Music labels and retailers settle CD price-fixing case

Discussion in 'Music Corner' started by Matt, Oct 1, 2002.

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  1. Matt

    Matt New Member Thread Starter

    Location:
    Illinois
  2. Todd Fredericks

    Todd Fredericks Senior Member

    Location:
    A New Yorker
    I'm a little confused here. They were mainly ripping us off (the buying public), so who is getting compensated?

    Todd
     
  3. Mike V

    Mike V New Member

    Location:
    Connecticut
    Lawyers mostly, I'm sure.
     
  4. Michael

    Michael I LOVE WIDE S-T-E-R-E-O!

    Ditto!
     
  5. lbangs

    lbangs Senior Member

    The Reuters story by Derek Caney says, "The companies, which did not admit any wrongdoing, will pay $67.4 million in cash to compensate consumers who overpaid for CDs between 1995 and 2000. The companies also agreed to distribute $75.7 million worth of CDs to public entities and nonprofit organizations throughout the country. " It also quotes New York State Attorney General Eliot Spitzer as saying, ""Our agreement will provide consumers with substantial refunds...."

    Now, how in the world that 'cash to compensate consumers' will be distributed is anybody's guess... ;)

    Shalom, y'all!

    L. Bangs
     
  6. Todd Fredericks

    Todd Fredericks Senior Member

    Location:
    A New Yorker
    Exactly! Sure I kept all my music purchasing receipts (along with all the supermarket ones, etc). Please give me a week to check my files (roll end sequence of 'Citizen Kane' or 'Raiders of the Lost Ark: Filled with Even More Lost Receipts')...

    Todd
     
  7. jkerr

    jkerr Senior Member

    Location:
    Suffolk, VA
    quote:
    "Under terms of the settlement, $67.375 million in cash will be distributed to the settling states. This money will be used to compensate consumers who overpaid for CDs during the 1995-2000 period, as well as to pay settlement administration costs and attorneys' fees. Consumers who purchased CDs between 1995 and 2000 will be able to file claims for part of this fund. "


    File claims!?! After deducting the lawyers fees, what could possibly be left to claim? Imagine how many millions of consumers who bought millions of cds from 1995-2000!

    Ha! I'm better off cleaning out the garage and returning all those empty beer cans...
     
  8. Ken_McAlinden

    Ken_McAlinden MichiGort Staff

    Location:
    Livonia, MI
    Wahoo! Being as I was never a smoker and never got around to getting those breast implants, this is my first chance to really ride that class action gravy train, and I didn't even have to put my physical health on the line. Where's my big fat rebate?!

    Well, come on, I'm holding my breath, here!:sigh:

    Regards,
     
  9. lbangs

    lbangs Senior Member

    I hear ya! I'm not even sure I could find my red shirt I wore earlier this week...

    Maybe they'll just take our word on how many CDs we bought during that time period. :righton:



    Shalom, y'all!

    L. Bangs
     
  10. Todd Fredericks

    Todd Fredericks Senior Member

    Location:
    A New Yorker
    2.3 years from now, Ken gets his mail and notices a strange letter. It has references to the Music Industry. "Gee, is it a discount coupon for Steve's upcoming Beatles catalog release on vinyl & SACD?!" He goes into his home and fixes lunch. An hour later he remembers the envelope. He opens it and sees a very important legal letter written in a language that only lawyers can mangle. He scrolls down the jargon to the last sentence which seems to be in English, "Please accept the enclosed check as your legal compensation for the overcharging of the CD format from the years (of our Lord) 1995-2000 (1994 was excused for vacation)". Ken has a big smile on his face, "Finally, I got my rebate check!!!!" He reaches in the envelope and pulls out the light-blue paper. He unfolds it. The kettle whistles (he was making tea for the afternoon). He reads the amount and promptly faints. The light-blue paper gently floats to the floor. A small mouse named Chuck skips over to the light-blue paper (thinking it may be a thin piece of cheese). He reads the light-blue paper, "50 Cents!!!! What a bunch of cheap-skates!! Well, there goes the BMW!" Chuck promptly faints....:sigh: :sigh: :sigh:
     
  11. Matt

    Matt New Member Thread Starter

    Location:
    Illinois
    Remember the tobacco settlement? Most of it went to individual states, who then used the money for various projects/programs. I believe anti-smoking campaigns were court ordered, but I think states were able to use most of it at their own discretion, I'm not sure.

    Yeah, it's not going into your pockets, but understand 1) the logistics of paying it directly to the consumer are impossible. How do you keep track who bought how many CD's from 1995-2000, and from what distributor, from what label (indie or one of the settling majors), etc. 2) states getting the money will be less likely to raise taxes in the future. Impossible to say what tax raises aren't going to happen when they don't even exist yet, but it's something that'll benefit everyone.

    Just be happy that they're paying up. Maybe this will keep prices from inflating further, as well, so lots of good probably will come out of this.
     
  12. Mike

    Mike New Member

    Location:
    New Jersey
    Do you guys even know what this settlement was about?! The idea behind MAP was to prevent the Best Buys of the world from selling cd's below cost in order to keep the independent cd stores in business. Since MAP has ended hundreds of independent cd stores have closed. Is that a good thing?
     
  13. Mike

    Mike New Member

    Location:
    New Jersey
    Here's a summary that I pulled from another board. The person who wrote this is not an industry apologist by any stretch of the imagination.

    The MAP policy was a good one, in that it protected many of the smaller chains from being priced out of business by non-record companies such as Best Buy and Target. As a former buyer for a large wholesaler, I can assure you that there were all sorts of laws and agreements between us and our competition not to sell to our customers for less than a six percent mark-up. I believe it was Californa law, designed to protect small companies.

    When the large retailers, Best Buy and Target et al, mostly out of Minnesota, jumped in the record biz, they began putting records on sale at LESS THAN cost. Which, despite assurances that these retailers reached a different customer base than the people who shopped in traditional record stores, negatively affected record chains across the country. And so the record industry instituted the MAP policy--which was a signal to the big boys that if they were gonna use their stereo and refrigerator sales as leverage while they undercut their competitors at record stores, and put them out of business, well the record industry wasn't gonna help them by PAYING them to do it.

    But, it failed miserably and was found, incorrectly I believe, to be of questionable legality. And so Best Buy, Circuit City, and Fry's et al killed off hundreds of record stores, only to turn around and complain that they weren't making any money, and that unless the record labels, beyond merely paying for advertising, also helped them out by PAYING FOR POSITIONING in their stores, they wouldn't be able to carry records anymore, as the standard mark-up on music just wasn't enough to warrant their floor space.

    So now, as a result, in part, of the death of MAP, the record industry has far less and far less convenient retail outlets, featuring reduced selection, but with lower prices on sale items. It follows from there that many of the recently deceased labels, distributors, and one-stops were infected by Best Buy disease, long before Napster disease finished them off. Most people aren't happy with the trade-off.
     
  14. Mike V

    Mike V New Member

    Location:
    Connecticut
    Very interesting post. And poignant since one of the great indies of old in my area just shut it's doors with no notice :(
     
  15. Ken_McAlinden

    Ken_McAlinden MichiGort Staff

    Location:
    Livonia, MI
    Most of the indies that are still plugging away around here are heavily into the used CD & DVD market as well. I'm sure that is where they are turning their profit in addition to carrying more varied inventory than the Best Buys of the world and having the "Hold the pickles hold the lettuce special orders don't upset us" approach to customer service. :)

    Regards,
     
  16. Paul L.

    Paul L. New Member

    Location:
    Earth
    I got some kind of settlement once on a big class action suit. I forget the exact amount, but my cut was roughly $1.25.

    But in the detailed legal papers on the settlement, it showed that the lawyers got many many millions of dollars.

    That is *always* the way it is.

    And how can anyone expect things to change when just about everyone in Congress is a lawyer himself, and just about every judge is a lawyer and a politician as well.
     
  17. Matt

    Matt New Member Thread Starter

    Location:
    Illinois
    When I said "lots of good," I was referring to the boost it would give to state governments; at least in Illinois, there's been a bit of a budget problem.

    As for keeping independent stores in business, it's very unfortunate they've gone out of business, but I don't think MAP was a great plan to keep them in business. Price-fixing has a strong tendancy to inflate prices in the long run.
     
  18. Mike V

    Mike V New Member

    Location:
    Connecticut
    And multi-million dollar lawsuits don't?? That money will come out of our pockets. And it will be squandered on pet projects throughout the states that benefit. What a waste.

    Ultimately, this suit hurts the consumer, whether or not the parties were operating outside the law.
     
  19. Mike

    Mike New Member

    Location:
    New Jersey
    Matt - I wasn't responding directly to your post. I just wanted to clarify the situation a little bit. It seems that people are misinterpreting this as the record companies getting caught ripping people off or some such thing. While that is usually the case (wink) at least they were trying to do some good here by keeping more stores in business, which of course is good for them in the long run. Whether or not MAP was a good thing is open to debate.
     
  20. Mike

    Mike New Member

    Location:
    New Jersey
    As far as states getting money, as a former government employee, I say take all of their money away! They only squander it on wasteful stupidity. I believe it was sociologist Max Weber who said, "A bureaucracies primary mission is to perpetuate itself." This is what I witnessed during my time in the government. Forget all about the mission statement, keep your job at all costs, even if your job is staring out the window from 9-5.
     
  21. Matt

    Matt New Member Thread Starter

    Location:
    Illinois
    I understand, Mike from NJ; it's good to clarify things a bit. As for government waste, yeah, it will always be a problem, but this past year, a lot of money was slashed from education in Illinois. With all the problems Chicago schools have had to deal with in recent years, this certainly did not help matters. May not all go to good use, but you take what you can get.

    Mike from CT, yeah, legal costs have to come from somewhere, but in the long run, price-fixing is more harmful. I think if they found a better solution to sustaining competition among big chains and independent stores, the lawsuits could have been avoided, but unfortunately, that has happened.
     
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