May 13, 2009 • 2 min read

CMU says: The ISPs' arguments aren't strong, but they don't need to be

CMU argues that ISPs' claims that content companies hinder legal services are weak, yet the music business still needs to improve digital licensing and tackle file-sharing.

The ISPs' argument that the content companies are hindering the development of legit content services, and that that is behind the continued growth of illegal file-sharing, becomes harder to justify as the months go by, given the ever increasing number of very compelling, and actually quite affordable download stores and on-demand streaming content services that are now available online. The music business is now offering numerous such services, while the TV industry has also started to really hone its on-demand players. The movie industry is playing catch-up, but has made a start, especially in the US.

True, five years ago the content companies were wasting their time on pointless DRM and litigation instead of experimenting with innovative new online services that could reap long term rewards revenue wise.

True, many of the current success stories in the online content sector are currently funded by start-up capital, and are probably enjoying favourable start-up royalty rates, and may struggle once those rates go up, and they start to actually rely on advertising and subscription income.

True, the amount of major label content not yet digitised is a disgrace, and record companies should be investing all they can into getting every single track they ever released online, because comprehensiveness of catalogue remains the illegal content network's second greatest selling point (after freeness).

It's also true that the collecting societies, and the major labels in particular, probably do ask for too big an upfront payment and per-listen royalty fees from web firms, and negotiating terms can be tedious.

But it's also true that internet service providers and big web players have a long history of under-valuing the cost of good content, often professing ambitions to become the TV networks of the future, but without any commitment to invest the millions, and sometimes billions, that TV (and music and movie) companies invest in making new content, sometimes from unproven talent that may or may not return on investment.

Given that both sides are probably taking the piss in royalty discussions, it is also true to say that elements of the more established radio royalties system - which obliges certain companies to licence their content to other companies at a fair price - probably should be adopted in the digital domain. And the Copyright Tribunal, which steps in when there's a royalty dispute, should be honed to better cope with digital issues.

But the fact is that most mainstream music is now available to buy via legit download stores in a usable format, and most of it is also available to stream for free via ad-funded services. And yet millions of people continue to access content illegally, some ignorantly, some not, from unlicensed sources, utilising file-sharing networks, BitTorrent trackers and other content search facilities along the way. Can that ever be stopped? Digital rights management technology can't and didn't stop it. Direct consumer litigation can't and didn't stop it. Could the three-strike system have any possible impact? If it could, shouldn't it be something we should try? After all, the intellectual property rights on which the content industries rely aren't really rights at all if there's no way to protect them.

Questions, questions. Three-strikes may not be the answer, and it's certainly not a panacea. But the ISPs' arguments sound increasingly weak as this debate develops. Though, to be fair, they probably know that the current government is unlikely to introduce a copyright protection system that could result in unpopular disconnections before the next General Election, and so for the time being they don't really need any better reasons why rampant online copyright infringement really isn't their problem.

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