diff --git a/pkg/otel/arrow_record/consumer.go b/pkg/otel/arrow_record/consumer.go
index 8bb67172..62eff883 100644
--- a/pkg/otel/arrow_record/consumer.go
+++ b/pkg/otel/arrow_record/consumer.go
@@ -17,6 +17,7 @@ package arrow_record
 import (
 	"bytes"
 	"context"
+	"errors"
 	"fmt"
 	"log"
 	"math/rand"
@@ -60,9 +61,12 @@ type ConsumerAPI interface {
 
 var _ ConsumerAPI = &Consumer{}
 
-var ErrConsumerMemoryLimit = fmt.Errorf(
-	"The number of decoded records is smaller than the number of received payloads. " +
-		"Please increase the memory limit of the consumer.")
+// ErrConsumerMemoryLimit is used by calling code to check
+// errors.Is(err, ErrConsumerMemoryLimit).  It is never returned.
+var ErrConsumerMemoryLimit error = common.LimitError{}
+
+var errConsumerInternalError = errors.New(
+	"internal error: number of decoded records is smaller than the number of received payloads")
 
 // Consumer is a BatchArrowRecords consumer.
 type Consumer struct {
@@ -311,12 +315,15 @@ func (c *Consumer) TracesFrom(bar *colarspb.BatchArrowRecords) ([]ptrace.Traces,
 
 // Consume takes a BatchArrowRecords protobuf message and returns an array of RecordMessage.
 // Note: the records wrapped in the RecordMessage must be released after use by the caller.
-func (c *Consumer) Consume(bar *colarspb.BatchArrowRecords) ([]*record_message.RecordMessage, error) {
+func (c *Consumer) Consume(bar *colarspb.BatchArrowRecords) (ibes []*record_message.RecordMessage, retErr error) {
 	ctx := context.Background()
 
-	var ibes []*record_message.RecordMessage
 	defer func() {
 		c.recordsCounter.Add(ctx, int64(len(ibes)), c.metricOpts()...)
+		if retErr != nil {
+			releaseRecords(ibes)
+			ibes = nil
+		}
 	}()
 
 	// Transform each individual OtlpArrowPayload into RecordMessage
@@ -356,8 +363,7 @@ func (c *Consumer) Consume(bar *colarspb.BatchArrowRecords) ([]*record_message.R
 				ipc.WithZstd(),
 			)
 			if err != nil {
-				releaseRecords(ibes)
-				return nil, werror.Wrap(err)
+				return ibes, werror.Wrap(distinguishMemoryError(err))
 			}
 			sc.ipcReader = ipcReader
 		}
@@ -370,16 +376,27 @@ func (c *Consumer) Consume(bar *colarspb.BatchArrowRecords) ([]*record_message.R
 			rec.Retain()
 			ibes = append(ibes, record_message.NewRecordMessage(bar.BatchId, payload.GetType(), rec))
 		}
+
+		if err := sc.ipcReader.Err(); err != nil {
+			return ibes, werror.Wrap(distinguishMemoryError(err))
+		}
 	}
 
 	if len(ibes) < len(bar.ArrowPayloads) {
-		releaseRecords(ibes)
-		return nil, ErrConsumerMemoryLimit
+		return ibes, werror.Wrap(errConsumerInternalError)
 	}
 
 	return ibes, nil
 }
 
+func distinguishMemoryError(err error) error {
+	limErr, ok := common.NewLimitErrorFromError(err)
+	if ok {
+		return limErr
+	}
+	return err
+}
+
 type runtimeChecker struct{}
 
 var _ memory.TestingT = &runtimeChecker{}
diff --git a/pkg/otel/common/arrow/allocator.go b/pkg/otel/common/arrow/allocator.go
index dac4e71b..6ac7d304 100644
--- a/pkg/otel/common/arrow/allocator.go
+++ b/pkg/otel/common/arrow/allocator.go
@@ -16,7 +16,8 @@ package arrow
 
 import (
 	"fmt"
-	"os"
+	"regexp"
+	"strconv"
 
 	"github.com/apache/arrow/go/v14/arrow/memory"
 )
@@ -44,8 +45,34 @@ type LimitError struct {
 
 var _ error = LimitError{}
 
+var limitRegexp = regexp.MustCompile(`memory limit exceeded: requested (\d+) out of (\d+) \(in-use=(\d+)\)`)
+
+// NewLimitErrorFromError extracts a formatted limit error.
+//
+// Note: the arrow/go package (as of v16) has a panic recovery
+// mechanism which formats the error object raised through panic in
+// the code below.  The formatting uses a "%v" which means we lose the
+// error wrapping facility that would let us easily extract the
+// object.  Therefore, we use a regexp to unpack memory limit errors.
+func NewLimitErrorFromError(err error) (error, bool) {
+	matches := limitRegexp.FindStringSubmatch(err.Error())
+	if len(matches) != 4 {
+		return err, false
+	}
+
+	req, _ := strconv.ParseUint(matches[1], 10, 64)
+	lim, _ := strconv.ParseUint(matches[2], 10, 64)
+	inuse, _ := strconv.ParseUint(matches[3], 10, 64)
+
+	return LimitError{
+		Request: req,
+		Inuse:   inuse,
+		Limit:   lim,
+	}, true
+}
+
 func (le LimitError) Error() string {
-	return fmt.Sprintf("allocation size %d exceeds limit %d (in-use=%d)", le.Request, le.Limit, le.Inuse)
+	return fmt.Sprintf("memory limit exceeded: requested %d out of %d (in-use=%d)", le.Request, le.Limit, le.Inuse)
 }
 
 func (_ LimitError) Is(tgt error) bool {
@@ -65,9 +92,6 @@ func (l *LimitedAllocator) Allocate(size int) []byte {
 			Inuse:   l.inuse,
 			Limit:   l.limit,
 		}
-		// Write the error to stderr so that it is visible even if the
-		// panic is caught.
-		os.Stderr.WriteString(err.Error() + "\n")
 		panic(err)
 	}
 
@@ -86,9 +110,6 @@ func (l *LimitedAllocator) Reallocate(size int, b []byte) []byte {
 			Inuse:   l.inuse,
 			Limit:   l.limit,
 		}
-		// Write the error to stderr so that it is visible even if the
-		// panic is caught.
-		os.Stderr.WriteString(err.Error() + "\n")
 		panic(err)
 	}
 
diff --git a/pkg/otel/common/arrow/allocator_test.go b/pkg/otel/common/arrow/allocator_test.go
index cc28564f..4362bf26 100644
--- a/pkg/otel/common/arrow/allocator_test.go
+++ b/pkg/otel/common/arrow/allocator_test.go
@@ -16,13 +16,14 @@ package arrow
 
 import (
 	"errors"
+	"fmt"
 	"testing"
 
 	"github.com/apache/arrow/go/v14/arrow/memory"
 	"github.com/stretchr/testify/require"
 )
 
-func TestLimitedAllocator(t *testing.T) {
+func TestLimitedAllocatorUnformatted(t *testing.T) {
 	const boundary = 1000000
 	check := memory.NewCheckedAllocator(memory.NewGoAllocator())
 	limit := NewLimitedAllocator(check, boundary)
@@ -47,9 +48,26 @@ func TestLimitedAllocator(t *testing.T) {
 	}()
 	require.NotNil(t, capture)
 	require.True(t, errors.Is(capture.(error), LimitError{}))
-	require.Equal(t, "allocation size 1 exceeds limit 1000000 (in-use=1000000)", capture.(error).Error())
+	require.Equal(t, "memory limit exceeded: requested 1 out of 1000000 (in-use=1000000)", capture.(error).Error())
 
 	limit.Free(b)
 
 	check.AssertSize(t, 0)
 }
+
+func TestLimitedAllocatorFormatted(t *testing.T) {
+	// Arrow does not wrap the error, so the consumer sees its
+	// formatted version.
+	expect := LimitError{
+		Request: 1000,
+		Inuse:   9900,
+		Limit:   10000,
+	}
+
+	unwrap, ok := NewLimitErrorFromError(fmt.Errorf("some sort of prefix %v some sort of suffix", expect))
+	require.Error(t, unwrap)
+	require.True(t, ok)
+	require.Equal(t, expect, unwrap)
+
+	require.True(t, errors.Is(unwrap, LimitError{}))
+}