Clampdown on music piracy heats up

GREEN SHOTS: Figures for 2012 are likely to show a slight upturn in music sales profits – possibly due to the clampdown on piracy.
GREEN SHOTS: Figures for 2012 are likely to show a slight upturn in music sales profits – possibly due to the clampdown on piracy.

The clampdown against internet piracy is about to pick up pace with the Copyright Tribunal set to release its second "Skynet" ruling in the next few days.

Recording Industry Association of New Zealand (Rianz) boss Chris Caddick knows he'll already be a hate figure for the nation's computer geeks after the association secured a $616 award against the first woman caught under the new online piracy law last week.

The second ruling was reached on Tuesday and will be made public after all parties have been informed of the outcome, a Justice Ministry spokesman said.

"It is a carrot and stick situation and yes, we are clearly wielding the stick," says Caddick. "But balanced by that, we've been incredibly proactive in dangling the carrot."

He claims Rianz had a hand in persuading Swedish music streaming service Spotify to launch here last May, hot on the heels of United States rival Rdio.

Spotify's service, free if you tolerate advertisements and up to $13 a month if you don't, offers unlimited access to several million songs any time, anywhere. It is one of 19 different legal streaming and download services available in New Zealand - from the familiar iTunes to internet radio stations such as Pandora. But the difference with Spotify is it appears capable of rejuvenating falling revenues in the music industry.

In Sweden and Norway, where the service first launched, sales have rocketed, bucking a global downturn. In the year to June 2012, music sales rose 30 per cent in Sweden - almost entirely due to Spotify.

Admittedly, some artists have withdrawn from the service or complained about its revenues. Black Keys drummer Patrick Karney said last year, when his band removed its songs, that "I always pay for music".

But Caddick says Rianz' members have reported "really gutsy increases" in royalties every month since it launched in New Zealand. "It is still quite tiny in relation to the potential, but there is virtually no reason why every household couldn't have one of these services."

While CD sales still represent over half of all music sales in New Zealand, their continued decline has hit physical record stores. Closure is planned for Marbeck's flagship Auckland store and last week the British giant HMV went into receivership. 

Spotify and rivals like Rdio could conceivably see the death of the actual music collection you can touch. iTunes, launched in 2006, was initially a slow-burner, says Caddick, and Spotify and its ilk, which offer unlimited plays of a song but not actual ownership of a copy is "another conceptual leap".

The Swedish figures excite Caddick because in the last decade, music sales profits here have halved, following a worldwide pattern. Sure, the ability to buy single tracks, not albums, and the reduction in CD prices has contributed, but that cannot explain it all, says Caddick, who spent 20 years as an executive with the EMI label.

Figures for 2012 will show a "fractional" upturn for the first time in 10 years, he says. "It's a little green shoot of recovery." The key factors, he reckons, are new legal alternatives for acquiring music and a resolute approach to piracy.

Last week's "prosecution" of a woman for sharing three songs was the first of eight in front of the Copyright Tribunal and there are another 20 cases in the pipeline. Caddick says Rianz expects to take 150 pirates to the tribunal a year. It has cost it $250,000 already, including the salary of a fulltime staffer, but he says the fight is necessary for the industry to survive and Rianz is ready to pump in the same amount again this year.

That $250,000 includes a $25 fee paid to internet service providers each time they send a warning letter to offenders. Offenders are sent three such infringement notices, with time to respond, before any cases can be taken to the tribunal.

Of nearly 6000 notices sent, fewer than 100 have been challenged, Caddick says. "So our conclusion is most people know perfectly well they have been doing it."

Although the file sharing law was designed to tackle the illegal sharing of movies as well as music, Rianz movie-industry counterpart, the NZ Federation Against Copyright Theft, has so far decided against making use of the regime because of the $25 price it must pay internet providers to send out infringement notices on its behalf.

Its chief executive, Tony Eaton said the fee was "unworkable . . . to the point where the legislation may ultimately prove to be completely ineffective".

Caddick says the convoluted nature of the process means it's inevitable Rianz is catching recidivists. "And if people insist on doing it, we need to act to draw the attention to the fact it is illegal. I think we have every right to say ‘hey, it is not acceptable to pirate and deliberately deny artists, songwriters and everyone else investing in music the right to earn money from their work'. We won't back away from that."


An ambiguity in the Copyright Tribunal's first "Skynet" judgment means it is not clear whether the penalties it will hand down for illegally sharing music will typically be hundreds of dollars or run into the thousands.

Recording Industry Association (Rianz) chief executive Chris Caddick said the tribunal had struck a good balance issuing a $616.57 award against a Telecom customer for illegal file sharing last month and the sum might set a "broad precedent for future cases".

Rianz unnerved internet advocates last year when it asked the tribunal to make an award of $2669 against a Wellington student whose internet account was allegedly used to download and share five songs. It later asked for an even larger sum, $4675, from another alleged pirate it accused of illegally sharing 11 songs, before dropping both cases on technicalities.

Controversially, Rianz asked the tribunal to order compensation for the possible "knock on" losses its members may have incurred as a result of people downloading songs from the computers of Skynet-accused. Rianz estimates that once someone has downloaded a song using file-sharing software, it will typically be uploaded from their computer by 90 others.

In last month's landmark ruling, the Copyright Tribunal rejected that claim after "careful consideration".

Instead, it awarded Rianz only $6.57 in direct compensation for the illegal sharing of two tracks, one of which was downloaded twice. The majority of the award comprised a $120 "deterrent" for each of the three infringements and the reimbursement of $250 in fees that Rianz had had to pay to bring the case to the tribunal.

Auckland lawyer Rick Shera said it was not clear whether the tribunal intended setting a precedent of a $120 per track, or whether the deterrent was in respect of each of the infringement notices the woman received under the three-strikes regime.

That was a potentially important distinction for pirates accused of illegally sharing large numbers of songs. A Ministry of Justice spokesman said the tribunal would not help interpret the decision.

Either way, by dealing with the knock-on effects of file-sharing by way of a deterrent rather than compensation, the tribunal had given itself huge discretion over the level of awards, Shera said.

"Often, both courts and tribunals are a bit more lenient with people who were first to be caught up in a regime. Once it has been in place for a while I would expect the levels of penalties could increase."

Sunday Star Times