Recently, the Australian Government asked for comments in an RFC titled Digital Economy Future Directions Consultation Paper.[i]

We responded to 30 of the 32 questions – here is our response to Question 23

Q.23  Should the existing copyright safe harbour scheme for carriage service providers be broadened?

Setting the Scene.

The safe harbour scheme provides legal incentives for ‘carriage service providers’ to co-operate with copyright owners to deter unauthorised infringement of copyright material. The scheme applies to four categories of offending online activity. Broadly, these include providing facilities or services for transmitting, caching, storing at the direction of the user, and referring users to an online location using hyperlinks.If a carriage service provider complies with the conditions of the scheme, the remedies that can be awarded against it for the infringing activities of its customers are limited (i.e. no monetary damages and a restriction on court orders). The conditions to be satisfied differ for each online activity. For some, there is a condition that the carriage service provider takedown infringing material.

The current Australian version of the Safe Harbour legislation requires ISP’s to terminate the accounts of repeat offenders when notified by a duly authorised representative of the copyright owner.

Whilst the notion of stopping a copyright infringement is reasonable, one has to look first at whether a copyright has in fact been infringed, and second at the economic impact of the concept.

People have been sharing content with each other ever since books were first printed, through loaning them to each other. Prior to the invention of the digital recorder and the CD, people were recording radio shows and LP’s onto cassettes and then copying favourite pieces of music from one cassette to another to share with a friend.

While it is important that there is a strong copyright law, it is just as important to ensure that it is used to pursue real criminals and not used to criminalize real people.

The economic impact of unconstrained legal actions by content companies is a key issue.

According to the content companies they have been negatively impacted by file sharing. However, the statistics that are now coming to light and which will be the subject of a report to be released by this author tell a different story.

Briefly, the data that is emerging indicate that P2P file sharing tends to help propagate information about content that leads to that content being purchased by consumers. Declining top line revenue numbers belie the fact that gross margins have increased through legitimate digital distribution by companies such as iTunes. The very public argument that negatively attacks P2P obfuscates the true nature of the way that content companies’ business models operate and enables shrinkage numbers and costs to be misconstrued thus ensuring that there is the ability to point elsewhere when bemoaning failure to develop strong individual pieces of content.

In addition to this there is the matter of ISP economics

According to all available (conservative) estimates between 21% and 32% of all internet users in Australia engage in file sharing.

 Non commercial interest surveys like the Whirpool Internet Survey Series covering 2003-2007 show that 57.7% of Australians either file share or are about too. ( Respectively  54.4% and 3.3%with an average compound 5.62% increase per annum.)

In other words, the Safe Harbour scheme as it currently stands requires ISPs, to initially police and then disconnect up to 32% (and growing) of their income stream with no compensation payable by the copyright owners for having to do so.

If service providers are expected to terminate approximately 32% of their user base of the accounts of repeat offenders as required under section s16AH(1) item 1 condition 1 to satisfy the Australian Governments desire to retain cordial relations with the United States – then a compensation arrangement needs to be reached for:

1.         The increasing workload on ISP’s for the policing of users’ online habits through issuing infringement notices, examining log files to identify the user, contacting the user and issuing a warning and having to notify the issuer of the infringement notice that the ISP/CSP[1] has complied; and;

2.         If the user continues his activities, a compensation for the lost revenues of the user for the balance of the user’s contract period.

The cost to the ISP for item 1, is likely to be the cost of one employee for 20-30 minutes per incident report.

The cost to the ISP for item 2, is likely to be between several hundred to potentially thousands of dollars.

The numbers.

The ABS collects stats on Australia’s 35 Largest ISP’s. Each of these ISP’s has in excess of 10,000 users.

Let us for a moment examine the number of infringement notices that may arrive in a month at an ISP with 10,000 users of whom 3,000 are sharing files.

If the ISP receives one infringement notice for every-one of those 3000 users in the first month, then it requires ten full time employees working on nothing else but infringement notices for the entire month – just to ensure that it is complying with the Act and to qualify it for exemption from prosecution from the relevant  copyright industry policing authority.

There is no warranty on the part of the content industry that their information is accurate – in fact there is definitive evidence to the contrary.

Further there is no offer of restitution if the ISP is subsequently sued for damage to business or other perceived or real damage because of a user’s disconnection. Nor is there any relief offered by existing Australian case law or legislation.

If the offenders repeat their activity – and statistics suggest that this would be the case; the ISP is then required to terminate these same users in month two, and the ISP suddenly losses 150K per month revenue or 1.8 million per annum.

If this was repeated on a global basis, the numbers (using the conservative 32%) would be:

1,463,632,361     Total Internet Users

468,362,356        32%

$59.95                 Monthly Spend

$23,394,699,658 Total Loss of Revenue.

This would appear to be more than what the content industry make – and therefore could lose.

It would appear to me that the neither the courts[ii] nor the legislature has grasped the magnitude of the numbers of individuals whose activities could be classed under the content industries’ suggested guidelines as “offending”.

According to IPOQUE[iii], P2P is increasing In Germany – it is nearly 74% of the total internet usage.

If everyone is doing it - are the moral majority in fact Pirates?

The Question of Definition

There is some discrepancy about the word “piracy” that is bandied about so freely by the copyright industries and increasingly by legislators as a direct result of the rhetoric from industry lobbyists.

File sharing should not be classified as an act of piracy.

The Online edition of the Oxford Dictionary defines a Pirate as:

Pirate[iv]   • noun

1 a person who attacks and robs ships at sea.

2 before another noun denoting a text, film, recording, etc. that has been reproduced and used for profit without permission: pirate videos.

3 before another noun denoting an organization that is broadcasting without official authorization: a pirate radio station.

Note, with regard to content, “profit” is a key ingredient in parsing the word as an epithet. There is no 4^th entry for non-profit oriented copying of copyrighted content. 

Searching Wikipedia, for “piracy” results in;

This article is about maritime piracy. For the term referred to as copyright infringement or other uses of "piracy" or "pirate", see pirate (disambiguation).

Copying CD’s and selling them is clearly a crime. Promoting content by telling someone about it and giving it to them to listen to or to view is an age old practice that used to be called word of mouth marketing.

The process of Government is to create laws to keep the population safe.

The question is then what is the definition of safe.

When the majority of the population consider that something is right and just, is it not time for the Government to rethink its policies and how it applies the letter of the law?

In a recent presentation to an industry body we included the following data:

When the mothers of Sydney are downloading old versions of Hi-5 for their children’s education/entertainment, it is time to consider re-thinking the term “The Moral Majority.”

As an exercise in moral determination of music, movie and game downloading – I challenge every politician, every advisor and reader of this document whose children were born between 1980 and 1995 to ask their children candidly if they think it should be legal to download music via the internet for free.

I feel sure without hearing the response that it will unanimously be ”yes”

And, just in case that the desire to please the parent is stronger than the desire to tell the truth, a second question could then be posed. “Out of curiosity – do your friends do it?”

The current action vis AFACTS – vs – IInet, one of Australia’s Internet Pioneers, is because IInet, couldn’t afford the continuing resources of complying with a legislative instrument that provides no recourse for the recovery of costs.

Under Australian Trade Practices, if a customer of the Newspaper advertises a misleading and deceptive advertisement, the Newspaper cannot be sued.

This is fair and reasonable. But the same rule should be applied to all CSP’s/ISP’s.

In Conclusion:  The Scheme should be expanded to include all carriage service providers, and it should include the ability that all CSP’s can bill the issuer of the take-down notice for the time spent in responding to his “safe-harbour”  legislation enabled “demand”.

It is my opinion that the legislation should open the doors to chargeback billing by the Carriage Service Providers and let the courts work out how serious the copyright industry is.

By definition, universities are exempted from being classified as CSP’s. Recognition of this should be made in any amendments to the Bill since universities have always been the basis of a nation’s economic future and, mindful of  Mr. Ross Jones’ (Commissioner, Australian Competition & Consumer Commission) comments;

“or if it fosters successive innovations (incremental or “leap-frog”) by requiring access to the intellectual property of the initial innovator.”

Consideration should be given to extending the umbrella of Safe Harbour to all Australian education facilities, and allowing for the originator of the take-down notice to be billed for a fair and reasonable cost of compliance by the CSP/ISP.