The UK government took its swig from the poisoned chalice of film and music piracy this week. The result, of course, was a fudge. Most attempts to take on counterfeiting have proved either incoherent or unworkable. Sometimes both.

Like the 'war on drugs' the prospects for a knock-out blow are limited and each successful action leads to a technical escalation from the counterfeiters. But the new UK position is eminently workable. That's because for all the grand dressing, its initial ambitions don't really stretch beyond containment.

In essence, it's an information campaign in which the internet service providers (ISPs) have agreed to send customers a polite reminder that, on the whole, illegal downloading is not really cricket. It points out there are places you can get films legally and that embracing piracy can lead to nasty viruses.

As ever, such an approach is open to ridicule: if you stand in the middle of the road, you get run over from both directions. But it has one major virtue: the creation of a consensus - albeit a lowest common denominator one - between content rights owners and online distributors.

The policy emphasises 'educating' customers, which may not please the hawks but should not be underestimated. Awareness of viruses and the ability of third parties to use unsecured wireless connections to access owners' accounts is no bad thing. And the fact that an internet user's IP address is as visible to authorities as their house address will be a light-bulb moment for more people than one might imagine.

The kids who have been making merry with the copyright laws on mom and pop's PC will see the potential for great embarrassment. Having tried unsubtle threats and appeals to the public-spirited morality of customers, the notion that your online activities can be exposed might prove a deterrent of sorts.

But what happens next is obviously the nagging question. The UK has sensibly parked the issue of sanctions against recalcitrant customers. Yet a significant number of users will simply ignore the warnings and continue low-scale file sharing. And that's when policies are exposed as a parade of paper tigers.

Governments like straight lines and clarity of policy that can be taken into trade negotiations. But legislation passed in Spain shows that attempting to force ISPs to turn into policemen is a legal minefield. Also people - ie voters - don't much like the idea that the people who provide their internet access know what they are up to.

The ISPs are treading carefully because they want to remain self-regulated and fear being forced by law to get tough at some stage. And the industry knows that criminalising a significant portion of its potential customers is really not the brightest business plan. Lawyers are no doubt ordering the new Ferrari as policies unravel.

The UK approach will be watched keenly because those who thought that downloading film might just be a passing fad are slowly accepting the inevitable.

Physical goods, including new Blu-Ray DVDs, will struggle to compete with digital alternatives and the technical reasons that have held back growth - such as broadband speeds and access to content through television - are reaching resolution.

Piracy is being pushed back to the top of the agenda, challenging the way we perceive the business. The stringent copyright-controlled physical world we live in cannot be so easily contained online. And there's a serious discussion about whether it even should.

The biggest advantages of the internet are that it can bypass natural boundaries and allow customers to decide what they want to see. But it's hard to see how the current business models can adapt to the challenge.

If overly stringent controls stifle innovation and stunt the reach of content, there are other forms of entertainment that can fill the gap.

A combination of containment, new legal alternatives to piracy and a rethink on the whole issue of copyright looks like a smart starting point for what comes next.

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