This is Celia Hirschman with On the Beat for KCRW.
These days, you can't pick up the newspaper without reading about the music business. The major labels seem to have missed some very significant opportunities in the last few years. One area you probably haven t been reading about, is the growth of used CD sales. That's because no one seems to know quite what to do about it. When a record store sells a used CD, and thousands of record stores do, neither the artist, the label, nor the publisher receives any income. The only person who gets paid in the sale of used CDs is the seller.
CDs were launched in the US in 1983. By 1992, record companies began complaining that used CD sales cut into their new CD sales. Some labels tried to cut advertising support to those stores that sold used CDs. Others refused to sell them new product at all. But at the end of the day, all the labels decided to let sleeping dogs lie. At that time, the sale of used CDs was considered a marginal business and CD burners were very expensive, running about $2000 each.
Over the course of the next decade, the sale of used CDs grew. Even huge mainstream chains like Wherehouse Records with over 100 stores, set aside major areas in the store for used CDs. Most retailers found their used bins were doing brisk business and earning more margin in the sales.
Now it's 2004. A CD burner costs less than $150 and comes standard in most new computers. Used CD sales are certainly not marginal, but rather significant and flourishing. Here in Los Angeles, record stores like Amoeba, Rhino, Arons and Wherehouse feature huge selections of used CDs and some say it represents about half of their sales overall. And the used CD market is definitely not limited to brick and mortar retail stores. There are many online websites including Half.com and Ebay, who cater especially to audiences who sell used CD sales.
All of this would just be a burr in the saddle of the record business if it were strictly about losing a secondary income stream.
But since everyone can now burn CDs perfectly, and millions keep their music collection on their iPods or other MP3 players, buying used CDs is quickly becoming a preferred choice for many music consumers.
And considering that a CD can be recycled over and over again infinitely, with the same perfect audio resolution, there s a real problem on the horizon.
It's a complicated issue. The originating music consumer appropriately compensates the producers of the CD when he makes his original new CD purchase. But all subsequent buyers, who received the exact same work with the same quality do not pay a penny to the producer.
The law says, the record label or master owner has the legal right to object to someone creating a copy of their work, without appropriate compensation. Given the technological developments in music, the industry should be addressing this delicate but important issue. It's the artist who is hurt the most in used CD sales.
They received nothing for their work in spite of their lifelong efforts. And though it may seem politically incorrect, labels and artists should look at the ramifications of used CD sales and the future implications in today s music business. Only with measured consideration and wisdom, can the industry respond to this growing problem.
This is Celia Hirschman for On the Beat on KCRW.