Topic: New Laws Threaten Used CD Market

From Billboard

May 01, 2007

New legislation aimed at curbing the sale of stolen goods could threaten the growing used CD marketplace in a number of states.

The National Assn. of Recording Merchandisers outside counsel, John Mitchell, an attorney with Washington, D.C.-based Interaction Law, reports that Florida and Utah have passed second-hand goods legislation, sometimes referred to as pawn-shop laws, that could make the buying and selling of used CDs much more onerous to stores and less attractive to customers looking to sell music they are no longer interested in owning.

In Florida, the new legislation requires all stores buying second-hand merchandise for resale to apply for a permit, would be required to thumb-print CD sellers and get a copy of their state-issued identity documents, such as a driver's license. Furthermore, stores could only issue store credit -- not pay cash -- in exchange for traded CDs, and then would be required to hold them for a 30-day period, before re-selling them.

In addition to the two previously noted states, Rhode Island also has pending legislation, says Mitchell. "State lawmakers in different states tend to talk to one another...and there seems to be some sort of a new trend among states to support second-hand-goods legislation," says Mitchell.

While most states have pawn shop laws, they are not typically enforced against all sellers of second hand merchandise. But as a precaution, most merchants, including record stores owners, already collect ID from individuals selling previously owned goods.

In the states where pawn shop laws are getting more restrictive, it practically makes it prohibitive to sell used CDs, says one merchant. In fact, one music retailer -- who operates stores in Florida but is not headquartered there -- reports that one of the chain's stores has already had a visit from the local police enforcing the law. As a result, the chain stopped dealing in used goods in that store.

Meanwhile, video and video game retailers are less hit. Stores selling previously owned video and video games do not need a permit, and only have to wait for 15 days before reselling the merchandise.

Laws that result in the curtailment of used CD sales likely would be considered good news to record labels and music distributor executives who have long abhorred the growing strength of the used CD market. In fact, until the mid-1990's labels used to put pressure on merchants who bought directly from them not to carry such merchants. At the time, some majors attempted to kill the strategy by initiating new policies to withhold cooperative advertising from retailers buying directly from them but selling used CDs, a move endorsed by some artists including Garth Brooks.

But that effort triggered a revolt from independent stores and consumers, highlighted by barbeques of Garth Brook CDs, in some places called a "garth-eque." It also served as a catalyst for a Federal Trade Commission investigation of the music industry practices, forcing those majors to back down from its anti-used CD stance.

Since then, merchants who buy direct from majors who participate in the category say that used CD sales have grown from about 5% to sometimes 10%-20% of overall CD revenues. Also, those sales are more profitable.

Traditionally, used CD sales are protected by first-sale doctrine in copyright laws allow owners to resell CDs, according to Mitchell. Also, a CD resale is also protected by the U.S. Constitution's First Amendment, argues Mitchell. Since selling a CD could be seen as an indication that the owner does not like or agree with the content, the collection of identification information could be seen as a violation of first amendment rights.

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Re: New Laws Threaten Used CD Market

Yet another reason to buy from independant artists.

    Record labels have been legal rip-offs for a century. We've all heard the stories of record execs paying artists nominal "one-time" fees, for recording their songs and totally selling all of their rights away. Record companies demanding "Producer's points", etc.

    How many artists are seeing their music bought and sold by others? Paul McCartney is one of them. Just for an example.

    CDs were cheaper to produce than cassettes, within a year or two of their introduction. But, the labels still charged about $20.00 for them, while cassettes were $10.00. Then, labels start releasing the same music, with "one EXTRA track". For the serious ciollectors, of course. So, they want you to buy the same CD, twice?

    If you produce your own CD, good luck getting anyone to hear it. Radio station Payola, and deals that keep independants from getting their CDs into stores ("Oh, you don't use my cousin Vito to distribute your music?") have tried to shut down actual artists, for YEARS! It's getting better, with internet distribution, and home recording, etc. But, it's not because of the efforts of the big labels, that's for sure.

    All of these actions the labels are trying, are directed at the labels' losses. They have nothing to do with right and wrong. Or, with nurturing the artists. I can't blame them, for wanting to save themselves. But, I can't help them. Their interests run directly contrary to my interests as a music-lover.

    Did any of you have your computers get fried by Sony, with their DRM/Computer Virus? I did. But, Sony is still allowed to do business in America. I bet I would be put out of business, or in JAIL if I hid a computer "Bug" in my product, and sold it to millions of unassuming people.

    There's just a long list of reasons to say "See'Ya" to the major labels. I bet everyone here can think of more.

    There is a war going on here, as I see it. And I don't see the Record Companies accepting the fact that their old "Robber-Baron" ways are over. So, they'll continue to try and legislate themselves into a "safe room" of government protection. Good luck.......

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3 (edited by Rocket 2007-05-17 10:31:33)

Re: New Laws Threaten Used CD Market

The cops can't solve crime & the robbers have to THINK of ways to do "business"...what a pitiful state of affairs!  Bah! Our governor here in New York sued Sony and others over payola and won!!! This was when he was our Attroney General.  Now our current Attorney General is going after fraudulent student loan sharks.  I defeated that Sony DRM thing but it's illegal to do so, even though I sell / steal nothing but only want to manipulate my use of the CD certain ways!!! Go figure! Yes indeed, another reason to buy independent, hopefully the wave of the present one day..

Rock On & Keep the Faith,
Rocket

Budda wrote:

Yet another reason to buy from independant artists.

    Record labels have been legal rip-offs for a century. We've all heard the stories of record execs paying artists nominal "one-time" fees, for recording their songs and totally selling all of their rights away. Record companies demanding "Producer's points", etc.

    How many artists are seeing their music bought and sold by others? Paul McCartney is one of them. Just for an example.

    CDs were cheaper to produce than cassettes, within a year or two of their introduction. But, the labels still charged about $20.00 for them, while cassettes were $10.00. Then, labels start releasing the same music, with "one EXTRA track". For the serious ciollectors, of course. So, they want you to buy the same CD, twice?

    If you produce your own CD, good luck getting anyone to hear it. Radio station Payola, and deals that keep independants from getting their CDs into stores ("Oh, you don't use my cousin Vito to distribute your music?") have tried to shut down actual artists, for YEARS! It's getting better, with internet distribution, and home recording, etc. But, it's not because of the efforts of the big labels, that's for sure.

    All of these actions the labels are trying, are directed at the labels' losses. They have nothing to do with right and wrong. Or, with nurturing the artists. I can't blame them, for wanting to save themselves. But, I can't help them. Their interests run directly contrary to my interests as a music-lover.

    Did any of you have your computers get fried by Sony, with their DRM/Computer Virus? I did. But, Sony is still allowed to do business in America. I bet I would be put out of business, or in JAIL if I hid a computer "Bug" in my product, and sold it to millions of unassuming people.

    There's just a long list of reasons to say "See'Ya" to the major labels. I bet everyone here can think of more.

    There is a war going on here, as I see it. And I don't see the Record Companies accepting the fact that their old "Robber-Baron" ways are over. So, they'll continue to try and legislate themselves into a "safe room" of government protection. Good luck.......

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