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Comments: 229 +-   RIAA Loses Bid To Keep Revenues Secret on Thursday July 16, @01:43PM

Posted by timothy on Thursday July 16, @01:43PM
from the but-your-honor-that's-our-secret-recipe-for-money-soup dept.
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NewYorkCountryLawyer writes "The RIAA's motion to keep secret the record companies' 1999-to-date revenues for the copyrighted song files at the heart of the case has been denied, in the Boston case scheduled for trial July 27th, SONY BMG Music Entertainment v. Tenenbaum. The Judge had previously ordered the plaintiff record companies to produce a summary of the 1999-to-date revenues for the recordings, broken down into physical and digital sales. On the day the summary was due to be produced, instead of producing it, they produced a 'protective order motion' asking the Judge to rule that the information would have to be kept secret. The Judge rejected that motion: 'the Court does not comprehend how disclosure would impair the Plaintiffs' competitive business prospects when three of the four biggest record labels in the world — Warner Bros. Records, Sony BMG Music Entertainment, and UMG Recording, Inc. — are participating jointly in this lawsuit and, presumably, would have joint access to this information.'"
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  • Show us the money! (Score:5, Interesting)

    by pilgrim23 (716938) on Thursday July 16, @01:48PM (#28720723)
    I will believe it when the smoke and mirrors are actually changed to some hard data. This seems more an Emperor's new clothes thing to me though. The RIAA does not wish to reveal that the hand they are playing is a busted flush
  • I wonder if ... (Score:5, Insightful)

    by TomTraynor (82129) on Thursday July 16, @01:50PM (#28720745) Homepage

    I wonder if they told the artists one set of numbers and need more time to make sure what they give to the court matches that set.

    • Re: (Score:3, Informative)

      That part is standard practice, and I doubt they're worried about the artists finding out since they're the ones who draw up the contracts.

      http://en.wikipedia.org/wiki/Hollywood_accounting [wikipedia.org]

    • Re:I wonder if ... (Score:5, Insightful)

      by elrous0 (869638) * on Thursday July 16, @02:53PM (#28721663)
      That would be pretty typical in show business. A major motion picture can have a HUGE box office and still mysteriously show no profit when it comes time to give out the money to the people with "points" in the movie. Peter Jackson had to sue New Line [nytimes.com] to get his fair share of the The Lord of the Rings movies, after they tried this with him (and he won).
    • Re:I wonder if ... (Score:5, Interesting)

      by ewilts (121990) on Thursday July 16, @02:56PM (#28721703) Homepage

      I wonder if they told the artists one set of numbers and need more time to make sure what they give to the court matches that set.

      Herein lies the issue. If they go with the artist numbers, then revenues might be small. Punitive and compensatory damages will likely be small as a result. However, if they want to claim higher numbers, then the artists will turn around and sue them for the stolen revenue. They're caught between a rock and a hard place, and that's good...

      • Herein lies the issue. If they go with the artist numbers, then revenues might be small. Punitive and compensatory damages will likely be small as a result. However, if they want to claim higher numbers, then the artists will turn around and sue them for the stolen revenue. They're caught between a rock and a hard place, and that's good...

        You could expand that as well. If there is a *cough* significant difference between the two numbers, the disclosure could open the RIAA companies to accusations of conspiracy to defraud on a grand scale. Passing the hot potato between holding companies until fees eat up the value that would otherwise be distributed as profit is an old trick. A very old trick, and one that wouldn't be treated sympathetically by a court that enforced visibility of the transactions as a group. The term, I think, is "forensic accounting" and firms like KPMG (disclosure: once was employee, long ago) have practice groups that are used by prosecutors for just this purpose.

        I don't think it would be the first time that the discovery part of a lawsuit triggered new proceedings. Sort of like "Well, I was just on my way to a burglary when the guy ran into me..."

      • Taxes too (Score:4, Interesting)

        by phorm (591458) on Thursday July 16, @05:14PM (#28723655) Homepage Journal

        It's not just the royalties/payments to the artists, it's the taxes, which could become an even bigger issue.
        While big corps might be able to get away with shady practises to hide their real profits, if they try to stick with a large penalty by announcing revenues of several times what was declared on their taxes they're likely going to be in deep trouble

        Not only that, but showing huge profits is going to blow away their pleas of "piracy is killing the industry and we're losing money/profits/etc", which is probably the real point here....

    • ...when you publicly state that you want the 3.5% that the artists get, to get down to 2.8%, while still expecting them to pay the studio from that.

      Because that is exactly what they tried to do.

      Those that they told another set of numbers are us. To justify the "piracy" inquisition. (Occam's razor!)

  • Not only that ... (Score:5, Insightful)

    by taniwha (70410) on Thursday July 16, @01:50PM (#28720755) Homepage Journal
    because music copyright usually results in a monopoly situation there is not competition - no one else is publishing the same track in competition to them, so the information is not commercially sensitive
  • I object! (Score:5, Funny)

    by Anonymous Coward on Thursday July 16, @01:51PM (#28720765)

    Reede: Your honor, I object!

    Judge: Why?

    Reede: Because it's devastating to my case!

    Judge: Overruled.

    Reede: Good call!

    • Cop: You know why I pulled you over?
      Fletcher: Depends on how long you were following me!
      Cop: Why don't we just take it from the top?
      Fletcher: Here goes: I sped. I followed too closely. I ran a stop sign. I almost hit a Chevy. I sped some more. I failed to yield at a crosswalk. I changed lanes at the intersection. I changed lanes without signaling while running a red light and *speeding*!
      Cop: Is that all?
      Fletcher: No... I have unpaid parking tickets.
      [groans]
      Fletcher: ... be gentle.

      Bum: Got any spare change?
      Fletcher: Absolutely!
      Bum: Could ya spare some?
      Fletcher: Yes I could!
      Bum: Will ya?
      Fletcher: HMM-MMM!
      Bum: How come?
      Fletcher: Because I believe you will buy booze with it! I just want to get from my car to the office without being confronted by the decay of western society!... Plus I'm cheap! AHHH!

  • by Opportunist (166417) on Thursday July 16, @01:52PM (#28720787)

    They'd have to show what they actually gain from "honest" business and have that compared to their extortion schemes. It could even show that the "claimed losses" exceed what one person could possibly cause in damages.

    And that in turn could mean that their insane claims (and the verdicts that ensued) could be up for review, they could end up with far more sane sentences and that in turn would make the whole "shock and awe" deterrent a joke.

  • by croddy (659025) on Thursday July 16, @01:53PM (#28720793)
    haha! well, maybe now their hollywood accounting [wikipedia.org] will come back to bite them in the ass as they struggle to show that the songs are now worth massive damages, when they were worth nothing or less as they computed royalties for the artists they were screwing.
  • cracks in the dam (Score:5, Informative)

    by Dan667 (564390) on Thursday July 16, @01:59PM (#28720869)
    Sony, EMI, Warner Bros, and Universal are in real trouble. Make sure you check http://riaaradar.com/ [riaaradar.com] to make sure when you purchase music you don't buy anything from these companies that fund the RIAA.
  • by gurps_npc (621217) on Thursday July 16, @02:15PM (#28721095)
    If their sales/profits are low, then they can claim the illegal copying is to blame. If their sales/profits are high, then they claim it would be even higher without the copying.

    The only issue could be that they are not consistent with regards to their demands.

  • But Sir (Score:5, Funny)

    by kenp2002 (545495) on Thursday July 16, @02:16PM (#28721107) Homepage Journal

    MAFIAA: But sir we sold 4 million digital downloads and made 2 million in revenue from those downloads.

    JUDGE: So your are saying you made about 50 cents each download right?

    MAFIAA: Yes sir.

    JUDGE: So we can roughly say the value of each download is 50 cents right?

    MAFIAA: Yes sir.

    JUDGE: So even if we get "Biblical" in damages of 40 fold we are looking at about $20 a track right?

    MAFIAA: Errr well....

    JUDGE: So for 24 tracks at $20 bucks each Jammie owes you about $480 bucks right?

    MAFIAA: You have to take into account everyone that downloaded them.

    JUDGE: Ok so lets say 10 people downloaded each one, that's about so that's about $4800 right?

    MAFIAA: Sir that isn't enough!

    JUDGE: How much is enough?

    MAFIAA: IT'S NEVER ENOUGH!!! (Rips off the mask to reveal he's infact a tenticle demon!!)

    • Re:But Sir (Score:5, Insightful)

      by Colonel Korn (1258968) on Thursday July 16, @02:35PM (#28721375)

      MAFIAA: You have to take into account everyone that downloaded them.

      JUDGE: Ok so lets say 10 people downloaded each one, that's about so that's about $4800 right?

      By definition, the average participant in a peer sharing network uploads one copy. There's no way around that. If the actual number of uploads is unknown, the only remotely reasonable assumption for damage calculations is 1.0000000000000000000000000.

      • Re: (Score:3, Insightful)

        MAFIAA: You have to take into account everyone that downloaded them.

        JUDGE: Ok so lets say 10 people downloaded each one, that's about so that's about $4800 right?

        By definition, the average participant in a peer sharing network uploads one copy. There's no way around that. If the actual number of uploads is unknown, the only remotely reasonable assumption for damage calculations is 1.0000000000000000000000000.

        I know the defendant in this case wasn't using bittorrent, but is there actually any way to prove a person has uploaded one entire, complete, copy to anyone? I expect it's more like 30% to that person, 40% to another, 30% to a third, but since people are connected to multiple uploaders, how can you tell?

      • Re: (Score:3, Interesting)

        Infringement isn't about sharing a complete copy. If you shared half a song with two people, that could be interpreted (and would be, I expect) of two infringements.

        Taken to an (absurd IMO) extreme, that could be taken to mean that if you shared 1/N of a song with N people, that would be N infringements ... meaning one could easily "infringe" several hundred thousand times while uploading to someone over p2p. This seems absolutely absurd to us, but until someone answers "what fraction of a copyrighted wor

  • by Anonymous Coward on Thursday July 16, @02:16PM (#28721123)

    Ray--if I was ordered by a judge to produce a detailed breakdown of my accounting (say a trial for tax evasion) practices over the past years by 7/31, and on the 31st I came to court with just a "protective order motion" asking that my accounting practices be kept secret...

    Wouldn't I be held in contempt?

    I mean...I can see producing the motion *with* the information...or...before it...but... tell me why it is these guys appear to have rights in the legal system that everyone else doesn't... More importantly, what piece of paperwork do I have to file so I can ignore court orders like they do and get off scott free?

    • Ray--if I was ordered by a judge to produce a detailed breakdown of my accounting (say a trial for tax evasion) practices over the past years by 7/31, and on the 31st I came to court with just a "protective order motion" asking that my accounting practices be kept secret... Wouldn't I be held in contempt? I mean...I can see producing the motion *with* the information...or...before it...but... tell me why it is these guys appear to have rights in the legal system that everyone else doesn't... More importantly, what piece of paperwork do I have to file so I can ignore court orders like they do and get off scott free?

      If I were the Judge I probably wouldn't have held them in contempt, but I probably would have issued a discovery sanction. Since in this case the material is needed to assess the fair use defense, which would be a complete bar to the action, I would have issued an order striking their complaint, dismissing the case.

    • by mr_matticus (928346) on Thursday July 16, @03:10PM (#28721935)

      The way most things work in court is that your response is due based on the order from the judge. If you are ordered to provide tax information by 7/31, you have a number of options. Only one of them is actually providing that information. You can also respond by challenging the order, requesting a limitation on the order, showing cause why you can't comply with the order, and depending on the situation, other options.

      The deadline is the due date for the responsive filing. As long as the response isn't completely devoid of rationality or some support, the court will review the response and then either adjust the original order or respond by saying, "nice try, but now do what I said". It's not contempt to push back in civil litigation unless you're doing it solely for the sake of wasting time or money.

      In this case, because a protective order was issued, it obviously wasn't devoid of a real issue.

      Now, sometimes, an order is an order and the only permitted responses are (a) compliance or (b) a request for more time to comply (which may or may not be granted, especially if dropped on the court at the last minute). This is rarely the case.

      Moreover, the summary is again biased and sensationalized, part of a pattern that shows increasingly unprofessional conduct on the part of the submitter. The RIAA offered a proposed order that was greater in scope than what they had argued for. Had the judge and her clerks read only the moving papers and then just signed the order, the RIAA would have had that order amended upon discovery of the inconsistency. The RIAA actually got the protective order it had argued for--it just didn't get the overbroad proposal they submitted.

      You could automatically bounce back to "the RIAA is evil and incompetent", which no one would disagree with, but there's almost no chance that this would have ever worked--it's not like the judge is powerless upon discovery of the problem, which is almost inevitable unless opposing counsel is beyond incompetent, and attempting to slip an expanded order in intentionally opens them up to all kinds of sanctions. The thing is, you rarely get more than what you ask in a proposed order attached to a motion--so it's not uncommon to "shoot for the moon" and then the court writes a narrower order based on how much it's willing to give you. In most cases, it's not a plot. It's just the way the game is played.

      • by RIAAShill (1599481) on Thursday July 16, @03:28PM (#28722191)

        Moreover, the summary is again biased and sensationalized, part of a pattern that shows increasingly unprofessional conduct on the part of the submitter. The RIAA offered a proposed order that was greater in scope than what they had argued for. Had the judge and her clerks read only the moving papers and then just signed the order, the RIAA would have had that order amended upon discovery of the inconsistency. The RIAA actually got the protective order it had argued for--it just didn't get the overbroad proposal they submitted.

        Be nice. NYCL has a viewpoint and he likes to express it loud and clear, but accusations regarding professionality are uncalled for. He's not representing anyone in the case or publishing information that one couldn't get through PACER.

        It isn't any use arguing what the RIAA would have done had the judge signed off on their prosed protective order. They should have vetted it before submitting it to avoid any appearance of deceptive behavior. Since they didn't, then they deserve a little nose tweaking.

        And no, they did not get everything they wanted. The judge refused to protect the revenue information of the plaintiffs. They did seem to get what they wanted with regards to the non-revenue information.

  • by yuna49 (905461) on Thursday July 16, @02:19PM (#28721167)

    Gertner's ruling states that "[the Court] will, however, order the second set of documents, which implicate the business interests of third-party artist-owned companies, shielded from disclosure."

    What are these documents, and who are these "third-party artist-owned companies?"

    • Gertner's ruling states that "[the Court] will, however, order the second set of documents, which implicate the business interests of third-party artist-owned companies, shielded from disclosure." What are these documents, and who are these "third-party artist-owned companies?"

      That's non-controversial. It refers to the agreements with recording artists, other record companies, etc.

  • There, RIAA shit. (Score:5, Interesting)

    by unity100 (970058) on Thursday July 16, @02:21PM (#28721191) Homepage Journal

    the judge has corrected a MAJOR malfunction in your logic circuits. next time when you accuse someone of damaging your profits, you will remember to actually prove EVIDENCE to back up your case. that is, unless your leashholders are afraid of being proven wrong about all the shit you have been perpetrating. enjoy.

  • by erroneus (253617) on Thursday July 16, @02:21PM (#28721193) Homepage

    This could be the beginnings of an interesting new strategy against the RIAA. Forcing the RIAA to produce the verifiable truth about various things and to pull their skeletons from their closets and put them on display can likely act as quite a deterrent against RIAA actions.

    Still. How is the judge taking their failure to produce the data? Does making a motion instead of producing the data result in an automatic extension somehow? Is this an unwritten part of due process now?

    • If it were you or I, we would likely be held in contempt. After all, we are a single person with no real power of any kind... a huge set of officers grab us and throw us in a cell. Now think about this in the context of 3 out of 4 of the music producing companies in the world... who do you throw in jail? Who was the one that actually made the decision to try and play the courts? You could argue that the lawyer is at fault... if they knew it was questionably legal, they should simply refuse, right? I don't believe it as cut and dry as that. Someone on the plaintiffs side who pays the check of said lawyer could fire him for doing so. We have no idea how this would affect said lawyer. Maybe he is on the hook for $2M in medical bills because his 6 year old daughter is dying of leukemia, therefore he can't afford to lose his job, even when he knows what the right actions would be.

      Not that I'm saying that someone shouldn't be tarred, feathered, then gang raped in a max security prison, but who to throw in there isn't so clear.
    • Re: (Score:3, Insightful)

      Exactly, I wonder what their advertising says for new artists compared to what they say when they pull the "ZOMG OUR KIDS ARE GOING TO STARVE IF WE DON"T SUE YOU FOR $3.6 million per song!!!111!1!1".
    • Re: (Score:3, Interesting)

      by Anonymous Coward

      While decreasing CD sales are being caused by increasing digital sales, overall cash is going down. But that's not anybody's fault. People don't want to buy the CD because it's overpriced and they only want the one or two good songs that are hyped on the radio. Why buy the rest of the trash?

      Then add in Wal Mart is running independent music stores out of business and then turning around and only offering a fraction of the selection - the majority of it being the latest hype crap that everyone wants to buy si

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