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It simply means that it is either a promotional copy sent out to either a store, radio station or reviewer...or something that the record company has discontinued and sold off cheap. The company marks them so they can not be returned later on for credit. Indeed, these are copies that were not sold in the regular retail market. Promotionals, review copies, etc. The only difference is a small hole in the barcode, nothing else. I've got a handful of those (LPs/CDs) myself.
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...or a really deep saw cut on the jewel case destroying the inlays. Lovely! Have never seen this mutulation in the European market. I have.
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Can't have cut-outs in my collection. Vinyl or CD. If it hadn't been for cut-outs, I wouldn't have had half of the LPs that I had in my first years of collecting. For OOP albums, I'd always choose a new cut-out over a used copy or a high-priced sealed one from a third party. And cut-outs were the perfect thing for when the music itself wasn't good enough to justify paying full-price for an album. Yep, same here. Cut-outs are usually perfect, except for that barcode hole (which I really don't particularly mind). Years ago, I ordered from a rather well know online soundtrack retailer "CLOSE ENCOUNTERS OF THE THIRD KIND" (the expanded digi-pack version), and it had a hole in the barcode (even though it was not sold as "cut out"). I did not even bother to complain, though obviously I could have. Everything else was fine though, it was just a hole in the barcode.
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