Few Takers for CD Settlement Cash
By Associated Press
Story location: http://www.wired.com/news/digiwood/0,1412,57111,00.html
09:15 AM Jan. 07, 2003 PT
OLYMPIA, Washington -- Suppose someone was handing out $20 bills and
almost nobody wanted one? That's roughly what's happening with a
massive price-fixing settlement involving states and compact disc
companies.
The deal calls for payments of as much as $20 for customers who bought
CDs between 1995 and 2000. But so far, only a few people have signed
up, and officials fear the money will go begging.
In September, the five top U.S. distributors of compact discs and three
large music retailers agreed to pay $143 million in cash and CDs to
settle allegations they cheated consumers by fixing prices.
The lawsuit alleged that the companies upset with low prices charged by
some stores conspired with retailers to set music prices at a minimum
level, effectively raising the retail prices consumers paid for CDs.
Part of the settlement about $44 million in cash is earmarked to pay
customers from $5 to $20, depending on how many people wind up dividing
the money.
By the end of December, only about 30,000 people nationwide had applied
for a piece of the pie, a tiny fraction of the number the settlement
could handle.
"The response thus far has been fairly abysmal," said Washington
Attorney General Christine Gregoire, who's been on morning radio shows
to promote the settlement.
Gregoire was among the attorneys general of 41 states and commonwealths
who accused record companies of conspiring with music distributors to
boost the prices of CDs between 1995 and 2000.
The companies settled rather than wage a costly legal battle.
The settlement's website has been up for a month, and legal notices
have been published in TV Guide, Parade and other national magazines,
but the response rate has been very low, said Tina Kondo, a senior
assistant attorney general in Gregoire's office.
"I guess people don't like to read legal notices," Kondo said.
Gregoire and other officials hope a radio advertising campaign set to
launch soon will boost interest in the settlement.
Anyone who bought a CD, cassette tape or vinyl record at a retail store
between 1995 and 2000 is eligible. The application window closes March
3.
You don't even need a receipt to prove you bought CDs by Hole,
Metallica or Shania Twain in 1998. Just click to the settlement's
website, answer three questions and fill in your name and address. But
don't try to recoup the entire cost of your music collection: Only one
claim per customer is permitted.
While 41 states took on the music companies, consumers in all 50 states
are eligible for the cash.
There is one catch. If more than about 8.8 million people apply, in
which case the per-person share would drop below $5, the customer part
of the settlement will be canceled. Sending out such small checks is
just too expensive.
Instead, the money will go to public entities and nonprofit
organizations in each state to promote music programs. The settlement
already calls for those organizations to receive 5.5 million CDs valued
at $75.7 million.
The music distributors participating in the deal are Bertelsmann Music
Group, EMI Music Distribution, Warner-Elektra-Atlantic, Sony Music
Entertainment and Universal Music Group. Also included in the deal were
three national retail chains: Trans World Entertainment, Tower Records
and Musicland Stores.
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