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The number of infringement notices sent by the movie industry? None. Not a sausage

I was recently at a BBQ. Three guys - all upstanding, middle class family men - freely discussed how they regularly downloaded pirated movies and TV series (if not sport; BitTorrent being no good for live NZ cricket, rugby or soccer - they key reason they still shelled out to Sky TV each month).

They justified their piracy by saying there was little content available for commercial download.

But with the new(ish) file sharing law, they were nervous. "I'm going to stop as soon as get my first letter," one said.

They might be even more nervous after yesterday, when the Copyright Tribunal released its first decision, which orders a Telecom customer to pay $616.57 for downloading three songs.

They shouldn't be.

This morning I called Tony Eaton, the ex police prosecutor who runs NZFACT (the NZ Federation Against Copyright Theft), which represents the interests of major Hollywood film and TV studios, plus their distributors. Its members include Disney, Paramount, Sony Pictures, Warner Bros, Village Roadshow, Universal Films and 20th Century Fox.

Eaton confirmed his organisation has yet to send a single infringement notice, and has no plans to do so.

By contrsast, the Recording Industry Association of NZ (Rianz), hit the ground running. It sent its first infringement notices on behalf of multinational record labels in November 2011, just days after the so-called "three strikes" law came into effect.

Figures published yesterday (scroll to the end of this story), show the major ISPs have each been sent hundreds of notices from Rianz (which have resulted in 12 cases making it to the Copyright Tribunal).

NBR has yet to find an instance of an infringement notice not sent by the music industry body.

None? Why
Why no notices sent by NZFACT?

"Our position hasn't changed in 15 months," Eaton replied.

And that position is that the movie and TV industry lobby group thinks the $25 infringement notice fee is too high.

In a submission to a government review of the $25 fee as the file sharing law came up to its first anniversary, NZFACT said it wanted it reduced to "pennies" or eliminated altogether. ISPs should bear the costs of an investigation. Eliminating or substantially lowering the fee would "encourage participation of rights owners who are presently unable or unwilling to pay $25 amount." It would also incentivise ISPs to invest in automated systems to deal with infringement, NZ FACT says - a key point, from the movie/TV lobby group's perspective.

Most ISPs all wanted the fee raised to cover what they said were their true costs. Telecom wanted it bumped up to $104, TelstraClear to $32.

Vodafone said $25 was appropriate; Tuanz and InternetNZ agreed. So did the Ministry for Business, Innovation and Employment and Commerce Minister Craig Foss. The fee said at $25.

Yes, yes - but why not just send one?
Now NZFACT faces an open-ended wait until the government reviews the fee again.

I can see why - from its point of view - the $25 mark is a key point of principle for NZFACT, and why it would like it lowered to more-or-less force ISPs to implement automated detection systems.

Why not just send one notice in the meantime, and pursue it through the three-strikes process. 

After all, if NZFACT's submission is correct, and illegal downloads immediately fell from around 110,000 a month to 40,000 - 60,000 a month, but then plateaued at that level, then it would be losing around $500,000 a month in gross revenue (the organisation does send around $1.5 million a year on education campaigns and its own enforcement action).

A single case could serve to make an example of someone, and strike fear into the hearts of illicit movie downloaders. It could also be a platform for discussing relevant issues - including the fact the $25 fee was too high for NZFACT to issue notices en masse.

So: why not send a single notice?

"Our position hasn't changed in 15 months," Eaton replied.

Okay, how about this?
If the $25 fee makes it uneconomic to send notices, then how has the music industry is active under the law?

During last year's review, Rianz submitted it would send 5000 infringement notices a month if the fee was reduced to $2. But nevertheless, the music industry lobby group been very active. From NBR's casual survey of ISPs, Rianz seems to be behind most or all of the 3000 or so notices sent to ISPs between November 2011 and December 2012 (see figures below).

The situation is even more curious given Sony is a member of both NZFACT and Rianz, and Sony Music was one of the labels behind the action that led to the first damages awarded under the new law.

Eaton said he did not represent the music industry, so could not comment on the economics or thinking behind Rianz' strategy. As for NZFACT ... you guessed, it: "Our position hasn't changed in 15 months."

A cynic would say NZFACT possibly does not want a case that would highlight the limited amount of content its members have made available for commercial download in New Zealand. There's a so-so number of new release movies, but iTunes NZ has no TV series - a stark contrast to the abundance on iTunes Australia, iTunes US and similar services. It all looks a little too much like lucrative, old-fashioned regional distribution monopolies are being protected, rather than copyright.

The new file sharing provision of our copyright law requires IPAPs (essentially, ISPs) to publish annual reports on their websites detailing their compliance. The first was due Dec 31 last year.

Tech Liberty has been surveying major ISPs and has so far found:

  • Maxnet - no complaints received and a very minimal report (bottom of page).
  • Orcon - received  234 complaints, sent 198 notices, received 16 challenges.
  • Slingshot (PDF) - received 473 complaints, sent 398 notices, received 14 challenges.
  • Telecom - takes a very minimal approach, just states it has complied. Telecom holds around 50% of the retail market. A briefing paper to cabinet in September last year said it had received 1238 notices.
  • TelstraClear (now owned by Vodafone) - received 818 complaints, issued 540 notices, received 25 challenges.
  • Vodafone - received 538 complaints, issued 350 notices, received 21 challenges.

Between them, Telecom, Vodafone/TestraClear, CallPlus/Slingshot and Orcon hold around 90% of the retail ISP market.

While not in the realm of thousands of notices a month predicted by some, it's still a robust level of activity.


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Comments and questions

I think there is another reason that the recording industry is happy to pay the fee while the film and TV industry isn't - cost recovery.

I'm not sure, but I wouldn't be even remotely surprised if the cost of detection and issuing the notices can be 'charged' to the artists in question. The same isn't true for film and TV.

In fact the whole question of who is losing out if a TV show is downloaded here is difficult to answer - it is a lose of licencing revenue to the distributor? Is it a loss of advertising or subscription revenue for a broadcaster? Is it a loss of retails sales revenue for a DVD distributor?

And, of course, how do they decide value? RIANZ can at least base their claim for loss on the song price on iTunes. NZFACT would stumble even at that first hurdle.

Let's not give the recording industry too much credit. The way the record companies estimate damages in the USA makes piracy cost more than all the money that exists in the world currently.

Who knew piracy was costing more money than exists?

Mr Eaton has a further quandary insofar as when the NZ taxpayer has to stick its hand out to the US govt to compensate Dotcom's demolished business at Hollywood's behest, maybe we should bump any notice fee to a grand a time. Cost recovery shared around after all. Rianz have nothing to gloat over, so they scuppered some poor legally ill advised, bullied, unrepresented and confused soul. I'm impressed ... not.

Our company is a business ISP. We have sent approx five notices, all received from Mediasentry (Peer Media Technologies, Inc) on behalf of studios such as CBS. All notices have been invoiced for at the rate of $25. However, not a single invoice has been paid by Peer Media Technologies, Inc.
Nowhere are we able to find information on what process to take in continuing to send notices on behalf of this organisation when they do not pay the fee prescribed in the law.
What to do?

If they don't pay you to process the notice, you don't have to process the notice. They can send as many as they like but they have to comply with NZ rules and part of that is the payment of the processing fee.

You'll also need to make sure they comply with the rules around the information required in any given notice - times to be quoted in NZ standard time, etc. Many of the earlier notices simply failed to take into account the NZ laws.

Surely if you've spent $100m on the creation of a movie a $25 fee isn't too great a price to pay to protect your investment?

Paul Brislen

You don't send the notice onto the customer until payment of the processing fee occurs.

I also work for an ISP; my understanding (which may be incorrect, as I'm not involved in the process) is that we've received a number of notices from the US, replied with an invoice for delivery of said notice, and then nothing further has been heard.

All the major ISPs recieve tens of thousands of automated notices from overseas companies each month, but if they are not in the correct format with the correct information you are well within your rights to just trash them.


"This law will be great to protect NZ Artists who are affected by the illegal download industry"

Number of NZ artists protected?


Just an American.

Piffle and Poppycock.

Follow up question for you Chris, ask Tony Eaton who funds NZFACT?

Issue is around setting a precedent as other countries (like Australia) are still working out their Copyright infringement regimes.

NZFACT fronts for the MPAA.

The MPAA are in negotations on copyright regimes around the world.

If they issued just one notice under this regime it would set a devestating precedent for those interactions, straining negotiations and possibly causing costs to balloon.

Not changing their position is the only thing NZFACT can do given what is at risk.

$25 should be higher - look at the bogus take down notices being fired at Mega - it is too easy for someone with deep pockets to game this law.

It seems to me that a refusal to issue notices at $25 is a clear admission that each instance of infringing media distribution is worth less than $25 to them. If they were actually protecting direct revenue they'd be issuing notices like nobody's business.