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Report: Best Buy to stop selling CDs; Target to pay vendors only for sold CDs

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Report: Best Buy to stop selling CDs; Target to pay vendors only for sold CDs

Electronics retailer Best Buy Co. Inc. has plans to pull CDs from its stores by July 1, while retail giant Target Corp. is demanding a change in negotiations with music suppliers, Billboard reported Feb. 2, citing unnamed sources.

Sources told the online publication that Best Buy's CD business is generating a relatively low $40 million a year. While it is pulling CDs from its stores July 1, the retailer does plan to continue selling vinyl for the next two years to keep its commitment with vendors. It will merchandise the records with turntables, according to the sources.

Target has a more aggressive solution for its CD sales. Sources told Billboard that the Minnesota retailer demanded that inventory be sold on a consignment basis where Target will only pay for CDs sold in its stores, leaving suppliers and labels with all the inventory risk of unsold CDs. Currently, Target is paying for all goods received within 60 days and must pay to return unsold CDs for credit.

Target gave suppliers and labels until Feb. 1 to agree to terms when it approached them with the proposal in the fourth quarter of 2017 but has since moved the deadline to between April 1 and May 1, sources told the publication.

According to the report, if Target is forced to pull the CD format from its stores, it could hasten the phase-down of the format, and sources suggested that it could "influence what happens in music."

However, citing a Feb. 5 statement from Target, Billboard said the chain is committed to entertainment software.

"We are committed to working closely with our partners to bring the latest movies and music titles, along with exclusive content, to our guests," a Target spokesperson said. "The changes we're evaluating to our operating model, which shows a continued investment in our entertainment business, reflect a broader shift in the industry and consumer behavior. We have nothing more to share at this time."