Dave:

There are a couple of important themes that need to added to your analysis.

First, it has to be appreciated that the development of file-sharing systems has been as much driven by the need to bypass legislative efforts to curb its use as it has by the desire to improve the technology.

On each occasion, thus far, that a legal basis has been found to effectively shut down a file-sharing network and haul it developers before a court, the response has been to move the technology on a generation and bypass the law. Systems like Kazaa and e-Donkey were devised specifically to circumvent the legal arguments used to take down Napster and when these came under legal attack then along came Bit Torrent to move the technical goalposts yet again.

Experience tells us that even if the government tries to make ISP enforce copyright and boot off users who share copyrighted files, the next generation of file sharing software will introduce counter measures designed to limit the ability of ISPs to carry out that function and in technical terms is very easy to see how this will all pan out – the next iteration will simply make use of strong encryption to raise the overheads facing ISP who do try to monitor the use of file sharing to the point where such monitoring becomes too expensive and resource intensive to be viable.

As a consequence, serious file-sharers, particular those who generate files for release, will barely be affected, if they are even affected at all – the people who’ll be getting the ‘two more strikes you out letters’ won’t be the hardcore file-sharers, it’ll the parents of teenagers who’re daft enough to download the latest episode of The Simpsons from an unencrypted public network because they can’t be arsed to wait for it shown on Sky.

Ultimately there ’s every likelihood that this will end up as political own goal, one which ISPs (and ultimately the government) are seen to be bullying school-kids while the hard core file-sharers are getting off scot free.

The other side of this io stress is that this is not , from the standpoint of corporate copyright owners (the big studios and record labels), really about ‘piracy’ and lost revenues but about these big corporations trying to reassert their former dominant control of the distribution of music, film, etc. as a means of inflating their profits.

What has seriously pissed off the corporates here is not that they’re necessarily losing revenues to piracy – if truth be told the kind of people who download copyrighted films and music with no intention of ever paying for them are the ones who, if you choked off their access to that material, would just not bother with it anyway.

What file sharing has achieved over the last few years is the creation of major structural changes in the market, changes that almost uniformly operate in the favour of the consumer.

I’ve been around long enough to have seen the very first public ‘talk’ of online music distribution, which appeared only in the specialist technology press and actually pre-dates both Napster and the MP3 format. What was being discussed at the time, in a very limited manner, was the very early thoughts of the music industry on the possibility of using the internet as a distribution mechanism and the industries thinking at the time, in terms how they would have liked this to develop, was uniformly along the lines of using the internet to distribute music in an identical manner to that under which it was distributed on CD under the same pricing model that was used for CDs.

Forget being able to pick and choose individual tracks at 99p a throw using iTune, the early plan was that you only be able to download either singles, meaning an A-side,B-side and extras/remixes, or full albums. In terms of the economics of this plan, not only is just over half the retail cost of CD taken up in the costs of distribution and retail margins – very little of which would have to be paid if online distribution was used to cut out the middle-men – but the standard terms on the vast majority of recording contract specified that artists would receive only half royalties on material released in new formats which came in existence/use after they’d signed a deal.

Effectively, what the major labels were hoping for was a ‘more than double your money’ deal for themselves at the expense of both the retailer and of recording artists.

Then along came MP3 and Napster to ‘queer’ their plans by establishing a very different ‘model’ of distribution, one that blew a hole in the industries plans and killed off any prospect of reaming the consumer on the back of wildly inflated margins.

That’s what really burns the industry – not the outright piracy but the fact that file-sharing has created a more discriminating and discerning market by enabling to ‘try before they buy’ – where buying a CD or video would once have been a bit stab in the dark in which consumers were forced to make purchasing decisions on the back of a very limited knowledge of the product – you might have heard the single and liked it, but you had no idea, in advance, of whether it was in anyway indicative of the content of the album or you might have seen the trailer and thought it looked pretty good but still had no idea whether what you’d seen was only the very best bits of an otherwise poor film – now its possible to preview a whole album or a complete film in advance and then decide whether its worth shelling out the cash for a kosher copy.

File-sharing severely curtails the ability of the music/film industry to make money out of hyping crap product because the no longer have sufficient control over distribution to prevent the consumer from finding out that a particular album or film is crap before they pay for it, and its that which the industry is desperately seeking to re-assert.

As I blogged about earlier it seems completely counter-intuitive for the government to step in and do this given how well the industry was getting on with moving with the times and starting to evolve.

There is another blog somewhere that I can’t quite remember the location of but basically says it would be illegal for ISPs to do what the government is asking. Of course that is true now but the point is if the government wish it so they can attempt to change those laws.

We really shouldn’t be surprised that this government talks big about liberty but acts completely contrary to it.

One more point – it actually well worth ‘doing the numbers’ on his issue as the industry has a consistent track record of spreading disinformation to support its arguments.

I well recall the first hoo-haw about filesharing, which targeted Napster, in which the music industry put out the claim that Napster was proven to be hurting their sales because CD sales were 10% down on the previous year and the year’s top-selling album has sold only 7.5 million copies compared to the previous year’s best-seller which weighed in with 12 million units.

What they didn’t mention was that while CD sales did fall by 10%, in the same year the industry cut the amount of product they released by 25%.

And they also neglected to mention that comparison of best sellers was based on comparing sales of Linkin Park’s ‘Hybrid Theory’, a first album from a previously unknown band which emerged from a niche market into the mainstream to sell 7.5 million units, with the previous years sales of a, by then, established mainstream artist – IIRC it was Eminem – in a year in which there were no major releases by top level mainstream artists.

The argument at the time was rather akin to the publishing bemoaning a drop in sales this year, over last year, while neglecting to mention that the biggest reason why sales will fall this year, overall, is the absence of a new Harry Potter novel.

It should be said that one of the things that has screwed over record labels over the last few years is that, a while back, they gambled heavily on a relatively small number of mainstream pop artists – particularly Michael Jackson – but offering them major long-term deals paying very high advances, only them for those artists to fail to deliver on expected sales.

The economics of the industry are well worth investigating as the picture that emerges is one that is very different from the hype.

The Human Rights Act trumps any act which doesn’t specifically amend it, and this would piss all over the Human Rights Act, especially the right to privacy provisions.

I fully predict that the government will enact totally unworkable legislation, and then wring their hands and blame the tricksy lawyers and say “but we TRIED!!” when it turns out to be unworkable. They have a long track record of this.

Unity – thankyou for your comments; I appreciate the extra info, which does put things in a different complexion! There are some areas where I slightly disagree – the try before you buy facility could conceivably be done by something like Last.FM – but the point you rightly make about albums full of filler stands.

I think that what differs here is the onus being put on ISPs. Correct me if I’m wrong (I’m being absolutely serious when I say you probably know better!) but previous legal action has been taken by the recording companies themselves or the trade associations. This shifts the onus onto the ISPs to prevent illegal behaviour. As I said, this puts ISPs in an invidious position, as we saw with Fasthosts, which might just result in them doing all manner of unpleasant things – bandwidth throttling, monitoring and so on – when I would hope that we could learn from the Americans and realise that ISPs need some sort of cover from SLAPPs. A similar principle should apply to blogs – it should be me, the blogger, who takes responsibility, not the host who does not and cannot have practical, day-to-day control or oversight.

xD.

How on earth are the ISPs going to police this without resorting to incredibly crude measures to block torrents which would:

a) make people very angry (admittedly not the biggest concern of the players involved)
b) be potentially illegal (I have no idea on this point but then it cannot be fair or legal to wtihdraw a service that has been used entirely appropriately just because it ‘looks’ like you’re pirating)?

On the other hand, if ISPs are going to try to be ’smart’ about it, will it not require a massive amount of investment in technology AND human resource that will drive broadband prices up just when they have really started to come down and get very competitve? Does this not fly in the face of the Government’s stated intentions of encouraging the penetration of broadband in this country?

Secondably, disregarding the ethics of file-sharing, surely it makes a lot more economic sense for the content producers to be concentrating their efforts and money in tackling the problem in emerging markets? These are the places where they are really losing sales because they are failing to capture a rising generation of relatively monied middle-classes (e.g. Thailand, to which my experience is limited, where the well-to-do and, most importantly, their kids have NO problem, morally and technically, with pirating music, video, everything really). Surely it is these places where they need to spend money to make money?

The way this would work:

1) record company gives intern BitTorrent client; intern downloads lots of songs while recording the IP addresses of the people he downloaded them from

2) record company looks up IP addresses to discover the ISP responsible for them

3) record company sends each ISP a letter with IP addresses and times saying “we’ve caught these naughty people, please track them down and give them a warning”

4) repeat until naughty person is disconnected

I disapprove, and (as hinted at above) it wouldn’t penalise people who know what they’re doing; however, it doesn’t require unworkable amounts of prying or blocking type lunacy.

John B

Even before getting into the realms of IP obfuscation and redirection there are two major problems with this idea.

1) The vast bulk of IP addresses captured by this method will not resolve back of UK-based ISPs.

2) Bit-torrent uses bi-direction streams, i.e. while your are downloading a file it makes those portions of the file you’ve received available for upload, even though you don’t yet have the full file on your PC.

In effect what is being exchanged much of the time is unusable streams of data – its only when the download is complete that you actually have a playable copyrighted work so its actually questionable as to whether one can claim a breach of copyright in those circumstances as what cannot be proven conclusively is that the data obtained from any given user is sufficient to amount to a breach.

There’s also the simple problem of dynamic IPs. Everytime I reset my router, I have a new IP address.

I think there would also be legal problems with John B’s proposal; it is a bit close to entrapment.