INDUSTRY CHATTER: Lots of people find it...

INDUSTRY CHATTER: Lots of people find it hard to imagine the major record labels are really worried about used CDs diverting funds away from new product, but the concern seems genuine. Sony Music’s distribution arm has joined Time Warner’s WEA and Thorn-EMI’s CEMA in refusing to pay for new product ads for stores that sell used CDs, and others may follow.

Record companies began battling with retailers over the issue in December after the Torrance-based, 306-outlet Wherehouse Entertainment became the first major retail chain to enter the used CD business. While used CDs currently make up less than 1% of all compact discs sold in this country, they could carve out more than 20% of the marketplace by 1998, recent studies conducted by record firms indicate.

A loose coalition of independent stores that sell used CDs in Michigan, Oregon, North Carolina and South Carolina have responded to recent moves at Sony, WEA and CEMA by threatening to halt promotional displays, in-store airplay and sale pricing for the firms’ new products. Legal action by store owners is also rumored.

Roman Kotrys, owner of the Dearborn, Mich.-based, three-outlet Repeat the Beat store, says there’s no room for merchants to compromise on the used CD issue.

“We will not bend on this,” Kotrys told Pop Eye. “It’s not fair to us nor to the consumer. With all of the serious issues facing the music industry these days, I can’t believe that the manufacturers are taking aim at us. I mean, aren’t these the same companies whose record clubs are out there right now offering eight CDs for a penny? How can they be so hypocritical?”