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

DATE: TUESDAY, August 31, 1993                   TAG: 9308310065
SECTION: BUSINESS                    PAGE: B7   EDITION: METRO 
SOURCE: PAT BROWN STAFF WRITER
DATELINE:                                 LENGTH: Medium

2 CD DISTRIBUTORS SUPPORT ADS AGAIN

Two of four compact-disc distributors being sued by independent retailers have decided to resume advertising support for firms such as Record Exchange of Roanoke.

Don Rosenberg, president of the 15-store, Charlotte, N.C.-based Record Exchange chain, said he will meet with other plaintiffs in the class-action suit on Sept. 8 in Washington, D.C., to decide how the case should proceed.

Cema Distribution of Woodland Hill, Calif., which handles Capitol and EMI labels, and Warner-Elektra-Atlantic Corp., part of Warner Music Group Inc. of New York, were among four major distribution companies that in May withdrew advertising support for retailers that sell used compact discs. They also threatened to withhold new releases from the stores.

Rosenberg said he lost $40,000 in advertising support since his co-op ad funds were stopped.

Cema has issued a statement saying it wants to "resolve our differences with used-CD sellers through market-based solutions rather than through the courts."

Warner said it is "confident that the policy it is now withdrawing is lawful" but "concluded that the intense controversy and litigation generated by its policy is detrimental" to cooperation between the distributors and retailers.

Cema and other distributors maintained that selling used CDs creates confusion among purchasers and causes problems for retailers when CDs are returned. They also say used-CD sales cut into royalties for artists and songwriters.

Used-CD handlers, including members of the Independent Music Retailers' Association, say the retailers are charging too much. Rosenberg, a founder of the association, said new CDs should sell for about $10 each, not $13 to $15.

Rosenberg has authorized his stores, including those in Roanoke, Blacksburg and Salem, to start a radio campaign asking customers to bring in record club promotions. The ad promises that Record Exchange stores will forward the heap to major record and CD manufacturers as a message that CD prices are too high.

The remaining two CD distributors named in the lawsuit are Sony, which handles the CBS and Columbia labels, and UNI, distributor of Universal and MCA brands.

by CNB