USED CD UPDATE: Wherehouse Entertainment--the Torrance-based retail...

USED CD UPDATE: Wherehouse Entertainment--the Torrance-based retail record chain whose recent entry into the secondhand CD market prompted three major record companies to institute strict anti- used-CD policies--ups the ante this weekend in the used compact disc war.

The 306-outlet chain launched an aggressive Memorial Day campaign last week encouraging consumers to trade in old compact discs for profit--offering customers $3 off any new album ($9.99 and above) for every used CD they bring in. Some record companies see used CDs as a threat to the business because they divert consumer spending away from new product and hurt the "perceived" $16.95 value of new products.

In related news, PolyGram has decided not to join Sony Music, Time Warner's WEA and Thorn-EMI's CEMA in refusing to underwrite new-product advertisements for stores that sell used CDs. A recently leaked internal memo confirms that the Philips-owned firm plans to capitalize on frustration over its competitors' used CD policies to strike closer ties with independent record retailers. PolyGram declined comment on the matter.

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