Copyright conflict: Who pays still a sticking point for rights holders, ISPs

Who would pay for a regime that targets customers of Internet service providers accused of breaching copyright is still a point of contention between rights holders and ISPs, judging from a public forum hosted in Sydney last night by Communications Minister Malcolm Turnbull.

The public forum brought together a panel drawn from ISPs, representatives from content industries and consumer advocacy group Choice.

The forum was held in the wake of a public consultation on a discussion paper released earlier this year by the Attorney-General's Department.

The paper raised a number of proposals for copyright reform focussed on preventing unauthorised downloading and sharing of copyright material. One of the examples of a copyright enforcement regime was a "graduated response" scheme whereby a series of notices are sent to ISP subscribers engaged accused of violating copyright, with potential sanctions, such as fines or a slower broadband connection, imposed if the behaviour continues.

Who would pay for such a scheme was one of the questions Turnbull asked the panel at last night's forum. In New Zealand a graduated response scheme, which involves sending three notices to ISP customers accused of breaching copyright, is paid for by rights holders. In the US and UK, costs are split, Turnbull said.

A response to the government's paper on copyright reform by telco industry body Communications Alliance said that ISPs and rights holders have previously failed to reach agreement about introducing a graduated notice scheme in Australia.

Discussions on an 18-month trial of a scheme took place before and after the High Court's 2012 judgement in the case brought against the ISP by movie studios, the Comms Alliance submission said.

"Rights holders were in broad agreement on the structure of the proposed trial, but refused to pay, or contribute to, I SPs costs, or to commit to making available more timely and affordable digital content. The discussions eventually halted pending the 2013 federal election," the submission states.

Foxtel CEO Richard Freudenstein told last night's forum that he accepts that content owners should bear the cost of detecting violations of their intellectual property rights and that rights holders might have a role in contributing to the upfront costs of establishing a notice scheme.

"I think that's a reasonable thing to contribute to," Freudenstein said. However, he added that Foxtel's position is that the "third cost" of "actually pressing the button and sending the notice" should be borne by ISPs.

"Our position is each player should bear their own costs," the CEO said. "We should bear the cost of finding the illegal downloaders but the actual implementation costs should be borne by the ISPs and the reason for that is we want this to be as efficient as possible. We want the ISPs to do this as efficiently as possible; [as I said] we'd contribute to any upfront costs if we need to.

"Because if we don't have that and there's not an incentive for ISPs to be efficient, then recalcitrant ISPs will find a way to make this expensive and make it slow and make it difficult and defeat the scheme."

The CEO said that such schemes are working "very well" in the US and "well" in Ireland and the UK. It's only in New Zealand, where rights holders bear the costs, that it's not working, Freudenstein said. The cost of sending a notice to an ISP customer is not high, he added.

Village Roadshow co-CEO Graham Burke said that "right now you have a situation where tax paying companies are being badly hurt, individuals are losing their jobs and it will accelerate and get worse".

"We're talking about all the theatres of Australia, we're talking about free TV, pay TV on and on, sporting bodies etc." He called on ISPs to "put some back".

Village Roadshow's response (PDF) to the discussion paper describes the NZ graduated response scheme as a "total failure"

"Village Roadshow strongly believes that legal action by copyright owners directly against infringing internet users is economically inefficient, as there is no legal relationship with those users, and, internationally, such litigation has proven costly, slow, impractical and does not achieve any positive outcome," the submission states.

"Village Roadshow is ready to step up and pay a healthy amount towards establishment costs (but, given the failed and flawed NZ example will not pay a cost per notice), as we will not only see a return in our numbers but we regard it as a moral issue for the very survival of Australian film production," the submission argued.

"We'll put [in] our share; we'll even put more than our share. It's good for Australia," Burke told the forum.

Brett Cottle, the CEO of APRA AMCOS, which represents rights holders in the music industry, said that ISPs should acknowledge that they have "some stake in the game" and are making money from the traffic of people engaged in copyright violations.

iiNet CEO David Buckingham said that research indicated the notice schemes are frequently ineffective. "Why should we contribute to a scheme we think is ineffective?" the CEO told the forum.

Buckingham cited research by Monash University's Rebecca Giblin that concluded there was little evidence for 'graduated response' reducing copyright violations.

Giblin also addressed the forum, telling the audience that "I'm not here as someone who is pro graduated response or anti graduated response. I'm here as someone who is pro evidence."

"I looked at all of the evidence in each jurisdiction that has graduated response," the academic said.

"What I was really surprised to discover is there is remarkably little evidence, scientifically credible evidence, that any of this different graduated [response schemes] are doing anything to achieve their aims."

"Graduated response schemes have been variously criticized for impinging on the human right to freedom of expression, for breaching privacy and for failing to comply with key tenets of the rule of law," a 2013 paper by Giblin concluded.

"But quite separate from those criticisms, their legitimacy is seriously thrown into question by the startling lack of evidence that graduated response helps achieve any of copyright law’s underlying aims...

"There is no evidence demonstrating a causal connection between graduated response and reduced infringement. If 'effectiveness' means reducing infringement, then graduated response is not effective. Furthermore, there is little convincing evidence that any variety of graduated response increases the size of the legitimate market."

"I think the incentives must be there to minimise [the costs of a graduated response scheme] no matter who pays," Telstra executive director Jane Van Beelen said.

"At the end of the day we want a scheme that is efficient as possible. I don't think you need to lump all the costs onto the ISPs to achieve that."

"Law abiding customers" could end up bearing the costs of a graduated response scheme if it's funded by ISPs, Van Beelen told the forum.

"Rights holders should bear the cost of any copyright enforcement mechanism, as they are the direct beneficiaries of reduced piracy levels and increased royalty streams," argued Telstra's response to the government's discussion paper.

Copyright © 2014 IDG Communications, Inc.

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