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

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.

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

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Marcus Carab (profile) says:

I’m glad you brought up the journalists/math issue, because it’s a big one, and I’m going to harp on it for a moment if nobody minds…

I first got frustrated with it in journalism school, when we spent an entire three-hour class on the difference between percentages and percentage points. Even the professors didn’t understand what they were teaching, and by the end of the class absolutely nobody who didn’t understand it already was any better off (they had written down a formula for converting one to the other, without achieving even a slight grasp of what they actually represented – and yes, I know, it’s a pretty simple concept)

That was the first time I heard one of the journalism communities favourite jokes: “well, that’s why we’re writers, right? we suck at math, ha ha ha”

I must have heard at least three or four different professors make that joke while absolutely failing to teach simple mathematical concepts to their classes. It was as if it went without saying that no journalist will ever truly understand math so they shouldn’t even bother trying.

Then it really got my goat when, a few years ago, Canada made some changes to our sales tax. The newspapers were FULL of stories explaining how it would affect prices of different products, and they were wrong more often than they were right. Nobody could properly calculate how much a one-percentage-point drop in sales tax would affect the price of a $1000 television. They made simplistic mistakes and outrageous claims about the numbers.

A columnist in one of our national newspapers decided to write a “humourous” piece about that very thing at the time, and she joked and joked about a press room full of befuddled journalists going cross-eyed with their calculators. The piece was essentially an excuse for the profession, saying “we know we screwed up, but come on, it’s *math*, you can’t expect us to get that right!”

So my message to math-illiterate journalists is this: your job isn’t about words, it’s about facts. Sometimes that means that before you can properly cover a story you need to learn stuff about politics, or about a field of science, or, yes, about the dreaded “math” – and the fact that you find it difficult isn’t an excuse for ignoring it or getting it wrong.

Dave W (profile) says:

Journalists looking at the wrong angle

My view is that the teenagers weren’t doing this to make money. Maybe they were trying to buy recognition. If by buying loads of copies of their album they got front page space on the iTunes store… And by using stolen credit cards pocketed a couple of ?1000 at the same time…

Well all I’m saying is its a better business model than “i’ll let the record company sort it all out and moan about pirates”, despite the obvious (and idiotic) illegality.

Karl (profile) says:

6000 cards, not songs

There’s an update on the linked news article. Martin Bryant (the TNW journalist) realized the math didn’t work out, too; his update assumes that there were 6000 downloads of multiple songs, using different credit cards each time.

In other words: it’s more like they uploaded multiple albums’ worth of songs, then downloaded each album 6000 times. Still, if you do the math, that would require at least 150 songs to each be downloaded 6000 times.

Now, according to the cited article in The Daily Mail, there were ten people that did this, and the total amount gathered by all of them was 500K pounds.

That means that ten people each uploaded about 15 tracks, and downloaded them thousands of times using (presumably the same) stolen credit cards. That makes a lot more sense.

…Mathematically, that is. It doesn’t make a lot of common sense. I have no idea how these guys thought they’d get away with it.

Bill Pytlovany (profile) says:

Guess who eats the cost of illegal credit cards

One misconception that people have is that somehow the credit card companies eat the lost revenue from stolen credit cards.
If I sell a product online( which I do ) and someone uses an illegal credit card they remove the money from my account. The vendor pays the price, not the bank or credit card companies.

So, if iTunes didn’t get paid for the download, I promise you the author didn’t get royalties.

Bill Pytlovany

Anonymous Coward says:

The best I’ve been able to find on this:

“The court heard the scam worked by exploiting the discovery that if a musician pays a flat fee to a music distributor and then uploads their own music on to iTunes and Amazon, any royalties go straight into their own pocket.
Ring leader Craig Anderson, 24, of Edwin Road, Dartford, Kent, bought 24 identical laptops, obtaining thousands of stolen or compromised credit card details and email addresses and recruiting helpers to log in and buy songs to generate royalties, the court heard.

“Often the credit cards they were using had been cloned rather than stolen and the purchases – which were for less than £10 each time – went unnoticed, prosecutor Helen Malcolm QC told the court last year.

“The court was told that the scam which ran between January 2008 and June 2009 made £500,000 but caused losses to iTunes and Amazon of between £750,000 and £1 million.

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