3 tips for threatening many people at once

The RIAA won a legal battle on Friday when a Minnesota woman was found guilty of copyright infringement for file sharing and fined for damages of $220,000. Although the award was significantly smaller than the requested $3.9 million plus legal fees, the RIAA considers the case a victory. Is it a victory, and will it deter down-loaders?

The problem is interesting from a game theory perspective. The situation is something of a guessing game. The RIAA would like prosecute every illegal down-loader, but then monitoring and legal fees would be exorbitantly high. People would also like to download songs for free, but only if the risk of being caught is low enough. Without enforcement illegal downloads are high, so the RIAA would choose to monitor more, but that discourages people from downloading, which allows the RIAA to save costs by lowering enforcement, and the cycle continues.

The problem is similar to cops who want to prevent people from speeding. The solution, or equilibrium, is that cops monitor at a level high enough to discourage rampant speeding but low enough to minimize costs. In this kind of game, high enforcement costs mean we have to live with some people speeding. But suppose the RIAA is not happy with the “optimal” level of illegal downloads and wants to stamp out even more people. What kind of strategy might it pursue?

For starters, the RIAA needs to threaten many people at the same time and one way to do this is what I call the “principle of embarrassment.” I first learned about it from a motivation speaker during high school. At the start of an assembly, our speaker politely asked us to be quiet to no avail. We kept chatting because we felt safety in numbers: I felt there way no way he could quiet all 1,000 of us in the audience. But I was proved wrong, as the speaker then did some thing that made us all dead silent.

In a strong and somewhat angry voice, he pointed at a popular student and called him on stage. The speaker made fun of him until we were all laughing. I can still remember the student’s look of embarrassment. It was effective enough that the rest of us dared not say a word for fear we would be the next one on stage.

By embarrassing one student, the speaker was able to threaten all of us. In theory, this strategy could work for the RIAA, and this appears to be what the RIAA is doing by prosecuting individuals very publicly. But if that is the case, the RIAA may be misapplying the theory as its situation is lacking three vital elements that make the “principle of embarrassment” work.

1. The penalty should be enforced quickly

During the assembly, the speaker immediately punished the popular student to get his message across. The RIAA lacks the advantage of speed. The legal victory from Friday is the result of file sharing from two years ago in 2005.

What the RIAA did is analogous to the speaker taking the student aside, going through two years of school board meetings, and then giving him a detention when most of us were already in college. This result would neither have deterred us from chatting during the presentation nor would it serve as much of a lesson to incoming students.

2. The target audience should witness the punishment

The speaker was able to send a message to us in the audience since we were watching him humiliate our peer.

The RIAA, on the other hand, went after a thirty year old single parent and that does not necessarily send the message to the majority of people who download songs illegally, like college students and foreign organizations.

3. The threat to repeat punishment has to be credible

This is a very important step. During the assembly, we were scared since the speaker had no hesitation to bring students on stage. It was easy and costless for him to do, and he seemed to enjoy making fun of us high school students.

Is the RIAA threat credible? The RIAA faces legal fees and court time for each offender it prosecutes. It is worthwhile to note the jury did not award legal fees to the RIAA, so it is unlikely the RIAA really will prosecute each offender where there is sufficient evidence. Update: Thanks a reader email, I learned that it appears the loser has to pay legal fees.

One last note

Even if the RIAA did apply the principle of embarrassment correctly, it might still take a hit from having a reputation of “bullying” individuals. The woman in the current case is a 30 year old single mother who makes $36,000 per year. She was fined $220,000 for sharing 24 songs.

And there are always people who want to rebel against bullies. Radiohead recently released an album in which fans can choose their own price. And, as you might expect, Radiohead is doing this without a record label.

Update: I stumbled across a great decision making analysis of the recent RIAA ruling from The Decision Strategist Nick. I highly recommend checking it out.