Posted on 10/01/2002 1:49:02 PM PDT by weegee
Attorneys general in 41 states and three U.S. commonwealths yesterday (Sept. 30) announced a $143 million settlement of price-fixing charges against the five major U.S. distributors and retailers Trans World Entertainment, Tower Records, and Musicland Stores, Billboard Bulletin reports.
In an anti-trust lawsuit filed in August 2000 in federal court, the states charged that the companies from 1995-2000 had conspired to inflate the price of CDs, costing consumers millions of dollars. The suit claimed that the majors and retailers illegally used minimum advertised pricing (MAP) policies to raise CD prices; this resulted in a reduction of discounting and competition among music retailers, the suit says.
In the settlement agreement, the distributors admit no wrongdoing. Universal Music & Video Distribution (UMVD), BMG Distribution, WEA, and EMI Distribution (EMD) issued statements saying they believe MAP policies were legal but that protracted litigation would be prohibitively expensive. Tower and Trans World also contend their innocence but say they too wished to avoid costly litigation. Sony Music Distribution and Musicland had no comment.
Under the settlement, $67.38 million in cash will be distributed to the settling states. This 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. In addition, 5.5 million CDs, valued at $75.7 million, will be distributed to public entities and nonprofit organizations in each state to benefit consumers and promote music programs. According to the agreement, the companies will pay artist royalties on the CDs.
Insiders say UMVD's cash payout will be approximately $18.8 million, followed by $13.65 million for WEA, $12.7 million for BMG, $12.5 million for Sony, and $6.5 million for EMD. The retailer defendants together are to pay just over $3 million.
The Federal Trade Commission (FTC) brought a separate action against the distributor defendants that was resolved in May 2000 with decrees requiring the parties to cease using MAP policies. The FTC did not obtain monetary relief and did not address price-fixing among retailers.
-- Bill Holland, Washington, D.C.
Chump change. Five years of price fixing, and they figure that's worth $143 million?
Some lawyer with 2 Wayne Newtons and a Barbara Streisand CD will get a few million though.
We live in a weird country.
"In other news, the Recording Industry Association of America announced today that its estimates project that the cost of CDs and other recorded music are due to rise this holiday season. Although considered bleak news for consumers, the Association estimates it should increase industry revenues for the last quarter of 2002 by about $150 Billion."
And they used inflated prices to come to this amount. An outrage!
I think that one of the smoking guns was cassette pricing. Cassettes have been phased out; won't have that problem again.
DVD sales are great because the prices are lower than CDs. If the entertainment industry wants to improve sales figures, they should get the hint.
For the last few years, CD's have been cheaper to produce than cassettes but they continued to incorporate a surcharge that was originally justified by them due to the higher costs of producing a CD.
Should have bought Napster, dumbasses. Should have bought Napster. Now there's no return, and no money for you.
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Nobody forced consumers to buy them. People think unnecessary items should be put on shelves at prices they arbitrarily wan to pay. Nobody owes me or anybody else CDs.
MadisonA: I don't even buy cd's anymore unless it's really something good. CD's prices are outrageous. I would rather spend my money on DVD's. Anything songs I want I download for free off the net.
Boy, I couldn't have said it better myself. WinMX rules!
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