Weekly News Roundup (18 September 2011)

The NPD analysis for August 2011 was written up by me during the week, and you can read it here. My (possibly flawed) maths predicts that the PS3, thanks to the $50 price cut, would have nearly matched or even exceeded the Xbox 360 unit sales figure, had the $50 price cut arrived earlier in August (and if the sales increase effect has been consistent throughout August). At $250, the PS3 is great value, considering it’s a competent Internet enabled media hub and Blu-ray player. The only problem is that Internet enabled media hubs and Blu-ray players (sometimes the same device) are not too expensive these days, and a lot of TVs have them built-in. So really, game consoles should be judged on their merits as game consoles, and I have to say both the Xbox 360 and PS3 are equal in these regards. So there’s really no real urgency to have a Blu-ray add-on drive for the Xbox 360, even though I had a dream last night they were already available to buy in the shops.


Let’s not waste any time and start with the copyright news. I spent Tuesday writing a news article, which could really have been a blog entry by itself, debunking the series of pro-copyright stories I was seeing in our local News Corp controlled media, all based on a press release from the Intellectual Property Awareness Foundation (IPAF), a foundation I’ve never heard of before.

Turns out, the IPAF’s board has includes from a News Corp controlled company, Foxtel, which just happens to have a virtual monopoly on the subscription TV market (the MPAA is also on the IPAF board). Said monopoly would be seriously hurt if the market was opened up via the Australian government’s proposed high speed fibre network (NBN), which via multi-casting, would force Foxtel to actually compete. Which is why The Australian, a News Corp newspaper, has been running anti-NBN stories almost every day for the past year or so. The piracy issues comes via a recent story which tried to link the NBN to increases in piracy (fast Internet = torrentz, lol), which may be the case. But piracy is also competing with subscription TV, which despite the high fees (USD$50 per month for the most basic subscription), still carries tons of ads and worse, new release movies and TV shows aren’t even part of the standard package (you’d have to pay up to USD$120 a month to access new movies and TV shows, and then, only selected shows – HBO shows like True Blood are delayed by weeks if not month, despite subscribers having to pay for the privilege – as I said, monopoly).

Three Strikes

The MPAA backed IPAF may be using misleading stats to suggest ISP intervention would solve the piracy problem, while another interpretation of the same data shows the reverse

And so when the IPAF claims that via a survey of some 1,600 Australians,  72% would stop net piracy if their ISPs started to send warnings against infringing activity, the so called “strikes” of a “three-strike” system. This seem to suggest that “three-strikes”, or graduated response, would be quite a success in Australia. The problem is that similar surveys in the UK and France, one is considering three-strikes, while the other has already adopted it, show that the actual percentage of affected users is in the range of 4% to 6%, nothing like the 72% the IPAF is claiming. And so when you look closely at the data, it seems the IPAF’s conclusion is extremely flawed, if not the polar opposite to what is actually being claimed. This is because while 28% did say they would not stop pirating stuff on the Internet if their ISPs started warning them, only 22% of the same group of people actually say they had ever used file sharing tools for piracy. While the 22% is not the entire number for all types of Internet piracy, as it does not include direct downloads, streaming, but file sharing tools like BitTorrent clients are the only tools that ISPs can monitor, and so it is the relevant number to look at. But it seems, from the survey data, that the 22% of people who used file sharing to pirate things before ISP intervention, would actually increase to 28% after ISP intervention (the 28% that are firmly saying they won’t stop pirating after ISP intervention).

Of course, this would be the wrong conclusion to draw from the data, just as it would be wrong for the IPAF to claim that 72% would stop pirating due to ISP intervention, because 78% aren’t even using piracy methods that could be tracked by ISPs, or have ever pirated anything at all. This is because 28% that say ISP intervention won’t stop their pirating behaviours may not be the same 22% that were pirating before – the survey can be interpreted in many different ways without knowing the overlap between the data points. The only piece of survey data that would actually have been useful – that is out of the 22% using file sharing tools for piracy, how many would actually stops after ISP intervention – is missing. Is it missing because this was a flawed survey, or is it missing deliberately because the data points didn’t match the conclusion that the IPAF had wanted when they commissioned the study, nobody really knows.

But the only conclusion you can really draw is that ISP intervention would not be the cure-all that the industry thinks, or at least want others, to believe it is. So that’s two debunks in two week, after last week’s MPAA info-graphic claiming pirates would spend an extra $1,000 if they were forced to stop pirating. An important point I missed in regards to last week’s debunk is that, when the MPAA claims $xxx billions lost to the US economy due to piracy, is it really lost? Or are people just spending it on other things, things they cannot pirate as easily as say a movie or a MP3 or a software package? And if they indeed spent that “extra” $1,000 on things like groceries, and other living expenses, or even other entertainment products such as eating out at a restaurant or new furniture, then nothing, absolutely nothing, is lost to the US economy. And even in the extreme case where they put the extra $1,000 in the bank, then that money eventually gets put back into the economy anyway via the bank’s investments. And so the “$58b loss to the US economy due to copyright theft” only makes sense if the American people are somehow hiding the $58b they’ve saved via piracy under their mattresses, with no present or future intention to actually spend the money. And for all the problems with the US economy at present, the average citizen having too much employment, earning too much money and not spending it, in my opinion, is not a problem.

And so I feel that the financial implications of the Internet piracy problem has been exaggerated. While there is definitely a financial impact from piracy, make no mistake about it, there’s also an impact on the economy, probably a greater one, from an industry that refuses to adopt to the new way of doing business on the Internet. And unfortunately, some of the new ways of doing business, the ways that consumers have chosen, are not as profitable as before (at least not as profitable to the same companies as before). Take music, for example. Album sales have been the mainstay of the music industry for years, and accounts for a large majority of their revenue. But now, in the MP3 age, track sales are what it’s all about, and naturally, the music industry will have to accept lower profits. And a large part of the new revenue streams are going to different companies too, Apple for one gets money for both hardware and downloads. And instead of accepting the new reality, and trying harder to get people to spend more money buying more tracks (a difficult task, because think of all the albums you’ve purchased, and how many tracks from these albums that you never actually wanted to pay for), they’ve laid the blame on piracy, and spent huge amounts of money trying to solve the piracy problem, through technically insane ideas such as DRM, and through political lobbying. The movie industry are in better shape because selling, renting movies, whether done via tape, disc or downloads, is basically still the same thing. Revenue may take a hit because people do expect cheaper and cheaper offerings (and because movies and TV shows are more expensive to make these days, and not necessarily better for it), but there’s also the potential there to extra more money from people by making them consume more, as the consumption process is much easier than before (you don’t even have to get up from your couch to buy/rent a movie, if you have the right set up). But, unfortunately, the movie industry is also blaming piracy for all their problems (despite earning record profits year after year).

And so they’ve paying vast sums of money to agencies such as the Dutch BREIN to fight piracy cases in court, and to lobby others to “get in line” when it comes to piracy issues. BREIN’s latest campaign sees them urging payment providers such as PayPal to do more on web piracy, including seizing funds for websites that BREIN says are conducting in copyright infringement. The thing is, if BREIN has a court order, I’m sure payment providers such as PayPal would be more than willing to oblige, but is BREIN really saying that in the absence of a court order, that PayPal should still take action, just because BREIN has a “bad feeling” about the website? This seems to be the case, because BREIN also wants PayPal to help identify the operators of “bad” websites – if they don’t even know who is running the website, and where these people are located, I seriously doubt they can convince a court to issue an order to freeze funds. Basically, it’s the same old tactic of shifting responsibility to more and more companies, as if there’s one thing agencies such as BREIN hates more than piracy, it’s actually having to work hard to stop piracy.

Jeremy Hunt

UK's Culture Secretary Jeremy Hunt says ISPs, search engines, advertisers and payment providers are all responsible for net piracy

But at least BREIN are paid to do and say the things they do and say, but when politicians come out with the same sort of rubbish, then it’s much more worrying (but to be fair, they may also be paid by the industry to do and say the things they’re doing and saying).  This week, the UK’s Culture Secretary Jeremy Hunt, that’s Hunt with an H, delivered a speech at the Royal Television Festival in which he also repeated some of the same statements (threats?), that BREIN has been talking about, saying that payment providers, and advertisers, should do more to stop web piracy. Hunt labelled piracy “a direct assault on the freedoms and rights of creators of content to be rewarded fairly”, and suggested that the only solution would be to launch a direct assault on the freedoms and rights of all citizens, as he wants to “streamline” the legal process in regards to copyright infringement, another way of saying that due process should be curbed to make it easier for people to be prosecuted for copyright theft. Hunt also thinks that search engines and ISPs should filter and block content, but only at the say so of the court, although Hunt did suggest that even websites that merely “promote unlawful distribution of content” could be targeted as well.

Staying in Europe, we have the story that the EU has extended music copyright from 50 years to 70 years, meaning that recordings made in 1961 whose copyright would expire this year, would now get a reprieve until 2031. Which unfortunately means I have to mention Cliff Richard in the WNR for the first, and hopefully, the last time. This is because Sir Richard is actually the man leading the fight to allow musicians to live off their past successes just a bit longer, and probably an appropriate representative to these kinds of artists. To be fair, this isn’t really much of a problem, because it’s not easy to live off something you did 50 years ago, and if the only thing stopping you from continuing to do it for another 20 years  is some arbitrary limit, then maybe the artists do have a point. The problem is with the more obscure works, where there’s no more financial benefit in said work to remain copyright protected, then there’s a real danger of the work being lost forever, simply because there’s also no financial benefit to preserving the masters in good condition by the recording label. The record labels won’t release the songs, won’t spend money to preserve, and artists cannot get the copyright back on their own work. The new EU law changes does allow artists to renegotiate copyright on such works after 50 years, but many works fall into this situation a lot sooner than 50 years.

We also have more development in the Hotfile lawsuit. Typical with these kind of lawsuits, the defendants will usually launch a counter suit in order to try and get the other side to back down on certain demands, and Hotfile have just done this, although it seems they do have a few legitimate gripes with the way Warner Bros. “abused” their anti-piracy tool. It seems that Hotfile did have a working anti-piracy system, in which rights holders can get a ‘Special Rightsholder Account’ that allows them to delete shared files independently of Hotfile. A Warner Bros. rep was given such an account, but instead of deleting the identified infringing content, even files that Warner did not hold rights to, all because the name of the file was similar to a work that did belong to Warner Bros. Also interesting was that WB actually approached Hotfile to set up an affiliate relationship, in which removed files would be linked to a Warner Bros. online store. And Hotfile alleges that, due to this financial incentive on Warner’s behalf, they removed a popular open source file and replaced it with a link to their online store. I don’t think Hotfile will get anywhere, and even if they win, it won’t negate the fact that they’re probably going to be punished severely by the court for their “promotion” of piracy related activities (giving money to people who upload the most popular files, seems not such a great idea considering the common knowledge that the most popular files are probably one of the 2 P’s – porn or pirated. Or both). But it’s interesting to see that Hotfile at least had a working relationship with some rights holders, and the tools for removing infringing content has been in place all this time.

Not much a happening in HD/3D, and I’m already a bit over my word limit, so let’s skip it and move onto …


… gaming. And nothing much happening here either, other than what I’ve already covered about the NPD stats. There was one interesting news story, but one that only affects Australian gamers, for now. Microsoft has saw the need to discount the Xbox 360 here in Australia, by only AUD$ 50, compared to the PS3’s AUD$150 discount.

But shops are already selling both consoles way below their recommended retail prices, and if the internal Microsoft data reveals that the PS3 is starting to outsell the Xbox 360, I suspect we’ll see the price cut extended to other regions as well. The only reason why I don’t think Microsoft will cut prices in the US is that they do have enough games lined up to ensure the Xbox 360 probably wins this holiday period, so any discount now would worsen the inventory situation, which always flares up at this time anyway. The only thing worse than not being able to sell enough consoles due to low demand, is to not be able to sell any consoles because you don’t have enough stock due to high demand.

My brain, my eyes, my fingers all hurt, so it must be time to stop writing for this week. See you in seven.


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