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Can you be more specific about the nature of the distortion? Is the distortion the same on all LPs? Are you sure you have overhang and VTA/SRA set accurately? The Benz has a narrow profile stylus, so set-up is especially critical. Is VTF set in the recommended range?
According to the manufacturer's spec, 47 ohm loading is too low for this cart - it wants to see something more than 240 ohms. If you meant 47Kohm, that's too high, and will make the cart sound bright.
.8mv is still pretty low, that's not the problem. Also, I would use the 100 ohm setting not the 47,000 ohm. The Benz M series is at 24ohms the JC3 only has 2 settings for MC and the 47,000 ohm setting is too high for that cartridge. Also, the JC3 has a AC polarity switch that you can use to eliminate ground hum.
Yes, I meant 47k. I haven't checked the tracking force in a while. The OL arm is a pain in the neck to adjust! But, it needs to be done. I noticed it on particularly bright albums, i.e. Vince G Charlie Brown Christmas. Not an audiophile pressing so highs are not rolled. The distortion is in the form of static on leading edge of highs and lows. Wasn't listening particularly loud either. I have it through my NAD M2 balanced input now (m2 arrived this morning). seems to have gone away but still sounds pretty bright/thin. The gain options are 100ohm mc, 47k ohm mc, and 47k ohm mm on the JC3. But now with the Nad I can knock down the incoming signal but prefer not to because the trade off there is loud hum. Too many system changes all at once !