Kiwiblog

InternetNZ CEO Vikram Kumar has a good blog post on how you can make money from zero priced products. He notes:

Accepting some people won’t pay doesn’t mean they can’t make money. Instead, they need to come up with innovative answers to the question, “How do we give people what, when, and how they want our products at a zero price?”

The answers are there but it takes effort, attention, and good ideas. Let’s take an example from another industry, the software industry.

Zero cost software

How do you make money from software without charging anything for it? It’s not simple but several models exist. For example, there’s the upgrade or “freemium” model (charge for extra features or functionality); the services model (charge for allied services, e.g. design or support or tools); the donation or funded model (customer pays what they can or want to, before or after the software is developed); the loss-leader model (gain popularity to sell other software); the advertising model (money made from advertisers); etc.

How can this be applied? Just ask Justin Bieber how he got his break. Or, read this great article in The Guardian about Gorillaz as well as the one in GigaOM where author Neil Gaiman talks about how he is selling more books in countries where his books are pirated.

The traditional business model of Hollywood is based on the 1970s, not the 2010s. It will take time, but eventually they will change.

James Murray, TV3′s online editor, has done a very well researched and comprehensive blog post on the proposed TPP free trade agreement.

I am a huge supporter of free trade and my ideal free trade agreements simply consist of saying “You can sell our residents us anything you want that is legal and safe and we can sell your residents  anything we want that is legal and safe”. Of course then up to individual consumers what they choose to buy and import.

But free trade agreements are rarely that simple. They have a mixture of good and bad stuff in them. Overall the ones we have signed have been massively beneficial for New Zealand such as CER and the China FTA. But that does not mean all future ones will be. Murray points out some areas of concern in the TPP:

Hughes points out that proposed changes to copyright law could see the international copyright term (the author’s life plus 50 years) extended for another twenty years.

This would mean that no new works would enter the public domain in any of the countries signed to the TPP until 2033.

To steal a quote from the analysis linked to above – lengthening copyright terms would “impose severe costs on the American public without providing any public benefit. It would supply a windfall to the heirs and assignees of dead authors and deprive living authors of the ability to build on the cultural legacy of the past”.

What would this mean for publishing in New Zealand?

Books by James K. Baxter, Dame Ngaio Marsh and Ronald Morrieson, all soon to come into the public domain, would stay in copyright.

The US in 1998 increased the term of copyright from 75 years to 95 years, partly at the lobbying by Disney to stop early Mickey Mouse works entering the public domain. This was in my opinion not needed, as Mickey Mouse would still be a trademark owned by Disney and not able to be used by others.

Critics of the TPP point out that the agreement spelled out in the leaked document would lead to a situation where pharmaceutical companies would be able to extend patents on medicines more easily and also delay generic drugs from hitting the market.

Ever picked up a camera or mobile phone from a Parallel Import shop for less than an approved supplier?

Kirsty Johnston at Stuff reports:

The men’s hearing comes as Opposition politicians call for accountability into Dotcom’s status as a resident.

Although the overweight, flamboyant former hacker – who legally changed his name to Dotcom from Shmitz – had convictions from his native Germany, he was able to settle in Auckland after investing $10 million in New Zealand government bonds in 2010.

Those bonds are now part of the assets frozen by authorities investigating the charges against Megaupload – which include racketeering, money laundering and copyright infringements.

NZ First leader Winston Peters called for the prime minister to set up an immediate inquiry into how Dotcom was allowed to stay permanently in Auckland, where he lived in a $30 million mansion belonging to the Chrisco enterprise founders.

“It has been reported that Dotcom is known in Germany as a notorious computer hacker and has been convicted of insider trading, yet immigration authorities let him settle here under the so-called investor-plus category. The prime minister should order an immediate inquiry … to see who was involved in this immigration scandal and ensure that it doesn’t happen again.”

Labour immigration spokeswoman Darien Fenton said that before there was an inquiry, it should be asked whose responsibility it was to allow the discretion to overlook his convictions.

The “investor-plus” category Dotcom’s residency fell into needed to be looked at to ensure others of “dubious” character were not also able to bypass the good character test, she said.

In a statement, the Immigration Service said that “Mr Dotcom made full disclosure of his previous convictions and they were taken into account in the granting of his residence. The Immigration Act allows for discretion to be exercised in certain cases. In this particular case, Immigration NZ weighed the character issue and any associated risk to New Zealand against potential benefits to New Zealand”.

Calling for an inquiry into why he had been granted residency before he has even had a trial, is a rather bad case of the horse before the cart.

Certainly based on what has been reported to date, I have a pretty negative impression of Mr Dotcom. And in fact in several media interviews have said that at this stage the copyright holders have acted appropriately in complaining to the authorities, and the authorities laying charges if they have a good faith belief laws have been broken.

This is very different to demanding that new laws be instituted so that people may lose their Internet access on the basis of accusation, or in the case of SOPA that ISPs be forced to block websites based on accusations. These damage the Internet terribly.

But having said that my initial impression of Dotcom is negative, he has yet to have his extradition hearing let alone have his day in court. Only if he is found guilty of breaking the law, would you then expect there to be (quite legitimate) questions about the process and decision making around his residency approval.

I’m in an area with very limited phone and Internet access, so I heard about the arrests yesterday, but couldn’t blog on them.

I’m reserving judgement on the issue, until details of the alleged offences are known more fully. I would make the point that to my mind there has always been a significant difference between someone who accesses a file-sharing site or torrent in order to (for example) see the latest episode of a TV show not available in NZ, and those who are commercially making money from infringing copyright, or assisting others to infringe.

Whether or not Dotcom and others have broken the law, will of course be a matter for the courts. It is worth noting that the NZ courts will not extradite unless the charges are for something that is also an offence under NZ law. So if for example there was an arrest warrant out for you because you took part in (adult consensual) oral sex in Utah, they would not extradite as thankfully oral sex is not illegal in NZ. Not sure if it still is illegal in Utah, to be honest – just using this as an example.

I’ve been saying for sometime that copyright issues will be a massive battle involving the Internet for the next decade or more.

In this case the US are not necessairly on the wrong side of the argument. I’m not saying their actions are justified either – it really depends on the details of the case. But few would argue that making money out of infringing other people’s copyright is a good thing (if that is what they have done). There is an argument they were just providing a service that “pirates” used. Again, will depend on what is revealed in court.

In other copyright news (and no I don’t think the timing is deliberately related), it looks like the SOPA and PIPA bills in the US Congress are dead. Senators have been dropping their co-sponsorship of PIPA as millions of Americans signed an online petitions and e-mailed their representatives on it.

Also of note is all the remaining Republican candidates for President have come out against the bills. So chalk this victory up to people power.

Hollywood may have bitten off more than they can chew.

The studios got their lackeys in Congress to put forward a bill called SOPA – Stop Online Piracy Act.

Rather than target those actually infringing on copyright – it targets anyone who links to sites that allegedly infringe – including search engines such as Google. It basically wants Google and others to act as filters on behalf of Hollywood – a law China could be proud of.

The ramifications are massive. Someone might post a comment on Kiwiblog mentioning the name of a site which tells you where some good torrent sites are. Bang – Kiwiblog is out of the search engines.

But it gets worse than that. Under SOPA, ISPs (US ones anyway) could be forced to block access to sites. Just like in Syria and Libya. A summary of views against from Wikipedia:

On TIME‘s Techland blog, Jerry Brito wrote, “Imagine if the U.K. created a blacklist of American newspapers that its courts found violated celebrities’ privacy? Or what if France blocked American sites it believed contained hate speech?”^[21] Similarly, the Center for Democracy and Technology warned, “If SOPA and PIPA are enacted, the US government must be prepared for other governments to follow suit, in service to whatever social policies they believe are important—whether restricting hate speech, insults to public officials, or political dissent.”^[22]

Laurence H. Tribe, a Harvard University professor of constitutional law, released an open letter on the web stating that SOPA would “undermine the openness and free exchange of information at the heart of the Internet. And it would violate the First Amendment.”

My views are simple. No Government should censor the Internet. If people access illegal material on the Internet then they should be held liable in a court for that. If people commit crimes on the Internet, then they should be arrested for that. And yes if people infringe copyright on the Internet, they should be liable under the law. But to have laws giving the power to require all ISPs in a country to block particular sites is a practice that should remain the norm in China, not the US and definitely not NZ.

Amusingly the MPAA has actually cited China in their advocacy, with the MPAA Chairman having said that as Google has figured out how to block sites when China requests it, it can’t be that big an issue.

Anyway the backlash has begun and could be huge. Wikipedia is closing down later today for 24 hours as part of a black out protest. I can just imagine the millions of pissed off Americans who will be e-mailing their complaints into Congress.

Think if Google did the same? Maybe even for just three hours the search engines all turned off and displayed a protest page?

The MPAA and RIAA are used to being the biggest players in the game. I think they are about to find out they’re not.

In my blog at Stuff I propose:

New Zealand should ask for the US to commit to a law change that any copyrighted material released in the US for sale, can also be immediately sold (or re-sold) to New Zealand consumers.

So if a US studio releases an episode on iTunes for 99c the day after it is broadcast in the US, then no more blocking New Zealanders from being able to buy it.

Such a law change would probably do more to reduce infringing file-sharing of TV shows, than any amount of punitive measures.

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The Washington Post reports:

A file-sharing group that considers itself a spiritual organization said Thursday that Sweden has recognized it as a religious community. According to documents provided by spiritual leader Isak Gerson, 20, his Church of Kopimism received that approval in late December. …

Gerson said in an interview that some of the church’s roughly 3,000 members meet every week to share files of music, films and other content they consider holy and regard copying as a sacrament. He said the church’s philosophy opposes copyrights in all forms and encourages piracy of all types of media, including music, movies, TV shows, and software. …

“Being recognized by the state of Sweden is a large step for all of Kopimi. Hopefully, this is one step toward the day when we can live out our faith without fear of persecution,” he said.

This could become a very popular religion. When is the next NZ census again?

Stuff reports:

Lucasfilm, owner of the Star Wars movies, has prevailed upon online electricity retailer Powershop to drop an advertisement featuring evil movie character Darth Vader.

In the online advert, Vader is pictured as a kind of Maria von Trapp figure from The Sound of Music. He is dancing across a field with mountains in the background and carrying a guitar case.

Lucasfilm’s lawyers said they had been instructed to write to Powershop asking it to cease use immediately of the advert, and undertake not to make further use of the Darth Vader character without the prior consent of Lucasfilm. …

Its chief executive, Ari Sargent, said he responded immediately to the request from Lucasfilm by withdrawing the advert, but was also surprised at having attracted the attention of Lucasfilm “Empire”.

“Powershop is not a member of any rebel alliance. I’m surprised the Empire considers small companies like Powershop to be a threat; perhaps our force is stronger than we thought,” Sargent said.

The advert is part of Powershop’s “Same Power, Different Attitude” campaign which shows dictators and tyrants engaging in unlikely acts of charity and goodwill. 

It can be amazing how thorough those law firms can be in tracking down infringements and sending out nastygrams.

In 2000, when I worked for the National Leaders Office, we set up a website to fight Labour’s proposed employment law changes. We called it Walking with Dinosaurs, and a logo from Jurassic Park was used.

Around two months later the nastygram letter turned up. But instead of sending it to the Leader’s Office, they sent to the then National Party President, who was rather alarmed to be having Universal Studios threaten him with legal action over a site he actually had nothing to do with.

Waldo Kuipers from Microsoft NZ blogs some advice on how account holders can avoid being stung under the new copyright law.  Well worth a read if you are an account holder and more than just yourself use the account. His main points are:

1. Set clear expectations about internet use
2. Cover the Internet security basics
3. Remove unwanted peer to peer file sharing software
4. Consider monitoring on restricting Internet use

On Friday Night I was watching a DVD of the TV series Las Vegas. For once we let it run past the credits, and I started to piss myself laughing at the copyright warning which followed, which is embedded below.

To the backdrop of a demonic guy working on a forge, FACT tells you the pirates are out to get you, piracy funds organised crime, will destroy our film and video industry costs jobs, will also destroy the music and publishing industries and best of all it funds terrorism.

I’m surprised they didn’t also say piracy will cause global warming, earthquakes and plague, and that you will go to hell if you torrent.

Clare Curran blogs at Red Alert:

If elected, we will introduce a Bill within 90 days to remove the termination clauses from the Copyright Act. Those clauses, which give the District Court the ability to impose account suspension as a remedy for infringing file sharing – can’t work in the long term.

This is a welcome policy from Labour. Congrats to Clare to have got Labour to change their position so radically. Three years ago the law was to require ISPs to terminate all repeat copyright infringers (based on accusation), and now it is to remove termination as an option.

This is a good example of the difference a dedicated spokesperson can make.

It is worth noting that the termination clauses are a “reserve” power at the moment, and can only be activated by Cabinet if they feel the current regime has failed to work. I don’t think it is likely they would ever be activated, but I certainly would much prefer the option is taken off the table – as Labour is proposing.

What this means, is that if a future National Government does ever try to activate the termination clause, it would be vigorously opposed by Labour as well as the Greens (and much of the community), which should reduce the chance of it happening also.

Labour will also undertake a review of the Copyright Act, with the aim of introducing a new Copyright Bill within 18 months that updates and extends the framework for digital copyright in New Zealand.

The first phase of the review will be to commission an independent analysis of the problems with the status quo from an eminent expert, such as the review Professor Hargreaves has recently conducted for the UK Prime Minister, and then consultation on a draft Bill before it is introduced.

New Zealand’s Copyright Act has been half-heartedly adapted for the Internet age.  Instead of more piece-meal reforms, we need to transform our digital intellectual property framework, to bring it into the 21st century and to promote innovation and growth in our economy

I’m supportive of this also. I hope any such review (if Labour do form Government) is what I would call a first principles review of copyright – asking what is the correct balance between economic protection and public use in today’s world. This is more than just asking how can we make the law better. I would see such a fundamental review as being more than an 18 month exercise.

The focus should also be on more than just digital copyright. We should also debate issues such as fair use vs fair dealing, protection for use for satire or parody etc. The debate should be about these basic issues, before we even get onto how then does it apply in the digital environment.

Overall though a very welcome announcement from Labour. Well done.

The Dom Post reports:

The Cabinet will today issue an instruction to government departments that they should make all data they hold available for free or at a reasonable-price in accessible file formats for reuse by businesses, unless there are good reasons not to.

The Government will recommend they do so under a “Creative Commons” licence that means they could not usually be held liable for any errors or omissions.

Finance Minister Bill English said the policy would spawn new business opportunities and services, increase government accountability and allow greater scrutiny of policy decisions.

“It is the Government’s expectation that agencies should release all non-personal and unclassified data with high potential value for re-use.”

Internal Affairs Minister Nathan Guy said departments had been opening up over the past 10 years, but the steps they had taken had been “ad hoc” and there were no clear expectations. About 1400 data sets are available free online through the website data.govt.nz.

Great to see the Government using Creative Commons, and also making a tangible commitment to opening up Government data.

Readers may not be aware that any evidence of file-sharing involving copyrighted works, can be used under the three strikes law from today.

The law comes into effect on 1 September, but complaint notices can refer to any alleged infringing within the last 21 days, which starts today.

So if you torrent etc any copyrighted works from today onwards, and your IP address is not masked, then it is possible your ISP will be sent a complaint, and you will receive a “first strike” notice.

Until around 10 days after your first strike notice, you can’t receive a second strike, no matter how many complaints are received – so the first strike might cover one instance or 100.

Be aware though if you do make it through to a third strike and the Copyright Tribunal, then costs can be imposed on all the recorded infringing (if proven).

Simon Power has announced:

Commerce Minister Simon Power today announced that internet service providers will be able to charge rights holders up to $25 for processing an allegation of copyright infringement.

The decision was made by Cabinet when considering technical regulations to underpin the Copyright (Infringing File Sharing) Amendment Act 2011, which comes into effect on 1 September.

“The Government decided that a fee of up to $25 fee was an appropriate compromise between what rights holders and the ISPs wanted.

“However, we will review that six months after the Act comes into effect to make sure it’s at the right level.

I’m pretty happy with that level, especially as RIANZ wanted $2. From an ISP perspective it might not be enough to cover costs (which is regrettable) but it is definitely set high enough to deter rights holders from filing tens of thousands of complaints a month, and swamping ISPs.

The “downside” of a relatively high fee is that is you do keep infringing and get found liable by the Tribunal, you’ll be ordered to pay the $25 costs per infringement notice plus the $200 fee for taking it to the Tribunal plus the cost of any actual works infringed.

The Cabinet Paper is here. Note that the paper talks of a $20 fee, which is what was recommended to them by the Minister. Cabinet increased it to $25, which is pleasing.

The fee will be reviewed after six months. This is useful, as by then ISPs should have some hard data on what the costs have been, and what the volume of notices has been.

Ars Technica reports:

Earlier this month we covered a UN report that argued that “three strikes” laws that deprive alleged copyright infringers of Internet access violate human rights. The report was delivered by an independent UN investigator, and so didn’t represent the view of any UN member governments.

Michael Geist notes that on Friday, Sweden made remarks at the UN Human Rights Council that endorsed many of the report’s findings, including the criticism of “three strikes” rules. The statement was signed by 40 other nations, including the United States and Canada. The United Kingdom and France, two nations that have enacted “three strikes” regimes, did not sign the statement.

“All users should have greatest possible access to Internet-based content, applications and services,” the statement said, adding that “cutting off users from access to the Internet is generally not a proportionate sanction.” It also called network neutrality and Internet openness “important objectives.”

Interestingly, the report is signed by New Zealand, which enacted legislation in April that sets up a special Copyright Tribunal for expediting file-sharing cases. The penalties available to the New Zealand government include Internet disconnections of up to six months.

Very interesting. The Swedish statement which NZ endorsed said:

All users, including persons with disabilities, should have greatest possible access to Internet-based content, applications and services, whether or not they are offered free of charge. In this context, network neutrality and openness are important objectives. Cutting off users from access to the Internet is generally not a proportionate sanction.

I’m glad to see the NZ Government says that cutting off Inernet access is generally not a proportionate response. From that I assume the Government will never activate the power for a Judge to cut off Internet access as a response to copyright infringement.

If the postition of the Government is such an act is not a proportionate sanction, then it would have been nice if they had removed it entirely from the Copyright Act. Otherwise there can be the appearance of saying one thing at the UN, and doing another thing back home.

Charlie Gates at Stuff reports:

The first New Zealand cinema census of 4000 people found 62 per cent went to the cinema once a month, with 27 per cent seeing as many as three films a month.

It also found 51 per cent regularly downloaded movies, but 87 per cent of those did not pay for them.

Only 40 per cent of respondents were opposed to illegal downloads. The survey was conducted by movie website flicks.co.nz, and 48 Hours and Incredibly Strange film festivals creator Ant Timpson.

Flicks managing director Paul Scantlebury said he was surprised by the number of people illegally downloading films.

He said people turned to the internet because movies were shown in New Zealand much later than the rest of the world.

“Everyone is online and knows a movie is out and is good, but often it will be out on DVD in the US before it is out in the cinema here,” he said. “iTunes is not really much better. The legal way of doing this is not very good.

“If there was a viable, legal and local option, people would use it. It is sad because people are forming habits and learning new ways to access movies.”

Exactly. If you do not make movies available legally, this means that the only way to see a movie in a timely manner is to access it illegally. Isn’t that sort of dumb?

However, Motion Picture Distributors’ Association chairman Robert Crockett said illegal downloads could damage an industry that sustained 22,000 New Zealand jobs. “This highlights the issue that there is illegal downloading and we need to do something about it as a creative industry,” he said.

“I think most people want to do the right thing if they know that what they are doing is illegal and has a cost locally.

“I’m sure they will choose to do the right thing if they are given a viable and legal option to do so.”

Exactly.

Top copyright law professor Michael Geist blogs on how Wikileaks revealed the extent of the US lobbying pressure on our copyright laws:

Wikileaks has also just posted hundreds of cables from U.S. personnel in New Zealand that reveal much the same story including regular government lobbying, offers to draft New Zealand three-strikes and you’re out legislation, and a recommendation to spend over NZ$500,000 to fund a recording industry-backed IP enforcement initiative.

Yes, the US Embassy actually offered to do the rewrite of Section 92A. Thanks, but no thanks. We’ll write our own laws thanks.

Geist also notes:

Finally, an April 2005 cable reveals the U.S. willingness to pay over NZ$500,000 (US$386,000) to fund a recording industry enforcement initiative. The project was backed by the Recording Industry Association of New Zealand (RIANZ) and the Australasian Mechanical Copyright Owners Society (AMCOS).  Performance metrics include:

“The project’s performance will be judged by specific milestones, including increases in the number of enforcement operations and seizures, with percentages or numerical targets re-set annually.  The unit also will be measured by the number of reports it submits to the International Federation of the Phonographic Industry (IFPI) on its contributions to IP protection and enforcement methodology.”

The proposed budget included four salaried positions, legal costs for investigation and prosecution, and training programs. The RIANZ still runs an anti-piracy site, but does not include disclosure about the source of funding.  It certainly raises the question of whether New Zealand is aware that local enforcement initiatives have been funded by the U.S. government and whether the same thing is occurring in Canada.

The current S92A is not too bad (but it should not have termination as an option), but the real danger is the TPPA negotiations. The US is demanding as part of those negotiations a total rewrite of our intellectual property laws in their favour. This is a price we should not be willing to pay, unless the trade gains from the deal are massive. To date the NZ Government has been resisting the demands. I hope they continue to do so.

Andrea Vance at Stuff reports:

Fierce protest erupted last night as the Government rushed through legislation that could cut off internet users.

Opponents took to social media sites such as Twitter to revive the 2009 “blackout” protest that brought about the redrafting of the controversial illegal-file-sharing legislation.

The replacement Copyright (Infringing File Sharing) Amendment Bill, which aims to stamp out internet piracy, is expected to pass through its final stage today. The new law would allow copyright owners to ask for a six-month suspension of the internet accounts of those who repeatedly infringe by sharing protected material. …

In November the select committee suggested a change to allay fears. Although the legislation still has a provision that allows for disconnection, this can only be enacted on the recommendation of the commerce minister by an order in council. It must be proved that other sanctions such as warnings taken over a two-year period had not proved effective.

Up until this week, the Government had followed pretty much a model policy process in rewriting S92A, but the decision to pass it through the remaining stages under urgency has led to the backlash, and has in fact over-shadowed the many positive changes the bill makes to the current law. It is, to be blunt, an own goal.

It ironically happens the same day as my blog post with Grant Robertson about over-use of urgency – which the Herald has reported on.

I’m quite understanding the Government has a big legislative agenda and needs to use urgency to clear the order paper before the election. But in this case they could have avoided unnecessairly alarming people by not having included the third reading of the law in the urgency motion, and having that debated the following sitting week.

To put things in context, I want to cover the process to date on the bill, and also the policy changes from the current law which was passed by the previous Government and Parliament. The previous Parliament passed a law requiring ISPs to have policies to terminate Internet access of repeat copyright infringers. This provision was thrown out by the Select Committee, but stuck bakc in by then Minister Judith Tizard (and supported by both major parties – kudos to the Greens who voted against).

The previous law was unworkable and would have led to ISPs having to act as judge, jury and executioner and people would have lost Internet access on the basis of unproven and untested allegations. The blackout campaign (which I helped with) resulted in the new National Giovernment suspending s92A from coming into operation, and they set up a process to amend it.

As I said, the process up untul this week had been pretty first class. It was:

1. Set up a working group to consider options
2. Working group proposes a policy
3. Feedback sought on proposed policy, changes made
4. Minister releases cabinet paper on proposed policy
5. Feedback given to Minister on proposed policy, changes made
6. Minister introduces bill
7. Select Committee hears submissions
8. Select Committee makes changes and reports back
9. Further submissions are made to Minister asking for “technical improvements” by way of SOP at Committee of the Whole stage
10. Minister agrees and introduces SOP

As I said, up until now the process has been consultative, considered and in my opinion at every stage the bill has got better and closer to what Internet users want (but still not ideal – I will cover that later). The process has stretched out over two years, and has been far from rushed.

The bill was reported back from Select Committee on 3 November 2010. So it has been sitting them for five months waiting for a second reading. And then suddenyl we have second reading, committee of the whole stage and third reading in (almost) one day. This is what has led to the protests – the public don’t like having multiple stages of a bill gone through in one day.

As I said, Im not arguing using urgency to progress the bill – just don’t do all remaining stages in the one urgency session – that is hat has turned what should be a good news story into a bad news story.

Now let’s turn to the substance of the policy of the bill. As I said previously, it is a big improvement over the former law. And the really nice thing is that at every stage we have managed to get some further wins  but that is perhaps a reflection of how bad the old law was.

Here’s what I blogged in response to the Cabinet paper:

Good:

• Three notices needed within 9 months to go to Tribunal
• Users can stay anonymous and send response via ISP
• Users remain anonymous at Tribunal stage unless they lose
• Notices must be sent to ISPs within 20 days of alleged infringement, so a huge number can not be collated over months and then piled into an ISP
• Rights holders will have to pay a fee per notice, to cover their admin costs in issuing the notices
• Termination/Suspension is an option only for courts, not the tribunal (or ISPs)
• Termination is defined as suspension of that account for up to six months so law is clear
• A new definition of ISP to be drafted for S92A only, which will be narrower then current definition which includes employers, bloggers etc.
• ISP given statutory protection where they comply with the Act and any court orders
• Law not to come into effect until six months after amendments passed
• 92A to be available for P2P infringing only, and material under 92C excluded from gambit of 92A

Not so good:

• Time between 1st and 2nd notice can be as little as 10 working days and 10 again between 2nd and 3rd. That means you can get to strike three in a month.
• The fee rights holders pay to ISPs is set by Govt and will not include capital costs of modifying systems
• No sanctions on right holders for false notices
• Termination/Suspension is still an option

Overall I have to say a huge improvement over the original 92A, and even a slight improvement over the discussion proposal.

And then in response to the select committee:

Overall the changes made by the Select Committee to the Copyright (Infringing File Sharing) Amendment Bill represent an improvement. I’m especially pleased that they have effectively shelved for now the termination provisions, as I thought that would set a bad precedent. What are the changes?

• The definition of an ISP has been narrowly defined to cover traditional ISPs and exclude universities, busineses and the like who might provide Internet access but are not really ISPs. This is a good change
• The definition of file sharing has been tightened so it won’t cover downloading a single file off a website etc. Has to involve using file sharing technology. Also a good change.
• Those given notices have an extra week now to challenge them – also good.
• ISPs are no longer required to consider whether to accept, reject or refer on challenges to rights holders – all challenges get passed onto rights holders
• No lawyers at Copyright Tribunal hearings unless very good cause. Yay.
• Now for the bad one – they have recommended that an allegation from a rights holder will constitute burden of proof which must be rebutted. This is dangerous. Google has given evidence that around 30% of the notices they have received in the US are false or incorrect. I think the Copyright Tribunal should be left to its own devices to decide if an infringement notice from a rights holder meet burden of proof. Different rights holders may establish different levels of reliability. I hope the Government will consider amenemdents to this at committee of the whole stage.
• The committee have said that any damages should include a punitive element, and not merely compensation. I partially agree. Compensation only would not provide any disincentive. However any punitive damages should be linked to the level of lost revenue. I see it like the IRD with 100% penalties. If you download $100 of music then you could get fined say $200 and if you download $500 of movies then the fine may be $1,000. But if the punitive damages are unliked to the offending then you may have someone fined $15,000 for downloading one song.
• The provisions for a Court to order an Internet account to be suspended for six months have themselves been suspended. The Minister can activate them by order in council, but only if other penalties are seen not to have worked. Not a bad compromise. I’d rather no provision at all, but this is a lightyear better than what was in the law passed by Judith Tizard and Parliament in 2008.

 In relation to the third to last bullet point, we got a further partial victory on this with the Minister introducing a SOP to clarify that you don’t need to prove yourself innocent. Rick Shera has said that the SOP may not fix the problem entirely, but it is an improvement.

I said in my last blog post:

The Greens have said they support the bill going forward, but think Internet suspension should be out of there entirely – not just held in reserve. I agree.

The Greens have consistently voted against termination being an appropriate punishment, and I support them on this issue. Over the years I’ve had several meetings with initially Nandor and then Gareth Hughes on this issue, and they have been excellent to deal with.

Chris Carter and Hone Harawira also voted to remove termination, so pleasing to see them vote with their consciences outside a party whip.

Amongst the opposition, Clare Curran deserves recognition for moving Labour from having supported the original S92A, to a policy position where Labour is against termination as a response to copyright infringement. At select committee they did a deal with the Government where the termination option was “put on ice” as a compromise and I think that’s a good example of an Opposition being constructive and gaining improvements in a bill rather than just engaging in rhetorical opposition that achieves little.

It would have been nice to get termination removed entirely. But over the last two years we got it changed from ISPs terminating upon accusation, to having a tribunal process. We then get termination removed as a “punishment” for the tribunal and restricted to the courts only. And finally got even that suspended as a punishment, so that it can’t be used unless there is an order-in-council to reactivate it.

Overall I’d say those on the “Internet side” got around 80% of what we wanted, and the rights holders didn’t get anywhere near what they wanted. Their biggest “loss” is the fact they will have to remimburse ISPs for their costs if they want an infringement notice sent to their customers. this will provide a significant economic incentive for rights holders not to file hundreds of thousands of notices.

Overall I think Simon Power has done well on this issue, with the exception of the use of urgency for the remaining stages. The policy process of the last two years was good, and the changes made to the law have overall been beneficial.

Again it is a pity that what had been a good news story for the Government has turned into a bad news story, due to the use of urgency.

Once the bill passes into law today, that isn’t the end of the issue. MED will be working on some regulations around the law, and one essential one will be setting the cost per complaint notice that rightsholders have to pay to ISPs. If it is set too low, then it would punish ISPs and encourage a huge torrent of complaints.

There is likely to be some sort of consumer guide to the new law also, so people understand what may happen if they download copyrighted material without paying for it after 1 September.

Few people are more enthusiastic advocates of free trade than me. I basically want to see a world without trade barriers.

The path to free trade is difficult due to entrenched interests. The best path is a multi-lateral agreement such as the GATT agreement which set up the WTO. Failing that, bilateral trade deals are worth pursuing. The China-NZ FTA, for example, has already led to a huge increase in exports to China. And CER with Australia is part of our economic DNA.

Personally I think bilateral free trade agreements are far too complex. My ideal FTA would be as follows:

1. Country A agrees that the businesses and residents of Country B can sell any goods or services they like to the business and residents of Country A, so long as they are legal in Country A.
2. Country B agrees that the businesses and residents of Country A can sell any goods or services they like to the business and residents of Country B, so long as they are legal in Country B.
3. There shall be no duties, tariffs or other barriers on exports or imports between Country An and Country B
4. ENDS

NZ is currently negotiating a free trade agreement, called the Trans-Pacific Strategic Economic Partnership Agreement, or TPP.

The TPP is now a brand new agreement. It is an extension to an existing agreement between Brunei, Chile, Singapore and NZ called the P4. Five additional countries are seeking to join it – Australia, Malaysia, Peru, Vietnam and the US.

Now New Zealand would gain immensely from free trade with the United States. One study estimated our exports to the US would increase by 51%. That’s an extra $2b a year approx.

So free trade with the USA would be great. But sadly free trade agreements are not as simple as the one I wrote above. They include areas which are not about reducing tarrifs, such as intellectual property laws. The United States wants New Zealand to agree to change our intellectual property laws, as part of any TPP agreement.

Top IT lawyer Rick Shera, has done a guest post at Public Address on what the US is asking for. I highly recommend you read his post in full. A summary is:

• Rights holders would be allowed to prevent parallel imports
• Massive extension of copyright terms, from life of author plus 50 years, to 70 years
• Circumventing a Technological Protection Measure (TPM) will to be a criminal offence even if the work it protects is in the public domain or you want to exercise fair dealing rights like educational use or current affairs reporting
• The return of guilt upon accusation three strikes Internet termination laws
• Forcing us to reverse the decision recently taken to exclude software from being patentable
• Introducing statutory damages (which give rights holders windfall damages up to 3 times their actual losses)
•  ISP policing of IP rights including a requirement for ISPs to give up their customers’ identities when they receive a mere allegation from a rights holder
• Criminal liability even where the infringement has no commercial value at all
• Pushing Courts to impose imprisonment as the default sentence for infringement even where no monetary benefit is obtained

Bloody nasty isn’t it. And it is not as if NZ is a country with weak copyright laws. The Property Rights Alliance do an annual index of property rights. Their 2010 report for New Zealand ranked NZ the 4th best country (out of 125) in the world for (lack of) copyright piracy.

The New Zealand Government position has been to reject these provisions, which is good. But at some stage, there will be some calls to be made and compromises to occur to get an agreement.

This will pose a challenge for free trade advocates such as myself. Is allowing the United States to rewrite our copyright laws, a price worth paying?

Well if it was a true free trade deal, where the United States agreed to phase out all (or at least the vast majority) of its tariffs, then yeah it might be. An extra $2b a year of exports would create a lot of extra jobs, extra investment, extra wealth and extra tax revenue.

But what if we don’t get the US to agree to let in our lamb, our beef, our wool, our milk, our fruit without restrictions? What if the lowering of trade barriers is modest at best? This can not be ruled out – the US/Australia free trade agreement was very modest in terms of lowering trade barriers.

Eric Crampton has blogged on the TPP agreement. I know Eric well enough to confidently say that he is probably just as big a fan of free trade as I am. However he is pessimistic about the TPP:

I suggested New Zealand might do best by sidelining the US for now. The biggest potential gains to New Zealand from a free trade deal with the States would be an opening of American dairy markets to New Zealand dairy products. But that won’t happen – a trade deal that would actually open up American dairy markets to New Zealand product would never make it through the Senate.

The actual economic impact on the US of allowing dairy competition would be minor overall. But it would create a political fuss in certain states which would make it very difficult for Obama to ignore.

Eric continues:

I’d put decent money that, if America signs onto the deal, there’d be years of costly arbitration before New Zealand had any kind of increased access to American dairy markets. For starters, American dairy farmers would argue that failure of the New Zealand competition authorities to prosecute New Zealand dairy cooperative Fonterra as a monopoly constituted a subsidy under US law and justified counterveiling duties. …

I don’t think the United States has any credibility on free trade when it comes to agricultural products. They can’t make time-consistent pledges. At point of signing it’s all friendly, then you’re straight into arbitration over whether you’re hurting US domestic competitors – never mind the benefits to American consumers who are paying double what Kiwis are paying for baby formula.

His solution:

And so it’s better that New Zealand sidelines America in the Trans Pacific Partnership negotiations so the rest of us can have a serious free trade zone. Get a serious free trade zone, then look to widen it by inviting China. The threat of a Pan-Asian free trade zone that includes China is about the only thing I can imagine that would bring the States around on agriculture. Since New Zealand already has a free trade deal with China, it’s not implausible that China could someday join the TPP.

The idea of a TPP without the US may sound implausible, but I think it is more important to have a high quality agreement that actually reduces trade barriers and doesn’t force IP law changes on us, then a free trade agreement that is more symbol than substance. John Key I believe wants this too – he basically told Japan to stuff off from the TPP negotiations, unless they were seriously willing to commit to a “high quality” agreement.

The same attitude should apply to the US. If at the end of the day we can’t get decent lowering of trade barriers, and they insist in trying to force draconian IP laws on us, then we should be willing to say that we’ll go ahead with Australia, Malaysia, Peru, and Vietnam joining the P4 – and leave the US for another day.

Both the Daily Show and the Colbert Report are no longer available on Sky, on the NZ Comedy Central channel.

Aaaaarrrrgh.

I don’t know who made the decision, but I’d like to shoot them. Both those shows were on my daily record series.

If you want to help push for their return, you can join the Facebook Group asking for that.

And people wonder why people use bit torrent? I pay almost $100/month to Sky so I can legally view overseas content such as the Daily Show. Take away my only legal way of viewing it, and well what a great incentive you give me.

Stuff reports:

Smash-hit Kiwi film Boy has been illegally uploaded on to the internet, potentially slashing the earnings of its investors.

Boy is a great movie. I went to see it at the cinema and blogged about it here.

It is a shame it has been placed on the Internet, but not surprising.

The Taika Waititi-directed flick has had huge box office success, going on to gross $8.4 million at the box office since its release in March, placing it third on an adjusted list of all-time New Zealand film takings.

Worth noting this. Despite the downloads, it has been very profitable.

However, with it yet to be released overseas and on DVD, its availability online is expected to curtail its future earnings.

And this is why of course people placed it on the Internet – there was absolutely no legal way anyone overseas could pay for it and view it, and no legal way anyone in NZ could buy it to view at home.

The days when movie companies can release it for cinemas, but not for individual purchase is fast dying – just as the days when we had to wait six to 12 months to see a US block buster in NZ cinemas have faded.

The world is now one global market. Try and maximise revenue by only releasing it to one segment of the market, and the response is entirely predictable – it only takes one person out of five billion or so to place it online.

Boy has been a fantastic success. Kiwis overseas have heard about it and want to view it. When you make it impossible for them to pay to see it, no surprise that they will turn to the only way they can see it – file sharing.

The last time a Kiwi film was illegally copied, it cost investors about $1 million.

Jesus, I wish media would not print assertions as fact.  Assuming that every downloaded copy is a lost sale is economic lunacy.

Just finished this submission. Now working on my electoral finance one. Curses they both close today.

SUBMISSION OF DAVID FARRAR
TO THE COMMERCE SELECT COMMITTEE
ON THE COPYRIGHT (INFRINGING FILE SHARING) AMENDMENT BILL

About the Submitter

1. This submission is made by David Farrar in a personal capacity. I would like to appear before the Committee to speak to my submission.
2. I appeared before the Committee in 2007 on the Copyright (New Technologies) Amendment Act 2008 where the removal of S92A of the principal act was advocated, and agreed to by the Committee. It was later reintroduced at the Committee of the House stage.

Executive Summary

1. I support the Copyright (Infringing File Sharing) Bill as a huge improvement on the current S92A of the Copyright Act.
2. I believe the provisions allowing for suspension of a person’s Internet account should be deleted as an unproportional response, and a bad precedent.
3. There are a number of other desirable amendments to the bill, which would in the main be considered technical improvements.
4. I urge the Committee to try and obtain quality research on the level of economic damage caused by personal non-commercial file sharing, and whether the proposed tribunal regime is justified in terms of the taxpayer investment into its costs

   The overall bill
   

5. I congratulate the Government, and especially Commerce Minister Simon Power, for his response to the problems highlighted by S92A.
6. The policy consultation and development process was robust and inclusive, and the policy outcome as laid out in this bill is generally well balanced. This was reflected in the unanimous support for this bill at first reading.
7. The critical features of this bill are
   * that the law will no longer presume guilt upon accusation
   * ISPs do not have to act as a judge in any disputes
   * rights holders gain the ability to send notices to alleged infringers
   * users have their privacy protected
   * ISPs can charge a fee to reflect the cost of processing and data matching infingment complaints
8. * That any tribunal action can only happen after ongoing alleged infringing

   Suspension of Internet Access as a penalty

9. I appreciate that the bill has considerable safeguards around the provision to allow suspension of an Internet account – specifically that the power is reserved to the Court, not the Tribunal, and that the circumstances in the proposed s122O(3) must be taken into account.
10. However I believe that it would be a very bad precedent to pass a law which has suspension of an Internet account as a penalty.
11. The Internet is a utility, much like power, water, and phone. It has become essential to many New Zealanders, and in fact the Government itself requires certain transactions to be done online, such as company annual returns.
12. If someone grows cannabis plants in a heated glasshouse at home, we do not give the courts the power to suspend their electricity account for six months. We charge them for the offence.
13. If someone sends a threat by fax machine to the Prime Minister, we do not give the courts the powers to suspend their phone line for six months. Instead we charge them for the threats.
14. Even with other highly undesirable activities on the Internet, we have not given the courts the power to suspend or terminate an Internet account. Many would agree the worst material on the Internet is child pornography. If someone is convicted of trading in child sexual abuse pictures, they may get sent to jail, or fined. But the court does not have the power to suspend or terminate their Internet access.
15. For what is a civil, not even a criminal, offence of copyright infringement, a punishment of Internet access suspension is grossly disproportional.
16. While it is unlikely to be used often, it would set a very unhealthy precedent.
17. I recommend that the Committee delete the proposed sections122O and 122P. Also a consequential deletion of S122Q(2)(e)

    Other Amendments
    

18. In s122Q(4) the date “31 September” should be replaced with “30 September”
19. Also in s122Q(4) I would propose that rather than require ISPs to publish compliance statistics on their own websites, it would be more useful for the purpose of analysis to have them submit the statistics to a government agency (probably MED) and have the statistics published in one central location.
20. A number of other technical amendments are detailed in the submission by InternetNZ, and I endorse those proposed changes.

    Research on economic damage
    

21. At the 2007 select committee hearings, I recall music industry representatives talking about how the failure to pass that law would lead to artists like Bic Runga having to flip burgers at McDonalds so she can earn enough money to live on.
22. Some rights holders produce reports stating that the economic damage is in the billions, assuming every single download of a “work” is a sale that would have otherwise occured. This ignores the fact that many downloaders “try before they buy”, or in other words download to see if they like something, and if they do then purchase it legally. This is not to condone such acts, but to point out that the assumptions over economic damage are unwarranted.
23. In Australasia, the most recent stats (from the Int Assn of the Phonographic Industry) show that music revenues are up 3.5% (physical sales down 2.4%, digital sales up 41.4% and performance rights up 8.6%) in 2009. Also APRA reported that in 2008/09 distributions to music creators increased by 10%
24. In the movie industry, global ticket sales were up 7.6% in 2009, during the worst recession in 70 years
25. Again, this is not to condone illegal file sharing, or to suggest it is of no consequence. But to put the claims of industry groups in proportion.
26. In giving the Copyright Tribunal a mandate to hear file sharing infringement claims, Parliament will be investing many hundreds of thousands of dollars into the Tribunal so it can do this work.
27. It would be prudent for members of the Committee to ascertain that they have sufficient quality research on the economic damage caused by non-commercial personal file sharing, to justify the investment of taxpayer dollars into the Copyright Tribunal’s expanded mandate.
28. An alternative is to do what Canada and the UK have done, and to simply implement a notice and notice regime, which research has shown will deter 70% of file sharers), and evaluate how that regime works, before deciding on the need for the Tribunal.

In summary I urge the Commerce Committee to recommend the Copyright (Infringing File Sharing) Amendment Bill be passed, with appropriate amendments.

David Farrar

Many readers will have seen various Downfall parodies. They have become an Internet cult. Hundreds of people have inserted their own subtitles over a four minute clip where Hitler goes beserk at his generals.

I especially enjoyed three of the parodies – Clark, Peters and Tizard in the final weeks of the 2008 campaign. Thankfully they are still up, but many other parodies have been removed due to a copyright complaint by Constantin films.

The clip above is a parody of the fact You Tube is removing the parodies.

AP report:

On Tuesday, the clips on YouTube, many of which had been watched by hundreds of thousands, even millions, began disappearing from the site. Constantin Films, the company that owns the rights to the film, asked for them to be removed, and YouTube complied.

Martin Moszkowicz, head of film and TV at Constantin films in Munich, said the company had been fighting copyright infringement for years. Jewish organisations have also complained about the tastefulness of the clips, he said.

“When does parody stop? It is a very complicated issue,” Moszkowicz said. “So we are taking a simple approach: Take them all down. We’ve been doing it for years now. The important thing is to protect our copyright. We are very proud of the film.”

The clips were in no way a commercial threat to the film. Not a single person would have not purchased the film, because of a four minute parody extract. On the contrary, it has exposed parts of the film to millions.

There is a real debate about whether the parodies would be allowable under the US fair use laws. However the DMCA can make You Tube liable if they do not err on the side of caution and remove them. It is a pity that this doesn’t go to a Judge. It does highlight the danger of adopting US style notice and takedown laws.

Abraham Foxman, national director of the Anti-Defamation League, said the league was “delighted.”

“We find them offensive,” said Foxman of the videos. “We feel that they trivialise not only the Holocaust but World War II. Hitler is not a cartoon character.”

On this issue I respectfully disagree. The parodies do not disrespect the Holocaust in my opinion.

For years, the meme has held an unusually steadfast position in internet culture. While most online parodies come and go overnight, new Downfall spoofs have been continually created for years.

It’s not known exactly how many have existed but estimates run in the hundreds.

I’ve seen a dozen myself. If done well, they never get boring.

Grant Robertson just started his speech on the S92A bill by saying he will join in the Simon Power lovefest. And Grant is right, the House has been having a Simon Power lovefest for the last four hours – a but a justified one.

The House unanimously passed the MMP referenda bill, and speaker after speaker praised Simon for the process. While some advocated for spending restrictions on campaigners, the fact the bill was passed without dissent spoke for itself.

Then we had the S92A copyright file sharing bill, and again every speaker said that the proposal developed by Simon was a huge improvement over the status quo, and was reasonably balanced.

Having been involved in this issue myself, I have to say that I agree – it is a very complex area, and the Government has done well to come up with a workable model. I still think the Internet suspension provision should go, but we’ll have that debate at select committee. Pleased to see the House unamiously pass the bill.

Fairly rare for a Minister to get two bills in a row passed unanimously, and to praise from all parties. Also good to have constructive speeches from all parties.

Back to the MMP referendum, two questions for people.

1. Should the voting at the first referendum for an electoral system to go up against MMP in the second referendum be a simple plurality option (tick one option, most ticks wins) or a ranked preferential option (ranks the four systems 1 to 4, and none get over 50%, drop off least popular option and redistribute preferences)?
2. Should the second referendum be held at the 2014 election, or held before 2014 as advocated by this petition?

I generally regard a preferential voting system as superior, but it can make things a bit more complex and put people off. However if we are asking us to pick a preferred option out of four, then is it too much to think they should be able to rank them?

The timing of the 2nd referendum is finely balanced. One wants a very high turnout for a binding constitutional change. However I think as it is a binding vote on a binary choice, we would have a high turnout even if held outside a general election. The first referendum would suffer from a low turnout if done stand alone as it is not a final vote, but the second one less so.

It occurs to me that one would get a better debate on the second referendum, if it was not held at the same time as a general election. The contest for Government will dominate the media.

So I think there is merit in looking at whether the 2014 referendum (if there is one) can be held in late 2012 or early 2013.

Peter Cresswell discusses copyright and says copying without permission of the owner is theft:

Make no mis­take, copy­ing with­out the per­mis­sion of the owner is theft–-no mat­ter how many sappy sugar-coated dit­ties you hear to the contrary.

I don’t think theft is the best word for it, but I agree it is illegal. PC notes however:

The way ACTA proposes protecting intellectual property–by going through people’s bags, laptops and MP3 players at airports; by holding ISPs responsible for what their customers do; etc.–-is hardly in accordance with the principle of property rights they purport to be upholding.

He says this violates the very principles they want to protect.

What I found most interesting is this comment by Eric Crampton on the post:

Strength of copyright protection has never been an absolute: it’s varied in duration and scope over the years. There’s a Laffer curve that operates in copyright as well: zero protection and fewer things will be produced, but too strong of protection and nothing is produced either.

Eric is right. Copyright is not an absolute right. It is a manufactured right that is about a balance of rights. Eric explains:

Let’s take the extreme case over on the right tail of the distribution. Every musician using a chord must pay a royalty to whomever invented that chord, then must pay another royalty to whomever came up with the chord sequence they’re using. Think much music gets produced under that regime? Nope. It’s too costly to produce anything new.

Another example is the right of a newspaper to quote something. If a politician writes on their Facebook page “I think the top tax rate should be 90%” they own the copyright to that statement. Would anyone want a society where it is illegal for a newspaper to report that statement, as they do not have permission of the owner?

Take it to blogs. Suppose copyright didn’t just protect the expression of an idea, but also the idea itself. Would you ever post anything, given fear of being sued by someone who’d previously come up with some idea you’d thought was original to you? Would Landes and Posner sue me for basically restating their argument in the first paragraph?

Spot on.

If you grant those two cases, then the optimal degree of copyright isn’t infinite. The optimal degree isn’t zero either. I’m reasonably convinced that we’ve pushed too far to the right on this curve: the costs of copyright in impeding new creation, at current legal levels of protection, exceeds the benefit of higher returns for those things that are created. And, I’d argue this is mostly due to Disney who earns more off its back catalogue than out of new production. The period of protection is too long, harm is done by excessive protection on orphaned works, and insufficient scope is given to fair use.

Copyright is for a specific term. If it was not, then every school in the western world would probably have to pay royalties to the great great great great great great great great grand nephew of William Shakespeare.

Eric makes a fair point that copyright protection is for too long a period. In the UK protection is for 50 years after making a sound recording, while in the US it is 120 years after creation.

Personally, I’d sooner see copyright abolished in favour of a solution through private contract where folks use creative commons to designate the strength of protection they’d like applied to their own works, but where also we’d deem the extant corpus of common culture (Grimm fairy tales, etc) only being available for commercial use if the folks making the film, book or whatever applied a duration of protection no greater than 20 years or so, helping to rejuvenate the commons from which they drew.

I am a big fan of Creative Commons which makes it easy for creators of works, to set their own terms and conditions of use.