Friday, October 12, 2007

RIAA, Fighting Desperately to Conceal Its Expenses for Downloads in UMG v. Lindor, Files Protective Order Motion

The RIAA has filed a protective order motion to resist Marie Lindor's motion to compel a response to her interrogatory seeking information on the plaintiffs' expenses per authorized download in UMG v. Lindor.

October 11, Letter of Richard L. Gabriel to Hon. Robert M. Levy requesting protective order re July 11, 2007, interrogatory requesting expense information*
October 12, Letter of Ray Beckerman to Hon. Robert M. Levy opposing motion for protective order and in further support of motion to compel response to July 11, 2007, interrogatory requesting expense information*

* Document published online at Internet Law & Regulation

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Reluctant Raconteur said...


Although the record companies have historically hidden their cost structure from sight for good reason, I suspect that they cannot honestly answer the question even if they were so inclined.

Entertainment company accounting is archaic and obtuse. Producing of the digital tracks is likely an overhead item that is applied to all records regardless of the actual cost, just like the utilities.

I think there is a long history of artists trying to get that very information and being unable to get a true accounting.

This is the last industry that will go to activity based accounting, even if it makes sense.

raybeckerman said...

I respectfully disagree, russell.... these are all public, audited companies. They know what things cost.

Todd said...

But as an accountant, I can safely say that whatever number they throw out will be quite subjective. It would have to be considering the fact that a copy is costless, and as russell says, it is all overhead.

There are public companies out there, that do get "unqualified opinions" (which means the audit was basically ok), and can still be audited via archaic, ineffective means.

raybeckerman said...

todd you are partly right... the overhead stuff is an approximation...

but part of the expenses -- by far the largest part -- is absolutely finite and quantifiable, the several royalties that are payable out of each download...

bbsux said...


Remind me to NEVER play poker against you!

Reluctant Raconteur said...


You are correct in the companies know what their expenses are. They must follow GAAP to be audited

Good luck in trying to figure out how they allocated those expenses.

But if what you are asking is what are the fixed marginal costs of a download, that they should be able to provide. Although it may vary by each song.

Nohwhere Man said...

I would think that the simple answer is (cost of server farm: operations & admin) / (number of downloads). That information should be fairly trivial to collect. I'd be highly suspicious if they claimed that they didn't know either one.