The Stop Online Piracy Act SOPA bill is being considered by legislators in the USA as a means of combating online copyright infringement.  “The bill is so over broad and badly written that it is going to impact all kinds of things that don’t have anything to do with stopping piracy” –  Jimmy Wales, founder, Wikipedia.

In the UK we are constantly under threat by Governments that latch on to the idea that they can solve specific problems by “controlling” the internet. Witness the Digital Economy Act plus a number of subsequent calls for the blocking of access to websites by a range of different stakeholders.

This is not to say that this blog supports the use of the internet for unlawful activities. It is however important to recognise that the phenomenal growth of the internet and, by definition, of the world wide web, has only been possible because of its openness. SOPA seeks to control this openness and will kill it.

Follow the discussion on Twitter using #SOPA

I had intended to switch off the blog tomorrow,  Wednesday 18^th January 2012 in support of the Wikipedia protest¹.

Unfortunately this clashes with the Grand Opening of the new Timico Datacentre in Newark. Timico has invested around 15% of its turnover in this project. For us it is a serious bet too important an event to have any distractions on the day.

I will be posting photos of the day on the blog as soon as the speeches are over and the champagne has stopped flowing. I’m the shy guy hovering in the background guy looking uncomfortable in a suit.

You will also be able to follow the day on Twitter using #TimicoDC – the stream appears in the sidebar of the blog if you prefer to stay here  Oh and by the way, as of tomorrow the datacentre is officially open – you know where to come if you need colo, dedicated servers or VMs. Drop me a line at hosting@trefor.net if you want to know more.

I am also offering personal guided tours to readers of the blog (fwiw ) – drop me a line if you want to come and see the facility including our brand new state of the art Network Operations Centre.

Finally comments on this blog are Twitter enabled – sign in with Twitter and a tweet will be sent with a link to your comment and quoting the #TimicoDC hashtag. If you want to help spread the news please comment using this facility.

¹ Wikipedia is being switched off for the day to illustrate what it would be like if it was blocked.

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Good old BT has stepped into the litigation fray and is suing Google for patent infringement. Yay. It doesn’t seem like yesterday that BT was in court trying to extract cash from US ISP Prodigy over its use of HTTP links.

What a world this is becoming. I recognise that Intellectual Property needs protection but it does seem at times that the feeding frenzy is doing nobody any good other than a global community of lawyers .

You can almost picture the scene, the birds of prey (legal eagles),  hovering at a safe distance, kept aloft by the thermal currents rising from the technology battlefield below.  If anyone wants to draw me a cartoon depicting this I will stick it in this post

It would be interesting to see how much the average price of a smart phone is driven up by the overhead incurred in legal fees spent defending patent litigation.

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I note that further to the court order presented to BT to block file sharing promoter Newsbin2 Sky is now also doing so. I have covered this a fair bit of late here here and here .

It is anticipated that all major consumer ISPs will get the same court order. It would be useful to measure the effectiveness of this activity. It will also be interesting to see whether Newsbin2 clones/mirrors will surface as  was the case with Wikileaks and Pirate Bay although to my knowledge Newsbin2 is only being blocked in the UK (happy to be corrected here). Furthermore it will be useful to see how much growth there is in encrypted traffic out of the UK following these court orders.

Newsbin2 is itself a phoenixed version of Newsbin.

Coincidentally in the House of Commons on Tuesday there was an adjournment debate on the illegal downloading of music.  Tabled by David Norris, Tory MP for Morecambe and Lonsdale, the debate was used to highlight the continued work in tackling online copyright.

Given that Mr Norris was once part of Rick Astley’s backing band on the 1980s the debate was fairly balanced. He called for a combined approach of new content services, enforcement and education. Interestingly, he highlighted the important role of free content and accepted that due process had to be followed.

Other contributors included Martin Horwood, who attacked BPI for being heavy-handed in their approach; David Amess, firmly on the side of rights holders, who welcomed government’s efforts to broker a solution; Mike Weatherly spoke of the economic harm online copyright infringement can cause; and finally, Kerry McCarthy called on Government to look at the economics behind legal services to ensure that artists were being fairly rewarded.

In response for the Government, Ed Vaizey said “we will never eradicate online piracy—such a goal would be foolish—but we can reduce it significantly“.  Whilst praising the economic and social benefits of the internet, he cautioned that it had made infringement too easy. He updated on the status of the DEA (Initial Obligations Code should happen in 2012) and the Hargreaves Review (ichard Hooper has been appointed to take forward the digital copyright exchange).

On search engine ranking and advertising the government is keen to find a voluntary solution:

“We are also working with internet advertisers to try to reduce the amount of advertising that appears on infringing sites. This can often be inadvertent, given the wide spread of internet advertising, but the Internet Advertising Bureau has made significant progress in reducing the amount of advertising that appears on illegal sites, and it continues to work on the issue.”

During his speech Ed Vaizey also demonstrated considerable knowledge of “popular music” quoting Chumbawumba, Michael Jackson ¹, Jarvis Cocker and Adele.  I’ll keep quiet – he knows more than me on this subject.

My thanks to the ISPA secretariat for drawing my attention to the debate which is a good read and can be seen in full here. Sorry about the shameless hashtagging today. Felt a bit rebelious

¹ deceased

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The EU Court of Justice has ruled that it is illegal to block copyright infringing file downloading on the basis of  the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information.

This  concludes a long running (2007) Scarlet-SABAM court case in which  Scarlet, a Belgian ISP was ordered by a national court to implement technical measures to block all P2P traffic that infringes rights held by the Belgian Society of Authors, Composers and Publishers (SABAM). The ruling also supplements a previous legal opinion on the subject by a EU High Court Judge that was not in itself binding in law.

This is a major milestone in the online Intellectual Property/Copyright saga and must surely bring into question the recent Newsbin2 judgement in which BT was required by a court to block access to the website that promotes the unlawful distribution of copyrighted material.

Proponents of internet blocking have already recently been acknowledging that in itself web-filtering is not a silver bullet. This is a softening of their previous hard line though it hasn’t stopped them seeking to implement filtering as “Newsbin2″ shows. With today’s judgement from the European Court of Justice will this finally stop  Rights Holders attempting to do this?

It will be interesting to see what happens next…

PS I am not against the ownership of Intellectual Property but this whole subject needs approaching in a fair and proportionate manner.

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Fibre networking company Geo today withdrew from BDUK’s Broadband Framework and from future NGA procurements. Rather than simply regurgitating Geo’s Press Release on the subject you can read it yourselves here. In summary though Geo is saying that BT has this market stitched up.

I have to say I feel sorry for UK citizens living in “the final third”. You can’t blame BT – they are just looking after the interests of their shareholders. I think you can blame the Government which is taking the easy route. Admittedly foremost in the mind of the Government will be cash, or lack of it and the need to be seen to be spending it wisely.  BT appears to have done a good lobbying¹  job in persuading the establishment that sticking with BT is in everyone best interest.

It will be worth seeing how other players hoping for a slice of this market progress. This seems a good time to revisit the idea of splitting Openreach away from BT and turning it into a mutual, owned by the ISP industry.

That’s all.

¹  This is in stark contrast to some situations such as the Digital Economy Act where BT did a very poor lobbying job and is now paying the price.

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I attended a Forum last week entitled “The industry priorities for the new Communications Bill”. We were given a ten minute talk by representatives from each of the BBC, C4, COBA (Commercial Broadcasters Assoc), Wall to Wall (independent media prod’n), Virgin Media, Google, BSkyB, BT, ITV, UKTV, Mobile Broadband Group, Association for UK Interactive Entertainment (ie video games) and Guardian Media Group. Quite top heavy with content production.

It is interesting to note that in the last Communications Act (2004) the word internet does not appear. This may be because the government of the day wanted to avoid regulation in a nascent market – let it grow unhindered. Whilst the talk is still of light touch and self regulation I can’t help get the feeling that this time round there is a big shadow of government looming over the proceedings.

A few themes came out of the meeting.

The market needs to provide a level playing field that allows competition and encourages investment. This may include addressing issues that allows UK plc to compete in a global market – regulation overseas is often different to that in the UK and can cause difficulties for UK companies trying to operate globally.

Some content providers were calling for increased regulation to protect Intellectual property. There were interesting contrasts here:

David Wheeldon of BSkyB believed that the government should go further than it had in the DEAct to combat IP piracy and seemed to robustly reject some aspects of the Hargreaves Report (“it should be up to Rights Holders not government to decide how to exploit their IP”).

On the other hand Andrew Miller, CEO of the Guardian Media Group recognised that content provider organisations needed to adapt to the changes in modern technology and society to survive. For example in the UK The Guardian is seen as the 3rd or 4th biggest newspaper. However the Guardian websites gets 50 million unique visitors a month and is a recognised and trusted global source of comment and opinion. The Guardian Media Group is clearly trying to move with the times.

If I were the government putting this Bill together I would be focussing on what will help UK plc to grow in the global market and to avoid making it in the words of Google’s Head of UK Public Policy, Sarah Hunter “a dumping ground for regulations as appears to have been the case with the Digital Economy Act”.

There are 2 years of deliberations before this Bill makes it to law. We need to make sure that we get this one right and not leave it to a last minute indecent rush as happened with the DEAct.

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Interesting to note that 8 out of the top ten keywords for visitors to this blog over the last month have been related to either FTTC or silkroad with 4 each.

I can understand the FTTC interest and I was an early writer on this subject so get decent Google rankings. As far as SilkRoad goes either there is not much written out there about the subject or there are huge numbers of people trying to find out more about it – human nature I guess!

As far as Bitcoin goes the underground currency seems to have recovered following the Mt. Gox crash. My original source for info seems to have stopped publishing at the time of the crash – 19th June. However it is now visible elsewhere and is trading at not far off the levels seen at Mt.Gox before the crash (for what it’s worth!).

PS whilst the two subjects seem totally separate FTTC and SilkRoad do obviously inhabit the same online universe. People will be using FTTC to access Bitcoin trading sources. I’m not sure that we will ever see the day when BT accepts payment for FTTC using Bitcoin though.

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MP for Cambridge, Julian Huppert has proposed an EDM entitled “Disconnection Of Users From The Internet” which calls up the report of the Special Rapporteur on Free Expression, Frank de la Rue, to the Human Rights Council of United Nations.

The report, covered last week on this blog comes out against web blocking and expresses  `alarm’ at the Digital Economy Act 2010.

This is an opportunity for you to chase your MP to get him or her to sign up and support this motion.  If you don’t know what his is about search for the DEAct on this blog.

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The Hargreaves Report, entitled Digital Opportunity, A Review of Intellectual Property and Growth, has already been extensively covered in a land rush of people wanting to get an early comment out there. The feedback has generally been good though not from all quarters as this response from the Business Software Alliance shows.

It is difficult to provide objective comment on the report without simply been seen to be replicating parts of it as its 130 pages are well written and provide their own concise summary. Also the document took 5 months to compile and a 30 minute read is not going to result in an analysis that would not be bettered by reading the report itself.

It was however interesting to note that the first point brought out by Prof Hargreaves was something I wrote about yesterday following the Nominet Policy Forum which is the need to base policy on evidence:

“Government should ensure that development of the IP System is driven as far as possible by objective evidence.”

“The frequency of major reviews of IP (four in the last six years) indicates the shortcomings of the UK system. In the 1970s, the Banks Review deplored the lack of evidence to support policy judgments, as did the Gowers Review five years ago. Of the 54 recommendations advanced by Gowers, only 25 have been implemented. On copyright issues, lobbying on behalf of rights owners has been more persuasive to Ministers than economic impact assessments”

He specifically highlights the lack of evidence when addressing the problem of online copyright infringement:

“The uncertain and disputed nature of the prevalence data makes it difficult to reach confident conclusions about the impact of copyright piracy on growth. This assessment is complicated further by a number of other relevant points:

• not all illegal downloads are lost sales – the user may not have paid a higher price for a legal copy absent cheap or free illegal versions;
• money not spent on legal copies is not lost to the economy – it may be spent on other purchases. This is of no comfort to the sector suffering losses, but the effects across the economy will not necessarily be problematic;
• even within the industry affected, purchases prompted by experience from an illegal copy (for example, concert tickets or other merchandise) can offset losses; “

“Most experts we spoke with and the literature we reviewed observed that despite significant efforts, it is difficult, if not impossible, to quantify the net effect of counterfeiting and piracy on the economy as a whole.”

Hargreaves concluded that the government should not “do nothing” re this particular problem but that Ofcom should urgently go about building an evidence mechanism that will be useful in determining the efficacy of the measures proposed in the Digital Economy Act – because it plainly is not there yet.

To a large extent Hargreaves has performed the due diligence that was not done during the passing of the Digital Economy Act. It is a shame it is a year too late.

You can download the report here - as government sponsored studies go it is one of the better reads.

I have cherry picked more of the report as pertains to the Digital Economy Act here if you want to save yourself the trouble:

“There are other questions to which we would like answers: how bad is piracy in the UK compared with other countries? A number of surveys, including the 2010 Music Matters/Synovate/MidemNet Global Survey, suggest that the UK has comparatively low levels: with illegal file-sharing perhaps below 15 per cent, compared with China, where some estimates suggest a figure approaching 70 per cent. What about the trend? Is online copyright infringement getting better or worse? We simply don’t know with any precision.

Another way of looking at economic impact of copyright infringement is to calculate it with regard to the creative industries, rather than to the whole economy, in order to assess the sectoral point of view. A study conducted for Business Action to Stop Counterfeiting and Piracy (BASCAP) puts a value on losses from piracy equivalent to 1.24 per cent of the contribution that the core copyright industries make to the UK economy We have examined this frequently cited study and found a number of methodological limitations, which together indicate likely overstatement of the extent and impact of piracy. This suggests that the 1.24 per cent figure is also at the upper end of probability.

Where else can we look for evidence of the damage done by piracy and the current enforcement regime? Creative industry sales figures provide a clue. In the UK music industry, though some individual businesses have suffered dramatically from the boom in digital downloads (HMV, the music retailer is an example) music industry revenues overall have continued to grow year on year: to £3.9 billion in 2009, up five per cent on 2008, driven by strong figures from live music, growth in international licensing and some stabilisation in the recorded musc market.

In the much bigger publishing market, figures from the Publishers Association, show that book sales have also grown or maintained their net value between 2004 and 2009. The video sector too has managed to maintain unit sales, but struggled somewhat to sustain value in the last two to three years. All of this in spite of recession in Europe and North America.

Copyright supports economic growth through incentivising creation of new works. How does piracy affect this incentive function? Here, US research suggests that while file sharing may have displaced music sales, it has not weakened the incentive to create new works. Other research found no evidence that changes since the launch of the original Napster file sharing site in 1999/2000 have affected the quantity of new recorded music or artists coming to market.

However some of the responses to the Call for Evidence reported some indications of weakened of incentives to invest in creation.

The BPI estimates that British record companies invest around £370m in A&R and marketing and promotion every year – approximately 10% of the global total. A significant decline in sales has a very profound effect on new talent development – in other words, it is reducing record companies’ ability to fund new artists and invest in careers… Across five years for which data is available… the total number of breakthrough acts in the UK was the lowest in 2010, with only 17 British acts reaching the 100,000 sales threshold for the first time. This follows two consecutive years where the total was much higher at 26 each year… The BPI collects data on A&R investment and has found that spend has fallen in each of the past three years for which data is available; from more than £250m in 2006 to £201m in 2009 – a decline of 20% over four years.- BPI submission

“The greatest barrier to growth in the creative industries is copyright infringement on the Internet … deterring investment in new content.” Motion Picture Association submission

“Spain, historically one of the strongest export markets for films, provides a sobering example… whereas producers used to count on Spanish distributors‘ minimum guarantee financing to cover up to 10% of a proposed film budget, advance distribution commitments today are rarely above 3-5% at best. This is the direct reaction to rampant online piracy…” Independent Film & Television Alliance submission

What conclusions can we draw from these wildly differing perspectives? Certainly that many creative businesses are experiencing turbulence, which translates into fears about the further, future impact of copyright infringement on sales, profitability and sources of investment. However, at the level of the whole economy or even at the level of whole creative business sectors, the measured impacts to date are not as stark as is sometimes suggested by the language used to describe them. That said, copyright infringement is a stubborn fact of the digital landscape which might well get worse and which justifies serious government effort in identifying the right mix of measures to address it.

What Impact Might Stronger Enforcement Measures Have?
Although online infringement of copyright and the measures used to combat it are well established phenomena, there is relatively little research evaluating the impact of specific approaches. A recent exception is a 400 page study by the US Social Science Research Council (SSRC)16 which reviews available evidence on what works and what does not in relation to addressing what they term “media piracy” (the term covers the making of both physical and non-physical copies).

The project looked at music, film and software piracy in emerging economies and at international and local enforcement efforts to address it. Despite the report’s focus on piracy in emerging economies (which it sees as a major threat to the interests of copyright owners in the most advanced economies) it also pulls together empirical evidence on enforcement in the developed world, including in the US.

The report argues that investment to date in stronger enforcement has not significantly reduced piracy. For example, it suggests that since the era of the free and illegal file sharing operation of Napster in 1999, when P2P sharing first took off, rights holders have brought legal actions against many P2P sites and have generally succeeded in shutting them down. But this is a short term effect. Looking at the approximately 27,000 Recording Industry of America Association (RIAA) legal cases brought against P2P users between 2003 and 2008, a Pew Internet and American Life Project survey, conducted just after the first RIAA announcement, showed a 50 per cent drop in the percentage of users acknowledging use of P2P services, from 29 per cent to 14 per cent. However, by 2005 this number had reverted to 24 per cent.

Hargreaves does recognise that we should not “do nothing” He recommends the Government should pursue an integrated approach based upon enforcement, education and, crucially, measures to strengthen and grow legitimate markets in copyright and other IP protected fields.

Specifically he wants a body of evidence to be built up so that “when the enforcement regime set out in the DEA becomes operational next year its impact should be carefully monitored and compared with experience in other countries, in order to provide the insight needed to adjust enforcement mechanisms as market conditions evolve.”

This is urgent and Ofcom should not wait until then to establish its benchmarks and begin building data on trends.

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US judge Harold Baker has denied a rights holder access to identity data of  ISP subscribers  whose IP addresses were identified as being associated with “illegal” file sharing. The judge said “there is no way to identify whether the computer used to commit a particular offence belonged to the subscriber, or to somebody else using that internet connection”.

In the UK court ruling against ACS Law the judge stated that the use of IP addresses as evidence was “untested”. This is now not the case (although obviously the test case was not in the UK).  Moreover this totally undermines the basic foundation of the Digital Economy Act and the three strikes system being introduced by the government to try and reduce unlawful copyright infringement.

I guess it may yet go to appeal in the USA but you would think that the body of evidence against the Digital Economy Act’s position is surely growing. Unfortunately the DEAct was fueled by emotion and not evidence.

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