Digital Britain and Music Piracy: First Take

[Posted by Mark Mulligan]

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Tuesday’s Digital Britain report covers a lot of ground and I’ll leave it to my colleagues to cover much of it, but I’ll focus here on the parts which refer most directly to the music industry.

The interim draft was a master class in nuanced, caveat-drenched civil servant speak that carefully avoided making a definitive call in any one direction.  The final report thankfully takes a more direct approach but many music industry executives will feel that the tone is struck firmly in the favour of the ISPs.

The report starts off with reaffirmation of the interim report’s assertions that the current digital market place is struggling and needs a framework of support to protect and uphold Intellectual Property (IP) in the digital domain, stating:

“The content industry faces a significant challenge. At its heart the current model is not working.”

And goes onto recognize the difficulty of monetizing consumption and the need:

“to turn a strong user base into hard currency.”

It even takes a very strong line on IP violation:

“The Government believes piracy of intellectual property for profit is theft and will be pursued as such through the criminal law.”

Though this statement will find support in areas of the content industries I think it is problematic.  The rights owners own the right to monetize the content, and when they sell that content to consumers they are actually selling them a license to use a copy of that content within predefined terms.  So the product is technically the license and any physical packaging.  When people download tracks illegally they are infringing copyright and terms of original license, and they are impeding the copyright owner’s legal right to exploit those works.  But they’re not stealing. But that is a technical aside. 

Then the report restates a previously bold commitment:

“…addressing this problem [digital piracy]….needs to result in a reduction of the order of 70-80% in the incidence of unlawful file sharing.”

That’s an ambitious target and one that requires equally ambitious measures.  Indeed the report even goes on to talk about a ‘Graduated Response’.  But just as music industry readers started to get their hopes up the ground beneath their feet is progressively chipped away.

The term ‘Graduated Response’ has become the industry language for the ‘Three Strikes and You’re Out’ pioneered in the troubled French ‘Hadopi’ bill, that provides for termination of Internet accounts of repeat file sharers.  As the then Culture Secretary Andy Burnham made clear at a music conference a couple of weeks ago, ‘Graduated Responses’ were off the agenda, because broadband access was considered to be a basic consumer right.  What the Digital Britain report has somewhat disingenuously done is appropriate the term for their own solutions that explicitly do not include terminations.  So the music industry is shorn of its more media-friendly term and left with the much more emotive ‘Three Strikes’ label.  An accident of language in the report?  Not in the slightest.

Andy Burnham also stated his preference for ‘technical solutions’ over the ‘unworkable’ ‘Graduated Response’ approach (that’s the old Graduated Response, not the new one by the way.  Confused? Mission accomplished by Digital Britain me thinks).  What we have in the Digital Britain is the provision of a series of ‘Technical Measures’ as indicated by Mr. Burnham. He even suggested Ofcom – the regulator – would be empowered to compel ISPs to use such measures and that is exactly what is suggested here, with a vast array of specific measures including:

“Blocking (Site, IP,URL), Protocol blocking, Port blocking, Bandwidth capping (capping the speed of a subscriber’s Internet connection and/or capping the volume of data traffic Bandwidth shaping (limiting the speed of a subscriber’s access to selected protocols/services and/or capping the volume of data to selected protocols/services); Content identification and filtering– or a combination of these measures.”

This is stern and comprehensive stuff that should result in a significantly poorer end user file sharing experience and will make downloading larger files such as movies a painful process.  So why, you may ask, would the music companies be so discontent, given that they have at least got these firm measures?  The answer lies in the work flow of the report’s own ‘Graduated Response’.  All of these measures are “backstop powers” that Ofcom, can use only as a last resort:

“Initially for Ofcom to have a duty to secure a significant reduction in unlawful file sharing by imposing two specific obligations: notification of unlawful activity and, for repeat-infringers, a court-based process of identity release and civil action. “

So labels will still have to resort to court action to get details of infringers from ISPs (an affirmation of the status quo which the ISPs had lobbied for) and no proactive responsibility on behalf of the ISPs to assist in the policing.    And even then, when they have been to the courts to get the details they simply get the right to send a letter to the infringers to request them to desist.  Stern stuff eh?

The ‘backstop powers’ only come into effect if

“…[these] main obligations have been reasonably tried but, against expectations, shown not to have worked within a reasonable but also reasonably brisk period.”

Throughout the government-brokered Memorandum of Understanding (MOU) discussions leading up to this report, the ISPs have consistently argued their inability to tackle individual file sharers.  Whilst the music companies believe that ISPs can use their Deep-Packet Inspection (DPI) technology the ISPs argue that this is designed for network level action, not subscriber level.  The Digital Britain ‘Graduated Response’ effectively forestalls testing these issues for the indefinite future.

But, you may ask, didn’t the report previously state it wanted to cut digital piracy by 70- 80%?  Indeed. So how does it intend to square the circle of hugely ambitious targets with ineffective measures?  The answer is by fudging the way the problem will be measured, relying upon measuring within the base of file sharers that are sent repeat letters.  Remember these are simply the ones that the labels have been able to proactively identify and then, after resorting to the courts, got the contact details of and sent letters to.  So a very small subset of a much larger installed base.  In the increasingly familiar masterful use of civil servant speak the remit of measurement is narrowed even further:

“Proportionate Notification Response trigger that we propose, should be focused on measuring the efficacy of the scheme involving a notification procedure, legal action and other measures as set out above in relation to achieving the 70% target for reduction in unlawful sharing. We therefore believe that the trigger should be calculated by (a) taking the number of unique individuals notified and (b) assessing what percentage of those notified have stopped unlawful file sharing, either voluntarily or due to prosecution. If that percentage does not exceed or is not significantly close to 70% the mechanism will be triggered (As an illustration: if the baseline unlawful peer to peer universe identified by Ofcom was 100, and notifications were sent to 50% of that universe with prosecutions against serial repeat offenders, the benchmark would be met if there was a 35% reduction in unlawful file-sharing i.e. 70% of 50%).”

So not only is the 70-80% just talking about testing a small subset, it's defining some very specific and, at best, arguable parameters, using an enforcement methodology (i.e. letter sending) that is at best unproven. In short, the report authors have given themselves a back door exit from their prior commitment to reducing file sharing by 70-80%.  It won’t need to mean reducing the installed base of UK music file sharers by the best part of 6 million, but instead be a semi-hypothetical sample based measure.  This is a shame, and smacks of backing away from the issue.

The interesting post-script to all of this is that Universal Music on Monday announced a ground break unlimited MP3 service with major UK ISP Virgin Media (see my post here for more details).  What makes it so relevant to the debate is that Virgin - in return for the holy grail of digital music licenses – agreed to implement their own voluntary Graduated Response solution.  Though there are significant caveats (e.g. no permanent disconnection, no use of DPI for enforcement) it sends a very clear message from Universal to the UK government: if you won’t give us what we want via legislation we’ll achieve it via commercial solutions.  Which is actually the best bet all round and exactly what Andy Burnham advised when saying

“Sort out the problems yourselves, don’t wait for the heavy hand of legislation”. 

Indeed the experience of the troubled French Hadopi bill illustrates that relying upon the legislative and judicial systems to help you meet your commercial ends can be a risky business.