Digital Audio Insider -- the economics of music and other digital content

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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

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April 27, 2012

Diving Into Amazon's Music Trade-In Service
by David Harrell
The prices of used CDs might seem somewhat tangential to the price of music purchased as digital downloads. Yet I've long maintained that the amount consumers can receive for their used CDs is extremely relevant to any discussion of the prices of digital content relative to physical products. Even if you never choose to sell a purchased CD, the potential value of such a sale can be factored into the purchase price. Purchasers of digital music, however, don't have that option, unless ReDigi is able withstand the legal challenges from record labels and establish a thriving market for "used" digital content.

Amazon's trade-in service, which was recently expanded to include music CDs, provides an extremely efficient (though not particularly lucrative) way for music consumers to extract value from their unwanted CDs. Given that the quoted trade-in offers are probably based on an algorithm that considers the current prices for used copies of individual CDs and the number of copies available to buy, you could argue that the new service doesn't provide any additional insight into prices for used CDs.

Yet it's still fascinating to see how much Amazon (or its third-party buyer, to be precise) is offering for a disc. And unlike the prices for new music, here you'll see a great deal of variation, based on the supply and demand for each individual release.

If you're looking to sell your discs, the prices Amazon offers are all less than the prices set by individual sellers. In other words, you'd probably do better selling any individual CD directly to an customer. That method is also preferable if want cash for your discs -- the trade-in service only gives you an Amazon store credit. But selling to Amazon eliminates most of the hassle factor -- instead of listing your discs individually, waiting for someone to buy them, and then having to mail them off to each buyer, you can put them all in a box and print a pre-paid shipping label. (There's also the option of trying your luck at a local record store that buys used discs, though it's difficult to make large-scale pricing comparisons, as an individual store's inventory needs will affect the prices offered for specific discs.)

I did a quick survey last week of the current top-selling CDs on, which I had to expand to the top-13 discs, as three of the top-10 sellers hadn't been released yet, so there was no trade-in option for them. And, somewhat surprisingly, Amazon wasn't making a trade-in offer for four of the other top-selling releases.

prices is paying for CD trade-ins
all prices as of 4/18/2012

Of the remaining six CDs, Amazon's current price for the new CD ranged from $7.99 to $11.99, with an average of $10.24. The trade-in offers ranged from $2.00 (Adele's "21") to $3.70 (Lionel Richie's "Tuskegee"), with an average of $2.83. These numbers are all "up to" amounts, however, and assume that the disc and the jewel case are in "like new" condition.

The interface also makes it easy to see the range of prices Amazon's third-party buyer is willing to pay for different releases in an artist's catalog. Again, unlike the prices for new music, here you'll see a great deal of variation. In general, Amazon offers the largest trade-in amount for an artist's most-recent release. And an act's earliest albums, even if they're considered classics, often have the lowest trade-in value. For example, Amazon is offering up to $3.95 for Van Halen's comeback album "A Different Kind of Truth," but just 65 and 95 cents respectively for the band's first and second releases. But that variation just reflects the supply and demand of existing CDs -- the fan base of any given artist is both more likely to already own the act's earliest releases and have more copies of those CDs to sell, depressing the price.

Another obvious trend is that the release of new re-mastered CD decimates the trade-in value of the previous version. Amazon is offering up to $4.80 for the 2009 version of the Beatles "Blue" collection but only $1.50 for the original CD release.

As for those one-cent used CDs you see on Amazon (the sellers actually make their money on a cut of the shipping charges), don't bother -- Amazon doesn't want them. But just because a portion of the artist's catalog is in the one-cent category, it doesn't mean that Amazon won't purchase other releases -- it's offering up to $4.05 for a live Hootie & the Blowfish album, even though it won't purchase the band's best-selling studio albums.

Finally, on a relative basis, Amazon's quoted trade-in amount is the least generous for out-of-print CDs that are commanding high prices in the used market. For example, when checking the trade-in value of Lionel Richie's current best-selling disc, I discovered that Amazon is will to pay up to $5.50 for the soundtrack to the 1981 film Endless Love, featuring Lionel Richie. But the lowest price for the used CD from individual sellers is a whopping $69.39, though who knows how long it'd take to sell the disc at that price!

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