How Much Could an American Three Strikes Law Cost?

Not too long ago, we reported that, if government comments and documents are correct, HADOPI could cost around $64 Million USD. Ever since I published that, I wondered how much a three strikes law could cost if an American equivalent to HADOPI was ever brought to American soil. After a few e-mails and looking in to this, we may have a rough figure.

Note: This is an article I wrote that was published elsewhere first. It has been republished here for archival purposes

It’s a topic that rights holders would likely not want to even think about bringing up and, as we found out, a topic ISPs aren’t entirely comfortable discussing either. Still, it’s a topic worth bringing forth for a more accurate assessment of any kind of three strikes law. It’s hard to gauge how likely a three strikes law would come to America because the idea was pushed by the US inside the ACTA negotiations (at least, right up to the initial official release of the text where the infamous footnote was removed).

Still, there’s little appetite in the US to bring in a three strikes law at this point in time. Major rights holder corporations haven’t really beat many drums to call for a three strikes law – at least, as of yet. Should that need ever come up, though, that requires any form of assessment to a three strikes law, we can safely point to one factor that would work against that – cost.

The issue of cost was brought up earlier this month in France where we discovered that HADOPI, based solely on IP look-ups which would, indeed, be individually needed per strike, the three strikes law in France would cost about $64 Million USD per year. We did note that this was quite a jump in enforcement compared to the $17 Million USD figure floating around as a result of an RIAA IRS form.

Bearing in mind, this figure that we are researching only takes in to account IP-lookups. Whatever the additional costs incurred over top doesn’t count (administrative fees come to mind as one possible example of additional costs). Having said that, we need to first figure out how much it costs in labor to do an IP look-up. This is not exactly the easiest number to obtain and it was a bit harder than the 8.50 Euro figure we were able to gather previously. After a few e-mails, we were able to obtain some information thanks to a political blow-up a few months back as a result of a flood of IP subpoenas that US ISPs weren’t too thrilled about (namely the Far Cry controversy). This gave us two figure’s.

The first was a conservative figure we were able to gather from The Hollywood Reporter where an agreed upon cost was lowered down to $32.50 per look-up. An interesting figure since, after converting from Euro’s to US Dollars, is three times the cost of a French IP subpoena. There are a lot of factors when you compare those two numbers that have more to do about economics rather than technical related facts. The second figure we came up with is $45. That comes from an article on Ars Technica which is about 4 and a half times the French rate.

We’ll say that this is our approximation: The cost per IP look-up can be a minimum of $32.50 to a maximum of $45. So that is our first piece of important data.

The second piece of critical data is how many subpoena’s are we talking about? I highly doubt US ISPs would even think about going above 500 subpoena’s a month because that is just an insane amount of additional work being pushed on to workers. Still, we are only looking at the costs strictly incurred on IP-lookups. This is, again, not an easy figure to come up with. Under the rule that we are simply translating HADOPI-style from France to the US, we can look at the comments made by the French government that said that they’ll be disconnecting 1000 accused infringers per day over top of an additional 13,000 letters for first and second strikes.

To my knowledge, that’s a pretty scary high statistic and I think that is a level that could inflict a lot on file-sharers. So since we are translating HADOPI into America, we’ll have to, once again, say 1000 disconnections means 3000 look-ups. Add that to the additional 13,000 letters, that totals 16,000 look-ups per day. Since there’s 365 days per years, that’s an estimated 5,840,000 look-ups per year or 486,667 look-ups per month.

The problem now becomes, this is a number for the French population. We are looking for a roughly equal campaign figure in the US. For that, we will look at the population of France that sits at 61,538,322. Meanwhile, the population of the United States, using the same source, is at around 307,212,123. The United States population is about 20% larger than France. So, we can scale up the yearly look-ups accordingly to fit the population size by an additional 1,168,000 to 7,008,000 look-ups per year which is about 584,000 look-ups per month.

Personally, I think the ISPs would race to congress with pitchforks and shotguns before submitting to a workload like that, but that’s just my opinion.

So now, we have our two pieces of data: an IP look-up costs minimum $32.50 per lookup and a maximum of $45. The second piece of data is that a US version of HADOPI would be 7,008,000 look-ups per year. This is where the math is a lot easier.

The Final Costs

At $32.50 per look-up, a three strikes law would cost $227,760,000 per year. That’s the low-end figure. Meanwhile, the high-end figure of $45 would make an American version of HADOPI cost $315,360,000 per year. That $17 Million dollar figure previously uncovered really looks like a few dusty pennies by comparison. It’s not exactly the NASA budget, but I’d argue it’s way up there. As we said, these costs are not complete. What about the cost of gathering those IP addresses? What about additional legal fees? These numbers we calculated only goes up from there.

In theory, the RIAA could foot the bill with $8.5 Billion in revenue in 2008, but would the RIAA want to foot a monster bill like that when their legal costs are so low right now? I doubt ISPs would even dream of just voluntarily footing a bill like that. Given the pressure to cut costs, it’s unclear if the US government would want to foot a bill like that and that’s just the financial aspect of it – we don’t have to even touch the political ramifications here since how much of a given such a market intervention would entail.

I submit that, on costs alone, the idea of bringing in a three strikes law in to the US is sufficient to call an American HADOPI-style three strikes law dead on arrival. It’s way too expensive and the strategy of suing the country costs a mere fraction of a penny compared to a three strikes law. I, for one, would be very amazed if a three strikes law were to ever come to the United States. It was a bad idea in France and it sure would be a very bad idea in the United States.

Drew Wilson on Twitter: @icecube85 and Google+.

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