Digital Economy Bill: Rightsholders Will Shoulder Most Three-Strikes Costs

Score one for the ISPs in the Digital Economy Bill debate. Stephen Timms, the minister for Digital Britain, yesterday said that copyright holders, such as record labels and film studios, should shoulder 75 percent of the cost of tackling online piracy.

The original bill had proposed ISPs and rightsholders split policing costs 50-50. But Timms, in a speech at the Oxford Media Convention on Thursday, said the government is issuing a “draft statutory instrument” that requires the likes of labels and studios to pay more. They will be the “primary beneficiaries” of the proposed graduated-response scheme, Timms said: “The benefits of what we are doing will go to the rightsholders. So I have not been convinced by the arguments of rights holders that the Internet companies should bear much of the costs.”

Plans being put forward in the bill, which include a three-strikes approach to punishing illegal file sharers, could cost up to £500 million to implement, ISPs had esimated – meaning rights holders may now have to cough up £375 million for the scheme.

In the Lords this week, while reading through the text of the Bill, there was a question over whether a 75:25 split would be applicable at all stages of enforcement:

Lord Clement-Jones: “Many of us would not argue with a 25:75 split precisely because of the Minister’s arguments about incentives. We should give people the incentive not to have to issue too many notifications, but the boot is entirely on the other foot when we are talking about appeals procedures. We need an incentive for creative copyright owners to make jolly sure that they get their facts right when they start…alleging that subscribers have breached their copyright.”

ISPs calculate that the Bill would translate into charges of around £25 per subscriber to execute the measures. The government meanwhile has estimated that the initial letter-writing campaign, which could cost £1.40 per subscription to implement, may lead up to 40,000 subscribers giving up their internet connections.

Impact assessments for the Bill say it could generate up to £350 million in extra tax for the government, and would bring in an extra £1.7 billion in sales to content owners.