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The Anatomy of Internet Service Provider Responsibility: Three-Strikes Copyright Law Comes to New Zealand

Changes in copyright laws are changing the Internet and how people use it around the world. This has become increasingly so since 2008, when the Recording Industry Association of America (RIAA) and International Federation of Phonographic Industries (IFPI ) set on a quest to make “ISP and intermediary responsibility” the law of the land in one country after another.

The idea that ISPs should be legally required to block access to websites that facilitate illegal downloading and file sharing as well as cut-off the Internet connections of those who use such sites is not a new idea but one that has been around since the 1990s, but politically impossible to implement. Now, however, as the IPFI states approvingly in its 2010 Digital Music Report, “the mood of change is clearly reaching governments” (p. 3).

Indeed it has. Since the IPFI and RIAA began their worldwide drive, Britain, France, Sweden, Australia, Ireland, South Korea and Taiwan have all adopted new copyright laws in which “intermediary responsibility” and three strikes rules play a starring role. These issues are currently coming to a head in the U.S., where Congress is considering two bills that would extend intermediary responsibility well beyond ISPs, websites and hosting services to include advertisers, search engines and financial intermediaries (i.e. banks and online payment services): the Protect IP and Stop Online Privacy acts.

The most recent convert to the copyright maximalist faith is New Zealand. Its new Copyright (Infringing File Sharing) Regulations, 2011 kicked into gear in September. It’s core features include a three-strikes law that sets out a sequence of progressively more punishing measures: notices, the possibility of a fine of up to $15,000 for repeat offences, and cutting off the Internet accounts of repeat infringers.

In the past few weeks, the Recording Industry Association of New Zealand (RIANZ) delivered its first batch of notices of infringement to four of the biggest ISPs in the country: Telecom, Vodafone, Orcon and TelstraClear. They’ll be sent to Internet subscribers as soon as the ISPs sort out who has to pay what for the delivery service.

The notices target 75 IP addresses on behalf of Universal Music, but one serious question in this is just who does an IP addresses belong to: individuals, a household, an office, or some other unit of organization? Until this issue is cleared up, whole households risk being removed from the Internet on account of one person in it who has run afoul of laws governing just one aspect of life online.

Yet before Universal Music and the RIANZ entered the scene, New Zealand’s ISPs had already noticed something else: a steep drop in international peer-to-peer Internet traffic. It was like somebody clamped down on the country’s Internet connection to the outside world.

Orcon — one of the major ISPs involved — noted that its international p2p Internet traffic had fallen by ten percent. As the second biggest type of data traffic behind streaming video from websites like YouTube, the decline in p2p Internet traffic has been significant.

This is not the first time this has happened, and some argue that it is a recurring and expected pattern. When Sweden implemented its new Intellectual Property Rights Enforcement Directive (IPRED) in April 2009 Internet traffic plunged thirty percent overnight (see here). The outcome left Swedish copyright lawyer Henrik Pontén delighted:

“The majority of all internet traffic is file sharing, which is why nothing other than the new IPRED law can explain this major drop in traffic . . . . This sends a very strong signal that the legislation works”.

Indeed, from the view of the music and entertainment industries, “virtually all P2P content is illegal”, as the IFPI baldly declares in its most recent Digital Music Report, (p. 14). Therefore, suppressing it is both justifiable and a deliberate aim of the new copyright rules. As New Zealand’s Ministry of Economic Development put it, the new law is all about “stopping illegal peer-to-peer file sharing such as sharing movies via BitTorrent”.

Supporters of this approach argue that the ‘graduated response’ approach to piracy achieves its goals “without unduly impacting individual liberties”. The majority of Internet users stop infringing after receiving notices from their ISPs (see here)

These are deeply problematic claims, however. Among other things, they blithely ignore the fact that p2p serves many other purposes than just facilitating traffic in ill-gotten media content.

To take just a few examples, the band Nine Inch Nails uses p2p to offer free downloads of their music. Akamai uses it to create ‘content distribution networks’ for entities like Netflix, Facebook and Amazon that run parallel to the Internet so as to relieve congestion on the telecoms carriers and ISPs networks. The CBC used it in 2008 to deliver an episode of  Canada’s Next Great Prime Minister via BitTorrent; the BBC still uses it for its iPlayer service.

P2P also underpins ancient pre-web 1.0 Internet functions such as Internet Relay Chat, the nasty bits of 4chan, and the privacy enhancing, authoritarian-fighting Tor protocol that has been used in the “Arab Uprising” and by the hacktivist group, Anonymous, alike. In the olden days, media content regulation was seen as more heavy-handed and less respectful to free speech concerns than structural rules that applied equally to all; today, app-specific regulation that deliberately targets specific Internet uses now stand in a similar place in relation to free speech and other democratic values.

App-specific regulation is destined to be fraught with overkill.  While their supporters claim that the “graduated response” and digital intermediary strategy have only a minimal impact on individual liberties (see here and here), a recent UN Internet & Human Rights minced no words when it argued exactly the opposite point of view:

“. . . [C]utting off users from Internet access, regardless of the justification provided, including on the grounds of violating intellectual property rights law, [is] disproportionate and thus a violation of article 19, paragraph 3, of the International Covenant on Civil and Political Rights” (p. 21).

Article 19, by the way, is the article setting out freedom of opinion and expression rights.

Beyond multiple uses of p2p, and freedom of expression values, others raise an economic argument to the effect that RIAA/IFPI-style copyright laws are broadband Internet development killers. Ericsson’s resident intellectual and policy wonk, Renee Summer, made this point in regards to New Zealand’s plans, warning that “the new rules could slow down consumer demand on the Government’s ultra-fast broadband network”. The point was also made with respect to Sweden back in 2009, when John Karlung of the ISP, Banhof, made the connection this way:

“Half the Internet is gone. If this pattern keeps up, it means the extensive broadband network we’ve built will lose its significance.”

The idea that new copyright laws are broadband Internet killers is appealing yet it may be too early to reach this conclusion because most countries have not carefully tracked the impact. Moreover, the Swedish case muddies the waters because a half-year after the new law was introduced, traffic levels climbed back to their original levels.

Whether this was because people simply returned to their old ways or the steep rise in bandwidth hungry TV and entertainment content (e.g. Netflix, LoveFilm, etc.) being delivered online is still an open question. Yet in all cases, significant changes had occurred nonetheless.

First, ISPs are now in the business of regulating information flows and user behaviours, rather than being neutral points of access to the Internet. Second, people modified their Internet use, adopting a slate of new tools — encryption, anonymity, and other means of circumventing the new rules – that reflected a tilt away from the open Internet towards a more closed system.

Changing people’s behaviour is not too be taken lightly and moving control from the edges of the Internet and putting it deeper into its central nodes by way of ISPs and an expanding array of intermediaries is no more palatable in the 21st century than fifteen years ago when first trotted out in the teeth of fierce resistance. Thus, we need to look beyond the careful stage-managed introduction of new copyright rules to carefully assess their impact on the Internet and the ever-widening range of what we do online.

Today, all eyes should be on New Zealand.

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Will Bill C-51 turn ISPS into Internet Gatekeepers?

My most recent column for the online technology section of Globe &Mail came out Tuesday. It is available here.

The article builds on some recent posts that I have done considering the mounting pressures being put on Internet Service Providers to act more like gatekeepers rather than gateways to the Internet. Four such forces, I suggest, are pushing in this direction:

  • a strong push from the ‘copryight’ industries, especially the music industries, to make ISPs and search engines extensions of the copyright enforcement regime. This has become especially strong since 2008, when the International Federation of Phonographic Industries (IFPI) and the Recording Industry Association of America (RIAA) turned to such measures more forcefully, while backing off somewhat from Digital Rights Management (DRM) (see page 3 of the IFPI’s Digital Music Report, 2008);
  • the near universal adoption of usage based billing and bandwidth caps by Canada’s ‘big six’ ISPs — Bell, Rogers, Shaw, Quebecor, Telus and Cogeco — and now the mid-sized Atlantic region player, Bragg/Eastlink (although with some recent significant developments from Shaw).
  • the fact that all of the major ISPs, except Telus, are vertically integrated and appear to be using usage based billing and bandwidth caps as a kind of ‘television business protection plan’ for their interests in the television industry.
  • and finally, the focus of yesterday’s column in the Globe and Mail, the push from national security and law enforcement agencies to build in increasing monitoring and surveillance capacities into their networks, and to conduct ‘warrantless searches’ if proposed new legislation is passed.
A fuller treatment of the issues covered in Tuesday’s column can be found in my earlier post here, and another that places things in a larger, global context here.

Musicians, Labels, Bankers and Retailers: Who Gets Paid What in the ‘Digital Music Age’?

Here’s something to get you seething, especially if you’re a musician. I came across it the other day in a book I’m reading: William Patry’s (2009) Moral Panics and Copyright Wars (Oxford U. Press).

Patry is a lawyer at Google, but as he admonishes us at the beginning of the book, don’t mistake him as a shill for the company. No, he seems much smarter than that and he gives us a learned treatise on copyright, its history, and the repeated ways in which the copyright industries have tried to whip up the public, nay, the politicians who write the laws, into moral panics.

As he notes, the Copyright Wars have broken out repeatedly for nearly 300 years. In each case, morality and the sanctity of the artist is invoked, yet mostly as a way of legitimating claims that allow the distributors (who are also often the financiers) and not the creators to obtain the lion’s share of the spoils from whatever art form is at stake — books, music, films, etc.

In terms of moral panics, the basic ingredient is to make the industry’s problem a public problem of the highest order, one in which deviants — mods and rockers in the UK that lead to Stanley Cohen’s pathbreaking sociology on ‘moral panics’ in the 1970s that Patry borrows from for his own title– threaten the fundamental foundations of society in one way or another. Now, it is pirates and people who rip and burn music, so the saying goes, that threaten to suck the lifeblood out of cultural creativity.

Patry, perhaps not surprisingly comes down full-square on behalf of the communication and media technology companies, the ones who make things from the VCRs and DVDs of yesteryear to the computers and smart phones of today: the Apples, Nokias, Microsofts, LGs and Google’s of the world. Copyright industries, in a tale well worn, but novelly told by Patry, are the enemies of innovation.

It’s a great read for anyone who wants to see how media technologies over the past four decades have been shackled by the music and movie industry’s penchant for either eliminating or blunting new capabilities that would allow people to say, record a broadcast and watch it at their own time (time shifting) or shift it from one device to another so that they can watch, read or listen to their content on a device or at a place of their choosing (space shifting). Great stuff indeed.

Now here’s the part that really got my goat, from page 118, where Patry breaks down who gets what in terms of the revenue generated from the sale of music. When CDs were king, musicians received about 9 percent of the sales revenues, the big labels (Warner, Sony, Universal, EMI), about 46 percent and the retailers (Walmart) 45 percent.  Key point: those who created the music to begin with were the low folk on the totem pole.

Now, fast forward a few years to the ‘digital music age’, where stuff is downloaded or streamed online from the likes of Apple, Amazon, Spotify and the 460 some odd other legit sites now in operation, according to the Recording Industry Association of America. So, have things got better or worse for musicians?

Worse. When it comes to digital downloads, musicians now get 8 percent (vs. 9), the label’s stake has soared to 68 percent (vs. 46 percent), the digital download sites get 15 percent (although Apple typically gets 30), and those who finance the transaction — credit cards and Paypal — get 9 percent.

It is a bit of a crazy, upside down world when those who facilitate the purchase of music actually get more than those who created the stuff in the first place. This is the intermediaries’ grubby tail wagging the musicians’ creative dog.

It is an index of a world out of whack. It is a world in which it is not pirates or music swapping amongst fans that are the problem but a set up in which the source of it all to begin with rank at the bottom of the heap.

More on how and why all of this ties back to Google, Patry’s place of business after all, and the rest of the ‘consumer electronics’ and ‘network’ industries in the next few days.  There is a tension between the latter and the ‘content industries’, and they are constantly at odds with one another, albeit just as often aligned. As Google introduces its own ‘digital swipe payment’ system, it now gets to stand midstream in the flow of money between media sellers and their audiences, as Visa, Mastercard, Paypal now currently do.

Google, like Apple want to bundle music and other media, with search or devices, and in their own digital lockers, or the more cuddly sounding notion of the cloud. In each, the bundling practice is presented as convenient, effective, technologically sleek and seductive overall. The name bandied about for such arrangements is ‘Total Systems Integration” (TSI).

I’m not sure why this is necessarily a bad thing. However, TSI sounds a lot like the notion of “one system, universal service” that AT&T rode to monopoly status for nearly a century. It sounds administratively technocratic.

Timothy Wu writes nicely about this in the Master Switch. I’ll write more about it, as I said above, in the next day or two. You may find the ‘refresher’ that I offered a few weeks ago on how the telegraph and telephone gave birth to the recorded music in the 1870s.

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