2 weeks Ago By [email protected] (David Bixenspan)
If you were born around 30 or more years ago and grew up in the era of physical media, you're used to being able ability to buy, own, and sell books, movies, music albums, and video games freely as long as you have a physical copy. In the realm of digital distribution, ownership is more precarious, because you're inevitably agreeing to End-User License Agreements saying that you've only purchased a license to the title in question, not a resellable item. However, if you can buy a title in a store and hold it in your hand, then you can do whatever you want with that individual copy.
Nowadays, vinyl records are having a renaissance as CDs slip into obscurity. In the early 1990s, the opposite was true, however. Vinyl records were seen as a dead medium replaced by the theoretically superior and more durable audio CDs, which were priced at a premium despite their low manufacturing cost.
There was an unexpected byproduct of this signature durability, though: It made the secondhand market incredibly lucrative. Between this and record companies forcing retailers' hands by ending acceptance of opened CDs as returns, the used CD market exploded. Despite this being fully legal, the record labels — and musician Garth Brooks in particular — became vocal opponents of the practice, fueling a brief war over used CDs.
Read on to learn exactly how it turned out. To explain why CDs were seen as far superior to vinyl when they took over recorded music sales, you need to understand that poor-quality turntables were incredibly common. Just as cheap turntables that might even damage vinyl are the cheapest options now (like "suitcase" systems from Crosley and Victrola ), they were ubiquitous back in the day, to the point that many children started on the likes of a durable but poor quality Fisher Price turntable.
With little to no control of the tracking force exerted on the record, they tend to dig into the grooves instead of gliding over them, resulting in damage like the visible rings caused by the Rokblok turntable-less record player seen on ABC's "Shark Tank." All of this is to say that, to the average person who didn't invest in a quality playback system, it was easy to see judge the vinyl record itself as having poor sound quality. A December 1991 Billboard article noted, "Since CDs, unlike vinyl records, are not easily damaged, consumers can buy a used disc with the confidence that it is as good as new.
" Given these factors, and the fact that CDs were hyped with the slogan "perfect sound forever," it's easy to see how the compact disc became the music format that retailers and consumers alike saw as preferable for a secondhand market. As the 1990s ticked by, more retailers began to offer used CDs. One catalyst for this was that, in March 1991, Sony Music announced it would no longer accept retailer returns on opened CDs.
Many music stores would not only accept returns on opened CDs, but also open in-stock CDs so customers could try them out at listening stations. Once Sony would no longer accept returns on those CDs, it only made sense for stores to sell them as used at a reduced price, which, in turn, led to a willingness to buy used CDs from customers. By the end of 1992, chain music stores had gotten in on the used CD business, and the recording industry was not happy.
PGD president Jim Caparro told Billboard that the move into used CDs was "repulsive," while WEA president Henry Droz said it was "not positive," and Sony Music Distribution president Paul Smith conceded that, though he didn't support the used market, "there is not much we can do about it." (Smith was referring to how the First Sale Doctrine under U.S.
law made the practice wholly legal.) Come 1993, it was a bigger issue, as record companies started to threaten stores selling used CDs with "sanctions" such as removing their ability to buy directly from the labels and not promoting "offending" chains. The retailers, naturally, tried to push back on this.
In June of 1993, Wherehouse, the largest chain offering used CDs, with 350 stores in 10 states, started promoting used CD sales in its advertising campaigns. Come July, Wherehouse sued the big four record labels in federal court, accusing them of unfair trade practices for pulling "co-op" advertising support from music retailers that were selling used CDs. "'The public has the right to sell their compact discs, and we have the right to buy them," Scott Young, Wherehouse Entertainment's CEO, told the UPI wire service .
"The music distributors violate our rights and those of our customers by penalizing us for entering the used CD business. Our decision to enter the used CD business is our way of giving the public what they want. We believe offering lower-priced, used compact discs helps stimulate additional sales of all CDs — both new and used.
" It was a big enough national news story that "NBC Nightly News" even covered the dispute with a two-minute segment on Aug. 3, 1993. The labels seemingly got the message, backing down on their pledge to pull advertising support from used CD vendors weeks after Wherehouse filed its lawsuit.
Public sentiment was clearly on the retailers' side, and the federal government was watching, too, with the FTC attempting to determine if new CDs were priced too high. By and large, in the public fight against used CDs, it was the record labels and distributors that stood on the front lines, not the artists. But as the war heated up in the summer of 1993, one musician spoke out on behalf of the labels: country star Garth Brooks.
In what may or may not be a coincidence, Brooks "The Chase," an album that he released less than a year earlier, was the first mass-market CD to carry a list price of $16.98. Brooks issued an ultimatum, expressing his intent to withhold his albums from stores selling used CDs.
He argued that they unfairly deprived the artists and labels of royalties. "I've just done a huge deal with my label and I need to do all I can do to make it a profit, and used CDs aren't going to do my label s***," Brooks told Billboard , adding that he was "disappointed" in retailers selling used CDs. Publicity-wise, this didn't work out.
For example, barbecuing the remaining stock of Brooks' CDs at Portland, Oregon's Music Millennium resulted in a movement. Used book sales have been around forever, and used video games were becoming increasingly common. Videotape rental was massive too, so the objection to used CDs may seem a little more displaced.
The fact that labels like Sony openly admitted that the practice of buying and selling used CDs was entirely legal certainly didn't help public perception for the recording industry's side. The labels' pledge to withhold advertising support from used CDs also backfired , as the resulting Wherehouse lawsuit just brought more publicity that favored the retailers. After all, it's not a good look to retaliate against something you've conceded is legal.
Eventually, middleman CEMA Distribution announced a series of common-sense policies it wanted stores to agree to that should have been the end goal in the first place. To receive advertising support, stores couldn't sell CDs clearly marked as promo copies or used CDs where the title was still being supported by co-op advertising, and they had to clearly mark used CDs in-store while avoiding mixing new and used CDs in their ad campaigns..
