Leaked State Department Cable Confirms What Everyone Already Knew: MPAA Was Behind Bogus Australian ISP Lawsuit

from the pulling-the-strings dept

When it comes to copyright issues, the various State Department leaks via Wikileaks have only served to confirm what pretty much everyone already knew. Earlier we'd covered revelations about US diplomatic involvement in new copyright laws in Spain, and the latest (as a bunch of you sent in) is the rather upfront admission that the MPAA was absolutely behind the decision to sue iiNet in Australia. As you may recall, the lawsuit, which was officially organized by the Australian Federation Against Copyright Theft (AFACT) along with the Australian arms of various movie studios, complained that Australian ISP iiNet didn't do enough to stop unauthorized file sharing. This was really a trial balloon of a case, because the MPAA knew damn well that blaming ISPs for the actions of their users was a tricky game to play. So, they tried to hit up iiNet from a slight tangent, sending over examples of infringement and then freaking out when iiNet didn't somehow magically stop all infringement.

Of course, the reality was that this was all driven directly from the MPAA in the US and iiNet was carefully chosen as a trial balloon given its size. As Richard Chirgwin notes, iiNet got to enjoy this experience because of its "Goldilocks status. iiNet was just right: Telstra is large, loud, litigious, and possessed of significant lobbying experience; too small a target and the case risked inviting the “bullying” perception that the MPAA was keen to avoid."
Despite the lead role of AFACT and the inclusion of Australian companies Village Roadshow and the Seven Network, this is an MPAA/American studios production. Mike Ellis, the Singapore-based President for Asia Pacific of the Motion Picture Association, briefed Ambassador on the filing on November 26. Ellis confirmed that MPAA was the mover behind AFACT's case (AFACT is essentially MPAA's Australian subcontractor; MPAA/MPA have no independent, formal presence here), acting on behalf of the six American studios involved. MPAA prefers that its leading role not be made public. AFACT and MPAA worked hard to get Village Roadshow and the Seven Network to agree to be the public Australian faces on the case to make it clear there are Australian equities at stake, and this isn't just Hollywood "bullying some poor little Australian ISP."

Why iiNet? Ellis said they were the right target on several levels. First, they are big enough to be important - iiNet is the third largest ISP in Australia. (Telstra, owners of top Australian ISP BigPond which has about half of the market, are the "big guns", Ellis admitted. It was clear Ellis did not want to begin by tangling with Telstra, Australia's former telecom monopoly and still-dominant player in telephony and internet, and a company with the financial resources and demonstrated willingness to fight hard and dirty, in court and out.) Ellis also said iiNet users had a particularly high copyright violation rate, and that its management has been consistently unhelpful on copyright infringements.
Amusingly, the cable claims the case is "very strong." Turns out that was wrong. iiNet famously won the case, and AFACT was even told to pay iiNet's legal costs. While an appeal somewhat limited the original (excellent and perceptive) ruling, it still crowned iiNet the winner. Perhaps the US government shouldn't trust the MPAA in setting the odds on its own lawsuits.

Anyway, while most people already knew that the MPAA was the key player here, it's nice to see it laid out in black and white. I'm also curious if the folks who usually rush to the comments to claim that the MPAA/RIAA aren't involved in some of the lawsuits we talk about will have any comment on this, since we've explained that most of these legal actions are coordinated from those two groups.

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  1. icon
    fogbugzd (profile), 2 Sep 2011 @ 1:01am

    In the last paragraph Mike says that the MPAA and RIAA are the driving force behind most legal actions. I am not sure that is accurate now. I think that the main driving force is the MPAA. The RIAA goes along with the MPAA, but I think the RIAA is mainly lending moral support at this point. I think the RIAA's main contribution now is that it can provide the image of the poor, starving musicians as victims of piracy; musicians are generally much more sympathetic victims than movie producers and actors.

    The RIAA is a economically weaker than it was ten years ago. Any company or industry that is shrinking is forced to pull back on activities that don't show a profit, and the war on piracy falls in this category for the RIAA. Suing private music infringers cost a lot of money and produced very little income while having a plethora of negative effects. Lobbying is expensive and fighting piracy does little if anything to actually increase sales. At the end of the day retracting industries are forced to be pragmatic, and pragmatically fighting pirates is not productive for the RIAA.

    The RIAA still has plenty of execs who chant the "Pirates are killing us" mantra. But they also have people working quietly in the opposite direction. I think the MPAA is fortifying the RIAA and keeping it on the bandwagon publicly, but behind the scenes you have a lot of RIAA people promoting bands and artists, especially the ones who have signed "360" deals. Promoting 360 artists means getting their music heard by just about any method possible.

    The movie industry and the music labels are in very different situations. The music industry really needs to promote bands and artists. For the music industry, the songs themselves are promotional. The songs bring the fans out to concerts and provide other potential revenue streams. On the other hand, the MPAA sees the movie itself as the revenue stream. For music there is a very plausible argument that a pirated song may very well create a concert ticket sale. It is harder to sell the idea that a pirated movie will sell a movie ticket. There is also a scale factor involved -- it is easier for a music exec to stomach giving away a 99 cent song when it might sell a 100 dollar concert ticket. It is a lot harder for the movie producer to see how giving away a 20 dollar copy of a movie makes sense for getting a one dollar Redbox rental. (Yes, I know that the marginal cost for reproducing the song and the movie are near zero for the industry, but I am talking about the modern business exec who doesn't understand basic microeconomics.)

    The final analysis will probably show that unauthorized copying is not hurting the movie industry nearly as much as the MPAA currently believes. However, the movie industry is still doing rather well. At least they can still afford to spend $300 million to pump out mediocre movies. If the industry can afford to that, they can afford to live in fantasy worlds for at least a little while longer. However, as the movie industry continues to price itself out of the market it is going to have to face reality. I am just hoping that they don't manage to do severe damage to the Internet, the rest of the economy, and the First Amendment before that reality sets in for the MPAA.

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