Friday, 3 December 2010

The Digital Economy Act

What is the Digital Economy Act?

The Ultimate Answer to the Ultimate Question of Life, The Universe, and Everything? Or the hyper spatial bypass which will finally destroy the internet (with an unreserved apology to Douglas Adams who found the answer to this question even if based on the wrong calculation)?

As so often in life, the practical reality is much less dramatic.

However, this complex and wide-reaching piece of legislation has huge significance for those whose livelihoods are dependent on music. Essentially, it compels Internet Service Providers to do two things:

• to send letters to their subscribers following a “copyright infringement report” by the copyright owner detailing the apparent infringement , and
• to collect anonymised information on serious repeat infringers

In doing so, the Digital Economy Act has established an important principle, supported by Parliament – that creators play a vital role in the continued evolution of a sustainable digital market and they should be rewarded for their work. The other key principle relates to the role of ISPs whose responsibility has now been spelled out.

On reflection, however, establishing principles was the easy bit.

The finer details (for instance, how the legislation operates, who pays and for what?) were still to be established when the Bill passed into law.

Since April, the communications regulator Ofcom has been working to draft an Initial Code of Obligations that will establish a framework of processes. Meanwhile, the Department for Business, Innovation and Skills was to determine who is paying for it.

This process is still ongoing.

At the time of writing, we know that rights holders, on top of the detection process, are liable to pay 75% of all costs (from the sending of letters right through to any appeals) but Ofcom are still working on the code. When completed, this will be scrutinized by both the UK Parliament and the European Commission before coming into force.

Add to this the uncertainty of a Judicial Review, sought by BT and TalkTalk, and it seems unlikely that any letters will be dispatched to P2P users until the latter half of 2011.

And it doesn’t end there.

Following the sending of the first letter, Ofcom will measure changes in the UK’s digital market for a period of 12 months, evaluating the impact of notifications on levels of infringement, of consumer education campaigns, of the development of new licensed services and of targeted legal actions.

If the Initial Obligations Code does not deliver the intended effect of reducing illegitimate file sharing significantly (70%) the Secretary of State can grant a power to Ofcom to introduce, via secondary legislation, a third obligation on ISPs to impose technical measures on serious infringers (“Second Stage”). Technical measures could include limiting the speed of the service; preventing/ limiting access to particular material; suspending the service provided to a subscriber; or limiting the service in another way.
Points the Secretary of State will consider when assessing the need for such a third obligation include

• Level of infringement/ potential changes
• Activities of right holders to enable legal access to works
• Impact of right holders’ activities to change public attitude
• The extent of legal proceedings by right holders

The earliest point of such a Technical Measures Code could be approved by the Parliament would be June 2012. Without predicting a riot (for instance in view of the judicial review instigated by BT and Talk Talk), it seems unrealistic that such a Code would be operational before end of 2012. An Initial Obligations Code might be operational by end of 2011 but the timetable can change.

The ultimate goal is to substantially grow and diversify the digital economy.

However, as a necessary legislative backdrop it could provide the basis for us to re-connect and excite the public who love our creativity. Ultimately, success will be measured by diversity and viability of new services and the volume of illegitimate users which migrate towards them.

The Digital Economy Act establishes that ISPs are part of the online music chain. In the words of Victor Hugo which are the motto of the French approach to illegitimate p2p filesharing: «Tout ce qui augmente la libert√© augmente la responsabilit√©».