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May 28, 2014

What Has Been Learned from the New Copyright Alert System (CAS)?

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For some time IPI has been at the forefront of arguing in favor of intellectual property protection, since we believe that property rights are the basis of any market-based system, and markets are the best way to allocate goods and services. And particularly in an innovation-based economy, ensuring that innovators and creators are able to reap the rewards of their successful products is the best way to continue to fund a virtuous cycle of innovation.

Most commonly IP is protected through the force of law, since it is a proper role of government to facilitate the protection of private property. But, practically as well as legally, everyone who wants their world to be a world rich in creativity and innovation has an interest in seeing that creators and innovators are rewarded, in order to encourage continued creativity and innovation as envisioned by the American Founders in the Constitution’s Copyright Clause.

Massive on-line piracy, of course, derails the virtuous circle by depriving creators of any hope of reward. But the development of new business models through which content can be legally obtained on-line means that today those who might have taken the easy piracy route can be educated and redirected toward an abundance of legal options.

This is what brought Internet providers to the table with content companies some time ago to devise a voluntary system to try to reduce online piracy. Whereas before ISPs had been sometimes accused of having interests opposed to those of the content companies, in the maturing Internet ecosystem it has become clear that all legitimate players in the Internet have an interest in making sure that the Internet is a place rich in creative content, and a place where those who contribute to this richness at least have the option of attempting to monetize their content through various business models.

Some countries have adopted legally imposed graduated response system to educate, warn, and eventually sanction those who stubbornly and repeatedly insist on participating in copyright piracy. But here in the U.S. major ISPs and content interests devised a voluntary graduated response system called the Copyright Alert System (CAS), which is administered by the Center for Copyright Information (CIS). It’s typically American and typically Internet for interested parties to come together and set voluntary standards as a means of spontaneous order and self-organization, so it would be great if such a system could actually make a difference. Today the CAS released its first report on almost a year’s worth of effort, and the results are encouraging.

The CAS is by design heavy on the education and warning functions but light on the sanctioning function, as you would expect from a voluntary system. So the success of the CAS is to be measured in terms of deterrence through the educational and warning emails. In other words, how many who received an initial warning required repeated and escalated warnings?

According to the report:

  • More than 2 million notices were delivered to ISPs (by content owners) and 1.3 million subsequent warnings were sent to account holders. (CAS expects that number to at least double in the coming year.)
  • That 1.3 million quickly drops down to 165,065 who required a 3rd notice, and to only 37,456 who required the strongest, 6th alert. This suggests that the early stage warnings have a definite effect in discouraging continued trafficking in pirated materials.
  • While the CAS includes a process whereby notice recipients can challenge through the American Arbitration Association (AAA) when they believe they have been improperly notified, only 265 challenges were filed, and there was not a single case in which an invalid notice was identified. This suggests that the identification process is very accurate, which rebuts charges by critics that large numbers of false accusations would be flying around.

CCI says that this report really describes the process of ramping up the CAS to operation, and that the ramp up has been successful. I’m particularly struck by the surprisingly small number of challenges to the notices—those 265 challenges reflect only 0.02% of all alerts sent to account holders—and by the fact that not a single invalid false positive was identified.

The report suggests that the CAS system has so far successfully navigated the tricky waters of protecting the privacy of ISP account holders and has also avoided sending false notices to households and thus angering consumers. And while doing so, the CAS has apparently managed to educate hundreds of thousands of customers about illegal copyright violations taking place through their accounts. So far it seems there is every reason to be optimistic about the CAS system, and every reason to ignore its critics.

Which makes me optimistic about the potential for further voluntary collaboration between all members of the Internet ecosystem going forward.

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