British Phonographic Industry ( BPI ) claims ISPs are exaggerating the financial hardship they will have to bear in order to enforce proposed “three-strikes” legislation.
Late last month I reported how UK ISPs warn that enforcing proposed “three-strikes” legislation will force them to add £25 ($40 USD) a year to individual Internet subscriber bills.
That’s aside from the more than £500 million ($799.5 million USD) UK Ministers have openly admitted the proposal will cost consumers annually over the next 10 years.
Obviously concerned with the fact that the public won’t appreciate being “taxed” to try and protect the profits of a private business, the British Phonographic Industry ( BPI ) has now decided to respond to those estimates.
A new BPI commissioned study from Sweet Consulting concludes that the first year cost for ISPs could be as low as £13.85 million ($22.4 million USD), dropping to £9 million ($14.6 million USD) in the second year and £3.45 million ($5.57 million USD) in the third. That stacks up to about 39 pence ($0.63 cents USD) per individual by the third year as compared to the £25 ($40 USD) claimed by UK ISPs
“Our evidence shows that ISPs are trying to pull off a massive con job on the British public with their back-of-fag-packet figures – the true costs to them of dealing with piracy will be a tiny fraction of their ridiculous guesstimates,” it says. “It’s time for Britain’s ISPs to stop spreading scare stories and face up to their responsibility to help tackle illegal file-sharing.”
However, considering the scheme will UK cost taxpayers approximately £500 million ($807 million USD) annually to impose, and record labels only predicted a loss of £200 million ($323 million USD) to piracy in 2009, it really amounts to a bloated bailout of an in industry that refuses to adapt and compete like every other business.
Worse still is that the £200 million ($323 million USD) estimated annual losses due to piracy figure is based on a 1:1, one illegal download equals one lost sale, estimate.
“It categorically is not – this is a myth and you’re repeating it,” counters Adam Liversage, BPI’s Director of Communications, in an email. “We do not base the loss estimate on ‘one illegal download equals one lost sale.’ It’s based on a very conservative estimate that factors in that many downloads may not have been purchased, or may lead on to purchases. ”
The point here, as he readily admits, is the fact that it represents what may have not been purchased. Any figures it may tout are estimates plain and simple.
There are countless studies that conclude the opposite, that P2P actually increases music consumption, and they come from sources much more reputable than the BPI.
Critics like UK ISP Talk Talk, the UK’s largest consumer ISP, have also repeatedly criticized efforts by the music industry to pass their costs onto ISPs and hence consumers in the form of higher monthly bills.
“Broadband consumers shouldn’t have to bail out the music industry,” said Charles Dunstone, chief executive of Carphone Warehouse, owner of Talk Talk, the UK’s largest consumer ISP. “If they really think it’s worth spending vast sums of money on these measures then they should be footing the bill; not the consumer.”
When it comes down to it any “three-strikes” proposal will be ineffectual from the moment the switch is turned due to the fact that there are literally dozens of ways to bypass anti-piracy technology.
Too bad the BPI wastes its energy on trying to force people to buy music rather than trying to convince them of the value of their product.
Stay tuned.
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NOTE: Story updated to include correction of period of time over which cost to fight piracy by ISPs estestimated.
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See, every retailer in the US & Europe feeling that they lose too much due to theft has installed these little nifty electronic RFIDs that’ll set off the alarm when you walk out the door with the item.
It is also commonly accepted, that this measure incurs costs, that’ll eventually raise prices in the store.
What I fail to see though, is why does the entertainment industry feel such an entitlement that the cost of such anti-”theft” measures be footed by ANYONE but themselves?!?
Because DRM failed and they couldn’t come up with viable options?
I mean, certainly no one at Target will get the idea to have the city a store is located in foot the bill for RFIDs, because thieves “utilize” public roads to get to and from the store.
And further, if the cost is so “manageable” but the “measure” so desperately needed, wouldn’t the industry place that investment themselves.
I’m sorry, it’s just the same drivel of self-pitying gazillionaires facing the fact that the 40 year gold-rush is over and blaming everyone else for it.
Assuming you didn’t mistake the acousto magnetic strip for an RFID tag. Which 90% of people seem to be doing lately, RFID costs very little, or comparably to acousto magnetic systems and isn’t likely to cost much to implement. RFID are poised to replace barcodes on all products in the future, enhancing the shopping experience with interactivity not possible with the current systems. So although I agree that the industry is stupid 90% of the time, RFID is not a stupid move.
And Yet the BPI and others have been shown to over exaggerate their losses to piracy.
Hello Jared,
A couple of observations on your piece.
“However, considering the scheme will UK cost taxpayers approximately £500 million ($807 million USD) annually to impose, and record labels only predicted a loss of £200 million ($323 million USD) to piracy in 2009, it really amounts to a bloated bailout of an in industry that refuses to adapt and compete like every other business. “
- Where does it say that the scheme will cost UK taxpayers £500m annually to impose?
“Worse still is that the £200 million ($323 million USD) figure is based on a 1:1, one illegal download equals one lost sale, estimate.”
- It categorically is not – this is a myth and you’re repeating it. We do not base the loss estimate on “one illegal download equals one lost sale”. It’s based on a very conservative estimate that factors in that many downloads may not have been purchased, or may lead on to purchases.
“- Where does it say that the scheme will cost UK taxpayers £500m annually to impose? ”
If you clicked on the link “openly admitted”, then read the first paragraph, you’d find the source of where they are saying this.
“- It categorically is not – this is a myth and you’re repeating it. We do not base the loss estimate on “one illegal download equals one lost sale”. It’s based on a very conservative estimate that factors in that many downloads may not have been purchased, or may lead on to purchases.”
Let’s just say for the sake of argument that they never said one download means one lost download (amidst the millions of times I’ve seen various lobbyists say that). How can you scientifically calculate the ratio between people downloading music and people who then also purchase that song afterwards? No matter what complicated formula you plug in a program, no matter what mathematical proofs you can come up with, at the end of the day, the only way to know for sure that ratio is to have the data on every single persons download and have a record for every single purchase. No one has that information. No one even has information on precisely how big networks even are let alone differentiating between what is a legal p2p download and an unauthorized p2p download.
Jared’s use of the word “estimate” is spot on and proves a point that every time the industry calculates “losses”, it’s purely a guess.
I think that not only addressing a problem purely on guess work and presumed outcomes is dangerous, but the proposed solutions I’ve seen from the industry fails to address any of the real problems that faces the industry today – adapting to todays digital landscape. The industry has had the choice for over ten years now of either working with the digital landscape and doing everything humanly possible to stop it. They’ve chosen the second choice for over ten years and, to this day, it has failed the industry completely.
Worse still is that the industry expects tax payers to pay for their, at best, failure to address a decade old problem because they refuse to try to really get to the underlying cause of their problems today. I guess, for the major record labels, looking at themselves in the mirror is a task that’s too much to ask for.
“If you clicked on the link “openly admitted”, then read the first paragraph, you’d find the source of where they are saying this.”
- I can see the link to the Times story, but this story doesn’t actually say that the £500m is an ANNUAL figure. The Times have lifted this number from a government Impact Assessment, that suggests that the maximum costs could be £500m over TEN years. Not annually. At best you could argue the Govt’s figures are talking about £50m a year – quite a bit short of the £400m+ the ISPs are talking about to scare their customers about the Digital Economy Bill.