Last month, the High Court in Ireland, the nation's highest court, ruled against the Irish Music Association's attempt to enforce the "three strikes and you are out" policy on illegal downloaders. Pitting record labels like EMI, Sony, Universal and Warner against UPC, one of the county's leading Internet Service Providers (ISPs), the Irish High Court determined that a European Community directive on copyright ruled against forcing the ISP to conform to the "three strikes" law.
What is striking about this case is how it has divided industry groups who should be allies in the global struggle against online thievery. The catastrophic impact of Internet piracy on the recorded movie, book, and music industries has been well documented by many observers--ranging from Silicon Valley based critics like myself to entertainers like Bono and his manager Paul McGuinness.
Less obvious, but no less problematic, is the corrosive impact of piracy on the ISPs themselves. Abusive and illegal content streaming and file-sharing (by what telecom insiders call "hogs") clog bandwidth and dramatically slow the network. Though they represent a relatively small minority of ISP customers, they have a majority impact on the bottom-line of the telecom and cable providers by sucking up profit, providing a costly legal distraction, forcing up prices and compromising the overall quality of the product for the majority of law-abiding customers.
As more than one senior ISP executive told me after the Irish ruling, the only way that we can get real solutions to the global epidemic of piracy is by the content and technology providers working closely together on solutions. This means focusing on new business models for monetizing online content, helping strengthen the tools by which law enforcement officers can go after the distributors of pirated content, and by aggressively educating consumers about the illegality of piracy.
For all their mutual suspicion, the content and technology providers are actually natural allies against today's dangerously pervasive cult of free content and our global epidemic of online theft. Both industries are reliant on the emergence of a free market ecosystem of paid online content--through smartphones, touchscreen apps and e-readers and via legal next generation services like Rhapsody, Kindle, Hulu, Netflix or Spotify--which can transform the Internet into an economically viable media ecosystem where content creators are appropriately compensated for their intellectual labor. This relationship is symbiotic: ISPs can't sell access unless there is high quality content travelling over their network; the content industry can't survive unless the distribution pipeline for their licensed product is secure and reliable.
What the post-Napster and Kazaa history of fighting piracy has proven is that extreme enforcement is a public relations nightmare--both for the content industry and for the ISPs. Thus, whatever the undoubted merits of the "Three Strikes," both ISPs and the content industry are better off collaborating by helping to strengthen the anti-piracy tools of law enforcers and by educating consumers through the graduated response of warning notices rather than through the draconian step of taking away people's access to the Internet.
The enemy of my enemy should be my friend. Unfortunately, however, this hasn't always been the case when it comes to the ISPs and the content industry. Indeed, some people in the creative community now see the ISPs as the core problem, somehow profiting massively from the plague of online theft and laughing all the way to the bank as the traditional movie, book and music industries wither away. In response to the Irish High Court ruling, for example, U2 manager Paul McGuinness even painted a bleakly dystopian vision of the future in which "we will get news from Google search and the telecommunications companies (telcos) and ISPs will dominate the horrible new world."
While McGuinness' stand against online theft is brave, he is wrong to finger the telcos as the real beneficiary of piracy. While some argue that Google is bankrolling piracy by serving up, and thus profiting from, advertisements on illegal websites, the truth--as Senator Patrick Leahy's proposed anti-piracy bill makes abundantly clear--is that only pirates, pirate friendly websites and P2P networks really benefit from piracy. As traditional for-profit businesses, the ISPs are no more good or evil than for-profit music labels, publishers or movie studios. There are natural business synergies that exist between the telcos and the creative community. These market synergies are the best guarantee that the Internet will evolve into a secure platform for the distribution for legal content rather than a shadowy virtual realm of illegal file-sharing and intellectual property theft.
If the content and telecommunications industries fail to establish a common front against online piracy and the cult of free content spread by online activists, the aforementioned "horrible new world" of free, stolen and algorithmically produced content will evolve. Civil discord between the content and technology communities only strengthens the thieves.
Rather than demonizing the ISPs and prioritizing unpopular and punitive solutions, the solution to today's crisis of the content industry--music, movies and publishing - is more consumer education, more effective tools for law enforcement agencies and more business innovation. Nothing else will work for either the content or the technology industries in our increasingly ubiquitous digital 21st century.
Andrew Keen is an advisor to media and technology coalition Arts & Labs, and is a Silicon Valley entrepreneur, broadcaster and author.