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A Swap Meet For Your Used CDs

Mon Mar 13, 2006 1:00 am

Interesting article...

http://biz.yahoo.com/weekend/cd_1.html

A Swap Meet for Your Used CDs

The Wall Street Journal Online
By Vauhini Vara

New Web Sites Let Users Trade
Music, DVDs and Games;
An Unsuccessful Hunt for Elvis


If compact discs are practically obsolete, imagine what used CDs must be worth. Some new Web sites are betting the answer is something.

The sites, with names like Peerflix, BarterBee, TitleTrader and Lala (which launches today), are aiming to give consumers a second lease on life on their CDs, movies and videogames by allowing them to trade them for better ones. In the age of the iTunes Music Store and digital devices like the iPod, the sites are making an unusual gamble: that downloadable media won't displace people's collections of CDs, DVDs or shrink-wrapped videogames anytime soon.

For all the buzz around digital music, online downloads still make up fewer than 6% of music sales world-wide, according to the International Federation of the Phonographic Industry, an industry trade group. An even smaller proportion of movies and videogames are sold as Web downloads, according to analysts.

Instead of receiving cash in exchange for, say, a copy of the Who's "Quadrophenia," members of the new sites collect points that can be used to buy other CDs, or other media like digital video discs, from fellow members. For now, Lala lists only CDs, while Peerflix focuses on DVDs. Other sites, like BarterBee and TitleTrader LLC, let people swap between categories -- a movie for a videogame, for example.

Here's how the sites work: After signing up online, you can create a list of used CDs, DVDs or videogames that you're willing to sell. If another member asks to buy something on your list, the site will notify you, usually by email. Once you agree to a sale, you have a few days to put the item in the mail. Some sites help with that step: Lala sends its members prepaid envelopes and CD cases, while Peerflix displays a page with an address on it that can be printed and folded into an envelope. BarterBee gives members the option of buying its branded envelopes, but they can also use their own.

The more items you sell, the more points you collect. (Some sites, but not Lala, also let you buy points outright.) You can make purchases once you've gathered enough points, plus a fee of $1 or more, payable via credit card. The seller gets the points, and the Web site collects the cash. Most of the sites rely on this cash for revenue, though some also feature advertising.

The new Web sites, which started to appear within the past year, aren't the first to hit on the idea of high-tech bartering. At FrugalReader.com, bookworms swap their own dog-eared novels for fresh ones. At SwapStyle.com, members trade pinstripe jackets and high-heel boots. A recent post in the "barter" section of Craigslist, the online classified-ads site, offered a new laptop computer in exchange for a van.

Some of the new sites also have social-networking features, allowing users to trade feedback and music suggestions with each other. Lala, for instance, lets members create a personal page with photos, a Web log and space for their friends to leave messages.

It's still unclear whether the sites will attract enough users to become viable. Yet the prospect of buying cheap music and other media online without breaking the law could hit a sweet spot for consumers, says Ben Bajarin, an analyst at Creative Strategies Inc., a Campbell, Calif. consulting firm. (Copyright law allows consumers to resell copyrighted works like CDs after buying them legally.) Another advantage sites like Lala have is their ability to turn up music that is out of print or hard to find in a digital format.

Peerflix and BarterBee, meanwhile, bill themselves as alternatives to online movie-rental services such as Netflix Inc., where memberships start at $9.99 a month -- about the cost of buying 10 DVDs on one of the upstart sites.

Larry Gilbert, a 38-year-old worker at a transcription company in Seattle, says he once used Netflix but dropped out when he ended up paying the monthly subscription fee even when he wasn't using the service. "It was bleeding me dry," he says. Six months ago, he discovered Peerflix when the site was still in a testing phase and has since used it to trade a handful of movies.

A spokesman for Netflix said the site's subscription model has been successful and that its user base is growing quickly. Many of the upstart sites are still gathering users and a critical mass of content. Netflix had 4.2 million members at the end of last year, compared with about 150,000 current users at Peerflix, which launched in September 2005.

While Netflix stocks 42 million DVDs, covering 55,000 titles, Peerflix says it has more than 250,000 DVDs covering 30,000 titles. Lala says it had more than 10,000 titles from about 200 test users ahead of its launch but that it expects that number to grow quickly.

On a recent afternoon, requests on Lala for albums from Elvis Presley and others during the test went unanswered for several days. BarterBee, which launched in June, won't say how many people use its site but says it features fewer than 10,000 items in each of its categories -- CDs, DVDs and videogames. Testing BarterBee suggested the actual number is far smaller: The site recently listed just 69 horror movies, 58 rap albums and 65 videogames for Sony Corp.'s PlayStation 2.

The sites are also wrangling with getting people to actually send items on time and in good condition. Some have basic rating systems in which users lose points for taking too long to mail a DVD or sending a scratched CD. But those systems aren't robust, and many sites don't use ratings at all, which makes it tough to know if a seller is trustworthy. Jeremy Laabs, a 31-year-old film buff in La Jolla, Calif., began using Peerflix a year ago but says he's not likely to stick with it for much longer, partly because he found other users unreliable. For instance, he recently waited six months for a special two-disc edition of the action movie "Heat," but received just one disc.

Others are having trouble getting rid of their own stuff. Mr. Gilbert says he wants to buy more movies but first needs to collect points by selling one of five movies he has listed in recent months -- such as "Adventure in Iraq," a 1943 film about a group of Allied soldiers who get stranded in the Middle East and are taken in by a local sheik. So far, he's had little luck. "They're just sitting there," he says.

Lately, Mr. Gilbert has been going elsewhere for free movies: his local library.

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Mon Mar 13, 2006 2:20 pm

Sounds way complicated. Not many are buying into this idea that used CDs aren't worth much. In the past year or so prices for out of print CDs have exploded like the market for 45s years ago.