Tuesday, December 14, 2004

There ain't no free

Page seven of today's Creative Business supplement in the Financial Times (I would post a link, but this article requires subscription - point proven) carries an article which seems to be advocating a compulsory licensing scheme for ISPs, apparently based on the view that ISPs are in effect enablers of illegal content distribution via P2P to end users. This is an issue I touched on here, including what I view as the almost untenable complexity of administering such a system. Nevertheless, I noted some time back that litigation in Europe might establish some precedent for imposing just such a system, and the FT views the outcome of the Tiscali case as providing just such a precedent. I suspect the same.

What's daunting is that this mounting pressure is only based so far on heat from the music industry. Wait until the broadcasters and film studios get seriously involved. At the European Media Leaders Summit last week, I observed that only four out of 200 attendees claimed to know what BitTorrent was, but with all of the decentralized video sharing going on, and the arrival of Cybersky next year, awareness levels should pick up dramatically. As I wrote back in July, it looks to me as though the media industry is going to attempt to extract blood from whoever it can, and players involved in distribution look like the most obvious and convenient candidates, particularly if the media's view is, like that of SABAM in Belgium, that the owners of the pipes have profited unduly from selling bandwidth which is used for piracy.

However, I come back to my original point - this is going to be exceptionally difficult to administer. Firstly, how do the various rights holders come up with a mutually acceptable framework for valuing different types of content and getting compensated accordingly? Secondly, with data-swarming applications like BitTorrent and Overnet all the rage, assembling a single piece of content may involve multiple contributors from various countries and service providers. Is there any way to account for this in a transparent manner? Thirdly, in the case of a DSL player reselling a plain vanilla product from a European incumbent, does the onus not really lie with the ultimate controller of the pipe, i.e., the incumbent? I could raise a number of other reasons why this is highly unlikely to work, but the main point is that, just because it's a ham-fisted approach doesn't mean that it won't be tried. I suspect that telcos/ISPs will bear the brunt, along with market growth, innovation, and competition.

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