High Court to copyright industries: why not lower your prices?

Introducing Ellen Broad:

Hello Troppodillians.  As some of you know, I am the patron of the Australian Digital Alliance which, broadly speaking, represents users of copyright protected products. Its members include Google, Yahoo!, each of the national cultural institutions, libraries, schools, universities and individuals. It is one of the few organised voices trying to make the views and interests of copyright users known to the community and to government.

Ellen Broad is the Alliance’s copyright law and policy adviser and she’s energetically embracing her role. She’s worked on both sides of the copyright fence, with a background in creative writing and publishing before moving to Canberra and working for the National Film & Sound Archive and the National Library of Australia. She is in short, doing a great job. Given that she updates members on various IP issues of note, I invited her to post any items of more general interest on Troppo. And this is her first post.

Nicholas Gruen

“The basic conundrum for the copyright holder”, Justice Hayne commented on day 1 of the iiNet High Court Hearing, “is that…the prevention of unauthorised sharing of copyright works ultimately depends upon the individual choice of the user of the Net.” All that an ISP can do, he observed, to have an effect on the individual user’s choice, is switch off.

The dispute between iiNet and AFACT in the High Court is ultimately over who should bear the burden of policing copyright infringement by users on the internet. It’s expensive and ineffective to take action against individuals implicated in unauthorised file sharing, and so the content industries have worked hard to shift the burden of preventing copyright infringement to ISPs. To succeed in this  particular case, AFACT needs to show that in failing to take any steps at all against identified copyright infringements by users of their services, iiNet effectively authorised the continued uploading of copyright works on their watch.

This would be a significant expansion of the doctrine of authorisation in Australian copyright law, and AFACT have done their best to reframe it in terms of negligence on the part of ISPs  – that ISPs had a “duty of care” or “obligation to prevent” copyright infringement.

Whether the Australian copyright legislation confers a responsibility on ISPs to take positive steps to prevent copyright infringement is a question for the High Court to answer. Still, any discussion of a purported duty of care owed by ISPs begs the question: to what extent should ISPs bear the burden for business choices made by the content industries?

“Is not the real conundrum lying behind all of this,” Justice Crennan asked, “that in an ideal world for the copyright owners, everyone who wants to watch a film will go and pay $30 for the DVD?”

“The truth probably is,” she mused, “that users who want to download films would not mind their service charges increasing by a margin in order to do that lawfully.”

iiNet must be feeling a bit hard done by in this case. iiNet actively encourages users to access legitimate content through their service Freezone, which enables users to download from sites like iTunes and Netflix without it counting towards their monthly quota. Even if users max out their monthly quota by other means, they can still download content from sites in the Freezone at full speed – all at cost to iiNet.

Asked by the High Court if users were ever put in a position where they could not access content lawfully, iiNet accurately pointed out that the availability of legitimate content through Freezone is dependant on decisions made by the movie studio, record company or publisher.

We’ve all heard the demands made of content industries to embrace new business models, relax territorial licensing, ensure same day release dates across jurisdictions and offer more attractive pricing of digital content. We can complain as much as we like, but the availability and affordability of content is ultimately the copyright holder’s decision.

Whether ISPs  like iiNet, who encourage users to access legitimate content that is available, should also be deemed responsible for the unlawful downloading of content that isn’t, is another question altogether.  To my mind, it’s a subversion by the content industries of privileges given to them under copyright law.

In the past decade, a number of measures have been introduced into Australian copyright legislation to protect the interests of the content industries in the internet environment. Without increased protections, (like criminal penalties for the circumvention of digital locks), the content industries argued that they could not make their works available to the public.  The point of stronger protections is to provide businesses and individuals with the confidence and security to undertake activities deemed too risky without them.

Despite succeeding on a number of demands for stronger copyright protections, content industries have continued to resist making content available for all users. Consumers in Australia still wait weeks and sometimes months to access the same content available readily in other jurisdictions, and generally at higher prices. Despite the convenience and affordability of iTunes rental, for example, movie studios still choose only to make new releases available for sale outright. The film Kung Fu Panda 2 will cost a resident in Australia $24.99 to download, while it’s only $14.99 in the US. Knowing you’re paying $10 more than the next person for the same digital file makes other, unauthorised options to obtain the movie more attractive.

Even attempts at alternative content delivery models tend to come with outlandish price tags. Take Universal Pictures’ recent foray into video on demand (VOD), allowing consumers to download new cinema releases from the comfort of their own homes. For a mere $59.99 (!) consumers could have watched Bruce Ratner’s new action comedy “Tower Heist”, featuring Ben Stiller and Eddie Murphy, from the comfort of their own homes only three weeks after its cinematic release.  As New Yorker film critic Anthony Lane puts it:

“Sixty bucks! For a Brett Ratner movie! It’s like one of those cafés in Weimar Germany where a glass of beer cost you four billion marks.”

All iiNet can do in the current environment for digital content is direct users to sites like iTunes and encourage them to take advantage of the Freezone. They can’t control consumer choice as to how much they’re willing to pay for legitimate content, how long they’re willing to wait for it or whether they’ll resign themselves, in the internet environment, to not being able to access content at all.

So if one of iiNet’s customers decides that $24.99 is too much to pay for a movie, let alone $59.99, and chooses instead to download it unlawfully, is it fair that the ultimate responsibility for the unauthorised download lie with iiNet?

AFACT argue that ISPs have the power to prevent copyright infringement and should take reasonable steps to reduce it because they control a user’s access to the internet. By this logic, the question needs to be asked: at what point will content industries take their own reasonable steps to reduce copyright infringement?  After all, they control the cost and lawful access to the content.

14 thoughts on “High Court to copyright industries: why not lower your prices?

  1. I submit that they should get rid of the restrictions, too. Make their content available on the same day everywhere and use basically the same file format as the pirates use, and charge something pretty small and easy to pay.

    We can get it sameday, for free and unrestricted anyway. All this would do is mean they’re directly competing with the pirates, but they’re offering something pirates can’t: Convenience and peace-of-mind. Let me pay for it.

  2. I would carp at two points, one pedantic, the other more relevant.

    The relevant is this:
    “Even if users max out their monthly quota by other means, they can still download content from sites in the Freezone at full speed – all at cost to iiNet.”

    Once the content is “in” the Freezone, a user’s download is at very little incremental cost to iiNet, because what goes into the Freezone is either (a) hosted in iiNet infrastructure (no Internet transit fees), or on peer partners (no transit fees). The biggest non-fixed cost in servicing a customer is the cost of shipping content from the USA; if this is eliminated the content cost is close to zero.

    However, the main point of the article is certainly intact in spite of this error – which I have to overlook, since even experts get into trouble trying to account the costs of providing broadband services.

    The pedantic point: that’s NOT what “begging the question” means! :-)

  3. We can complain as much as we like, but the availability and affordability of content is ultimately the copyright holder’s decision.

    Fine, but whether I should buy the bloody book/movie/whatever is ultimately my decision – and if that copyright holder makes it hard or unreasonably expensive to buy then you must expect what the decision will be.

    I feel a moral obligation to reward people who create works, and I also recognise a practical need to reward them to ensure future creations. But I have no moral obligation to their heirs (copyright duration is absurdly long) or their publishers, and with the change in economics an increasingly tenuous practical one.

    Such anticompetitive features as territorial licencing make me see red – why should I have to give more of my money than an American does to some megacorporation when the cost of production is identical? And if I have to pay more to my ISP for slower service as a result of AFACT’s protectionism, then I really will feel released from a moral obligation.

    The point is that you cannot argue as you have that the copyright holder has no moral obligation to the consumer, and in the next breath seek to enforce a moral claim on that consumer on the holder’s behalf. Yet if we take moral claims out of the picture entirely and look purely at economic incentives then you cannot possibly justify the absurdly restrictive copyright regime we have.

  4. derider
    Where did the ‘moral’ bit come in? Its an economic right, not a moral right and purchase is not compulsory.

    That said , the proposal would involve the law abiding users of the system effectively paying a tax-like levy towards the enforcing of the law by entities that are not the law. And the monitoring of usage necessary to detect law breakers will have privacy implications.

    It is already the case that groups of privately owned devises (iphones islates so on) in say a cafe can create a private local net for file sharing – the proposed scheme is provably already obsolete .

  5. The copyright industry’s greed is out of control. I mean, the lifetime of the author plus 70 years. Oh really? For what?

    Time for a major overhaul and down sizing of that alleged ‘right’.

    (And no, I don’t accept it will have any deleterious impact on the production of new works and ideas. Humans have been creating since way before copyright existed, and will happily keep doing so long after it ceases to exist.)

  6. Skeet
    I personally don’t have a use for copyright , I make and sell unique objects. However it is a valid and essential way of getting paid for some forms of creative work were a copy of the original is as useful as the original , but costs much less effort to make.

    The term of copyright is way too long, when it was extended to life “+’ ,in about 1850 , life expectancies for authors were low and there were no welfare provisions for widows and orphans. This is no longer the case.

  7. John

    Not against copyright in principle, it has a legit place. But it is now way out of proportion. Trademark and patent have a maximum protection of 20 years, so why is copyright so generous? There is no justification for it. A few years back when the lobbyists were pushing for the worldwide extension of copyright, one of the leading proponents was Sonny Bono, who wanted copyright in perpetuity, an extraordinary claim. Instead they ‘only’ got an increase from lifetime of author plus 50 years, to lifetime plus 70 years.

    Like I said, that industry is just out of control.

  8. John

    Not against copyright in principle, it has a legit place. But it is now way out of proportion. Trademark and patent have a maximum protection of 20 years, so why is copyright so generous? There is no justification for it. A few years back when the lobbyists were pushing for the worldwide extension of copyright, one of the leading proponents was Sonny Bono, who wanted copyright in perpetuity, an extraordinary claim. Instead they ‘only’ got an increase from lifetime of author plus 50 years, to lifetime plus 70 years.

    Like I said, that industry is just out of control.

  9. John, you are largely right. I am also right in that I can (and do) exercise my legal and moral right to buy stuff in the US, for example.

    I’m surprised that there any DVDs or games sold in Australia anymore frankly.

    I’m also very unfussed by piracy of games and dvds. I think it is a case of the local bully getting his nose smashed, it still isn’t right but somehow no-one cares (or, ‘turn and turn about’).

  10. Patrick
    Its a free market .

    The web has smashed the old natural monopolies over distribution … many are finding it hard to change , not all that surprising, it has happened very quickly and most of the upper echelons of publishing (and rights groups)are on the wrong side of 60.

  11. PS
    It may be just the bias of a pessimistic middle aged artist
    But I feel that people are already investing less and less effort into many media ‘products’(films TV web sites…so on) Especially if its a more ‘risky unknown’ sort of product I.e product that is not a ‘sequel’ to the power ‘n’. Products that cannot deliver enough quick first audience sales in the first week of release are particularly vulnerable in a free for all .

    But we cannot do a double blind trial.

  12. But I feel that people are already investing less and less effort into many media ‘products’(films TV web sites…so on) Especially if its a more ‘risky unknown’ sort of product I.e product that is not a ‘sequel’ to the power ‘n’. Products that cannot deliver enough quick first audience sales in the first week of release are particularly vulnerable in a free for all.

    Seriously??

    TV has never been better: The Wire, Breaking Bad, the Sopranos, Deadwood, how many am I forgetting??

    Games are probably consistently better than they used to be.

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