1. Copyright
enforcement for
the digital age
POLICY RECOMMENDATION

2. Agenda
› APOCALYPTIC TECH
ADVANCES
› FACTS AND FACT BASED
› WE THINK: GUIDING
ENFORCEMENT
PRINCIPLES
› CONCLUSIONS
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 2

3. Professional Media Industry-
Continued TRANSFORMATION
Content type Expect continued
changes in business
Audiovisual conditions
TV Film
Gaming
• Digitization
• Miniaturization
Audio Radio Recorded
• Screens
Music • Storage
• Processing
• Networks
• Broadband access
Photo
• Business models
Consumer
Newspaper Magazines • Falling transaction costs
Academic • Media Convergence
Journals • Online behaviors
Books
Text
Function
Information Education Entertainment
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 3 Source: The Internet and the Mass Media, Kung, Picard, Towse, 2008

4. MEDIA industry owes its
existence to technological
advances
Videotext P2P
Blog
WWW XML
Telegraph E-mail HTTP
FTP
Print Media
Digital Radio
Music
Radio
Recording FM MP3
Cassette CD Streaming
Telephony Radio
Audio
Internet Radio
Film Satellit VCR MTV
TV
Color e TV DVD IPTV
TV Digital
Text Streaming video
TV
TV Internet TV
Source: The Internet and the Mass Media, Kung, Picard, Towse, 2008
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 4

5. There is nothing new under
the sun
*
Source: Lucy Kung, 2010 * Music industry refers to Record Music Industry
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 5

6. The apocalyptic advances of
technology in creative
industry
1906: Advent of the music recording industry threat:
i.e. gramophones (today CD-players and DVD-players), players pianos
and talking machines. The technologies threaten to negate the value of
sheet music and the future of creativity; Composer John Phillip Sousa
to the US Congress: “…these machines are going to ruin the artistic
development of music….the vocal chord will be eliminated by process
of evolution, as was the tail of a man when be came from the ape”
1920: Advent of the FM radio industry threat:
“recording industry fears the new medium that would provide close
substitutes to buying records”.
Source: Arguments before the US Commission on Patents of the S & H.R, Conjointly on the Bills S 6330 and H.R. 19, 853 to Amend and Consolidate the
Acts Respecting Copyright 1906.
Source: Harvard Business Review File-Sharing and Copyright, Felix Oberholzer-Gee and Koleman Strumpf, May 2009
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 6

7. The apocalyptic advances of
technology in creative
industry
1960: Advent of the cable-TV industry threat:
Broadcasting industry (terrestrial TV) complained that CATV operators neither
need nor deserve a free ride at the expense of copyright owners and the
activities of “CATV operators constitute a clear moral wrong”. In 1975, the Film
Industry describes cable industry as a “huge parasite that is feeding and
fattening itself off local television stations and copyright owners”
1980: Advent of home recording industry– the VCR threat:
Stanley M. Gortikov, president of the Recording Industry Association of America
(RIAA), explained in hearings before a House committee on 14 April 1982, “I’m
scared, and so is my industry. Changing technology today is threatening to
destroy the value of our copyrights and the vitality of the music industry. Our
nemesis is home taping.”
Source: Tim Wu ―Copyright’s Communication Policy‖ 1043 Mich. L. Rev.278, 313 (2004)
Source: Harvard Business Review File-Sharing and Copyright, Felix Oberholzer- Gee and Koleman Strumpf, May 2009
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 7

8. Monocausal explanations
are simply not true …
› The MPAA* has discursively portrayed the digital
transition, in the press and in policy circles, as a zero-sum
situation with only two possible outcomes:
– the elimination of control, through piracy; or
– the perfection of control, and hence the protection of
creativity and property rights
› It is time to demystify the false zero-sum doctrine and put
it to the past.
*Source: (Vaidhyanathan, 2001, 2004) quoted in Currah, Andrew(2007) 'Hollywood, the Internet and the World: A Geography of
Disruptive Innovation', Industry & Innovation, 14: 4, 359 — 384
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 8

9. Going digital is not a zero-
sum game : Norwegian CASE
› Total annual industry
revenues grew from 1.4
BNOK to 1.9 BNOK
which is + 36%
› Number of Music artist
increased by + 28%
› Per Capita inflation
adjusted annual artist
income has increased by
+66%
Source: The Norwegian Music Industry in Age of Digitalization, Bjerke & Sorbro, BI Norwegian School of Management, Oslo 2010
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 9

10. The Economist reports half
year results (2011)
› The Economist Group’s consistent growth has been built
on the Group’s long-term investments in both the editorial
content and digital distribution.
› This approach reflects the business’s view that new
technology such as e-readers and tablets are significantly
changing reader behavior
› Economist is discovering great opportunities in digital.
For us, as for many publishers, digital is not a zero-sum
game.”
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 10 Source: The Economist

11. The Economist group
Experience – digitization not a
zero-sum game
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 11 Source: The Economist

12. Agenda
› APOCALYPTIC TECH
ADVANCES
› FACTS AND FACT BASED
› WE THINK: GUIDING
ENFORCEMENT
PRINCIPLES
› CONCLUSIONS
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 12

13. Fact based approach -
Hargreaves report
› No one doubts that a great deal of copyright piracy is taking
place, but reliable data about scale and trends is
surprisingly scarce.
› A detailed survey of UK and international data finds that very
little of it is supported by transparent research criteria.
› Meanwhile sales and profitability levels in most creative
business sectors appear to be holding up reasonably well.
› Many creative businesses are experiencing turbulence from
digital copyright infringement, but that at the level of the whole
economy, measurable impacts are not as stark as is
sometimes suggested.
Source: An Independent Report by Professor Ian Hargreaves, page 6 May 2011
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 13

14. Fact based approach -
Hargreaves report
› Such research as exists indicates that we should be wary of
expecting tougher enforcement alone to solve the problem of
copyright infringement.
› Instead, Government should respond in four ways:
– by modernizing copyright law;
– through education;
– through enforcement and
– by doing all it can to encourage open and competitive
markets in licensed digital content,
› which will result in more legitimate digital content at prices which
appeal to consumers.
Source: An Independent Report by Professor Ian Hargreaves, page 6 May 2011
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 14

15. Displace “free” with lawful
digital services !
Spain
Base: Spanish on-demand (streaming & downloading content) users (513 users out of 1000)
New & old content Attractive pricing User friendly & simple
60%
US
50% 2011
40% 2012
30%
20%
10%
0%
Other File sharing Apple iTunes Amazon Instant Operator On- TV Network Hulu Netflix
Video demand homepage
Base: US on-demand (streaming & downloading content) users (591 users out of 1000)
BASE: Spain & US [On-demand users that watch streamed or downloaded video content at least several times per month]
Source: Ericsson ConsumerLab TV Video Consumer trends 2011 & 2012
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 15

16. displace FREE with LAWFUL
Digital Services
Study from Norway (Norwaco/Synnovate Report 2011 for 2010):
› The Norwegian Collecting Society NORWACO findings over the last
few years, are quite remarkable.
› From 2008 to 2009 the number of illegal copies of music fell
dramatically
› In 2008/9, > illegal copies down - 40%
› In 2009/10 > illegal copies had gone down even further - 13%
› No enforcement measures; threes-strikes or graduated responses
were introduced during this period.
› Spotify , a legal digital music service (among others) was introduced in
2007/8
Source; http://norwaco.no/nor/content/download/7259/83338/version/2/file/Synovaterapport+2010.pdf
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 16

17. Sheer count of lawful
services is not relevant
We need to move away from a sheer count of lawful services and
look more closely at factors determining the successful adoption
and growth of lawful digital services.
Factors that define the level of success are:
timely availability
the range and depth of titles available,
business model (subscription, download to own, advertising)
ability to time/format/device shift content,
payment methods (credit card, pre-paid),
easy of use and
affordable price points.
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 17

18. Declining physical sales
(MUSIC)
› Format shifting (LP-CD) peaked around year
2000
› Lawful digital services displacing physical sales
(Korea, Norway, UK, Sweden)
› Increased competition from other
platforms, Music (CD sales) migrating to TV (X-
factor, Idol and Gaming)
› Increased competition from Live Performances
Sources: GOA United States Government Accountability Office, Report to Congressional Committees, Intellectual Property, April 2010.
See also: Harvard Business Review File-Sharing and Copyright, Felix Oberholzer-Gee and Koleman Strumpf, May 2009, Digital
Opportunity, a review of intellectual property and growth, Ian Hargreaves, May 2011 UK
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 18

19. Content ACCESS BARRIERS –
copyright not the only barrier
› Access barriers are barriers to unhindered consumption of
content, the presence of which often results in the personal
consumption needs of consumers being unmet.
› WIPO identified following access barriers:
– Consumer barriers (affordability)
– Content exclusivity and limited competition
– Deliberate non-availability of content
(windowing, territoriality)
– Policy and regulatory barriers:
› Content regulation
World Intellectual Property Organization, Twentieth Session, Geneva June 21 to 24 2011, or
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 19
access: http://www.wipo.int/edocs/mdocs/copyright/en/sccr_20/sccr_20_2_rev.pdf

20. The market supply failure of
lawful “on-demand/digital”
content
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 20
Source PWC Global Entertainment Outlook 2012

21. Agenda
› APOCALYPTIC TECH
ADVANCES
› FACTS AND FACT BASED
› WE THINK: GUIDING
ENFORCEMENT
PRINCIPLES
› CONCLUSIONS
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 21

22. we think – Guiding principles
› Continued educational efforts are necessary
› Reasonable expectations need to be
accommodated
› Enforcement is just a part of the solution
› Balancing the interests of innovators and
intermediaries
› Governments must stimulate growth of lawful
digital content services
– Reform copyright – but not liberalize file sharing
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 22

23. we think – Continued
educational efforts
› Educational and awareness raising campaigns on
the value of intellectual property should be
encouraged and promoted.
› Education about appropriate user behaviour, on
one side and enforcement measures on the
other, are certainly part of the solution, but they
are not enough.
› More compelling lawful digital offers must be
allowed to enter the market.
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 23

24. we think – reasonable
expectations must be met
›TIME SHIFTING In combination
with a legal
›DEVICE SHIFTING
system that
›PLACE SHIFTING promotes
›PRIVATE SPHERE availability of
digital licensed
›LAWFULLY content and
ACQUIRED efficient
licensing
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 24

25. we think – direct
enforcement by rights
holders
› Direct enforcement by rights holders is an
undisputed right to enforce private property rights.
› Rightly so, this right is undisputed and available
option to rights holders to act on infringements.
› The primary and often the sole beneficiary of
private enforcement is the private rights holders.
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 25

26. we think – indirect
enforcement
› There is a serious and important difference
between requiring intermediaries to pass
allegations of infringement on to end users
› And requiring intermediaries to take action to
impose sanctions on their users for alleged
infringement
› Intermediaries are obliged and must respect the
right to privacy, freedom of communication and
presumption of innocence
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 26

27. we think – indirect
enforcement
› The rights holder is the primary and often the sole
beneficiary of preventive infringement actions
› Accordingly, it is appropriate for the rights holder
to cover the costs of the action (including ISPs)
and also bare any associated risks
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 27

28. we think – indirect
enforcement
› To the extent that enforcement action of rights
takes place, relying on the evidence provided by a
rights holder, the rights holder should take
responsibility for the consequences of the action
› There is great variance in the accuracy and
trustworthiness of automated systems that are
employed (quality of alleged infringements)
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 28

29. we think – indirect
enforcement
› No outsourcing of law enforcement to
intermediaries should take place.
› Any sanctions should remain the prerogative of
the courts.
› Only due legal processes can ensure that
allegations are properly evaluated, defences
adequately considered, and proportional
punishments imposed .
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 29

30. we think – innovation is
also essential
› As technologies and business models continue to
develop, limitations of intermediary liability through safe
harbour regimes and explicit defences play an extremely
important role in enabling innovation.
› While placing increased liability and responsibility for
copyright infringement on intermediaries can assist in
making enforcement more efficient, such moves must
always be considered in light of the impact on the
intermediaries and investments in new innovations.
› Innovation should not be limited on the basis of
conventionalism or apocalyptic rhetoric or narrow interest.
Source: Josh Lerner, Jacob H. Schiff Professor of Investment Banking at Harvard Business School, Harvard
University, Cambridge, MA. In the paper titled; ―The Impact of Copyright Policy Changes on Venture Capital Investment in Cloud
Computing Companies, 2011
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 30

31. We think- stimulating lawful
digital services – should be the
main focus of policy reforms
›Increasing availability of lawful
digital/on-demand content
›Decreasing technology specificity of
copyright/licensing/exceptions
›Minimize transaction costs
More information available : Digital Content Promotion
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 31

32. we agree with - RIAA
statement 1 Dec. 2011
“To be clear, no legal
efforts are a panacea
— compelling legal
consumption options
are the most
important”
Source: The Tennessean, 1 December 2011, RIAA largely succeeds in goal of bringing piracy under control
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 32

33. Agenda
› APOCALYPTIC TECH
ADVANCES
› FACTS AND FACT BASED
› WE THINK: GUIDING
ENFORCEMENT
PRINCIPLES
› CONCLUSIONS
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 33

34. conclusions
› Digital creative transformation is our
common destiny
› Digitization is not a zero-sum game
› Adequate enforcement is just a part of the
solution
› Fact based enforcement policy approach is
necessary
› We need a Digital Copyright Reform to:
› Stimulate the growth of lawful digital market
› Formulate a sustainable approach to
displace illegal access and grow industries
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 34

35. Conclusions- Adequate
enforcement is
1. Fact based
2. Balanced
3. Focused on end user demand
4. Respects the right to privacy
5. Supports continued
innovation
6. Promotes growth of lawful
digital services
7. Respects the relative nature
of copyright
8. Avoids outsourcing of
enforcement to private third
parties
COPYRIGHT ENFORCEMENT PRINCIPLES | Public | © Ericsson AB 2012 | 2012-11-01 | Page 35