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

All because of piracy

[www.sorehands.com]

according to the RIAA.

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.

Why are they called specialty music stores?

[Anonymous Coward]

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.

Re:Why are they called specialty music stores?

[KoshClassic]

This is a good point. Most of the big stores seem to stock pretty much all the same mainstream items taken straight from the playlist of the local ClearChannel station. I am much more likely to shop at stores that have the mainstream stuff along with a good selection of not so mainstream items.

Hear Music (which is a small chain actually owned by Starbucks) fits the bill pretty well, and their selling model focuses a great deal on their "Hear Recommends" items (these are items that the store / staff recommends). I really like this because I can go into their store, see what they recommend and get exposed to new artists / new types of music.

Tower records selection varies from store to store, but its usually pretty good and its prices are at least competitive with other 'real world stores' - they also at least attempt to make the customer feel at home in a place that represents music culture and not just corporate profit. Virgin is similar to Tower in my eyes, except the stores are nicer, are fewer and farher between and they have a consistently large selection of everything - and the prices are a bit higher than Tower on average.

Sam Goodie, on the other hand, is simply awful. The prices are higher than any other chain, and every time I walk into one I feel like I'm in a generic mall shop instead of a store that is part of the music culture. No thank you.

On the other hand, when I do buy CD's (which I do less and less these days) I buy at least half from Amazon and most of the rest from Hear or Virgin. Amazon is cheaper that all of the physical stores I've mentioned on nearly every CD, selection is basically never an issue with them and I never have to leave home to make my purchase. In the end, the only reason I don't use Amazon exclusively is that at Hear or Virgin, I get instant gratification (that is, not have to wait for Amazon to ship me my order).

Using Virgin Records as an example for the market.

[Peter Cooper]

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?

not all record stores are doing bad

[xluserpetex]

Sales at the independant record store I go to have been steadily increasing. How do they do it?

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

Re:Why is it an either or question?

[thogard]

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.