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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?"
the music industry has been digging its own grave now for a while, i wonder how deep they'll get before they fall into it and die the death we all know awaits them.
it's basic evolution really, adapt or die. and it seems someone doesn't want to adapt...
Of COURSE the RIAA will use this as evidence against P2P. Hatch wants to blow up your PC. Perhaps he should think about blowing up the RIAA instead.
The first candidate for House or Senate who proposes rolling back copyrights to 14 years has my vote, regardless of party.
Napster-to-go says "Fill and refill your compatible MP3 player", which is a lie. It's not MP3. It's WMA with DRM.
WRONG!
According to the RIAA and MPAA low sales is because of piracy, therefore we must have more laws and no rights.
Why buy entire CDs when we can pay only for the song we like a from a per song legal music download site? The MPAA claims that movie viewing has gone down, but they fail to take into account that you can see movies as well at home on a home theater system without the $5 popcorn or the chewing gum on the floor.
Fight Spammers!
How dumb are they?
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
They just sell the same crap you get at Target. Real specialty music stores are doing quite well, at least from what I know from articles like this. When you sell the same crap as everyone else, the only ways you win are through convenience (e.g., location) or price. When you sell good music - a rarity through the Big 5 - that people want, they'll come back to you both because you offer a unique product and because, at least in some cases, they'll want to hear some of your suggestions. A rapport develops that no crappy chain can emulate or replace.
When Richard Branson started the music retail arm of his empire (of course, back then his empire was only a youth advice center anyway!) he capitalised on a big gap in the market. In the UK at the time (the early 70's), all record stores were really boring places, no music playing, and the people in the store didn't care about music.. it was just another thing they sold, along with pins and ribbons. Richard Branson figured he'd create somewhere where music was playing, where the staff were all hippies who 'digged' music, and where customers could lounge around on beanbags smoking pot and checking out the latest tunes. What's more, he'd sell the records cheaper than anyplace else. His store (in Oxford Street, and on which he actually paid no rent to start with!!) was flooded with customers for quite some time. He noticed after a while, however, that while sales were brisk, a lot of people were just turning up and smoking pot all day without buying anything. He cleared these people out, and made it so that people would still want to come to the store, but not that they could stay there all day. And so was developed the current model of 'specialty record store' retail. This is a model that hasn't changed since the 70's! Virgin Megastores tries new things like having listening booths, and computerised searches of their CD database.. but it's too little too late, in my opinion. The next model of retail kicked off in the late 90's with the discounted 'pile it high, sell it cheap' WAL*Mart model of selling records. The big problem, however, is that this is not much different to how records were sold in the UK in the 60's! The staff at Wal*Mart don't know music, and they could care less about what you're buying So.. it seems we've come FULL CIRCLE. And let's face it, the whole music industry has lost its vibe anyway. I remember back in the 'good old days' that it was fun to go buy records, and it was a real thrill to get them home and put them on. Nowadays? Sure, there are a lot of good gigs going on, but few people exhibit the same excitement over CDs these days, since you probably heard half of the tracks on MTV/the radio already anyway. I think commercially music has lost its way, and while there's still a LOT of great music out there.. music just isn't as fun anymore. These stores are feeling the pinch. Why go and hang out at a record store when it's not fun anymore?
I have no idea how Sam Goody would be hemorrhaging money when they inflate their shipping costs by 875%.
I bought the GBA game Advance Wars from them and paid $14 US for shipping. It took well over a week to arrive, and when it did the postage mark was for $1.60 US.
I let them have it in an email, but they claimed it was all part of the "third party shipping".
Whether it's games or music, if they're going to practice business like that, I hope they fold sooner than later.
This goes for DVDs at the offending retailers as well.
-matt
I agree with you that the RIAA will do all it can as it writhes in its death throes after having missed the bus when the Napster Revolution took place.
It reminds me of what Thomas Jefferson wrote:
To see a world in a grain of sand, and then to step back and see the beach where the sand lies
Suppose:
-Tower (or other big music retailer) had a massive storage system with a vast library of legally copied CDs. Could be near-line storage to be a bit cheaper.
-I walk up to a kiosk and pick songs from the catalog of music, building my own playlist.
-I pay the cashier using the playlist number.
-I wait a few minutes while my custom CD is burned.
-The waiting area is full of t-shirts, knick-nacks and bric-a-brac related to music so when I pick up my burned CD I pay for a few shirts and a pair of "Fleetwood Mac" bookends too.
-I am happy with my legal, high quality music.
-The store is happy with my money.
It would work for me! As it is, I have not been in a music store or the music section of a bigger store in years. I refuse to pay $18+ to get just two songs that I like mixed in with songs I'll just ignore.
they have reasonable prices (about $11-$14 new)
they have a good selection (everything but pop and newer country)
they have a knowledgeable staff
quick special ordering
they carry smaller, independant labels you'll never find at *insert huge chain here*
Just an example, the new Radiohead album:
borders: $19.99
independant record store: $12.88
... is employees who know where the really good stuff is.
From my experience, the clerks in music stores - with a few notable exceptions - mostly listen to rap, metal, or old rock. What I want is to walk into a store, talk to someone, and have them guide me to where the good (!!!), relatively unknown music is. I love going to my friends with a new CD and saying, "Check this out, I bet you've never heard of them, but they're an excellent band!"
Until that happens, I'll listen to shoutcast and download the good stuff. I'll do the work myself.
- "Nobody came out that night, not one was ever seen. But Old Man Stauf is waiting there, crazy sick and mean!"
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?"
The RIAA uses P2P as a scapegoat for the failed business models of the labels it represents and their inability (or unwillingness) to adapt their copyright stance in the face of new technology. In fact, the answer to your question is "both" in that as the reports of declining sales come out, the RIAA uses P2P to distract attention from the fact that labels have degenerated into top-heavy marketing machines.
The RIAA is not the record industry. When the RIAA says "we", they mean the big 5 record labels (Universal, Sony, EMI, Warner's, BMG). The RIAA is the recording industry's lobbying arm, charged with keeping the names of the labels out of the headlines as they seethe forward into the breach.
I'm wondering if accused P2P users can adopt a defense that they are non-profit broadcasters who got caught not paying their compulsories.
When I was a kid, we only had one Darth.
..is that most people treat P2P as radio/TV - and just as people don't run out and buy everything they hear/see on TV likewise they don't do it with P2P - and wouldn't have anyway - the loss is probably negligible.
If Google really cared they would fix Android Chrome to reflow text, instead of discriminating
The RIAA has no one to blame but themselves. We as consumers have voted with our wallets and they simply refuse to accept this so they are trying to legislate us into doing it their way. It's obviously not going to turn out how they would like it to.
I saw this coming when they went after Napster. Take down the largest at the time P2P service with centralized servers and replace it with numerous decentralized servers with no one to go after except for the user and you're fucked. So going after the person you're trying to convince to buy more of your product is your business plan RIAA? You bunch of fucking idiots. Whoever is dishing out the advice to the worlds largest group of techology n00bs should be shot. This has to rank as the best example of how not to do business, how not to work the P.R. angle, and how not to work into motivating your customers to spend more on your products.
You cannot legislate the free market via scare tactics and propaganda while in the mean time not working to create a more technology based business model and not expect to demonize yourself in the process. As soon as the RIAA starts to bear down on users and suing the shit out of them then they'll really start to see a backlash of epic proportion. It will come to that and they're going to be in for the shock of their lives. Fuck the the RIAA/MPAA. They are getting exactly what they deserve and there's not a person I know who feels any amount of guilt over not being ripped off and now having a choice.
You aren't free to do anything, until you've lost everything.
There's an answer that could virtually wipe out P2P music swapping, but the record companies are so blinded by greed that they will never see it.
Ever since recorded music first came into existance there is one thing that consumers have wanted and the record companies have steadfastly refused to deliver:
The ability to purchase exactly the songs you want and only the songs you want. At various times you've been able to buy singles in various formats (45 rpm, CD, cassette) but even then, the record companies dictated which songs were available.
The answer is amazingly simple: Put every song in existance on-line in one central location for download at a reasonable price (25 cents per song or less) in standard mp3 format with no DRM crap. This would be enormously successful and would generate huge revenue.
But the record companies will never agree to this and never even allow it to enter their minds. They are still locked into the mindset of "why should we let people buy one song for a quarter when we can force them to buy an entire CD for $18".
You are surely kidding. Commercial music has the shittiest dynamic range ever.
I rarely, if ever, go to a lot of the music stores (like Tower) that I used to make special trips to visit.
When you're avoiding 80% - 90% of the stuff in the store (because the big labels decided that customers would like things like SDMI, coasters, etc.), you sometimes wonder, "why bother?".
(Tower's recent move to increase their already not-so-great prices, and to cut their hours, do not exactly seem like a winning recipe to lure people away from the discounters.)
It depends a lot on the label. I have friends that work at (or are signed to) several indie labels in various parts of the electronic music scene - from what I can see they're being hurt WORSE than the majors. Nowadays you can have a world-wide "hit" and it'll only sell a few hundred copies.
I don't personally think that "the sky is falling" because of file sharing. Music will still come out regardless of what happens to the labels. I think it's absolutely naive, though, to think that file sharing is somehow "helping" these labels through better promotion or whatever.
Ten years ago when I was in college *every* kid I knew in the techno/industrial/etc scenes had a couple dozen CDs (or somethines LPs) in their dorm room. Some of us who were real music junkies had FAR more. Now kids in the same position usually have no CDs but have 3000 bootleg MP3s on their harddrive. And this is the *core* market for these labels - 40 year-old executives don't buy this stuff. Even if their music is more popular than ever they are selling a fraction of the units they once did.
Labels that specialize in music with a older demographic (folk, jazz, etc) may be doing quite well - their customers are more likely to have disposible income and less likely to be spending time online file sharing. But please don't think that "one label had its best year ever" means that it's a great time to be an indie label.
(FWIW, I'm not concerned about this trend, really. There will still be ways for artists to make money off their music. In the trance scene, for instance, few artists make much money on releasing CDs or vinyl... but once they have a few big hits they can command big money for live-pa or DJ performances)
- If I want to buy a "top 40" record, I'll pick it up for $12 at Best Buy or Target or something like that the next time I'm in the neighborhood.
- If I want to buy an obscure record by a local or indie artist, I'll visit the local House O' Piercings And Attitude (aka indie record store).
- If I want to buy something that nobody'll have in stock and it'll have to be special-ordered anyway, I'll go to Amazon.
See Sam Goody in there? Neither do I. There's no reason for me to go out of my way to visit a place that charges 50% more than Best Buy for the same mainstream crap. Besides, my days of "gotta have that new record right now" are over. If I am feeling lazy and willing to pay the premium, I'll just buy it from Amazon.Forward, retransmit, or republish anything I say here. Just don't misquote me.
I use to buy two CDs a week. Then it went to one CD and one DVD once I got a DVD player. The first thing I would do when I buy a CD is to make a copy of it and put the original away. This is simply because I have kids and the number of scratches I find on them (once I pick them up off the floor) would make the initial investment I made very expensive. I don't think this is piracy, I believe this is simply looking after and valuing what you have. I stopped buying CD simply because of the false and demeaning stance the RIAA has taken which would make my backup activity illegal! Although piracy should be (and is) illegal, where the phuk does the RIAA get off assuming that I am a pirate simply because I value my property.
Not trolling. After I sent the first message, I realized that I should have clarified.
Recorded music is a waste of time. To illustrate my position, think about sports.
Say you like baseball and the Yankees. You like baseball insofar as it is a tool toward the goal of gaining some level of pleasure and enjoyment. You like the Yankees because you admire how they perform in the moment. You don't watch the same game over and over because sports are not meant to be enjoyed as a recording.
Same goes for music. It's the performance that counts--much more so than the message or the sound itself. The enjoyment comes from watching musicians do their stuff in front of a crowd--be it 10 or 10,000--with the chance of disaster.
That's where the talent is. That's where the fun is. And not incidentally, that's where the artist makes money.
My fondest memories of music are at concerts--Dozens of them, not lounging around by the stereo.
Laws are for people with no friends.
Secialty restaruants are having a similar problem of people going to food discounters like grocery stores to get things to eat. Food "pirates" have enven set up soop kitchens! They must be stopped or the country's biggest and most important industry, food, will implode.
Friends don't help friends install M$ junk.
"the bottom line is that the retailers are getting creamed on price."
;-), listen to fragments without having to ask a store clerk, and choose from every piece of music known to man and then some, generally not having to worry about something being out of stock.
It's not only price. There's three area's where retail music stores fall short of the alternatives:
1) Price.
2) Selection.
3) Convenience.
Using P2P or online music stores, you can usually get better deals (p2p is free, deals don't get much better than that
Alternatives to retail stores don't have to be online though. I get all of my music from the CD rental place in the library and I copy the ones I like. I pay $2 a week to rent a CD, they have 250.000 titles available, and I can listen to any CD I want: they keep the discs inside the jewel cases in the racks. There you have a good deal, good selection and true convenience. Best of all: the rental price and the price of blank CDs include royalties, so it is perfectly legal to make copies and keep them according to the authorities.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Recent thought that occured to me: mass market tactics are generally designed to appeal to young consumers. You could argue that the high water point for the median target age of that demographic happened when the children of the baby boomers, the largest demographic wave to hit the scene in a while, peaked sometime in the late 80s and early 90s. Put plainly, there are fewer kids to pick up the trends.
Tweet, tweet.
But what are DVD prices? Why does it cost 2x as much to get a DVD over a vhs tape when the DVD costs much less to make. DVDs can be made very quickly, a video tape must spend at least 15 minutes in a very expensive machine.
But 3.8 million DVD players isn't much in the US. At one point a few years ago there were more than 280 million TVs in the US (I know more than one per person) so 3.8+1.9+? is about 2% which is very lame considering a what a DVD player costs. According to wal-marts web site the cheap ones are US$59.6 but the DVDs are 17 to $20.
I think record sales are down beause everyone has the music the like and the new bands all suck. All the CDs I have bought recently are either Indy bands, replaments for dmanaged discs or old bands with new material (and I'm not talking best of).
If the record company wants some of my business, they are going to have to improve the product and keep the price down. I used to have a rule that I never paid more then $10 for a CD and most of my collection is in that price point and my only exceptions were imports and local bands.
It appears that the RIAA has been judo chopped by the "invisible hand" of economics.
I mean between the fact that the RIAA is acting like an economic cartel and the fact they've set the price point somewhere in the stratosphere (e.g., US$18 or more per album-length audio Compact Disc), no wonder why sales are nose-diving. Anyone's who's taken a beginning course in economics in college knows that if a cartel sets its price too high, there is WAY too much economic incentive for consumer to thwart that cartel, hence the rise of file-sharing sites like the late Napster.com. If the RIAA had set its price at US$11 per album-length CD, the economic incentive to pirate music drops dramatically to the point that music piracy would not be worth the effort.
It is the MPAA allowing new-release DVD movies to be priced at US$20-US$24 that has actually discouraged movie piracy here in the USA, along with the fact that broadband Internet access is still not common and also that the file size of DiVX files of a movie are still very daunting to download even with cable modem connections.
It is here to stay like it or not, barring draconian political measures and dictatorship.
Clearly there is need to change business model. What else was Internet bubble all about? Many established business models, literally ported to HTML, few scripts and few servers, clearly don't work. What else was Internet bubble burst about?
Clearly music is not what it used to be. When I was in college I could find exciting new band at least once a month, if I tried. I (and many from my generation) could listen to 2-3 albums from a single band for 6 months or more, over and over.
Still, even the hardest music junkies arrived at 200+ vinyl records and that was it, for the next 5-10-15 years. Eventually they upgraded them to CDs and bought maybe extra 20-30 CDs of new, young bands. To stay in shape and remain open for the new things, so to say.
So where is the basis to expect the sales of music via standard distribution channels to grow, or even stay level nowadays? It doesn't exist.
Yes, I don't like ordering online. I also want to have hard CDs of any music that I want to keep for a long time. But there is a limit to it. At the same time I am getting tired of changing CDs. I used to think I need a brand new stereo equipment at least every few years. It was also very important piece of furniture, in every aspect of social interaction. Now I see it almost as garbage, taking room space.
Most people won't rush, as they used to, to upgrade to the latest version of Windows. Minority will continue to play with Linux and Mac. The same goes for hardware. At the same time more and more people are getting used to keeping music and other media content on their computers.
So where is the big money in music distribution via Internet? Nowehere. People just develop needs to experiment more for less money. On Internet there is no place for monopolistic vendor to apply the old business equation: increase the quantity and lower the cost.
Otherwise, by now we would all be happily paying $35 per month for guaranteed quality and delivery monthly stream of music of our momentary choice to our computers over the Internet. Why are we prepared to do the same with cable but not with music?
First, because the technology is still not reliable enough. Second, because the medium is different. It is much more about the discovery, search, temporary whim and experimentation. It is much less structured, preprogrammed and much more diverse and distributed.
Sorry media content distributors, but without planetary dictatorship and complete control over all Internet backbones, money flow will only continue decreasing. And so even if piracy was nonexistent.
Eventually it will hit its evolutionary bottom. It would still be a good chunk of money but nothing as stellar as it used to be.
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?"
Or it could be that the teeny boppers are running out of disposable income and everyone else knows the music sucks ass. I haven't heard any new decent material on the radio for a long time. Everyone is trying to sound either like Blink 182 or Britney. I think the music industry is starting to feel the backlash of homogenization and the one-size-fits-all mentality. I hope I'm right, because I would love to taste the irony that the RIAA and Clear Channel are on the path to mutual destruction at each others' hands.
-R
CD sales are down for a few major reasons. One people see less value in them than they used to and they are expensive and risky compared to other forms of entertainment. That is they don't give you the bang for the buck that a dvd or a concert ticket does and you never know if your gonna even like the music on the cd.
Two, the RIAA has been by their own numbers selling 25% less albums than were for sale in previous years. Compare that to only a 10% decline in their cd sales.
Three: CD's as a loss leader. Stores that sell CD's as their primary business cannot compete with stores like Best Buy, Walmart, Kmart, and Wiz and Circuit City that sell them at a loss because they bring people in to buy high margin items like TV's, clothing, and computers.
Four: P2P "piracy" and disdain for the RIAA and its tactics. When people copy a movie they say "oh cool I don't have to buy a ticket to see this movie" When people download a CD, they say "Heh sticking it to the RIAA again" The music industry has the worst reputation. Even worse than hollywood and oil companies and politicians
Some good points here, and your anecdotal evidence does seem pretty conclusive that piracy is where all the sales are going in this regard...
But I'm not convinced that on-line file sharing is the main vehicle of piracy. To point, have you actually tried assembling a complete album entirely from P2P applications?
First, you have to get a listing of all the tracks, and then you have to search for each track individually. Then you hope that they're all listed at the time you're on, which more likely than not they aren't. And then you try and find enough sources to download them, which could take hours or days (one source isn't enough, since they all tend to cut out after a minute or two).
Eventually, you've got your album assembled, but each file has different naming conventions, and they're not normalized; you might have to turn up your computer's volume on one song only to have the next song blasted at you. So you have to run normalization software yourself on all your files, which I guess is only a minor inconvenience. Now, this is all assuming that you actually downloaded the right file, which may not be a safe assumption given the number of mislabeled files out there.
By the time you're done creating your bootleg album, you've spent enough hours of solid attention to your computer that you might as well have just bought the album from Amazon (that's probably where you got your track listing from anyway). For your time, it may actually be cheaper, as you might have done something productive in that time.
Real piracy comes in much more convenient forms: campus network shares and friends with burners. SMB shares over 100-baseT are a godsend to the young pirate on a budget. Back when I was a student, I got gigs upon gigs of anime and mp3s over the campus network, and almost never ran KaZaA or Gnutella. And nowadays, most of my song discoveries are at friends' houses. Like this album? Here, I'll burn a CD for you. Even better, trade your entire collection with 7 or 8 other people at a LAN party. Remember, only one person has to buy the CD and rip it, and it's part of the "people" network.
All these methods are way easier to use than the big P2P networks, and they're exceedingly difficult to police. The only way a musician can hope to make money through distribution is to offer an option that is easy and cheap enough that the guilt factor (not insignificant) will be enough to convince people to either buy them or not share them.
Imagine the following scenario:
A:Hey, mind if I leech that album off you?
B:Sure, it's on \\pir8mus1k\shared\
A:Hey, thanks. I could pay $15 for this, but why?
And then another scenario:
A:Neat album, can you make me a copy?
B:Dude, it's like 6 bucks. Just download it from their site and quit lagging out my connection.
A:Alright, fine...
I've heard both of these conversations under different circumstances.
Competition is the reason, as you point out, for declining music sales. Competition for our time, interest and money.
The RIAA seems to operate under the premise music sales are a natural right. Wrong. Pop music is just another feature of our ever more diverse cultural and technical landscape. The demographics are vastly different too.
And until there is a NEW force of sound/charisma this is just rehash. It's been done. And I've got better things to do than buy more music that sucks.
"Don't Follow Leaders." Bob Dylan