Print 51 comment(s) - last by mithunchetan.. on Jul 28 at 1:50 AM

The cold hard numbers show the RIAA's legal campaign to be about as successful financially as burning money in a pit.  (Source: Views Skewed)
"That does not make sense!"

In the infamous Recording Industry Association of America's (RIAA) 2008 IRS tax filing, the organization revealed the stunning financial futility of its battle against piracy.  The document[PDF], obtained by P2PNet, reads like a lawyer's dream and like a financial officer's worst nightmare.

At the end of the day, RIAA paid Holmes Roberts & Owen $9,364,901 in 2008, Jenner & Block more than $7,000,000, and Cravath Swain & Moore $1.25 million to pursue claims against music pirates.  That's a total of over $17.6M USD.  And there were more law firms listed -- those were just the top three fees. 

In return, it received a mere $391,000 USD in compensation from its pirate victims.  In other words -- the RIAA spent over 45 times on lawsuits and threats than what it received in return.

The document proves similar to those obtained from past years.  For example in 2006 the RIAA in excess of $19M+ USD in legal fees and $3.6M USD investigative fees to pull in $455,000 (Source [PDF]).  And in 2007, it recovered $515,929 after spending $21M+ USD on legal fees and another $3.5M USD on its investigation (Source [PDF]).

In total, from 2006 to 2008 the RIAA spent $64M USD to make $1.361M USD.

Unless you're an electric car company, those kind of financials would typically spell the end of your company or organization.  However, the music industry seems more than happy to keep pouring money into the hole, as they feel they're overall preventing an even greater loss of revenue at the hands of pirates.

Unfortunately for them this may not be true at all.  Time and time again studies have shown that pirates will continue to pirate music and movies despite the RIAA's best efforts.  Piracy shows no sign of slowing down, despite all the lawsuits.  And likewise BitTorrent traffic continues to grow.

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And .. 3.. 2.. 1..
By dajeepster on 7/14/2010 9:02:30 AM , Rating: 5

i wish i had something more worthwhile too say.. but there.. oh hold on.

RIAA: We need to go after more pirates to pay for the lawyers.
Shareholders: WTF?!

RE: And .. 3.. 2.. 1..
By superPC on 7/14/2010 9:32:37 AM , Rating: 4
humans are not the most logical species indeed.

wouldn't it be more logical to spend that 64 mill in building a better online pricing scheme? looks to me services like hulu, last fm, and the rest make some fine profits. if the music industry spend that 64 on a killer internet portal for music they would have seriously reduce piracy by now.

RE: And .. 3.. 2.. 1..
By quiksilvr on 7/14/2010 10:15:55 AM , Rating: 4
They don't want to do that because we already have:

1) Grooveshark
2) Rhapsody
3) Pandora
4) imeem

Honestly, would YOU go to an RIAA music portal? I sure as hell won't.

RE: And .. 3.. 2.. 1..
By BladeVenom on 7/14/2010 10:26:44 AM , Rating: 4
Just avoid supporting the RIAA.

The RIAA and its members treat their artists worse than the pirates.

RE: And .. 3.. 2.. 1..
By quiksilvr on 7/14/2010 4:07:08 PM , Rating: 2
No wonder they care so much more than the musicians...

RE: And .. 3.. 2.. 1..
By bighairycamel on 7/14/2010 10:31:41 AM , Rating: 5
It's pretty clear the MAFRIAA is trying to use scare tactics to curb pirating and they knew from the start the costs would greatly excede damages won. They were hoping enough pirating would be stopped to generate actual music sales to increase revenue.

Obviously, we know it isn't working. Now it's just a question of how long will they keep trying before they give up. A "not for profit" agency can't keep this up forever.

RE: And .. 3.. 2.. 1..
By inperfectdarkness on 7/14/2010 9:49:46 AM , Rating: 5
as with malpractice suits, frivolous class-action suits, patent-troll suits, etc; the only parties benefitting are the lawyers.

an american businessman, a russian businessman, a cuban businessman and an american lawyer were all riding on a train together. after much discussion and friendly banter with the group, the russian businessman gets up, pulls a bottle of vodka out of his briefcase, pours each man a glass, and throws the remainder of the bottle out the window. the american businessman asks him why--even though the russian economy is suffering--he can afford to waste vodka. the russian businessman replies, "we have more vodka in russia than we could ever drink in several lifetimes."

upon seeing this, the cuban businessman gets up, pulls a box of cigars out of his briefcase, hands one to each man, and throws the rest of the box out the window. flabbergasted, the american businessman asks him why--in spite of the dreadful state of affairs that cuba is in--can he afford to waste cigars. the cuban businessman replies, "in cuba, we have more cigars than food...and every citizen can get them for free."

the american businessman pauses several moments for reflection. then he gets up, and throws the american lawyer out the window.

RE: And .. 3.. 2.. 1..
By djc208 on 7/14/2010 1:41:34 PM , Rating: 2

For every leagal justice some lawer achieves 100 more are causing more harm than good, and keeping most of the money involved.

RE: And .. 3.. 2.. 1..
By erple2 on 7/14/2010 2:22:37 PM , Rating: 2
I think it's the other way around - for every 100 lawyers that achieve legal justice quietly, one blows up into causing more harm than good, keeping more money than due in the process.

For every 100 people I drive with on the highway, that 1 person drives like a psycho-jerk. That leads me to make the loud and incorrect assessment that everyone on the highway is a maniac.

RE: And .. 3.. 2.. 1..
By Archibald Gates on 7/14/2010 3:10:54 PM , Rating: 4
Why should i pay for low quality mp3's?
Or CD's where i only like 2 or 3 songs and the rest is just crap?

I will not pay for low quality music.
I will not pay for over-priced CD's so i can get "3" songs off the disc and have to pay also for the other crap that i don't want.

I would love to pay for HIGH QUALITY uncompressed music!
I would love to buy a CD in a store where i could get only the songs i really want and not all the other crap they try to sell.

They should rather use the money to build a web portal where you could download all the music and i mean ALL OF IT in high quality uncompressed formats.

Until they offer something that torrents don't offer, and that is High quality music (uncompressed formats), ease of use, and a place where you can get every song you want. Until that time there will always be piracy!

RE: And .. 3.. 2.. 1..
By erple2 on 7/14/2010 3:48:23 PM , Rating: 3
I'll take lossless compression, too...

RE: And .. 3.. 2.. 1..
By icanhascpu on 7/14/2010 6:05:56 PM , Rating: 3
I think you're confusing "uncompressed" with "lossless" There is no intrinsic advantage in sound quality when you say "uncompressed". It reminds me of back in the day when radio shack was just getting into the digital TV era and the salesman was spouting how it was great "digital quality" picture. Digital quality? Really? What the hell does that even mean? :D

RE: And .. 3.. 2.. 1..
By afkrotch on 7/14/2010 8:22:33 PM , Rating: 1
It's called Japan's music industry. All the songs happen to be released as singles first. Each single will have a total of 2 songs and 1 instrumental (main single, coupling song, and main single instrumental), costing you roughly $12.

After about 4-5 singles are release, an album will be released. This album will be all the main singles combined with none/some of the coupling songs. Also maybe 2-3 brand new songs. The album will cost you $30.

$16 for a CD in the US. Pfff, you have it easy and you still complain like little bitches.

RE: And .. 3.. 2.. 1..
By zmatt on 7/14/2010 9:59:19 PM , Rating: 2
Yeah but if all the songs on the album can stand alone as single then it must be a pretty good album.

I think the bigger issue here is that with technology where it is there is no technical reason I shouldn't be able to walk into a record store and "make" a cd with the songs I want on it and pay for those individual songs. The price of each song being something like $.50 since the overhead is almost non existent. the store would comprise mostly of hard drives, blank cds, cd burners and then stations to hear new songs that you may want to buy.

RE: And .. 3.. 2.. 1..
By bigdawg1988 on 7/14/2010 8:36:08 PM , Rating: 1
The RIAA is laughing their asses off at YOU!
They made over $10b back in 2007 (don't know current figures) so they could give less than a damn about paying $64M for lawsuits when they would be making a lot less. Think about Rhapsody, itunes, napster, pandora, winamp etc., and all the royalties they get from those guys combined. Now imagine there was no limit to pirate downloading and you'll understand that none of them (well, except the OLD Napster) would exist to make them money. I don't agree with their figures (tens of billions or whatever), but it has to be in the hundreds of millions each year. Well worth that little $64m they spend on their attack dog lawyers. Sorry Jason, but you're just stirring up the masses. Nothing to see here, move along.

I agree that the RIAA sucks, but they don't give a ....!

By Digimonkey on 7/14/2010 9:05:47 AM , Rating: 5
They'll just argue that it probably prevented hundreds of millions even billions worth of pirating by instilling fear into would be pirates. You can't argue with stupid or crazy.

RE: Meh..
By Xavier434 on 7/14/2010 9:28:46 AM , Rating: 5
Adding to that, they will also completely ignore any data and/or evidence which suggests that pirating music and other content is being mitigated thanks to innovative investments in modern consumer products and services. Things like, Netflix, etc will be ignored.

They are so full of crap.

RE: Meh..
By amanojaku on 7/14/2010 10:29:44 AM , Rating: 5
I stopped pirating because it was too much work to find sources that weren't being monitored. Funny thing is I stopped buying media around the same time. Pirating was a try-before-buy thing for me; with all the crap out today I'm not willing to take a chance on anything I haven't seen or listened to first. I don't listen to the radio any more as I'm 30+ (it seems like the market is the 16-28 crowd; Jonas, Kanye, Swift, Rihanna, Timberlake, Beyonce, BOOOOOOO!!! ), and by the time shows make it to disc I've already forgotten them and moved on to the next one.

An interesting side effect is that I see little value in buying media any more now that I've lived for years without buying anything. I'll pick up something rare or truly great (IMHO), like the Pink Floyd boxed set, complete with book and postcards. Or the AC/DC boxed set with poster, guitar pick, and bottle opener.

And thanks to the scrubbing YouTube regularly gets I can't find rare or little-known media any more. Like that black-and-white version of Beethoven's 5th by Herbert von Karajan and the Berlin Philharmonic. I haven't seen it for sale (I bought the boxed set of 9 symphonies, and it included a newer, crappier performance), and I was pissed when it was taken down due to copyright violation. WHO'S COPYRIGHT??? If I can't buy it it shouldn't be copyrighted!

RE: Meh..
By bigdawg1988 on 7/14/2010 9:12:34 PM , Rating: 2
Try rhapsody, napster, or pandora. At least you can listen to the samples or songs and then buy what you want. I've found some good stuff on the rhapsody channels, although you do have to pay for it. Pandora's best if you don't want to pay (at least the 1st 40 hours).
BMI/ASCAP controls royalties for about 95% of all published music, even music in the public domain (WTF!). Those ass hats own the royalty business and nobody is big enough to stand up to them. Prince tried, but they ignored him and laughed at his ass, which probably drove him to saying crazy things like "the internet is over."

RE: Meh..
By slickr on 7/14/2010 10:48:29 AM , Rating: 3
I totally agree.
This is a clear fact that some people truly are stupid.
They would have been better off making a huge torrent site themselfs to blow all other out of the picture and than limit the downloads to few thousands only.

RE: Meh..
By jonup on 7/14/2010 3:06:18 PM , Rating: 2
990 Tax Return => It's an NPO => No Share holders.
Chances are the board is made of industry reps. and the industry is funding the NPO. It's a tax write-off for the industry (charitable donations). The board is very involved in the daily operations of the NPO (forced under current NPO regulations). => Funders are vary aware how the money are used and are driving force in the decission making in the RIAA.

RE: Meh..
By marvdmartian on 7/14/2010 11:14:55 AM , Rating: 5
So they go in front of the stock holders and say, "Hey, we spent $64 million on lawyers to combat piracy," to which the investors give a might WTF? gasp.

But then the almighty pirate fighters make it sound terrific, by backing it up with, "But hey.....we're saving you BILLIONS of dollars!!", to which they get thunderous applause.

I believe in politics, they call that SPIN.

Place to get music
By etshea on 7/14/2010 4:17:22 PM , Rating: 2
I'll list a few places.
iTunes is DRM Free.

Napster has a great price structure. I pay $15 for 3 months you get 15 download credits plus you can stream all the music you want.

RE: Place to get music
By Archibald Gates on 7/14/2010 5:20:17 PM , Rating: 2
What is iTunes Plus?
iTunes Plus is the new standard on iTunes. iTunes Plus downloads are songs and music videos available in our highest quality 256 kbps AAC audio encoding (twice the audio quality of protected music purchases), and without digital rights management (DRM). iTunes Plus music can be burned to CD as many times as you need, synced to any AAC-enabled device (such as iPod, iPhone, or Apple TV), and played on any Mac or Windows computers you own.

Is this all they can offer? 256 kbps?

And no i don't think that even CD "quality" is quality enough. Old LP's had a much better, warmer sound... so much for technological advancements...

The MP3 Generation? = EPIC FAIL!

RE: Place to get music
By RivuxGamma on 7/15/2010 9:48:54 PM , Rating: 2
Maybe, but CDs are a damn sight better than tapes. Also, MP3s don't get scratched or wear out with use. Try taking a record player with you when you want to listen to music on a bus. Records are definitely capable of producing better sound, but that's virtually only going to happen at home on a stereo. Many people, audiophiles not included, aren't even going to notice a difference between a high quality MP3 and a record. Convenience is a huge factor for most people when choosing a medium for music.

I'm not saying they're better in all aspects, just everything that your average person cares about.

In related news, "epic" is defined thusly: extending beyond the usual or ordinary especially in size or scope.

You are doing to "epic" what Alanis Morissette did to "ironic."

Winners and Losers
By Mitch101 on 7/14/2010 9:05:22 AM , Rating: 5
Pirates - Because it doesnt appear to be stopping.
Lawyers - They still get paid even if they lose the cases or dont recoup the costs.
Copyright Protection Software - For a product that should prevent piracy but doesn't even slow it down the RIAA/MPAA keeps dumping cash into it. Name one successful win?
Copyright Removal Programmers - Instead of selling their software once they can now sell a subscription service.

RIAA Loses - Legal Costs > Returns and alienates their consumer base probably making more pirates.
Consumer - Costs of Failed Copy Protection and Legal expenses passed on to us.

This is Awesome
By gorehound on 7/14/2010 9:06:00 AM , Rating: 2
Great news and news I love.Go ahead and keep spending away MAFIAA till you are broke and dead in the water.We do not want you.We do not need you.We know you do nothing for us.Here is to spending the big bucks to bust a few kids and some poor folks.
Keeep on soending losers.

RE: This is Awesome
By metaltoiletry on 7/14/2010 9:13:58 AM , Rating: 2
Here is to spending the big bucks to bust a few kids and some poor folks.

Don't forget about the family pets too!

Digital Download Content System..
By seraphim1982 on 7/14/2010 10:34:06 AM , Rating: 2
A digital download content system is nice, although.... they are charging the same prices as if you were to go to the store and buy a CD/DVD, which would be much, much more expensive/less-green (creating, shipping, packing, shelf real-estate in store, in store adverts, etc.), so what's the F'in point. These clowns increase their margins, yet cry like little girls when people pirate their songs/movies.

By afkrotch on 7/14/2010 8:45:14 PM , Rating: 2
Can't get rid of the physical distribution model, as not everyone has internet or even a computer.

Real Problem
By bobcpg on 7/14/2010 10:59:03 AM , Rating: 2
Like other have said before me: It shouldn't be easier to pirate, it should just be cheaper.

I am by no means a music junkie but let me say a few things.

1. If I want to buy a car I know to go to a dealership
2. If I need food I go to the grocery store
3. If I need worms for bait I know bait stores will have them

Problem is: If I want to buy a MP3 of a song that I know will work in any device/software now or in the future, I honestly do not know where to get it. Sure I can think of some places but I really do not trust that they will have a DRM free version as I described above.

And if I did find such a place I'm sure they would charge too much. Which brings me to another point that I have heard before: perhaps music and moves are too expensive! Does the crap they put out now in music and movie form deserve multi million dollar 15 years olds?

Anyways, just thought I'd say a few words.

RE: Real Problem
By lamerz4391 on 7/14/2010 11:16:28 AM , Rating: 1
Um ... Amazon??? 100% DRM free. Problem solved.

Anyone pirating music that is available DRM free today from legit sources is a fucking leech. It was different (late-90's to early 00's) when the labels refused to release songs individually, laced them with DRM, and refused to play ball with legitimate consumers. Now there are several million songs available DRM free from multiple legit sources for reasonable prices.

That said, I hate the RIAA and they should die a horrible death.

RE: Real Problem
By bobcpg on 7/14/2010 1:29:03 PM , Rating: 1
Problem solved.

Unless I have a problem with Amazon. Sued for tax evasion....No thanks.

RIAA and MPAA instead of pushing back against technology should have welcomed it and at a fair price. Instead of allowing/making companies lock down their music to one service one type of player, they should have left it open. Consequently I feel like I have to do all this research just to make sure what I am buying will work with all my current and future devices/software. aka I DONT TRUST THEM.

How does that lend to making people want to buy instead of copy?

From their viewpoint...
By TheEinstein on 7/14/2010 3:43:12 PM , Rating: 2
Seems I have to be devils advocate here.

If the lawsuits stop 2% of illegal downloads and ends up with 0.5% (guesstimate) of the illegal downloads turning into purchases they make more than they spend.

Think about their viewpoint.

RE: From their viewpoint...
By bigdawg1988 on 7/14/2010 8:28:07 PM , Rating: 2
I have to agree with your there. I think most people think the RIAA is some private company that only makes money from the fees they get from pirates they catch. The RIAA IS the music industry. Sony, EMI, Universal, and Warner are the big boys and they run the industry. They could give a damn about spending $64M to get $2M. They made $10b in 2007 so they spend less than 1% on lawsuits. A mere pittance. They are some evil bastards, but they are a free-enterprise company. Funny people on this board don't see it that way when music/movies are involved. It's the artists that are being screwed too (look up ASCAP/BMI), but they have no chance since they're all divided, and the big boys have conquered. That's why broadcast radio is bad and getting worse.
I can't stand the RIAA and their policies, but Jason is missing the point. They don't make money from filing lawsuits, they get money from misleading the artists and fans and raking in the dough! Think about how many of you would be downloading pirate songs now instead of buying them, or subscribing to rhapsody, pandora, etc., if the RIAA hadn't started cracking down on downloading? Get my point?

Do you know ASCAP/BMI spend 20% of the money collected for royalties on "expenses?" And since they own royalty collections there's not much anyone can do. This is one business(royalty collection) that should be taken over by the IRS. See link below for more info.

Nothing to do with collections
By lowsidex2 on 7/14/2010 9:24:19 AM , Rating: 1
This is about deterrence, not making money from the court cases.

What they seem to think when they claim $64billion in lost sales, is people would have bought $64billion legally if it weren't for pirating. They wouldn't. So in that respect they are losing money in the fight. Stopping pirating does not mean an equal amount of increased legal sales.

By Dark Legion on 7/14/2010 10:20:08 AM , Rating: 2
You either missed something (maybe everything past the title) or read wrong. This is not about their "lost sales", they actually spent that much suing and/or threatening pirates (lawyers fees, etc). And clearly they are stopping very little.

By BruceLeet on 7/14/2010 10:18:50 AM , Rating: 3
It's the RIAA vs Pirates much like the US in Afghanistan.

It's just not going to work you see.

Can you say
By tspinning on 7/14/2010 10:21:46 AM , Rating: 3
Tax evasion?

Honestly, the American corporate climate needs a serious monsoon, greed of a few has managed to overshadow all.

The only good pirate is dead or in prison
By Beenthere on 7/14/2010 4:12:56 PM , Rating: 1
Sorry but piracy is a crime and I have no sympathy for criminals. I hope every pirate eventually pays a stiff fine and does prison time. These people know they are commiting a crime so they should do the time like any other criminal.

By Archibald Gates on 7/14/2010 5:23:26 PM , Rating: 2
Beenthere... done that.

By driver01z on 7/14/2010 11:12:07 AM , Rating: 2
"However, the music industry seems more than happy to keep pouring money into the hole, as they feel they're overall preventing an even greater loss of revenue at the hands of pirates."
ok, I do support an effort to reduce piracy, I don't think people should have the right to get music for free if the creator does not want it distributed for free.
But still.

What's the total
By Sylar on 7/14/2010 11:28:44 AM , Rating: 2
If you include the staggering amounts they probably spend lobbying?

By The Raven on 7/14/2010 1:17:39 PM , Rating: 2
I love how every post here is positive (a bunch are rated up to 5!) There is not one voice of opposition here. Can you hear us RIAA?

Muse on this RIAA
By bugnguts on 7/14/2010 2:22:42 PM , Rating: 2
Band: Muse
Song: Uprising
"Rise up and take the power back,
It's time the fat cats had a heart attack
you know that their time is coming to an end"

Nothing can fit you better RIAA

That is the nature of Greed
By holymaniac on 7/14/2010 2:28:28 PM , Rating: 2
They are driven by greed and it will eventually be their own undoing. They need to work out a sliding scale to accommodate different income levels. These people have such an arrogance to assert that they "lost" money due to people sharing! I would NEVER have paid for any movie that I shared, if it had not been shared. They are not "losing" anything...they are gaining exposure and popularity by people doing free marketing for their mvies!
It is helping them market the movies. Those that want to buy it or pay to rent it will do so.
Their greed will be their ruin in the long run. Just like someone who eats too much.

By dgingeri on 7/14/2010 2:39:27 PM , Rating: 2
This is the reason they are pushing for the ACTA treaty. They want to make the government pick up the bill for stopping something that cannot be stopped.

Simply put, these guys are a bunch of horses' asses.

New methods needed
By macthemechanic on 7/14/2010 3:35:50 PM , Rating: 2
This type of spend/gain scenario would indicate that other options should be explored. Why continue to fight a war that kills the wrong side?

frivolous ??
By Silver2k7 on 7/14/2010 5:05:11 PM , Rating: 2
If RIAA is using the courtrooms for their own benefit of producing scare tactis, does that count as frivolous lawsuits ??

RIAA's financial
By mithunchetan on 7/28/2010 1:50:39 AM , Rating: 2
But the amounts collected from the settlements were not; they were far lower. I would have expected the RIAA to have been collecting in the neighborhood of $5,000,000 per year during that period, rather than a mere $450,000 per year.

By Daniel8uk on 7/14/2010 9:04:43 AM , Rating: 1
The whole industry needs to move to a new system, something along the lines of Spotify, ever since I started using it I haven't downloaded one album. The plain and simple truth is that it's incredibly easy to get hold of music and listen to it, while also having some pretty damn good features for finding new music.

As it stands there are quite a lot of albums on Spotify that aren't available to certain people solely down to the labels dictating what country Spotify can and cannot stream too, which is a bit silly in this day and age.

Moving to this type of system would inevitably cut costs, but also it would cut revenue income so most major labels would have to downsize a little, which every company has to do if they want to survive and go on into the future, perhaps getting rid of the RIAA would be enough to save job losses, after all they spent an excessive amount of money to perform a bad PR job, increase piracy, make a few lawyers richer, penalise some old people and mothers and basically got nothing what so ever out of it.

In fact if the whole media industry moved to this type of free-ad-sponsored content then perhaps they would have some way of offering the pirates and people who can't afford content the chance to get free content, while still making money from the companies who buy advertising time.

Of course this will never happen as you couldn't pay a film star $30 Million, while having investors pour in $300 Million and still expect a profit, of course the money could be better managed but can you honestly see an A-list actor doing a film for $5 Million or less?

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