The record companies have made headlines for threatening extremely high-stakes and time-consuming litigation against people who have illegally downloaded songs on the internet. The maximum statutory penalty is $150,000 per song you downloaded. At that rate, the record company’s offer to settle the whole kerfuffle at $4,000 seems positively like a bargain.
This strategy relies on the threat of a horrible outcome (downloading a single 12 song album leaves you open to as much as $1.8 million in liability) to prevent these pirates of the internet from attempting to defend their dastardly digital deeds in court. Do note that the record companies, despite the fact that roughly 800% of all albums in America are downloaded illegally, still have enough collective resources to make defending such a lawsuit extremely expensive.
But what if the tables were turned, and the record companies were staring down the business end of a high-stakes and painfully drawn-out lawsuit?