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Requiem For The Record Store
Rick Zeman writes "The Washington Post has an article (minimal registration required) in which record stores ('Daddy, what's a record?') are preparing for their own demises. They attribute this to the big box stores (Best Buy, etc), online retailers (Amazon, etc) and, you guessed it, downloading, both illegal and legal. 'The fat lady is warming up, but she's not exactly singing,' says one retailer, knowing that he still has a few more years until his business is totally moribund." Get it while it's hot -- soon, the Washington Post is switching to a more annoying registration system.
Requiem for the Record Store
Downloaders and Discounters Are Driving Out Music Retailers
By David Segal
Washington Post Staff Writer
Saturday, February 7, 2004; Page A01
With a total stock of more than 85,000 albums, Manifest Discs & Tapes was a music lover's mecca in the North and South Carolina towns where it operated. And despite an industry-wide downturn in CD sales in recent years, all five Manifest stores were turning a decent profit right up until the end of 2003.
So there was shock all around when chain owner Carl Singmaster announced in late December that Manifest would close all locations and lay off all 100 of its employees. There were still plenty of consumers eager to browse the bins, Singmaster explained, but his company's prospects looked bleak and were getting bleaker.
"I felt like I needed to take this opportunity to exit," Singmaster said in a telephone interview. "Indies in the smaller markets face a very risky environment."
It's not just the indies, and it's not just the smaller markets. On Thursday the parent company of Tower Records, which has four stores in the Washington area and a few dozen more in major cities nationwide, was on the verge of filing for Chapter 11 bankruptcy, according to news reports, having failed to find a suitable buyer. In September, the bankrupt Wherehouse Entertainment chain was acquired by a company that promptly said it would close 35 under-performing stores. Mall chains such as Sam Goody are hurting, too.
As pop's superstars strut down the red carpet in Los Angeles tomorrow night for the Grammy Awards, there's something close to panic in the retail trenches of the music business. The record store is in serious trouble. Sales have been hammered by Internet piracy as well as competition from big-box retailers, such as Best Buy and Wal-Mart, which are two of the nation's leading music vendors. Online CD stores, such as Amazon.com, are gaining momentum, too -- 3 percent of the market in the most recent survey by the Recording Industry Association of America, up from zero eight years ago.
Now a new threat looms. The market for legally downloadable music is tiny today, but the success of Apple's iTunes online music store and the rush of rival services to the marketplace is expected to gobble up an ever-larger share of the pop music pie. A recent study by Forrester Research, which examines technology trends, predicts that in five years fully one-third of all music will be delivered through modems, and the CD itself will be passe, if not obsolete, in the years after. This isn't necessarily bad news for the record labels, but it could be lethal for brick-and-mortar stores.
"I tell retailers they need to get out of the plastic business," said Josh Bernoff, the Forrester analyst who wrote the report, titled "From Discs to Downloads." "Two-thirds of the people who currently download say that when it comes to music, it isn't important to them to hold a physical object. They're done with the CD. They just care about the songs."
If that's true, the album is doomed and the industry is headed back to its roots in the '40s and '50s, when the single was the most popular format. It's already moving that way. Last week, the punk trio Green Day released a cover of the rock classic "I Fought the Law" through a promotion advertised on the Super Bowl and available exclusively on iTunes. That's a peek at the future: Hear the song one minute, own it the next.
That's a transaction that doesn't require a record store, of course. As a precedent, consider the airline ticket. Thanks to online travel sites and the advent of ticketless travel, millions of flyers no longer think of tickets as physical objects that must be printed and brought to the airport. And that's been brutal for travel agencies: in the past three years, 30 percent of them have closed, according to Airlines Reporting Corp., which keeps tabs on the industry.
Plenty of stores like Manifest have surrendered, while others believe the end
Unfortunately for the record stores, they are nothing more than the middleman. They do not own the music they sell, they merely own the discs the music is pressed on.
This means they do not have th freedom to experiment in the manner you suggested. They need approval from the various music companies that are loathe to try anything new that does not involve legislation or lobbying. Getting all music companies to agree on any given plan is very difficult.
-- You see, there would be these conclusions that you could jump to
One of the troubled chains mentioned in the article tried to do exactly that. But they were stymied by the record companies.
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In all fairness, the report referred to had the store owner who was being focused on in an interview.
The guy mainly blamed a large 'boxes' retailer that just started down the block, and they were selling CDs below Dutch import/cost price.
He simply couldn't compete anymore.
The store patronizers also pointed out the collateral damage - though they can get the popular stuff at that large retailer, they can't find the more obscure things there.
They could at the record store.
One patron actually walked in with a bag from the large retailer (Mediamarkt.. closest equiv. would be Best Buy) and pleaded guilty to buying CDs there, but was still coming to the record store for the other things.
Basically, he realized that his buying at the large retailer helped the demise of this record store, but at the same time had a look on his face as if to say that he doesn't care enough for him to be paying extra for the same music just to keep the record store alive.
Yes, online downloads were mentioned, but they weren't largely blamed for the demise of record stores at all.
In parallel, at the ending, some other once-common, now-obsolete stores from radically different markets simply due to the fact that MegaCorps are sprouting up from the ground and nibble at their specific market-segment with a vastly lower sales price.
And when push comes to shove, people would rather save money and go along with mainstream anything, rather than go out of their way to do the right thing and basically get 'punished' due to having to pay extra.