Journalists Don't Do Math: How Does Buying 6,000 Songs With Stolen Credit Cards Get You £500,000 In Royalties?

Scams

from the doing-the-math dept

Shocklee points us to a story claiming that a group of teenagers in the UK uploaded some of their own songs to iTunes, then used a bunch of stolen credit cards to download the songs thousands of times, and then collected approximately $773,000 in royalties. The article notes that this would be “an easy enough crime to commit,” but something in the reporting on this story doesn’t make much sense at all.

First off, something appears to be way off in the numbers. The reports claim that the teens downloaded their own songs approximately 6,000 times over the course of a year and a half. Yet, they claim they made $773,000 (£500,000) in royalties? I know that Apple now allows slightly higher prices on some songs, but they’re not that high. The math doesn’t add up at all. iTunes songs in the UK cost £0.79 per song, so 6,000 songs would mean £4,740 spent in total. Take Apple’s (approximated) 30% cut, and you’re left with £3,318 — a far cry from £500,000. Even if you assume these songs got the “premium” pricing of £0.99, we’re still orders of magnitude off (hat tips to Dave W & Stephen for UK iTunes pricing info). I’ve gone through the news reports — and a whole variety of press reports and blogs all report the story exactly the same way: 6,000 total downloads (2,000 by this one guy, Lamar Johnson, who pled guilty to the crime) but not one report that I’ve found which seems to question the math.

I guess it’s entirely possible that buying a bunch of songs yourself would boost the songs onto some lists, that would drive additional “real” sales, but if that were the case, that would be a much more interesting story — and you would think that the press would point that out. We’ve certainly heard claims of “real” music releases where labels have dumped money into getting people to “buy” thousands of copies of songs to try to push a song into a hit list but none of the news on this story suggests that’s the case.

Separately, despite the claim of the original article that this is a crime, I fail to see how that’s the case at all. It’s clearly an attempt to launder money via iTunes, but there seem to be multiple serious problems with it. First, as soon as the stolen cards are discovered and the false charges are made clear, it has to be incredibly easy to track down the likely suspect: whoever uploaded the music. On top of that, given iTunes’ 30% or so cut, it seems like a somewhat costly way to launder money… in a way that is incredibly traceable, so the money isn’t even that well laundered.

Filed Under: itunes, royalties, scams