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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony,
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To: Anthony@Pacific who wrote (57223)6/9/2000 1:14:00 PM
From: chris431  Read Replies (2) of 122088
 
Wow! The announcement of the settlement is very bad news for MPPP. One of the more attractive aspects of MPPP was it's large cash position that would have allowed it to stay alive during the evolving expansion on digitally distributed music. The recent announcement suggests that MPPP will no longer have this security of waiting this out. An alleged settlement of $75-100 million nearly takes 1/3 of MPPP's cash position and hands it to 2 of the powerful labels.

MPPP now has 3 labels left to deal with. It seems clear that they will demand stiffer terms & a higher cash settlement. Assuming that $35 million a piece was not enough, we may assume that either MPPP will be going to court, once again creating uncertainty, or that MPPP will be shelling out over $105 million to these 3 labels. The terms of these agreements is evidenced by news coming out that suggests a settlement with another label will include terms that will prevent MPPP from charging for a subscription service to that labels music. This leaves MPPP with a little over $100 million in cash.

MPPP also has the independent labels to deal with. While one can argue their take will be much smaller, the independent labels could thrive in the court room. This gives the independent labels a great deal of leverage over MPPP. Attorney's fees alone in negotiation with many independent labels will run in the millions.

After all is said & done, MPPP will have less than $100 million in cash and a business model that simply will not create profits by the time they run out of cash. Their my.mp3 service will now cost MPPP more money than it will likely bring in. Few individuals will pay to download MP3's that they could otherwise make themselves.

With little cash, increased net losses as a result of litigation & negotiation expenses, & an even more expensive cost structure, MPPP is in the worst position it has been in.
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