Price-Fixing Settlement Checks in the Mail

toastyman writes "Remember the Music Industry $67m settlement from way back in 2002? Seven months later than planned, your $13.86 check is finally on its way. In addition to the cash settlement, the defendants in the suit are also giving 5.6 million CD's to educational programs."

Wonderful!

This is pretty great, but weren't the checks supposed to be a bit larger, closer to 20 (US) dollars?

Not that I'm complaining, since it's great we finally get to stick it to those thieving bastards. My brothers and sisters all should be getting checks too, as well as my father. I for one am going to put the money towards a new hard drive to store all the music I download. :-P *

Re:YIPPY

Really? Every CD at my local Best Buy in the Twin Cities is $13 - $18, apart from a handful of "bargain" titles. At record stores, it's even worse.

As far as I've seen, CD prices are exactly where they were a year ago, if not slightly higher. Anybody who thought this lawsuit would accomplish anything other than making a few scumwad lawyers rich was a naive fool.

This is why I never participate in class-action lawsuits unless I was actually wronged in some way. Accepting my money for an overpriced item I choose to buy of my own free will is not something I should be able to sue you for.

Re:YIPPY

Actually, a quick google search does seem to show that it was just Universal that unilaterally slashed its MSRPs for all of the labels it owns, mostly to $12.98 instead of $18.98. I don't know if any of the other labels made across the board cuts, but I've noticed that a lot of CDs are selling closer to $13 than to $18 lately.

Of course, I usually buy new music from iTMS if at all, so I don't spend all that much time comparing CD prices. Anything I want is $.99 per song.

Re:YIPPY

Universal is also the studio who put copy protection on their discs, and announced that all such discs were returnable.

Re:YIPPY

And, taking inflation into account, that's cheaper than a US$9 LP is 1980 dollars.

In 1989 when I started buying CDs, they were about US$13 to US$18. So, after inflation, they have gotten cheaper.

On top of that, most LPs in the 70s and 80s were 35 to 40 minutes; the average CD I'd reckon on 50 to 70 minutes. So, again, you're getting more music for your money these days.

Re:YIPPY

"Anybody who thought this lawsuit would accomplish anything other than making a few scumwad lawyers rich was a naive fool."

On the contrary, it was extremely successful -- people just don't understand why the suit came about, and what it meant.

Due to the success of the suit, the record companies are no longer allowed to set MAPs, and Wal-Mart and Best Buy are now free again to run ads for CDs at loss-leading prices. It wasn't about what price that stores were able to sell at, but about what prices they could advertise. The record companies set MAPs to protect smaller retailers. It all transpired a couple of years ago and the checks are just now being mailed.

The biggest effect of this action is that Wal-Mart and Best Buy will continue to dominate the retail market for CDs, because they can afford to sell CDs at margins that smaller stores simply cannot support to survive. This action is great news for the Wal-Marts and Best Buys of the world, and great news for consumers, as long as they buy from stores like Wal-Mart and Best Buy. It's not-so-good news for specialty retailers, ranging from the Tower Records chain (who were busted along with the record companies and have recently filed for bankruptcy), to the indie record stores. Wal-Mart can afford to sell a CD for $10.99 or $11.99 because they'll make the money back on the other stuff you'll buy while you're there. Your favorite local indie record store cannot.

Not to sound overly dramatic, but if your favorite local indie record store has gone out of business or is on the ropes, the results of this price-fixing lawsuit may have a lot to do with it. Enoy your $13.86, folks. See you at Wal-Mart.

Re:Wonderful!

Seven months later than planned, your $13.86 check is finally on its way

"I for one am going to put the money towards a new hard drive to store all the music I download. :-P"

Forget that. I think 13.86 is the exact price, with tax for 100 cd-rws at the fry's near my house.

You may think that 13.86 isn't a lot of money, but I'll make it back...

Re:Wonderful!

Pretty great?

What a slap on the wrist! No... It's not even a slap on the wrist. It's even cheaper than the money they spent greasing the wheels at Congress to solidify their tyranny to begin with. It's 30 million dollars cheaper than their annually budgeted legal department.

64.7 million dollars is less than 1 % of their yearly gross. Cheap price to pay to get away with price fixing for decades. THis price fixing has allowed them to make what, A billion extra dollars PER YEAR?

Re:Wonderful!

You're assuming everyone that joined the class actually bought a CD during that time. While statistically probably that the majority did, since no proof of purchase was required, we can safely assume there are at least a few people who hadn't bought anything but signed up for the free money.

Re:Wonderful!

You're assuming everyone that joined the class actually bought a CD during that time. While statistically probably that the majority did, since no proof of purchase was required, we can safely assume there are at least a few people who hadn't bought anything but signed up for the free money.

No need to assume. I'll end your questioning right now. :)

Re:Wonderful!

That mean, naughty music industry duped you into buying all those CDs - you had not the will power to say no.

What part of "price fixing" don't you understand?

This isn't some weird products liability case (e.g., you McDonald's analogy.) This is a case about the RIAA using its monopoly power over the CD market to set an arbitrarily high price of CDs. It's what happens in the absence of competition. (Another consequence is that the RIAA can abuse its customers and treat us all like scoundrels, without fear of us taking our business to a competitor.)

This crime was complete when the first CD was offered for sale at $20 - even before it was purchased. So your sarcasm is poorly aimed.

David Stein

Re:Wonderful!

Why isn't this a fine levied by the government?

I'd argue the RIAA does have to pay the government for their abuse of monopoly power....in the form of campaign contributions.

But what makes you think that you are entitled to anything?

We are entitled to a country in which corporations obey the laws applicable to them because of their monopoly status. If we have to sue corporations as citizens because our law enforcement turns a blind eye, so be it.

We should all

Give our HUGE check to the woman fighting the RIAA, that would be good :)

$i3.86?

Talk about a poke in the eye to the RIAA.

Refund!

Oh yay! With that $25 tax refund, I'll be stylin'!

Big bloody deal.

the defendants in the suit are also giving 5.6 million CD's to educational programs.

I bet these will be the first CDs to sport the New & Improved FBI Anti-Piracy Seal [slashdot.org]

Jokes aside, the story doesn't quote the exact number of people getting cheques ("More than three millions") so I'll err to averages that 3.5 millions people will get $13.86. That's $48,510,000. Who gets the other $18,490,000? The lawyers.

Another nit to pick is that they'll be giving out 5.6 million CDs. big deal, they can write that off in the accounting office. What they'll donate are discs that are sitting in warehouses because of poor sales. After all, a write off is better than dumping them in a landfill.

The recording industry isn't taking a bit hit on this by any stretch, the only ones to profit are the lawyers.

Re:Big bloody deal.

As long as you're looking a gift horse in the mouth, don't forget that you have to report the $13.86 check as income on your taxes next April!

No, since the award is compensation for damages you've already suffered, its even and no taxable event occured... Unless you wrote off the "damage" already in a previous tax year. (IANATA - I Am Not A Tax Accountant...)

Oh yeah, lawyers are Bush's second biggest $source

List by section: Lawyers/Law Firms $5,948,854 [opensecrets.org]

Pull your head out.

...giving 5.6 million CD's to educational programs

In addition to the cash settlement, the defendants in the suit are also giving 5.6 million CD's to educational programs."

Why not sell those 5.6 million cds and give the profit to educational programs instead?

Re:...giving 5.6 million CD's to educational progr

"Why not sell those 5.6 million cds and give the profit to educational programs instead?"

Because we're not the only ones who know their product is worthless.

Re:...giving 5.6 million CD's to educational progr

My inside sources say that those CDs are just a bunch of Soul Asylum and Living Colour records.

Re:...giving 5.6 million CD's to educational progr

Why not sell those 5.6 million cds and give the profit to educational programs instead?

For the same reason that Microsoft gives $xM worth of free software whenever possible to settle their lawsuits:

It's not a "real" penalty, it just looks like one to the rubes who don't realize that each physical software package/music CD costs practically nothing to produce, but is counted at its full retail value when given away.

Giving away profits as penalty for corporate wrongdoing? In George W. Bush's America? Ha!

~Philly

5.6 Mil CDs...

5.6 million CD's to music-education programs? Did the government specify what counted as educational? They could have just used this as an opportunity to send more "Don't be an evil pirate, YAAAR!" propaganda to the schools.

A public service announcement

"Yaaarrr.... well, I guess it started innocently enough. I thought I had power over me piracy, yarr I did, downloading a song heeeere, a dirge there. I still bought cd's, but I did so less and less. Eventually, yaaaar, it escalated to movies and the last games for me X-box. But it didn't stop there.

"Pretty soon I had me eyepatch and started swashbuckling. I spent all me bullion on spiced rum and me ship, a fine seafaring vessel she be. Yaarr, I thought I could stop, but now it's gone to far. Now I am stuck in an endless loop of pillage, sack and plunder, yaaarrr."

Remember kids, only pirates wear eyepatches. Don't be a pirate, YAAAR!

A whole $67million settlement?

Well, at least it's nice to know that as punishment for their sins, record industry executives will have to settle for regular leather instead of the Corinthian leather on their next Lexus purchase.

That's a lot of CDs

the defendants in the suit are also giving 5.6 million CD's to educational programs

Not to be outdone, AOL announced they will donate 56 million CDs to LFAA (landfills across America).

The same people...

... sue teenagers and grand parents for using Kazaa and/or exchanging music MP3s on P2P.

Then they are condemned for price fixing. Ain't life grand? The inmates are running the asylum, the foxes are guarding the hen house, and so on and so forth.

(Yes, I know that the RIAA is probably not involved in this settlement, but the RIAA bosses... er... members are the one who are condemned in this case)

Best way to spend $13.86

Buy CD-R's [provantage.com]

superfluous apostrophes bother me

The plural of CD needs no apostrophe.

What the heck?

They're donating millions of CD's for educational purposes?

I'd love to see what those albums are, and what their educational value truly is. Unless they're delivering symphony recordings and classical masterpieces for a music class, I can't see how that's an advantage for consumer me.

At least when MS donated OS licenses and things, one could argue that Windows machines can actually facilitate learning in all sorts of areas (let the MS flaming begin). This sounds like a cop out to me. Blah.

By the way..

These CDs? Yeah, they're each worth $5,000 USD.

I hate the way people can get away with giving away "content" at inflated prices. If they gave away $5.6M in MEDIA costs of CDs to educational entities, I'd feel like they were punished. This is like MS giving away a bunch of software.

I've written this many times before, but it's not a punishment/loss of revenue if there was never any money in the first place. If the CD's cost $.10 each for them to make (made that number up, but it seems reasonable), then it really cost them $560K. A large number, but not nearly as large s 5.6M. If they had to REFUND $5.6M back to educational groups that had purchased CDs, that would be the way to really punish them.

This is just like MS offering to give a bunch of money's worth of software to schools. It doesn't cost 'em anything to give stuff to a place that would have never bought it in the first place, since initial R&D is the cost, and that's constant. Distribution is a trivial cost at the end.

So...

I purchased well over 50 CDs in my lifetime. I get back $13? From my quick calculations I feel that I should be getting back about $300 instead.

I figure that CDs should be no more than $6.00/ea (before tax) so I should get back at least 50% of the money I spent.

Instead these idiots get off by shelling out $67 million plus free CDs to educational institutions so that they can have kids listen to their music? I hope that these CDs aren't ones they own... I want them to be TRULY taxed when they have to give away that money.

Re:So...

I purchased well over 50 CDs in my lifetime. I get back $13? From my quick calculations I feel that I should be getting back about $300 instead.

You're doing the math wrong. Here are the equations you should use; it's actually quite simple:

If you are a customer and (potentially) screw a record company by infringing a copyright, you owe $150,000 times the number of incidents.

If you are a record company and (actually) screw a customer by illegally overcharging, you owe the customer $13 times the number of incidents, then divided by the total by the number of incidents.

You left out the denominator.

Re:Yea!!!

amazingly enough CDs still are quite expensive and I don't see any true ramifications from this ruling (like forcing the CDs to cost what they should).

So we didn't 0wn0rz anyone.

Great!

Now the Music Industry is only suing me for:

$100,000.00
- $13.86
-----------
$99986.14

Yipee!

Nice, but...

I think a better settlement would have forced the recording industry to stop producing

Oh, wait, but if they actuallly had something resembling a worthwhile product, they probably never would have felt the need to engage in price-fixing. Silly me.

Maybe I'm wrong. But has any major label released anything halfway decent in the last ten years?

I want a check from the RIAA for the pain and suffering caused every time I've been within earshot of a Top 40 radio broadcast.

Demand Justice!

Priceless

Personally, I plan to take my $13.86 check and give the money to the EFF.

A complete rip-off

Do yourselves a favor and donate your refund to the Electronic Frontier Foundation [eff.org].

Personally, a check that small is a slap in the face. They did nothing to account for the number of CDs purchased during the time in question. I checked. I added well over 200 CDs to my collection during that time. Yet I get the same amount back as someone who bought just a few.

-S

But....

But will it do anything about the fixed prices (ie, make them lower)??

... for EDUCATIONAL???? programs?

So I guess this would explain the state of school systems and education in general.

"OK kids, for next week you need to write a 2 page report on the latest 'Britney' CD."

Pointless.

Get over yourself.

So I guess this would explain the state of school systems and education in general.

"OK kids, for next week you need to write a 2 page report on the latest 'Britney' CD."

You do know that the RIAA also sells classical music, audiobooks, educational children's songs, discs that teach you how to learn to speak a foreign language, and all sorts of other material than the latest pop music, right?

Maybe if your education and purchasing habits were broader and deeper, you'd know these things and appreciate that there actually is a wealth of material that the RIAA could donate to schools.

(Of course, I'll bet you that it's still a slap on the wrist because the value of the discs for purposes of the settlement is probably the value they sell them for instead of make them for, but I digress.)

Trust / law fund...

You know, $67M would go a long way towards a nice trust or law fund to help people fight these law suits. Not that they would not continue to sue to get "their" money back, but at least to put up a good fight.

A bunch of small donations to EFF maybe?

In a related story

In a related story, SCO has been forced to send checks for $699 each to every single Linux user.

Oops. it is not April 1. Sorry, "DarlDay" has not yet happened.

EFF, here I come!

So I have 13.86 coming in the mail. I wonder what I could do with that. I could buy a cd, but that's just like giving it back. I could see a movie, but that just gives the money back to the parent company of the RIAA agencies. I could buy a book I suppose, but even that lets the money trickle back into the regime.

I guess I will just donate it to the EFF, and hope that everyone does. It would be great if they made a few million straight from the record company - would really make the settlement sting more.

give it to an unsigned musician!

I know any money is helpful, but consider that the overwhelming majority of musicians are not signed and have no hope of securing a record deal. And that iTunes (if they can get signed on), only compensates them about 11% or so.

Here's a better idea. Look at all those musicians who let you download music legally and dash them an email, saying I want to give the money to you as a way of saying thanks for being so generous and talented.

To love the music, you must share the music. Sharethemusicday [geocities.com].

it's all about the lawyers....

the only ones who make money in these ridiculous suits are the lawyers.

Track how much the law firms involved keep in legal fees, and then you'll know in whose interest these cases are really brought.

Put your money where your mouth is

Donate your check to the EFF and help fight for those freedoms you keep complaining about being taken away. Just forward your check to:

Electronic Frontier Foundation
454 Shotwell
San Francisco, CA 94110

You can also make a donation at their website:
https://secure.eff.org/

A drop in the bucket...

...not to sound like michael moore, but this corporate crime thing really bothers me. this settlement adds up to a drop in the bucket for the recording companies. if corporations are allowed to be treated like individuals, so that no individual within the company is ever held responsible, then we should be able to punish corporations like individuals. legally control their business practises... freeze wages, firing, and take a percentage of their profits.

Re:Murphy's law

From questions [musiccdsettlement.com] section of the settlement site:

If you have a change of address after you submitted a claim, you need to provide your new mailing address to the Administrator at the address below. Additionally, it is recommended that you update your mailing address with the U.S. Postal Service.

Compact Disc MAP Litigation Administrator
PO Box 1650
Faribault, MN 55021-1650

better hurry!

'Price-Fixing Settlement'

How misleading.

You say the prices have been fixed, but the local Sam Goody still has eveything at $14 and up!

*sigh*

Of the CDs

There should be no apostrophe in CDs you insensitive clod!

so what does that fix?

the prices are still as high and higher than before the court found them guilty of price fixing.

Big fucking deal. I want to try small claims court

I bought about 200 CDs during the time when they were convicted for price fixing and over charging by up to $5 per CD. So, having been robbed of $1,000 in late 1990's dollars, I am offered $13.86 in 2004 dollars. Woo fucking hoo.

No, I did not sign up for the lawsuit as I correctly assumed it would be a waste of my time and they would probably just sell my personal info for a profit.

Now that they have been convicted, perhaps it would be a simple matter to sue and win in small claims court? Any lawyers out there?

Re:Big fucking deal. I want to try small claims co

"I bought about 200 CDs during the time when they were convicted for price fixing and over charging by up to $5 per CD. So, having been robbed of $1,000 in late 1990's dollars, I am offered $13.86 in 2004 dollars. Woo fucking hoo."

There's a lot of misunderstanding of what happened here. A lot of people think this has to do with the margin that the record companies charged channel-wide. Reading the original article does provide some of the details, but it doesn't cover everything. I posted the below as a response to another message but I think it bears repeating. The article covers the basics: also named were Tower Records, TWE and MusicLand. Why just those three?

Set the way-back machine to the early days of the 21st century...

1. The big box stores (Best Buy, Wal-Mart, etc.) started selling CDs at little or no profit as an incentive to bring customers into the store (where they'd presumably also buy a high-margin item at the same time).
2. Smaller vendors and specialty vendors -- Tower Records and the other chains eventually named in the charges -- as expected, freaked out and complained to the record companies.
3. The record companies starting using a mechanism (already common in many other industries) called MAPs, or Minimum Advertised Prices. Retailers who sold their wares had to agree to not advertise CDs below a certain price -- they could sell them for any price they want, but not advertise them. This was done to help protect the specialty retailers (again, read: Tower Records, etc.) who didn't have a metric buttload of high-margin CE devices in the back of the store and thus couldn't slash prices on CDs as a draw.
4. The big box retailers complained to the government.
5. The record companies stopped doing MAPs. Meanwhile, lots of other merchandise in your local Best Buy is sold with a MAP arrangement -- the difference is that nobody's complained to the government. Yet.
6. Specially retailers who can't compete on price continue to go out of business. For example, Tower Records has filed for bankruptcy.

Putting this in black-and-white terms for /. readers, in this case the "bad guys" were the record companies, as well as TWE, Tower Records, and MusicLand, who originally complained to the record companies regarding unfair competition from the big box retailers. The "good guys" are Best Buy, Wal-Mart, and the other large retailers who used CD sales as a little-or-no margin incentive to bring customers into the stores. I am generally not a fan of Wal-Mart and its business practices, but in this case, they've won one for the free market economy.

The price fixing affected what you paid if (a) you bought those 200 CDs Tower Records, MusicLand, etc. who kept their prices high in a (sometimes successful) effort to stay in business. If, like many other people, you shopped around for the lowest price, then it's less of an issue.

By the way, if a manufacturer sells an item into the distribution channel for a fixed price (for CDs, it tends to be around $8), if the retailer marks it up by 10%, 20% or even 100%, it does not affect how much the original manufacturer made when they sold it to the distributor. I'm not privy to the price that record companies sell in to Wal-Mart vs. specialty retailers, but the price difference between stores is often more about the store's profit margin, not the manufacturer. For the record companies, this was less about how much they made per CD, and more about protecting their retailers, so that they could ultimately sell more CDs.

What a great scam this was!

Not only didn't this cot the recording industry nearly as much as a real anti-trust suit would have cost, but now that they've managed to delay it for this long, I'd bet many of those checks will be returned to sender, as the people who should have gotten them have moved already. I did, and it's now long past when the post office will foreward mail.

So they skate again, by abusing our legal system. Yeah, I know, it wasn't a huge check, but as Geddy Lee said in "Take off to the Great White North,", "Hey, ten bucks is ten bucks, eh?"

Bah.

Re:geeks at work!

And lawyers! Three cheers for lawyers everyone - specifically, state attorney's in New York and Florida [state.ny.us] as well as the Federal Trade Commission [ftc.gov].

Geeks and Attorneys! Together, we're unstoppable.

Get a RIAA Education

Your math is off chief, $13.86/100 = $.1386 or to round up, 14 cents... so you paid 16.86 for 100 of those $17 cds.

Re:geeks at work!

13 bucks is the people winning? That's like saying 2 days in prison for rape and murder is the victim getting justice.

There were NO geeks at work here. Just a bunch of lawyers, who got what they came for. 13 dollars is what you got if you bought 5 CDs or 5000. That's winning?

Please, do the minimum amount of research before you post. This is not your blog.