Illegal file sharing online is not as damaging as predicted, InternetNZ says in its submission on a bill to tighten up copyright.
The Copyright (Infringement File Sharing) Amendment Bill puts in place a three-notice regime to deter illegal file sharing.
The bill also extended the jurisdiction of the Copyright Tribunal, enabling it to hear complaints and award penalties of up to $15,000.
Copyright owners could also seek suspension of an internet account for up to six months through the district court.
InternetNZ policy director Jordan Carter said figures from the International Federation of the Phonographic Industry (IFPI) show that in 2009 New Zealand and Australia digital sales increased by 41.4 per cent and performance rights returns were up 8.6 per cent - for an overall revenue industry increase of 3.5 per cent.
"The sky is not falling. While there is no doubt that infringing file sharing is happening - and cannot be condoned - the copyright content industries have been doing exceptionally well in a recessionary environment.
"Sales are up and more money than ever before is going to Kiwi artists. Furthermore, recording industry 'evidence' of massive losses has recently been deemed unreliable by, among others, the United States government."
The organisation does think the measures in the bill are needed.
"The obvious and proven way to tackle file sharing is to impose a notice and notice regime, where those found infringing are told their activity has been picked up. This is much lower cost to the Crown, to ISPs, to the content industry and to citizens, while still reducing file sharing by as much as 70 per cent.
"It creates the opportunity for all involved to collaborate on educational messages, particularly to younger New Zealanders who are just starting to use and create digital content."
InternetNZ strongly opposes termination of internet accounts as a sanction for copyright infringement and thinks that would be an over-reaction.
At the bill's first reading Commerce Minister Simon Power said it would set up a fair and balanced process to deal with online copyright infringements.
"The three-notice process ensures that file sharers are given adequate warnings that unauthorised sharing of copyright works is illegal, at the same time as providing effective methods for copyright owners to enforce their rights," he said.
"Online copyright infringement has been especially damaging for the creative industry, which has experienced significant declines in revenue as file sharing has become more prevalent," he said.
"The issue is a complex one and this bill is the result of extensive consultation to get it right."