The relatively new and still evolving retail used-CD business is sending a capitalist shiver through the old-style marketeers, sparking debate, not to mention outrage, in the boardrooms of major record labels, distributors, and retailers. A used compact disc often costs less off the shelf than a new one costs wholesale. No fair! The public is scooping up the preowned recordings for one simple reason: CDs are rarely damaged through use, so used is as good as new. The industry that bemoans this trend tends to not acknowledge the fact that they created the configuration, thrust it down consumers' throats, and filled their coffers with the loot.
Even worse, it's led to a war on South Dixie Highway.
On one side of the line is Michael Schwartz, part of the new breed that sells and trades used CDs. On the other side is Martin Spector, an old-style marketeer if ever there was one. Neighbors in a South Miami strip mall, the two have found that the proximity is not working out very well. "Call it the War of the Digital Domain," Schwartz suggests.
A 50-year-old music lover, Schwartz went from a music-video format to hawking used discs at a store he owned at 11331 South Dixie Highway in July 1989, calling his new business the CD Solution. The idea was simple: buy used CDs for five dollars and sell them for $7.95. A year later, on October 6, 1990, Schwartz opened a second store, in Fort Lauderdale. This past December 14, the businessman unveiled a third outlet, at 1590 South Dixie - within spitting distance of Spec's Music's flagship store.
Martin W. "Mike" Spector founded what has become Florida's largest record-store chain when he opened his South Miami Spec's on March 1, 1948. Spector, 86 years young, was a lawyer from 1928 to 1937, when he went overseas to serve under Gen. George Patton during World War II. After the war, he worked for a couple of years as head of talent at Universal Pictures, and then came Spec's, which in 1950 posted sales of $108,000. In 1991, six years after going public, the company's 57 stores and 650 employees brought in nearly $60 million, with net earnings of $1,766,000. More than just music, as the slogan goes, the record-video chain claims to generate the highest sales per square foot of store space in that industry.
Not one millimeter of Spec's floor space is devoted to preowned product. "I don't want to sell used," Spector says flatly. "I'm not in the used business." He doesn't much care for others selling it, either. "They call it `used CDs,'" growls the magnate. "Most of the product they're selling is [free copies] that radio gets and people in business get and which are not supposed to be sold. It's illegal and unfair. The other thing is that people are ripping us off in our stores and other stores. They take the [stolen CDs] to them. [CD Solution] is like a fence."
"I'm not here for stolen CDs," counters Schwartz. "We lose them that way, too. We had some stolen CDs from his store, and we took them back to him. We gave him back CDs he didn't even know were stolen. Look, I just want to do my business."
Schwartz claims that Spector has visited his store more than once, that the Spec's boss hired someone to photograph his store and its customers, and that Spec's provided a list of its employees to CD Solution with the command that those people not be permitted to sell or exchange CDs there.
"We have known, have heard, a long time ago, that someone who had worked for us sold some of these to them," Spector says by way of explaining the list. "One of my managers said to give them the names of people who work here, so if someone goes over there and sells, [CD Solution] can refuse to buy it." As for the other charges, Spector says, "I haven't done a damn thing. I've only been in there once. This is garbage."
The bubbling feud boiled over on the afternoon of January 16.
"Two Spec's employees came in," CD Solution's Tony Udell recalls. "I knew both by face. I asked if I could help them with anything. They said `no' very curtly and walked across the store. I told them I had a list, and that I wanted to verify if they were on the list because their corporation would like me to do this. They explained that they had chased a shoplifter into my store. They give me some guff and walk out."
Udell feels that the two should have told him what was up immediately. (Both he and Spector note that it is common courtesy for record retailers to work together to combat theft.) Instead, he says, "They just left the shoplifter here. So I watch the guy. I can't say if he's a shoplifter; I haven't seen him steal anything, he didn't seem suspicious. He walks out the back door. I'm thinking, Hey, since they made this big to-do, I'll walk out front to Spec's. In front of their door were the two gentlemen from Spec's plus a Metro cop. I told them [the suspect] had left. The cop asked for a description, and I gave it to him. He drives away."
Udell says he and the two Spec's employees exchanged words after the cop drove off. "Out of the corner of my eye," he says, "I saw this little Mercedes next to the back door of Spec's. I've never met Mr. Spector personally. But I had a feeling about who he is. No big deal, I go back to my store. Two or three minutes pass by."
Then, Udell says, the man appeared on the back steps of CD Solution. Sure enough, it was Martin Spector. "He says he's been in the business 43 years, and where do I get off telling his employees not to come in the store," Udell recounts. "I told him it's my right to prohibit them. He told me I had bullshit coming out my ears. Then Mr. Spector grabbed me, trying to get inside my store. I said, `If you need to go through me, I'm getting out of your way.' He gets in, about six feet inside, and starts insulting me again, telling me my product is stolen, that it's promos. I said, `Why not inspect our records, sir? If your attitude is to insult me in front of customers, then audit me.' He kept saying, `Bullshit,' and he says, `I'm going to break your balls if you don't let me inside.' As he was walking back out, I told him, `You're an elderly gentleman and you really don't intimidate me.' He whipped around: `What right do you have to call me elderly?' I said, `Well, you said you were in the business 43 years.'"
Back outside, Udell says he told Spector not to disturb CD Solution customers, to which Spector responded that he had every right to do what he did. "Sir, you're a real arrogant bastard," Udell replied. "He whips around and bam, open-hand slap. He hit me. I was stunned. I'm thinking I should pound this little guy into the pavement. But he made a mistake. I say, `You just assaulted me. Eric [Udell's assistant manager], did you see this?' He's nodding yes."
Udell says he took a few hours to cool off, then called Coral Gables police and filed a battery complaint.
"That story is a lot of bullshit," says Martin Spector, upon hearing Udell's version of the events. "My clerk sees somebody steal a CD. So two employees went next door to see if he would sell it at CD Solution. The asshole next door, I guess he's the manager, starts telling my two people that they're barred from coming in his store. I said, `Listen, you jerk, who are you to say that? Your place is open to business.' He physically tried to prevent me from getting in his store. There was a little pushing and shoving. He said he was going to report me, that arrogant little jerk."
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Udell, who insists Spector slapped him, says, "I'm going to press charges, at the very least. Personally I don't want any money out of the gentleman; there was no personal injury. But I do want to be left alone. I don't need to run my business this way."
After meeting with an attorney this past Thursday, Michael Schwartz decided to file an injunction to keep Spector out of his South Miami store. "I don't want it to happen again," he says. "The old man could have been hurt. I don't want that to happen. I can't say if he will ever come back, but I have to protect myself. And him, I guess. I just don't want this to happen again."
The popularity of used CDs promises to remain a music-industry concern for some time to come, but the skirmish on South Dixie appears to be winding down. Spector seems a bit sheepish about his encounter with Tony Udell, commenting, "I hope I'm not portrayed as some pugnacious SOB. I'm not. This isn't a fight over customers, it's about an unsavory sort of business."
Spector says he's optimistic about improvements on the industry front. Record companies should, and will, he predicts, begin marking promo copies "not for sale," in a consistent and clear way, which would leave only theft to worry about. Meanwhile, he posits: "How would you like to be selling Michael Jackson records that cost you ten bucks for $14 or $16, when they sell it for $7.95?