[Infowarrior] - Record Labels Turn ISPs Into ‘Copyright Cops’ to Deter Piracy

[Richard Forno]

Record Labels Turn ISPs Into ‘Copyright Cops’ to Deter Piracy
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http://www.bloomberg.com/apps/news?pid=20601109&sid=agXjCIONibps&refer=home#

By Kristen Schweizer and Adam Satariano

Feb. 13 (Bloomberg) -- The world’s biggest record companies sued  
college students, a 12-year-old girl and a dead woman and still failed  
to stamp out music piracy. Now they’re turning to Internet service  
providers.

Universal Music Group, Warner Music Group Corp., EMI Group and Sony  
Music Entertainment have gained leverage through court and government  
actions to pressure ISPs into warning customers not to steal music --  
in some cases with a threat to cut service. Crowded networks are  
helping to soften U.S. and European access providers’ resistance to  
working with record companies.

Irish phone company Eircom, in a settlement with music labels, said  
last month it will unplug customers who ignore illegal-download  
warnings. A law being drafted in France would do the same, while  
Britain may require ISPs to pass information on offenders to rights  
holders. The four largest U.S. labels have struck preliminary accords  
to work more closely with ISPs.

“There has been an international push by the rights holders to pursue  
a similar strategy across the world,” said Danny O’Brien,  
international outreach coordinator for the San Francisco-based  
Electronic Frontier Foundation, which advocates expanded digital  
rights for consumers. “The end goal is the same: co-opt Internet  
service providers as copyright cops.”

Millions spent suing alleged pirates have earned the music industry  
negative press while failing to stop the practice. Today, 95 percent  
of music downloads are illegal, according to London’s International  
Federation of the Phonographic Industry.

Piracy Costs

Piracy in the U.K. cost 180 million pounds ($265 million) last year,  
according to Jupiter Research. U.S. record companies’ 2007 losses were  
$5.3 billion, according to the Institute of Policy Innovation in  
Lewisville, Texas.

That’s fed a decline in the industry. New York-based Warner Music, the  
only publicly traded music company, has fallen 93 percent from a May  
2006 high. Universal Music, the largest record company, is owned by  
Paris-based Vivendi SA, EMI is privately held and Sony Music is owned  
by Japan’s Sony Corp.

“The network service provider is the logical place for us to go to  
protect our business,” Michael Nash, Warner Music’s executive vice  
president for digital, said in an interview.

Some artists have embraced the anarchy of the Web. Radiohead released  
the album “In Rainbows” on the Internet and allowed fans to pay what  
they wanted. Wilco, in a dispute with Warner’s Reprise Records,  
released “Yankee Hotel Foxtrot” for free, and Nine Inch Nails singer  
Trent Reznor, without a label, offered fans options to purchase his 36- 
track instrumental album, from giving some songs away to charging $300  
for a limited edition.

In a three-month test, U.K. Internet providers agreed to send warning  
letters to users caught sharing files illegally. Denmark’s largest  
provider, TDC, blocked access last month to The Pirate Bay, a  
repository of free music, films and books.

Breakthrough

ISPs haven’t volunteered for the role of watchdog, because they could  
lose business, said John Kennedy, chairman of the Phonographic  
Federation.

“One of the biggest breakthroughs recently is that ISPs are concerned  
about usage of their bandwidth,” Kennedy said. “File- sharing is huge  
traffic.”

The Recording Industry Association of America, the Washington-based  
trade group, warned ISPs in May 2008 it may push for laws addressing  
piracy. That added urgency to “years of conversations,” RIAA Chairman  
Mitch Bainwol said in an interview.

AT&T Inc., the largest U.S. telephone company, and the biggest cable  
network, Comcast Corp., are among those cooperating, CNET.com reported  
on Jan. 28, citing unidentified people with knowledge of the matter.

AT&T, based in Dallas, and Philadelphia-based Comcast declined to  
comment. Verizon Communications Inc. isn’t participating, spokesman  
David Fish said.

Music Monitors

Eircom settled the February 2008 lawsuit to avoid the threat that  
record labels would monitor its network.

“We will not install monitoring equipment on our network and no  
customer information will be handed over to record companies,”  
spokesman Paul Bradley said.

Some ISPs argue they shouldn’t be watchdogs.

“Copyright infringement isn’t a criminal offense,” said Adam  
Liversage, spokesman for BT Group Plc, Britain’s biggest provider.

The threat of being disconnected would change the behavior of 72  
percent of illegal downloaders in the U.K., a study by London-based  
Entertainment Media Research showed, while 74 percent would change  
their habits in France, an Ipsos poll found.

Unlimited Downloads

A letter isn’t enough, said Geoff Taylor, head of the British  
Phonographic Industry. “File-sharers are only likely to change their  
behavior if they know that letters are the first step in a process.

The Isle of Man, a self-governed island of 80,000 people in the Irish  
Sea, has proposed charging Internet subscribers for unlimited music  
downloads. Revenue would be distributed to copyright holders.

Warner Music, whose artists include Kid Rock and Metallica, is  
exploring ISP fees in the U.S. The company hired former Geffen Records  
executive Jim Griffin, who’ll initially focus on universities, Nash  
said.

ISPs have a responsibility to act because they’ve allowed illegal  
transfers, said Barry Bergman, president of the U.S. Music Manager’s  
Forum.

“The ISPs have a direct relationship with the pirates,” said Bergman,  
whose group pushed for stronger U.S. copyright laws. “It’s very  
important that they step up to the plate.”

To contact the reporters on this story: Kristen Schweizer in London at kschweizer1 at bloomberg.netAdam 
  Satariano in San Francisco at asatariano1 at bloomberg.net
Last Updated: February 12, 2009 23:40 EST