Mr. Benefactor makes an amazing point about RIAA’s war on illegal file sharing in his blog. Mark Cuban points out that with the introduction of Yahoo!’s Unlimited music service, they have essentially capped the market value of music thus limiting the amount that RIAA ought to be able to claim as damages to $5 per month when they sue kids.
“The RIAA can no longer claim that students who are downloading music are costing them thousands of dollars each. They can’t claim much of anything actually. In essence, Yahoo just turned possession of a controlled music substance into a misdemeanor. Payable by a $5 per month fine.”
[Blog Maverick]
So what if you could just pay that $5 per month for the rest of your life all at once? You could essentially be immune from all lawsuits and download anything and everything for one lump sum payment…
To figure out how much you would owe in one payment cannot be simply calculated by multiplying $5 times the number of months you are expected to live. There are other factors that must be taken into account, such as inflation and net present value.Your life expectancy will be determined by your current age and sex. For demonstration purposes lets say that you are an 18 year old male. The average life expectancy for you will be 74, that’s right you have 56 more years to live. So you will need to pay $60 a year until you are 74, but that $60 will not be worth the same as it was in year 56. It is not simply $60 times 56 years equal $3,360 total payment.Here is where net present value (NPV) comes into play. NPV compares the cost of the present value of a dollar to the future value of a dollar by considering the rate of return and inflation factors. So inflation is around 2.75% and you can get around a 6% safe return on your money, NPV says that you should only pay RIAA $1,538.24 once for unlimited downloads for the rest of your life. Anyone willing to take this to court?
