Free money from the record companies...
Category: News Commentary...
Posted Wednesday, February 05, 2003 at 10:19 AM [GMT-6]

Until today, I was unaware of the class action settlement against some of the world's largest recording companies, including Capitol Records, Sony Music Entertainment, Warner Bros. Records and Atlantic Recording Corp, plus a few national retail chains, including Tower Records and Musicland Stores.

The plaintiffs in the case - referred to as the "Compact Disc Minimum Advertised Price Antitrust Litigation" - were the attorneys general of 43 states and US territories, and they successfully alleged that the recording companies conspired to illegally raise the prices of recorded music - CDs, albums and cassettes - by implementing "Minimum Advertised Price policies." Apparently, if a retailer wished to discount the price of a CD below that "Minimum Advertised Price," it risked the loss of promotional payments, amounting in the aggregate to millions of dollars.

The interesting part of the settlement is that the members of the settlement class are entitled to a cash refund of up to $20.00 each. The really interesting part is who makes up the settlement class: anyone who purchased a CD, album or cassette from any retailer during the period January 1, 1995, through December 22, 2000. According to the Wall Street Journal report I just read, more than 4.1 billion albums were sold during that period (source: Nielsen SoundScan).

So, if you purchased offline music between 1995 (heyday of Hootie & The Blowfish and Boyz II Men) and 2000 (can you say "Santana"?), all you have to do is file a claim on or before March 3, 2003, and wait for the dough to roll in. You don't even need a receipt.

Maybe. See, the deal is limited in scope (up to $67 mil and change), and the more people who file, the lower the payout per person. There's also a clause in the settlement that says if the per capita payout drops below $5.00, nobody gets anything... individually. Bummer, you say; like, where's the justice in that, man?

Well, here's where this is actually a win-win situation. If not enough people file claims, and you do, then you could get enough cash to buy another 1.2 CDs (although I'd advise you to spend it on a movie DVD, or maybe multiple triple espressos, given the sorry state of current music...but that's a whole 'nother post.) OTOH, if too many people file a claim, you get nothing yourself, BUT...the aforementioned cash will be distributed to "not-for-profit, charitable, governmental or public entities to be used for music-related purposes or programs." (That's in addition to $75.7 million of music CDs to be distributed to those groups regardless of the cash payout. See next paragraph for details.)

So, here's my recommendation. If you did buy music during the stated period (no cheating, now), file a claim. The worst that could happen is that you help some presumably worthy group get some money. And there's no point in worrying how those groups will be selected or whether they are righteous or not, because they've yet to be selected. As to the music to be donated, according to the WSJ article the CDs to be donated have already been picked and "Record companies were given strict guidelines about acceptable titles -- lots of jazz, classical and pop records, and absolutely no albums stickered for obscene language."

The downside - and it is extreme - is that some otherwise deserving school is going to get a boatload of Mariah Carey CDs, along with something like "Slim Whitman Yodels Beethoven." Ouch.