Author Archives: Morgan O'Rourke

About Morgan O'Rourke

Morgan O’Rourke is editor in chief of Risk Management magazine and director of publications for the Risk & Insurance Management Society (RIMS).
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The $2 Million Playlist

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musicBack in December 2007, we reported on the case of Jammie Thomas, a Minnesota woman who was found liable for copyright infringement in the first (and still only) music piracy case to go to trial in the United States. Thomas had been found guilty of downloading and distributing 24 songs on the now-defunct file sharing network Kazaa and was ordered to pay $220,000 to the recording industry for her transgression.

Evidently, the story did not end there, however. After determining that he had given incorrect instructions to the jury in the original case, the judge ordered a new trial. This second trial did not go so well for Thomas (now Thomas-Rasset) and on Thursday, the new jury hit her with a $1.92 million fine, or $80,000 per song. While the judgment was less than the $150,000 per song maximum allowed by law, it was significantly more than the average $3,500 settlement reached in the more than 30,000 similar lawsuits that never went to trial (and obviously more than the 99 cents per song it would have cost to acquire the tracks legally).

In repsonse to the verdict, Thomas-Rasset told reporters that she had no intention of paying the fine. “There’s no way they’re ever going to get that,” she said. “I’m a mom, limited means, so I’m not going to worry about it now.”

Although the case seems like an obvious win for the Recording Industry Association of America (RIAA) in its fight against music piracy, some analysts, such as New York attorney Ray Beckerman, believe the verdict may do the RIAA more harm than good.

“Oddly, this gigantic verdict may do more to hurt than help the RIAA, because it offers a vivid demonstration of how out of synch the RIAA’s damages theory is with decades of case law about the reasonableness requirement for copyright statutory damages,” Beckerman said.

The size of the award also goes against a century of case law “deeming punitive awards unconstitutional if they are unreasonably disproportionate to the actual damages sustained.”

Regardless of whether the verdict is ultimately overturned, however, the RIAA has said it remains willing to settle.

What If?

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Every year the World Economic Forum releases its Global Risk Report with the aim of addressing the key current and emerging risks and advancing thinking about their mitigation. It’s no suprise that financial risks top this year’s list. The potential for further deterioration of asset prices and fiscal positions could be exacerbated by a potential slowdown in the Chinese economy and gaps in global governance that could allow a problem to reach critical mass before it is addressed. Meanwhile, natural resource concerns, particularly about water scarcity, loom as does the possibility of increased levels of chronic disease around the world. In all, 36 risks are mentioned in the report and very few are seen to be decreasing in terms of possible severity and liability. It’s enough to give you nightmares.

As with any report of this kind, there is a temptation to dismiss the findings as far-fetched and unlikely — the kind of thing best left to the Chicken Littles of the world who want to live in fear that the sky is falling. But what if the sky does fall? What do you do then? As John Merkovsky, managing director of Marsh Risk Consulting, said during Marsh’s analysis of the report this morning, “It doesn’t matter if you’re out of business for reason A, B, C or D. You’re still out of business.” 

Risk is increasingly interconnected and any risk manger can visualize a scenario where a global concern can quickly become a personal concern. Now is not the time for what the World Economic Forum calls “risk myopia.” The impacts are too great. After all, if the extremes on the bell curve can kill you, it would be crazy not to pay attention.

Below is a video from a World Economic Forum panel discussion on the survey’s results from January.