February 12, 2007
Incentives
Playing the lottery:
Odds of winning any prize at all in the lottery: 1:68.96.
Odds of winning the jackpot: 1:146,107,962.00.
Cost of a lottery ticket: $1.
Potential payout: $1 - $150,000,000.
Immediate "value" of that lottery ticket: negligible through $1. (Odds of winning times potential payout.)
Value of purchase if you don't win: $0.
Downloading a
Very rough, back-of-the-napkin calculation of odds of getting sued for downloading/distributing any particular copyrighted file: 1:600,000,000.
Cost of downloading: $0 (assuming you're already online).
Potential "payout": most cases settle for $5,000, so -$5,000.
Immediate "value" of downloading: somewhere between a $4 movie rental and a $19 album purchase. (Money saved by not buying a physical copy; iTunes is not a viable option, as it's defective by design.)
Value of "purchase" if you don't get sued: $4-$19.
Now which one does it make more sense to play? Playing the lottery costs money, so you've an overwhelming chance of losing a buck and a fraction of a chance of winning a lot of money. Downloading costs nothing, provides immediate enjoyment, and has an even lower chance of legal troubles leading to a modest payout. No one, copyright holders included, expects any individual consumer to be able to pay the $1,500,000,000 it would take to pay the statutory fines on a reasonably large mp3 collection.
Conclusion: it makes more economic sense to download music than play the lottery. Which explains why more people do the former than the latter.
