CREEPING IN: Movie studios say internet piracy appears to have halved since the 'SkyNet' law came into effect.

Movie studios say internet piracy appears to have halved since the controversial "SkyNet" three-strikes copyright law came into effect in September but they are still unhappy.

Music and movie industry bodies said piracy had since "plateaued" and they would need to send out many more infringement notices to internet users to make more progress.

The law gave rights holders the power to haul people in front of the Copyright Tribunal if they were accused three times of illegally accessing music and movies, to face fines up to $15,000.

The Recording Industry Association of New Zealand (Rianz), which represents major record labels, said that between October and April 26 it ordered internet providers send 2766 infringement notices to people it believed it had caught pirating music, including tracks from Lady Gaga and Rihanna.

It wants to increase that to 5000 notices a month, but said the fees it had to pay internet providers for on-sending the notices would first need to be cut from $25 to $2 or less.

The Federation Against Copyright Theft, which represents major US movie studios, said the number of times top-200 movies were viewed illegally by New Zealanders online plummeted from 110,000 in August, the month before the copyright law change took effect, to about 50,000 in September. But it said there had been no discernible progress since.

Neither it nor any of its members had ordered any infringement notices because of the $25 fee, which it said should be cut to "pennies".

Rianz said overall use of peer-to-peer file sharing (P2P) services had fallen 18 per cent since Skynet, but it estimated that despite the "dent in piracy", New Zealanders were still big cheats.

P2P services let computer users search for and share files, including pirated movies and music, stored on other people's computers.

Forty-one per cent of New Zealand internet users accessed such "copyright infringing services online" in February, compared to a global average of 28 per cent, it said.

TelstraClear said there were many legal uses of P2P including streaming music service Spotify and World of Warcraft, a popular computer game.

The information was contained in submissions made to the Economic Development Ministry, which is reviewing the fees right holders must pay for infringement notices, and were released under the Official Information Act.

Rianz said the fees needed to be more affordable if right holders were to issue enough notices to "educate" internet users and the review was "critical".

Sending out 5000 infringement notices a month would let record labels issue warnings to 5 per cent of P2P users each year, Rianz said.

It was inevitable the current "low level of notices would reach the public arena", it said. "The public will know that the chances of receiving a notice are minimal, effectively rendering the law impotent".

But Telecom said the fees should rise to $104. It said it had spent $534,416 complying with Skynet, but had been asked to send only 1238 notices.

Other telecommunications companies, the Telecommunications Users Association and InternetNZ also opposed cutting the $25 fee.

The submissions showed Telecom, TelstraClear and Vodafone each had one customer who had received a final "third strike" enforcement notice, which meant Rianz could have brought them in front of the Copyright Tribunal.

But all three enforcement notices have lapsed without Rianz taking action, meaning those internet users would be back on a clean sheet of "no strikes".

Rianz won't comment on why it hasn't taken action on those three offenders.

InternetNZ chief executive Vikram Kumar said he was pleased Rianz had resisted pulling the trigger.

"We don't want to see anyone fined."

But he disagreed with rights holders' approach to piracy.

"Make material available in time, in the way people want it, and most of the problem will disappear," he said.

Rianz said there were now six music download stores and four "all you can eat" streaming music services operating in New Zealand, with another four streaming services planning to launch in the near future. Many had been encouraged to launch because of the crackdown on piracy, it said.

Fifty-eight of its 2766 infringement notices had been challenged by internet users, but it had adjudged only two of those challenges "valid".