To stop the record from shifting during shipping and splitting the spline.For normal storage keep the record inside the jacket.
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also....for the longterm, lp's are stored (by hardcore collectors)outside of the jacket to prevent 'ring wear'and 'spine splits'. I have records I have owned since I was a teen (hard to imagine I was ever a teen), and the covers are as 'mint' as the records. The LP should be stored in a proper inner sleeve, then slid into the outer bag that the cover is stored in, but not into the cover, unless you don't care about the appearance of the cover. the truth is, original mint covers are harder to find than the records themselves in many cases.
eBay sucks for LPs. Lucky me I live in a bigger town with several places to buy used LPs.
My eBay experience ranged from decent to very bad. All in all it was not a cost effective way to add to my collection.
Locally I have found a few very good things at 'steal' prices. And lots of stuff at decent (way better than any online) prices.
My experience on ebay has been generally very positive. This summer alone I found three different records I had been looking for in vain for years. I have found several sellers who grade accurately and who take great care in the shipping of the LP's. And yes, the best sellers do all seem to ship them in the manner you describe, for the reasons others have stated above. And no, I have never seen any of the good ones describe a record as mint, unless it was still sealed.
There are certainly people out there who have no clue or who are trying to make a fast buck, but if you know what to look for in a seller, there are some great ones out there. Most of the ones I have bought from have even cleaned them very well first. I have only had a real problem once, and the guy made up for it by sending me something else I requested for free. If you are not sure about a seller, ask them all the questions you want. The good ones will always answer, whether it's ebay or audiogon or wherever.