Used CD stores cause sour notes

July 09, 1992|By Los Angeles Daily News

As the economy tightens and consumers feel the pinch, used compact discs have become a valuable commodity for sellers and buyers alike. For music fans looking to increase their collections, used CDs offer a way to build a collection at half to two-thirds the cost of buying new CDs; for others, they have found a new type of currency, exchangeable for cash or credit at music stores that had thrived on vinyl.

In the wake of the CD explosion, specialty shops are popping up all over, offering opened new releases or promotional copies for around $5 less than sealed discs. Unlike records and tapes, which wear out after repeated playings and therefore see their value dwindle quickly, there is usually little difference in quality between new and used CDs.

Consumers generally are delighted, but record companies cite concerns about home taping and royalty payments, and hope the trend goes the way of vinyl. Judging by sales of used CDs and the proliferation of stores specializing in them, they're here to stay.

"It's alarming and a detriment to the music business overall," said Eddie Gilreath, vice president of sales at Geffen Records, which boasts a roster of Guns N' Roses. "To try and create a want and need for a product and see that product sold two or three times over again undermines our industry. The perception of a product's value is totally destroyed. Luckily, it hasn't spread throughout the country."

Most stores sell previously owned CDs for between $6 and $9. The stores generally give around $5 credit for popular used releases that cost up to $14 new. Cash is given at a rate of 25 percent less than the trade-for-credit amount.

Record companies complain the resale of CDs cuts into their profits and robs artists of royalties.

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