Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, June 11, 1993                   TAG: 9308250331
SECTION: EXTRA                    PAGE: 7   EDITION: METRO 
SOURCE: Mark Brown Knight-Ridder/Tribune
DATELINE:                                 LENGTH: Medium

WAR OVER SELLING USED COMPACT DISCS HEATS UP

It's true. And it means a cruel economic irony for the industry in the '90s: The sound of U2's "Achtung Baby" CD will be just a crisp coming out of the used bin for $7.99 as the new bin for $15.99.

That has thrown record executives into an uproar after the 315-store, California-based Wherehouse record chain decided to start making those used CDs available in many of its stores. Other major chains also are selling used discs.

The war of words escalated to an explosion last month. Three major distributors - Sony, CEMA (Capitol/EMI-America) and WEA (Warner/Elektra/Atlantic) - fought back, cutting off advertising dollars to any store that stocks used CDs. Caught in the gray are the small independent stores that have sold used dics without problems for years.

In response, some retailers have banded to form their own advocacy group, the Independent Music Retailer's Association.

Roanoke native Don Rosenberg, president of the 14-store Record Exchange chain in Virginia and North Carolina, is one of the five founding members of the retailers group.

He says the effort to squash used CD sales ultimately hurts consumers, but also has an ill effect on radio stations and new artists.

``The record industry is shooting itself in the foot.''

Rosenberg says that his chain will lose $100,000 in advertising money annually about one-half of his promotional budget per year.

``That's a big chunk.''

Already, he has had to cancel support of the Music Monitor radio show on ROCK-105 in Blacksburg, a show that promotes new artists and new releases. He says he spent $15,000 on the show annually advertising dollars ROCK-105 now must do without.

Rosenberg says he also has pulled the same support of a Music Monitor show in Norfolk, and he has cut some advertising money for the Music Underground program on WROV-FM in Roanoke.

``We're really sorry about it, but $30,000 is a lot of money.''

Similar shows across the country also have been hit.

He says this especially hurts new artists that often get their first widespread exposure on these shows. And what hurts them, in turn, also hurts the record industry, which counts on these new artists for much of their own future growth, he says.

For consumers, he says the impact is equally damaging.

At Record Exchange stores, he says record buyers pay less for new CDs $12.98 because of his freedom to trade used CDs and make a profit from them.

``It's very positive for the consumer.''

Without used CDs, which he buys for $5 and sells for $8, Rosenburg says his new CD prices would have to go up. The list price on most new CDs is $15.98.

He suspects the record industry wants to bump that up to $19.98, the retail price CDs fetch in Europe. But he believes the industry can't get away with it as long as the used market remains.

\ see micrfilm for the rest of the text.

Staff writer Mark Morrison contributed to this story.