New Laws Threaten Used CD Market

[Chas]

NARM Coverage: New Laws Threaten Used CD Market

May 01, 2007 - Retail

By Ed Christman, Chicago

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.

Source

[zen archer]

This country doesn't understand Capitalism why don't we have laws that ban the reselling of cars

and HOMES ! What a bunch of morons why dont we have a LAW that Bans legislation now that would be

a step in the right direction !

[Jim Alfredson]

The record industry is really trying to kill itself, isn't it?

[mgraham333]

The record industry is really trying to kill itself, isn't it?

Amen!

[Claude]

Don't judge a draft law based on the information from one news article. It could be that the situation described is unrealistic (extreme interpretation of the law) or just a side effect from a much more general law aiming to prevent reselling of stolen goods. The article could be part of a lobbying campaign trying to ease the law as to goods which are often resold and don't need this kind of regulation (CDs, DVDs, books,...)

[porcy62]

Don't judge a draft law based on the information from one news article. It could be that the situation described is unrealistic (extreme interpretation of the law) or just a side effect from a much more general law aiming to prevent reselling of stolen goods. The article could be part of a lobbying campaign trying to ease the law as to goods which are often resold and don't need this kind of regulation (CDs, DVDs, books,...)

Correct.

Obviously the general results could be a disaster or simply unapplicable. Consider only the huge amount of stuff that is going on internet in transactions between normal citizens. A strict law could kill it.

[AllenLowe]

well, whenever, every once in a while, I find one of my CDs in a used bin, I always say to myself, "hey, who the hell didn't like my CD enough to hold onto it? It's a sacred text." Now I'm thinking, good; they should fingerprint everybody who disposes of a CD to a store for re-sale, put 'em in a data base, and make 'em traceable. That way I can send nasty letters and emails to the ingrates.

go, Republican enemies of free speech! We wanna see what Berigan returns -

Edited May 9, 2007 by AllenLowe

[porcy62]

well, whenever, every once in a while, I find one of my CDs in a used bin, I always say to myself, "hey, who the hell didn't like my CD enough to hold onto it? It's a sacred text." Now I'm thinking, good; they should fingerprint everybody who disposes of a CD to a store for re-sale, put 'em in a data base, and make 'em traceable. That way I can't send nasty letters and emails to the ingrates.

go, Republican enemies of free speech! We wanna see what Berigan returns -

Fingerprints? You're still living in E.J. Hoover's era. DNA is the hot stuff now, don't you watch CSI?

[AllenLowe]

I know, but who wants everybody licking cds?

[porcy62]

I know, but who wants everybody licking cds?

They often choughed on it because of the dust.

[David Ayers]

Dead Man in Suicide Bid: Lost Soul Sues Void

[Jazzmoose]

Wow...people still take used CDs to stores? With eBay around?? Bizarre...

[Shrdlu]

This country doesn't understand Capitalism why don't we have laws that ban the reselling of cars

and HOMES ! What a bunch of morons why dont we have a LAW that Bans legislation now that would be

a step in the right direction !

Well, there are too many laws. It's just about illegal to get out of bed in the morning. When the Lord comes back to rule the world (and that is the only way it can be ruled properly), there won't be any new laws. He spoke out against all the ridiculous laws and said "Woe unto to you, lawyers, for ye lade men with burdens grievous to be borne."

[.:.impossible]

dude, people still take cds to pawn shops, with cd shops around. ebay is way more complicated than either of them. not everbody's a computer whiz.

[J Larsen]

dude, people still take cds to pawn shops, with cd shops around. ebay is way more complicated than either of them. not everbody's a computer whiz.

Some of us also find ebay to be a bit of a pain in the ass. I'd rather take less money for my cds (or even give them away) than deal with selling different items to different buyers, waiting for payments, individually packing each item, going to the po, etc.

[Aggie87]

When the Lord comes back to rule the world (and that is the only way it can be ruled properly), there won't be any new laws. He spoke out against all the ridiculous laws and said "Woe unto to you, lawyers, for ye lade men with burdens grievous to be borne."

Ok.

But in the meantime (however long that is), the rest of us will have to deal with these rules, laws and burdens.

Edited May 22, 2007 by Aggie87

[BruceH]

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.

Source

What the HELL??? That is fucking insane!

[Dan Gould]

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.

Source

What the HELL??? That is fucking insane!

There aren't many good used CD places anymore but I've got a follow up dental appointment the first week in June, and on the way is one of the best stores in Fort Lauderdale for both CDs and vinyl. I need to remember to ask the owner, Sean, about this law.

[clifford_thornton]

Wild.

But get this:

"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."

[Dan Gould]

Wild.

But get this:

"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."

I'm a First Amendment absolutist but I don't think that argument stands a snowball's chance at any level of the Federal courts.

[Tim McG]

This country doesn't understand Capitalism why don't we have laws that ban the reselling of cars

and HOMES ! What a bunch of morons why dont we have a LAW that Bans legislation now that would be

a step in the right direction !

Here, here.

Excellent post.

[Tim McG]

Wow...people still take used CDs to stores? With eBay around?? Bizarre...

I can understand that.

One's a sure thing, the other is a crap shoot.

[Tim McG]

When the Lord comes back to rule the world (and that is the only way it can be ruled properly), there won't be any new laws. He spoke out against all the ridiculous laws and said "Woe unto to you, lawyers, for ye lade men with burdens grievous to be borne."

M'kay.

Luke 11:46, very nice.

And CDs were mentioned in the Bible, um...where again?

I don't seem to remember the Apostle to CD in the Bible...perhaps you could refresh my memory there, uh...Shrdlu, is it?

[Looney Alert]

Edited May 23, 2007 by GoodSpeak

[Shawn]

Washington State has had a similar law for years. If a store purchases 9 CDs or under they can put them right out on the shelf and sell them. But if it's 10 CDs or more it's considered a "bulk buy" and those have to be put on hold for 30 days prior to sale.

Of course the scumbags who sell stolen CDs get 3 of their friends to help out and they each sell 9 discs a piece....