Used CDs: Indie Retail’s Secret Weapon

After the crash, there’s more inventory—and demand—than ever before.

When John Herman started working at West Seattle's Easy Street Records in 2004, there was a lot of room for used CDs. "Now there's like no room in there whatsoever," he says, pointing at the jam-packed shelves. Not only are the shelves crammed tight, but cardboard boxes of used CDs sit neatly in the aisles waiting to be properly displayed.The compact disc is the new cassette tape, a highly disposable and inferior format for music. And all signs point to it being wiped out for a variety of reasons—namely the MP3 and its primitive cousin the vinyl LP, no doubt the "comeback kid" of the 21st century. The retail value of the CD has plummeted, making them cheaper than ever before—good news for consumers. But we're not biting: 2008 sales of new CDs dropped 20 percent from 2007. Even though our local stores haven't seen as big a drop in the number of sales as many corporate places, the low retail value has meant significantly less revenue.Statistics like this do not bode well for industry giants like FYE or Circuit City, which just announced last week that it's going out of business, and they really don't bode well for independent local retailers like Easy Street, Sonic Boom, or Silver Platters. But the little guys are able to cling to a life raft not accessible to the corporate giants: used CDs. And because a combination of factors has recently led to a spike in the number of people looking to sell off their CD collections, the used market has been a glimmer of sunshine because of the higher markup on previously owned CDs as opposed to new ones. While new CDs may be getting pushed out of the market, owners of all three local indies say there is definitely still a market for the compact disc—so long as it's a used one priced at around $6.99."Right after the stock market crashed there on Sept. 20, we saw a lot of people bringing in used product," says Mike Batt, co-owner of Silver Platters.Though Batt says Silver Platters is relatively new to the used-CD business, that business has grown: Used CDs now make up about 18 percent of Silver Platters' revenue, tremendous growth for something in its infancy. Similarly, Jason Hughes of Sonic Boom says used-CD sales at his stores have gone up and now account for about 10 to 15 percent of their revenue, whereas it used to account for about 8 percent.Last year, Easy Street, which already had 25 percent of its revenue coming from used CDs, sold more than ever before. According to owner Matt Vaughan, people brought in so many CDs for cash or trade that the store was able to bring down the prices of used CDs to the lowest in the city, an average of $5.99 per unit (compared with Silver Platters' and Sonic Boom's average of $7.99)."It's getting silly," Vaughan says of the overwhelming amount of used inventory.The music industry has been in shambles for several years now. Some say the downfall in sales is related to piracy issues, though RIAA data suggests this isn't as big a factor as some would think. Others say it's competition for consumer dollars—not to mention consumer attention spans. Still others, like Batt, chalk it up to the fact that we do not live in an age of blockbuster sellers like Michael Jackson or Fleetwood Mac, who were able to move 10 million units without breaking a sweat.Some of last year's biggest-selling albums—among them the Beatles' Abbey Road and Pink Floyd's Dark Side of the Moon—were made not in 2008, but three decades ago. Lil Wayne's Tha Carter III did the unthinkable last year, selling one million copies in its first week and managing by year's end to be the #1 seller at around three million. That was a huge success considering the industry's slump, but it's nothing phenomenal when stacked against a record like Jackson's Thriller, which was selling one million copies per week when it was released in 1982. It's even more disheartening considering Dark Side, an album released in 1973, still manages to sell a few hundred thousand copies a year.Meanwhile, downloads continue to explode, with 2008 sales up by 27 percent over 2007. But while there's no denying we live in a digital era, 2008 saw the sale of 1.8 million vinyl LPs—the largest figure since Nielsen began tracking vinyl in 1991. (The biggest-selling vinyl set was Radiohead's In Rainbowsat 26,000 copies; our own Fleet Foxes came in seventh.)Despite the surge in vinyl and digital download sales, CDs still represent more than 80 percent of total album purchases. Many customers, Vaughan says, are getting rid of their collections because they've loaded them onto iTunes for efficiency, leaving no need for physical copies. But there are also a good number of penniless music fans trading in unwanted CDs just to be able to afford the new Radiohead or Brian Wilson album. Hughes adds that his stores see more people selling off their CDs toward the end of the month, because "people need cash at the end of the month for rent, bills, etc.""We've become part of the solution," says Vaughan. "But in a much bigger way than I would have expected. We recycle, if you will."

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