The UK's version of the RIAA, BPI, has been a very, very strong supporter of Peter Mandelson's Digital Economy Bill -- a position that has even some of its members resigning in disgust. In the past, BPI has also implied that ISPs already have some sort of legal obligation to stop file sharing and that they rely on unauthorized file sharing to fund their own business model. As the battle over the bill heated up, many ISPs pointed out that the cost of implementing the bill's requirements would be quite high. On top of that, the UK government did its own study and found that the costs were even higher than the ISPs estimated and the cost of implementing the bill would outstrip even the most ridiculous of BPI's estimates of "losses" from file sharing.

Of course, BPI can't accept those numbers, so its commissioned its own study which (of course!) claims that the cost to ISPs would be tiny. Hell, they'd barely be noticeable at all.

Well, if BPI is so sure of this, how about it steps up and puts some money behind that claim. I would imagine that ISPs would feel a bit more comfortable about supporting the Digital Economy Bill if BPI promised to pay any of the fees above and beyond what its own estimates are for implementing the plan. According to BPI's analysis, it would cost ISPs all of £13.85 million ($22.5 million) in the first year, £9 million ($14.6 million) in the second year and just £3.45 million ($5.6 million) in the last year. Hell, if it's such a small cost, how about BPI pays for the whole thing. Only fair, right? After all, the whole purpose behind the plan is to prop up BPI members' business models because they'd rather not adapt. Seems only right that they should pay for it.

There was some buzz earlier this year concerning reports that new streaming apps, like Spotify, somehow decreased unauthorized access to music. And yet, a new study from BPI suggests unauthorized access to music continues to grow, despite the rise of authorized services like Spotify. Now, there are some caveats. BPI isn't exactly known for being entirely accurate with data and these results are from an online survey. While you would think that fewer people would admit to unauthorized access in an online survey (people don't like to fess up), counteracting that is the fact that BPI has incentives to suggest the issue of piracy is a big deal, as it's pushing hard to force ISPs to kick people offline for file sharing. Still, what strikes me as interesting is that BPI still keeps insisting that this is a "problem," without any evidence that this is true. The only real "problem" is the failure of the record labels that BPI represents to adjust their business models. If they did that, there wouldn't be much of a problem at all. But, the labels don't want to do that. They want the government to rescue them and to pretend they can keep doing business they way they always did.

BPI and IFPI, lobbying groups that represent record labels, have been major supporters of Peter Mandelson's Digital Economy Bill, that will grant him powers to change copyright law at will, and to kick people off the internet based on accusations (not convictions) of file sharing. However, it appears that at least some record labels are realizing what an incredibly bad idea this is. EFF points us to the news that the boss of indie label Pure Mint Recordings has resigned from both the BPI and IFPI committee's he was a part of, citing his opposition to the Digital Economy Bill, and both organizations support of the bill:

Hall believes the proposed legislation has been rushed in a bid to get it through parliament before the next General Election, that it is in danger of disregarding some sacred legal principles (regarding process, presumption of innocence and burden of proof) and that it won't solve the record industry's piracy problems anyway.

In his resignation letter to the BPI, Hall writes: "I have enjoyed contributing to both [the BPI's] Rights [Committee] and the [IFPI's] ILC, but increasingly feel that my contributions are falling on deaf ears as an agenda has already been reached that I now consider is unmovable. As you know, I do not think the Digital Economy Bill is a sensible or well thought out piece of legislation. In my view it is being rushed through the last months of a parliament of an unpopular government and it is not legislation that I support".

Referencing clause 17 - the one that gives senior ministers the right to change copyright laws on whim - he continued: "I am particularly surprised that the record industry has chosen to endorse s.17 of the DEB, which I consider is wholly undemocratic and contrary to centuries of good practice regarding the forming of our copyright legislation. I also believe it may set a dangerous precedent going forwards (and could come back to haunt the industry)".

So, we recently wrote about how Geoff Taylor, head of BPI (the UK's equivalent of the RIAA) seemed to be going after British Telecom (BT) with a variety of highly questionable claims about how BT had some sort of obligation to stop file sharing on its network, and that BT was using unauthorized file sharing to prop up its own business model. Both claims are flat out ridiculous, but BPI apparently was quite upset with us pointing that out. Of course, rather than actually respond in the comments where we might have a conversation about it, they've been sending us a series of emails, taking issue with our statements and laying out their claims in more detail. In the interest of an open debate, I'll post BPI's comments here, with my responses mixed in (but of course):

It's unfortunate that in a piece which wrongly charges BPI with making things up, you have misrepresented what our Chief Executive said. He did not say that "BT broke the law in not stopping file sharing", as you assert.

Hmm. Let's look at what he did say: "If you operate a commercial service and know it is being used to break the law, taking steps to ensure it is used legally is a cost of doing business." Perhaps there's a way to interpret that, which doesn't imply that BT is breaking the law in not stopping illegal activity, but it seems like that is the rather clear implication of his statement. But, BPI goes on to say they actually just meant BT has a "social responsibility" to stop the illegal activity. Ah.

BT fosters a reputation as a socially responsible company. BPI has questioned whether it's appropriate for such a company to do nothing about 100,000 instances "a small sample" of the illegal behaviour that BT knows is occurring on its network. BT knows about this activity because BPI provides detailed weekly notifications enabling BT to verify each and every infringement. BPI's notifications are based upon robust copyright infringement detection techniques which have been accepted by the UK High Court in over 150 cases.

I see. Would that be the same "robust copyright infringement detection system" that a recent study in the UK found was accusing elderly couples of downloading gay porn, along with a significant number of other "false positives"? Furthermore, there's quite a difference between knowing that there is illegal activity on the network and being able to stop it. As we noted in one of our original posts, in a land with due process (the UK has that, right?), people aren't guilty upon accusation. It appears that BPI has leapfrogged beyond even the draconian "three strikes" proposals and is looking for something of a "one strike."

But this is a serious question for BPI: really, what would you have BT do? You are informing them of activity you claim is infringing, but BT has no way of verifying that is a fact. Secondly, by the time you've informed BT, the activity is over. So what is BT to do at that point? Finally, how is BT to determine what ongoing actions are actually legitimate? Plenty of smart content creators choose to give away their works on purpose. Plenty of the record labels represented by BPI, even, have long histories of sending out mp3s themselves for promotional purposes. BT has no way of knowing which content is legit and which is not. Pretending that BT can wave its magic wand and suddenly be all-knowing is just silly.

Oh yeah, as for the claim that BT "fosters a reputation as a socially responsible company," I would think that such would include not violating the civil liberties of its customers by spying on what they do online in an effort to prop up someone's obsolete business model. Wouldn't you?

We understand that BT employs very sophisticated traffic and network analysis technologies that allows it to see the proportion of network traffic that is P2P. We have never said that all P2P traffic is illegal, because not all of it is. But the weekly notifications we send to BT relate solely to music files which we know are being shared illegally.

Again, BPI assumes that BT can magically tell which content is infringing and which is not. Just recently, we pointed out that EMI -- in the UK -- was happily distributing infringing mixtapes from Lily Allen off of an EMI owned website. If someone is downloading such content, should BT stop them? How could it possibly know which content in real time is authorized and which is not? And, more importantly, why should that be BT's responsibility? Just because the folks at the labels that make up BPI haven't been able to adapt? If BPI believes that individuals are breaking the law, why is it not going after those individuals? Obviously, because it knows that it would be a public relations nightmare. But just because BPI has a PR issue, it doesn't mean that BT should have to spend a ton of money trying to fix BPI members' broken business models.

Since 2003, annual UK broadband revenues have increased from £0.6 billion to £2.7 billion (2008). Recorded music revenues have fallen every year in the same period, principally due to illegal filesharing. It is therefore not difficult to see that the growth of BT's consumer broadband business has been assisted by the increase in illegal filesharing.

Wow. I mean... wow. Talk about a logical somersault. Seriously? First off, just because one industry's revenue falls and another's grows, it does not mean the two are causal. I mean, this is really, really basic stuff. Correlation, causation, blah blah blah. But, even then, the link is so tenuous as to be laughable. First, the claim that recorded music revenue is falling. Well... be careful. As we've been pointing out, PRS in the UK has admitted that the music industry is actually growing, not shrinking. Apparently, the folks at BPI don't read the PRS economic reports. If they did, they'd know that the study found that the overall industry is growing, with a big shift in money going from recorded music to live music.

BPI, you're blaming the wrong culprit! It ain't the ISPs, it's the live venues! And those bands playing live shows! Why aren't you demanding that they cut it out! After all, wouldn't it be the "socially responsible" thing for them to stop gigging so that people would go back to buying CDs?

And, of course, the whole claim that the decline in recorded music sales is "principally due to illegal filesharing" is also flat out, ridiculously, laughably wrong. Study after study has shown that file sharers tend to buy more. Isn't it a lot more likely that the decline in recorded music revenues is due to a shift in the marketplace due to technology? That technology has taken away the monopoly on distribution that BPI members used to have. Whenever you lose a monopoly on distribution, it's to be expected that you lose monopoly rents and your revenue goes down. That's Econ 101 (or maybe 201, if we're talking monopoly rents... depends on your econ prof).

Besides, we spend a lot of time here working with and talking to and about musicians who have embraced file sharing, and put in place smart business models to take advantage of it. And, you know what? They're doing better than they did in the past. The problem isn't "illegal filesharing." It's bad and obsolete business models. Those who are embracing file sharing in combination with a good business model are doing better than in the past. That rules out "file sharing" as the problem, and suggests the real problem is BPI's resistance to smarter business models.

Other ISPs are recognising that it is not sustainable in the long-term for a high percentage of ISPs revenues to be based on the transmission of illegal data, and that in future they need to share in revenues from providing high quality entertainment services for their customers

This is again ridiculous. ISP revenues are not "based on the transmission of illegal data." ISP revenues are based on the fact that pretty much everyone needs an internet connection these days just to function. It's how people communicate, you know? Claiming that BT is making any more revenue because people file share is laughable. People are using the internet because it's useful for all sorts of things. Hell, we keep hearing ISPs saying that they need to break net neutrality because all this file sharing is filling up their network and costing them too much in network upgrades. How can they be making so much money off of file sharing if it's costing them so much?

Once again, this is typical entertainment industry drivel. They totally overestimate how much their own stuff is "worth" to the wider ecosystem, and then demand that everyone just pay up. Except... that's not the way the world works. The world works by having smart people with smart business models figuring out ways to make people want to give you money, not by sitting back and demanding others just hand over money.

So, thanks for the emails, BPI, but at least work on making your statements a little more believable next time. And, as always, our comments are wide open for you to reply to and interact directly with people here.

Last week, in responding to claims that it would cost ISPs more to police the internet than the music industry claimed it was losing from "piracy," BPI boss Geoff Taylor made a few funny statements, including the ridiculous claim that ISPs used piracy as a part of their "obsolete business model" without any support at all. It appears that Geoff can't stop making stuff up. As he continues to hit back at BT for the cost claims last week, he's now suggesting that BT broke the law in not stopping file sharing:

"It's shameful for a company like BT to know that a high percentage of the traffic it carries is illegal material but do nothing," Taylor told The Mirror. "If you operate a commercial service and know it is being used to break the law, taking steps to ensure it is used legally is a cost of doing business."

Of course, it's not quite accurate to say that BT knows a high percentage of its traffic is illegal material. BT doesn't know that, because it has no real way of knowing exactly what much of the traffic is, or what's authorized and what's not. Furthermore, Taylor is flat out wrong in saying that if you operate a service that is used to break the law, you must stop it. BT also runs a phone service, but no one's saying that it has a responsibility to stop phones from being used in the commission of a crime. BT accurately suggests that if BPI finds evidence of a copyright violation, it should prosecute, but that none of that is BT's issue. I'm reminded of how Australian ISP iiNet responded to similar charges last year:

They send us a list of IP addresses and say 'this IP address was involved in a breach on this date'. We look at that say 'well what do you want us to do with this? We can't release the person's details to you on the basis of an allegation and we can't go and kick the customer off on the basis of an allegation from someone else'. So we say 'you are alleging the person has broken the law; we're passing it to the police. Let them deal with it'.

Once again, it appears the entertainment industry thinks everyone else has to bend over to make sure their old business model still works. But that's not the way the world works.

It's really funny to watch the entertainment industry lobbyists use a popular trick among disingenuous debaters: it tries to flip the arguments being used towards themselves against their opponents. For example, we've seen copyright maximalists argue against those of us who question the need for gov't intervention in issues like copyright claim that copyright represents a true free market, and weakening copyright law is somehow unfair gov't meddling in the free market. The latest trick is particularly neat. Plenty of people argue that all of the attempted changes that the entertainment industry has been pushing for around the world are unnecessary attempts by this industry to prop up an obsolete business model. Would you believe that the entertainment industry is now using the same language in favor of its proposals?

Indeed. As lots of people are pushing back on dangerous plans to "kick people off the internet," ISPs have pointed out how costly such a three strikes policy would be for ISPs who are suddenly drafted to be copyright police. In response, the head of BPI, the major UK music lobbyist group, responded by charging that ISPs were relying on an obsolete business model. Seriously:

"BT is clinging on to an old business model which is supported by illegal downloading. That's not only unfair to artists and creators, but penalises BT's many customers who use the internet legally,"

This implies -- incorrectly -- that file sharing is somehow a massive boon to ISPs. The very same ISPs who keep claiming they need to use traffic shaping to prevent any network from being overloaded by file sharing. It's pretty ridiculous to claim that ISPs are relying on file sharing as any sort of business model at all. A huge percentage of people have internet access, not because of file sharing, but because these days it's hard to get through life without an internet connection. Suggesting that they make their money because of file sharing is patently ridiculous. It's the sort of thing that a reporter should push back on, when an industry rep spews such nonsense.

Eric points us to yet another story of yet another artist getting pissed off that his own videos have been pulled from YouTube. The writeup suggests that this is about competing record labels issuing bogus DMCA-style takedowns on artists as a part of their competitive fervor, but I'm not sure that's true in this case. The artist, Calvin Harris, is based in the UK, who is signed to Sony Music. In the UK, due to a royalty dispute, Google has removed all official major label music from the site. So contrary to TechCrunch's reporting, it seems that this may just be collateral damage of the silly royalty dispute, rather than nefarious competitors issuing bogus takedowns. Still, the point remains: this dispute, which the music industry claims is to "help" artists, is actually doing exactly the opposite.

It seems like it's become the "in thing" in the recording industry these days to "admit" that suing Napster, rather than working out a deal, was a "mistake" ten years ago. Of course, plenty of folks were telling them this at the time, but we were brushed aside as wackos who just wanted free stuff. The latest to make this claim is BPI's Geoff Taylor, who says he "regrets" that the industry didn't move faster to embrace online music. But, of course, Taylor and others still don't get it. They still want ISPs to police users. They still claim that piracy is a legal problem, and they still seem to get the facts wrong. Taylor claims: "There is simply no getting around the fact that billions of illegal free downloads of music every year in the UK mean that significantly less money is coming into the music ecosystem."

Except... that's not true at all. As a recent Harvard study showed, the amount of money going into the "music ecosystem" has grown -- tremendously. The only thing that's dropping is the sale of plastic discs.

In the meantime, considering BPI and others were so incredibly wrong 10 years ago, and they're only willing to admit it now, why is it that they think everyone should trust them now -- and that those of us who were actually right 10 years ago should still be brushed off as wackos who just want stuff for free? Perhaps it's time to start actually listening to those who have been pointing out new ways to embrace what consumers want to do with music in order to make more money. Otherwise, we'll be seeing the same thing in another 10 years, about how BPI's Geoff Taylor (or whoever replaces him) made a mistake trying to shut down The Pirate Bay.

While there are still some concern about what the UK gov't is planning concerning ISPs in relation to the recording industry, reports are coming out that kicking file sharers off the internet with a "3 strikes" policy is off the table -- at least according to David Lammy, the Intellectual Property Minister in the UK. That's a good sign, and fits with what the EU Parliament has said. The full government report is expected later this week, though no one has yet explained to us why the government is stepping in to what is effectively a business model issue, and trying to force a different industry (ISPs) to help deal with a problem created by an industry (the recording industry) that has spent a decade trying to hold back new business models that would solve any "problem" it faces.

Meanwhile, of course, Lammy's comments have (not surprisingly) upset the recording industry. Folks at BPI are particularly pissed off that Lammy compared file sharing to swiping a bar of soap in a hotel room you rented (i.e., a minor issue, not something to arrest someone over). BPI's representative claims he's "appalled" that the IP minister would say such a thing, and even says it shows a lack of understanding about intellectual property. Generally, if you're pissing off the established recording industry folks, you're probably doing something right these days.

One of the big discussion points at MidemNet, this year, was the idea that ISPs might start offering "legalized" file sharing offerings, where for a certain fee, you would be able to file share without worry of a lawsuit. Depending how this is implemented it could be quite problematic, but structured in a voluntary way, it would at least be an interesting experiment to watch. And, in fact, at MidemNet, folks like Feargal Sharkey suggested that it would only be a matter of weeks until we heard about such offerings in the UK. That may not be the case. The Register is reporting that UK broadband provider Virgin has killed off plans for just such a service that it was just about set to announce... due to ridiculous demands from at least two of the record labels involved. Despite the fact that the plan was to create a "legal" P2P offering that would track file sharing using deep packet inspection (ick), Sony Music and Universal Music supposedly demanded that Virgin agree to block file uploads and downloads from users' PCs.

That really doesn't make much sense -- as the whole point of P2P (legal or not) is that it involves people uploading and downloading from their computers. Still, this also explains part of why Virgin was so willing to jump on the recording industry's bandwagon for sending warning notices to customers and threatening to kick them offline. It was apparently step one in a negotiation to see about working out a deal for a "legalized" P2P solution. While I still don't believe such a solution is the best way to do things, it at least seems like a step in a more reasonable direction... so, of course, the big record labels were quick to kill it off.