stories filed under: "cost"

Hotel Lock Company Wants Hotels To Pay For Fixing Their Hackable Product

from the and-probably-will-next-time,-too dept

Mon, Aug 27th 2012 4:03pm — Timothy Geigner

Picture yourself on vacation. You leave your hotel room, listening to the fully-licensed music in the lobby on your way out. You make sure not to ask the hotel staff for anything as you leave, lest something called a PARFF come after you. And as you're out frolicking on the beach, sucking in that gut and puffing out your chest (asexual insults FTW!), Zero Cool takes a small electronic device that costs less than your average Electronic Arts videogame and hacks your hotel room's lock, giving him access to all the tourist crap you bought in the past three days.

Now, I know what you're thinking. You're thinking that this couldn't possibly happen. After all, Johnny Lee Miller is probably still too busy spinning in place from the speed with which Eli Stone was cancelled after two seasons (and again, I'm reminded that Firefly lasted one. Sigh...) to be stealing stuff from your hotel room. And besides, it can't be that freaking easy to hack into a hotel lock, can it?

Yes, it can. Forbes has the story of hotel lock-maker Onity's reaction to Cody Brocious revealing at a Black Hat security conference how to hack the company's locks (found on over 4 million hotel room doors) with $50 worth of equipment.

The company’s response to that epic security bug has two parts–a quick fix, and a more rigorous one, both of which it plans to make available by the end of August: First, it’s issuing caps that cover the data port Brocious’s hack exploited, which can only be removed by opening the lock’s case. To further stymie hackers who would try to open the locks and remove that cap, it’s also sending customers new, more obscure Torx screws to replace those on the cases of installed locks.

The second fix is more substantial: Onity will offer its customers new circuit boards and firmware that ostensibly fix the problems Brocious demonstrated.

Not bad, right? We've certainly seen companies in the past react poorly when shown the security flaws in their products, attempting to silence those that point them out rather than just fixing the problems. So this would seem to be a step in the right direction, yes? Maybe, except for this:

But Onity is asking owners of some models of its locks of some to pay a “nominal fee” for the fix, while offering others “special pricing programs” to cover the cost of replacing components. It’s also asking its customers to cover the shipping and labor costs of making hardware changes to the millions of locks worldwide.

That's ridiculous. Onity sold hotels a product that had one job to do: keep the wrong people out of hotel rooms. The product does the job so poorly that $50 worth of equipment and a little technical know-how defeats it entirely. And now you want customers to pay to fix your bad device?

Even Brocious himself pushed back on Onity's statement.

Brocious criticized Onity’s move to put the financial onus for the fix on its customers after selling them what he’s described as fundamentally insecure products. While the free mechanical cap solution could create hurdles for hackers, he says that’s only a partial fix replacement until the lock’s circuit boards are replaced–something that’s not likely to happen if it requires millions of dollars in costs for Onity’s customers. “This will not be insignificant, given that the majority of hotels are small and independently owned and operated. Given that it won’t be a low cost endeavour, it’s not hard to imagine that many hotels will choose not to properly fix the issues, leaving customers in danger,” he writes.

It's an especially bizarre move in terms of public relations. How quickly do you think word will get around to other hotel owners, particularly small independent hotels, about how Onity designs their locks and treats their customers? This could be a win for Onity, if they go out of their way to properly fix their flawed product, but instead they appear to want to turn this into a double-dip of bad business.

Filed Under: cost, fixes, hotels, locks, security
Companies: onity

43 Comments

Once Again, If You're Trying To Save The $200 Million Movie, Perhaps You're Asking The Wrong Questions

Movie Industry

from the why-$200-million dept

Wed, Jan 25th 2012 2:29pm — Mike Masnick

Many years back, when discussing new business models that don't need to rely on copyright at a Cato event, an NBC Universal executive demanded to know how he could keep making $200 million movies. As we said at the time, that's asking the wrong question. It's makes no sense at all to start from a cost, and then derive back how to make that profitable. I could just as easily ask how can we possibly make $1 trillion movies in the future? The only thing that should concern Hollywood is how it can make profitable movies in the future. That could mean figuring out ways to make a profit on a movie that costs $200 million (and, certainly big blockbuster movies like Avatar sure seem to still be able to make plenty of money, despite being widely downloaded via unauthorized means). However, it might also mean making really good movies for a lot less money. Of course, we've suggested that in the past, and got mocked by Hollywood folks who seem to insist that any good movie has to cost a lot of money. That seems pretty presumptuous.

I'm a bit behind on this (the SOPA/PIPA stuff took up a lot of time), but filmmaker/actor/director/writer Ed Burns, who came to fame a couple decades ago with the massively successful indie film The Brothers McMullen, likely had every opportunity to follow the path of plenty of successful indie moviemakers: go mainstream. He could have hooked up with a big studio and been filming the latest of those $200 million bubble-gum flicks. And while Burns has appeared in a few big studio films (Saving Private Ryan), over the last few years, he's really focused on staying close to his indie roots. In fact, he's stayed so close to them, that you could argue his latest efforts are even more indie than his first film.

He filmed his latest movie, Newlyweds for a grand total of $9,000 ($2K for insurance, $2k for actors, $5k for food, transportation, and other costs) and was done in just 12 days -- but spread out over 5 months. He used a three-man crew, natural lighting, found locations that didn't require paying, and filmed with a Canon 5D camera. Of course, he's admitted that the editing and post-production work really brought the overall budget up to about $120,000 -- but that's still an incredibly inexpensive movie. He's also focused on using Twitter to market the film. In that interview, he notes that if you connect with your fans, they'll "work on your behalf" to help you do stuff. He's distributing it using VOD, and it seems very likely that it will make a nice profit (if it hasn't already), just given the low budget, and all the buzz the film has been getting.

Of course, no one is saying that all movies should be made for $9,000 (though, I'm sure some of our regular critics will pretend that's what I'm saying). But there is an argument that lots of really great movies that would never have been made before, now have the ability to get made, distributed, watched (and be profitable!) in a way that simply wasn't possible just a few years ago. Frankly, I'd rather focus on ways to help more filmmakers be able to make movies like this, than worry about how some exec at NBC Universal defends his decision to waste $200 million on the next "reboot" of some franchise no one cares about.

Filed Under: $200 million movie, cost, ed burns, movies, production

103 Comments

How Much Does File Sharing Really Cost Hollywood?

from the questions,-questions... dept

Thu, Dec 1st 2011 6:23am — Mike Masnick

The MPAA is famous for throwing around all sorts of completely bogus numbers when it comes to the "costs" of online infringement. Even parts of the US government have mocked the MPAA for its way of calculating "losses" from infringement. In one case, the calculation was so ridiculous that even the MPAA had to admit that it had fudged the numbers. However, the folks over at TorrentFreak decided to see if they could come up with a more reasonable calculation by doing a thought exercise: what if everyone who shared unauthorized movies and TV shows via BitTorrent, suddenly switched to Netflix instead? How much more revenue would that bring in?

The answer? Not a hell of a lot. Now, the report makes a large number of assumptions -- all of which are laid out directly, and whenever possible, they sought to use a number that favored the MPAA. So they assume that every download is a "lost sale" and are extremely quick to inflate how much BitTorrent traffic is movies and TV. They also assume that all BitTorrent traffic is infringing. Again, the idea is to be as favorable as possible to Hollywood. In the end, they find that it's possible the studios might have made about $60 million more under this simplistic scenario. They then point out that the MPAA's own budget is greater than that. We can quibble about the methodology, but assuming that the methodology stands up, it certainly raises significant questions about the true size of the "issue."

Filed Under: cost, file sharing, hollywood, piracy

61 Comments

Patent Trolls Cost The Economy Half A Trillion Dollars

Patents

from the ouch dept

Tue, Sep 20th 2011 8:35am — Mike Masnick

Last month, in talking about an episode of Planet Money with James Bessen on it, we mentioned his new research suggesting that patent trolls evaporated half a trillion dollars in wealth. Now that research, done with Michael Meurer and Jennifer Ford has been released (thanks to Tim Lee for the pointer): The Private and Social Costs of Patent Trolls.

Note that this isn't trying to count "losses" like the entertainment industry in trying to make up numbers about what would have sold. This is a direct observation on value of companies sued by patent trolls, and looking at how much of their value evaporates in response to the lawsuits. The $500 billion number represents a total over 20 years -- from 1990 to 2010. But, even worse (and not surprisingly), the numbers show that this number has been going up. Over the last four years, the total decimation of value from patent troll cases has averaged over $80 billion per year. In other words, over $320 billion of that $500 billion came in just the last four years.

Does this mean that some of this money is being transferred to actual inventors? Nope. Again, the research finds otherwise. The incentive to inventors has not increased by nearly the same amount. The research points out that licensing companies could add value -- but that under the current system, they do almost certainly do not. And as the problem is getting worse, all Congress can do is pass some hapless reform bill that doesn't even deal with the patent trolls issue at all.

Filed Under: cost, economy, james bessen, jennifer ford, michael meurer, patent trolls, patents, software patents

68 Comments

RIAA Says There's No Value In The Public Domain

from the true-colors dept

Fri, Jun 3rd 2011 4:57am — Mike Masnick

While I've already written about the hearings for the Copyright Office concerning copyright on pre-1972 sound recordings, but I wanted to call out one particularly egregious and ridiculous statement from the RIAA. The RIAA's Jennifer Pariser claimed that there's no value to a work in the public domain. Apparently Pariser is unfamiliar with the works of Shakespeare. Or Beethoven. Is she serious? I mean, you could make the argument that it makes life more difficult to sell those works for the labels she represents, but those works have tremendous value. Pariser, of course, is famous for making ridiculous statements, sometimes under oath. Back when she worked for Sony-BMG she made some statements, on the stand and under oath, in the Jammie Thomas trial that were blatantly untrue. Only much later, after the jury had ruled, did the RIAA admit that Pariser "misspoke" while on the stand. One hopes she "misspoke" here as well, but I get the feeling she actually believes the blatantly incorrect statement she made.

Filed Under: copyright, cost, economics, jennifer pariser, public domain, riaa, value
Companies: riaa

91 Comments

Homeland Security Doesn't Do Cost/Benefit Analysis; They Just Do Fear And Bluster

Studies

from the you-might-die!!!!!! dept

Tue, May 10th 2011 8:12am — Mike Masnick

This should hardly come as a surprise, but a new paper that analyzes money being spent on Homeland Security finds that it's incredibly wasteful (found via Julian Sanchez). You can read the full report (pdf) by John Mueller and Mark G. Stewart, which probably confirms what most people were already thinking. Basically, Homeland Security has ratcheted up spending at a massive rate, and there's little to no effort to judge that spending against the actual risk reduction. That is, there's simply no one doing any sort of real cost-benefit analysis on this spending. The report seeks to do some of that, and what it finds isn't pretty. From the abstract (with my emphasis):

The cumulative increase in expenditures on US domestic homeland security over the decade since 9/11 exceeds one trillion dollars. It is clearly time to examine these massive expenditures applying risk assessment and cost-benefit approaches that have been standard for decades. Thus far, officials do not seem to have done so and have engaged in various forms of probability neglect by focusing on worst case scenarios; adding, rather than multiplying, the probabilities; assessing relative, rather than absolute, risk; and inflating terrorist capacities and the importance of potential terrorist targets. We find that enhanced expenditures have been excessive: to be deemed cost-effective in analyses that substantially bias the consideration toward the opposite conclusion, they would have to deter, prevent, foil, or protect against 1,667 otherwise successful Times-Square type attacks per year, or more than four per day. Although there are emotional and political pressures on the terrorism issue, this does not relieve politicians and bureaucrats of the fundamental responsibility of informing the public of the limited risk that terrorism presents and of seeking to expend funds wisely. Moreover, political concerns may be over-wrought: restrained reaction has often proved to be entirely acceptable politically.

In seeking to evaluate the effectiveness of the massive increases in homeland security expenditures since the terrorist attacks on the United States of September 11, 2001, the common and urgent query has been "are we safer?" This, however, is the wrong question. Of course we are "safer"--the posting of a single security guard at one building's entrance enhances safety, however microscopically. The correct question is "are the gains in security worth the funds expended?" Or as this absolutely central question was posed shortly after 9/11 by risk analyst Howard Kunreuther, "How much should we be willing to pay for a small reduction in probabilities that are already extremely low?"

Among other things, the report looks at everyone's favorite DHS boondoggle, the naked radiation scanners at the airport by the TSA. Apparently, DHS was directly told by the GAO to study the cost-benefit and it refused to do so. The same is true of other DHS expenditures:

Indeed, at times DHS has ignored specific calls by other government agencies to conduct risk assessments. In 2010, the Department began deploying full-body scanners at airports, a technology that will cost $1.2 billion per year. The Government Accountability Office specifically declared that conducting a cost-benefit analysis of this new technology to be �important.�12 As far as we can see, no such study was conducted. Or there was GAO�s request that DHS conduct a full cost/benefit analysis of the extremely costly process of scanning 100 percent of U.S.-bound containers. To do so would require the dedicated work of a few skilled analysts for a few months or possibly a year. Yet, DHS replied that, although it agreed that such a study would help to �frame the discussion and better inform Congress,� to actually carry it out �would place significant burdens on agency resources.�

Of course, from a political perspective, this makes perfect sense. It's all game theory. You don't get praised and promoted for doing a cost-benefit analysis that saves taxpayer money from wasteful and useless projects if a terrorist attack happens. So the end result is that the incentives for everyone at DHS to just spend as much as possible in the hopes that it stops something, knowing that if anything bad happens (as it inevitably will), all of the blame will go towards anyone who said "we shouldn't do project x that would have prevented attack y."

Of course, the real problem is that this is exactly what our enemies would like. They don't care about "terror" for the sake of terror. They want the US to spend itself silly to completely bankrupt the country. And it appears to be working. That doesn't make me feel any safer at all, no matter what the cost.

Filed Under: benefit, cost, fear, homeland security

40 Comments

Will The Recording Industry Pay For ISP Monitoring In The UK?

Politics

from the come-on,-pay-up dept

Wed, Feb 3rd 2010 2:05pm — Mike Masnick

Recently, as the BPI was arguing yet again that ISPs were exaggerating how much it would cost to implement a three strikes type regime in the UK (which would be required under Peter Mandelson's Digital Economy Bill, aka DEB), we wondered if BPI would be willing to foot the bill, since it's so sure that it'll be cheap. After all, since the whole law is designed to prop up BPI's own business model, it seems to only make sense that BPI should be the one paying for it, right?

Turns out that we're not the only ones to think so. In a recent post about the DEB, Jeremy Silver (who I had the pleasure of meeting at Midem) points out that BPI is in the troubling position of trying not to make it sound so cheap that it's expected to pick up the bill, while still arguing that it's not so burdensome for ISPs to pick up the bill. But, various proposals actually are suggesting that BPI should pay the cost:

The Digital Economy Bill that is wending its glacial way through the UK parliament has produced an interesting row between the BPI (representing the interests of the major record labels) and the ISPs, telco's and mobile network operators. They are arguing over who should pay how much to fund remedial measures to clamp down on illegal file-sharing. The BPI is in a tough place since the cheaper they argue the cost will be, the more the ISPs respond by saying "well then you can pay for it." Minister Stephen Timms recently suggested the split should be 75/25 (with the BPI paying the greater amount).

Honestly, I fail to see why BPI shouldn't have to pay 100% of the cost (or, perhaps in conjunction with other copyright industry organizations) if such a plan goes through.

Silver recognizes the bigger issue of course, which is that almost no one actually thinks that a three strikes plan "will make a blind bit of difference," and that this whole game is really about rights holders "wasting their money by trying to control file-sharing." On that we agree. However, I have to disagree with his suggestion that the answer is a collective licensing regime, because I think that introduces way too many questions where it's not needed. A collective licensing scheme puts yet another bureaucracy in the middle, just for the music industry (well, not for long, because then suddenly everyone else wants one too: the movie industry, the software industry, the video game industry, the newspaper industry, etc. -- and why should it stop there, new industries will jump on board too: don't we need a collective license for people who view blogs too?). As it stands, I just think that we're finally seeing free market business models that are working, and it's way too early to jump in and distort the market with a collective licensing scheme.

Filed Under: collective licensing, cost, isps, record labels, three strikes, uk, who pays
Companies: bpi

43 Comments

Still Debating The Cost Of Ebooks

(Mis)Uses of Technology

from the marginal-cost-people... dept

Thu, Oct 8th 2009 3:11pm — Mike Masnick

A few weeks ago, we wrote about why it didn't make sense that ebooks were often so expensive given that the marginal cost of an ebook is much, much, much lower than a physical book. ChurchHatesTucker points us to a recent argument against that claim by Andrew Wheeler:

Creating an individual ebook format -- one of the current suite of them -- costs roughly as much as creating a print-on-paper edition; the costs of the actual paper and ink are vanishingly small in this equation. Some ebook formats, such as the currently fashionable one, have a baroque process of creation that involves multiple transformations and iterations of quality control, which drives up costs further. And the cost per unit is massively higher for ebooks than for printed books -- infinitely so in some cases, since there are plenty of ebook editions that have never sold a single copy.

Now, the issue here, of course, is a fundamental misunderstanding the difference between total cost (or average cost) and marginal cost. This happens a lot -- especially among non-economists. But it misses the point. Total cost is important in figuring out an overall business model, because obviously you want to be able to make more than it cost overall, but it's a terrible way of picking a price. That's because the driving force in pricing is the marginal cost. Meanwhile, CHT also points us to a good rebuttal to Wheeler from Paul Raven, where Raven basically says that Wheeler is doing things wrong:

I'm not going to refute the claim that ebooks currently cost a lot of money to make. I am, however, going to say that they shouldn't cost a lot of money to make, that they don't have to, and that the longer they do, the smaller the chances of them ever becoming a viable industry in their own right...

He goes on to note that part of the problem is with the publishers themselves, and their inability to come to terms on a standard (and open) format.

But there are other problems in the ebook publishing world as well -- where it appears that some publishers are less focused on figuring out how to use the technology to improve the experience for readers, and more about how to screw them over. Charlotte Payan-Salcedo discusses her her recent attempt to buy some ebooks, where she discovers that the ebooks she bought require special software to read, including DRM that limits where the books can be read... and then discovers that the books "expire" after 180 days. She doesn't say it, but I'm guessing these are actually textbooks (both from the price -- $180 for two ebooks) and from the claim that they expire. When textbook companies first started offering ebooks, many of them were designed to "expire" after the course was over. I hadn't looked at the etextbook market in a while, and had sorta expected (hoped?) this silly concept was gone -- but apparently not. It looks like in this case, the publishers have figured out how to provide none of the benefits of ebooks, but added all sorts of additional negatives.

Filed Under: cost, ebooks, economics

33 Comments

Lame: Apple Charging $0.30 Per Song To Ditch DRM

(Mis)Uses of Technology

from the do-it-yourself dept

Wed, Jan 7th 2009 4:06am — Mike Masnick

In the initial news about Apple going DRM-free, I saw it reported that Apple would let you convert your existing files to DRM-free. However, what was left out of the reports I saw (though, people in our comments pointed it out) was that Apple wants to charge you $0.30 for the privilege of getting rid of the DRM. Of course, you can just get rid of the DRM yourself if you don't mind going through the conversion process (though, even that's a bit of a pain). Either way, it's pretty lame to charge people to get rid of DRM. Why even offer that as an option? Are people really going to pay more?

Filed Under: cost, drm, itunes
Companies: apple

101 Comments

Much Ado About Nothing In Accusations Over Text Message Pricing

Overhype

from the focus,-people,-focus dept

Tue, Dec 30th 2008 4:25am — Mike Masnick

I'm hardly a mobile operator apologist, but the NY Times' Randall Stross is trying to make a pretty tiny molehill into a mountain by picking up on that old, dead story suggesting that mobile operators are somehow ripping users off with SMS text messaging pricing. As was noted when Senator Herb Kohl first tried to make an issue out of this, per message pricing is fairly meaningless, since most users of text messaging subscribe to bulk plans or even unlimited plans. Besides, if pricing really were a problem, then people wouldn't be text messaging so much. The fact that they're using it so much, suggests there really isn't that much of a problem with the pricing. Stross tries to focus on the actual "cost" to the carriers for sending a text message, which is tiny, but that, again, is rather meaningless. A year ago, Tom Lee pointed out just how silly such an argument is for text messaging. As mobile phones grow more and more sophisticated, if SMS pricing really is a problem, alternatives (such as mobile instant messaging) will grow as well, and SMS providers will need to adjust their pricing. If, however, consumers don't have a problem with the current system (and all indications are that they don't), then why is the NY Times even bothering?

Filed Under: cost, text messages

52 Comments

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Hotel Lock Company Wants Hotels To Pay For Fixing Their Hackable Product

from the and-probably-will-next-time,-too dept

Once Again, If You're Trying To Save The $200 Million Movie, Perhaps You're Asking The Wrong Questions

from the why-$200-million dept

How Much Does File Sharing Really Cost Hollywood?

from the questions,-questions... dept

Patent Trolls Cost The Economy Half A Trillion Dollars

from the ouch dept

RIAA Says There's No Value In The Public Domain

from the true-colors dept

Homeland Security Doesn't Do Cost/Benefit Analysis; They Just Do Fear And Bluster

from the you-might-die!!!!!! dept

Will The Recording Industry Pay For ISP Monitoring In The UK?

from the come-on,-pay-up dept

Still Debating The Cost Of Ebooks

from the marginal-cost-people... dept

Lame: Apple Charging $0.30 Per Song To Ditch DRM

from the do-it-yourself dept

Much Ado About Nothing In Accusations Over Text Message Pricing

from the focus,-people,-focus dept

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