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Comment by mayneack | Hacker News Reader

For those of us not used to reading something like this, can you explain? Is the RIAA somewhere in here: "Selling/General/Admin. Expenses, Total"?

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I downloaded their detailed income statements[0]. The Google Finance income statement appears to be wrong. Google's income statements imply royalties of less than 8.5%.

In their latest quarter (Q2 FY2013) "Cost of Revenue" made up $68,036,000 on revenue of $101,267,000. Of that, "Content acquisition costs" were $60,522. That means royalties make up a whopping 60% of all revenue. They're not making a profit and have lost money in FY2012 and FY2011.

0. http://investor.pandora.com/phoenix.zhtml?c=227956&p=iro... (see Historical Financials).

A few weeks back Google Finance was reporting GOOG's own earnings incorrectly. Most people with interest in such things recommend avoiding it like the plague

> That means royalties make up a whopping 60% of all revenue.

Is that surprising? I'd imagine inventory makes up more than that of Amazon's revenue. Both are in the business of selling stuff made by other people. They help you find what you want, sure, but they're distributors.

I see from that report they have 589 employees. Why do they need so many?

They have zero profit, so you could argue any single cost is taking away "all their profits". But I'm probably missing a more insightful point - maybe that the RIAA engineers the situation so that their margin is ~0.

Apple gets 30% from their music sales, and that still doesn't leave them with much. Let's just say the labels leave Pandora, Spotify and others with a lot less than 30%, which makes it very hard for them to operate their business, and if these services can't be sustainable and eventually start dying out, it will all because of the labels.

Which, of course, would be perfectly fine with the labels.

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