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The CD Price-Fixing Settlement Explained |
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or |
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How Oligopolies Invest |
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by Baratunde Thurston |
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Comedian / Writer / Tech-Geek |
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www.baratunde.com |
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Have you received
an email or read a news story claiming you can get $20 back from the music
industry? Well, it's true, but it’s not a good idea for everyone to do it.
Here's why |
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Notes & Sources in Bold Italic |
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Number of Unique CD buyers 1995-2000 |
100,000,000 |
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estimated roughly as 1 in 3 americans during the period
in question |
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Cash Distribution |
$67,375,000 |
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as agreed to by defendants |
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Non-Cash Distribution |
$75,700,000 |
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as agreed to by defendants. Will donate CDs to schools,
libraries, etc |
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Lawyer and Admin fees ($) |
$23,375,000
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Lawyer fees (%) |
35% |
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based on AP story assuming $44M actually remains |
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Remaining Cash to Payout |
$44,000,000 |
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what consumers actually get, according to AP story |
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Min Payout per Claimant |
$5.00 |
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Max Payout per Claimant |
$20.00 |
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as agreed to by defendants |
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Max number of Claimants |
8,800,000 |
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| % of total potential claimants |
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9% |
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asumming minimum payout |
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Theoretical Optimal # Claimants |
2,200,000 |
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% of total
potential claimants |
2% |
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asumming max payout |
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Current # Claimants (WSJ 5 Feb 2003) |
1,800,000 |
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Amt each receives |
$20.00 |
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Total Payout to
Individuals |
$36,000,000
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Amount distributed to
not-for-profit, charitable, governmental or public entities to be used for
music-related purposes or programs for the benefit of consumers who purchased
Music Products |
$8,000,000 |
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Where the rest of the money goes, according to the
agreement |
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THE REAL DEAL |
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Amount Fed Trade Commision
accuses industry of overpricing during period in question (WSJ 5 Feb 2003) |
$480,000,000 |
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Sum of Cash and Non-Cash
Industry Payments |
$143,075,000
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Return ($) |
$336,925,000
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Return (%) |
235% |
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Conclusion: Not a bad investment!!! |
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And they didn’t even have to front the cash.
They put up the money after earning it back. I wanna do that! |
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Can Bush make that part of his economic
package? An RIA or "Retroactive Investment Account"?? |
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More information |
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www.musiccdsettlement.com |
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