Cut-out record albums -- stolen property???

Inspired by this thread: Books without covers...Why are they stolen? - Factual Questions - Straight Dope Message Board
(Paperback books with covers removed were supposed to be destroyed by the bookstore and therefore if they still exist, they are considered stolen)

Does this have any correlation to the old “cut-out” records (LPs) you could buy in the bargain bin for 50 cents? They would have a corner cut off of the album cover or sometimes a notch out of one of the corners, or even a hole drilled through the label of the record. The records were not damaged by this process, and were still playable. I’ve even seen notches cut out of CD cases and Cassette cases.

What exactly was the deal with this? Were they supposed to be destroyed, but instead sold by a dishonest record store? I bought about 20 of them when a local chain record store quit selling LPs back in the early 90s. All of them had a corner cut off.


Records were handled differently. Like books, records were fully returnable. However, the records were returned to the record company; you had to return the entire record.

The record company would then sell these returned records in bulk to the cut-out distributors. They would cut the corner (or mark them in some way) so that they could not be returned for credit. Cutouts were then distributed to stores – usually non-returnably.

All perfectly legal.

The only thing stolen was royalties from the artist, by the record company. When your LP or CD is cut from the catalog, the remaining and/or returned stock is sold at a severe discount - and the artist gets no royalties. Of course, if it was not a success in the first place, it would have never recouped the advance and recording costs and promotional costs. The entire record business is set up to prevent the vast majority of major label artists from making any money via royalties.

So yes, in one sense they are stolen property. But legally so. The major record companies can’t die soon enough as far as I’m concerned.

I thought this was done in the store itself but may be wrong on that point.

You might find an LP in said bin, then go back and find the same title in the racks. The difference is that you couldn’t return the cut out one (for which you paid 99 cents) as though you’d paid full price (say, $9.99) from the racks. I don’t know if you couldn’t return them at all…I never tried.

Now it’s all UPC but back in the day, the receipt might simply read “LP—$9.99.” So buy a different LP that you want for $9.99 and the one from the bin…it would have been easy to screw them out of $9.00 unless they physically marked them somehow.

Yes, they are stolen. But before I explain this, we need to clear up our terminology. The term ‘cutout’ as used in the music industry means an album which has been removed from a distributor’s domestic catalogs and is no longer returnable to that distributor for credit. It does not refer to the drill hole or notch cut into a CD case—that’s usually called a ‘cut’. Cutouts are very, very rarely cut. Cutouts are a completely different entity altogether, and have nothing to do with what the OP is discussing.

If you see an album with a cut in the jewel case, it’s a promo, not a cutout. You’re not supposed to find those in a mom-and-pop retailer’s bins, or anybody else’s bins, for that matter. When a major label album is pressed, about 1% of the albums are earmarked for promotional distribution, and the jewel case is cut to identify them as being such. The cost of pressing these promos is deducted from the artist’s royalties. They’re given to sales reps to distribute pretty much at their individual discretion. The sales reps give them mostly to one-stop buyers and other buyers at the retail level. It’s not uncommon for a sales rep to give an entire box of 30 cut CDs to a one-stop buyer with the intention of them being in turn distributed to retailers. Here’s where it gets dicey. Let’s say this album is currently in the Billboard top 40, and let’s also say that the one-stop buyer needs to make his car payment. Off to the used record store he goes, and sells them to the owner for $3 apiece. Happens every day. The record store owner is taking a big chance, because if somebody from the distributor happens to walk in and see them in the bins, they will be notably pissed. If the artist happens to walk in and see them, he will be downright apoplectic. But nothing ever really comes of it, because the music industry makes strange bedfellows, with the artist invariably being the only one who winds up getting screwed. But long story short, yes—they’re stolen. Most people don’t know this (even quite a few people in the industry), but a promo is technically property of the distributor. The distributor can legally demand back any promo that it has ever given away. I’ve never seen it happen, but the bottom line is that the record store owner who buys promos is technically receiving stolen property.

And gaffa’s link was spot-on. The way I’ve always heard it expressed is that an artist with a major label contract doesn’t see a penny until he sells 100,000 copies.

Then I can expect Capitol Records to kick down my door to repossess all the demos we took home from work after the store let them go? That was one of the perks of working in a record store: we got to divvy up all the out-dated demo LPs at the end of the week.

Some RCA Lps from the 70s have a handsome gold foil stamp reading “Complimentary Copy-Not For Resale” or some such.

I know someone at Sony-BMG, who tells me there are no plans to come after my prized Bluebird gatefold big band sets. Which is good, because I really don’t wish to start keeping firearms in my home, and that just might drive me to it.

Well, with records, the albums for resales were called “cutouts” and many had the corners clipped or a hole drilled into them.

Promotional records never had any markings on them to differentiate. They were sent en masse to radio stations for airplay, but there were absolutely no restrictions on what the stations did with them. Many were given out as prizes, but the others were either thrown out or collected. Record companies didn’t really care, since if you got on the record station’s case about it, they might stop playing your records.

I doubt things changed with CDs.

The stores had separate bins for the regular records and the cutouts. The cutout bins were often not managed by they store – a jobber would fill them and would get a payment from the store based on how many sold. A record store generally wasn’t allowed to move records from the regular bins to the cutout bins. (Well, they probably could – but by not returning them to the record company, they paid the full wholesale price for the records, which was probably more than what they’d get for the cut-outs).

So, the process was:

[ul][li]Record sent to store; store billed wholesale price.[/li][li]Record sells; everyone happy.[]Record doesn’t sell; store returns record to record company for full credit on the wholesale price.[]Record company sells returned records at a steep discount to cutout distributor.[]Cutout distributor puts record in store on consignment.[]Record sells; cutout distributor gets cut; record store gets cutRecord doesn’t sell; cutout distributor eats cost; record store loses nothing.[/ul][/li]
The cutout distributor, of course, factored in the sales rate in their pricing. If 25% of their records sold, they’d price things so it would make a profit.

Heh. When I worked in a record store we just gave the sales reps a list of the promos we wanted.

Sure they did, at least from some companies. Often with a white label and “Promotional copy - do not sell” printed around the edge. I have a few.

I have a promotional album and it was a freebie given to me. It is stamped on the album cover not notched.

I used to check in stock and occasionally our store would get hundreds of corner notched albums from our normal distributor. These were sold for a dollar piece and not returnable. They were always low demand albums that the distributor wanted to get rid of and never have to deal with again. I found a number of artists I liked by buying many one dollar albums and cds. They do let you try new artists and get you hooked. With all the preview sources on the internet now I don’t think I’d buy random marked down cds any longer to see if I like the artist.

It’ll never happen. The distributor really doesn’t care that much what happens to promos, because they didn’t have to pay a dime to press them. Now if you really want to have fun with promos, you need to get your hands on what are called ‘cleans’. Those are exactly what they sound like—a promo album that doesn’t have a cut. Those are as good as gold. If you can get your hands on a skid or two of those, I’ll make a few phone calls and we’ll both profit handsomely.

Thank you.

All the radio station and record store promo copies? The cost of those comes out of the artist’s share of the royalties. There is no other industry that treats it’s employees as poorly as the record industry except possibly Organized Crime.

Promo copies and cut-outs are very different entities. I’ve never seen a major label promo that wasn’t identified as such, or a cut-out that wasn’t punched or drilled.

By the way, a copy of the very first Tori Amos album “Y Kant Tori Read” that isn’t a cut-out is supposedly worth a fortune.

I’ve never made any distinction between the two industries.

I think some of you are still confusing cut promos with cutouts. I’ve seen literally hundreds of thousands of cutouts, and none of them were cut. There’s no need to cut a cutout, because they’re non-returnable anyway. It serves no purpose. Last time I was in Walmart, I saw a bin full of several hundred cutouts, none of which were punched. Why damage the artwork or jewel case? Cutting a jewel case serves only one purpose: to alert the distributor not to accept it in a return.

As an aside, cutouts are a huge global business, and a more or less legitimate one, despite the longstanding involvement of the New Jersey DeCavalcante family in virtually all cutout trade. There’s a huge amount of criminal activity involving cutouts, but the actual sale and transfer of them is perfectly legitimate.

The record companies liked to maintain this was the case, but a federal district court disagrees. The court ruled that “first sale doctrine” (basically, that once you’ve legally acquired an item, you’re free to dispose of it as you please) applies to promo media…regardless of the verbiage they hot-stamp onto it.