Warner Music’s Tune of Folly

May 2008

Internet, record labels
How will record labels monetise copyright in the future?

C/Net News Editor’s note: Music attorney Chris Castle is all for finding a way to boost the music industry out of its current nosedive. But bundling music charges into ISP bills is not the way to go, he says.



And from the glorious IP Kat an update in this area:

It looked like Internet service provider and telecom company Virgin Media was going to become the first UK internet company to crack down on subscribers who download music illegally. While record labels are lobbying for a “three strikes” regime that would see those who collect pirated material disconnected from the internet, Virgin has been working with music trade body BPI on a pilot project which could see “dozens of customers” sent warning letters. This trial will go live within months, with the threat (or “option”) of disconnecting customers who ignore the warnings. The trial is also open to film and television studios. Says the Sunday Telegraph (30/03/08):

“This would be the first time a British internet company has publicly moved to share responsibility for curbing piracy. Two years of negotiations between record labels and internet service providers (ISPs) have so far failed to produce an industry-wide agreement.

A spokesman for Virgin Media said: “We have been in discussions with rights holders organisations about how a voluntary scheme could work. We are taking this problem seriously and would favour a sensible voluntary solution.”

The BPI has teams of technicians to trace illegal music downloading to individual accounts. It will hand these account numbers over to Virgin Media, which will match them to names and addresses”. In February the UK government said it would implement legislation by April 2009 unless ISPs came to a voluntary agreement with the music and film industries. According to industry sources, the Department for Business, Enterprise and Regulatory Reform is due to publish a consultation paper next month, outlining legal measures.

Says the IPKat, getting in with a consensual arrangement ahead of any legislative initiative will keep Virgin in the recording industries’ good books, but is unlikely to stave off pressure for legislative intervention unless (i) the pilot works, (ii) it is adopted as a sectoral norm by all the other ISPs and (iii) does not raise suspicions within the European Commission that there exists any hidden market-sensitive agenda that will distort or reduce competition between ISPs or upstream or downstream of them. Merpel adds: Virgin’s own slightly risquee, devil-may-care, young-and-attractive image may the main victim of this initiative — it all depends on how carefully Virgin’s publicity people spin it.


However it seems the BPI is not quite as positive as Virgin saying in press release

“Unfortunately it simply isn’t true that we have agreed a pilot – or any sort of deal – with Virgin Media, though we continue to work towards that. We think that every socially responsible ISP should help their customers avoid the illegal use of their broadband account. It is true that the BPI is talking to major ISPs, including Virgin Media, about how we can work in partnership to create a richer legal music downloading experience that benefits everyone and reduce online music theft”.

And the boss of Talk Talk has taken up the gauntlet thrown down by record labels trade body the BPI and hit out at proposals by the music industry that Internet service providers should take a more active role in preventing illegal file sharing online saying it wasn’t their job to police the Internet. Carphone Warehouse and Talk Talk CEO Charles Dunstone issued a statement criticising the BPI and rejecting their demands for assistance in fighting online copyright infringement. He told reporters: “We are the conduit that gives users access to the Internet, we do not control the Internet nor do we control what our users do on the Internet. I cannot foresee any circumstances in which we would voluntarily disconnect a customer’s account on the basis of a third party alleging a wrong doing. We believe that a fundamental part of our role as an Internet service provider [ISP] is to protect the rights of our users to use the Internet as they choose”. He added that he was of the opinion that the record industry, who were struggling because of their own failures to adapt to the digital age, were simply looking to “foist their problems on someone else”. The BPI quickly responded to Dunstone’s statement, claiming that the Talk Talk boss was seriously misrepresenting, or possibly misinterpreting, their requests saying that it was not unreasonable to involve ISPs in the fight against illegal downloaders saying “We believe that any socially responsible ISP should, as a core part of its business, put in place steps to help their customers avoid engaging in illegal activity, and deter those who knowingly break the law.” Against a background of the UK government telling labels and ISPs to talk, the BPI recently posted their views athttp://www.bpi.co.uk/isp-partnership

The Guardian newspaper reported on this 24/04/06) and makes a guess at what action could be coming, and even speculates at the potential for future law-making and the IPKat reports that copyright holders already have a powerful tool against ISPs that they could use right now, in the form of section 97A of the CDPA. This allows the High Court to grant an injunction against an ISP “where that service provider has actual knowledge of another person using their service to infringe copyright“. To the IPKat’s eyes, this seems to be pretty broad, and gives the BPI potentially pretty strong grounds to go after ISPs, provided they have good evidence that their service is being used for infringement (which everybody knows is widespread). They would presumably only need to show that infringement is taking place, for example by users making available copyright works contrary to s20(2)(b).


Across the Channel, the European Parliament has narrowly voted against a rule which would cut the Internet connections of people who illegally download copyright infringing music and other digital files. The parliament voted 314-297 in favour of an amendment that saw off a requirement that would have protected copyright music files on the Internet; 297 voted against the amendment. The amendment raised the issue of human rights and civil liberties – “avoid adopting measures conflicting with civil liberties and human rights and with the principles of proportionality, effectiveness and dissuasiveness, such as the interruption of internet access”. The International Federation of the Phonographic Industry (IFPI) has said the amendment was badly drafted and a contradiction to the contents of the full report.

And again in Europe a new task force on culture and the creative economy, has produced a report suggesting less VAT and a sharper focus on training and mobility in an own-initiative report for the Committee on the cultural industries’ potential to contribute to the Lisbon growth and jobs strategy. French Socialist MEP Guy Bono noted “Criminalising consumers who are not seeking to make a profit is not the right solution to combat digital piracy…The central message of this report is to find a balance between the possibility to access cultural events and content while ensuring cultural diversity and genuine income to the right holders,”


ISPs and privacy – a European view http://www.p2pnet.net/story/15543



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