There's only a couple of days left to make submissions on proposed legislation governing how copyright affects your internet use.

It follows last year's debacle, in which former culture and heritage minister Judith Tizard and departmental officials used a supplementary order paper to jam a new section into the Copyright Act stuffed with provisions a select committee had already rejected. According to technology law specialist Rick Shera, the regime would have been even worse than that in the United States, where record industry enforcers are winning millions of dollars in damages against hapless downloaders.

Shera says the US Digital Millennium Copyright Act requires actual knowledge of infringement rather than the "reason to believe" in the New Zealand Act, and penalties for people making false or misleading takedown notices.

That's important, because as Judge David Harvey pointed out in a submission to the Telecommunications Carriers Forum, 30 per cent of New Zealand copyright litigation fails because of a failure to prove ownership of copyright, or due to the copyright in question not being governed by New Zealand law.

The new section 92A was not implemented because of public uproar, and officials were instructed to try again. At issue was wording which would have required internet service providers to cut off the accounts of customers suspected of downloading copyrighted material.

On one side are the rights holders, the music and film industries. On the other the ISPs. The two sides have been unable to come up with a voluntary code of practice on how section 92A would operate.

There are also other parties whose interests aren't being properly considered by the proposals - artists, who want to reach an audience and get fair recompense for their efforts, and the audience, which wants a constant diet of new sensation at a reasonable price in a convenient format.

The Ministry of Economic Development says its aim is "to provide a fair and efficient process for rights-holders to deal with repeat copyright infringement in the digital environment". Its current proposal is for an escalating process.

When a rights holder considers its copyright has been breached, it would send an infringement notice to the ISP to be forwarded to the subscriber. If the infringement continues, they will be sent a cease and desist notice, again via their ISP.

If they still won't stop, the rights holder can go to the Copyright Tribunal to demand their identity, and then force them into mediation.

The problem with all this is there is a huge amount of effort going in to fix a broken business model.

The recording and film industries are structured around distribution of physical items - getting bits of shellac or vinyl or plastic into shops, celluloid into cinemas.

Their responses to the digitisation of their output has been to fight to retain their old privileges, rather than embrace the new medium. As a result they are rendering themselves increasingly irrelevant, apart from resorting to barratry. Peer-to-peer distribution of music and films is inevitable, despite their efforts to criminalise anyone who goes near a download site.

In the case of music, rather than working out how they could give customers a satisfactory online shopping experience, the industry left the door open for a computer manufacturer, Apple, to work out how to monetise internet music distribution as a by-product of its need to sell hardware.

The rights holders claim to be acting on behalf of the artists, but this has never been the case with the industry, so why should it be so now?

It's artists who have been embracing and experimenting with internet distribution models. In Britain, the Featured Artists Coalition, including Billy Bragg, Tom Jones, Annie Lennox, Nick Mason from Pink Floyd, Radiohead and many others, is arguing for a complete overhaul of the rights regime to give a better deal for artists.

The internet has been a boon for music. A new report by Will Page, the chief economist for UK-based royalty collecting group PRS for Music, found that while spending on recorded music is down 6 per cent since 2007, concert ticket sales have grown by 13 per cent and total industry revenue is up 4.7 per cent.

Peer-to-peer distribution is exposing people to a wider range of music. Older artists are finding new interest and new audiences, and are able to cash in through playing live or by releasing new or archival recordings.

Page points to the ecosystem around music, an ecosystem that record companies have fought because they see it as threatening their disproportionate control of an artist's revenue stream.

The internet threatens established business models. Let's face it, you're reading this in one. But the Government isn't proposing to shore up newspaper revenues through selective gatekeeping.

Rather than create restrictive codes which will diminish New Zealanders' ability to benefit from the internet, this is an area where the Government should stand back and let the market work.