That back story sets up the current “six strike” system that the RIAA proposed in July 2011. They signed on AT&T, Verizon, Comcast, Cablevision and Time Warner Cable to implement a “graduated response system.”

What would this “six strike” system entail? Well, a P2P user would be give warnings until their fifth or sixth alert. The ISPs at this point would implement more strict measures such as throttling the user’s Internet or redirect them to a warning page until they call their ISP to discuss copyright matters. They could also deem it necessary to permanently disconnect the user from the Internet.

The group put in charge of this is the new Center for Copyright Information. CCI’s Web site and Twitter account were created on July 7, but neither have been updated since. The group said that ISPs would be implementing copyright alerts in 2011 and 2012 and that the center would be formally opened in 2011.

It’s now February 2012 and there’s no sign of the CCI. Ars Technica found this odd and went digging. They found a couple of sources who would comment on the group off the record. They confirmed that the CCI is still continuing onward and will launch shortly. They have hired an executive director and are waiting for the director to get caught up to speed before they announce anything.

As Ars Technica rightly points out, the Internet has changed since the RIAA first formulated this plan. More people are sharing content through streaming sites and file lockers. Going after people on P2P networks isn’t going to be as effective as it would have been a few years ago.

Yesterday, the agreement that had been rumored for weeks was finalized. In brief, ISPs have said that they will participate in the efforts against online piracy by implementing a “graduated response,” which basically means a penalty system that increases in severity with each infraction.

Except the first four measures are simply slap-on-the-wrist warnings to “illegal file sharers.” Upon the fifth time that copyright holders flag you as a participant in piracy, the ISPs have the “voluntary” responsibility to implement one of many measures. Those include actions like the slowing of internet speeds and redirecting web traffic to designated pages pending the completion of an educational program on the ills of piracy.

Speaking on behalf of the White House, U.S. Intellectual Property Enforcement Coordinator Victoria Espinel said that the Obama administration is “committed to reducing infringement of American intellectual property.”

Here is some more of her statement –

The joining of Internet service providers and entertainment companies in a cooperative effort to combat online infringement can further this goal and we commend them for reaching this agreement. We believe it will have a significant impact on reducing online piracy.

We believe that this agreement is a positive step and consistent with our strategy of encouraging voluntary efforts to strengthen online intellectual property enforcement and with our broader Internet policy principles, emphasizing privacy, free speech, competition and due process.

As such, we will follow the implementation and outcomes of this arrangement with great interest. Our expectation is that the new organization created by it will have ongoing consultations with privacy and freedom of expression advocacy groups to assure that its practices are fully consistent with the democratic values that have helped the Internet to flourish.

Simultaneously, the Administration will continue to pursue comprehensive solutions to the problems associated with Internet piracy, including increased law enforcement and educational awareness. To win the future and succeed in the global economy, it is critical to protect the intellectual property of America’s innovators and creators.

The takeaway: To win the future, we have to prevent John Q. P2P from downloading The Expendables?

Another, more serious takeaway from this statement: With the administration officially behind the agreement, does it really fall into the realm of “voluntary” for the ISPs anymore?

With regard to broader issues like free speech and communication, do we really want ISPs having the final say on our “guilt” when it comes to filesharing? Do we want them to be able to limit our internet access based on accusations by copyright holders? And is it alarming that the White House thinks that they should?

As Nate Anderson at Ars Technica writes –

There’s a huge, obvious risk to piling up the obligations on intermediaries, who begin taking action against people without court orders and in areas in which they may have no technical expertise. (While appeal mechanisms are available, the new infringement agreement is a “guilty until proven innocent” approach.) ISPs dealing with spam and viruses and DDoS attacks is one thing; ISPs dealing with copyright, speech, and fair use issues is another entirely.

Today’s focus on “education” is therefore an encouraging one, but the “mitigation” measures ISPs will start taking raise key questions. How far we want ISPs to go in private enforcement actions that might target speech, communications, and even Internet access itself is a debate well worth revisiting in light of today’s news—and the White House support for such approaches.

Folks on Twitter, for the most part, aren’t too happy about the White House involvement -

What do you guys think? Should ISPs become protectors of copyright? Let us know in the comments.

Today, according to Ars Technica, that agreement has been signed.

The ISPs that have agreed to begin implementing the new set of warnings include big players like AT&T, Comcast, Time Warner Cable and Verizon.

Here’s how it will work, in brief –

Copyright holders (the industry) will continue to do what they already do, which is scour the interwebs for copyright infringers. When they snatch some IP addresses from a P2P file sharing network, they will report that IP address to the providing ISP.

ISPs will then implement the graduated program that they have just agreed to. it is important to note that ISPs have not agreed to automatically turn over your information to copyright holders. They will still need a court order to do that. This new agreement simply allows for the ISPs to notify you that you have been tagged.

Here is the complete list of the six steps of the graduated response, courtesy of Ars.

First Alert: In response to a notice from a copyright owner, an ISP will send an online alert to a subscriber, such as an email, notifying the subscriber that his/her account may have been misused for content theft, that content theft is illegal and a violation of published policies, and that consequences could result from any such conduct. This first alert will also direct the subscriber to educational resources which will (i) help him/her to check the security of his/her computer and any Wifi network, (ii) provide explanatory steps which will help to avoid content theft in the future and (iii) provide information about the abundant sources of lawful music, film and TV content.

Second Alert: If the alleged activity persists despite the receipt of the first alert, the subscriber may get a second similar alert that will underscore the educational messages, or the ISP may in its discretion proceed to the next alert.

Third Alert: If the subscribers account again appears to have been used for content theft, he/she will receive another alert, much like the initial alerts. However, this alert will provide a conspicuous mechanism (a click-through pop-up notice, landing page, or similar mechanism) asking the subscriber to acknowledge receipt of this alert. This is designed to ensure that the subscriber is aware of the third copyright alert and reminds the subscriber that content theft conducted through their account could lead to consequences under the law and published policies.

Fourth Alert: If the subscribers account again appears to have been used for content theft, the subscriber will receive yet another alert that again requires the subscriber to acknowledge receipt.

Fifth Alert: If the subscribers account again appears to have been used for content theft, the ISP will send yet another alert. At this time, the ISP may take one of several steps, specified in its published policies, reasonably calculated to stop future content theft. These steps, referred to as Mitigation Measures, may include, for example: temporary reductions of Internet speeds, redirection to a landing page until the subscriber contacts the ISP to discuss the matter or reviews and responds to some educational information about copyright, or other measures that the ISP may deem necessary to help resolve the matter. ISPs are not obligated to impose any Mitigation Measure which would disable or be reasonably likely to disable the subscribers voice telephone service (including the ability to call 911), e-mail account, or any security or health service (such as home security or medical monitoring). The use of the mitigation measure is waivable by the ISP at this point.

Sixth Alert: Whether or not the ISP has previously waived the Mitigation Measure, if the subscribers account again appears to have been used for content theft, the ISP will send another alert and will implement a Mitigation Measure as described above. As described above, it’s likely that very few subscribers who after having received multiple alerts, will persist (or allow others to persist) in the content theft.

So basically you will receive warnings for the first 4 instances of “illegal file sharing.” Upon being flagged for the 5th time, the ISP may take measures to slow down your downloading or browsing. “May” being the operative word. They don’t have to implement any punishment, but if they do, it’ll be up to them to determine the nature of it.

And like we talked about before, the “education” part of the agreement is front and center. It’s possible that users can only receive full restoration of their service after participating in some sort of educational program about the horrors of file sharing.

There’s no indication that shutting off service completely is any part of the deal, even after 6 strikes.

There are two basic questions that arise from this news. First, will ISPs consistently take the initiative to implement these “mitigation measures,” since it’s all voluntary? And second, will four slaps on the wrist deter flagged P2P sharers before ISPs have to implement the harsher stuff?

Let us know what you think.

The agreement, which has apparently been in the works for some time, would see participating ISPs put some teeth on their anti-piracy efforts.

Under the proposed plan, ISPs would send out written warning to users who were flagged as sharing copyrighted material across P2P networks. These written warning would be called “Copyright Alerts” and there is no word on how many warnings a user would get before more drastic measures were implemented.

This is basically what is in place right now for many ISPs. Not all ISPs send written warnings, some send emails and make phone calls as well.

Where the new plan distinguishes itself is with the strategies for dealing with the repeat “offenders.” Apparently ISPs would have some flexibility in choosing how to deal with these customers, but CNET’s sources give some specific examples of possible responses. A user who is deemed to have shared files illegally may see their internet restricted – maybe just to the top 200 sites until the sharing ceases. The ISP may even be able to intentionally slow down the user’s bandwidth speed.

Here’s the best part – “The subscriber may also be required to participate in a program that educates them on copyright law and the rights of content creators.”

So…P2P traffic school? Seriously? Will it help me avoid points on my internet license?

The plan is called a “graduated response” method.

Of course the ISPs will not be constantly monitoring users for “illegal file sharing.” It will be the job of copyright owners to accuse internet users of malfeasance, and then the ISPs will be at liberty to act.

Recent attempts to combat file sharing by industry groups include the takedown and eventual settlement with P2P service Limewire. Some film companies have enlisted the services of U.S. Copyright Group. That particular organization monitors IP addresses for “illegal file sharing” and then subpoenas ISPs for user’s information. Many times they will sue large numbers of users, as we’ve seen with the Hurt Locker and Expendables cases. They will then offer smaller settlements, maybe a couple thousand dollars, to the defendants.

Those cases involved over 47,000 people combined. These new measures, if they go into place, have the ability to affect an even larger number of people.

CNET’s sources made a point to stress that the deals were not finalized, but were incredibly close. Unless the communications fall through, it looks like ISPs are going to join the anti-piracy movement in a big way.

Last year Voltage Pictures, makers of the Academy-award-winning The Hurt Locker, joined up with U.S. Copyright Group to sue 5,000 file sharers. Now, according to documents obtained by TorrentFreak, they have expanded the scope of their lawsuit to now include 24,583 BitTorrent users.

The modus operandi, per say, of the U.S. Copyright Group involves targeting a large number of said “infringers,” hitting them with enormous punitive figures, and offering them smaller settlements. Hopefully some bite.

The Expendables case was a substantial case not only for the large volume of accused persons, but because of the ruling the judge made regarding the subpoena of ISPs. Just a week before The Expendables case, a judge ruled in another case that IP addresses do not equal people. A Canadian porn producer wanted the right to subpoena ISPs for the names of the IP address they had procured while digging for “copyright infringers.” THe judge denied this request.

But the judge in The Expendables case made the exact opposite ruling, allowing U.S. Copyright group to move forward with the ISP subpoenas.

It seems that not everyone is on the same page.

A little more on those documents:

In a status report obtained by TorrentFreak, Voltage Pictures lawyers give the U.S. District Court of Columbia an overview of the massive list of alleged BitTorrent downloaders they filed complaints against. This report reveals that most defendants are subscribers of Comcast (10,532), followed by Verizon (5,239), Charter (2,699) and Time Warner (1,750).

The report also provides details on the agreements the lawyers have struck with various ISPs regarding the release of subscribers’ personal information. There is currently no agreement with Comcast, while Charter has promised to look up 150 IP-addresses a month and Verizon 100 a month for all ongoing BitTorrent lawsuits.

100 a month? So this could drag on for eternity, then?

Who knows? It is rarely the goal of the plaintiffs in these cases to actually pull a BitTorrent user into court. But small settlements that are paid to call off the litigation dogs can add up. As TorrentFreak points out, if just 10,000 of the 25,000 defendants settle for $2,000 or so, that could bring in a settlement that totals more than The Hurt Locker grossed at the U.S. box office.

At least, if you go by peak period traffic. A new report by Sandvine Intelligent Broadband Networks says that real-time entertainment has overtaken web browsing as the source of the majority of internet traffic in North America. And more specifically, Netflix has become the largest component of internet traffic on North American fixed access networks.

Real-time entertainment it described by Sandvine as any application the allow on-demand content that is consumed as is arrives. This includes services like Netflix, Hulu, YouTube and Spotify. According to their study, real-time entertainment makes up 49.2% of all internet traffic during peak evening hours. In 2009, it only accounted for 29.5% of the traffic.

The growth in traffic devoted to real-time entertainment has cut the most into web browsing. Web browsing made up 38.7% of traffic in 2009, dropped to 20.2% of traffic in 2010 and is now at 16.6% of traffic.

A really interesting find from this study involves the share of traffic devoted to P2P filesharing. The current share is 18.8%, which is only down .4% from 2010. It would seem that, almost counterintuitively, the boom in streaming content has not really hurt P2P filesharing. From the study:

Despite the emergence of an “on-demand” mentality, P2P networks have maintained a relatively consistent share of Internet traffic, and absolute volumes continue to increase. Opinions no doubt remain divided as to whether P2P’s staying power is evidence of widespread piracy or mainstream acceptance of the ease of distribution that P2P networks like BitTorrent provide for content creators.

Also, perhaps a shock to some, Social Networking is 6th, only accounting for 2.1% of peak hour traffic.

The emerging of real-time entertainment traffic as the dominant force in internet consumption translates to Netflix becoming the top dog when it comes to bandwidth usage.

Within North America specifically, the continued growth of on- demand applications is largely fuelled by the runaway success of Netflix, which now accounts for 29.70% of peak period downstream traffic. This share represents a 44% increase over the figure presented in the Fall 2010 study. Even when measuring total traffic and averaging over 24 hours, Netflix, with 22.2% of traffic, has overtaken BitTorrent (21.6%) as the largest component of Internet traffic on North America’s fixed access networks.

The study took into account hundreds of millions of subscribers in over 85 countries, so it also compiled statistics from Latin America and Europe as well.

In Latin America, real-time entertainment also places 1st in internet traffic, but not by a very wide margin. It only bests web browsing 27.5% to 24.9%. P2P filesharing takes 18% of the share. Interestingly, Facebook makes up a whopping 13.25% of the traffic during peak hours. It only makes up 1.86% in North America.

In Europe, real-time entertainment is also the winner, taking 33.2% of the share of traffic. But in a close second place is P2P filesharing, garnering 30.1% of the peak time traffic. This is up almost 300% from 2010. BitTorrent is the clear leader in both upstream and downstream traffic in Europe.

So it looks like streaming content is the biggest source of internet traffic across many parts of the globe. And here in the states, we see that during peak evening hours, most people are watching videos through Netflix.

This out-of-court settlement with 13 different record labels comes just days after the trial got underway. The RIAA has been seeking to take LimeWire down since the mid 2000′s. They have always claimed that the LimeWire client, in allowing users to download digital music, has perpetrated “massive scale infringement.”

Last May Federal District Court Judge Kimba Wood found LimeWire and its CEO Mark Gorton guilty of copyright infringment. In the fall, the RIAA won and injunction against LimeWire that forced the sharing service to shut ‘er down. In December 2010, LimeWire went down for good.

The $105 million settlement that was reached last night is a far cry from the original damages claimed by the RIAA. In a mind-boggling claim, the RIAA said that damages caused by LimeWire could total $75 trillion. Let’s put that in long form, just to remember what that looks like:

$75,000,000,000,000.

Judge Kimba Wood scoffed at that outrageously comical figure, saying:

“If plaintiffs were able to pursue a statutory damage theory predicated on the number of direct infringers per work, defendants’ damages could reach into the trillions…As defendants note, plaintiffs are suggesting an award that is ‘more money than the entire music recording industry has made since Edison’s invention of the phonograph in 1877.’”

The figure was later dropped to just over $1 billion in damages. This settlement is obviously significantly lower than either of those figures.

From RIAA Chairman and CEO Mitch Bainwol:

We are pleased to have reached a large monetary settlement following the court’s finding that both LimeWire and its founder Mark Gorton personally liable for copyright infringement. As the court heard during the last two weeks, LimeWire wreaked enormous damage on the music community, helping contribute to thousands of lost jobs and fewer opportunities for aspiring artists.

The significant settlement underscores the Supreme Court’s unanimous ruling in the Grokster case — designing and operating services to profit from the theft of the world’s greatest music comes with a stiff price. The resolution of this case is another milestone in the continuing evolution of online music to a legitimate marketplace that appropriately rewards creators. This hard fought victory is reason for celebration by the entire music community, its fans and the legal services that play by the rules.

Mark Gorton said that he was “pleased that this case has concluded,” as quoted in The Guardian.

Last week, just as the LimeWire / RIAA trial was getting underway, CNET and parent company CBS were sued by “eccentric billionaire” Alki David for providing LimeWire and other P2P clients as downloads. The suit claims that in providing the software, CNET is complicit in illegal file sharing.

Although the service went offline in December of last year, I feel this signals actual closure to the saga. RIP, LimeWire.

Days after one District Court Judge rules against the right to subpoena ISPs, another has granted a motion allowing copyright infringement litigators the power to do just that.

C’mon guys, you’ve gotta have a team meeting or something.

U.S. Copyright group has won a motion to subpoena ISPs to find out the identities of over 23,000 people who downloaded the dream-team-of-ass-kicking action movie The Expendables. The subpoenas would ask Alltel, AT&T, Atlantic, BellSouth, Comcast, Insight, Road Runner, Sprint, Verizon and more to turn over the identities of specific IP addresses attached to P2P sharers in February and March of this year. Straight from the ruling itself:

It is hereby ORDERED that Plaintiff’s Motion for Leave to Take Discovery Prior to the Rule 26(f) Conference is GRANTED. ORDERED that Plaintiff is allowed to serve immediate discovery on the internet service providers (ISPs) listed in Exhibit C to Plaintiff’s Motion to obtain the identity of each Doe Defendant, including those Doe Defendants for which Plaintiff has already identified an Internet Protocol (IP) address and those Doe Defendants for which Plaintiff identifies IP addresses during the course of this litigation, by serving a Rule 45 subpoena that seeks information sufficient to identify each Defendant, including name, current (and permanent) addresses, telephone numbers, email addresses, and Media Access Control addresses, and the ISPs shall respond to such subpoenas.

U.S. Copyright group has become quite famous recently for their suits on behalf of independent film makers. They monitor BitTorrent use of specific films, take down IP addresses then sue to subpoena ISPs to release information on the customers tied to those IP addresses. Many times they will offer settlements of $1,000 to $3,000 to those involved in P2P sharing of the films.

So this ruling is an obvious victory for copyright infringement litigators. But this ruling is not the only one this week that pertains to ISP subpoenas. Earlier, U.S. District Court Judge Harold Baker denied a similar request, labeling it a “fishing expedition.”

This time it was VPR, a Canadian porn producer that was targeting 1017 people. Bakers ruling explained that knowing the IP address where downloading is occurring is not the same thing as knowing the person responsible for the downloading.

Since often times people steal wi-fi from their neighbors and multiple people in households use the same IP, it is not a particularly solid method to prove guilt.

That ruling is in direct conflict with today’s Expendables ruling. It is clear that two federal judges looked at the exact same issue and came to completely different conclusions. I wonder if appeals tactics could already site precedence that IP addresses do not equal people.

This latest ruling OK’s the biggest torrent case ever. The second largest targets 15,500 downloaders of various pornos. The judge in that case has yet to rule on the subpoena issue.

Hat tip to Wired.

In the latest round of who-can-we-sue, disgruntled “victims” of file sharing have taken aim at CBS’s CNET, specifically their software downloading site cnet.download.com.

Entrepreneur, FilmOn Founder and “eccentric billionaire” Alki David has filed a lawsuit against CNET alleging that they aided in copyright infringement by distributing P2P clients, most notably LimeWire but also Morpheus, iMesh and FrostWire.  Of course, LimeWire is already in its own mess.

Joining Mr. David as plaintiffs are a number of rappers and R&B artists that include members of 2 Live Crew, Pretty Ricky and Ying Yang Twins.  Fifteen plaintiffs are listed in all.

Whose fault is copyright infringement, if anybody’s? Is it the person who shares the files, the makers of the client, or in this case do you agree that CNET shares some responsibility? Tell us what you think.

Part one of the argument is that CNET is guilty of copyright infringement because they allowed users to download software that was used for copyright infringement.

The CBS defendants have been the main distributor of Lime Wire software and have promoted this and other P2P systems in order to directly profit from wide-scale copyright infringement…the CBS Defendants’ business model has been so dependent upon P2P and file sharing applications that entire pages of Download.com are designed specifically to list and categorize these software offerings.

So, blame Dick’s Sporting Goods for selling the hockey stick that was used to bludgeon someone to death with.  Got it.  Maybe we should sue Google for providing search results linking to CNET.  Actually, let’s just sue the internet.  Let’s sue Al Gore.

All ranting aside, the fact remains that while CNET was distributing LimeWire, is was a legal product. Limewire does not inherently have to be used for “copyright infringement.” File sharing does not necessarily equal copyright infringement.  Of course, P2P clients are used for the sharing of copyrighted files – nobody can deny that.

But I simply don’t know if we should sue the tackle shop for selling the bobber used to snag and keep the fish from the catch-and-release pond. Should we?

But I digress.  The second part of the argument is that along with hosting downloads, CNET also wrote reviews for products like LimeWire, thus instructing users specifically how to break the law.

The CBS Defendants have not just distributed and profited from software applications used to infringe copyrights on a massive scale.  They also furnished articles and other content that explained how users could use P2P software to infringe.

On cnet.com, Download.com and other website, the CBS Defendants offered videos, articles and other media that instructed how to use P2P software to locate pirated copies of copyrighted works and remove electronic protections placed on digital music file sin order to prevent infringement.

Or as I call it, the Anarchist Cookbook argument.

Part 54 of the lawsuit provides my personal favorite complaint, simply for its leave-no-stone-unturned approach:

As part of their review process, the CBS Defendants tested the software that they reviewed and, in the case of P2P clients, infringed copyrights to do so.  In a video that Download.com posted to its website, the CBS Defendants again reviewed LimeWire, but this time demonstrated how it worked to Download.com users.  The message of the video is clear: LimeWire is really great at infringing copyrights.

The lawsuit seeks damages as well as an injunction barring CNET from offering P2P client downloads.

Here’s a video of Alki David ranting against CBS, thanks to Ars Technica.  David says that CBS “finds itself publicly exposed as an irresponsible hypocrite, that has ruined the lives of hundreds of thousands of people in the creative community and created copyright infringement damages into the trillions of dollars.”

“Hypocrite” is most likely a reference to past legal dealings between CBS and David’s site FilmOn. Last fall CBS along with Fox, NBC and ABC won a restraining order against U.K. based FilmOn in the U.S. The networks argued that because FilmOn was rebroadcasting their content over the internet, they were in violation of copyright law. Although the merits of Alki David’s lawsuit against CBS deserve a fair debate, it is not a stretch to see this current lawsuit as some sort of retaliation for previous actions.

CBS has responded to the lawsuit, saying:

“This latest move by Mr. David is a desperate attempt to distract copyright holders like us from continuing our rightful claims. His lawsuit against CBS affiliates is riddled with inaccuracies, and we are confident that we will prevail, just as we did in the injunction hearing involving his company.”

Also, does anyone see the awesome irony in Dentron Bendross of 2 Live Crew suing someone for copyright infringement, considering his group was part of one of the more famous fair use lawsuits ever?

Oh well.  It shouldn’t be too hard to discern where I land on the issue.  But what do you think? Let us know in the comments.

CNET Limewire Torrent Freak Report

But research published today by the folks at NPD Group suggests a decline in P2P music downloading since the demise of Limewire. According to NPD, Americans downloaded music via P2P client at a 16% clip in Q4 of 2007. In Q4 of 2010, when Limewire went down, that number had fallen to 9%. More statistics from the study:

The average number of music files downloaded from P2P networks also declined from 35 tracks per person in Q4 2007 to just 18 tracks in Q4 2010, although some downloaded just one or two tracks, while others took hundreds. NPD estimates there were 16 million P2P users downloading music in Q4 2010, which is 12 million fewer than in Q4 2007.

“Limewire was so popular for music file trading, and for so long, that its closure has had a powerful and immediate effect on the number of people downloading music files from peer-to-peer services and curtailed the amount being swapped,” said Russ Crupnick, entertainment industry analyst for NPD. “In the past, we’ve noted that hard-core peer-to-peer users would quickly move to other Web sites that offered illegal music file sharing. It will be interesting to see if services like Frostwire and Bittorrent take up the slack left by Limewire, or if peer-to-peer music downloaders instead move on to other modes of acquiring or listening to music.

Yeah, I’m going to go with the find other means option.

After the fall of Limewire, NPR reports an 11% rise in Frostwire use and a 4% rise in uTorrent use. These numbers seem low, especially the uTorrent rise. It might be helpful to note the information was gathered through online surveys. I’m not saying people lie, but people lie. With private tracker torrent sites like waffles.fm and what.cd popping up, people are going to feel more secure in using torrents to download music. (If you can score an invite to one of those sites)

Even with record companies suing for laughable amounts like $75 trillion, for some people that have been freely acquiring all their music since the early days of Napster, it could prove to be an impossible habit to break.