Cut Outs

8-19-10

Cut Outs

I recently had an exchange with a friend in England who wrote to me wondering why legit stock copies of US 45’s sometimes had drilled holes…Frank zappa 45’s were what we were discussing…

For 60’s Verve, a 45 gets scheduled / released.  Mono promo white label is sent to radio stations and some copies are given to ‘reps’ – the men whose job it is to sell the regular release to accounts.  Buyers at distributors evaluate the promo samples they are given and decide what to order for their business.  After that decision is made, buyer usually takes the 45’s home, keeps ’em or gives them to friends – or sells then, on the sly.

Stock copies are then pressed in fairly minimum quantities, unless the orders from distributors indicate a larger pressing is in order.  That being said, a typical stock small run is 3,000 units – which would seem to be the standard involved for typesetting 2 x labels and running a load.  Promo copies might be as little as 500 copies.  Label typesetting variants creep in when a record is re-pressed – usually due to demand.

The stock copies go out into the world, and sit in someone inventory.  Sometimes, they don’t sell at all.  When a warehouse supervisor looks at verve VK-10570, he notes in his order book that all 25 copies they ordered have not sold, so a request to return the records is prepared and sent to the record company.  If they approve the return authorization request, they can box ’em up, send ’em back – and their account receives a credit of the original purchase price of the box of 45’s, less the specified shipping amount.

As the 70’s approached, organized crime crept in – they would print counterfeits records, box ’em up and try to return them to the labels, often falsifying paperwork etc.  MGM / verve was one of the labels that ‘got involved’ with cooperating with organized crime, to defraud the (legit) record labels.

Back to the box of VK-10570 45’s: They have now arrived back at Verve’s Chicago-area warehouse, checked in, credit given to the distributor that returned them.  By this time, Verve will know if their 45 is going to sell or not.  I have heard that sometimes, returns were merely put back on the shelf, awaiting a customer’s order.  But more often than not – the box of dead dog 45’s will be sent to a drilling room.  The 45 (or LP) is drilled through the label, and then sold off for pennies on the dollar.  The drilled hole will tell the returns manager to not accept and / or credit a drilled hole 45 for full price, if someone buys it and tries to return it.  So, that’s how a blue label Verve 45 ends up with a hole drilled through it’s label.

Similar story with how LP covers end up with a hole drilled through the cover.  Another way they can get rid of the ‘drilled hole’ unwanted titles:  they can call an old guy in Evanston who has a “Cut Out Distributor” called XXXXX XXXX, and sell him all the drilled hole titles for pennies; he will then generate a list of titles that he distributes to thousands to record retailers, “LP’s for 50 cents!  45’s for 10 cents!”.

This is the fate that awaits LP’s that get pulled from a catalogue, such as FZ’s Verve LP’s, once he signed to Warner / Reprise.  It took a while for the lawyers to figure out that they owned the titles they had paid for and could continue selling them for another 10 years (hence late 70’s Verve issues with white/blue labels).

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3 Responses to Cut Outs

  1. Brian Ware says:

    Very interesting Ron. While I’ve known the basics about promos and cut-outs, this article really fleshed out the details.

  2. ronkanefiles says:

    I was told all of this many years ago. A wise old record business guy told me – he’s probably long gone by now. Someone has to remember this kind of stuff.

  3. postpunkmonk says:

    This is one of your best posts, EVER! Long have I lived on cutouts but this really make it all come alive with detail and nuance! And then I would go to Record City in Longwood and be gobsmacked at the cutouts featuring import 12″ singles/LPs for a fraction of their normal retail cost. Stuff I would have gladly paid full retail for had I ever seen it before then! No matter. My scant record buying dollar got a huge boost from cutouts back in the days (’81-’94-ish).

    My last experience with cutouts was a distributor in the Akron area who used to deal with the Camelot chain. We would go to the Hartville flea market near where my wife grew up and there would be a trailer there with thousands of CDs and laserdiscs at rock bottom prices. I used to clean up personally, and even flip the goods on e-bay for a nice profit. OOP MFSL golds at $8-10! This would have been the late 90s, and then it was no more. I used to see cutouts at Camelot in the early 90s but as the decade progressed, cutouts just became less and less evident.

    Where in hell are they now that I need them?! I’m no longer making those software developing bucks from multi-national corporations.

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