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?"

Comments

Not Mutually Exclusive

[Gleng]

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.

But...

[OmniGeek]

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...

It's the economy stupid!

[MountainLogic]

The US economy was booming and record sales were strong.

The US economy has crashed and record sales are down, doh!

Put people back to work and record sales will go up, doh!

Here is why...

[Mullen]

I'll sum up why the music biz is taking such a hit: "you can't put shine on shit."
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.

Re:Who goes to the store to buy music?

[Frymaster]

You either download the few songs you like, or you order it from an online store where it doesn't cost so much.

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:

1. 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
2. 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.
3. 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.

Nothing special about specialty

[poptones]

Sounds like the UK was the very opposite of here. When I was a kid my best friend was the guy who ran the record store in town. I used to hang out there all day, too, although I didn't smoke pot. I just hung there (and a few others) because we were friends and the store was usually pretty slow (small town).

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.

Re:Who goes to the store to buy music?

[bitmason]

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.

Pardon my french,

[paranoidsim]

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.

I bought ONE cd last year

[RiffRafff]

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.