[This was a column written for Classic Record Collector, a magazine I still write for. I can’t claim particular credit for prescience, since the trends were already obvious. But the values of LP records, except for the greatest rarities, have continued in freefall.]

Why Records Make Bad Investments

Years ago, I had a customer in California. Let’s call him Jerry. He told me he was a very successful lawyer. He didn’t buy many records from my business, but the ones he did buy were generally expensive and mostly of the so-called “audiophile” variety. He wasn’t a major factor in our business, but we had a courteous relationship until he abruptly stopped buying records. That happens sometimes, and I didn’t think twice about it.

Several years later, I heard some interesting stories about Jerry from another dealer. This fellow, a New Yorker whom I’ll call Harry, is a specialist in audiophile and other high-priced records, who sells to a small group of customers and to other dealers. Harry had been Jerry’s main supplier. For more than a year, they had maintained a regular weekly date. Every Sunday night at the appointed time, Harry would call Jerry and spend about an hour on the phone with him, reading off new acquisitions. Jerry would frequently ask Harry if the records were “investment grade,” a term not common in the classical record business. He was concerned with the usual aspects of labels and matrices, but also with minutae about the state and condition of the jackets. Harry got top dollar for his records, but Jerry was satisfied to pay it as long as the records met their descriptions.

In the course of a year, Jerry bought almost $80,000 worth of LPs from Harry. Harry even flew from New York to California at Christmas time to take Jerry out for dinner. The following year they ran into a conflict and Jerry stopped buying records from Harry. As far as I know, he stopped buying records altogether.

Jerry was buying these records as an investment. He apparently didn’t care about the music, and although he owned expensive stereo equipment and did listen to some music, he wasn’t spending all this money for his own listening enjoyment. He thought he was going to make money.

Since I don’t know what happened to Jerry’s collection, I can’t even tell you if he sold them or not. If he did, he must have taken a horrific loss. In the decade since he bought the records, this particular field of collecting has experienced drastic deflation. Its aggregate value has probably dropped by close to half.

But even at the height of the “audiophile” market, Jerry would have been lucky to get more than a quarter of Harry’s prices from any other dealer. Record collecting isn’t nearly as codified a collectible field as stamps, coins, or antiques, fields that have at least semi-reliable price guides. Hardly anybody pays any attention to record price guides, except for inexperienced dealers–who soon, if they are lucky, learn not to trust the fantasies of the compilers–and would-be sellers, who become convinced that reputable dealers are out to rob them when offers for their collections amount to a very small fraction of the guides’ prices.

In general, records are very poor investments. There are obvious exceptions. If you come across a cache of pre-Revolutionary Russian vocal 78s, or authentic (not counterfeit) copies of Elvis Presley Sun label 45s, you have valuable records that are likely to retain their value. But most records are volatile, and the direction their value takes is generally downward.

In fact, most records are worth approximately nothing.

Recent articles have covered such phenomena as the auction of a murdered disc jockey’s enormous record collection at a major auction house, and might leave novices with the impression that records are indeed a promising collectible field. But even that case is open to further interpretation. The collector paid little or nothing for most of his records. He held them for many years, and his heirs had them for a while longer before deciding to sell. The relatively few valuable records helped to elevate interest in the collection overall. But if someone had bought all those records at retail prices, they would probably not have proven as good an investment as the average mutual fund. And this was publicized as one of the great record collections ever to be sold–“investment quality” records if there ever were any.

Recorded music is an entertainment medium. It bears a close analogy to books, another reproducible entertaniment medium. Book collecting is a far older, and therefore far more codified, field than record collecting. Yet, most books are worthless. Books with no collectors’ value clog library sales and the outside displays of used book dealers. Have you ever wondered why you see all those books on outdoor racks where they aren’t watched over or protected? The sellers aren’t really worried about whether they get stolen or not, since they are worth so little.

Obviously, some books are worth a great deal of money. Book collecting is still a very active field, and rare books that are in great demand bring very good prices. But it takes an unusual combination of factors to make a book worthwhile as a collector’s item. Mere age isn’t enough, unless you are considering incunabula, books printed before the invention of moveable type, which are collected simply for their age and format. (Berliner discs and Bettini cylinders are the record analogies, very early recordings which are so rare they are automatically collectible.)

To be valuable, a book has to retain strong interest for collectors, and it must be difficult to find. Anyone can buy a copy of Charles Frazier’s Cold Mountain, a first novel which recently attained enormous critical and economic success. But since the author was unknown when the book was published, its first printing was quite small, and the first edition is already bringing $300. Decades from now, the first edition will still be the only Cold Mountain to retain any value, and later printings will still be clogging those outdoor racks.

Like books, most records are worth very little. This has nothing to do with their artistic merit, of course. (A later printing of Cold Mountain is still just as great a novel as the first printing.) It’s just that when there are more copies of something available than there are people looking for it, the item doesn’t have much value. I still get requests in my business for LP records that I consider to be of very little value. When I find those records, I offer them to the people who want them (at appropriately low prices). But the next time I find that same record, it probably won’t even get into my catalog, because it’s unlikely to sell.

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