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The ROI of RIAA Lawsuits July 15, 2010

Posted by Bill Rosenblatt in Economics, Law.
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Tax returns discovered by p2pnet reveal that the RIAA spent over US $16 Million on legal fees during 2008 alone to sue individuals for illegal downloading, and netted less than $400,000 in settlements.

This has provided fodder for big yuks and told-you-sos around the techblogocracy.  On the one hand, I’ve always said that the biggest problem with all so-called antipiracy efforts, whether technological, legal, or otherwise, is that no one has successfully measured their efficacy — if indeed it’s even possible to do so, which is doubtful.  In fact, even the long line of commenters on Slashdot are collectively ambivalent about whether or not the $16 Million was well spent on instilling FUD into the downloading public.

But this is not really anything new: it’s a continuation of the major music companies’ insistence on funnelling large amounts of money into legal departments to fight infringement while spending virtually nothing on technological innovation to protect rights while providing users with decent value for money.

Recall that in 2007, Universal Music Group alone likely spent millions of dollars a year to thwart unauthorized file-sharing of only its frontlist music tracks, as shown by leaked emails from the antipiracy services company MediaDefender (now part of Peer Media Technologies).  Other media companies, such as Viacom, spend equal (or higher) sums of money on such services to keep their videos off of sites like YouTube, which is one reason why they are suing to change the laws so that those websites are required to pay for the policing.

As I’ve said before, it’s part of a trade association’s job to say and do that which its members find too distasteful to do themselves.  But such tasks are normally “inside baseball” such as lobbying governments and managing relationships with related industries.  The RIAA’s lawsuit campaign resulted in a public backlash, which has outlasted the actual lawsuit campaign and which this revelation about expenditures perpetuates.

Antitrust law limits what any trade association can do in promoting technological R&D.  Yet I still say that the worst thing the RIAA has done to date in this vein was to threaten Ed Felten of Princeton University with a lawsuit for hacking the SDMI watermark back in 2001.  Because of this action, academic research into DRM and other rights technologies in the United States has diminished to virtually nil.

(For example, a search of IEEE shows that of all digital rights-related research papers published from 2008 to the present, 40% were from China, 27% were from the rest of Asia, 20% were from Europe, and less than 4% were from the United States.  Spain by itself had more activity than the US.)

In addition to scaring US researchers away, the SDMI episode served to radicalize Felten and energize the anti-media-industry element.  None of this has served the music industry well.  Some of it will be very difficult to undo.

Comments»

1. Pixelm - July 16, 2010

Good questions but the youtube case is not just about policing costs – its about whether policing can be done. YouTube has only a couple of formats to search, can search just on upload, and can use pattern matching technologies. In contrast, most ugc sites prevent crawling, and many have no search function at all. Others require passwords, or use captcha technologies to thwart automation. So content owners need to use keyword searches and people to search the entire web, while it’s changing, with large parts off limits and without video and audio pattern matching technology.

There is also a volume issue. When something is popular, hundreds or thousands of uploads overwhelm any takedowns, training users that if they want to see something, they should go look for piracy, rather than authorized sites.

Bill Rosenblatt - July 16, 2010

Thanks, Mike, agreed. But I think we’re saying largely the same thing: regardless of whether automation is available, it’s a cost issue on both sides.


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