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Smacking Down Online Piracy – Does New Zealand Know Best?

We know online piracy exists; we know governments want to stop it – but what are the options?

Richard Freudenstein, CEO of Australia’s largest pay-TV provider Foxtel, has joined the chorus of entertainment industry bodies to call on the government and internet service providers (ISPs) to clamp down on online piracy.

During his speech to the 2013 ASTRA conference last week, Freudenstein demanded that a new anti-piracy enforcement regime be delivered before the National Broadband Network (NBN) is rolled out “because with super-fast broadband the floodgates could really open”.

Freudenstein’s belief that Foxtel’s business model would be under threat from the NBN is scarily similar to the recent wailing and teeth gnashing of the music industry: the faster internet speeds the NBN will bring will lead to dramatic increases in the illegal downloading of TV shows.

Peak music industry bodies claimed the NBN would be a “disaster” for copyright infringement in a recent report.

So, what’s to be done?

Kiwi solution: the one we nearly had to have

In Australia, talks have been held in recent years between content owners and ISPs, with the aim of agreeing on a “graduated” copyright warning and enforcement system – that is, a system in which users who breach copyright are sent a series of warning notifications.

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Repeat offenders under this type of system risk punishments such as bandwidth reduction and possible temporary account suspension.

Talks were again held by former attorney-general Robert McClelland during 2011/12, but fell apart after the major ISP iiNet withdrew from the talks, citing concerns that the entertainment industry was only attempting to force ISPs to act as the police to enforce a broken system – one which fails to meet the demands of consumers.

Freudenstein named New Zealand in his speech among a number of nations who have a co-operative enforcement systems between ISPs and content owners.

So what does New Zealand’s co-operative system look like? And could it work here in Australia?

Three strikes

New Zealand operates under a three-strikes system. Introduced in 2011, the requirements of the Copyright (Infringing File Sharing) Amendment Act oblige ISPs to issue infringement notices to internet account holders when content owners (rights holders) allege file-sharing activity by the end users of that ISP.

The scheme is structured as “guilty until proven innocent”. A rights holder’s allegation is considered to be sufficient evidence of infringement, unless the account holder can disprove the claim.

No matter who carried out the infringing behaviour, account holders are held solely responsible for infringements. Issues relating to children using their parents accounts, neighbours stealing Wi-Fi, and small businesses providing internet hotspots have been raised by media and in blogs.

The “strikes” are as follows:

1) The first infringement notice issued by an ISP to an account holder is called a detection notice. That notice must spell out the details of alleged infringement, warn the account holder of the consequences of continued infringing behaviour (such as file-sharing), and explain how the notice may be challenged.

The infringement notices must be sent to the account holder by the same method in which bills are delivered (i.e. online or in posted paper form).

2) If the file-sharing activity continues beyond 28 days from the date of the detection notice, the ISP is then obliged to issue a warning notice. The requirements of this notice are similar to the detection notice, and it must also make reference to earlier notice, and warn of the consequences of continued file-sharing.

3) An enforcement notice is then issued where rights holders allege file-sharing activity has continued for a further 28 days. Once the enforcement notice has been issued, the rights holder is provided with a copy of the enforcement notice, but that notice must not contain the name or contact details of the account holder.

The rights holder is then entitled to have the matter heard before the New Zealand Copyright Tribunal.

Silver bullets

Simple answer? New Zealand’s three strikes system has not been the cash cow some may have expected, and not the silver bullet for stopping illegal downloading either.

Iain Tait

Iain Tait

Despite the legislative amendments that brought the scheme to life in 2011, the first case was not brought to the Copyright Tribunal until the end of January 2013. Only five file-sharing cases have been heard by the Copyright Tribunal to date, and all bear similar features:

  • The applicant, the Recording Industry Association of New Zealand (RIANZ), has claimed thousands from each account holder, that amount being the price of purchasing the music legally multiplied by an estimated 90 possible uploads, in addition to deterrent amounts and reimbursement of fees incurred. In one matter, RIANZ claimed a whopping NZ$3,931.55.

  • In each case the Copyright Tribunal awarded the price of purchasing the music legally without any multiplier to account for uploads.

The highest award under this head of damages was NZ$7.17, which was arrived at by using the iTunes rates of NZ$2.39 per song, multiplied by three infringing songs.

This has occurred in three cases: here, here and here.

  • The claims for reimbursement of fees paid to the ISPs were in each case reduced in accordance with legislation to contributions of NZ$50, representing approximately two-thirds of the claimed amount. Reimbursement of the NZ$200 tribunal fee was upheld in each case.

  • The deterrent fee was considered by the tribunal according to the culpability of each account holder. The tribunal varied between awarding nothing at all and NZ$180 per song.

With the largest amount awarded to RIANZ falling short of NZ$800 – after ISP and tribunal fees are removed that amount falls to around NZ$525 – it is easy to see that the recording industry might feel a little short-changed.

Indeed, in the most recent case, involving infringements that were alleged to have occurred while the account holder was serving in Afghanistan, the tribunal awarded just NZ$255.97.

This resulted in a loss to RIANZ of at least NZ$20 once the ISP and tribunal fees are deducted.

Given the time and effort RIANZ must go to in order to enforce its claims – and the limited resources of tribunals – the tiny returns from their enforcement action make it hard to imagine this system being viable in New Zealand, let alone worth setting up in Australia.

Richard Freudenstein, is this really what you want?

Karl Schaffarczyk does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

The Conversation

This article was originally published at The Conversation.
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