co=cc + cct + cm + cr (1)
cc is the cost of creation, for example, payments to the author;
cct is the cost of chunking and tagging, or otherwise preparing the information for publication;
cm is the cost of marketing, including promotional expenses, distribution costs, and costs of billing and collection; and
cr is the cost of copying or reproduction.
cp=ca + ct + cm + cr + cll (2)
ca is the cost of acquisition, for example, finding and downloading the material a pirate intends to resell;
ct is the cost of transformation;
cm is the cost of marketing;
cr is the cost of copying; and
cll is the pirate's cost of legal liability.
A free-ride problem exists only if the pirate's costs are less than the originator's costs, in other words if
cc cct>ca ct cll (3)
Most assume that
cc + cct >> ca ct (4)
and therefore that the value of cll must be increased to maintain the current level of free-riding risk.