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General and Administrative

The following table presents our general and administrative expenses, and general and administrative expenses as a percentage of revenues for the periods presented (dollars in millions):

General and administrative expenses consist primarily of compensation and related costs for personnel and facilities related to our facilities, finance, human resources, information technology and legal organizations, and fees for professional services. Professional services are principally comprised of outside legal, audit, information technology consulting, and outsourcing services.

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General and administrative expenses decreased $135.3 million from 2008 to 2009. This decrease was primarily related to the settlement agreement with the Authors Guild and the Association of American Publishers (AAP) under which we recognized $95.1 million of expense in 2008. In addition, consulting costs decreased $59.6 million.

General and administrative expenses increased $523.3 million from 2007 to 2008. This increase was primarily related to an increase in professional services of $243.0 million, the majority of which were related to legal costs, including the aforementioned legal settlement with the Authors Guild and the AAP. In addition, there was an increase in labor and facilities related costs of $137.8 million, primarily as a result of a 9% increase in general administrative headcount from 2007 to 2008, and an increase in bad debt expense of $96.1 million due to the general economic downturn.

General and Administrative.

The following table presents our general and administrative expenses, and general and administrative expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

General and administrative expenses consist primarily of compensation and related costs for personnel and facilities related to our finance, human resources, facilities, information technology and legal organizations, and fees for professional services. Professional services are principally comprised of outside legal, audit, information technology consulting and outsourcing services.

General and administrative expenses increased $39.0 million in the three months ended March 31, 2009 compared to the three months ended March 31, 2008. This increase was primarily due to $26.3 million of expenses recognized related to the exit of our audio and print ads businesses, as well as severance benefits for the termination of certain employees and an increase in legal costs of $29.5 million. These increases were partially offset by a decrease in consulting services of $15.6 million.

General and administrative expenses increased $36.9 million in the three months ended March 31, 2009 compared to the three months ended December 31, 2008. This increase was primarily due to $26.3 million of expenses recognized related to the exit of our audio and print ads businesses, as well as severance benefits for the termination of certain employees. This increase was also due to an increase in legal costs of $17.0 million and an increase in bad debt expense of $10.1 million due to increased collection risk as a result of the general economic downturn. These increases were partially offset by a decrease in labor and facilities related costs of $25.6 million primarily due to lower annual bonus expense recognized in the three months ended March 31, 2009 compared to the three months ended December 31, 2008.

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General and Administrative

The following table presents our general and administrative expenses, and general and administrative expenses as a percentage of revenues for the periods presented (dollars in millions):

General and administrative expenses consist primarily of compensation and related costs for personnel and facilities related to our finance, human resources, facilities, information technology and legal organizations, and fees for professional services. Professional services are principally comprised of outside legal, audit, information technology consulting and outsourcing services.

General and administrative expenses decreased $95.7 million from the three months ended September 30, 2008 to the three months ended December 31, 2008. This decrease was primarily related to the settlement agreement with the Authors Guild and the Association of American Publishers (AAP) under which we recognized a $95.1 million of expense in the three months ended September 30, 2008.

General and administrative expenses increased $523.3 million from the year ended December 31, 2007 to the year ended December 31, 2008. This increase was primarily related to an increase in professional services of $243.0 million, the majority of which were related to legal costs, including the aforementioned legal settlement with the Authors Guild and the AAP. In addition, there was an increase in labor and facilities related costs of $137.8 million, primarily as a result of a 9% increase in general administrative headcount from 2007 to 2008, and an increase in bad debt expense of $96.1 million due to increased risk in this area as a result of the current general economic downturn.

General and administrative expenses increased $527.5 million from the year ended December 31, 2006 to the year ended December 31, 2007. This increase was primarily due to an increase in labor and facilities related costs of $306.4

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million, primarily as a result of a 72% increase in general and administrative headcount from 2006 to 2007, including an increase in stock-based compensation expense of $51.3 million and an increase in professional services fees of $95.1 million. In addition, there was an increase in bad debt expense of $35.6 million. The additional personnel, professional services and bad debt expenses are primarily the result of the growth of our business.

General and Administrative

General and Administrative.

The following table presents our general and administrative expenses, and general and administrative expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

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General and administrative expenses consist primarily of compensation and related costs for personnel and facilities related to our finance, human resources, facilities, information technology and legal organizations, and fees for professional services. Professional services are principally comprised of outside legal, audit, information technology consulting and outsourcing services.

General and administrative expenses increased $32.2 million from the three months ended June 30, 2008 to the three months ended September 30, 2008. This increase was primarily related to the settlement agreement we entered into in October 2008 with the Authors Guild and the Association of American Publishers (“AAP”) under which we recognized $95.1 million of expense in the three months ended September 30, 2008. This was partially offset by a decrease in professional services of $51.8 million, the majority of which were related to legal costs. See Note 15 of Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for additional information on the settlement agreement.

General and administrative expenses increased $185.7 million from the three months ended September 30, 2007 to the three months ended September 30, 2008. This increase was primarily related to the settlement agreement with the Authors Guild and the AAP under which we recognized $95.1 million of expense in the three months ended September 30, 2008. In addition, there was an increase in professional services of $40.5 million, an increase in bad debt expense of $19.1 million, and an increase in labor and facilities related costs of $12.2 million primarily as a result of a 16% increase in headcount.

General and administrative expenses increased $489.1 million from the nine months ended September 30, 2007 to the nine months ended September 30, 2008. This increase was primarily related to the settlement agreement with the Authors Guild and the AAP under which we recognized $95.1 million of expense in the nine months ended September 30, 2008. In addition, there was an increase in professional services of $181.3 million, an increase in bad debt expense of $70.2 million, and an increase in labor and facilities related costs of $73.2 million primarily as a result of a 16% increase in headcount.

As we expand our business and incur additional expenses, we believe general and administrative expenses will continue to increase in dollar amount and may increase as a percentage of revenues in 2008 and future periods.

General and Administrative.

The following table presents our general and administrative expenses, and general and administrative expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

General and administrative expenses consist primarily of compensation and related costs for personnel and facilities related to our finance, human resources, facilities, information technology and legal organizations, and fees for professional services. Professional services are principally comprised of outside legal, audit, information technology consulting and outsourcing services.

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General and administrative expenses increased $65.6 million from the three months ended March 31, 2008 to the three months ended June 30, 2008, primarily due to an increase in professional services of $61.7 million, the majority of which were related to legal costs.

General and administrative expenses increased $155.5 million from the three months ended June 30, 2007 to the three months ended June 30, 2008. This increase was primarily due to an increase in professional services of $100.5 million, the majority of which were related to legal costs. In addition, there was an increase in bad debt expense of $23.2 million as a result of increased risk in this area, as well as an increase in labor and facilities related costs of $13.9 million primarily as a result of a 41% increase in headcount.

General and administrative expenses increased $303.4 million from the six months ended June 30, 2007 to the six months ended June 30, 2008. This increase was primarily due to an increase in professional services of $140.9 million, the majority of which were related to legal costs. In addition, there was an increase in labor and facilities related costs of $61.0 million primarily as a result of a 41% increase in headcount as well as an increase in bad debt expense of $51.1 million as a result of increased risk in this area.

As we expand our business and incur additional expenses, we believe general and administrative expenses will increase in dollar amount and may increase as a percentage of revenues in 2008 and future periods.

General and Administrative.

The following table presents our general and administrative expenses, and general and administrative expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

General and administrative expenses consist primarily of compensation and related costs for personnel and facilities related to our finance, human resources, facilities, information technology and legal organizations, and fees for professional services. Professional services are principally comprised of outside legal, audit, information technology consulting and outsourcing services.

General and administrative expenses increased $32.3 million from the three months ended December 31, 2007 to the three months ended March 31, 2008, primarily due to an increase in bad debt expense of $21.2 million as a result of increased risk in this area. In addition, there was an increase in fees for professional services of $14.7 million.

General and administrative expenses increased $147.9 million from the three months ended March 31, 2007 to the three months ended March 31, 2008. This increase was primarily due to an increase in labor and facilities related costs of $47.2 million primarily as a result of a 59% increase in headcount. In addition, there was an increase in fees for professional services of $40.3 million and an increase in depreciation related expense of $10.5 million.

As we expand our business and incur additional expenses, we believe general and administrative expenses will increase in dollar amount and may increase as a percentage of revenues in 2008 and future periods.

General and Administrative.

The following table presents our general and administrative expenses, and general and administrative expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

General and administrative expenses consist primarily of compensation and related costs for personnel and facilities related to our finance, human resources, facilities, information technology and legal organizations, and fees for professional services. Professional services are principally comprised of outside legal, audit, information technology consulting and outsourcing services.

General and administrative expenses increased $2.0 million from the three months ended June 30, 2007 to the three months ended September 30, 2007. This increase was primarily due to an increase in professional services of $8.3 million, partially offset by a decrease in stock-based compensation expense of $7.1 million (see discussion below).

General and administrative expenses increased $131.4 million from the three months ended September 30, 2006 to the three months ended September 30, 2007. This increase was primarily due to an increase in labor and facilities related costs of $63.5 million primarily as a result of a 90% increase in headcount. In addition, there was an increase in professional services expense of $30.7 million and an increase in stock-based compensation expense of $12.0 million (see discussion below).

General and administrative expenses increased $370.2 million from the nine months ended September 30, 2006 to the nine months ended September 30, 2007. This increase was primarily due to an increase in labor- and facilities- related costs of $197.2 million primarily as a result of a 90% increase in headcount. In addition, there was an increase in professional services of $58.7 million and an increase in stock-based compensation expense of $38.6 million (see discussion below).

As we expand our business and incur additional expenses, we believe general and administrative expenses will increase in dollar amount and may increase as a percentage of revenues in 2007 and future periods. In addition, we expect greater stock-based compensation expenses as a result of the launch of our employee TSO program (see discussion below).

General and Administrative.

The following table presents our general and administrative expenses, and general and administrative expenses as a percentage of revenues for the periods presented (dollars in millions, unaudited):

General and administrative expenses consist primarily of compensation and related costs for personnel and facilities related to our finance, human resources, facilities, information technology and legal organizations, and fees for professional services. Professional services are principally comprised of outside legal, audit, information technology consulting and outsourcing services.

General and administrative expenses increased $58.0 million from the three months ended March 31, 2007 to the three months ended June 30, 2007. This increase was primarily due to an increase in labor and facilities related costs of $28.3 million primarily as result of an increase in accrued expense related to our annual bonus plan and an 8% increase in general and administrative headcount. In addition, there was an increase in stock-based compensation expense of $9.1 million (see discussion below) and an increase in bad debt expense of $7.5 million.

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General and administrative expenses increased $146.8 million from the three months ended June 30, 2006 to the three months ended June 30, 2007. This increase was primarily due to an increase in labor and facilities related costs of $74.8 million primarily as a result of an 80% increase in headcount as well as an increase in accrued expense related to our annual bonus plan. In addition, there was an increase in professional services expense of $24.2 million, an increase in stock-based compensation expense of $18.5 million (see discussion below) and an increase in bad debt expense of $10.0 million.

General and administrative expenses increased $238.8 million from the six months ended June 30, 2006 to the six months ended June 30, 2007. This increase was primarily due to an increase in labor and facilities related costs of $133.6 million primarily as a result of an 89% increase in headcount as well as an increase accrued expense related to our annual bonus plan. In addition, there was an increase in professional services of $27.9 million, an increase in stock-based compensation expense of $26.6 million (see discussion below) and an increase in travel and entertainment expense of $14.3 million.

As we expand our business and incur additional expenses, we believe general and administrative expenses will increase in dollar amount and may increase as a percentage of revenues in 2007 and future periods compared to 2006. In addition, we expect greater stock-based compensation expenses as a result of the launch of our employee TSO program (see discussion below).