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http://www.insanely-great.com/news.php?id=1037
States settle CD price-fixing case
By ron carlson, Insanely Great Mac
October 1st 2002
Record companies getting off easy in out-of-court settlement
USA Today reports that the five largest music companies and three of the US's largest
music retailers agreed Monday to pay $67.4 million and distribute $75.7 million in CDs
to public and non-profit groups to settle a lawsuit led by New York and Florida over
alleged price-fixing in the late 1990s.
In total, the record companies and their minions will pay only $143.1 million to
settle a suit in which they were accused of overcharging consumers more than $480
million since 1997. This "settlement" figure of course assumes that the $75.7 million
of CDs they will distribute actually cost them face value, which is highly dubious.
The two states, who were joined in the lawsuit by 39 other states, said that the
industry kept consumer CD prices artificially high between 1995 and 2000 with a
practice known as minimum-advertised pricing (MAP).
According to USA Today, the companies claimed MAP was needed to protect independent
music retailers from rising competition from discount chains -- i.e. Wal-Mart, Circuit
City and Best Buy -- which slashed CD prices, often below cost, in the hope that once
consumers were in their stores they would buy other, more expensive products.
The settlement will go to all 50 states, based on population.
Editor's note: Who do you root for in a case like this? The scum-bag record companies
or the equally slimy national discount chains? The big loosers in this case will
likely be consumers -- have CD prices actually come down?
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