Making personal copies for private use of copyrighted media is now legal in the UK following an amendment to UK Copyright law. The scope of the exception to UK Copyright law does not allow file sharing to friends and family but does allow consumers to format-shift or back-up their content. Consumers will be able to store their content both on local hard drives as well as in the Cloud, contingent on the content being stored in a non-public manner.
The change in Copyright law follows the exemption made to help disabled people in June 2014, which allowed charities and any individuals to make an accessible copy if they lawfully own a copy of the work and accessible version is commercially available.
Despite the iPod launching twelve years previously, the UK government has only now modified the country’s copyright laws to reflect the digital age. Despite it previously being illegal to format-shift, the UK’s judicial sector has not enforced these restrictions particularly widely. Due to this prior lack of enforcement, IHS does not expect any significant change in consumer behaviour.
The new legal reality may affect the studio backed UltraViolet (UV) initiative, a free cloud-based digital locker initiative, as consumers can make their own private digital locker to store their purchased content. UV had 1.12 million accounts in March 2014, a household penetration rate of 4%. UK retailers are expected to begin to support UV imminently, and coupled with the increase in the number of UV titles available, the number of accounts is sure to grow.
The new rules on format-shifting present an opportunity to the backers of the UV initiative. If the UV consortium or individual studios can create a portal that would be the go to site to rip DVDs and Blu-ray Discs and store them in a private cloud they would avoid losing control of the digital copies consumers may be making. Furthermore it could be used to drive further users of UV in the UK while retailer support remains lacking.
Despite limited uptake Walmart in the United States offered a similar service that allowed customers to convert discs to digital formats both in store and at home. Through authentication it ensured that the disc was a non-rental copy and immediately gave access to the movie within the UV library.
IHS does not expect that the ability to format-shift legally owned content will affect sales of either digital or physical products. With ripped music contributing the vast majority of music content within consumers’ libraries on iTunes consumer behaviour with respect to format-shifting is already entrenched. IHS research shows that over the lifetime of Apple’s iPod only 22-26 songs were purchased on average per device, the remaining songs were ripped or pirated.