A report published by the French High Authority for the Dissemination of Creative Works and Protection of Rights on the Internet (HADOPI) is being touted by file sharing opponents the world over as proof that so-called "graduated response" policies are very effective at stopping copyright infringement.

Problem is, it neglects to mention something very important: the profits of the French film and music studios have continued to decline despite the harsh Internet restrictions.

France passed a "three strikes" graduated response program a little over a year and a half ago at the prompting of U.S. businesses, wherein users are severed from the Internet after their third time being caught downloading copyrighted material. It is similar to a U.S. program being voluntarily launched in July by Internet service providers working in conjunction with the movie and music industry lobbies.

The report shows that France's law has made a dramatic impact, with the sharing of films down 66 percent, and file sharing website traffic dropping off by 17 percent. The key metric, overall sharing that flouts copyright laws, is was also down 43 percent from Dec. 2009 through Dec. 2011.

As one might expect, the use of legitimate streaming media streaming has grown due to the new piracy controls, with services like iTunes, Spotify, Qobuz and Beezik seeing the strongest gains. Overall, the new digital platforms for content owners grew by about 20 percent from 2011 to 2012.

While that certainly puts France's law in a positive light, it's not all roses for copyright owners. Sales of physical media are dragging the film and music industries down in a big way, seemingly disproving the labels' old claim that illegal downloading directly translates to losses.

The Netherlands-based Telecom.paper, which tracks industry statistics, noted that physical sales of French music dropped 11.5 percent in 2011. Even in the face of growing online subscription revenues, that gap in physical media dragged total industry profits down 3.9 percent in 2011.

With the film industry, a similar story emerges: though online streaming services are more popular than ever in France, the European movie industry tracking group DVD Intelligence found that sales of DVDs and Blu-ray discs were weak in 2011, dropping 9 percent. While video on demand was up more than 50 percent, the declining physical media marketplace caused French film studios to see a 2.7 percent loss last year overall.

While the HADOPI report is hopeful for the copyright industries, it also shows a prime reason why lawmakers and members of the public should be wary of so-called "copyright math," which gives content owners tremendous wiggle-room to claim that illegal downloads represent millions or billions of their ostensibly stolen profits.

Today's reality would seem to show that it's a broken business model doing most of the damage to movie and music studios' bottom lines -- and a decade of unwillingness to deliver their product in a manner attractive to and convenient for consumers can't be far behind, either.

Read the whole HADOPI report, below.


Hadopi Report

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(H/T: TorrentFreak)