Someone once gave me a CD of heavy metal Hanukkah songs called Gods of Fire. It was funny for a minute. Then it sat on a shelf for years, because I didn’t want to throw it away and it’s not like anyone on eBay would buy it from me, but I finally found a taker. The new company Decluttr paid me $2.85 for it, which, when combined with a bunch of other crap I sent them, netted me a total of $45.95.Decluttr buys anything—because that’s their business model. They will literally buy any CD, DVD, or video game you want to mail them. And they pay the postage, too.
"We have 470 Alanis Morissette Jagged Little Pill CDs," says its U.S. president, Brett Lauter. "We can’t get rid of them. We open up the box and it’s like, not another one! But we’re still buying them."
This isn’t some charity for 1990s survivors. The company, including its U.K. counterpart, notched more than $150 million in revenue last year.
The thinking goes like this: Although the number of physical-media retailers has gone down—farewell to Borders, Blockbuster, and many others—an actual market for this stuff still exists. In 2013, 165.4 million CDs were sold, according to Nielsen SoundScan. And although consumers could sell their own stuff on eBay or Amazon, it’s a big pain: We’d have to list them individually and manage a ton of listings, all to make a few measly bucks a pop, if anything at all. Who has the time?
Decluttr takes advantage of that gap. The reason it buys everything is simple, Lauter says: "The first CD you scan in may be another Jagged Little Pill. If we say we’re not going to buy it, you may give up. We just lost you. So we’re going to give you the minimum, 50 cents, because maybe your second one is Green Day’s Insomniac, and oh my gosh, this will sell quickly." In fact, that 1995 album is one of the hottest on the market now; Decluttr currently pays people $5 for it. "It would be poor judgment on our part if we’d blown you off on your first CD."
Decluttr then sells your media in a variety of ways, and earns more than a 50% margin.
The amount it pays you is controlled by a proprietary algorithm, which takes into account how many copies of an item are already in its warehouse, what the item sells for on Amazon or eBay, and how quickly it usually moves. That makes Decluttr’s prices a sort of Billboard chart for the bizarro second-hand market. What’s super hot right now? Judy Collins’s 1971 album Living. "We’re paying $5 because they come in and fly off the shelves," Lauter says. What’s not hot? The widescreen DVD edition of the 2000 X-Men movie; he has 416 of them piling up.
The company began life in the U.K. in 2007 as musicMagpie, and now receives 100,000 items there every day. Its two British co-founders officially launched a U.S. expansion this past January; they hired Lauter, the one-time CMO of Wine.com, to head up the operation. Lauter’s first move: change the U.S. version’s name to one Americans can understand. (The magpie reference only works in the U.K., where people commonly know it as a bird that picks up shiny objects.) Although it’s done very little marketing, Decluttr is already buying 10,000 items a day from people. Lauter expects to reach profitability by the end of the year.
