City Lights Records Manager Ken Kubala compares it to General Motors trying to abolish the used-car business. Blue Train Compact Disc employee Jay Williams likened it to furniture companies combing neighborhoods for yard sales and asking for royalties.
The it is the current controversy over the selling of used compact discs. Although mom-and-pop record stores such as Arboria Books and Records, 151 S. Allen St., and City Lights Records, 316 E. College Ave., have been selling used CDs (and used records and tapes) for years, label executives just started fussing about them.
According to Billboard magazine's March 20 issue, at the annual National Association of Recording Merchandisers convention, distributors such as Sony Music Distribution, Time Warner Inc.'s WEA and Thorn-EMI's CEMA threatened sanctions against stores selling used CDs.
By midsummer, MCA Music's UNI had joined the fold.
The Washington Post then reported that the major distributors have refused to pay for co-op advertising to any store selling used CDs. Co-op advertising includes any radio and print advertisements, circulars, in-store play, "no-risk" discs and other promotional tools.
Labels and distributors believe the used-CD industry would reduce purchases of new CDs. Also, artists do not receive royalities from resold albums.
The industry's bloodletting heated up when Garth Brooks sprang into the ring. Brooks spoke up in favor of the labels' action, announcing that Liberty Records, the company that distributes his albums, wouldn't ship his upcoming album In Pieces to any record store selling used CDs.
That would have included City Lights -- the store has five used Brooks CDs on sale. Brooks later retracted his threat.
Local record stores have been defiant throughout the controversy. City Lights, Arboria and Blue Train Compact Disc, 418 E. College Ave., all continue to sell and buy back used CDs. Record store employees said the distributors' action doesn't really affect them because they use minimal co-op advertising and don't order albums directly from the labels.
"I think the labels are shooting themselves in the foot," Kubala said. "If (customers) don't know a product is out, they won't buy it."
Kubala compares this latest controversy to the debate over blank tapes in the early '80s and parallel imports -- the buying of imported albums that are out of print in the United States although U.S. companies still own the albums' rights -- in the mid-'80s.
"Before pointing the finger, the record companies should look more internally than externally," Kubala said, adding that the sale of used CDs makes up 1 percent of the record industry, a reportedly $9 billion business.
Because of the recession and the increasing suggested retail price of new CDs (new ones like Janet Jackson's latest sell for $16.98), the market for used CDs is expanding in State College and elsewhere.
"Almost everyday, people would walk in ask, 'Do you sell used CDs?'. We'd say 'no' and they'd walk out," said Blue Train owner Bruce Shamma. Blue Train just started selling and buying back used CDs this summer.
Kubala said the uproar began because major chains like the California-based Wherehouse Records started selling used CDs.
Bruce Jesse, vice president of marketing at Wherehouse Entertainment, said the chain gradually implemented used CD sales since last November and currently sells used CDs in 300 of its 339 stores.
Jesse said he is just fullfilling customer need.
"Someone wrote we're biting the hand that feeds us -- the hand that feeds us is the hand that reaches in its pocket and takes out $10," Jesse said.
In response to the labels' actions, Wherehouse has filed a lawsuit against CEMA, Sony Music, UNI and WEA in the Central District of California. The suit claims the labels "conspired to unreasonably restrain trade and commerce in used CDs" and "discriminate in the granting of advertising or promotional allowances," which threatens to "eliminate and restrict competition among retailers."
"We can't stand by and let them punish us . . . we can't bury the law," Jesse said. "Every used CD was a new CD once. When a used CD is sold, the CD was already compensated . . . If anyone can be accused of being greedy, it's the record companies."
Jesse is not the only one who feels this way. Over 100 small independent store owners have formed the New Jersey-based Independent Retailers Music Association. The L.A. Times reported in its June 29 issue that the group was cutting back on pre-orders and any promotion of new artists affiliated with Sony, CEMA, MCA and WEA. The group's goal is to recruit half of the nation's 4,000 indendent record stores as members.
Jesse said IRMA has filed a class-action suit against the four distributors as well.
Independent record labels are also joining the fight for used CDs. Cruz Records, a subsidiary of the legendary SST Records, has recently started a grass-roots movement, the "Getting Even Co-op Advertisement Campaign." The campaign gives co-op advertising funds on specific titles to retailers regardless of whether they sell used CDs.
In September, Grass Records will release the Buy This Used CD compiliation featuring Sebadoh, Truman's Water and Uncle Tupelo. The CD will be priced at $5.98 retail and be available to record retailers on a "buy-three-get-one-free" basis. This allows stores to sell it in either the used or new racks.
Gerard Cosloy, founder of Matador Records, said indie labels have always supported record stores selling used CDs.
"I'm not dumb enough to think I can stop someone from selling used CDs," Cosloy said. "I like used CDs," he said, adding that much of what he's learned about music is a result of used CDs.
Despite the support of indie labels and small chain stores, Nina Klein, manager of National Record Mart, 226E. College Ave., said the store has considered going into the used-CD business but decided to comply with the major labels' wishes. The store does sell used "no-risk" discs with label approval, but Klein said the labels' sanctions would hurt.
"We use a lot of co-op advertising," Klein said. "That was an issue."
While used CDs may be a riskier business for larger chain stores such as National Record Mart and Wherehouse, most doubt the major distributors -- WEA, Sony and MCA declined to comment for this article, and Thorn EMI could not be reached -- could prevent stores from selling used CDs.
