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.