Returns - be they CD returns, vinyl returns or returns of any other product - are copies of a release that are sent back to the music distributor as unsold by record stores. When returns come back in, the record shop is basically saying to the distributor, "we won't be able to sell these." These returns then show up on the sales sheet the distributor sends to the record label - usually, returns will work as a debit on the account - the amount of returns will be subtracted from the amount of the sales, which is how labels end up in the red with their distributors. However, the exact way returns are handled both between the distributor and the shop and the distributor and the record label can vary greatly depending on the deal.
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