LP "Cutouts"

Wrong. Records are a fully returnable commodity at wholesale, so a title needs to be 'deleted' in order to reduce a label's exposure to future potential returns from stores (and accompanying return credits, which may be applied against future purchases).

When a record is deleted, notice is given by registered mail, and then there is a period during which stores are allowed to return the titles in deletion - these days as long as 9 months. After that the record may no longer be returned for credit to the label.

Deleted titles suffer various fates - they may be discounted, they may be scrapped en masse, and they may be sold to 'cut-out' distributors. These distributors (Performance was a notorious one in the 1980s - read the superb book 'Stiffed' to find out how one cut-out distributor used by MCA was tied up with the Mob) specialize in buying excess stock of deleted (unsaleable) titles) from labels and offloading them at anywhere from a quarter to a buck a unit.

Deleted titles are often marked with a punch or a clip to show that they cannot be returned anymore for credit. Hence the term "cut-out."

Sarmarks in the corner of a CD case!? Nah, that's just from me trying to get the darn thing open!
-John

I agree with Swampwalker, typically the cutouts, whether they are holes or saw marks on the edges, were used to denote overstocks that would be sold by stores at reduced prices and were a way the stores could tell that, if someone returned one.

If you buying LPs only for the music, cutouts are in my experience a good way to get somewhat cheaper vinyl. Keep in mind though that cutouts typically command a lower price as compared to the same LP in same condition noncutout - good if you are buying and not so good if you are selling. Why? 1) Because some people are collecting the cover as well as the vinyl and holes or saw marks can detract from the look and 2) albums typically became cutouts at the end of their popularity which translates to later pressings of the album which may denote larger press runs per master which in turn may denote lower quality. I have not found that to be an audible fact with reasonable care of the albums and a good player.

records being pressed today have no return priviliges. a dealer must take the loss, if he has to take a return from a customer, or buys too many. a distributer or middleman may make exceptions, but the label sales are strictly one way given the small pressing quantities. cut outs were sold to deplete inventory when a title was temporarily or permenantly discontinued. sold at a lower cost, the artist or artists saw no royalties from these sales.

Why did a retailer have to "cutout" the album. Why didn't he just reduce the cost??

I mean, I buy things on sale all the time. I don't remember having the shirt I bought having a piece cut out. If I have to return it, I have a receipt that shows how much I actually paid.