A leaked draft submission from the content industry makes it clear that the Australian government's other controversial proposal — mandatory data retention — will be a useful tool in cracking down on online copyright infringement.

The discussion paper released by Attorney-General George Brandis and Communications Minister Malcolm Turnbull last month called for views on the best way to deter Australians infringing copyright online through downloading TV shows, films, and music. Some of the proposals put forward by the government favour blocking websites such as the Pirate Bay, and compelling ISPs to send notices out to customers who are infringing, with the ultimate result being deterrence or some form of punishment, be it through a throttled internet connection or rights holders taking alleged infringers to court.

Submissions are due by Monday, and none have yet been officially released by the government. However, a draft submission from the peak international copyright lobby groups, including the Australian Screen Association (formerly AFACT), the Australian Home Entertainment Distributors Association, and the Motion Picture Distributors Association of Australia, was leaked yesterday to news website Crikey.

In the submission (PDF), the studios largely welcome much of the government's recommendations for methods to crack down on copyright infringement, and detailed exactly how the infringement notice scheme should work.

The proposal matches that of the recently implemented US Copy Alert system, and sees the costs shared equally between both rights holders and ISPs for alerting customers when they have allegedly downloaded an infringing TV show or film.

"Copyright owners would pay their own costs of identifying the infringements and notifying these to the ISP, while ISPs would bear the costs of matching the IP addresses in the infringement notices to subscribers, issuing the notices and taking any necessary technical mitigation measures," the submission states.

"This is a rational approach to meeting the costs of a scheme. It means that the parties with the control oversteps in the process — rights holders have control over the investigative steps, which ISPs have control over the account matching steps — have the incentive to control and can control the costs of that step."

The shared-costs approach is not one favoured by the industry, in particular iiNet, which is also battling the government on another front, with the proposal for telecommunications companies to retain customer data, including IP addresses, for up to two years.

iiNet has previously confirmed that the company does not keep customer data, including assigned IP addresses, for any longer than it requires. Under a mandatory data-retention regime, iiNet would be required to retain all IP addresses assigned to its customers for a period of two years.

Although the government has previously said that data retention is not associated with copyright infringement policies, the two are inexorably linked, through the requirement of both copyright holders and law-enforcement agencies to match IP addresses against user accounts.

And in order to comply with any copyright infringement notice scheme, ISPs will be required to make sure that they retain logs of IP addresses long enough, so that when rights holders come knocking, they can match that IP address with the account holder.

If both data-retention and piracy laws come in, ISPs, in the meantime, could be slugged with the costs of not only retaining the data for the mandatory data-retention regime, but also for checking that data against IP addresses sent to them by the rights holders.

The studios opposed the government's proposal that rights holders bear the cost of the system, stating that the New Zealand system where rights holders pay NZ$25 per notice sent is "poorly designed" and "poorly implemented". They argued that it is uneconomic for rights holders to issue notices, and claimed that "anecdotal evidence indicates that the cost charged by some ISPs generates a profit for them".

This claim came despite evidence to the contrary from the industry in 2012 (PDF) that the cost to investigate each notice sent cost ISPs in the country between NZ$30.50 and NZ$104 per notice, with a cost recovery of between 24 percent and 81 percent

The submission claims that between August 2012 and August 2014, there have been 12,345 notices sent out, "equating to a mere 128 notices per week", with only 18 cases ending up before the Copyright Tribunal, and BitTorrent infringement rates returning to pre-legislation levels.

They were also supportive of website-blocking proposals, and indicated that although they are easily circumvented, it will stop most people from visiting sites like the Pirate Bay, citing internal research in the draft paper that has yet to be approved for disclosure.

"Recent research of the effectiveness of site-blocking orders in the UK found that visits to infringing sites blocked declined by more than 90 percent in total during the measurement period, or by 74.5 percent when proxy sites are included."

The paper also claimed that consumers would benefit from a reduction in online copyright infringement, stating that those who pay are "subsidising" infringers.

"Consumers who purchase legitimate content are subsidising the internet users who take illegally, because it is only the former that are contributing to creation and investment in that content — the latter are free-riding."

Turnbull is holding a forum on the proposals on September 9 in Sydney, with industry stakeholders from all sides speaking at the event. However, one vocal advocate for cracking down on copyright infringement, Village Roadshow CEO Graham Burke, will not be in attendance. ZDNet revealed last week that Burke told Turnbull directly that he would not attend a forum dominated by "crazies" only interested in the "theft of movies".

"These Q-and-A-style formats are judged by the noise on the night, and given the proposed venue, I believe this will be weighted by the crazies," he said.

"What is at stake here is the very future of Australian film production itself, and it is too crucially important to Australia's economy and the fabric of our society to put at risk with what will be a minuscule group whose hidden agenda is theft of movies."