CEMA cooperates, retailer suit dropped

HOLLYWOOD — Record retailer Wherehouse Entertainment has dropped its lawsuit against CEMA Distribution following the distrib’s announcement Aug. 26 that it had agreed to resume cooperative advertising with retailers that carry used CDs.

CEMA is the distribution arm of Capitol-EMI Music, parent company of such labels as Capitol, Virgin, SBK and Liberty. Latter is home of country superstar Garth Brooks, whose vocal opposition to sales of used CDs prompted the CEMA move.

Other suits continue

Wherehouse’s lawsuit against three other record distribs — Uni, Sony and WEA — will go forward. Uni distributes MCA-affiliated labels, while WEA handles diskeries under the Warner Music umbrella.

The announcement is the result of discussions held the week of Aug. 23 between representatives of the 339-store chain and CEMA. It comes less than two weeks after the distrib quietly informed stores carrying used CDs that it would sell them Brooks’ new album.

“We’re very pleased with CEMA’s decision,” said Bruce Jesse, marketing VP and spokesman for Wherehouse. “The withdrawal of our lawsuit is a sign of our satisfaction. We hope (the other distribs) will take a look at the CEMA decision.”

CEMA president Russ Bach said in a statement the distrib continues “to be concerned about the unchecked growth of the used CD market … We would prefer to resolve our differences with used CD sellers through market-based solutions rather than through the courts.”

The distrib has set several parameters for retailers carrying used CDs that seek co-op funds (label/retailer advertising that is a key part of music advertising). Among these rules is a requirement that stores “should not sell used CDs of specific titles which at the time are being supported by co-op funds.” The deal also specifies that retailers may not “advertise used CDs with new ones,” and new and used discs must be displayed separately, the latter already the procedure for most stores, including Wherehouse.

Brooks is said to be disappointed by the announcement, according to sources. Representatives for the singer would not comment on CEMA’s new position, but Brooks scheduled a press conference Aug. 31, the day of the much-anticipated Liberty Records release, “In Pieces,” to discuss the album, among other topics. Details were not available at presstime.

NARAS support

The National Academy of Recording Arts and Sciences, which announced its support of the distrib’s decision to withhold co-op funds Aug. 12, continues its stance against the sale of used CDs, despite the obvious blow to their cause by the CEMA decision.

“It does not affect our position at all,” said NARAS president, Mike Greene. “They are responding to the wishes of their legal counsel, and while I can understand it, I don’t agree with it.”

Sony and WEA representatives said execs at their distribs would have no comment on the announcement. A Uni rep was at the distrib’s convention in San Diego and did not return phone calls.

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