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U2 Manager Slams Broadband ISPs for Decimating the Music Industry

Posted: 23rd Aug, 2010 By: MarkJ
p2p uk music pirateThe manager of popular music band U2, Paul McGuinness, has slammed broadband ISPs in the UK and around the world for "decimating the music industry" by profiting off the availability of FREE unlawful copyright file sharing (P2P) downloads. Some of the remarks almost mirror those made by U2's front man, Bono, last year (here) and show an equal lack of technical understanding.

The controversial comments were made in the August edition of GQ Magazine UK and include praise for the country's recent Digital Economy Act 2010 (DEA), which McGuinness believes has helped to create "some of the world's best legal environments for rebuilding our battered music business". That remains to be seen.

McGuinness continues on to attack ISPs and "anonymous bloggers" for their harsh criticism, before telling broadband providers that the "free-music bonanza has got to stop". Sadly some of the comments continue to demonstrate a complete misunderstanding of both why MOST people use the internet and how ISPs actually work. Here's a few highlights from what he said.
Paul McGuinness Comment Highlights

* "For the world's internet service providers, bloated by years of broadband growth, "free music" has become a multi-billion dollar bonanza."

* "Look at the figures as free music helped drive an explosion of broadband revenues in the past decade. Revenues from the "internet access" (fixed line and mobile) business quadrupled from 2004 to 2009 to $226bn."

* "Free content has helped fuel the vast profits of the technology and telecoms industries."

* "I've done a lot of debating on this issue in the past two years. I have walked the corridors of Brussels, learned about the vast resources of the telecoms industry's lobbying machinery and encountered truly frightening naivety about the basics of copyright and intellectual property rights from politicians who should know better."
Many of the remarks ignore the fact that most big ISPs, at least in the UK, do not make their profits solely from internet access. Indeed profit margins per customer tend to be quite small and some broadband providers are only now moving into profitability after years of difficult subsidy (Sky, TalkTalk etc.). We also keep seeing reports of rising digital music download revenues.

Similarly mobile operators are known, according to Ofcom, to only account for a tiny proportion of music piracy due to stricter network controls and P2P blocking. So it is perhaps not fair to mention them at all, although other countries could be different.

Most critically McGuinness appears not to understand that the worst offenders of piracy are often also the most costly to support, with just a small percentage of customers being able to consume the bulk of an ISPs COSTLY SHARED bandwidth and thus reduce the performance for other users. This is a huge problem and is part of the reason why so many ISPs already restrict network traffic.

A TalkTalk Spokesperson told ISPreview.co.uk earlier this year:

"ISPs generate no additional revenue or profit from customers sharing files. In fact we incur some marginal cost due to the extra bandwidth required."

Darren Farnden, Head of Marketing at Entanet UK, echoed:

"Those of us within this supposedly swollen, profit rich Internet industry are more than aware of the reality. Consumer demand for the cheapest, fastest broadband continues to increase resulting in even lower profit margins for us “greedy” ISPs. And as for the comment about our “swollen profits perfectly mirroring the lost receipts of the music business” – where do we begin?

I would hazard a guess that these, are yet again, calculated on flawed hypothetical principles that everyone who downloads illegally would actually legally purchase the same amount of music. This is ridiculous. Just because Fred can download 20 songs for free does not mean that he would have otherwise paid for them all."

McGuinness even appears to mistakenly believe that the only reason why consumers want more broadband bandwidth is to download unlawful content, saying, "do people want more bandwidth to speed up their e-mails or to download music and films as rapidly as possible?"

We take from this that he does not understand the massive wealth of other legal and rich media content being demanded these days, such as multiplayer gaming, game updates, game demos, software updates, xbox live, PSN, Facebook pictures and videos, YouTube, BBC iPlayer, Skype.. need we go on? Many consumers will also buy flexible packages when they don't actually need them and unavoidable technological change/improvement also plays a part.
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