RIAA Spent $17.6 Million In Lawsuits... To Get $391,000 In Settlements?

from the business-as-usual dept

Wed, Jul 14th 2010 9:44am — Mike Masnick

Last month we discussed the question of whether or not the RIAA's legal strategy was a success or not. An RIAA supporter had claimed that it was clearly a success, since most of the people the RIAA sued chose to settle. We questioned that, pointing out that the bottom line of the major record labels was shrinking fast, and the rate of file sharing was increasing. At the same time, we pointed out that the record labels themselves had admitted that the lawsuits were "a money pit." Ray Beckermann has done some digging and is pointing out just how big a money pit it really was. In looking through the RIAA's financial statements, he notes over $17.6 million spent on big name law firms who were the key players in the lawsuit campaign. And all those settlements? In 2008, they brought in $391,000. The 2007 numbers were even worse. $21 million in legal fees, plus another $3.5 million for "investigative services" to bring in... $515,929 in settlement fees. 2006? $19 million in legal fees, $3.6 million in investigative services... $455,000 in settlements.

So if we're doing some quick math, over a three year period, the RIAA spent over $64 million on this lawsuit campaign... which brought in about $1.4 million in settlement money. We're talking about getting back about 2% of the money spent.

Wow. These lawsuits weren't just a money pit. They were an economic disaster. And don't buy the argument that this was the cost of "educating" people not to file share. If that were the case, then file sharing wouldn't still keep increasing. There's no way you can look at these numbers and not realize just how disastrous the RIAA's legal campaign was. And yet the RIAA bosses are getting raises? Incredible. It's been a dozen years since the RIAA had a very real opportunity to lead the recording industry into the digital era by adapting and embracing what the technology allowed. Instead, they've fought it the whole way, costing millions of dollars, and severely impacting the labels' bottom lines. Can anyone explain why the labels are still supporting the current RIAA leadership when it appears that every step of the way they've made exactly the wrong decisions?

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Filed Under: copyright, lawsuits
Companies: riaa

118 Comments

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Sal, 14 Jul 2010 @ 9:50am

It is good to read about greedy bastards destroying themselves.
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Scote, 14 Jul 2010 @ 9:52am

"Can anyone explain why the labels are still supporting the current RIAA leadership when it appears that every step of the way they've made exactly the wrong decisions?"

Well, because running a Fortune 500 company these days isn't about insuring long term success, it is about short term profit's and bonuses based on short term profits. With all the incest at board level, this kind of back patting and quid pro quo is to be expected. I doubt any of the executives really care about the long term success of the recording industry, only about how much money they'll be able to personally milk out of it regardless of its success.
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Anonymous Coward, 14 Jul 2010 @ 9:54am

if it was about the money, they would have not repeatedly offered to settle with jammie thomas for a very small amount, or with tenenbaum for a very small amount.

also, how much of these legal actions are still pending? are they all 100% complete? or more typically, is the court system dragging its heels and many of these cases will only get brought to judgment in 4 or 5 years?

mike, are you attempting to discredit the riaa? why be so blatant?
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Anonymous Coward, 14 Jul 2010 @ 9:57am

Wow, where is the money to fuel the lawsuits coming from?

If they managed to get that much money for lawsuits alone, I guess piracy isn't killing the music business after all.
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Free Capitalist (profile), 14 Jul 2010 @ 9:57am

Re:
if it was about the money, they would have not repeatedly offered to settle with jammie thomas for a very small amount, or with tenenbaum for a very small amount.
...
mike, are you attempting to discredit the riaa? why be so blatant?

LOL this has got to be a TAM imposter. That was funny though.
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Anonymous Coward, 14 Jul 2010 @ 9:59am

Are we sure they did not apply Hollywood accounting? That seems to be pretty popular...
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danto10 (profile), 14 Jul 2010 @ 10:01am

Slight Logical Flaw Here
"These lawsuits weren't just a money pit. They were an economic disaster. And don't buy the argument that this was the cost of "educating" people not to file share. If that were the case, then file sharing wouldn't still keep increasing."
While I don't doubt that the lawsuits have been ineffective, the fact that file sharing has increased does not conclusively prove the law suits to be a waste of time. It's entirely possible that the law suits reduced the growth of file sharing, but without some real numbers its hard to know. Very few companies can make a business model based on suing people anyway (outside of law firms, of course, who clearly made a killing running these lawsuits).
To contribute something a bit more meaningful though, the real problem with the RIAA's approach is that they aren't changing the culture that surrounds file sharing. These lawsuits are always mentioned to me by people from a generation that doesn't file share anyway... never by the under-30 crowd that makes up the majority of file-sharers. So even if these lawsuits do have some sort of "educational" (/intimidation) value, they are only being noticed by the people who didn't file share in the first place.
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Anonymous Coward, 14 Jul 2010 @ 10:06am

Re:
If it isn't about the money, then what is it about? Scare tactics to scare away file sharers? That failed too, in case you haven't noticed.

And no one is discrediting anything. The data is in front of your nose. The RIAA is spending money faster than they are making it. This is the path to financial ruin.

They would have done better if they had invested in ways to improve the music business. Take advantage of the new tools and formats that kept popping up, instead of trying to go after the easy money and suing people.
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Anonymous Coward, 14 Jul 2010 @ 10:06am

"And don't buy the argument that this was the cost of "educating" people not to file share. If that were the case, then file sharing wouldn't still keep increasing."

This is silly reasoning.

Unless you can make a comparison between the actual increase in unauthoirized file sharing and the amount of unauthorized file sharing that would have happened in the absense of the lawsuits, you can't state definitively whether this "cost" was well spent or not.

Note that I'm not saying it *was* well spent, just that the reasoning employed above is faulty.
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Killer_Tofu (profile), 14 Jul 2010 @ 10:10am

Re:
The RIAA discredits the RIAA.
I am unclear why Mike needs to do hardly anything other than spread word about what they do.
That alone makes nobody like them or want them around, including most artists as the current trends seem to indicate.
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Modplan (profile), 14 Jul 2010 @ 10:15am

Re:
So the evidence we do have of file sharing not having stopped, nor stopped growing, along side the RIAA making so little money back from so much legal fees in no way suggests the cost wasn't well spent.
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TtfnJohn (profile), 14 Jul 2010 @ 10:15am

You know a 2% margin isn't bad...
If you're running a coffee shop that's about to close!

The data may be incomplete but I can't see that the margin is changing even with some law firms attempting mass actions in the absence of any decent actions. I'd suggest this is an outgrowth of SLAPP suits so popular in the 70s and 80s.

Mind you if the idea was to stop file sharing then with this return on investment I'd call it a failure too as file sharing is increasing not decreasing.

And not just in the under 30 set either. I base that on the increase I've noticed in this, one way or another, in the 40+ set all the way to people in their 70s. While they aren't as active as the under 30s they're certainly there and that demographic is likely the most price sensitive. Also likely to be the most law abiding provided those laws make a small degree of sense.

Old Boomers never die we just quietly file share while thumbing our noses at da man!
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Christopher Weigel (profile), 14 Jul 2010 @ 10:19am

Re:
Alright, a slightly modified argument... These lawsuits failed to prevent an increase in file sharing.

One would hope that when you spend $20 million to patch a leak, you don't receive merely a decreased (but still positive) growth in the water flow.
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Scote, 14 Jul 2010 @ 10:20am

"Unless you can make a comparison between the actual increase in unauthoirized file sharing and the amount of unauthorized file sharing that would have happened in the absense of the lawsuits, "

Yes, and I'm sure that is what the RIAA is telling its member companies, that the RIAA didn't waste 64,000,000 over the last few years, but rather brilliantly defeated an imaginary, larger trend of file sharing. And if you buy that logic I have some magic, tiger repelling stones to sell you. I've never been attacked by tigers, so they can't be a waste of money, nor can you **prove** otherwise--which, of course, is why the burden of proof is on the **positive** claimant. If the RIAA wants to claim that sure, file sharing has increased but not as much as it would have without their 64,000,000 dollar plus campaign then the burden of proof is on them--and we know the kind of "proof" the industry has offered in the past about file sharing :-p
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Michael, 14 Jul 2010 @ 10:22am

Re:
Perhaps, but their short-term record seems to be a dismal failure as well.
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Anonymous Coward, 14 Jul 2010 @ 10:23am

Re: Re:
I can't tell if this is a question, a sarcastic comment, or what. The double negatives don't not hurt.

Anyway, the conclusion that the lawsuit strategy has not helped (and/or has hurt) may be totally valid, and there is certainly evidence to support that.

But the notion that only a decrease in absolute numbers of unauthorized file sharing could justify spending money on lawsuits is not a very good argument.
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RadialSkid, 14 Jul 2010 @ 10:24am

Re:
"Unless you can make a comparison between the actual increase in unauthoirized file sharing and the amount of unauthorized file sharing that would have happened in the absense of the lawsuits, you can't state definitively whether this 'cost' was well spent or not."

In other words, it would be considered a success since even though file-sharing has increased, it would have increased MORE if not for the lawsuits?

It seems to me like ANY growth in file sharing in the face of a campaign against it means that the campaign has failed.
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Anonymous Coward, 14 Jul 2010 @ 10:24am

No wonder why they can never seem to afford to pay artists what they are owed.
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Anonymous Coward, 14 Jul 2010 @ 10:24am

Re: Re:
I agree.

However, I'll also note that the article sort of assumes that all those legal fees went to lawsuits. It wouldn't surprise me if the RIAA uses some of the same law firms for non-lawsuit-related legal work.
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techflaws.org (profile), 14 Jul 2010 @ 10:24am

Re: Slight Logical Flaw Here
...never by the under-30 crowd that makes up the majority of file-sharers.

The majority? Says who?
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Michael, 14 Jul 2010 @ 10:27am

Re:
Most settlements are about keeping costs down or ensuring you do not create a ruling that can be used against you in the future. Offering a settlement was not altruistic in either of the cases you mention.

And yes, some cases are still pending, but with their current record of 'success', 98% of the cases need to still be pending to break even.

At this point, they are jamming more coins into the slot machine praying it will pay off with repeated jackpots. This may not be a bad strategy in today's legal climate, but the jackpot on this particular slot machine is only a small percentage of what they have already put into it.
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Anonymous Coward, 14 Jul 2010 @ 10:28am

Re: Re:
"In other words, it would be considered a success since even though file-sharing has increased, it would have increased MORE if not for the lawsuits?"

Well, I don't think you're saying *quite* the same thing "in other words," but that's the general point.

If bailing out water on a sinking ship slows the sinking long enough to get to some other rescue means, then I'd call the bailing successful, even if you keep sinking while you're bailing.
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Michael, 14 Jul 2010 @ 10:29am

Re:
I assume you understand that the money being funneled into these lawsuits is the very same money they fail to distribute to the small starving musicians.
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Anonymous Coward, 14 Jul 2010 @ 10:31am

Re:
"the burden of proof is on the **positive** claimant."

That would be Mr. Masnick in this case, as he claimed that this $$$ is not just the cost of educating or whatever.
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Jamie, 14 Jul 2010 @ 10:32am

You're reading that wrong.
It isn't a 2% margin. For every $100 they spent, $2 was recouped. Unless the goal was to provide employment to lawyers, it would have been more efficient to set the money on fire.

Even if your coffee shop is closing, you don't burn the cash - you find a way to close up shop and take as much of it with you as you can.

I mean, seriously - even most of the late 90s dot.commies ("...but we'll make it up on volume") weren't that inefficient.
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Michael, 14 Jul 2010 @ 10:33am

Re: Re: Re:
At the rate they are suing people, these firms have not had time to do much else...

However, even if it was half - they have been a total failure to prevent even the growth of file sharing and returned less than 5% of the money spent. They would have been better off burning the money to heat their offices and reducing their utility bills.
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Anonymous Coward, 14 Jul 2010 @ 10:35am

Resembles another enemy of the internet
This article reminds me of the failure of the Cult of Scientology. They're moto is always attack, never defend. They're goal is to never pay up, just keep the lawsuits going. Even if they lose money, they keep up the lawsuits. This tactic has footbullet written all over it. The RIAA will not come out of this alive if they don't change.
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Anonymous Coward, 14 Jul 2010 @ 10:36am

Re: Re: Re: Re:
I think they would have been better off developing a viable alternative business model for online distribution.
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Anonymous Coward, 14 Jul 2010 @ 10:39am

maybe its a new scheme to save on taxes
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Anonymous Coward, 14 Jul 2010 @ 10:40am

Re: Re:
If it isn't about the money, then what is it about?

Precedent. They got the verdict they wanted.
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Scote, 14 Jul 2010 @ 10:41am

Re: Re:
No, it is on the RIAA to explain why the money was a good investment given the lack of returns and the lack of a decline in file sharing.
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Hephaestus (profile), 14 Jul 2010 @ 10:45am

Re:
"if it was about the money, they would have not repeatedly offered to settle with jammie thomas for a very small amount, or with tenenbaum for a very small amount."

You are right, it wasn't about the money. It was about making examples and being able to use the maximum penalties as threats to coerce submission. They knew the case would never stand up to appeal based on the excessive penalties. Now with both cases having the judgements reduced, it leaves RIAA and the MPAA with out any ability to threaten or coerce. It will also lead to alot more people fighting these cases in the future because the monetary risk is less.

"also, how much of these legal actions are still pending? are they all 100% complete? or more typically, is the court system dragging its heels and many of these cases will only get brought to judgment in 4 or 5 years?"

Truth be told you are an IDIOT. There is a 2% return on the law suits. For them to make a profit at this rate, better than 98% (Ninety Eight Percent) of the cases would still need to be open. That doesn't include future legal or administrative costs.
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senshikaze, 14 Jul 2010 @ 10:45am

Is everyone west of the Rockies an idiot?

I am thinking so.
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NAMELESS.ONE, 14 Jul 2010 @ 10:46am

precident LOL
riiiiiight
so people have stopped downloading stuff right????

NOPE every time they run there yappy mouths off more MORONS
( see article about morons today) go hey free stuff let me try that...and if you sue 1 out of every one million thats like not gonna work now is it.

POOREST people dont have cash thus you get nothing more and love it. THINK JOE BIDEN yapping off the lil secret hideout of the vice president after he got into office....FURTHER proof they cant just shut up.

NOW that cats out of the bag they cant put it back in too many in every town prolly have a almost copy of everything that would in effect make it impossible to enforce short of hiring half the population as cops and bankrupting every nation on earth.

NOT NOR EVER GONNA HAPPEN.
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Hephaestus (profile), 14 Jul 2010 @ 10:48am

Re:
"Hollywood accounting?"

I had the same thought.
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Jay (profile), 14 Jul 2010 @ 10:50am

Re:
Government intervention increases file sharing

This increase in piracy shows that the French are not changing their downloading habits much, despite the tougher legislation. There is, however, an interesting shift in the sources people use to download copyrighted movies and music. At an increasing rate the French are using streaming services along with file-hosting ‘cyberlockers’ such as Rapidshare and Megaupload.

This is just one example. The lawsuits have been going on for years and yet filesharing hasn't stopped nor abated.

If you want even more information, look into the Harvard study that was from ~ 3 weeks ago describing filesharing and what's going on with it, "piracy" and the effects it has on touring for artists.
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Anonymous Coward, 14 Jul 2010 @ 10:52am

Don't worry
They'll make it up on volume.
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Anonymous Coward, 14 Jul 2010 @ 10:52am

Re: Re: Re:
No they didn't. They are still appealing the Jamie Thomas boondoggle.
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sehlat (profile), 14 Jul 2010 @ 10:53am

Re: You're reading that wrong.
"Unless the goal was to provide employment to lawyers, it would have been more efficient to set the money on fire."

How do you know that wasn't the goal all along? The RIAA, like its member organizations, has demonstrated over and over again that they are NOT run by entrepreneurs but by lawyers and accountants. Given the lobbyists they pay for, in many respects much of the legislation passed in the United States over the last fifty years or so can all be lumped as "The Lawyers and Accountants Full Employment Act of 1960 1961 1962 ... 2010."
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nonanonymous, 14 Jul 2010 @ 10:54am

Re: Re: Re:
Precedent does not get set through precedent. And none of the cases that went all the way set a solid precedent.
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Anonymous Coward, 14 Jul 2010 @ 10:55am

Re: Re:
"The lawsuits have been going on for years and yet filesharing hasn't stopped nor abated."

Yeah, I know. I'm saying "hasn't stopped or abated" doesn't automatically translate to "suits did no good whatsoever."
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Mike Masnick (profile), 14 Jul 2010 @ 10:56am

Re: Slight Logical Flaw Here
While I don't doubt that the lawsuits have been ineffective, the fact that file sharing has increased does not conclusively prove the law suits to be a waste of time.

Fair enough. But I would argue that the overall bottom line of the record labels is the proof. The whole point of these lawsuits was supposed to help save the record labels. That has clearly failed.

You could argue (weakly, as it is easily countered) that these actions slowed the decline of the labels, but a business strategy focused on not dying as quickly is not a real business strategy.
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Anonymous Coward, 14 Jul 2010 @ 10:56am

It ain't a 2% margin. It is a 100% loss.
To be a 2% margin the RIAA would have had to have earned 102% of what it spent--that is, it would have to make **more** than it spent. So, if it's costs were $64,000,000, it's gross return would have to be $65,280,000, for a net profit of $1,280,000.

So, what was the net profit of the RIAA lawsuits? There wasn't one. Instead, there was a net loss of about 62.6 million dollars. There is no net, no margin. Just loss. Pure loss.
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Mike Masnick (profile), 14 Jul 2010 @ 10:57am

Re: You know a 2% margin isn't bad...
You know a 2% margin isn't bad...

It's not a 2% margin. It's a -98% margin.

2% margin would be 2% more than cost. This is 2% *of* the cost.
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GeneralEmergency (profile), 14 Jul 2010 @ 10:57am

Also missing..
Also missing from these numbers is the millions of shiny disks -NOT SOLD- because the RIAA's "education" campaign really just educated consumers that the Recording Industry -hates- music's best customers.

I have a special bottle of Champagne in the fridge set aside for the day the RIAA flat lines.
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Anonymous Coward, 14 Jul 2010 @ 10:57am

Re: Re: Re:
Why? The RIAA didn't write this article and, as far as I know, isn't making claims in the comments section. Why does Masnick get to say whatever he wants and you put the burden on some other entity to disprove his statements?

Look, if I'm an RIAA member, the RIAA decision-makers better have a good explanation for why spending this money is/was a good idea. But I'm not. I am a Techdirt reader.
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TPBer, 14 Jul 2010 @ 10:58am

File Sharing has increased exponentially...
When TPB first became popular somewhere in 04 or so it took about 24+ hours to get a normal DVD rip approx 700MB. These days I get one of those in about 45min-1hr on avg, some faster.

This includes screeners , ripped dvd, and some very good quality cams that have been revised multiple times, hence the r5 label.

It's funny how many people spew numbers or theories that are pure shit without any real world experience. Every service providers DLs vary quite a bit, some throttle some could care less. TWC is my favorite. AT&T does not seem to care either, Cox is just like it's name implies.

Those of you who say it could increased even more are smoking better weed than me, if I can get some popular torrent in 30 min or less and you say it could have possibly been faster, then I guess Santa is real.
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Anonymous Coward, 14 Jul 2010 @ 10:59am

Re: Re: Re: Re:
They may be appealing, but they did get massive verdicts
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Anonymous Coward, 14 Jul 2010 @ 11:00am

Re: Re: Re:
Except in this case, they're bailing out water by overflowing the ship.

If this is indeed the case, the question should be "how much money was protected compared to the amount spent". I'd honestly be amazed if the amount of cash dumped into lawsuits, legal campaigns and lobbying was anywhere close to the actual money lost.
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Scote, 14 Jul 2010 @ 11:04am

Re: Re: Re: Re:
"Look, if I'm an RIAA member, the RIAA decision-makers better have a good explanation for why spending this money is/was a good idea. But I'm not. I am a Techdirt reader."

Sure, sure, you are a **Techdirt reader** NOT and **RIAA member**.

Got it. Saynomore. Wink wink. Nudge nudge.
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Anonymous Coward, 14 Jul 2010 @ 11:12am

This is what happens...
when you let the lawyers run the company. SCO is another good example.
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Anonymous Coward, 14 Jul 2010 @ 11:20am

Re: Re:
In other words, it would be considered a success since even though file-sharing has increased, it would have increased MORE if not for the lawsuits?

Or how about, "The surgery was a complete success, but the patient died".
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Anonymous Coward, 14 Jul 2010 @ 11:20am

Re: You know a 2% margin isn't bad...
It isn't a 2% margin, it is a -98% margin.

For reference, a 0% margin is when you get back all of the money that you invested.
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Mike42 (profile), 14 Jul 2010 @ 11:26am

Would all you people shut up?
Please! Telling the RIAA they are losing money is counter-productive. Tell them that they are making the 2% profit! Woo-hoo! Let them do the math and figure out it's really -98%.

I wonder how long it will take until the RIAA is bankrupt, or at least can't afford their lobbyists. That "fool and his money are soon parted" saying must be in a geologic timeframe.
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Anonymous Coward, 14 Jul 2010 @ 11:26am

Re:
That would include Mike, nice one.
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Anonymous Coward, 14 Jul 2010 @ 11:32am

Here's three four answers I'm sure every mid-level manager on up through the RIAA has cited as reason in declining revenue. The best way to save your job is deflect criticism.

1. It's the politicains fault (they won't pass the laws required needed to stop this no matter how much money we throw at them)

2. It's the ISP fault, they won't stop allowing file sharing

3. It's google faults, they links user to file share

4. It's AT&T fault they won't restrict the bandwidth

You see, easy, it's everyone else fault
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weneedhelp (profile), 14 Jul 2010 @ 11:32am

Wahhh wahhhh
RIAA math:
http://www.techdirt.com/articles/20100712/23482610186.shtml

Indirectly, the RIAA is using the artists money to sue their fans, while at the same time denying those same artists payment. What a wonderful company.

If they would have spent that money to innovate, rather than litigate, they would not have to cry like little bitches.

64 million on this lawsuit campaign... which brought in about $1.4 million
How DO you get fired from the RIAA? Must be a union gig.
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Anonymous Coward, 14 Jul 2010 @ 11:36am

Re:
The greedy bastards are the lawyers and they walked away with a pocketful. Hardly looks like "destroying" to me.
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Jay (profile), 14 Jul 2010 @ 11:46am

Re: Re: Re:
What were the suits supposed to do?

We can look at the EFF for this one. From the very beginning they were to:

1) Recoup money through settlements, making this expensive for filesharers personally

- Note: After a while, they weren't allowed to be given people's ISP numbers and threaten them with lawsuits. Verizon stepped in and made this very difficult for them to do

2) Alter the behavior of filesharers
- Any study of economics tells us that this hasn't happened (and why). Colleges are still a haven for filesharing (depending on where), people still have private networks and people have caught on to alternatives other than the RIAA music such as Jamendro, Magnatune, or Dmusic. As it turns out for every action of the RIAA, there is an equal but opposite reaction.

3) Go after the networks.
Napster wanted to negotiate. The RIAA sued them out of existence. Limewire just changed to a subscription service. Even then, that's still not enough for the RIAA.

4) Sue, sue, sue
The sue em all strategy has worked exactly as they wanted it to. It's lost their parent companies money out the yin yang, no one really wants to work for the RIAA (in terms of artists), they have had a massive layoff, and all in all, this business should have failed a long time ago and yet it's propped up... for what?

Name one good thing that the suits did.
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Hephaestus (profile), 14 Jul 2010 @ 11:46am

Re: Slight Logical Flaw Here
"While I don't doubt that the lawsuits have been ineffective, the fact that file sharing has increased does not conclusively prove the law suits to be a waste of time."

How does it not prove that the lawsuits were a waste of time. It created a ton of bad press for the labels. Made people search on "what is p2p file sharing?", "what is limewire?", etc.

"It's entirely possible that the law suits reduced the growth of file sharing, but without some real numbers its hard to know."

In the month to month data, 3 months after the lawsuits started, there was an increase in the usage of p2p software. Combining quarterly age and p2p usage statistics allows you to show a substantial hop in usage in the 18 - 24 year old range. Using past charts of disruptive technologies as a basis for forecasting, brings the failure of each of the remaining big record labels about a year closer. That true if there is a correlation between the increase in p2p usage and the lawsuits.
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senshikaze, 14 Jul 2010 @ 11:49am

Re: Re:
oh yea. damn. Mike needs to move East. I hear Denver is lovely.
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harbingerofdoom (profile), 14 Jul 2010 @ 11:54am

Re:
no, just 78.4% of the elected officials, nearly all members of SAG and 92% of anyone that is at a EVP or higher level of a multi million dollar corporation.

the rest of us are just out here cause we dig the scenery mostly...
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Danny, 14 Jul 2010 @ 11:56am

They really do understand long term profits
As I'm sure someone has already noted (I haven't read all the comments) I would be that the reason they carried on with this strategy is because they are hoping to set a precedent. They hope to collect enough settlements and "wins" in order to just start mowing down people en masse.

Now the ironic thing is this is a clear example of giving up the short term profit to etet the big time profit. What's 64 million now if 5 years from now they start suing people for hundreds of millions and winning.

But lord forbid they apply this strategy to dealing with their customers. Give on something short term to build up brand name and loyalty to get the big pay off down the line in the form of lots of loyal custoers.
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Anonymous Coward, 14 Jul 2010 @ 11:58am

So...let's see, since they actually have spent about $61 Million dollars on legal fees over a period of years and only recovered something like $1.3 Million, that means that leaves...let's say around $ 59.7 Million dollars in legal fees. SO....at 99 Cents each, they have lost the cost of about 59,700,000 downloadable songs through their efforts. If you add to that the damage they did to their reputation and business model and loss of future sales...then someone wasn't using their heads to well.
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Krusty, 14 Jul 2010 @ 11:59am

Pirates...
FTW!
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chris (profile), 14 Jul 2010 @ 11:59am

Re: Slight Logical Flaw Here
While I don't doubt that the lawsuits have been ineffective, the fact that file sharing has increased does not conclusively prove the law suits to be a waste of time. It's entirely possible that the law suits reduced the growth of file sharing,

it's also entirely possible that these lawsuits prevented another terrorist attack on new york city. after all, piracy supports terrorism and these lawsuits are an obvious deterrent to both piracy and terrorism.

you should also note that both steve jobs and lance armstrong did not die from cancer. it is entirely possible that these lawsuits stopped the spread of cancer in both of these cases.

while it might be a coincidence, i think it's also entirely possible that these lawsuits helped the united states to elect it's first black president.

so i ask you, isn't $17.6 million a small price to pay to put an end to racism, cancer, and international terrorism?
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Rabbit80, 14 Jul 2010 @ 12:01pm

Re: File Sharing has increased exponentially...
"This includes screeners , ripped dvd, and some very good quality cams that have been revised multiple times, hence the r5 label."

Wrong.. r5 stands for region 5. They are usually pre-release dvd rips.
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Anonymous Coward, 14 Jul 2010 @ 12:06pm

Re: Re: Re: Re:
"Why? The RIAA didn't write this article and, as far as I know, isn't making claims in the comments section. Why does Masnick get to say whatever he wants and you put the burden on some other entity to disprove his statements?"

Uh....because 1) its Mike's site and 2) its an open forum for people to contribute whatever they want?

This isnt a journalism site you know, this isnt CNN, the NY Times or whatever, its a

TECH

BLOG

So, you know, opinions and observations and all that. Get a clue.
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Jay (profile), 14 Jul 2010 @ 12:07pm

Re: Re: Re: Re:
Look, if I'm an RIAA member, the RIAA decision-makers better have a good explanation for why spending this money is/was a good idea.

Yeah...

Why should the Big 3 go through the RIAA for music when the RIAA is the ones leading them into a money pit?

I see your logic in how they're explaining spending this money.
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out_of_the_blue, 14 Jul 2010 @ 12:08pm

"And yet the RIAA bosses are getting raises?"
Your view of capitalism falls short of the ugly truth. It's not about *overall* profits, it's about individual greed, to hell with everyone else, anything goes short of landing in jail. So when these execs make out like bandits despite squandering company funds, they're just being good capitalists.

By the way, wouldn't surprise me if there are kickbacks from these law firms.
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Auditrix (profile), 14 Jul 2010 @ 12:46pm

Incomplete Picture
The settlements and awards on the RIAA's books exclude the hundreds of millions in cash and non-cash consideration that the record labels have received directly from major infringers, which is connected to the RIAA's campaign.

How do you think the record labels have stayed afloat all this time? It is the settlement money that they have not shared much with artists or songwriters.
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Anonymous Coward, 14 Jul 2010 @ 12:55pm

Re: Re: Re: Re: Re:
Doesn't matter, it's not like most people can pay the verdicts. They just file bankruptcy. Any verdict above the someone's bankruptcy level is meaningless.
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Killer_Tofu (profile), 14 Jul 2010 @ 1:14pm

Re: Re:
They should change their tagline into
"Won't somebody think of the lawyers?"
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Anonymous Coward, 14 Jul 2010 @ 1:21pm

Re: Re: Re: Re: Re: Re:
Not so. Such verdicts have meaning as warnings to other would-be infringers.
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Anonymous Coward, 14 Jul 2010 @ 1:26pm

Re: Re: Re: Re:
"Except in this case, they're bailing out water by overflowing the ship."

I have no idea what that is supposed to mean.

"the question should be "how much money was protected compared to the amount spent"."

Sure. The question should always be what is the benefit v. the cost (including opportunity cost of not spending the money on other things), but looking only at absolute numbers doesn't accurately evaluate whether there was a benefit or what it was.
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Anonymous Coward, 14 Jul 2010 @ 1:27pm

Re: Re: Re:
That is the case with every successful surgery (unless you're aware of some immortal who had surgery performed).
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Anonymous Coward, 14 Jul 2010 @ 1:29pm

Re: Re: Slight Logical Flaw Here
"How does it not prove that the lawsuits were a waste of time."

Short answer: unauthorized filesharing might have been even more prevalent if the lawsuits hadn't taken place. An increase in the overall amount doesn't address that possibility, and therefore is not conclusive proof.
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TPBer, 14 Jul 2010 @ 1:29pm

Re: Re: File Sharing has increased exponentially...
Thanx for the info, I thought it stood for revision5...
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Anonymous Coward, 14 Jul 2010 @ 1:32pm

Re: Re: Re: Re:
Again, I'm not saying the suits did any good at all. I'm saying "filesharing went up" does not necessarily mean that the suits did no good whatsoever.
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Anonymous Coward, 14 Jul 2010 @ 1:32pm

Re: Re: Re: Re: Re:
lol
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Anonymous Coward, 14 Jul 2010 @ 1:34pm

Re: Re: Re: Re: Re:
Your response is only relevant to why Masnick gets to say whatever he wants, not why any reader would put the burden on someone else to disprove the validity of what he says.

Still think I need a clue?
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bob, 14 Jul 2010 @ 1:37pm

Re:
You seem to forget how this settlement scam works.
I fire up kazza or what ever. The bloodhounds for the RIAA lawyers see that I have 10 songs in the shared folder.
I get a letter telling me I can settle for $2,500.00.
As I don't have $30,000 to pay a lawyer, I say ok sure.
That money is counted as settlement cash. I might only be paying a small sum at a time, but the total is the settlement.
Only a micro percentage of cases are in the courts pipeline.
So no blatant discreditation of the RIAA is need from Mike, The RIAA has done a swell job on it's own.
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Mike Masnick (profile), 14 Jul 2010 @ 1:41pm

Re: Re: Re:
oh yea. damn. Mike needs to move East. I hear Denver is lovely.

It should also be pointed out that the RIAA is based in Washington DC... decidedly east of the Rockies. :)
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btrussell (profile), 14 Jul 2010 @ 1:43pm

Re: Re: Re: Re: Re: Re: Re:
Yes. It warns them to encrypt their files.
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btrussell (profile), 14 Jul 2010 @ 1:47pm

Re: Re: Re: Slight Logical Flaw Here
The lawsuits made more people aware of the ability to fileshare.
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Richard (profile), 14 Jul 2010 @ 1:54pm

Re:
if it was about the money, they would have not repeatedly offered to settle with jammie thomas for a very small amount, or with tenenbaum for a very small amount.

Thomas and Tenebaum could have paid the small amounts - they could never pay the large sum - and of course by proceeding to trial the RIAA incurred more legal expenses than they could ever hope recover.

The settlement offers were most definitely about the money.
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CrushU, 14 Jul 2010 @ 2:19pm

Re: Re:
"the burden of proof is on the **positive** claimant."

That would be Mr. Masnick in this case, as he claimed that this $$$ is not just the cost of educating or whatever.

Wow, that was easy to refute!
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Anonymous Coward, 14 Jul 2010 @ 2:31pm

Re: Re: Re:
I hope you're being facetious.

Otherwise, I could just claim that you are not a good person and do not obey kiddie porn laws, and the burden would be on you to prove otherwise.
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Anonymous Coward, 14 Jul 2010 @ 3:18pm

Re: Re: Re: Re: Re: Re:
"Your response is only relevant to why Masnick gets to say whatever he wants, not why any reader would put the burden on someone else to disprove the validity of what he says.

Still think I need a clue?"

Well, since you skipped over #2 and only looked at #1, then yes I would say you do.
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nasch (profile), 14 Jul 2010 @ 3:40pm

Re: Re: Re:
If the lawsuits were a stopgap meant to get them through to the start of their long term strategy, that would be one thing. I think they did consider this a relatively temporary strategy, but not because they knew it would fail. Because they thought it would work. The lawsuits would get people to stop file sharing, and they could go back to selling music like always.

In boat terms, they thought they were patching the hole, but in reality they were bailing out the boat*. And the hole keeps getting bigger while their bucket does not.

So to sum up, yes it was a failure because it did not accomplish any rational goal it could have been designed for, whether that was reducing file sharing or providing a transition period to a new business model. The only way this strategy could be considered a success is in pointy haired boss terms:

http://dilbert.com/strips/comic/2010-04-22/

* at best. It seems more likely to me they were actually dumping more water in.
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nasch (profile), 14 Jul 2010 @ 3:41pm

Re: Re: Re: Re:
You win today's coveted Needless Pedantry Award. Congratulations.
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JB, 14 Jul 2010 @ 4:01pm

Re:
I'm not sure about all that--the idea of the lawsuits was to *stop* filesharing, not simply contain it. If you were to truly believe the "piracy will kill the music business" dogma, then simply reducing the rate of adoption does no good--it's just delaying the inevitable, and at a high price at that. I think you can conclude from that data that the RIAA's lawsuit tactics, even if they were cowing some users, weren't doing nearly enough of it to produce the intended effect.
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nasch (profile), 14 Jul 2010 @ 4:20pm

Re: Re: Re:
Denver is nice, and its traffic is good*.

* compared to Los Angeles
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nasch (profile), 14 Jul 2010 @ 4:24pm

Re: Incomplete Picture
Do you have a reference for all these piles of money (sorry, "consideration") they're taking in?
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Anonymous Coward, 14 Jul 2010 @ 4:35pm

Re: Re: Re: Re: Slight Logical Flaw Here
Exhibit A: http://thepiratebay.org/
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Jay (profile), 14 Jul 2010 @ 5:15pm

And stop sharing on P2P.
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Brian (profile), 14 Jul 2010 @ 5:19pm

Re: Re: Re: Re: Re:
Hahaha, don't be silly. That would have been productive and produced positive results!
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Jay (profile), 14 Jul 2010 @ 5:20pm

Re: Resembles another enemy of the internet
After 10+ years, I doubt they will.
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Anonymous Coward, 14 Jul 2010 @ 5:44pm

Re: Re: Re: Re: Re: Re: Re:
Sounds like you don't really have any response to the burden of proof issue the other poster raised. That's fine, but you might want to refrain from the insults in that case.
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Alan (profile), 14 Jul 2010 @ 6:09pm

Re: Re: Re: Re:
I agree. I think the original reason for the lawsuits was that the recording industry had no interest in disrupting the status quo to innovate in the face of the Internet, but they also couldn't sit idly by while people "stole" their product.

I have to also imagine that the decision was made inside the vacuum of self-righteousness that must exist in the recording label boardrooms.
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TtfnJohn (profile), 14 Jul 2010 @ 6:23pm

Re: Re: You know a 2% margin isn't bad...
Though I wasn't at all serious about this it did generate some discussion, at least.

And not a sight of TAM anywhere. For all of that I was trying to poke some fun at the RIAA and their alleged success rate, not to mention accounting.

Yes, it's a -98% margin which is appalling under any circumstances. Except, it seems, when the RIAA gets into the act or MPAA for that matter. Not many other organizations would try to spin any of this as a positive in any way.
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TtfnJohn (profile), 14 Jul 2010 @ 6:31pm

Re: Re: Re: Re: Re: Re:
The clue might come in the fact that this is his analysis of the information available and it's that analysis that we are discussing.

As for a burden of proof as yet the RIAA has offered not a scintilla of proof that it does work if what you're looking for is "beyond a reasonable" doubt proof. Lots of opinions but very little of that sort of proof.

As it happens I agree with the bulk of his analysis of the information available at this time. If someone wishes to disprove it it can be the RIAA, you, TAM or anyone else.
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Auditrix (profile), 14 Jul 2010 @ 6:45pm

Re: Re: Incomplete Picture
My sources are confidential.
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Auditrix (profile), 14 Jul 2010 @ 6:46pm

Re: Re: Incomplete Picture
My sources are confidential.
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nasch (profile), 14 Jul 2010 @ 7:03pm

Re: Re: Re: Incomplete Picture
You should understand that there is really no point to posting information based on sources you're not willing to cite. The only way that can work is if you have a reputation of trustworthiness to back it up with, and you have no such reputation here that I'm aware of. As it is, nobody has any particular reason to believe you.
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Anonymous Coward, 14 Jul 2010 @ 7:21pm

Re: Re: Re: Re:
I'm sure that applies to silicon valley too.
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Jay (profile), 14 Jul 2010 @ 9:21pm

Re: Re: Re: Re: Incomplete Picture
Judging from her background, it seems she's a little bit closer than she can say.

Also, her assessment does coincide with what was originally said in the article. Money isn't being created out of thin air. It's being shifted from the artists against their fans in every way. I just believe this is backfiring against the industry since people are becoming more savvy to the game that the Big 3 play.
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Anonymous Coward, 15 Jul 2010 @ 2:18am

I'm ashamed at the greed of the RIAA & Music Business. Truly ashamed.
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nasch (profile), 15 Jul 2010 @ 7:52am

Re: Re: Re: Re: Re: Incomplete Picture
The article says they've taken in $1.4 million from this campaign, and Auditrix said there are "hundreds of millions in cash and non-cash consideration that the record labels have received directly from major infringers, which is connected to the RIAA's campaign." That doesn't sound consistent to me. It's the difference between financial disaster, and an extremely lucrative campaign. I can't think why the RIAA would rather people think this campaign was a failure if they're actually raking in hundreds of millions of dollars.
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darryl, 15 Jul 2010 @ 10:51am

Law enforcement is not a business model...
This is why people should not and generally DO NOT tie making money and profit with law enforcement.

If all it came down too was a profit and loss statement that determined law enforcement. And if it was not "worth it" you would not do it.

Then every murder would go unsolved, as it would cost far more to find the killer than to just let him go.

but fortunately, we live in a society that does not put a price on enforcing and upholding the law.

The law is not a business model, it is a social expense, that we ALL pay for, like insurance. If you break the law, its ME or someone else who has to pay taxes for police to catch you. We all pay for your crime.

Just as we all pay for your insurance fraud, I would rather pay to stop criminals, than to have them run free without risk of being caught,, just because you do not think it is "worth it" to enforce the law.

Thank goodness governments and authorities do not think the same way, putting everyone is basic dollars and cents terms.

When clearly the world does not work that way, but nice spin all the same.
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senshikaze (profile), 15 Jul 2010 @ 2:32pm

Re: Re: Re: Re:
damn you and your logic! i am trying to make baseless and sensationalist comments. stop applying logic!
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Tek'a R (profile), 15 Jul 2010 @ 8:34pm

Re: Law enforcement is not a business model...
darryl, pay close attention. The RIAA is not burning through billable hours to catch killers. Or rapists, molesters, animal-abusers, people who spit gum on the sidewalk or even thieves.

They are engaging in massive numbers of civil suits, legal threats, name-calling and vote-buying activities. They are taking these actions despite the enormous costs in an attempt to hold back a tide and stop the sun in the sky. This is not "law enforcement". The only thing that is being "enforced and upheld" is the creaking structure of a few meddling groups at the expense of actual law enforcement and citizens, even those citizens that the special interest groups claim to be serving. ("we are making sure our artists get paid" comes from one side of the talking heads while "no checks for you, we decided to keep everything you earned" comes from the other)

And another important note, the way you conflate the actions of a handful of multi-national conglomerate corporations with "governments and authorities" is deeply frightening.

Let us all bow before the capricious big-money overlords and their jack boot enforcers.. remember, infringement is theft And piracy And terrorism And anything else we decide to call it.

Now pay me for the rights to remember this post or we will have to beat it out of your head on the way to PirateTerroristThief Jail.
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Jay (profile), 17 Jul 2010 @ 12:43am

Re: Re: Re: Re: Re:
...

I'm having a hard time following your argument. It's as if you're using a double negative to explain your side of what you think it accurate.
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steve, 3 Feb 2011 @ 8:30am

The RIAA is a wast of time. yes i agree that file sharing of copyrighted content is wrong but so is monopolizing your company and trying to take over the world for money. this is whats wrong with the world today. Large company's run this county now and laws are made just to take money out of your pocket and put it in there's. and this is what there fight is all about. we all found a way to just take it without making them money and there pissed off. i feel a good amount of people just take it because there sick of paying a big chunk of there pay check for some music they enjoy. and it seems the bands that make this music are not the ones complaining about all this. its just the greedy record company's. Is there something wrong with making an honest living anymore? i know when my small business has a slow year i suffer. but i always put my employees first and see that they get payed. i don't lay them off and give myself a bonus. the way i see it. if a company can clam to be loosing millions a year over this yet still seem to go on making money then im all for file sharing.
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tonyspeed, 31 Mar 2011 @ 12:45pm

No music
That's why people like have just stopped doing music all together. I can't download. Well, I definitely won't buy it either. I'll just listen to the radio. Instead of putting out a forest fire, they should get music down to the level where it costs about 10 cents a song. Then everyone would buy music on a regular basis.
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LX, 31 Mar 2011 @ 2:39pm

" They were an economic disaster. " - Not if you're a lawyer.
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Mr Watchy, 24 May 2011 @ 3:47pm

What am I (still) missing?
A few years ago NPR sent out a legal opinion that cooled virtually all affiliate stations on podcasting. The opinion was that the DJ, the staff and the station board were liable for excessive fines and fees if DRM right were not acquired for podcasts of musical programs. The fees set for podcasting of musical programs was set (as of May 1, 2007) absurdly high. Far higher, up to a hundred or more times higher, than the broadcast fees typically paid by a public radio station to ASCAP/BMI. Further permission to use a track would have to be obtained from the artist, the recording company, the publishing company and the licensing agency. Four entities would have to sign off on each tune podcast.
Here's my questions: Why did the Library of Congress-empaneled BRM board set podcast fees so enormously high? What act of congress allows these rates? Was the formation of the federal three-man board even legal? And finally, what interest does the recording industry have in quelling music podcasting, especially when it is so easy to record from an internet stream?
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Joe M, 20 Apr 2015 @ 2:51pm

I have seen the RIAA in action years ago. A bunch of greedy bastards going around literally looking for trouble. Hanging out in clubs even to see if copyrighted music was being played and such. Its ridiculous that those types of people are allowed to roam the streets. As long as we live in a corporate society, it will be that way. hence the reason why we MUST destroy corporate government.

But I am glad to see that the people have all gotten on the bandwagon. When law breaking is so big, there isn't a damn thing they can do about it. What's good here isn't about breaking the law. But by changing the law. Lawmakers dont like change. They create laws to benefit themselves and not people. It goes all the way back to the olden days when settlers didn't like a law, they didn't follow it. They would even battle with guns to get the lawmakers out of their midst. People always know what they need. What they don't need is greedy assholes telling them what they need. And the government fits those shoes. Once we break down the big guys, we will no longer have to put up with the BS. Just go on about YOUR business without someone looking over your shoulders.
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