France: Music Sales Continue to Fall After Three Strikes Law

By Drew Wilson

One of the main theories behind the three strikes law is that it would reduce piracy and stop the decline of music sales in the marketplace. France is one of the countries that first put a three strikes law in place for copyright infringement though HADOPI back in 2009. Fast forward to 2013, music sales continued to slide even after the laws were put in place.

HADOPI is one of the laws we’ve been tracking. Last month, procedural error sunk a would-be HADOPI conviction. For those that have followed HADOPI since 2009, that’s just one event in a long list of problems that faced both the law and the enforcement body. Still, that didn’t stop major record labels and movie studies from demanding similar laws be brought in to other countries. New Zealand followed suit with their own version of the three strikes law which was dubbed the “Skynet” law. While there conviction, the major record labels had to spend $250,000 to get a $616.57 fine. While large sums of money may be spent to achieve little results, the three strikes law concept has been dealt with a fresh blow – music sales are slumping even with a three strikes law in place.

South Korea, New Zealand and France do have on thing in common – they all have a so-called three strikes law in place to deal wit copyright infringement. Negotiations between ISPs and record labels have taken place in the US to enact a similar “six strike rule” governed by the Copyright Alert System (CAS). The one thing that is different about the six strike rule other than the use of six warnings instead of three is the fact that a sixth strike doesn’t necessarily mean automatic disconnection. Disconnection is merely an option. It’s really up in the air whether or not that really makes the law any better and outside of commentators saying that these differences make the punishment somewhat more humane, there’s not a whole lot of discussion beyond that point that we’ve seen in this area.

Of course, as many critics including myself have pointed out, these laws are very problematic. Now that we’ve seen these laws in practice, more problems over top of what people have discussed are emerging. Earlier this month, we’ve detailed an interesting point from New Zealand that RIANZ (The New Zealand arm of the RIAA) spent $250,000 just to reap a reward of $616.57. This is not a good sign given that there was less than a dozen people made it to the third strike so far. Even if, in the end, a dozen people payed a fine of $5,000 each, that’s only a gross revenue of $60,000, this scheme would still prove to be a money losing endeavor. In order to get more convictions, more notices need to be sent out which in turn costs money. The math just isn’t pretty.

More recently, we found out about another tidbit of results and it makes the concept of a three strike rule look even worse. Mike Masnick over at TechDirt made a very nice find out of France where a report showed trends both before and after the enactment of the three strikes law. According to Digital Music News, the rate of file-sharing dropped in France by 35% after the three strikes law was put in place. As the report validly notes, the drop isn’t necessarily attributed to HADOPI itself. Users may have simply switched to streaming music services. Masnick from Techdirt also points out that VPN services used to mask a file-sharer’s identity could also contribute to that drop. Another point would be made that maybe several users switched to private BitTorrent sites in a way that can’t be so easily tracked (i.e. using a seed box located outside the country). Some people may also be using FTP, usenet, or even switching to darknets – the last one probably contributing the least to the drop of the three.

These explanation also fits with the drop in cyberlocker use which reportedly dropped by 27%. More people switching to other services. Some of these services may be legal and some of these services might be used in ways that rightsholders say is piracy related activities. This move away from clients like Frostwire and eMule isn’t exactly new though given that since BitTorrent came on the file-sharing scene, users have been drawn away from older networks over the years. An argument can easily be made that maybe HADOPI hastened this transition, but it can’t be the only reason for it either.

The last graph in the report, however, is probably the most interesting of all. This is because one of the presumed goals is that if people turn away from unauthorized sources, they’ll be pushed towards more authorized sources of content – thus increasing sales. The sales trend doesn’t show that at all. Prior to the three strikes law, the data showed that there was a drop in music sales. Masnick attributes some of this drop to inflated sales numbers. We don’t know enough about music sales in the 90’s and early 2000’s to be able to agree or disagree with this comment, but this opinion is out there. Knowing that HADOPI was enacted/created in 2009, we see that the drop in music sales continued. In fact, we see that the general trajectory of this particular downward trend can be seen starting in 2008, so a year before the law was even enacted. Since the law was enacted, music sales continued to decline by 22% since 2009 (the graph goes up to 2012).

Between the New Zealand experience and the French experience of the three strikes law, there needs to be serious questions as to whether or not the three strikes laws are even an effective approach. Disregarding the moral implications of letting a private entity enforce the laws, the validity of the evidence in term of a mere IP address being used to lay blame, the fact that there is merely a reliance on a mere accusation, the possibility that innocent people may find themselves caught up in this and whether or not this law is even a deterrent in the first place (to name a few), this law just doesn’t make much sense. If the idea is to recoup any alleged losses, that clearly isn’t happening because, judging by what’s happening in New Zealand, just maintaining the law is a money losing process. If the idea is to increase music sales, well, judging by the experience in France, that clearly isn’t happening. In fact, a case can be made that a three strikes law hasn’t even affected the downward trend in music sales.

The only thing that can be said for the three strikes law at this stage is that it’s an anti-competitive tool. If an artist wants to use these file-sharing networks as a means of distribution, users are being actively discouraged from using them. Beyond that, there really isn’t anything left from any angle that speaks positively about the three strikes law. If this law is in CETA (Comprehensive Economic Trade Agreement) and in the final version of the Trans-Pacific Partnership (TPP), then there should be questions about why such a non-functional law is being embedded into these trade agreements in the first place.

Drew Wilson on Twitter: @icecube85



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