Tag: RIAA accounting

RIAA anser att limewire ska betala 75 000 miljarder i skadestånd

RIAA Thinks LimeWire Owes $75 Trillion in Damages | PCWorld

The music industry wants LimeWire to pay up to $75 trillion in damages after losing a copyright infringement claim. That’s right . . . $75 trillion. Manhattan federal Judge Kimba Wood has labeled this request “absurd.”

You’re telling me. To put that number into perspective (I bet a lot of you didn’t even know “trillion” was a real number), the U.S. GDP is around 14 trillion — less than one fifth of what the music industry is requesting. Heck, the GDP of the entire world is between 59 and 62 trillion. That’s right, the music industry wants LimeWire to pay more money than exists in the entire world.

Låt oss se nu, RIAA tycker alltså att Limewire ska betala 75 000 miljarder för fildelning av 11 000 musikfiler. USA har en BNP på ungefär 15 000 miljarder. 75 000 miljarder är mer än jordens all BNP tillsammans. RIAA har just bevisat att de inte bor på samma planet som oss andra…

Uppdatering: Det verkar som denna historia var mer än ett år gammal och stämningen förlikades med ett skadestånd på $105 miljoner. Jag hittade den först via en notis på Brooks review: RIAA Math — The Brooks Review, där länkades vidare till PC World artikeln jag har länkat till ovan och jag missade att den var daterad den 26 mars 2011. Mike Masnick har skrivit en bra artikel som verkar reda ut begreppen: No, The RIAA Is Not Asking For $72 Trillion From Limewire (Bad Reporters, Bad) | Techdirt

Anyway: basically this story is bogus. Well over a year ago, the RIAA made a ridiculous attempt to seek damages on every download. No specific amount was named, and no matter how you do your math, that $72 trillion number never made any sense at all. It was just a reporter looking for a good headline. Either way, the judge totally rejected that plan 15 months ago, and the entire case settled a year ago.

Piratkopieringens kostnad?

Det är inte så lätt som vissa vill få dig att förstå:

Hulu, Pricing Strategies, and the Costs of Piracy | Cato @ Liberty

To illustrate, let’s imagine television show that initially streams online for free with advertising, garnering a million viewers per episode and earning $1 per viewer in ad revenues, for a total of $1 million. A small number who really dislike ads, or have connections too slow for streaming, let’s say 5,000, download pirate copies anyway—but the vast majority watch legally. After building an audience and generating some good word of mouth, the accountants suggest that it might be more profitable to stop the free streaming and instead sell ad-free episodes for $4, in hopes that enough dedicated fans will pony up to compensate for the predictable drop in viewership once the program is no longer free to watch. The paying audience does indeed drop to 255,000, which still leaves the company slightly better off for the switch, but 100,000 viewers decide to keep up with the show (at least initially) by downloading pirated copies. A subsequent price hike to $10, however, turns out to be a money loser. Now the show has only 80,000 paying viewers, while 150,000 are engaged in piracy.

Undoubtedly that piracy is costing the show’s producers something: If piracy were impossible, some unknown fraction of those who download illegally would be willing to pay the asking price. But just crudely using the actual market price at each stage—even if modified by some constant “displacement rate” to acknowledge that not every illicit download represents a lost sale at that price—yields some perverse results. As the pricing strategy for the show changes, the “cost” of piracy rises from $5,000 to $400,000 (even as revenue rises) to $1.5 million (while revenues drop by $20,000). Obviously, something is wrong here.

It’s no great mystery what: The problem is that the rate of piracy, the price of a digital good, and the “displacement rate” (the percentage of the pirates who’d buy at that price in a world of perfect copyright enforcement) are not independent variables. And, of course, the interdependency runs both ways: Pricing decisions are influenced by the knowledge that we don’t live in a world of perfect enforcement, and you can tell plausible stories according to which this might keep prices higher or lower than they’d be under perfect enforcement, depending on your assumptions about the conditions under which a particular audience will substitute the pirate for the legal good.