190. _org_ Australian Content Industry Group (ACIG)
The Australian Content Industry Group submission to the Australian Law Reform Commission’s Copyright and the Digital Economy Issues Paper
The Australian Content Industry Group (ACIG) wishes to thank the Australian Law Reform Commission (ALRC) for the opportunity to comment on the Copyright and the Digital Economy Issues Paper.

The ACIG is made up of the major content industry groups across book publishing, music, interactive games, software and visual arts. These groups have come together to seek a common solution to the issue of online copyright infringement. 

For the past three years the ACIG has been working with the Federal Government, Internet Service Providers (ISPs) and other interested stakeholders to develop a voluntary industry code of conduct to address unauthorised file sharing on peer-to-peer (P2P) networks and other forms of unauthorised use of copyright materials online.

As part of this work we are keenly aware of the copyright issues at the forefront of the debate around the development of new online digital business models, the current high levels of unauthorised file sharing and the paramount rights of creators to determine how their works are distributed and accessed on the Internet.

We are also acutely aware of the need for consumers to have access to genuine content from new and established creators. 

Our members are all actively involved in fostering and nurturing new creators and developing new and innovative ways to make their content available to consumers.

However, all these industries understand the continuing debilitating impact of the unauthorised use of creative content, both here and overseas, through P2P technologies, unauthorised streaming sites and ‘rogue sites’ which offer only unauthorised content. 

It should be the fundamental role of any effective copyright framework to ensure that the creators and owners of copyright material are protected from these sorts of breaches taking place, often as blatant commercial enterprises, across the Internet.

That said, we strongly believe that a solution can be found. However, it will require appropriate copyright protections, a willingness to address the problem by all parties — ISPs and other intermediaries included - a concerted education campaign, support for new business models to allow improved legal access to content and the support of the Federal Government.

Background

This submission will focus on the issues that present themselves in question one of the Issues Paper: ‘how the present copyright law affects the ability of creators to earn a living and participate in the digital economy’.

Australia’s creative industries, as in most other countries, are being profoundly impacted by the growth of online copyright infringement. 

The impact of online copyright infringement is felt across most, if not all, cultural endeavours that are, or should be protected in one way or another, by Australia’s copyright laws:
•	In 2012, 44 per cent of people surveyed in the recent CCi Digital Futures report  said they shared files because it was free and 24.3 per cent of those who file share buy less music (CCi Digital Futures 2012: the Internet in Australia);
•	There has been a 54 per cent increase in pirated e-book demand since August 2009, driven largely by the launch of the iPad in 2010. (http://attributor.com/data/php/research/234-the-rise-in-ebook-piracy.php);
•	Twenty three per cent of new software installed on Australian personal computers in 2011 was unlicensed and illegal.  The commercial value of this illegal software was estimated at US$763 million. (BSA and IDC, 2011 Global Software Piracy Study, March 2012);
•	Globally, it is estimated that 28 per cent – one in four – of internet users access unauthorised services on a monthly basis and around half of these are using P2P networks. (Digital Music Report 2012)

While P2P file sharing continues to substantially interfere with legitimate business, other online threats to the content industries, including illegal streaming and rogue sites, are making it increasingly difficult for artists to earn a living and for legitimate new online distribution to evolve and compete.

The ACIG sees this as the most significant threat to the creative industries in Australia and, if left unchecked, it is likely to have a devastating impact on the ability of musicians, software developers, authors and other artists/creators to evolve and continue to work.

In this context, we believe that as an overarching principle, any changes to Australia’s copyright law must ensure that artists exercise control over their work, to innovate and continue to reinvest in new quality material and for new business models to develop so as to allow this work to be delivered to consumers.

To achieve these objectives the ACIG sees three fundamental elements of Australia’s copyright framework being built on:
•	Protection; 
•	Education; and
•	Content availability.

Protection 

For Australia’s content and creative industries to thrive in the digital world they need assurance that their efforts will be rewarded and that they will have control over the way their work is used and distributed.

The ACIG believes that in order to ensure that Australia’s content production industry remains dynamic and sustainable, creative content needs to be appropriately protected.

According to a recent PricewaterhouseCoopers (PwC) report into the Economic Contribution of the Australian Content Industries to the Local Economy in the year 2010-11, Australian copyright industries employed more than 906,000 –some 8 per cent – of the Australian workforce. 

Compared with other countries including Canada, China and Malaysia, Australia has a higher percentage of the workforce employed in copyright industries in 2010-11, with only the USA, Mexico and the Netherlands reporting a larger copyright related workforce.

The report also found copyright industries comprised $93.2 billion or 6.6 per cent of GDP and generated some $7 billion or 2.9 per cent of Australia’s exports.

Unfortunately, what the report also highlighted was that employment, revenue and exports had all fallen since the last similar report was released in 2007-08. 
PwC attributes these falls to a number of factors including the increased risk of unauthorised copying. 

The impact of online copyright infringement is felt across most, if not all, cultural endeavours in Australia. Without a comprehensive platform for rights protection, it will be difficult for business models to compete and for new models to emerge.

Content industry artists and copyright owners are merely asking that they should be the ones who decide how their work is used and distributed.

With the advent of new digital technologies and the increased use of the Internet as a major distribution platform, the ability of content creators to control the use of their material has fallen away.

It has become increasingly easy for rogue sites to be set up. These sites enable downloading or streaming of unauthorised material and at the same time attract advertisers. 

The advertising revenue goes to the rogue site operators not the owners of the material which they are illegally distributing and the placement of branded advertisements has the potential to mislead consumers. 

Having to compete against ‘free’ unauthorised downloading of content is always going to be a challenge and will discourage entrepreneurs from building new legal digital networks which recognise the value of the material they are distributing and provide the content owners with appropriate remuneration.

While most, if not all creative sectors, have to a greater or lesser extent put in place business models that embrace new technologies these will only ever be successful if they are able to operate in an environment where the inherent value of the work is recognised.

Any new business model designed to deliver music, literature, film and games starts on the back foot when it is forced to compete against sites which only deliver unauthorised content or other rogue distribution networks which make the content available without any recognition of the rights owners or payment to the creator. 

These competing sites do not have the burden of creative expenses, nor do they assume any revenue risk even though they often profit from associated advertising or other commercial inputs on their site.

The ACIG supports full digital access to creative content. However, it strongly believes that unless content creators, and those who support them, can operate in an online environment which both respects creative content and protects their creative endeavours, then the full potential of the online economy will be held back.  This will impact creators, consumers and the wider economy.

Industry Code

Over the past two years, ACIG members have been working with the Commonwealth Attorney-General’s Department, ISPs and consumer groups to put in place a voluntary industry code which would in part address the unauthorised use of creative content online. 

This code would include a ‘graduated response’ scheme which would see a series of notices sent by ISPs to their subscriber accounts which continue to be identified as engaging in accessing unauthorised content.  Importantly the code would not call for any subscriber’s Internet connection to be disconnected. 

While we acknowledge this matter is not entirely within the ALRC’s terms of reference, the issue of unauthorised use online is wider than the use of P2P technology and we ask the ALRC to also consider the damaging impact of unauthorised use in its wider sense.

We ask the ALRC to take submissions from content owners on possible solutions to address these issues during its deliberations.

The ACIG believes the 2011 landmark US copyright alert system, which is broadly in line with the graduated response scheme advocated by the ACIG, should further encourage content providers in Australia and our local ISPs to continue talking.

In June 2011, major US content industries across movie, music and TV businesses announced a cooperative agreement with the country’s largest ISPs to encourage legitimate consumption of content online. 

In essence, the US voluntary agreement involves the ISPs sending their Internet subscribers a series of copyright alerts and warnings, with escalating urgency, where there is evidence that unauthorised file-sharing is occurring on their Internet account.  

The aim of the copyright alert system is to educate Internet users about the damage unauthorised  file sharing does to content owners and seeks to encourage them to access content from authorised  sites. It reinforces the need for creators to be rewarded and remunerated for their hard work in a practical and targeted way.

Importantly, while the US scheme includes mitigation measures for those who repeatedly ignore the copyright alerts, it does not involve terminating Internet accounts.  It also enables subscribers to request independent review to invalidate an alert and avoid any mitigation measures. 

The research on this type of ‘graduated response’ scheme is clear. The  recent audit of the French HADOPI scheme found that 95 per cent of first notice recipients did not require a second notice and 92 per cent of second notice recipients did not require a third notice. 

A recent independent study also found that the HADPOI system had a positive effect on consumer behaviour. (The Effect of Graduated Response Anti-Piracy Laws on Music Sales: Evidence from an Event Study in France,  2012 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1989240)

An ongoing review of the operations of the US copyright alert system by the ALRC would, in the opinion of the ACIG, provide valuable information regarding the protections these sorts of schemes can provide copyright owners.

In the absence of a productive outcome of the ongoing discussions between content owners, the Attorney General’s Department, ISPs and consumer groups, the ACIG urges the ALRC to consider the issue of ongoing unauthorised use online in any further discussion papers and to take submissions on this serious matter.

In particular, we urge the ALRC to consider the evidence of international schemes and how they have shown that effective proportionate schemes can impact consumer behaviour positively and assist content owners to protect their valuable intellectual property without recourse to costly and largely ineffective litigation. 

Education

As part of the voluntary industry code proposed by the ACIG a significant proportion of its operation would involve joint educational programs designed to ensure, as far as possible, consumers are aware of the consequences of accessing unauthorised content and where to go to source authorised content online.

This education component would focus on:
•	How to access legal material and where to go to find authorised content. How to access new business models that are online or being developed to help distribute content and access to sites and other links which support creativity and content creators;
•	The loss of earnings for content owners, particularly artists and content creators who rely on income from their work to support themselves and which gives them the economic freedom to continue to create;
•	The consequences and dangers of breaching copyright laws, the possibility of allowing computer viruses and other malicious programming into their networks.

The recent review of France’s HADOPI graduated response scheme, referred to above, found that the education benefits of receiving notices are more effective than any punitive actions which could follow upon an ISP subscriber continuing to access unauthorised content.

As part of the education elements of the ACIG proposed scheme, ISPs will be encouraged, through the notices, to inform their account holders about the need to respect copyright while at the same time the content industries will work to increase awareness of the sources of genuine content. 

Content availability

In Australia, the creative industries have embraced the new digital business models enabled by broadband and wireless technology – allowing them to provide Australian consumers with great new services including over the web, IPTV and mobile phones.

Most major music, software, books and games publishers and creators now have in place digital distribution networks, delivering latest releases at the time of release or very close to it.

The world’s biggest music and book retailers, iTunes and Amazon, are online digital services and virtually all software and gaming companies are using the internet to distribute their products.

The interactive video game and music industries make more than a third of their revenue from digital sources and, according to PwC’s Outlook Report, by 2016 over half the revenue generated from video game sales will be from digital sources.

Many creative industries and ISPs have partnerships to provide legitimate content to Australian consumers including:
•	BigPond Music, and the MOG streaming service, which is operated in Australia by Telstra;
•	Microsoft delivers a range of creative content to Australian consumers on devices from phones to PCs to home entertainment systems, through online services such as Xbox Music.

It is abundantly clear that creative industries and ISPs will increasingly be working together on more commercial opportunities to offer value-ads to Australian consumers such as video on demand, subscription music offerings and the like. 

While several years ago it might have been reasonable to criticise the content industries for not making material available, this is no longer the case.

As the NBN is rolled out across the country, the demand for creative content will grow and the opportunity and threats to the content industries will increase.

Conclusion

The ACIG encourages the ALRC to acknowledge that a sustainable solution to promote legitimate online consumption of content in Australia, and therefore a positive contribution to Australia’s digital economy, is essential to ensure that local content can be sourced from a dynamic domestic content production industry: an industry that will have an incentive to create original materials, reinvest in the local economy and advance new digital technologies.

Part of this solution includes flexible, strong and robust copyright laws that reflect the current environment, that are dynamic and able to address issues as technologies and business models develop and mature while protecting content creators, owners and consumers alike.

Specifically, we ask the ALRC to recommend the introduction of a code as envisaged in s36 and s101 of the Copyright Act and any necessary amendments to the Copyright Act and ancillary legislation to ensure effective compliance.

If the major issues of online copyright infringement are not comprehensively addressed now in a way that strengthens protections rather than weakens them, then generations of young Australians will grow up believing that content has little or no value.

The consequences of this, from an economic, creative and cultural perspective, are grim. Over time these consequences will have a devastating impact on the people whose livelihoods depend on being financially rewarded for the work they put into generating online content.

I can be contacted, on behalf of the ACIG, on (02) 8569 1177 or VHutley@musicrights.com.au

Best regards

Vanessa Hutley			
	
On behalf of ACIG members: