RIAA: Our anti-fan lawsuits are costing us millions

During yesterday's RIAA trial proceedings in Virgin v. Thomas, Jennifer Pariser, Sony BMG's the head of litigation. admitted that the 20,000+ anti-downloader lawsuits run by the labels had cost the companies "millions" and were enormous money-losers. I had previously heard from an industry insider that they were running the suits on a break-even basis, shaving costs by running a sloppy boiler-room operation that used cheap telephone thugs and flimsy, badly assembled evidence to extort a few thousand bucks from each of the victims, just barely breaking even.

The next line of questioning was how many suits the RIAA has filed so far. Pariser estimated the number at a "few thousand." "More like 20,000," suggested Toder. "That's probably an overstatement," Pariser replied. She then made perhaps the most startling comment of the day. Saying that the record labels have spent "millions" on the lawsuits, she then said that "we've lost money on this program."

The RIAA's settlement amounts are typically in the neighborhood of $3,000-$4,000 for those who settle once they receive a letter from the music industry. On the other side of the balance sheet is the amount of money paid to SafeNet (formerly MediaSentry) to conduct its investigations, and the cash spent on the RIAA's legal team and on local counsel to help with the various cases. As Pariser admitted under oath today, the entire campaign is a money pit.