RIAA paid its lawyers more than $16,000,000 in 2008 to recover only $391,000 | Hacker News Reader

RIAA paid its lawyers more than $16,000,000 in 2008 to recover only $391,000

recordingindustryvspeople.blogspot.com

156 pointsaj77 comments

This isn't really the whole story. They are assuming that their member companies will make more money as a result of less piracy. And that additional money should/would be added to the total.

(Note: I did not say if it will actually reduce piracy, just that that is their assumption, and is why they are willing to pay this.)

Three things: This will not result in less piracy, pirates spend more money on music than non-pirates, and frequently-pirated music makes more money than less-pirated music.

Since January, there has already been one album that I have literally only bought because of piracy (I never would have heard of the band were it not for piracy). Last year I bought 2 or 3 albums which I never would have bought were it not for piracy. How many albums do "normal" non-pirating consumer buy a year?

> This will not result in less piracy, pirates spend more money on music than non-pirates, and frequently-pirated music makes more money than less-pirated music.

B and C do not follow from A. Even though pirates spend more money than non-pirates, who's to say they wouldn't spend even more if they couldn't pirate. And, frequently pirated music makes money than less-pirated music because music that is popular is more likely to be pirated.

Firstly, I didn't mean that A logically implies B and C. I meant them as three separate statements.

How is it possible that they couldn't pirate? Unless the world governments plan on actually filtering the entire internet clean of piracy, then all they'll be doing is criminalizing piracy, which is already the case most places.

"Pirates spend more money on music than non-pirates"

Without taking a position on the accuracy of the claim I will say the study that determined that was deeply flawed. Let me quote the first article that comes up on Google...

The Norwegian study looked at almost 2,000 online music users, all over the age of 15. Researchers found that those who downloaded "free" music – whether from lawful or seedy sources – were also 10 times more likely to pay for music. This would make music pirates the industry's largest audience for digital sales.

This is flawed because people who are actively seeking music can reasonably be called "music enthusiasts" who would normally buy more music than their counterparts who don't actively seek out new music. Note the study says the ones who were categorized as "not pirates" didn't even use free sources to listen to new music.

So in order to get an accurate answer as to how piracy impacts sales you'd have to compare enthusiasts who pirate to those who don't.

Even that wouldn't be fully free of confounding variables, because you don't know if enthusiasts who pirate vs those who don't have the same quality of enthusiasm.

My personal enthusiasm suffers from a lack of quality.

This would still support the specific claim that "Pirates spend more money on music than non-pirates." It would not, however, support the claim that pirates spend more money on music than they would if piracy were not available as an option. As they say, correlation does not equal causation.

Granted, there's no scientific evidence that they wouldn't spend more if piracy weren't an option, but from personal (anecdotal) evidence as well as common sense, I think it's likely the case. Being exposed to more music seems like it would lead to more music sales.

Deductive proof is not the goal of everything. There is not proof of causation, but it is the strongest inference. Without evidence to the contrary, it seems reasonable.

Without evidence to the contrary, it also seems reasonable to relate declining movie ticket sales with increasing piracy. I think we all know what's wrong with doing that.

The right way to run this sort of experiment would be to track how much music someone buys for a while, then give them a mildly inconvenient all-access pass to iTunes or something (a la Rhapsody) and see what changes.

pirates spend more money on music than non-pirates

Without going into too much incriminating detail I just find that really hard to accept.

There seems to be some studies that indicate that this is the case, even though it is a counter-intuitive finding:

1. http://arstechnica.com/web/news/2009/01/dutch-government-stu...

2. http://www.guardian.co.uk/music/2009/apr/21/study-finds-pira...

It's only counterintuitive until you think about it. Like "people who receive chemotherapy are more likely to die of cancer than people who don't."

"frequently-pirated music makes more money than less-pirated music"

Which can be rephrased far less interestingly as "popular music is frequently purchased as well as frequently pirated".

And yet, the way RIAA portrays it is as if every album has a set number of potential sales, and each instance of piracy takes away from those potential sales. The truth is, the piracy rate will usually be pretty constant across all albums, e.g. one album sale for every 20 free downloads.

There's no contradiction there--it's entirely possible there will be one album sale for every 20 pirate downloads, but that doesn't rule out the possibility that each album is capable of selling 20 times more than it does. It's implausible, but not logically ruled out.

More to the point, maybe for those 20 free downloads, 5-6 would have actually bought the album but didn't, and 5-6 (possibly overlapping set) will be convinced to see a show or buy a t-shirt, so the actual financial situation for the band isn't so much different as they think it is.

This isn't just about demand for an album; demand is tempered by the price attached to the product. This is about demand for an album at $15/copy. There is demand for the album; the downloads demonstrate that. There is almost no demand for that same album at $15/copy. That is the limit of what you can assume about this scenario.

How many albums do "normal" non-pirating consumer buy a year?

Myself; about 30-40. This is probably a high number; most of my friends will buy anything from 3-5 (in a quick straw poll of about 30 of them).

And it's totally a coincidence that the bottom has fallen out of the record industry since Napster.

This is more due to the shift from buying albums to buying singles. This shift is made possible by digital distributions. http://arstechnica.com/tech-policy/news/2010/05/the-death-of...

While I don't doubt that the increased ease and frequency of piracy has had an impact on the bottom line of the recording industry, I believe the decline of the industry as a whole has much more to do with the increased capabilities of home computers and the spread of broadband Internet access.

The big recording companies provide a few main services to artists: production, distribution, and promotion. For years they kept CD prices artificially high because there weren't alternatives for most people (for artists to create albums or for consumers to obtain music).

Once everyone could record and burn CDs expensive production studios became much less valuable, and broadband Internet makes distribution nearly free (relatively, at least). Simultaneously, radio has become a much less important means of promotion, so the connections that the recording companies had in that arena become much less valuable.

In other words, the big record companies just don't offer the value they used to - either to artists or to consumers. And once the value your company offers disappears, so should your company (unfortunately this usually happens very slowly, with the company(/ies) trying everything to avoid extinction).

So was it a coincidence that this all happened at around the time that Napster took off? I don't think so, I think there were just common causes that led to both results.

Right, because since the internet took off, huge, mass-media publicized "artists" have fallen to the wayside and been replaced with a wider variety of niche acts, many of whom weren't signed to labels at all? No. The labels aren't suffering because they have to compete with independent artists, they're suffering because they have to compete with the Pirate Bay and friends.

Are you aware that the world is not binary?

Very much so, as a matter of fact. Still, widely available piracy of major-label music has diminished record sales to a far greater degree than competition from independent artists.

If the major-label hegemony was truly broken, we wouldn't see these mass-market pop stars on major labels get the publicity and record sales (compared to indie artists) that they do, nor would the top touring bands by major revenue continue to be major-label acts. On the contrary, major labels continue to be successful at choosing and promoting which acts achieve popularity and success--they are just less able to share in that success themselves.

The price of CDs were not "artificially high." That's copyrighted material. The copyright holder is supposed to have a monopoly on it. That means that they get to charge whatever they think the market will bear, not what you think is fair or the cost of production + x%. There were at least a few labels like Dischord that charged lower prices, but the masses didn't want that music. They wanted major label stars with lots of marketing behind them.

If the copyright holders still had the ability to enforce copyright, the fact that internet distribution is cheap wouldn't mean anything, except that they would be able to charge less and still turn a profit. The real problem with the internet for them is that it made piracy on a massive scale easily accessible. You don't have to respect their copyright anymore.

I'm kinda old now and don't follow pop music that closely anymore, but as far as I know the masses still want their top 40 pop music recorded by heavily marketed stars, not some dude on an indie label or no label at all who used his laptop as a recording studio. So the fact that said dude has an easier time now is irrelevant, except to the minority of people who are interested in hearing/recording that kind of thing.

The bottom of the horse-drawn trailer business has fallen out since industrialization. New technology can make existing products worth less. The horse-drawn trailer industry didn't rely on legislation to keep its newly-obsolete business running—they either modified their product or died out.

The music industry always relied on intellectual property legislation, as do lots of businesses - including the automotive industry that replaced horsed-drawn trailers (they had and still have lots of patents). It's just not being enforced now.

More generally, all businesses rely on legislation to keep their property from being stolen, whether that property is intellectual or physical. If those laws were widely ignored, it would be hard to do any kind of business.

Not true. The music industry used to rely on the fact that only a large conglomeration like themselves could afford to print vinyls, cassettes, and compact discs as well as distribute them nationally and internationally. The Information Age has changed that, and their only hope for remaining solvent (other than actually adapting their business model like most other businesses) is to lobby governments and harass downloaders.

Also, you should really read up on copyright infringement legislation—it's absolutely nothing like theft. It's a completely separate legal notion.

Newspapers died at pretty much the same time. Also piracy?

No. Newspapers died because of competition from the internet, but since there was little or no copyright violation involved it wasn't piracy.

Newspapers take out the breaking the law step by providing all their content online. I think if newspapers collectively as an industry refused to do this then their content would be pirated.

I think a key difference is that each newspaper has something slightly different to offer, the same stories are written different in each. Whereas people are only interested in a song by one artist generally not the same song sung by many different artists. The point being that you would think that music subscription services would be even less successful than written content ones because written content on the same thing can come from many different angles and styles, music doesn't share that trait so it's easy for a pirate bay ect to provide everything a subscription service would.

The bottom has dropped out of everything since Napster, since Napster's rise coincided with the availability of high-speed internet access. The internet is an entertainment and information source, and all traditional entertainment and information sources have seen a decline.

There's more supply out there. Demand for a specific commodity goes down because if it. It's really basic, and only peripherally related to piracy.

Ask around: I'll bet you find close to 100% of your peers say if their TV watching habits have changed in the past ten years, hours in front of the set have only gone down. Extrapolate.

This will not result in less piracy

How so? Data point: I don't pirate music, partly because I'm paranoid about getting sued by the RIAA. I'm sure I'm not the only one.

frequently-pirated music makes more money than less-pirated music.

Yes, popular music makes more money than unpopular music. Duh.

pirates spend more money on music than non-pirates

Which, even if true, is not a demonstration of "pirates spend more money on music than they would if they weren't pirates".

I am extremely skeptical of the idea that piracy helps the music industry. It smells strongly of the kind of thing that people believe in order to justify their own actions, rather than the kind of thing that people believe because it's likely to be true.

If you're still pirating music in 2010, and the track you're pirating is available on the Apple Store for 99 cents, then you're just being a cheap bastard.

> If you're still pirating music in 2010, and the track you're pirating is available on the Apple Store for 99 cents, then you're just being a cheap bastard.

Where can I get my iTunes for Linux?

Amazon's digital music is pretty awesome. The only annoying limitation is that you're only allowed to download the file once, but I just immediately upload it to S3.

Another annoying limitation is that Amazon MP3 is limited to US customers only.

This greatly annoys me as there's an album I want that's not on iTunes, but is on Amazon MP3. None of the local music stores stock it. My only choices are to either pirate the album or pay exorbitant fees and wait several weeks to import the disc.

Guess which one's easier.

On the dual-boot to your hackintosh. Ah crap that does not seem to resolve the pirating problem. :)

The response to the itunes lover.... Seriously when we mention pirated music sells more, its because studies show that while pirating is up so are sales. In fact sales are higher now than when pirating was non-existent. There is very little corelation shown that pirating hurts music sales, and vice versa, so both arguments are kind-of equally valid. The music industry just wants every damn penny.

See the post about the Humble Bundle's pirating issue. The entire bundle of games could be purchased at 1 penny, yet people pirated, and often there are good reasons why someone will pirate vs buy.

> partly because I'm paranoid about getting sued by the RIAA.

No need to be paranoid, here. They only go after big distributors, not downloaders (aka leeches).

And 8 year old schoolgirls and grandmothers and deaf people and...

> If you're still pirating music in 2010, and the track you're pirating is available on the Apple Store for 99 cents, then you're just being a cheap bastard.

No, its because you've been brought up with the idea that free music is ubiquitous and encourages more music consumption. You've seen the rise and fall of Napster, Morpheus, Limewire, etc and you justify it to yourself that these sites helped you discover new music more rapidly than having to pay for music. You believe that not spending $100/month on music means you can attend more concerts and buy more merch. Music pirates aren't cheap, they just choose to spend their money elsewhere. Fortunately, the music industry is just beginning to realize where this elsewhere lies. Go to best buy and see the new Dr. Dre Beats headphones that everyone is crazy about. Go to Wal-Mart and see the new Miley Cyrus line of clothes and DVDs. Bands and Brands is the future of music and this is how people choose to pay for music.

The fact that somebody doesn't spend $100/month on music doesn't mean he's spending it on concerts or merch. He might be spending it on heroin or video games instead.

Nah, you can pirate the video gamnes too. Heroin however...

> ... paranoid about getting sued by the RIAA. I'm sure I'm not the only one.

All of my internet-savvy friends pirate music, and nearly all of my non-savvy friends pirate music. The only difference is the non-savvy ones may actually get caught.

> ... popular music makes more money than unpopular music. Duh.

It being obvious doesn't make it not true. If the top-selling album in a year gets pirated 10 times as often as purchased, does the RIAA really think they only got one eleventh of the payments they would've gotten were it not for piracy?

> ... is not a demonstration of "pirates spend more money on music than they would if they weren't pirates".

I gave myself as an example to show that piracy can in fact directly lead to sales.

> If you're still pirating music in 2010, and the track you're pirating is available on the Apple Store for 99 cents, then you're just being a cheap bastard.

What if I pirate it, then either don't like it, or buy the physical album? I have never purchased music digitally because the digital versions are easily available for free. That seems like business 101—if your product is easily available for free (whether or not acquiring it is a crime), lower your prices or somehow make your product more appealing than the free version.

> What if I pirate it, then either don't like it, or buy the physical album? I have never purchased music digitally because the digital versions are easily available for free. That seems like business 101—if your product is easily available for free (whether or not acquiring it is a crime), lower your prices or somehow make your product more appealing than the free version.

What do you do for a living?

Get student loans from the gov'ment.

> If you're still pirating music in 2010, and the track you're pirating is available on the Apple Store for 99 cents, then you're just being a cheap bastard.

I'm a cheap bastard until the band rolls into town the next time and I go because I know who they are and that I like their music. Touring is the new business model--records are live show promotion tools.

Fair enough if that's what the band wants, but who are you though to decide how the band should use it's IP?

He is the consumer, creating the demand. There is no demand for $15 compact discs, and there is lots of demand for good live performances. A band, like every business, must provide supply to meet demand if they want to make money. This is economics 101.

One of the biggest mistakes that music/film/software industries make is assuming that each pirated copy is a direct revenue loss. I don't know if that's what they actually believe, though it's often reported this way in the media and I'm pretty sure organisations like RIAA support that style of reporting. Though the problem is, not everyone who pirates something would pay for it if that were the only way of obtaining it. Certainly the higher the price, the less likely that is to occur.

Here's the funny thing about "piracy=lost sales": there's no good reason to believe that anyone believes it.

The RIAA is a group of lawyers whose best interest is directly behind saying it, particularly if they don't believe it. If you can sell an eternal war, you can guarantee a whole lot of budget for an awful long time.

The studios themselves are largely obsolete. The top 10% are on borrowed time; their job won't exist after the transition to digital is complete.

The analysts will remain, the accountants will remain, the producers will remain. But there'll be no advantage to having Sony records in its entirety, let alone the overpaid execs. All you need is some good producers/engineers, a marketing agency and an accountant.

So, if suing delays the transition, it enriches the decision makers by extending the time over which they draw a check. If it doesn't, oh well, it's only shareholder money being burned. Either way, the lawsuits give them a perpetual excuse for missed revenue targets.

And the longer the shareholders are unable to muster any defense, the further "lawsuits as business model" gets pushed. Sue digital radio. Sue terrestrial radio. Sue incidental recordings in online videos. Sue everyone, because the heads are out of ideas.

I think it's more of squelching distribution channels that are outside of their control. So they can build an illusion that they are the ONLY ones distributing music and continue to control the creation of content.

And people wonder why the settlements/lawsuits demand so much money. Its not to recover costs but to deter. HOWEVER just like the death penalty, a deterrent that is not immediate, seen as unfair, and is extremely unlikely to happen to you, is not a deterrent at all.

Not to mention the deterrent effect. You can debate about what effect piracy actually has on their bottom line, but I'd wager that if there were never any prosecutions even more people would pirate music than do currently.

Arrrr, I'd have to say I doubt it. Plenty of methods of (partially) counter-acting "piracy" exist, mate.

Shiver me sides! The "Madonna" wench put sound files full of swearing that would embarassa deckhand on file sharrrring networks. These files probably only appealed to perrrverrts, but piracy is filled with such perrrverrrts.

And what about bands/label pre-emptively releasing sub-optimal (mono, low sample rate) singles to the file sharing networks, but sellling pristine, high-fidelity versions?

This whole mass-lawsuit thing smacks of incredible dumbness, or of a general tendency towards larceny rather than honest labor. Which a pirate, can respect, mind you!

Now they can add $15,609,000 to their "money lost due to piracy" figure.

I'm not sure. This would be first real number there. Unless you count the DRM costs in.

Does anyone know how much a music DRM system actually costs to develop? The voice of the internets says that it costs at least a bajillion dollars, is a huge financial burden on the music industry and they're passing the costs on directly to the artists.

Realistically I'd guess it costs more like a couple of million at the very most which, spread over every product sold for a period of several years, is actually peanuts.

Developing DRM is the cheap part. You have to deal with the reduced sales and bad press afterward.

That's an assumption. Do they really have a negative impact on net sales figures?

I think everyone knows that you don't sue random torrenters on the internet hoping to make a profit.

This was really part of a huge marketing campaign, where your audience reads in all the big papers that some college student is being sued for $50,000 dollars and then are dissuaded from illegally downloading music... that's the intent anyways....

Unless you are ACS:Law -- they seem to be making a profitable business from it.

That isn't that unreasonable. The US spends far more on preventing counterfeiting than the total value of counterfeit money. The over-reaction is meant to act as a deterrent so that the problem doesn't become more wide spread (and in the case of currency, remove faith).

Yes, but they did it to "encourage" people to purchase legal music which presumably increased their revenues.

Indeed. But a lot of reports (non on hand atm) state that this is not a direct correlation.

that said, the figure quoted also (presumably) includes legal fees for matters other than suing "pirates"/copyright infringers. So perhaps not a very accurate figure but indicative at best.

>that said, the figure quoted also (presumably) includes legal fees for matters other than suing "pirates"/copyright infringers.

This seems to be correct. The numbers come from pages 8 and 9 of the linked PDF. All it says is the law firms provided "legal services". I'm sure they have many more uses for legal services than just suing pirates.

All we really know is "the RIAA recovered $391,348 from filesharers".

I imagine they spent a lot more on advertising their anti-"piracy" message. Compared to that, the ROI is probably pretty good. I therefore expect the lawsuits will continue, more's the pity.

What's interesting to me is that at least in the UK there's been a noticeable shift in the anti-piracy message.

Most telling is the anti-piracy ads in cinemas. (EDIT: I realize RIAA deals with music recordings only, and that it's the same for their UK counterpart; the ads used to be pretty much the same and the shift has been much more dramatic for movies)

A year or so ago in the UK the cinema's were full of "if you pirate you support organized crime and terrorism and you're pretty much satan" messages with ominous music and threats about how you'd get thrown out and more if you dared bring out any kind of recording device.

Now it's "thank you dear, nice customer for coming and paying to see the movie and helping us make more instead of pirating"... It's almost creepy what a turnaround it's been.

Maybe my long tradition of raising my finger at the old ads had an effect, or maybe some execs have finally realized that antagonizing your paying customers isn't as smart as it seemed to them at first.

Good, I wholeheartedly recommend the RIAA to continue on this obviously profitable path.

More than $17.5 million.

Can we just declare this law as unenforcible and make it void?

hey, they found a good online business model at last! ;-)

its not the only recovered $391,000 its the protection of a RICO possible racket whereas through fraud-like accounting they 'steal'musicians money.

Wow. Well that's definitely not sustainable, so it will have to end sometime.

No one will miss them much.

"The RIAA? Or their lawyers?"

Ohoho, ahah, I crack myself up.

edit: ALL RIGHT ALL RIGHT I'M SORRY I'M NOT FUNNY THIS LATE AT NIGHT I'LL NEVER MAKE BAD JOKES AGAIN

Go and sin no more.

How dare you make a joke on hackernews. I would downmod you if I could. Maybe you should post on facebook..ouch!

Reply on news.ycombinator.com