For months now, the brightest minds in the UK—well, the brightest minds in the Department for Business, Innovation, and Skills, anyway—have been pondering a thorny question: who should pay for all the warning letters that will soon be winging their way by e-mail and post to (suspected) P2P users? Today, we learned the answer (PDF): rightsholders will pick up 75 percent of the tab, but ISPs will pay the rest.

Under the Digital Economy Act, passed earlier this year, the UK gave its courts the power to order complete blocks on websites, required ISPs to start sending P2P warning letters from copyright holders, and opened the door to throttling and Internet disconnection for repeat infringement at some future date.

Given that the law helps copyright holders enforce their rights, one might wonder why an ISP would pay anything for the privilege of helping out another industry. You would not be alone in asking this question; ISPs raised it on every possible occasion during the government's implementation proceedings.

"ISPs strongly felt copyrights holders, as 'sole beneficiaries' of the obligations, should pay all costs incurred by ISPs," according to the government's summary of their position. "Otherwise a 'copyright enforcement' tax would be imposed on innocent customers, cost sharing could reduce broadband uptake, slow down essential innovation needed to properly solve the problem of copyright infringement and distort competition between ISPs."

Copyright owners argued that ISPs do accrue big benefits from file-sharing, though, in the form of happy, piratical customers who subscribe to fast broadband tiers to satisfy their peg-legged lust for online booty (or, err, words to that effect). In fact, ISPs make so much money from file-sharing that they should split not only the cost of processing IP addresses and sending out warning letters; they should also help the rightsholders pay for the detective firms that round up infringers' IP addresses in the first place.

This last idea was roundly rejected by the government. Detecting infringement involves "largely 'business as usual' costs that copyright owners would face as part of protecting their own copyright material," said the government, and music and movie company will have to cover all of the costs.

So rightsholders will pay up to find the pimple-faced teens swapping copies of Twilight online, but the ISPs will pay 25 percent of the cost involved in processing the IP address and mailing a letter to said pimple-faced teen (or, more likely, to his parents).

The UK's Minister for Communications, Ed Vaizey, said, "We expect the measures will benefit our creative economy by some £200m per year and as rights holders are the main beneficiaries of the system, we believe our decision on costs is proportionate to everyone involved." But the Open Rights Group, a digital advocacy group, says the move will actually cost consumers "up to £500m" as ISPs pass their increased costs along.

As part of the new rules, the government did make one excellent and noncontroversial decision on fees: appealing a letter will be free of charge. If, however, too many people start claiming "I didn't do it!" just because they can do so at no charge, the government reserves the right to charge a small appeal fee to cut down on "vexatious" claims.

"It doesn't matter"



Costs aside, will the bill work? One ISP doubts it. Back in March, Talk Talk said a survey of its own showed that file-swappers would simply migrate away from P2P, switching to download lockers and Web streaming services instead. (This mirrors recent research from France, which is about to implement a similar law).

"In any case," said Andrew Heaney, TalkTalk's director of strategy and regulation, “the record labels’ claims of the demise of the music industry are simply scaremongering. They have consistently claimed that new technology will wipe them out—for instance in the 1980s with the 'Home Taping is Killing Music' campaign. Of course, taping didn't kill music, the industry adapted and survived.

"Over the past few years consumers have become used to accessing music and video content online for free. We don’t condone it or encourage it but this behaviour is embedded in a whole generation of music fans.

"It doesn't matter how many sites are blocked, how many families are snooped on or how many customers are disconnected, music fans who want to can and will get the content they want online for free."

One rarely hears ISPs talk in these terms; we'll soon find out if Heaney was right, or whether warning letters are actually enough to strip the veil of anonymity and force pirates to tack their boats toward legal waters.