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. Read the original article.



    You have now power here, is what I think every time I read one of these. They really think they going to clamp this, shame pity the money being wasted on these ventures doesn't go into the mouths of the hungry.

    The problem with three strikes is that after two strikes you switch providers. NZ like Australia has many ISP's. The system as it stands only catches small fish, most will use a VPN or throttle upload speeds to avoid detection. The music industry also has to pay the ISP's to investigate each piracy claim.
    The most insidious part of the NZ system is that the onus of proof rests with the individual in that you are assumed guilty until you can prove that you are innocent. Australia does not need such a punitive unconstitutional system.

    The sleeper issue here is how governments are going to regulate the internet under the guise/justification of "controlling internet piracy". The idea of the internet being so regulated and controlled is closer than you would expect.

    Piracy meant "robbery or illegal violence at sea". When did it become an emotive substitute for copyright infringement?

      Probably around the time we started surfing the Web.

      1940, and it's not an emotive substitute.

      The publisher who handled Jonathan Swifts (Gulliver's travel, and in particular some poetry) works, in the early 1800's, did a letter to the Times at one stage where he attacked those people who would pirate things that he'd paid for. Swifts response to it all was that he just hoped the people who copied the poems copied them properly.

      That is the earliest anyone can track down for the term piracy being used to say "They are stealing things that I should be paid for"

      It was over the top emotive rubbish then, and it's even worse now.

    "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."

    This is why it's a bad system. There's not a single good thought in these two sentences. Under no circumstances should such a system ever be implemented here or anywhere else in the world.

    BitTorrent needs to become massively anonymous to save the internet from becoming massively restricted and lame...

    The money makers: 'Broadcasters', 'Record Labels', 'Publishers' (etc); have for years lived-off the fat of content creators (creatives). Very few content creators to date make money (a substantial income - enough to go to the bank and get a loan for a new car) from their creations.
    The internet is changing the game for the money makers and there's tears at bedtime.

      Thats exactly right. They can't expect there current model to last forever. I cant remember who said this: "adapt or die..."

    Sooner or later the creators will figure out their misunderstanding of what the real problem is and stop beating up on the wrong person.

    Convenience and availability is the main reason people download TV shows as an example. You don't have to wait, you don't have to watch ads, you don't have to watch "sneak peaks" of some garbage that can't sell itself. It's not for free either, last i checked you have to pay your ISP bill and you have to "schedule" your downloads.

    Can't see people going to this trouble if there was a good distribution system available from the local TV networks where you could get everything you wanted when you wanted it without being forced into their programming. Charge people for add free, provide it with ads charge free, isn't that how TV works?

    The local distributors can't or don't want to respond to what the market wants, the creators can't change the TV networks so they beat up on the consumer.

    It's can't last for ever, the market comes to the consumer eventually.

      I agree with Vern.
      I would happy pay $100 per Month for "LEGAL" downloads. Most people pay this kind of money for Foxtel, I have a system in place which uses Grabs TV Shows for me. This allows me to watch TV Shows when I want, plus I can get shows which have never aired here. Or Others which are only just starting here (Arrow anyone).

      The Market may allow legal download, the main rest people download is they wish to catch up on shows in there own time. Providers would could in fact make more money from this, as they can claim a percentage of the Downloaded content for themselves. However starts this service could stand to make alot of money (newsnet service would be the best, add Sickbeard and your laughing)

      I think the system your envisioning partly exists. Cable TV!

      Accept its massively overpriced and choked full of adds... In theory i guess i they distributed say Foxtel via the internet, then it might be cheaper then having all the network maintenance stuff to pay for as well?

        Not Cable TV, I have it now and don't watch it. As I'm still restricted to watching a TV Show when they broadcast it. With my Current set up i can watch any TV from Any where in the world, when ever I want. And being here in Australia we get alot of shows well after they have aired overseas.

    I'll believe the industry is poor when hell freezes over.

    When content is adfree and at a reasonable price, perhaps then people will pay.

    What's Foxtel now, $1500 a year and full of ads? Pay more for new movies, limited on demand. I wonder why piracy is everywhere... hmmm.

    Everyone back to the boardroom and we can discuss pay rises again.

    Last edited 19/03/13 3:58 pm

    Offer me the ability to pay $2 via paypal for an HD movie I can download and watch, without silently rootkitting my PC, or requiring I use your windows/mac-only jokeware, or some BS proprietary hardware...accept that I could duplicate and distribute it, but almost certainly won't at that price point because you have invisibly GUID watermarked it... release everything simultaneously worldwide... and stop all this greedy dinosaur stupidity.
    Silly Industry experts.

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