue to the UK economy, equivalent to 8 per cent of gross domestic
product, and employ 1.9m people. Piracy costs the film industry £268m
a year, according to Respect for Film. It cost the music industry
£180m in 2008, according to the British Phonographic Industry.
Worldwide, the number of files downloaded illegally last year has been
estimated at 40bn. For every track bought online, 20 were downloaded
illegally last year, according to IFPI, the international music
industry lobby group.

It is unclear whether new political will can translate into effective
law, however. Pressure groups are already looking at how to challenge
the proposed UK measures. The Pirate party, which defends file sharing
and lobbies for less restrictive copyright law, is now established in
nine countries - including Sweden, where it has won a seat in
parliament.

The proposed French "three-strikes" law was thrown out by the
constitutional council in June, on grounds of freedom of expression
and the presumption of innocence.

Proposals to cut broadband connection may also be deemed illegal under
European Union law. Proposed EU telecommunications legislation
includes a clause stating that internet access is a fundamental human
right. The decision to cut off access, therefore, may not be one that
an ISP can take.

There is confusion over how much the law can require of ISPs, says
Innocenzo Genna, a board member of EuroIspa, the trade grouping for
European internet service providers. Under European law, internet
companies are liable only for hosting illegal content, not for
allowing their customers to view it. "The rights holders are confused
over the two liabilities, and are trying to get something more from
ISPs than European directives allow," Mr Genna says.

Charles Dunstone, chief executive of Carphone Warehouse, one of the
UK's biggest providers, says: "We are going to fight [being forced to
disconnect customers] as hard as we can. Our fundamental duty is to
protect the rights of our subscribers."

The music industry sees such arguments as shirking responsibility.
John Kennedy, chief executive of IFPI, the organisation representing
the recording industry worldwide, says: "It is not enshrined in any
law anywhere that one has the right to steal music, films and books.
There is a crisis in the economy, and as well as respecting rights we
have to think about the economy and jobs."

In fact, the Brussels telecoms proposals have yet to be adopted and
could still be subject to change. "We are in a state of flux over
where national regimes will come down and how they will chime with
Brussels. September and October [when MEPs return to work] will be an
interesting time to see how this shakes out," Mr Young says.

In the US the issue has a lower political profile, as the record
industry is focused on winning voluntary co-operation from internet
service providers. It stopped suing individual file-sharers in August
2008 in what it said was an "act of good faith" aimed at furthering
talks with the ISPs.

The major labels have asked the big connectivity companies to impose a
mandatory monthly surcharge on customers for access to approved music
libraries and to pass along warnings to pirates before cutting off
repeat offenders. Neither plan has been finalised, leading some in the
industry to conclude they will never be put into practice. A handful
of ISPs, however, such as AT&T and Verizon have agreed to pass on
warnings.

But no ISP is cutting the cord. "This is not something where we're
turning off customers," says AT&T spokesman Fletcher Cook.

Anumber of court cases in the pipeline may help to bring some clarity
to the legal posi tion on piracy in Europe. In Ireland, internet
companies UPC and BT Ireland have refused to comply with music
companies' requests to cut off suspected pirates. They maintain that
Irish law does not require them to do so, and it is now up to the
judges to decide.

L'Oréal's lawsuit against Ebay for not doing enough to stop
counterfeit beauty products being listed has been referred to the
European Court of Justice. Defining how much the online auction site
must do to fight illegal listings would have implications for
filesharing sites and ISPs.

Advances in technology mean determined pirates will always find a way
to avoid detection. Virtual private networks, for example, allow
people to mask their identity, and subscribing to these sites can
costs as little as €4 a month. There is also a new generation of "dark
nets" - private networks of computers used for file sharing.

Some argue that the arrival of more legal movie and music downloading
sites will in the long term wean people off piracy more effectively
than draconian laws. "Piracy is the sign of a market that isn't being
met but now you have plenty of legal sites to choose from, which
rather removes the pirates' moral argument from under their feet,"
says Mr Fluet.

The high political profile of the issue may also help. Industry
executives say it is becoming clear to the general public that these
practices are illegal. However changing behaviour may take time.

The golden age of maritime piracy came to an end in the early 18th
century after the Royal Navy strengthened its powers - but the battle
took several decades. Despite its powerful political allies, the media
industry may be in for a similarly long haul.

Additional reporting by Tim Bradshaw and Jim Pickard

Table

Ways for consumers to access music, films or television programmes
online range from the illicit to the legitimate, though clarity is
frequently lacking in between:

*BLACK (facing legal action): Pirate Bay , Mininova , Isohunt

*WHITE (backed by rights holders): iTunes , Hulu , Spotify , BBC iPlayer

*GREY (linking to both licensed and unlicensed content): Megavideo
(video streaming); Hype Machine (music blog aggregator); Surf the
Channel , Sidereel (television show search engines)