iiNet: AFACT wasted time and money
- 23 February, 2010 12:42
- Comments 5
iiNet has slammed the Australian Federation Against Copyright Theft (AFACT) for squandering time and money that could have been spent exploring legitimate online content distribution solutions.
AFACT, which represented 34 high-profile movie studios, initiated legal proceedings against the Perth-based ISP in November 2008 on grounds that iiNet allegedly authorised movie piracy activities by its customers through inaction. iiNet argued ISPs were not obligated to police the Internet and was ultimately awarded a victory in the Federal Court.
In iiNet’s half-yearly results ending December 31, 2009, the ISP indicated $5.8 million was spent fighting the court case launched by AFACT. Insurance covered $2m of the legal cost.
The Federal Court ordered AFACT to foot iiNet’s legal bill but with an imminent appeal set to delay the payout, the ISP may not see the money for some time. iiNet CEO, Michael Malone, saw the entire case as “pointless” and disapproved the use of litigation to combat piracy in Australia.
“The disappointing thing for us is we feel like we’ve wasted a year when we should have spent the time and money [on developing a content distribution model],” he said. “If we spent $6 million on this, how much have the studios spent? You would have to imagine given 34 studios were involved, their legal cost would have far exceeded ours.”
“We could have spent $10-15 million onto establishing some legal and legitimate online resources.”
Malone used the example of iiNet’s Freezone, the company’s online content portal, to highlight opportunities presented by legal content distribution via the Internet.
According to the CEO, Freezone accounts for 11 per cent of total volume downloaded by iiNet’s customer base; higher than any single source.
“The obvious questions from investors is ‘does anyone actually use it?'” he said. “We look at that and think that demonstrates if you can get this content online, customers will use it.”
A directions hearing will be held on February 25, where it is expected AFACT will appeal the original verdict. The group had not responded to requests for comment at the time of publication.
Nominations for the 2012 ARN IT Industry Awards open on Tuesday, June 12.
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Comments
Hellfire
This whole case has been a total waste of the Court's time. Any higher court should disallow any appeal by AFACT who only picked on iiNet because they were a small internet provider and believed mistakenly that they could win against a smaller ISP and create a president to then take on the other larger ISP's. Well they lost and they should pay IINet their costs and get over it. By the way CONGRATULATIONS iiNET for sticking up these parasites from AFACT.
Rogue
The Empire will strike back.
Time for iinet to celebrate in the meantime.
Charles Lawson
I am interested in finding out, who AFACT should of gone after for copyright infringement?
Should AFACT have gone after the people actually downloading the material, personally this is exactly who I would of attacked, very deliberately clogging the courts up with cases against people that do know better, but cannot pay. Make an example of the individuals, then hopefully turn people against the idea of downloading illegal material, for which they have no right to download.
The alternative to this outcome, is that they alienate the very people that they want to buy their products, this is the trade off that the people AFACT represents.
Personally I hope that the government recognise that the theft of copyrighted material is a serious matter, and that piracy be it software, music, movies or media needs to be dealt with. I hope that the government does indeed alter the law to allow people to have their downloads monitored randomly, and if found to be in breach of copyright laws, that the courts indeed fine them, removing the responsibility from the government and placing it where it belongs with a government department (like the police).
There is no easy answer to this situation, it is obvious that AFACT is right in its quest for compensation against this perceived lost revenue, however the ISP was the wrong target, which rightly fought the case and won.
The individual is the right target, but is it better to allow the crime to continue rather than prosecute the crime and alienate the public. The followup question to this, is the alienated public the customer base that AFACT clients want, the people that steal from them, and have no respect for the product that they produce, or respect the product but refuse to pay for it.
Peter
" I hope that the government does indeed alter the law to allow people to have their downloads monitored randomly."
Charles, I really don't believe that one industry should have the right to monitor anybody's internet activity. I realise piracy is an issue, but it has existed before the internet, and would continue to exist even with the kind of evasive laws you propose. The traffic would likely just be increasingly distributed and encrypted.
I mean these guys have no one but themselves to blame. Increasing the price of digital tracks in the middle of a recession doesn't win customers, and now online music is more expensive in iTunes than at somewhere like JB Hi Fi (whose sales are increasing, vs the slowing of digital distribution for muisc). Plus it looks as if there is some price fixing going on, as the price per track is IDENTICAL at every online retailer. That's assuming they have even given the rights for digital distribution, and even then they cling to old by-region releases on a global internet!
Case in point:
Muse - Absolution (Album) - iTunes: $16.99 | JB: $9.99
iTunes doesn't have manufacturing costs, warehousing costs, distribution costs, retail store overheads, etc. Yet the digital copy costs a lot more!
There is a growing generation that is media hungry and technology savvy. They want their movies on demand, their TV shows the minute they come out, and their favourite band's tracks as they're recorded. The technology has existed for years now, and illegal distribution (Bittorrent et el) has shown it can be done. It's just groups like AFACT can't seem to get be organised for anything but a lawsuit.
karl
I like the costs argument but would be interested to see some actual analysis of the costs involved in delivering the Apple platform. Perspectives:
- Apple don't own the tracks and must pay royalties (JB just buy and sell the disc, it's a small difference but it's effects on the revenue model could be substantial if apple are paying $1/track in royalties and the music industry are continuing to reap the benefits of already sunk costs).
- Manufacturing is cheap - I can turn out 500000 discs at about 4c each and ship them around the country for $35/pallet.
- Rack space costs in excess of $1500/month + Power + hardware (2U San Array = $40k x 15, Switching = $20K + routing hardware + Bandwidth + maintenance and technical services at $250/hour).
Internet delivery is already about convenience - the IPOD was always a loss leader for the accessories and continues to be one for Itunes - we're paying for the convenience.
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