The Gower Review states that the “UK’s music and film industries lose around twenty per cent of their annual turnover through pirated CDs and illegal online file sharing.” In support of these figures the Review cites a UK music industry report: “According to a report commissioned by the British Phonographic Industry (BPI), filesharing cost the music industry £414 million in lost sales in 2005, on total retail sales of £1.87 billion. These losses have risen steeply from £278 million in 2003.”

The above Chart 5.5 appears in the section of the Review titled “P2P filesharing”. Peer-to-peer or P2P computer networks are used by groups of people to share and deliver digital files, including music, film, television, photo and test files. P2P filesharing has added to the woes of the music industry, which include pirated CDs and a myriad of digital devices competing for the consumer dollar.

"court_us_supreme" The Gower Review notes that P2P filesharing jeopardises the value of rights held by content industries, in particular copyright protected material. It also notes the major P2P copyright court cases (in the US Supreme Court [pictured] of MGM v Grokster and in Australia in the Federal Court of Universal Music Australia v Sharman License Holdings). As regards legislation it states “ISPs currently have limited iability for traffic passing through their network due to certain ‘safe harbour’ provisions.” The Review’s Recommendation 39 is for a watching brief: “Observe the industry agreement of protocols for sharing data between ISPs and rights holders to remove and disbar users engaged in ‘piracy’. If this has not proved operationally successful by the end of 2007, Government should consider whether to legislate.”

Despite some technical differences in copyright law, the situation for content owners is broadly similar in Australia as regards P2P filesharing. The real issue for content owners in both the UK and Australia is how to respond to the P2P filesharing threat and opportunity.

In the final quarter of calendar 2006 the owners of Australian free to air television Channels 7 and 9 have responded by partly cashing out of the risk to their financial future by selling off equity to private equity investor groups. In recent weeks the owners of Channel 10 are also reported to be thinking about doing something similar. To understand why, consider the television and online habits of Australian P2P filesharers. It seems IPTV (Internet Protocol TV) is already a habit for many, at least those under say 40 years of age.

IPTV issues are turning up in court. The Supreme Court in Italy, in its decision here [PDF], found in favour of the broadcaster, Sky Italia. The case involved two websites which were allegedly used to transmit Italian Serie A football matches illegally. It was claimed that the two websites used peer-to-peer (P2P) techniques and proprietary software to aggregate and deliver IPTV streams from third-party Websites, and that the content broadcast through them breached the exclusive broadcasting rights of Sky Italia, the Italian subsidiary of News Corp.

"lost_remote_logo"In passing, Lost Remote has an interesting Archive section with articles relevant to IPTV. This US blog is dedicated to IPTV, TiVo, TV websites, online video, HDTV and the business of television and media generally. It also offers a newsletter and a discussion groups for developers, producers and executives .

In 2007 Lightbulb will continue to monitor and report on responses to the threat and opportunity of digital media. A review is needed given the passage into law of the Australian Copyright Amendment Bill 2006 (Cth). It affects content owners and users and covers such subjects as technological protection measures, enforcement, unauthorised reception of encoded broadcasts, time-shifting and format-shifting, parody and satire.

Lightbulb’s focus is on intellectual property and its commercialisation, and not just for the media and Internet sectors. Indeed we’re actually more interested in drawing out trends, strategies and ideas useful for players in other sectors. For all, there’s a need to learn how to love P2P filesharing. It makes more sense than just fighting it.

Noric Dilanchian