RIANZ Spends $250,000 on Three Strikes Law to Reap $616.57

By Drew Wilson

The Recording Industry Association of New Zealand (RIANZ) finally convicted its first file-sharer under the now tested New Zealand three strikes law. While RIANZ may be feeling satisfied it got a result, the money spent may raise some questions over the effectiveness of such a law.

We’ve been covering the developments of the New Zealand three strikes law for close to a month now. When we reported on the first conviction, one of the things we discussed is the possible similarities between the Skynet law and HADOPI – particularly how the balance sheet didn’t look pretty for HADOPI. Now, today, New Zealand media is reporting on exactly this topic. Apparently, in order to get to this point in time, RIANZ spent a quarter of a million dollars to send out copyright violation notices. Since RIANZ has only gotten one conviction, the rewards for spending that money came to a grand total of $616.57 in fines.

This certainly can raise a number of questions like is RIANZ repeating the same problems as HADOPI in France? After all, HADOPI faced similar financial problems when the Socialist party pointed out that 16 million euros is a lot of money for 60 agents to send out 1 million e-mails. Some might argue that we are now two for two in finding out that a three strikes law is ultimately a money pit with, at best, dubious results.

Even RIANZ isn’t exactly happy with these results. From the NZHerald:

Rianz said the fee should be dropped to $2-a-notice but this was rejected by the Government.

If set at $2 Rianz said it would have sent 5000 notices a month.

“We believe this level of notices would have more fully realised the aim of the law.”

If the cost is going to be a problem, this could also raise another point raised earlier, would this be repeating what the RIAA did in the United States during the mid 2000’s when it sent out thousands of litigation notices only to find themselves only reaching a statistically insignificant number of file-sharers? It’s likely that 5000 file-sharer’s receiving notices may wind up being only a drop in the bucket.

Of course, this could also raise a third point. If it costs such a large sum of money to send a few thousand notices and only fine one individual a few hundred dollars, is this even a good return on investment? When an organization is spending such a large sum of money to achieve such little progress on a perceived problem, it’s only going to be a matter of time before that money dries up. It’s simple math, when an organization spends more money then it takes in, it’s not a matter of if, but when that organization runs out of money. In this case, the organization lost $249,383.25 on this deal. The return on investment here is 0.25% or earning one cent for every four dollars spent. Besides creating a money losing prospect and upsetting a lot of people including customers, what exactly is this law even solving anyway? A temporary drop in file-sharing before file-sharers find better way to hide their tracks?

Another question might be, are we going to see similar problems crop up in the Copyright Alert System in the United States when that rolls out? The RIAA (Recording Industry Association of America) and the ISPs (Internet Service Providers) did agree to split the costs of running this policy, so we know for a fact that the alert system isn’t going to be free.

What will be interesting to see is if this financial trend continues with such three strikes law-like policies.

Drew Wilson on Twitter: @icecube85