Online piracy is one of the biggest threats to the film industry yet finding the right approach to tackling it remains a challenge in itself.

Just a couple of months after Lord Carter’s Digital Britain report was published, outlining a well-balanced approach to combating online film piracy, the British government is trying to toughen it up in a heavy-handed, unwelcome way.

“Legislation that too easily criminalises millions of people is unhelpful and runs the risk of alienating a generation of potential customers”

Under Carter’s proposals, the right balance had been struck in terms of educating consumers, discouraging illegal activity and, finally, imposing sanctions by blocking URLs or reducing bandwidth. The harder-line measures would only have been introduced if the process of legal letters and warnings to illegal file-sharers had failed to achieve a reduction in illegal downloads by 70% within 12 months.

Digital Britain’s fundamental point was that most people would stop illegal file-sharing once it was made clear to them that they had been identified and further action would follow unless they desisted. It balanced communication and education with the threat of technological restrictions if required. The government’s new proposals would see an acceleration of this process - with legal action and disconnection happening more quickly.

Carter’s report made clear that “theft was still theft” in the digital world and there was no difference between someone illegally downloading a film or stealing a DVD from a store. The problem of course is the vast majority of online users - particularly the young - do not see it that way. And as I have argued in the past, creating legislation that too easily criminalises millions of people is ultimately unhelpful and runs the risk of alienating a generation of potential customers. Education and communication are key; legal actions and restrictions on web access need to be a last resort.

The film industry is divided on this issue, with some encouraging the kind of action the British government seems to favour, and others arguing that such an approach fails to address the core issues of creating a real online market at prices that people can afford and are willing to pay.

There is also the obvious question of how the idea of turning off internet connections is going to work in practice. Do you turn off an entire household just because one user is a persistent offender? The European Parliament recently ruled that internet access is a fundamental right (a point also made strongly in Digital Britain), so how does this sit with a policy that would disconnect households?

There is no panacea for online piracy, and the film industry will need to be bolder and more creative in its thinking if it wants to turn illegal file-sharers into paying customers. It is a challenge that requires change to the market and the way that film companies and distributors think and behave. That means thinking about pay-services, release windows and the cost of watching a film in an online world. Anyone who believes illegal peer-to peer will disappear because of lawyers’ letters and the threat of internet disconnection is kidding themselves.