On Wednesday, Lord Mandelson the government Business Secretary said the U.K. will cut Internet access of repeat offenders as ‘last resort’ – a move that broadly speaking has been well received by artists, labels and industry organisations.  There are a few dissenters, most notably telecoms companies and ISPs who are concerned about bearing the extra costs of monitoring and enforcement.  But is the basic principle sound?

There can be no doubt that something needs to be done – Future of the Left guitarist Andy Falkous’ now famous MySpace rant, turned into a Guardian full page advert by UK Music to highlight the issues of piracy from the point of view of struggling acts makes a very simple point  – reiterated in a recent interview “I’m sure that Metallica don’t need the money, unless you’re talking of a fourth holiday home or whatever, but it doesn’t really change the moral issue. Theft is still theft”.   UK Music CEO Feargal Sharkey added at the Labour Party conference that artists are having their work stolen whilst they live in poverty, and the government must act to provide mechanisms where fans can consume music at a fair price in the formats they want to consume it.  The Future of the Left situation is typical – within hours of releasing their new album ‘Travels with Myself and Another’, it was being downloaded free on a Russian file trading site, whilst the band are still struggling to pay for the studio time.  But is cutting off internet access for persistent offenders relevant?

Here’s the problem: Stopping persistent offenders from using the internet will reduce piracy by a small percentage.  If you’re The Future of the Left, every illegal download is serious, not just the ones by persistent offenders. So there’s a basic mismatch between evaluating the pain caused to the victims of piracy and the measures suggested to reduce it, i.e. the difference between losing 80% of your income to piracy vs. losing 50% of your income to piracy won’t make everything OK.  Reducing piracy demands a change in the way the music business monetises its products so that the overwhelming majority of fans are happy to pay for music, rather than sticking to a model that is clearly broken and picking out a percentage of the offenders and making an example of them.

Mandelson’s announcement has much deeper ramifications for civil liberties in the UK, and artists and labels are in danger of finding themselves on the authoritarian side of the fence – a place it cannot survive given the fact the politics of music and youth culture only thrive on the anti-establishment side.  The argument being made by various civil liberties commentators is simple – the music industry is lobbying hard for the government to act, but there is a danger that private business interests are leaking into public policy.  As Jim Killick, open government advocate put it “this is like saying people who persistently drop litter should be banned from walking down the road… even if you get arrested for drunk driving you’re still allowed access to the roads”.  This is a valid point, web access is increasingly important in education and social communication – cutting off the right of people to connect to the web will damage their social mobility, work prospects, education and life chances.  It’s like being arrested for shop lifting and the punishment being denied the right to go to school, socialise or use public transport.  This may sound dramatic, but the argument is being made that just because the music industry doesn’t change its core business model it shouldn’t be allowed to drag telecoms operators, computer manufacturers and the millions of web services that have nothing to do with music into their fight by encouraging attacks on the web access that all those businesses need to survive.

Adding to the debate, Philip Virgo, EURIM secretary general and the man behind extending copyright laws to cover software in the 1980s said “children are using the web to get things they can’t afford to buy, if record labels sold tracks in the UK at the low prices they can be purchased in China, piracy would be dramatically reduced”.  Looking at iTunes prices, averaging around 75p per track, the cost of music remains at roughly high street CD prices, which means the cost savings on distribution electronically rather than via CDs aren’t being passed onto the consumer, which means the black market of P2P is thriving through simple supply and demand economics.  If tracks were sold cheaper, more people would buy.  At least, that’s the theory.

So back to the announcement from Lord Mandelson… everyone agrees there is a problem, and everyone agrees there is a solution hiding somewhere between the ISPs, the copyright owners and the law.  You can’t control illegal markets through legislation alone, but you can reduce offending by balancing the stick with a carrot of making the economics of the illegal market less attractive…  if you download £10,000 worth of illegal music, you might consider it worth risking fines or losing your web access, but if the same tracks were only worth £500 would you still take the risk?

Theft is still theft, but as a general rule people don’t bother stealing things they can easily afford, and given the revenue losses facing artists and labels, wouldn’t it be better to make some money rather than none at all?  Watch this space…