Business Matters: 700,000 French ISP Subscribers Have Received an Infringement Warning
Business Matters: 700,000 French ISP Subscribers Have Received an Infringement Warning

The long-awaited Copyright Alert System, or CAS, is coming to the U.S. in the coming weeks through five major broadband providers and their partnership with the RIAA, MPAA and the Center for Copyright Information. The impact the alerts will have is unknown, but the awareness generated by an anti-piracy law in France could provide good guidelines.

A report released last week by the French Hadopi agency brings news U.S. content owners want to hear. Similar to the report released in April, the new report shows the country's anti-piracy agency has led to an increase in awareness, a decrease in file sharing and a decrease in repeat infringements.

News reports on the Hadopi report focused on the agency's 23% decrease in operating budget from €10.3 million to €8 million, but the substance of Hadopi's work is overlooked. The EFF points to a single guilty verdict as proof the law must be repealed, and many news reports view the lack of prosecutions as proof of the law's failure. But perhaps it's best to consider the law's intended impact -- piracy reduction -- and be pleased that people aren't being punished.

The numbers suggest Hadopi has been quite an effective deterrent. The latest report shows 682,525 subscribers were sent first-infringement notices and 82,256 -- or 12% -- were sent second notices. Most importantly, few people are in jeopardy of actually being punished for infringement. In June, only 340 cases were examined in the third phase on infringement and just 14 cases had been sent to the prosecutor.

Peer-to-peer traffic has slowed as the law appears to have had its intended impact on awareness. According to the April 2012 Hadopi report, from July 2010 to December 2011 Nielsen found a 17% decline in peer-to-peer audience levels. MediaMetrie/NetRatings found a 29% decrease in audience levels at uTorrent, BitTorrent, eMule and LimeWire in 2011. Studies by Peer Media Technologies and ALPA covering 2011 found fewer films were being shared in France in 2011 than the prior year.

At the same time, the law appears to have had a positive impact on digital sales. According to one academic study released earlier this year, increased awareness of France's anti-piracy law resulted in a 22.5% and 25% increase in track and digital album sales at iTunes for the four majors, respectfully, of the control group. The revenue impact was estimated to be €13.8 million ($18.6 million) per year for all four labels.

Much of the Hadopi's thrust is to educate people about the value of online cultural goods and point them toward legal services. There are now 59 services -- 33 of them for music -- in France that have been given the "PUR" ("Promoting Responsible Use") label. Video games, book and photography sits are also given the PUR label.

Ignorance is a problem in the U.S. as well. Last week, CCI executive director Jill Lesser told me consumers are still confused about the legality of entertainment sites and services. The CCI has spent the last few months speaking with consumers to find out what they knew about copyright, and Lesser said they often can't discern the different between what is legal and illegal.

If most Americans simply want to do the right thing, infringement notices will allow them to do just that. The CCI will help U.S. subscribers who receive infringement notices better discern between legal and illegal. Lesser told me the infringement emails sent by each ISP will point subscribers to a list of legal entertainment services at the CCI website. Since no American subscribers will face termination, fine or legal penalty under CAS, better awareness and education are all content owners have to work with.

U.S. content owners need to remember that outcomes are unpredictable. A recent review of Sweden's Ipred law found that only 11 cases were brought between 2009 and 2012, far short of the government's original estimate of 400 to 800 cases per year, according to a report at the Local.

But Sweden has had a fortunate confluence of factors that has muted the failures of Ipred. The country is the home of Spotify and has had high broadband and mobile penetration. Even though piracy rates remain high -- 61% of Swedes between 15 and 25 engage in file sharing -- subscription services are very popular in the country.

The U.S. is not Sweden, but U.S. consumers have a lot of good options in the event they get an infringement notice. And if U.S. subscribers respond to copyright alerts anything like French subscribers have responded to notices like Hadopi, many will show a willingness to change their behavior.