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April 23, 2021

A skeleton army to fight online piracy

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Game of Thrones: Foxtel's pricing policy has prompted local viewers to dowload it illegally.
Game of Thrones: Foxtel’s pricing policy has prompted local viewers to dowload it illegally.

Bernard Keane, Crikey

We are, it seems, in the throes of yet another online piracy panic.

Last weekend, Village Roadshow executive chairman Graham Burke offered up this piece in Fairfax, conflating piracy and Google’s tax dodging into one big ol’ mess welcoming Attorney-General George Brandis’ efforts to ‘reform’ copyright law.

And last week, the season finale of Game of Thrones prompted a clash between Foxtel and Choice, while Brandis again made the (unverified) claim that Australians are the worst file sharers on the planet.

Ah, Game of Thrones. It’s not exactly our favourite show – if we wanted to watch the 13th century with a strong fantasy element, we’d read some of Cory Bernardi’s speeches – but plenty of Australians, it seems, disagree, and they don’t like that they have to get Foxtel if they want to watch it, for a minimum sum of $24 a month. You can’t even watch it on iTunes until after the season is over, due to an exclusivity deal between the makers, HBO, and Foxtel.

Let’s deal with Burke first. Now, we’ll defer to Burke on Google’s reticence when it comes to tax – the tech giant is almost mining company-like in its refusal to pay tax. But more to the point, Burke knows what he’s talking about. Burke has admitted under oath that Village Roadshow ‘had engaged in film financing deals that were simply ‘tax rorts’, according to The Australian. Burke also admitted ‘he made irrational business decisions because he had been ‘smoking funny stuff’. A Victorian Supreme Court judge concluded Burke was ‘prepared to ignore the requirements of the corporations legislation when it suited their purposes’.

The sight of Graham Burke – who, as Stephen Mayne pointed out some years back, is a huge supporter of the Liberal Party – lecturing anyone about corporate ethics is, at the very least, rather amusing.

Then there’s Burke’s whole contention, that piracy threatens Australian jobs. A bit like local retailers whingeing about the threat of online retail, this is a favourite refrain from the copyright industry: file sharing is a diabolical threat to employment because it undermines industry revenues. It used to be used to argue against removing absurd parallel import rules for music, then it was used against pirated DVDs (remember those?), but it is now one of the key arguments invoked by the Australian branch of the copyright industry.

‘As for Foxtel, its behaviour illustrates exactly the problem of file sharing – and its solution.’

Except that you’d have to be smoking some of Burke’s funny stuff to believe it. It’s wrong. Dead wrong. Deader than one of those skeleton swordsman on Game of Thrones the other night. According to a study prepared by an economics firm for an Australian studio body in 2010, file sharing would cause over 8000 Australians jobs in content industries to be lost that year and cost those industries $900 million. Those numbers were different to those in another report by another economics firm for another content industry group just months earlier, which concluded movie piracy would cost Australia $551 million and caused the loss of 6000 jobs across the whole economy. And there’d been another report four years earlier claiming piracy cost the Australian movie industry just $230 million annually.

But according to the Australian Bureau of Statistics, in 1999, employment in Australia’s creative industries averaged 27,000 people over the year, and motion picture production 22,000. In 2013, they averaged 41,000 and 27,000 jobs respectively. More Australians are employed making films and in the creative industries now than when, courtesy of a dirt-cheap Australian dollar, George Lucas made those awful Star Wars movies here.

Burke claims ‘about 910,000 people depend upon copyright protection for their livelihood’, a figure he seems to have simply made up – at that level, copyright-related industries with be our third- or fourth-biggest employer.

And it’s not just in Australia. In a similar period, employment in the American arts and entertainment industry has risen 16%. Moreover, the United States broadcasting industry’s revenue has risen 22% since 2009 to hit a record US$121 billion in 2012. Worldwide movie ticket sales have soared in recent years – in 2013 they set a new global record of US$36 billion, and ticket sales have risen 22% since 2009, and even the music industry is on a high – despite a decline in sales of recorded music in recent years, global live music sales have smashed records, with an all-time record $4.8 billion spent in concert ticket sales in 2013, a 30% increase on 2012.

And sadly, piracy can’t be blamed for Village Roadshow’s latest unfortunate movie experience, called Transcendence, starring Johnny Depp. So poor was its reception that it cost Village’s film division $2 million and forced the company to not only miss earnings forecasts for the 20-13-14 financial year, but miss paying shareholders a special dividend of 25 cents a share – that was cut to 15 cents a share. Perhaps Burke is unhappy that not too many punters pirated Transcendence – that would have helped explain away why the film flopped.

As for Foxtel, its behaviour illustrates exactly the problem of file sharing – and its solution. Foxtel, via its greedy exclusivity agreement with HBO, removed a cheap, legitimate way for Australians to access Game of Thrones online, so it wouldn’t threaten its expensive, clumsy business model of bundling content people don’t want with the small amount of content they do want. So people went online and simply got it for free.

In 2012, we found via Essential Research polling that 42% of file sharers would readily buy content legally if it were easily accessible at the same time across the world – people viscerally loathe the old broadcasting practice of delaying foreign content – and available at a low price. Moreover, younger people, who are more likely to file share, are more willing to pay for content online than older people.

And if Graham Burke, George Brandis and the Murdochs seriously think a copyright ‘crackdown’ (which, by the way, voters on balance oppose) will work, check overseas, chaps, and you’ll see there’s no evidence that expensive ‘graduated response’ schemes of the kind Brandis apparently favours (and which in effect require ISPs to spy on their customers) have any effect.

What does have an effect is giving customers easily accessible, timely online content for a reasonable price. That Foxtel and likes of Burke, 15 years after content producers first began struggling with this issue, still prefer the kind of command-and-control business model they could run in the analog era suggests a deep, deep form of denialism. We await the skeleton warriors of the copyright crackdown.

This article was first published in Crikey.

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