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The Downward Spiral of Music Retailing
chundo writes "Business Week has an article about the financial problems plagueing specialty music retailers. Tower Records, Musicland, and Sam Goody are all "hemorrhaging money", despite efforts to move sales online. Some chains are trying to adapt - Virgin Megastore is testing an in-store service to download songs to portable players, and their Radio Free Virgin unit hopes to break into digital music retailing. Is the failure of conventional music sales reinforcement that the RIAA's business plan just doesn't work, or will it just provide them with more ammunition against the P2P crowd?"
Both, unfortunately.
"Proudly Posting Without Reading The Article"
The real problem is that nobody in the industry is trying to adapt to all the changes that have come about in the past few years. The RIAA has spent all its effort trying to stop P2P sites rather than finding an alternative to lure consumers back to buying.
And while all this was going on, the retailers were just sitting on their butts not doing anything. What the CD retailers should have done was band together and get on the RIAA's back about coming up with a better product that would bring back consumers to CD purchasing.
The retailers will always have the hardcore music listeners who will continue to buy CDs no matter what. They are the people keeping those businesses around at least for a little while longer. Unfortunately, the average CD buyer has been swayed by P2P sites, being satisfied with the quality of the files they get from them.
So, what the retailers (and RIAA) should be doing is developing new incentives for people to go back to CDs (or another media). Why not add cool features (like they've been experimenting with) such as bonus content, exclusive concert ticket buying rights, etc.? Or, they should really push the DVD-Audio and Super Audio CD formats (preferably picking one as the standard), which offer far superior sound to MP3s.
Perhaps it is too late. Perhaps the procrastination has killed the CD industry. I hope not, personally, because I highly prefer a physical product to MP3s.
Why? They want to know why they can't sell music? Here are some lyrics from some song...
Tell me, tell me, baby
How come you don't wanna love me
Don't you know that I can't breathe without you
Tell me, tell me, just how
What am I supposed to do right now
Why can't you love me?
Why-y, tell me, my baby
Do you think that would appeal to me, glasses wearing, Linux using, me? Maybe they should try songs marketed towards the demographic with some discretionary income.
Silly RIAAbit. According to a recent NPR piece, several folk and indie labels are doing just fine, thanks; one label just had its best year ever. Seems they distribute music people actually want to - gasp - Buy...
"My strength is as the strength of ten men, for I am wired to the eyeballs on espresso."
No, that's just bull, the fact is, I and many, many others just don't have the money to spend on music...plain and simple. It's just not a high enough priority.
The US economy has crashed and record sales are down, doh!
Put people back to work and record sales will go up, doh!
More then likely it will give them more ammo against the P2P crowd. The RIAA and the companies it represents are trying hold onto a buisness practice that doesn't work with the changing market. The real estate market is going through a similar problem. Instead of fixing the way THEY do things, they expect everyone to buckle and do things the way they've been doing them for so long. The RIAA knows they aren't going to get too much money out of the people they're suing, it's mainly a scare tatic. We sue a few people and guess what, people might not want to do it just because they don't want the hassle. So even if sales keep dropping they'll never admit it's them. And when/if sales do return to normal, they'll just simply praise their own efforts. Either way, the people on the technology side lose.
The answer, obviously, is that there isn't money to be made in P2P, at least not really. Kazaa can maybe make more money off of advertising than they spend on hosting, but thats because the overwhelming majority of the content is provided by users for free.
Of course, its not really free. The record companies pay to record, produce, and market it. If they had to cover the costs of actually producing content on ad revenue from a P2P service, they would go bust, like every other dot-com that thought they could make it big off of banner ads while giving their product away for free. They quite reasonably don't want to do that, because they have a business model now that, provided their consumers respect existing copyright laws, is quite a bit more profitable.
Is it just me, or is sales for EVERYBODY seem to be a little bit slumped? From what I learned in a basic economics class, is that the economy can go up and down. You would think that since we've got the worst economy in 20 or so years, maybe people are holding off on buying CDs to do things like, oh I don't know.. PAY THE BILLS?
Perhaps sales for them will start going back up when jobs quit getting exported overseas, when people start buying things as locally as possible, and corporations stop paying people dick for wages. I think if this were to happen, people here would have more money, and they could buy more CDs.
There is no good new music out there. Period. It's all a rip-off of something else, which sucked.
CD's are over priced. I wanted to buy a older CD (Metalica's, Ride the Lighting) and it was $14. Come on, that album came out 20 years ago, why so much?
Amazon.com and other like online sellers are killing these companies. Why? I can sit at home and order new, used and hard to find CD's, DVD, books and more. Why drag my ass out to Tower Records (Which always plays the worse music on the store's stereo system) and pay too much for music and DVD's.
The music biz business model is not working in todays market, so they'll blame pirates. Make a good product and sell it at a fair price.
Linux O Muerte!
bingo. although it should be noted that p2p only gets a small amount of attention in the article. the bottom line is that the retailers are getting creamed on price. simply, there are other channels that offer the same material for less and consumers are going there instead. sure, p2p is considered a factor, but the three big culprits are:
- discount stores: walmart, target and friends can flog the most popular cd's at a discount - sometimes even as loss leaders to generate traffic. with prices sometimes several dollars less than, say, hmv people will pick up the new madonna cd along with their toilet paper. this price discount is all about volume
- online sales of new cds: amazon for instance. they can underprice tower records because of volume just like walmart, but also because of reduced operating costs of not having a physical store front.
- online sales of used cds: ebay here. even for something as durable as a cd, the used price always comes in lower than new. with the internet facilitating used cd sales, it's taking a big chunk out of the retailers.
note also that this is only about retailers, not labels or artists. the riaa is concerned about geffen moving units. it doesn't necessarily car if those units are moved through tower or target or amazon.2 1337 4 u!
Imagine that - go to any store, download an album onto the iPod in a matter of seconds (via the fast Firewire or USB2 ports). This way anyone with an iPod, no matter what OS or platform, can get music onto their iPods!
You've just named a grand total of two projects that have been able to stay afloat because of donations from the public; and only because these are extremely high profile projects. I'm not even sure Blender counts, because the original company that created Blender just sold the source code, they didn't continue to develop it.
Go ahead and ask the average SourceForge developer if they're able to quit their day jobs and continue their projects based upon PayPal donations. I dare you. I'll tell you right now, the positive response rate will be in the neighborhood of less than one percent. Less than one percent of open source developers are able to write open source for a living.
Similarly, if you switch the music business over to a harebrained donationware scheme, you will absolutely kill the independent artist, the person who languishes in his/her studio day in and day out just so they can sell a couple thousand copies of an album for $10 a pop.
That's the great thing about capitalism: companies charge what the public will bear. You may not be willing to pay $20 for an album, and that's perfectly fine-- that's your perogative. However, you may be willing to pay $.99 for the one good song off an album, in which case I would refer you to the iTunes Music Store.
But under no circumstances should the entire industry go to a "take it all, and maybe you'll throw us a dollar" model. It will kill the independent musician.
You have two consoles before you. On the left, the blue console. It has a full catalog of DRM-restricted songs made by many major record labels. You are not allowed to burn those songs, listen to the in your car or portably, and each downloaded song costs one U.S. dollar. If your hard drive crashes and takes your licenses with it, you've lost rights to all the songs you once had, and you must buy them again. Downloads are quick and easy.
One the right, the red console: a vibrant P2P network teeming with shares. It has perhaps 50% of the musical selection blue, but with the added benefit of hundreds of terabytes worth of movies, software, images, and, well, above all, porn. All content is free, based on open standards, and unrestricted. Downloads are quick for popular media, but can take days or even weeks for hard-to-find items.
Which would you choose?
C'mon, be honest. That the latter exists right now and the former isn't even close to is beside the point. Human nature being what it is, blue has almost no chance of ever succeding while red is right there by its side.
I think there is a world market for maybe five personal web logs.
Why do you listen to artists that only come up with a few songs that you like? Seems to me like you haven't found what you like if that's the case.
Also remember that buying downloads comes with DRM, and also leaves you without artwork or liner notes, or a physical object containing your product. Personally I'd rather go buy a cd single for a couple dollars if I only liked one song, get the packaging, and the disc, and make my own DRM free mp3s, or oggs, or whatever.
Plus you get a b-side song or two that way.
I usually download full albums, and then decide if I like them. If I do I look for used copies that are around $4-5 since that's what I'm willing to pay for a cd.
A new release is Metallica's St. Anger, downloaded it, hated it, not buying it. Nobody lost a dime in this other than me paying for the electricity to listen to it. Hey, electricity broke the DMCA! Time to shut down the power plants!
Type O Negative's Life Is Killing Me is another very new release, which I loved, (and I'm talking about the ALBUM, not a song here or there) and plan to buy it as soon as I can find it for a price I'm willing to pay. In the meantime they're going to get money from me when they come to town, because I'll be right up front at the show.
But we all cared about music, and we knew music very well. All the store sold was musical equipment, stereo equipment, and music - not pins and ribbons here. But my bud was in school and didn't really care too much about the store - it was a trap for him (the family business) and he was more concerned with getting his phd so he could get on with a career of his own.
Anyway there were probably tens of housands of music stores like that back then. Some were hard core, some were family businesses - but most all had one thing in common: the people running them at least KNEW something about the music they specialized in. A good many of them traded in used records as well.
But most of those places are gone now - they died even before the chains started feeling the pinch. With the chains in the back pocket of the majors, I think this change is actually a good thing. Because the one thing the indierecord stores CAN provide like no other is service. If the indies were to specialize in indie artists, in providing a local "hangout" and a place for people to gather and trade knowledge and music, they could once again become a dominant force in the industry.
Consider: why is it OK to hang out in a book store, sit and drink coffee and read all day, but record stores think this is so bad?
Even with the internet, people still like gathering and hanging out. Provide a place for them to feel comfortable and organize your service around that model, and there's no telling where the stores of the future could go. Think about people sitting around, drinking coffee and eating crullers, trading music on their ipods, exchanging knowledge - maybe even bringing in their old LPs to have them "ripped" to SHNs or APEs on the store's high quality LP playback system.
No matter how they spin it, I just never hear a downside when talking about the death of the (old) music industry. It's a great time to be alive... unless you're a slave of the RIAA.
Plus (on amazon etc.) you have an essentially unlimited selection. You can read what other people and reviewers have to say about a particular album. You can typically listen to far more extensive (albeit shorter and lower quality) song clips. You can take your time and just put something in a wish list. You can easily skip over to related titles. Overall it's a much "richer" experience.
I still sometimes go in stores and do the serendipity thing especially in a really good used store (like Amoeba in SF). But, overall, online's bothe better and cheaper (except for loss leaders). That's hard to beat.
Industries like the RIAA and music distributors are using a model that doesn't work anymore. Technology has made them redundant. All you need to play recorded music is to have a copy of it. Obvious enough, but only recently has the media carrying the music itself become irrelevant.
Time ago, that copy came on vinyl, then tape, then CD. Fine and dandy, and the record companies supported this customer demand fairly well (not really music companies - the label and the artist was a different thing). They progressed through the different media and made a ton of money.
So here we are in 2003, and people still want music, but many of us don't need or even want a CD to hold our copy of the music - we just want the music!
That's what the record industry can't handle. Their distribution and business model needs to be overhauled. They need to reshape themselves into pure production and marketing houses, but get the hell out of the distribution game. If they were smart, they'd sell "per song" to Amazon, or whoever, and do it just like iTunes does. Hell, you could set up terminals in CD-Stores for punters to grab the tracks they want directly to their iPod and then pay at the counter.
P2P has always been there - we used to swap tapes and dubs back in primary school years ago - so I don't buy the "Napster is Killing Us" lines. If they play the game right, people won't need to scour the net to find their favourite tracks in high quality - they'll just dial up Warner Music, or the 50c website or whatever and download it. I'm sure some payment method could be handled, say a monthly account type of thing (eg, pay up purchases on the 20th), or an online version of EFT-POS to avoid CC charges.
It's not that difficult, but these cats seem to be shit-scared of making the necessary changes
Forget thrust, drag, lift and weight. Airplanes fly because of money.
(A RANT) ...Especially since the FCC's recent "deregulation" ruling allowing monopolies of the airwaves. Say goodbye to anywhere having a "local scene" that would generate some income for the music industry. Without the local airwaves to promote local music there will be less and less choice. Without a large pool of local musicians to draw upon, and by focusing on narrower and narrower "cash generating genres", the music is always going to get worse, and sales will go down. Right now music is targeted at 14-year-old girls and moody teenagers, AND THAT'S IT. What about the rest of us? Box sets of stuff that's 20 or 30 years old. Wow. How about some good music? How about videos on regular TV? If the Beatles came out now they'd be ignored, because they "don't fit the mold". Screw the music industry! Support the musicians, encourage the good ones, and spread the word around when you hear something good. Go see the bands live. Buy a t-shirt. It's about time that the music industry stopped being a bunch of lawyers and turned into artists again.
But yes, I agree, the entertainment industry has always been "big business" and it's not as if the execs have only recently gotten greedy. It's just that the whole thing has been snowballing and a significant minority of consumers have reached the breaking point.
HI, MY NAME IS ISAAC.
But fuck them. Fuck them in their ears, just as we get fucked in the ears listening to the shitty music they put into the machine. Fuck their silly equations implying what music we "must" like. The stuff in these "speciality" stores is the crap that plagues today's radio stations. I Live in one of the most culturally diverse areas of the US, the New York Metro area, and most of the radio stations here are owned by the same company, and most of them play the same garbage. Do they think we want to listen to a bunch of whiney, scrawny white kids with tatoos or a bunch of illiterate hip hop artists talking about clubs, cars, guns and bitches? I certainly dont, and none of my friends do either. Maybe thats why album sales are down? Maybe its also the 18 dollar sticker adorning the cd's. Have i illegally downloaded music? yes. would i if i felt i had a viable alternative? no. Being morally bankrupt as they are ripping off the consumers, i hope they go financially bankrupt as well.
Which wouldn't have been playable on any of the current players.
Which would have required record stores to stock twice as many discs, meaning probably half as many selections, since they would have the old and new formats.
Which would have increased mastering, manufacturing, and inventory costs.
Which a lot of people wouldn't have wanted to update to because frankly most of us don't want to spend an additional $500-$1000+ for a difference we can't hear.
Which wouldn't have succeeded well at all for years at best.
Which might not have played an any computer players, ending that market.
And which wouldn't be immune from digital ripping, compression, and filesharing anyway.
You call that a plan?
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
I haven't bought any this year. I used to buy a couple per week. I have 61 mp3 files (I just looked) on my computer. I have thousands of ogg files, all ripped from my own cds. I don't buy fewer cds because I'm stealing music, I buy fewer because
a) I don't much care for what the studios are producing these days, and
b) I've got other things to spend my money on besides cds that may only contain one or two decent songs.
Piracy is an easy scapegoat, but as long as they believe that piracy is the cause of all their ills, they will continue to lose revenue and must eventually figure it out or die.
They are blind to their true problems.
"I might have made a tactical error in not going to a physician for 20 years." -- Warren Zevon
That, and the crappy US economy at the moment. I sure don't go buy music when I'm broke...of course, this is just another excuse to say "OH, they're PIRATING because they CAN'T AFFORD IT".
Sadly, the RIAA answers their own question about why some people prefer to go to the trouble of pirating (hunting it down, getting a stable connection, finding correctly labeled files at a decent bitrate), but they dont realize that the answer isn't "eliminate piracy", that's a fight you'll never win.
The answer is better quality for lower cost, just like EVERY OTHER INDUSTRY IN THE WORLD MUST DO. Somehow they think they can do it sdrawkcab and sue/lobby their way to success. Thy're not losing much from me, I never pirate music anymore because I feel most things I could find I wouldn't want to listen to. Other people, however, won't just vote with their wallet, they'll vote with their LimeWire. The music industry is destroying themselves and they don't even realize it.
Intestesting side note: Think this dip in sales might possibly be a massive "voting with out wallets", and the RIAA just thinks we're all pirates because we're not buying? I think they need a wakeup on the content front, I'd really be happy to give them my money if they'd improve the situation instead of just antagonizing it. It's easy guys:
- Make it better. (More interest.)
- Make it cheaper. (More units sold.)
- Profit! (And everyone else is happy, too.)
Not everyone is interested in "stealing". We do, however, like to be entertained and we're willing to pay when we can afford it. Think about that.CAn'T CompreHend SARcaSm?
That's the RIAA's real problem. Competition.
There's a lot more content on a DVD than an audio CD, it costs far more to make a movie than an audio recording, the movie plays longer than an audio CD, yet movies on DVD are cheaper than music on DVDs. What's wrong with this picture?
And then there's the basic problem that most of the mainstream musical genres are mined out. The best symphonies are a century or more old. The best jazz is from the middle of the 20th century. The best rock was made several decades ago. The best house, rap, and hip-hop dates from a decade ago. Until somebody comes up with a new mainstream genre, the RIAA is stuck. (People keep trying. Gospel rock? Country/rap crossover? Noise music? Next, please.)
Video killed the radio star...