E-Book Watermarking Gains Traction in Europe October 3, 2013Posted by Bill Rosenblatt in DRM, Europe, Publishing, United States, Watermarking.
The firm Rüdiger Wischenbart Content and Consulting has just released the latest version of Global eBook, its overview of the worldwide ebook market. This sweeping, highly informative report is available for free during the month of October.
The report contains lots of information about piracy and rights worldwide — attitudes, public policy initiatives, and technologies. A few conclusions in particular stand out. First, while growth of e-book reading appears to be slowing down, it has reached a level of 20% of book sales in the U.S. market (and even higher by unit volume). This puts e-books firmly in the mainstream of media consumption.
Accordingly, e-book piracy has become a mainstream concern. Publishers — and their trade associations, such as the Börsenverein des Deutschen Buchhandels in Germany, which is the most active on this issue — had been less involved in the online infringement issue than their counterparts in the music and film industries, but that’s changing now. Several studies have been done that generally show e-book piracy levels rising rapidly, but there’s wide disagreement on its volume. And virtually no data at all is available about the promotional vs. detrimental effects of unauthorized file-sharing on legitimate sales. Part of the problem is that e-book files are much smaller than music MP3s or (especially) digital video or games; therefore e-book files are more likely to be shared through email (which can’t be tracked) and less likely to be available through torrent sites.
The lack of quantitative understanding of infringement and its impact has led different countries to pursue different paths, in terms of both legal actions and the use of antipiracy technologies. Perhaps the most surprising of the latter trend — at least to those of us on this side of the Atlantic — is the rapid ascendancy of watermarking (a/k/a “social DRM”) in some European countries. For example:
- Netherlands: Arbeiderspers/Bruna, the country’s largest book publisher, switched from traditional DRM to watermarking for its entire catalog at the beginning of this year.
- Austria: 65% of the e-books available in the country have watermarks embedded, compared to only 35% with DRM.
- Hungary: Watermarking is now the preferred method of content protection.
- Sweden: Virtually all trade ebooks are DRM-free. The e-book distributor eLib (owned by the Swedish media giant Bonnier), uses watermarking for 80% of its titles.
- Italy: watermarking has grown from 15% to 42% of all e-books, overtaking the 35% that use DRM.
(Note that these are, with all due respect to them, second-tier European countries. I have anecdotal evidence that e-book watermarking is on the rise in the UK, but not much evidence of it in France or Germany. At the same time, the above countries are often test beds for technologies that, if successful, spread to larger markets — whether by design or market forces.)
Meanwhile, there’s still a total absence of data on the effects of both DRM and watermarking on users’ e-book behavior — which is why I have been discussing with the Book Industry Study Group the possibility of doing a study on this.
The prevailing attitude among authors is that DRM should still be used. An interesting data point on this came back in January when Lulu, one of the prominent online self-publishing services, decided to stop offering authors the option of DRM protection (using Adobe Content Server, the de facto standard DRM for ebooks outside of the Amazon and Apple ecosystems) for ebooks sold on the Lulu site. Lulu authors would still be able to distribute their titles through Amazon and other services that use DRM.
Lulu announced this in a blog post which elicited large numbers of comments, largely from authors. My pseudo-scientific tally of the authors’ comments showed that they are in favor of DRM — and unhappy with Lulu’s decision to drop it — by more than a two-to-one margin. Many said that they would drop Lulu and move to its competitor Smashwords, which continues to support DRM as an option. Remember that these are independent authors of mostly “long tail” titles in need of exposure, not bestselling authors or major publishers.
One reason for Lulu’s decision to drop DRM was undoubtedly the operational expense. Smashwords’ CEO, Mark Coker, expressed the attitudes of ebook distributors succintly in a Publishers Weekly article covering Lulu’s move when he said, “What’s relevant is whether the cost of DRM (measured by fees to Adobe, [and for consumers] increased complexity, decreased availability, decreased sharing and word of mouth, decreased customer satisfaction) outweigh the benefits[.]” As we used to say over here, that’s the $64,000 question.
MEGA CEO to speak at Copyright and Technology London 2013 September 26, 2013Posted by Bill Rosenblatt in Asia-Pacific, Europe, Events, UK.
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With less than three weeks to go until our Copyright and Technology London 2013 conference, I’m very pleased to announce some additions and updates to the conference agenda. Most importantly, Vikram Kumar, CEO of Kim Dotcom’s new service MEGA, will appear by videoconference from New Zealand. I’ll be talking with him about copyright issues related to the market for cloud storage services, and he’ll take questions from the audience.
I’m also particularly excited about a few of the sessions at this year’s conference. A very hot topic in the digital copyright field nowadays is websites that attract traffic with offers of free unauthorized copyrighted material and make money from advertising, and what the advertising industry could be doing about this. Our panel on this issue will include Nick Stringer from the Interactive Advertising Bureau (representing the ad industry side) and Geoff Taylor from BPI (representing recorded music). It will also feature Jeremy Penston, an independent consultant in the UK who has been the brains behind piracy studies for PRS, Google, and Spotify; and Nick Swimer from the law firm of Reed Smith to provide the legal context.
And speaking of piracy studies, our panel on cyberlockers will feature David Price of NetNames (formerly Envisional), author of a highly detailed study called Sizing the Piracy Universe just this week.
We will also get a presentation on HADOPI, the French graduated response agency, from Pauline Blassel, HADOPI’s research director — just a week after the agency is to give a progress report in Paris. And speaking of progress reports, our session on the launch of the Global Repertory Database (featuring speakers from Google, STIM, and others) should be quite interesting.
With a spectacular setting at Reed Smith’s offices in London, Copyright and Technology London 2013 should be a great event. Please register today! Our sponsors, MarkMonitor and Civolution, are helping to keep registration fees low.
For those of you on the other side of the world from London, you may also be interested in the International Copyright Technology (ICOTEC) 2013 conference, which will take place at the COEX conference center in Seoul, Korea, on November 4-5. I will be giving one of the keynote addresses.
Netherlands Rejects Ban on Illegal Downloads December 21, 2012Posted by Bill Rosenblatt in Economics, Europe, Law.
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A lengthy political debate in the Netherlands has resulted in rejection of a law banning illegal downloads in that country, as the Dutch parliament finally voted against the law yesterday. This development paves the way for enactment of a private copying levy of up to €5 per device on devices such as PCs, smartphones, tablets, and set-top boxes.
Without a law against downloading infringing content, it will be impossible for the Netherlands to adopt the kind of graduated response scheme that France has implemented and that shows promising early results. Instead, the country will go down a path that has led to unfairness, confusion, and inaccuracies in compensating rights holders according to actual use of content.
Levies on consumer electronics have their origins in German taxes on photocopiers. Under EU copyright law, people have the right to make copies of content for their personal use, but rights holders have the right to be compensated for those copies. Levy schemes were enacted in order to compensate rights holders according to formulas for estimating the value of copies likely to be made by each owner of consumer electronics. These schemes vary widely from one country to the next and have been the source of unnecessary complexity in European content licensing as well as gray-market consumer electronics sales in high-levy countries.
(A notable exception to this is the UK, which has neither levies nor private copying rights, though the latter, at least, is about to change.)
The European Commission has been working for years to eliminate — or if not possible, at least harmonize — the unfathomable levy system in the EU. This step in the Netherlands works against the EU’s efforts. It is, admittedly, politically expedient: given the choice, politicians would rather be seen adding a tax onto consumer electronics purchases (thereby motivating Dutch people to drive the short distance to Luxembourg, where consumer electronics are levy-free) than passing a law that criminalizes online infringement. Media companies also find levies desirable because they create more stable and predictable revenue streams.
Yet this is a retrograde move. Levies are blunt, unfair instruments in an age where fairness and accuracy — at least relatively speaking — are available through technology. Everyone has to pay the same levy regardless of how many copies of files they make or whether those files are infringing or not. It’s not even clear whether the levy is meant to compensate rights holders for infringement or for private copies (of anything). It is especially disappointing to see levies spread in the home country of Europe’s leading authority on levy chaos, Prof. Bernt Hugenholtz of the University of Amsterdam.
The new levies are set to take effect in the new year. Yet this issue may not be resolved after all, as several makers of consumer electronics have filed suit against the Dutch government over the levies.
The Future of HADOPI October 26, 2012Posted by Bill Rosenblatt in Economics, Europe, Law.
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A recently-released report from the French government, Rapport sur les autorités publiques indépendantes (Report on the Independent Public Authorities), includes a section on HADOPI (Haute Autorité pour la diffusion des oeuvres et la protection des droits sur internet), the regulatory body set up to oversee France’s “graduated response” law for issuing warnings and potentially punishments to online copyright infringers.
The headline that most Anglophone writers took away from the 24 pages in this report that were devoted to HADOPI was “HADOPI’s budget to be cut by 23%.” These writers took their cues from anti-HADOPI statements by various French politicians — including new French President Francois Hollande — and mischaracterized a statement about HADOPI by the French culture minister, Aurélie Filippetti.
Unfortunately, none of these people appear to have actually read the government report. (Yes, it’s in French, but there is Google Translate. I used it.) HADOPI is not on the way out; not even close.
Let’s get the most obvious facts out of the way first. Yes, HADOPI’s operating budget is being cut from €10.3 Million to €8 Million, but its headcount is being increased (from 56.2 to 65.2 FTE). Apparently the budget cut reflects the fact that HADOPI’s ramp-up period is coming to an end in 2012, and the focus is being shifted to increasing operational efficiencies and cutting overhead. Moreover, HADOPI’s purview is being expanded to include video games as well as music and video content.
Another bit of factual cherry-picking in the Anglophone press: HADOPI has merely sent out more than a million emails but only prosecuted 14 people and only fined one (less than €200), so therefore it must be a big waste of money.
On the contrary: all of the data in the report, as well as the conclusions it draws, point to an agency whose successes are outnumbering its failures and whose mission is quite properly being optimized.
As it turns out, HADOPI has several objectives, not just issuing warning notices to illegal downloaders. Those other functions are where HADOPI does not look as successful as hoped. One objective is to increase the number of legal content offerings in France. To do this, it has put a labeling system into place, along with a website called PUR (Promotions des Usages Responsables, also an acronym for the French word for “pure”) that lists all of the labeled services. Although the report cites a sharp increase in the number of such services in France over the past year, that increase is surely attributable to market forces and is no different from similar increases in other countries.
Another of HADOPI’s objectives is to regulate the use of DRM technology according to rules derived from the European Union Copyright Directive of 2001. This means both ensuring that DRM systems don’t unduly restrict users’ rights to content and that DRM circumvention schemes (hacks) are prosecuted under the law. So far, HADOPI has only been asked to intervene in two DRM disputes concerning users’ rights, and both reviews are ongoing. This can’t be counted as a great success either.
Yet regarding HADOPI’s core “graduated response” function, the data in the report shows nothing but success so far. Fining people (a maximum of €1500) and suspending their Internet access (up to one month) is not the objective; reducing copyright infringement is. The number of people who have been fined or had their Internet access suspended is simply the wrong metric.
The good news is that HADOPI appears to be succeeding as an education program rather than as a punitive one. In 2011, HADOPI reports that fully 96% of people who received a first warning message did not receive a second one; this number stayed about the same in 2012. In addition, the percentage of people who received second notices but not third ones rose from 90% to 98% from 2011 to 2012. (The legal steps that could lead to fines or suspensions begin after the third notice.) To buttress this data, HADOPI has published results from four independent research reports that note significant decreases in illegal downloading in 2011. No one has substantively debunked any of these findings.
Furthermore, HADOPI does not simply take complaints from copyright owners — which monitor the Internet and submit complaints to HADOPI — at face value. For more than half of the users who received three warnings, HADOPI chose not to send the cases to French authorities for prosecution.
It is also interesting to note that the educational aspect of HADOPI appears to be succeeding despite the fact that it treats violations as misdemeanors, with small punishments, in contrast to the enormous criminal penalties associated with copyright infringement in France (as they are in the U.S.). This points to the conclusion that online education is more effective than large statutory damages in curbing infringement.
Now let’s talk about the economics. Ideally, this type of program would be funded by copyright holders — the ones with rights that they want protected. France is funding HADOPI with taxpayers’ money, although copyright owners do pay for the monitoring services that detect allegedly illegal downloads and report them to HADOPI.
At the same time, €8 Million isn’t a bad deal. France currently has about 50 million overall Internet users and about 25 million fixed broadband subscribers. Let’s assume that the total number of French people who pay for Internet subscriptions is about 30 million. In that case, HADOPI’s annual budget could be apportioned as a levy on Internet subscribers of about €0.27 (US $0.35). This is two orders of magnitude smaller than the £20 (US $32) annual antipiracy levy on ISP subscribers that the Digital Britain Report proposed for the UK in 2009.
Furthermore, HADOPI measured the market impact of unauthorized downloading (not counting P2P) as €51 to 72.5 Million annually. Although this figure can’t be taken as a magnitude of lost sales, the worst case break-even point for HADOPI’s cost-effectiveness would be that 16% of illegal downloads displace sales (one study attempted to measure promotional effects vs. sales displacement and suggested that about two-thirds of illegal downloads displace sales).
It’s still too early to proclaim HADOPI’s success or failure. For example, the more determined infringers could move to ways of obtaining content that evade detection (e.g. HADOPI only deals with downloads and not streaming). But the signs are encouraging enough that the French government has decided to keep the experiment going.
(By the way, if you would like to argue with me about this, I will be in Paris from November 7 through 11, speaking at the SNE conference “Les assizes du livre numeriques” on Thursday November 8.)
Copyright and Technology London 2012 and Hadopi June 21, 2012Posted by Bill Rosenblatt in Europe, Events, Law.
The first European edition of the Copyright and Technology conference took place in London this past Tuesday. The highlight of the event was surely the non-appearance of the keynote speaker: Eric Walter, General Secretary of Hadopi, the French government agency set up in 2010 to administer the French graduated response system. Walter cancelled his appearance at the last minute owing to unspecified “agenda issues.”
The law creating Hadopi was very much an artifact of the administration of French president Nicolas Sarkozy. Eric Walter had cycled through a number of ministerial advisory positions in the Sarkozy government before his appointment at Hadopi. In other words, both Walter and Hadopi itself have been very much tied to the now former president.
Furthermore, new French president Francois Hollande had made a campaign promise to dismantle Hadopi (as had his other opponent, the right-wing candidate Marine Le Pen).
So we all had to wonder: was Walter’s cancellation a sign that Hadopi’s existence is being threatened? (And for that matter, was his original request to speak at the conference a sign that he was concerned about the future of his job?)
Fortunately, some of the well-placed attendees at Copyright and Technology London 2012 had some relevant information to share. It seems that the Hollande administration is backing away from its promise to pull the plug on Hadopi, and instead is taking a more deliberate course of reevaluation.
The ambivalence over Hadopi (and over graduated response in general) in the context of France’s move from center-right to socialist government should lead to a healthy dialog about the purpose and economic effects of such a system. This has the potential to be a more productive conversation than the usual ones we get from lawyers, some of which ultimately boil down to complaints that automated systems like Hadopi disenfranchise them from copyright claims processes. (One such comment came at the conference this week from Gilles Vercken, a leading French intellectual property and technology lawyer who gave a very interesting overview of recent developments in France.)
Who actually benefits from a system that is meant to educate users about copyright responsibilities and prosecute repeat infringers? Is it “Big Media,” as epitomized by Vivendi, the French owner of Universal Music Group which pushed hard for the enactment of the Hadopi law? Or is it individual content creators who are finding it harder and harder to get paid?
Governments like those of Francois Hollande are caught in the middle of this. Sarkozy, a conservative, was seen as favoring big business, in this case Vivendi. Hollande is a socialist and therefore presumably in favor of distributing economic goods to the people — including individual content creators. There isn’t much disagreement that online copyright infringement is a problem that has gotten out of hand. Yet the economic statements used to refute graduated response usually come down to “it only benefits Big Media” (a cop-out without analysis to back it up) and “they don’t pay artists anyway” (a separate and irrelevant issue).
The good news is that Hadopi has been amassing statistics on the system’s use that the Hollande administration can use to make a substantive analysis before deciding what to do next. Some of these statistics were in Walter’s presentation, which I obtained from his office and presented myself at the London conference.
There was some discussion at the conference over the validity of statistics on Hadopi’s effect on online copyright infringement in France. Everyone agreed that these things are difficult to measure with any accuracy. Yet the fact remains that four separate independent research studies showed significant reduction in online infringement in France over the first year of Hadopi, and none of the “usual suspects” (such as the advocacy group La Quadrature du Net) have substantively debunked any of them. Steps against online infringement need to be taken in response to hard data; government’s responsibility includes insuring that the data is the best and most unbiased available, even if it isn’t 100% reliable.
Thanks once again to the Copyright and Technology London 2012 sponsors: MarkMonitor, castLabs, Civolution, PicScout, Simons Muirhead & Burton, and Booxtream. And a huge thank-you to Music Ally, the event producers and as excellent a partner as I could hope for.
Graduated Response in the Post-Sarkozy Era May 24, 2012Posted by Bill Rosenblatt in Europe, Events.
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Now that Nicolas Sarkozy is no longer president of France, there’s some question about the future of the graduated response regime that was implemented during his tenure in the Elysee Palace through the HADOPI regulatory body. Although it wasn’t exactly the leading campaign issue, government response to online copyright infringement did get highly politicized during the Sarkozy years, to the extent that his opponents built campaign platform planks around graduated response repeal.
As an American, I watched this take place across the ocean with a sense of bewilderment — not only that an arcane issue like Internet piracy would be discussed alongside larger issues like unemployment and the European debt crisis, but also at the seeming political inconsistencies and opportunism that characterized other candidates’ responses on both the left and right.
That’s why I am proud to say that we will have a very timely opportunity to hear from Eric Walter, General Secretary of HADOPI, share his thoughts on his organization and its future at the Copyright and Technology London 2012 conference coming up on June 19th. France’s leadership on graduated response ensures that whatever happens with it under new president Francois Hollande will influence the rest of Europe and beyond. Hollande’s socialist party campaigned on a promise to replace the graduated response system with a system of flat taxes and statutory license; yet M. Walter is still at HADOPI.
M. Walter will provide the keynote speech at the conference and will then participate in a panel on “Policing Piracy” that will include speakers from all sides of this controversial issue. There will be no better place to learn about the future of graduated response than at the King’s Fund in central London on June 19.
Please join us — register today!
Hadopi Becomes un Ballon de Football Politique February 21, 2012Posted by Bill Rosenblatt in Europe, Law, Uncategorized.
Those of us who deal with the so-called copyright wars here in the United States can take comfort in one thing: the battles between Big Media and Big Tech have mostly avoided getting sucked into this country’s corrosive, debilitating party politics.
The “balanced copyright” movement has some alignment with leftist politics — not for nothing do many call it “copyleft” — but that’s mostly confined to academics and a handful of not-very-industry-aligned advocacy groups. Now that SOPA and PIPA are dead, the Republicans who run Congress can’t decide whether to continue to align themselves with the politically entrenched media industry and promote further legislation, or to tout individual liberties (and appease the burgeoning Big Tech lobby) and repudiate such legislation. Nobody involved in this year’s presidential election has touched the online copyright issue.
France, however, shows a completely different picture. As a recent New York Times article describes it, the Hadopi progressive response legislation has been in place for two years, warnings have been issued to consumers caught downloading illegally, and the first group of repeat offenders — 165 of them — have been handed over to the justice system for potential fines and suspension of their Internet accounts. The first warnings were sent out in October 2010, about 1-1/3 years ago.
First of all, let’s compare this with the RIAA’s campaign of individual lawsuits in the US: the RIAA appears to have gone after between 18,000 and 35,000 people over a period of five years, or 3600-7000 per year on average. Even if one allows for the fact that France has 19% of the Internet-using population of the US, the number of French Internet users thus affected by Hadopi is only 18-35% of the proportionate number of US Internet users sent nastygrams by the RIAA.
Every study of the Hadopi system that has been done so far has shown the system to be successfully reducing illegal downloading and increasing legitimate consumption of content, particularly music sales on iTunes. (The effect of the law on subscription streaming services like Deezer and Spotify hasn’t been measured.) One would expect the “usual suspects” to debunk the studies, but they haven’t. Instead, there have been statements such as “the effects are undeniable but hard to quantify” (the liberal newspaper Le Monde) and “Apparently some of its intimidation is having a psychological effect” (La Quadrature du Net, a French advocacy group which otherwise argues that Hadopi is a waste of taxpayers’ money to solve a nonexistent problem).
In other words, like it or not, the Hadopi system seems to be working so far.
French President Nicolas Sarkozy, who actively supported the Hadopi law, is up for re-election himself. As a result, online copyright has become in France what we in America call a political football. Socialists have been the most vocal enemies of the Hadopi law in France and have been calling for flat-tax statutory licenses, following the ideas of the Electronic Frontier Foundation, Terry Fisher of Harvard Law School, and other copyleft figures. Yet now that the right-wing candidate Marine Le Pen is now stealing the socialists’ thunder by calling for a statutory license herself, the socialists are backing away from the idea, calling instead for some hazy combination of taxes and crackdowns on sites that enable illegal copying. Nevertheless, both anti-Sarkozy parties have professed Hadopi hatred, as both a populist gesture and a Sarkozy differentiator.
This is just a little bit crazy. Conservatives are supposed to be for individual liberties, low taxes, and small government. So what is a hard-right politician doing embracing a system that amounts to a tax on content, no matter how much each consumer uses, and that distributes money to content creators through opaque, government-entrenched entities like the collecting society SACEM? And what are the socialists, who are supposed to be for big government and equitable distribution of resources, doing opposing it? I’m sure that I, as an American, do not have a proper understanding of French politics. But to me, this smacks of political opportunism and demagoguery of the type that we are deluged with in this US election year on issues such as healthcare, taxes, gay marriage, etc., etc. It’s sad.
I think five years is a reasonable timeframe in which to judge the success of Hadopi, so it’s premature so far. Die-hard infringers will find ways around the system, such as through anonymizers, virtual private networks, and file encryption; we have yet to see how popular such methods become. The fairness and effectiveness of the enforcement and appeal mechanisms have yet to be established. But one hopes that Hadopi’s educational effect coupled with the fear of getting caught will reduce infringement enough to make it worthwhile; in that case, other countries should adopt progressive response with a strong educational component too.
Let Hadopi-haters do their own serious quantitative studies, and let’s compare the results. Let’s make the judgments on facts, and for God’s sake let’s not let political posturing pollute the atmosphere. Then let’s see the Copyright Alert System assess what’s working in Hadopi and adopt it here in the United States, where — at least for the moment — no one need worry about the issue being demagogued to death in election years.
IFPI Claims Success of Progressive Reponse in Curbing Infringement January 30, 2012Posted by Bill Rosenblatt in Europe, Law, New Zealand.
The International Federation for the Phonographic Industry (IFPI), the global umbrella of national music trade associations like the RIAA in the United States, published its annual Digital Music Report last week. Among the most interesting findings is results of studies of the effects of the progressive response law enacted in France in 2009.
The French Creation and Internet Law, which is referred to as “Hadopi” after the agency it created (Haute Autorité pour la Diffusion des Oeuvres et la Protection des droits sur l’Internet), is one of a handful of so-called progressive response regimes, in which ISPs in a given country are obliged to respond to complaints about file-sharing by issuing a series of increasingly stern warnings and then potentially suspending their Internet accounts or fining them.
IFPI worked with Nielsen to measure Hadopi’s effects on file-sharing in France, and found that the effect was to decrease file-sharing by 26% over the year after Hadopi’s October 2010 implementation, although the numbers have been creeping back up a bit since October 2011. IFPI’s report also published the results of a separate academic study by economists at Carnegie-Mellon University and Wellesley College that claims a net increase of 22.5-25% in paid iTunes music downloads from before to after Hadopi was implemented.
The IFPI report also cites studies that show that warning messages have an effect: a May 2011 study found that 50% of people who either received a Hadopi notice or knew someone who got one stopped their illegal file-sharing. The same measurement for South Korea, another country with progressive response in place, was 70%.
Critics of progressive response reply that P2P file-sharing has been decreasing anyway, that file-sharing is “yesterday’s problem” as copyright infringement moves from file-sharing networks to torrent sites, cyberlockers, and other places. It’s hard to argue that the reduction of 26% in French file-sharing means “piracy has decreased by 26%” (and in fact IFPI isn’t arguing that at all). Yet the graph in the IFPI report clearly indicates a drop in file-sharing activity that coincides with the deployment of Hadopi.
It’s worth bearing in mind that the vast majority of Hadopi activity is warnings, which fall under the heading of “education” instead of “technical protection measures,” because the warnings don’t actually prevent users from doing anything that they could do before.
At the same time, there is one sour note in the IFPI report: in a discussion of the graduated response system in New Zealand (which accompanied a decrease in P2P usage of 16%), rights holders complain that “the high cost of notifications to ISPs … could prevent the graduated response system being used over the long term to optimum effect.” In other words, it’s not enough to have a government-mandated requirement for ISPs to act on complaints of file-sharing; copyright owners also don’t want to have to pay to generate the complaints. I don’t know what they call this in New Zealand, but in France, Marie Antoinette might have called it “Qu’ils ont de la brioche et la manger aussi.”*
P.S. The IFPI Digital Music Report also contains the very exciting statistic that the total of paying users of music subscription services has shot up 65% over the past year to an estimated 13 million plus. That number blows by the 10 million that I thought would be reached by next September.
*”Let them have their cake and eat it too.”
European High Court Says No to ISP-Level Copyright Filtering November 28, 2011Posted by Bill Rosenblatt in Europe, Fingerprinting, Law, Music, Services.
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Last Thursday the European Court of Justice (ECJ) ruled that ISPs cannot be held responsible for filtering traffic on their networks in order to catch copyright infringements. This ruling was the final step in the journey of the litigation between the Belgian music rights collecting society SABAM and the ISP Scarlet, but it is a landmark decision for all of Europe.
This ruling overturned the Belgian Court of First Instance, which four years ago required Scarlet to install filtering technology such as acoustic fingerprinting to monitor Internet traffic and block uploads of copyrighted material to the network. Scarlet appealed this decision to the Brussels Court of Appeals, which sought guidance from the ECJ.
The ECJ’s statement affirmed copyright holders’ rights to seek injunctions from ISPs like Scarlet to prevent copyright infringement, but it said that the Belgian court’s injunction requiring ISP-level copyright filtering went too far. It cited Article 3 of European Union Directive 2004/48, which states that “measures, procedures and remedies [for enforcing intellectual property rights] shall be fair and equitable, shall not be unnecessarily complicated or costly and not impose unreasonable time-limits or unwarranted delays.” The ECJ decided that the mechanism defined in the appeals court’s ruling did not meet these criteria.
The real issues here are the requirement that the ISP bear the cost and complexity of running the filtering technology, and the fact that running it would slow down the network for all ISP users. It’s easy to see how this would not meet the requirements in the above EU Directive.
This decision has direct applicability in the European Union, but its implications could reach further afield. For example, the issue currently being argued between Viacom and Google at the appeals court level in the United States boils down to the same thing: whose bears the cost and responsibilty to police copyrights on the Internet?
Of course, EU law doesn’t apply in the United States. In the Viacom/Google litigation, Google is relying on the “notice and takedown” portion of the Digital Millennium Copyright Act (DMCA), a/k/a section 512 of the US copyright law. This says that if a copyright holder (e.g., Viacom) sees one of its works online without its authorization, it can issue a notice to the network service provider to take the work down, and if it does so, it won’t be liable for infringement. Google’s argument is that it follows section 512 assiduously and therefore should not be liable.
Viacom’s task in this litigation is to convince the court that the DMCA doesn’t go far enough. More specifically, its argument is that the legislative intent behind the DMCA is not served well enough by the notice-and-takedown provisions, that network service providers should be required to take more proactive responsibility for policing copyrights on their services instead of requiring copyright owners to play the Whack-a-Mole game of notice and takedown.
The ECJ’s decsion in SABAM v. Scarlet has no precedential weight in Viacom v. Google. But it may help get the Third Circuit Appeals Court to focus on what Jonathan Zittrain of Harvard Law School has called the “gravamen” (which is legalese for “MacGuffin“) in this case: who should be paying for protecting copyrights.
How High Will Spotify’s Paid Subscribership Go? August 10, 2011Posted by Bill Rosenblatt in Business models, Europe, Music, Services, United States.
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More on the direct consumer revenue trend: the first set of results of Spotify’s US launch are in, courtesy of the Wall Street Journal’s All Things D. As of earlier this week, only a month into the service’s US presence, Spotify has signed up 1.4 million subscribers, of which 175,000 are paying. At 12.5%, that’s a bit lower than the 15-16% paid subscribership Spotify is enjoying in Europe, but it doesn’t change Spotify’s overall paid-subscriber rate very much.
All Things D’s Peter Kafka points out that the US conversion rate from free to paid is likely to be lower because US subscribers get more free music during the first six months of the US launch than European free subscribers do. But I would also argue that the conversion rate is lower because Spotify is new in the US, and people are just trying it out — many of whom may already subscribe to a competing service such as Rhapsody.
Given that the addressable market for Spotify increased by 150% when it launched in the US (about 150 million Internet users in the seven European countries in which Spotify operates vs. about 220 million in the US), Spotify’s total subscribership could end up in the multiple tens of millions fairly quickly. But to me, the more important question is: given the steep growth in its percentage of paid subscribers, where does that growth stop?
Here’s a poll: