Here’s the New Media and ISP Industrial Complex

Hollywood and the music industry are taking a new approach to preventing piracy. The nation’s top Internet service providers have agreed to a systematic approach to identifying customers who may be digitally infringing on copyrights, who will be notified by e-mail that they are suspected of illegally downloading copyrighted files and asked to stop. If they do not, then the ISP reserves the right to cut off their internet connection.

“The ISPs want to cooperate with Hollywood because the carriers recognize that their own growth depends in part on bundled content strategies,” said Eric Garland of BigChampagne, a company that tracks and analyzes online media traffic.

The new system involves a series of six warnings, ranging from simple e-mail notifications to more severe warnings of “mitigation measures” like reduced bandwidth and blocked web browsing. Also as customers receive more severe warnings, they are required to acknowledge that they have received and understand their content. Customers will also have the opportunity to contest the ISP’s recognition of their copyright infringement.

Music and movie companies have, in the past, relied on litigation against copyright violators, but the vast majority of people infringing on copyrights, illegally downloading media files, have gone completely unpunished. Now the deal with the nation’s largest internet carriers, including AT&T (NYSE:T), Cablevision (NYSE:CVC), Comcast (NASDAQ:CMCSA), Verizon (NYSE:VZ), and Time Warner Cable (NYSE:TWX), though enforcing less severe consequences, should be able to catch a larger amount of violations.

Music and movie companies estimate that that piracy costs the industry, and in turn the U.S. economy, $16 billion in lost revenue each year. With illegal downloading so widespread, and so culturally ingrained, especially in America’s youth, litigation became less effective and only inspired contempt for the industry. But the new deal, instead of swiftly and harshly punishing young people for illegally downloading music or movies, gives them plenty of chances to reform their behavior.

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So how do ISP providers identify cases of copyright infringement? Content owners provide the evidence to the internet providers, who in turn send alerts and can ultimately decide whether to mete out penalties, though the agreement does not require them to do so, and they can act according to their own discretion on a case-by-case basis should they so choose. The Internet providers will not be disclosing the identity of any violators to the content owners.

However, some industry experts don’t think the system does enough, as it mainly targets users of peer-to-peer file-sharing tools like BitTorrent that, while they do account for a large number of illegal downloads, are not the only sources of free copyrighted music and movies. And as Internet providers begin to enforce their new rules, pirates will find or adapt new technologies to evade detection.