3.35 The Terms of Reference for this Inquiry direct the ALRC to consider whether the Copyright Act needs reform to allow:
transformative, innovative and collaborative use of copyright materials to create and deliver new products and services of public benefit; and
appropriate access, use, interaction and production of copyright material online for social, private or domestic purposes.
The Terms of Reference require the ALRC to consider reform in the context of the ‘real world’ range of consumer and user behaviour in the digital environment. Many stakeholders agree that ‘law reform should be driven by a desire to simplify the law, provide certainty, promote accessibility and maintain the relevance of the law’.
3.36 Maintaining the relevance of copyright law was explicitly recognised as an aim of the 2006 amendments to the Copyright Act. The Attorney-General, the Hon Philip Ruddock, referred in his second reading speech to making the law more ‘sensible and defensible’ by ‘making sure that ordinary consumers are not infringing the law through everyday use of copyright products they have legitimately purchased’.
3.37 Clarifying which activities infringe copyright now, and whether certain activity should continue to be categorised as infringement, is part of this Inquiry. This context is an integral part of reform discussions taking place around the world. In the EU, for example:
Citizens increasingly voice concerns that copyright laws hinder what they view as their freedom to access and use content. Experience shows that many of them would rather pay for legal offers than use illegal content, but they often do not know whether what they download, stream or share is illegal. Businesses increasingly argue that the current copyright model is a barrier to developing the business models they consider necessary for the digital economy. These consumers and businesses agree, for different reasons, that copyright rules have to be made more flexible. 
3.38 In his book Making Laws for Cyberspace, Chris Reed points out:
Attempting to impose rules which clash with strongly established norms, or making law in such detail that the cyberspace user is not able to understand or comply with it, are not the only ways in which laws can be rendered meaningless. Law needs to regulate the reality which is faced by those who are subject to the law.
3.39 The ACCC referred to ‘consumer empowerment over consumption’ where consumers wish to organise use of copyright material around their own preferences in terms of time, location and method of consumption. This could lead to a situation where:
worthy individuals and citizens, many of them children (some maybe even judges), are knowingly, ignorantly or indifferently finding themselves in breach of international and national copyright law. And they intend to keep on doing exactly as before.
3.40 The Australian Communications Consumer Action Network (ACCAN) observed that:
Currently multiple everyday activities without any commercial implications are likely to breach copyright. Indeed, many consumers would be surprised to learn they were breaking the law by privately copying and recording in a way that has been commonplace for decades and in using devices that have been marketed to them vigorously.
3.41 Any suggestion that taking note of consumer attitudes and practices is a consideration in law reform was treated with alarm by other stakeholders:
The ALRC must not allow social norms which condone illegitimate use of copyright material, or would be used to justify unreasonably broad exemptions to copyright infringement provisions, or to dictate amendments to copyright law which will diminish the ability of content creators and owners to appropriately exploit their protected works.
3.42 In this context some stakeholders stated that it is preferable for law to shape consumer behaviour, rather than for consumer behaviour to shape the law. This would include educating consumers about copyright and ‘why the legislation is in place’.
3.43 However, laws that are almost universally ignored are not likely to engender respect for the more serious concerns of copyright owners: ‘[p]eople don’t obey laws they don’t believe in’. CCI submitted that:
The wide gap between law and norms in terms of private use is not desirable for copyright law, It is possible that widespread, pervasive disregard for copyright rules in terms of private use may support a broader legitimacy problem in copyright. It seems clear that the gap between social norms and the law should be reduced where possible.
3.44 The concern that lack of enforcement is a more significant issue than most other issues was expressed by a number of stakeholders. In discussing whether driving social norms through ‘education and more pervasive enforcement procedures’ achieves compliance with copyright law, CCI observed that the economic evidence available indicates that innovative new business models, rather than strengthened regimes of copyright enforcement, will ultimately be of most significance in reducing piracy and copyright infringement. CCI submitted that available evidence supports the view that a broader concept of ‘fair use’ would assist in removing existing inhibitions to ‘the development of new business models’.
3.45 Consistent with the framing principles set out in Chapter 2, the ALRC does not intend in any way to undermine property rights or a fair reward to copyright creators, owners and distributors. However, questions of recognising ways in which individuals use and communicate ideas and experiences, without damaging the economic interests of the copyright owner, are relevant. The Australian Communications and Media Authority (ACMA) has conducted research which shows that Australians are:
pragmatic about the limited capacity to regulate content distributed over the internet and, with the exception of illegal content, expected that much of the content available online would not be regulated. These expectations may be helpful in framing individual rights and responsibilities for copyright material.
3.46 Not all infringing behaviour is regarded as ‘piracy’ or ‘theft’. There is clearly an understanding among stakeholders that some infringing use of copyright material is ‘fair enough’ and other use is more egregious. There is also a distinction between consumers who may (or may not) erroneously believe that certain practices constitute copyright infringement, and those who would blatantly infringe, steal or engage in piracy.
3.47 One way of taking consumer preferences into account is through market responses in providing copyright content as consumers wish to consume it. The ALRC is aware of a number of emerging business models that recognise time and format shifting, among other consumer behaviour. It is suggested that ‘providing convenient and legal means for consumers to access content may also reduce demand for illegal downloading’. Indeed, the digital environment creates new market opportunities and ‘more sophisticated, flexible and efficient means for companies to measure and charge for usage’.
3.48 The ALRC considers that the reform proposals in this Discussion Paper recognise legitimate use of copyright material that does not detract from the rights of owners and will allow markets to operate efficiently.
 Arts Law Centre of Australia, Submission 171. ‘Copyright law needs to be in step with common, established community practice. This is important to promote public perception of copyright law as a constructive, flexible and sensible framework for governing protection and access to content’: Law Institute of Victoria (LIV), Submission 198.
Copyright Amendment Act 2006 (Cth).
Debates, House of Representatives, 19 October 2006, 1 (Philip Ruddock MP, Commonwealth Attorney-General).
 European Commission, Orientation Debate on Content in the Digital Economy (2012), 1.
 C Reed, Making Laws for Cyberspace (2012), 151.
 ACCC, Submission 165.
 M Kirby foreword to B Fitzgerald and B Atkinson (eds), Copyright Future, Copyright Freedom (2011), 4. See also NSW Young Lawyers, Submission 195, citing I Hargreaves, Digital Opportunity: A Review of Intellectual Property and Growth (2011) on this point.
 ACCAN, Submission 194.
 Foxtel, Submission 245. See also Music Council of Australia, Submission 269; News Limited, Submission 224; Australian Copyright Council, Submission 219; ALPSP, Submission 199. Some stakeholders note that consumers do not generally consider ‘infringement of copyright is justified’: AFL, Submission 232; Cricket Australia, Submission 228.
 APRA/AMCOS, Submission 247.
 ALPSP, Submission 199.
 J Litman, Digital Copyright (2001), 112. See also R Xavier, Submission 146; EFA, Submission 258.
 ARC Centre of Excellence for Creative Industries and Innovation, Submission 208
 See eg AFL, Submission 232; Cricket Australia, Submission 228.
 ARC Centre of Excellence for Creative Industries and Innovation, Submission 208 citing H Varian, ‘Copying and Copyright’ (2005) 19 Journal of Economic Perspectives 136 and J Karaganis, Media Piracy in Developing Countries (2011), Social Science Research Council. Hal Leonard Australia suggested that in the context of print music ‘copyright law has had zero impact on the introduction of new and innovative business models’: Hal Leonard Australia Pty Ltd, Submission 202.
 Australian Communications and Media Authority, Digital Australians—Expectations about Media Content in a Converging Media Environment (2011).
 ACMA, Submission 214.
 See a distinction made between individual infringing behaviour and piracy in C Geiger, ‘Counterfeiting and the Music Industry: towards a criminalisation of end users? The French ‘HADOPI’ example’ in C Geiger (ed) Criminal Enforcement of Intellectual Property: A Handbook of Contemporary Research (2012) 386;P Yu, ‘Digital Copyright and Confuzzling Rhetoric’ (2011) 13 Vanderbilt Journal of Entertainment and Technology Law 881, 887.
 For example, consumers who believe they have the ‘right’ to copy material legally acquired; ADA and ALCC, Submission 213.
 Cricket Australia, Submission 228; AFL, Submission 232; Australian Industry Group, Submission 179; ALAA, Submission 129.
 Australian Industry Group, Submission 179. See also Cricket Australia, Submission 228.
 Australian Industry Group, Submission 179. See also AIMIA Digital Policy Group, Submission 261.