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Wal-Mart Squeezing Record Labels to Cut CD Prices
Raindance writes "RollingStone.com has a revealing article detailing how retail giant Wal-Mart is making loud noises about throwing its weight around in order to get significantly better bulk prices on CDs. Says one industry executive, 'This wasn't framed as a gentle negotiation, it's a line in the sand -- you don't do this, then the threat is [your product is dropped].' This is the first time a big player has attempted this sort of hardball move on the labels, and the labels may be forced to deal, as Wal-Mart sells 1 out of every 5 retail CDs. Monopoly one, meet monopoly two."
Tensions are not as high now as they were last winter, but making sure Wal-Mart is happy remains one of the music industry's major priorities.
How about making the customers happy? Personally, I can't believe that 1 out of 5 CDs are sold in Walmarts. I can't stand their stores. I absolutely DREAD entering one. They aren't clean, they aren't friendly after you pass the greeter, and they aren't someplace that I want to shop for music as it's just usually a mess and full of people.
Why not concentrate on making music available for less money somewhere that I might want to buy it instead of worrying about making sure Walmart is happy.
Virtually no industry executives would publicly comment about their company's relationship with Wal-Mart. But off the record, many record-industry executives shared their concerns. "I don't think there is a music supplier in America who really enjoys doing business with Wal-Mart," says one major-label rep.
Awww, are we supposed to feel sorry for them? Am I supposed to shed a tear from the corner of my drying eyes that they don't like something? Here's the river... Notice it's dry.
I don't like dealing with either company and I certainly don't think that Walmart is going to bat for the consumer. They are only doing this to make themselves richer. We aren't exactly benefiting by buying a $10 CD.
Wal-Mart is like no traditional record seller. Unlike a typical Tower store, which stocks 60,000 titles, an average Wal-Mart carries about 5,000 CDs. That leaves little room on the shelf for developing artists or independent labels.
I was at Walmart recently buying something I couldn't find at Target. I happened to stop into the electronics section while my fiancé did some shopping elsewhere. Perhaps I wasn't looking in the right spots but I wasn't finding anything by developing and independent artists. If anything it was most older music that wasn't exactly getting radio play. I saw the typical teenybopper crap but nothing that I would consider new and exciting.
"When you're buying CDs for twelve dollars and selling them for ten like Wal-Mart, it makes the rest of us look like we're gouging the customer, when we're not," says Don Van Cleave, head of the Coalition for Independent Music Stores, a retail consortium. "It's supertough to compete with that price point."
Most independent stores I have gone to shop for music in are charing $16+ for a CD. If you're buying it for $12 and making $4+ a CD I seriously believe that you are gouging us. I don't feel bad for you.
"They proposed it to a bunch of artists and managers, but everyone was worried that we are sending a message that instead of the sixteen-track album we sold, those nine extra songs were filler," says a label executive.
You sent the message when we bought your shit music for $16+ and found that 14 of the songs were filler. Walmart didn't help to spread that message... Your crappy albums did.
I'm still not buying any more RIAA CDs, Walmart or elsewhere.
HBI's Law: Frequency of calling others Nazis is directly correlated with the likelihood of the accuser being Communist.
Two wrongs sometimes do make a right.
Which one am I supposed to ridicule?
--Good morning fellas; Hand me that thing; Boy, this work's hard; Guys, break's over.
meet Evil Empire 2.
Make it difficult to know who to BOOOOH! at!: Ugly Sister 1 (speciality: cutting wages to the bone and destroying local stores) or Ugly Sister 2 (speciality: suing young children and pensioners).
Bad analogies are like waxing a monkey with a rainbow.
...treat others as you would like to be treated. Enjoy the seed you sowed RIAA (and members)!
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Capitalism can work if the big boys are greedy enough to turn on each other!
Unfortunately, someone is going to try to do this to Microsoft and when the dust settles, Bill Gates will still be there smiling.
You'd think the 5 major countries that use the most oil could form a bargaining voice powerful enough to counter OPEC in this same way....speaking of dangerous challenges.
If WalMart doesn't stock an extremely wide range of music, it will not be taken seriously as a place to get music. To be honest, I'm surprised it is taken seriously at all anyway, given the fact the music it sells tends to be the bleeped versions anyway.
You are not alone. This is not normal. None of this is normal.
I really dont think you could label Walmart as a monopoly by any stretch of the word. THere are plenty of competing businesses, Walmart is jsut the biggest.
Nothing like having to take it as well as dish it out.
Ironically, if they give in and sell cheaper it will probably result in MORE money for all involved, since people will be able to buy more CDs without feeling quite so ill at the prices.
Can't say I'm real happy about Walmart having so much power though. Frankly I don't trust any business with so much power. But I will say I'm inclined to worry about Clear Channel more than Walmart, since for most of Walmart's products the barrior to entry in the market isn't unthinkably high.
"I object to doing things that computers can do." -- Olin Shivers, lispers.org
Walmart does it to ALL of their manufacturers. Perhaps this one may deserve it.
If you're buying it for $12 and making $4+ a CD I seriously believe that you are gouging us.
Making a profit on a 33% mark-up is gouging? Sheesh, I had no idea that CDs should be sold for one penny more than they were purchased.
I can't stand [Walmart]. I absolutely DREAD entering one. They aren't clean, they aren't friendly after you pass the greeter, and they aren't someplace that I want to shop for music as it's just usually a mess and full of people.
I think it depends on where you're at. Most of the Walmarts I use are Super-Walmarts in Wisconsin. They are always clean, pretty friendly, and very spacious. Yet when I was on vacation in St. Louis, I was in a normal sized Walmart that was at least 10 times over capacity. They were in serious need of a store upgrade and a few extra stores in the area.
So you may find that different people have different experiences with going into Walmarts. Big city people will probably hate them (lots of negativity toward them here in Chicago) while the less populated areas will love them.
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Sorry. 1 in 5 is not a monopoly at all. A major player, obviously, but not a monopoly. Walmart has been doing this type of price squeezing on suppliers for years. It's how they got where they are. If the major labels didn't see this coming, they're pretty foolish.
In the blue corner we have a gorilla weighing in at 600 lbs! The Recording Industry!!!!! In the red corner we have another gorilla weighing in also at 600 lbs!!!! Wal-Mart!!!! Announcer1, "This bout is expected to go the full 15 rounds and the odds makers are expecting a split decision that will just end up costing every one more money one way or another." Announcer2 "Yes, but we have seen a lot of this pre-fight hype before."
My
though many of you hate walmart for a bunch of good reasons, if you do not sell your CD in walmart, you can not top the billboard charts. Artists have changed core elements of their music/art because walmart said they wouldn't sell it if they didn't. This might actually lower prices for some independant music resellers, though unlikely. Them walmart will just ask for an even lower price. The fact remains that walmart has such a huge purchasing power, that little stores can not compete.
That's 20% of all CD sales. Wal-Mart is a monopoly for very different reasons (i.e. killing off all competition in rural and suburban communities).
While I don't agree with this practice, I am glad to see it getting turned on the record companies now, since they've been ripping me and other consumers off for years. Let the jackals tear each other to pieces...
Sigh... here we go:
...and who made you buy the CD? If you don't like the price, don't buy it. No one has a gun to your head, and you certainly don't need a CD to survive.
How about making the customers happy? Personally, I can't believe that 1 out of 5 CDs are sold in Walmarts. I can't stand their stores. I absolutely DREAD entering one. They aren't clean, they aren't friendly after you pass the greeter, and they aren't someplace that I want to shop for music as it's just usually a mess and full of people.
Making the customer happy? Wal-Mart is their customer. You would be Wal-Mart's customer.
And if you don't like Wal-Mart, don't shop there. Your personal experience isn't exactly scientific proof that Wal-Mart sucks, there are plenty of people (myself included) that shop there because the employees on the whole are friendly and because their prices are incredible.
Why not concentrate on making music available for less money somewhere that I might want to buy it instead of worrying about making sure Walmart is happy.
Because they have a responsibility as a company to maximize their profits. So does Wal-Mart. Why should they make it available for less money if they can charge more and you'll still pay for it? Do you know anything about business?
I was at Walmart recently buying something I couldn't find at Target. I happened to stop into the electronics section while my fiancé did some shopping elsewhere. Perhaps I wasn't looking in the right spots but I wasn't finding anything by developing and independent artists. If anything it was most older music that wasn't exactly getting radio play. I saw the typical teenybopper crap but nothing that I would consider new and exciting.
Do you ever consider anyone else's point of view? Reading through all of your comments, all I see is that they are all super-biased and don't actually involve any rational thought. You are a selfish, elitist prick. Just because you don't like the music being sold at Wal-Mart doesn't mean that it sucks. There are plenty of people buying those discs (or Wal-Mart wouldn't stock them!), so maybe you should think about that for a minute.
Most independent stores I have gone to shop for music in are charing $16+ for a CD. If you're buying it for $12 and making $4+ a CD I seriously believe that you are gouging us. I don't feel bad for you.
evil adrian
Most independent stores I have gone to shop for music in are charing $16+ for a CD. If you're buying it for $12 and making $4+ a CD I seriously believe that you are gouging us.
Do you honestly think that a mom and pop record store is buying discs in the same volume at the same price as the largest retail juggernaut in the history of this planet?
Where does the school board find them and why do they keep sending them to ME?
The cost of carrying 60,000 cds instead of just five is tremendous assuming you don't want to be constantly stocked out. Granted, I buy all my music on the 'net and none of it from major labels, now, so I'm not necessarily supporting the old model, but if people want to find those other 55,000 CDs in a store, they're going to have to pay more. No gouging about it.
Read jack phelps dot net
This is the first time a big player has attempted this sort of hardball move on the labels, and the labels may be forced to deal, as Wal-Mart sells 1 out of every 5 retail CDs.
It scares me just how big Walmart is. What happens when Walmart succeeds? You think the record labels are simply going to drop the prices across the board? Of course not, they are only going to do it or Walmart. And then more people will buy CDs at Walmart because they are cheaper than elsewhere, making Walmart even more powerful.
The sole reason why the record labels are so powerful is because they are fundamentally a monopoly. It doesn't matter if you can buy music from an indie record label if your favourite band is signed with a major record label. There is no competition. It's even worse because the major record labels have formed a cartel.
What I would like to see is a shortening of the copyright term to something realistic like 14 years. Then people could legitimately make money and compete with the major labels by selling public domain works. Right now, for music that the public actually want to listen to, the public domain is practically nonexistent. And don't give me any crap about the RIAA training us to like Britney Spears. I like lots of artists signed to major record labels.
Barring that (hey, with Disney's deep pockets, no music will ever enter the public domain again), I would like to see regulation of these monopolies. The artist should keep the copyright, and be forbidden from signing exclusive contracts with the record companies. That way, if a record company has excessively high profit margins, another record company can come in and sign up their artists and undercut them. The free market in action - this is how it is supposed to work, competition is good for the public. If the government insists on screwing it up with copyright, then the best they can do is offset the negative effects with regulation.
Oh, and one last thing:
Wal-Mart sells 1 out of every 5 retail CDs.
Bullshit. Perhaps they sell one in five retail CDs in the USA, but not worldwide.
Come on guys. I know most of you hate Wal-Mart. But this article isn't about how they pay low salaries, make employees work overtime or whatever your complaints are.
Let's for once be glad a move was made in the direction we want. Even if it's WalMart. If this works out, and WalMart isn't all too greedy to keep all the aditional profit to themselves, well, then prices should go down to the end customer.
I for one would like that.
If Walmart truly sells every 1 out of 5 CDs sold, it should simply start signing major artists directly. That way Walmart could keep even more of the profits.
If someone says he and his monkey have nothing to hide, they almost certainly do.
Walmart that was at least 10 times over capacity
Walmart has a monolopoly on the Third dimesion. If my house could store 10 times its capacity than I would be rich as them. Those b*s!e^#s having a monopoly on such a comondity - it should be FREE!
I hate Walmart's Business practices...
I hate the RIAA's price fixing...
I like cheaper music prices....
*Head explodes from the logical paradox*
Cliff Claven
K.E.G. Party Chairman
Founding Leader of: Koncerned for Egalitarin Governance
Monopoly one, meet monopoly two.
You are completely misusing the word. Walmart is a leader in the incredibly competative retail sector. They got that way by being maniacly efficient and offering low prices on goods people need. They compete with other strong retailers (Target, Sears, Home Depot ...) everyday
to the benefit of everyone. To make money they require
volume. To create volume Walmart
must offer low prices. The RIAA is under
the same market pressures as any other Walmart
supplier.
an ill wind that blows no good
"Personally, I can’t believe that 1 out of 5 CDs are sold in Walmarts."
The thing is, nearly 1 out of 5 *anythings* are sold by Walmart. They are big on a scale most people can't imagine.
We view "entertainment" industries as big, but really, companies like Walmart dwarf them. They just aren't in the news every day like the movie and record industry. They chug along making billions of dollars without drawing attention to themselves.
Wal-Mart has 3500+ domestic stores, and nearly 1500 international units. They pull in over $60 BILLION dollars per quarter and $2 billion of that is PROFIT.
Walmart has so much purchasing power with wholesalers that this current story is just everyday business. However, this time they happened to target a branch of the media, who tend to yell and scream louder than most industries when *anything* happens to them.
The Glass is Too Big: My Take on Things
It depends on what part of the country you're from. Here in the North-East, we're not as affected by the Walmart monopoly. But I've got relatives that live in Florida, and they don't say "Store" or "Supermarket" anymore.
... I need to run to the Walmart". "Oh, we need a new TV ... I need to head up to the Walmart."
They say, "Oh, we're out of soda
Walmart is ubiqitious in some parts of the country. They're the second highest employer in the country, behind the government. Frankly, I'm surprised it's not a higher ratio.
If Walmart wins will that pass the savings on to the consumer or do something for their horribly treated workers like give them health care?
Probably neither, why should we care.
Just two big behemoths fighting over a scrap of plunder
From the end of the article...
$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead
Democrats and Republicans only disagree about how to enslave you
Reading through all of your comments, all I see is that they are all super-biased and don't actually involve any rational thought. You are a selfish, elitist prick.
No offense, but having a strong opinion is not a crime. You're certainly not going to change that opinion by throwing around insults, either. The guy may have his problems (or he may not, I don't know), but intelligent discourse is a much better way of getting him to change his mind. For all you know he may be a very intelligent person who you would often agree with, or at least enjoy debating with.
Sorry to interrupt, carry on.
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Incredibly priced dog shit is still dog shit.
I just thought I'd tack something onto that post--a bit of math in case you don't understand my point. Purchasing 60,000 CDs at one unit each is $720,000. If you expect a store to shell out enough to carry ten each of those most-popular 5,000 CDs and still carry one each of the rest, you're talking $1,260,000. At EACH store branch! Up front, with no chance of recouping most of them, offering that variety for you as a customer so you can have what you clearly desire: choice!
Assuming they want to stock enough to not lose sales to the store-next-door if they sell one of those 55,000 albums of which they only stock one, they need to tack on another $660,000 in stock. If you were to go try and borrow that kind of money, it'd cost you all your profits just to pay the interest!
I seriously cannot believe you fault indie-er record stores for charging what they charge, man. It's really, really pathetic.
Read jack phelps dot net
I can't believe that 1 out of 5 CDs are sold in Walmarts.
I saw the typical teenybopper crap but nothing that I would consider new and exciting.
This is the same demographic that made Titanic the box office "phenom" that it was.
I wasn't finding anything by developing and independent artists
I don't think the masses of America buy stuff by developing and inde artists. So I can see how 1 in 5 are sold at walmart.
see your quote below to reinforce that many people buy music from walmart.
it's just usually a mess and full of people.
500 dollar reward for tip(s) leading to the arrest of the person(s) who stole my sig.
lol. I remember marking stuff up 100%. $12 cost, $24.99. It's still a good deal when you think about it. Think about what the retailer has to pay for: rent, electric, water, employee salaries (managers, assistant managers, cashiers Christmas help), insurance, shipping, returns, snow removal and other maintenance, and new product. How is a record store supposed to pay all of that with a %33 markup? What a moron.
Some of those stories details how Wal-Mart abuses its position as the largest, wealthiest and subsequently most powerful retail chain in the world.
They have squeezed their suppliers enough that many suppliers have had no choice but to shut down all manufacturing operations in the United States and move those operations into foreign markets where they can continue to stay in business.
The option is either lose their largest customer and possibly enough revenue to shut down completely or shutdown all US Factories, put anywhere from a few hundred to several thousand American factory workers out of a job and stay in business. Business-wise, they have no choice but to comply with Wal-Mart. Unfortunately, that isn't good for the US workers that just lost their jobs.
You can say things like, "Well, those American workers should have learned to live with earning less money."
It's not all about just the money paid to an hourly worker. It's about the cost of benefits, cost of mandatory operation fees, like licenses, worker's compensation, unemployment office fees and a number of additional aspects that raise the cost of production in the US.
Then, you also have to take into account the minimum wage law. If you can have something produced overseas by workers that are fine with making, over the couse of a single day, the same amount that a highly skilled American manufacturing worker, like a Tool & Die Maker (Which is between $19 and $25 an hour), is paid for one hour. As a business, what are you gonig to do? Stay in business or go out of business?
Wal-Mart has done more to help decrease the number of available manufacturing jobs in the United States then most people think.
If you ignore the other uses of a tool, does that make the tool less useful, or you less useful?
"Paying fifteen dollars for a piece of music is a difficult value equation for customers."
WOW! Is it ever. Apparently Walmart marketers understand the music biz better than the music biz people.
At Wal-Mart, we're a commodity and have to fight for shelf space like Colgate fights for shelf space."
Which is why people go to walmart. Walmart is like a commodity store. Are we going to sell the new Eminem CD based on the "Intrinsic Value" of the liner notes or the number of hits on the CD?
Then the article says:
Unlike a typical Tower store, which stocks 60,000 titles, an average Wal-Mart carries about 5,000 CDs.
and then
. "When you're buying CDs for twelve dollars and selling them for ten like Wal-Mart, it makes the rest of us look like we're gouging the customer, when we're not," says Don Van Cleave, head of the Coalition for Independent Music Stores, a retail consortium. "It's supertough to compete with that price point."
Well, Don Van Cleave, there you go! Your message to consumers needs to be, your prices are higher, but they have to be because you carry a much larger inventory and your large selection is a service your store is providing. Have tastes that go beyond the top of the charts? Well guess what, your music is in our store, and for the selection we have our price while still not the best, they are very fair. Now you're not selling a commodity. You are selling a service. You are selling expertise that perhaps your music staff has. But instead, you people try to do the same thing - push the hits.
My girlfriend took a temporary position at a cocunuts store here in town. And let me tell you, they don't get the sell based on value thing. They push the hits, hits, hits. The kind of CDs you will listen to for a month or two and then forget. How is that kind of CD worth $15? It's not. She has pretty diverse tastes, and has broken "company code" by playing other "non-corporate approved" kinds of music,a nd has had a lot of sucess selling it. She figures every time she plays something, even if it's old, she has 5 or 6 people that ask "What is this?It's interesting". And a lot of them buy it. Now imagine what could happen if the whole store's marketing was geared that way. You could sell a good amount of that older or lesser known stuff, for a higher price. And you could still take the hits, and trim the price way down, as a loss leader, to get people in the first place. Maybe you can't go sub-cost like walmart, but you can get down close.
Kudos to Walmart for beating the record industries margins down. As long as they only stock 5000 cds in each store, independent retailers should have no worries if they figure out how to position themselves correctly. The beauty of this is it could also force the record companies to sell to distributors and record stores for a lower price, actually helping the smaller guys.
Easy guys, I put my pants on one leg at a time. The difference is after I put on my pants I make gold records!
Monopoly has a lot of definitions, not all of which apply in all cases. Walmart often has a monopoly in a market area. They drive out the Mom & Pop businesses in small towns, removing any competition. In the area I live, central NJ, there are enough people that they their tactics aren't completely effective. But small towns, isolated from larger metropolitan areas, are areas that they have certainly been able to gain a monopoly.
"Glory is fleeting, but obscurity is forever." --Napoleon Bonaparte
Yup. The creepiest thing about those places is how they also have meeting centres, photo labs, halls, etc. This is the old Town Hall. The goal is that they become the only store in the community. Not just the only department store, or electronics store, or grocer - but the only store. They become the centre of town. The local Wal-Mart then dwarfs the government in power - they provide access to all goods for a community.
Consider this: you have one company that provides for all of the needs of the citizen in the town, and a lion's share of the citizens work for that company. How is this not a commune? Its like communism's evil twin!
Having dealt with Wal-Mart as a supplier, I can say that they definitely DO have leverage that seemingly can't be fought. Basically, they are the 800 pound gorilla that calls the shots. Don't like it? Then they won't carry the product.
From a CD-purchasing-consumer's perspective, this may sound great, but my problem with this is that it is easy to get caught up in anti-music industry sentiments while overlooking the fact that Wal-Mart can do this in just about any other industry too. Don't like the price of tires? Just threaten to drop the product. Don't like the price of milk? Just threaten to drop the product. Never mind that the price is already competitive with other, smaller businesses that don't have the leverage to "force" lower prices.
My mom always said, "Jim, you're 1 in a million." Given the current population, there are 7000 of me. God help us all!
One way that Wal-Mart makes more money on sales is they do this: 1) What you just described - be the only customer for a product maker. 2) Stop paying when they receive the product, only pay after a short time AFTER the product is sold! 3) During that time that the product is sold, that money goes into short term investments, and only then is it given back to the producers of the goods. On another note, Wal-Mart also has one of the most advanced distribution methods and this is one of the major reasons their products are so cheap.
Why not concentrate on making music available for less money somewhere that I might want to buy it instead of worrying about making sure Walmart is happy.
While much of what you say about the stores are true, you should feel sorry for the folks trapped working there. I've worked at one, appalling is about the only word that comes close to describing how management treats employees. Many of the people there can't find other work, or Wal-mart pays more than anything else they can find. Wal-mart knows this and abuses it. I fully expect there to be lots more class-action lawsuits against the company in the near future, even with current ones they're getting worse if anything.
But the 1 in 5 figure is quite believable. While Wal-mart might not have as large a selection, their core customer base isn't looking for one. The CDs sell like proverbial hotcakes at even smaller Wal-marts, bigger ones move so many it's scary. Around here (Tennessee) there are very few chain record stores left. Of the two malls in the closest large city to me, there's one record store apiece. There are a few small retailers, but the biggest of those is a local used-CD chain (two locations).
On this one you're both right and wrong. Wal-mart is indeed wanting to make more money, but their entire business plan is to buy low and pass along the savings, keeping profit margins lower and making up their money by selling tons of the stuff. Anything Wal-mart can get cheaper will benefit consumers because then the consumers will get it cheaper. Granted Wal-mart's not doing it because they're some grand benefactor, but the end result helps consumers a bit. Actually I suspect that Wal-mart is pushing for this because the overwhelming consensus of their customers is that the CDs cost too much, even at Wal-mart's prices. (I worked in Electronics, you hear this constantly, although people still buy.)
I was at Walmart recently buying something I couldn't find at Target. I happened to stop into the electronics section while my fiancé did some shopping elsewhere. Perhaps I wasn't looking in the right spots but I wasn't finding anything by developing and independent artists. If anything it was most older music that wasn't exactly getting radio play. I saw the typical teenybopper crap but nothing that I would consider new and exciting.
Umm, did you not read the sentence you posted? It said it left little room, which is exactly what you found to be true. Wal-mart's not big on new and exciting though, they're big on selling decent stuff cheap and lots of it. Independent artists and developing artists don't fit that so it's no surprise they're absent.
It is interesting to note that Wal-mart doesn't handle the merchandising of the CDs itself, they hire a company that does it, so I'm not sure how much direct control Wal-mart has over exactly what is on the racks.
While it's hard to understand t
Umm. It's obvious you've never run a business. This markup barely covers overhead and people expenses. What do you expect them to pay their people with? Dorito's?
It's funny listening people complain that the Independent record stores are disappearing and then think those same stores should give their stuff away for free.
Money from heaven I guess.
After college I worked at a great independent bookstore for about 3 1/2 years, just at Burns Ignoble (Barnes & Noble) was starting to drop store everywhere.
More than once UPS, USPS, etc dropped off the wrong box in the shipping room, intended for B&N, we'd be opening boxes quickly usually and didn't always notice until we looked at the invoice. The discount a place like B&N gets over the independent is significant, like 8-12% more. This is a similiar situation with record stores.
When you're running close margins to begin with and your comptetitor is getting stock for 8-12% less than you, THAT's huge, and it's d*mn hard to compete. Sadly, that bookstore, after 45 years in business, closed this summer.
Also before you complain about costs, think about what independent media places (records & books) tend to offer; people who love their product, are knowledgeable about it, and MOST importantly, they support small presses/publishers/labels than the uber stores won't touch (including Target by the way, not just Wal-mart)
As independent record and book stored closes, so do the many small presses & labels. The store I worked at bought some great books from indie pubs, many of those are now out of business since Target, Wal-Mart and the like won't even talk to them. Those books are no longer available and those people lost their jobs.
Seriously, thing hard about where you buy things. Yes, I understand $2-3 more is a lot to some people, however, you are ultimately reducing your the choices and varieties of the music you hear and books you read. Sometimes being a consumer involves more than just the price of an item.
My 2 cents
'The unexamined life is not worth living' - Socrates
Hello Mr Pot, I'm Mr Kettle. By the way, I couldn't help noticing that you're black...
Telling people that anyone who disagrees with you and attacks you is a troll after you post a comment full of attacks - attacks on the record industry, attacks on Wal-Mart, attacks on its staff, attacks on people who buy the music that it stocks, attacks on independent music stores - is a bit rich.
Let moderators decide for themselves how the comment should be moderated. If I've noticed anything in six plus years of reading Slashdot it's that people with mod points aren't shy of moderating down even the slightest personal insult.
In the meantime though, I suggest you learn to appreciate a few things, including the fact that Wal-Mart does just fine selling CDs you don't want to buy, that other people have different tastes to you and that's not a crime, and that independent stores sell CDs for $16 because that's what they need to do to survive.
"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg
>> I'm still not buying any more RIAA CDs, Walmart or elsewhere.
Of course, you realize that's "stealing" (by the RIAA's) definition. They have a right to your money, and by denying them your hard-earned cash you're just plain evil.
Now if the RIAA were intellectually honest (stop laughing, I'm trying to make a point) they would revise their annual "loss due to piracy" (e.g. "we lost 3 billion dollars to internet pirates this year...) statements downwards due to the lower retail costs. Of course, that wouldn't suit their agenda so don't hold your breath waiting for it to happen.
You may resume laughing, now.
Walmart is only about 1 out of 10 average things (they are about 8-9% of US retail sales. It's no surprise that they are above average in a loss leader catagory though. Size of a company is an odd measure, Walmart is huge in sales they swap with Exxon Mobil for most revenue, but Microsoft consistently makes more money than Walmart (on about 1/4 the revenues). Exxon generally makes more than both.
Keep in mind that the music market has historically operated with small costly stores (in malls and such) that stock a wide variety of albums (to get people in the stores) but make their money on say the top 200 selling albums that turnover (sell through inventory) much more rapidly than the others. Walmart tries to stock only the albums that sell (letting online sellers fulfill the remaining orders) and sells them below cost (also to get people in the store) in order to make money on all the high margin items they are selling. Nearly every business does this they sell certain things cheaply in order to increase sales of higher margin items. Fast food joints give away the burgers to make money on soda and fries. Fancier resturants try to break even on the food and make their money on wine. In software the real money is made on maintenance contracts rather than licensing. What surprises me is how much music Wal-Mart sells when so many titles are edited. Seems kinda pointless for Wal-Mart to even have a rap section, but I guess you never go broke underestimating American smarts.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
Hidden Cost Of Wal-Mart Jobs
t %20study.html
t %20study.pdf
Use of Safety Net Programs by Wal-Mart Workers in California
Arindrajit Dube
UC Berkeley Institute for Industrial Relations
Ken Jacobs
UC Berkeley Center for Labor Research and Education
from http://www.dsausa.org/lowwage/walmart/2004/walmar
A Study for the UC Berkeley Labor Center
August 2, 2004
Wal-Mart is the largest employer in the United States, with over one million workers. It is the largest food retailer and the third largest pharmacy in the nation. The company employs approximately 44,000 workers in California, and has plans to expand significantly in the state over the next four years. Wal-Mart workers receive lower wages than other retail workers and are less likely to have health benefits. Other major retailers have begun to scale back wages and benefits in the state, citing their concerns about competition from Wal-Mart.
We estimate that Wal-Mart workers in California earn on average 31 percent less than workers employed in large retail as a whole, receiving an average wage of $9.70 per hour compared to the $14.01 average hourly earnings for employees in large retail (firms with 1,000 or more employees). In addition, 23 percent fewer Wal-Mart workers are covered by employer-sponsored health insurance than large retail workers as a whole. The differences are even greater when Wal-Mart workers are compared to unionized grocery workers. In the San Francisco Bay Area, non-managerial Wal-Mart employees earn on average $9.40 an hour, compared to $15.31 for unionized grocery workers--39 percent less--and are half as likely to have health benefits.
At these low-wages, many Wal-Mart workers rely on public safety net programs-- such as food stamps, Medicare, and subsidized housing--to make ends meet. The presence of Wal-Mart stores in California thus creates a hidden cost to the state's taxpayers.
This study is the first to quantify the fiscal costs of Wal-Mart's substandard wages and benefits on public safety net programs in California. It also explores the potential impact on public programs of Wal-Mart's competitive effect on industry standards.
Main Findings:
* Reliance by Wal-Mart workers on public assistance programs in California comes at a cost to the taxpayers of an estimated $86 million annually; this is comprised of $32 million in health related expenses and $54 million in other assistance.
* The families of Wal-Mart employees in California utilize an estimated 40 percent more in taxpayer-funded health care than the average for families of all large retail employees.
* The families of Wal-Mart employees use an estimated 38 percent more in other (non-health care) public assistance programs (such as food stamps, Earned Income Tax Credit, subsidized school lunches, and subsidized housing) than the average for families of all large retail employees.
* If other large California retailers adopted Wal-Mart's wage and benefits standards, it would cost taxpayers an additional $410 million a year in public assistance to employees.
For the complete study (840 KB pdf file):
http://www.dsausa.org/lowwage/walmart/2004/walmar
If Slashdot were chemistry it would look like this:Cadaverine
When someone on Slashdot admits he is wrong, a geek loses his virginity. God bless America!
An Education is the Font of All Liberty
To do business with Wal-Mart is to invite death."
I think I saw it in a Wall Street Journal article at some point...
The World Wide Web is dying. Soon, we shall have only the Internet.
OK, everyone, read the parent post where it says:
They pull in over $60 BILLION dollars per quarter and $2 billion of that is PROFIT
Now, while 2 billion bucks is a load of cash, 58 billion was spent in search of it. That's a margin of only 3.3%. It is NOT a profit of 33% as a post farther up claims with the illustration of a $12 CD being sold at $16. Walmart makes all of its money on razor thin margins. Yes, 3.3% is razor thin. Compare to, say, Intel, who pulls in a whopping 22.7% profit margin. Now THAT'S a huge margin of profit. Not Walmart and their piddly 3.3%, nevermind how many billions that 3.3% adds up to. Say what you want about the monolithic nature of Walmart and their heavy handed tactics with supplies but you cannot knock it on gouging or otherwise extraordinary profits.
It makes perfect sense. They only carry the items that are pushed by radio/tv/etc that they know are going to sell. Why the hell would they carry 15 copies of Album X by Unknown Band Y if they're just trying to make money?
Meanwhile RIAA would still sell CDs to other retailers at current prices.
This can NOT be viewed as a good thing. If Walmart gets what they want, the independent record store will dissappear everywhere where Walmart is. They simply won't be able to compete, their revenues will continue to drop until they go out of business.
And since Walmart is well known for exercising "editorial control" over goods sold at Walmart, you will no longer be able to buy any records with explicit lyrics or controversial topics. Certain types of music will simply dissappear or become even more expensive in areas where Walmart dominates.
Welcome to Fahrenheit 451 21st century style.
In Soviet Russia, I ruled you
I don't like Wal-Mart's "kill the little retailer and the supplier" attitude, so I don't shop there.
I don't like the RIAA's CD pricing and 'CD copyprotection' methods so I buy exclusively from iTunes Music Store or I download it from Limewire if iTunes doesn't carry it.
You hold the power, it is in your wallet.
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
That $15.99 quoted is 8.90 GBP according to XE.com's converter. Clearly our CDs are better quality than yours? No?
That $9.72 quoted as Wal-mart's price equals 5.41 GBP. At that price I for one would be buying lots of CDs, but all you can get for that price in the UK is the broken stuff in the remainder bin.
Differential pricing and price pointing are the scourge of modern retailing. I'd love to see Asda (UK arm of Wal-mart) take on the BPI in this way, but I fear it would have consequences for the independent record stores that still exist, not to mention the second-hand record stores.
When I think of the music industry these days I think of King Canute (that one who thought he could hold back the sea by just sticking out his hand and shouting stop).
He got wet.
In the end, the small towns are screwed either way. With the "walmartification" of small towns, the main street stores are being run out of business. Even some large regional grocery stores are having a difficult time fighting the Super Walmart stores. The result is fewer store choices in a small town, generally low wages for employees, and most of the profit being pumped out of the state.
Now, without Walmart we'd probably have far more locally-owned mom-and-pop businesses in small towns. But there would be fewer product choices in each of these small stores. Also, due to the low volume purchased and sold by mom-and-pop, the prices would be higher. The winner is the supplier, who is probably out of state anyway. How many employees do these small stores have? Maybe a high school kid to stock shelves or deliver grocerys in the afternoons.
Walmart sucks, yes. But small town mom-and-pop stores aren't all that great either. Damned if you do, damned if you don't.
(This is why you never see those 'explicit lyrics warning' stickers at Wal Mart -- they just don't give you a choice and force their censorship on you without your knowledge or consent.)
Apparently, Wal-Mart is doing just fine with these CDs on their shelves. It seems that theer is a large enough market for these censored CDs that they turn a profit on them. That's all well and good.. but if you're not happy with it, don't shop there. Simple as that. Don't complain about a company because they do something you don't like. Voice your opinion by disposing of your cash reserves elsewhere.
What is your penile percentile?
Depends on turnover, and that's a big part of the problem. WalMart isn't going to buy anything risky, they know that the vast majority of the albums they sell will sell quickly, so the money will be available to buy another album to sell quickly...Profit on an individual item doesn't have to be high if you can turn it over enough times. Meanwhile, the perceived price of an album is whatever WalMart's price is. "Why do I have to pay $6 more for than I pay for Eminem? The independants can't afford to compete with WalMart on the hits, but can't survive only on non-hits.
There's a reason why Walmart is popular in sparsely populated areas -- time. In rural areas, a consumer may have to drive to several different stores separated by great distances to get everything they need for the household. This takes an enormous amount of effort and time. Walmart brings all of these disparate "stores" under one roof, making it much more convenient for rural shoppers to go to Walmart. The tradeoff is that the stores may not be the cleanest or have the greatest variety of products, especially at the high end.
By contrast, in the larger cities, the necessary goods are in closer proximity to one another so that going from one store to another is much less cumbersome. This also creates greater competition for shoppers' dollars, and the stores (on the whole) have a greater variety in order to distinguish one from another. In addition, bigger cities are actively trying to fight back against suburban sprawl and make better use of nearby land. The sheer size of Walmart runs counter to those goals. Therefore, Walmart is disdained in the big cities because it takes up an enormous amount of valuable space and does not stock the high end products that are locally available.
Rule #1 -- Politics always trumps technology.
Walmart is so powerful it's scary.
Firstly, perhaps you didn't deserve to be called a prick but crying about it after you've done such an effective job denegrating so many others doesn't get you much sympathy. And, whatever you may think, your comment definitely had an element of elitism in it.
Secondly, it's interesting that you have no faith in the moderators (by the way, neither do I, when push comes to shove) but you feel comfortable practically telling them what to do. Here's a thought: don't cry about it (to the moderators or anyone else) because you threw the first punch.
Lastly, as other people have pointed out, 20 percent isn't a monopoly. It isn't even close to being a monopoly. If Wal-Mart really had a monopoly then those independent stores that you think are gouging you on price by making $4 a CD (and I'm not even sure it's that much), when they have higher costs and overheads to think about, as well as the online retailers that you do buy from, wouldn't exist.
And indie stores shouldn't deal with the RIAA? Gee, don't you think they have a hard time keeping their heads above water without turning away every other customer who wants to buy something from a RIAA-backed artist? Do you have any concept of how quickly all but a few very specialised indie stores would fold if they took that approach?
Taste has nothing to do with this discussion, huh? That's rich coming from someone who described the music that Wal-Mart does stock as "the typical teenybopper crap".
I'm not sure how you could come across worse, because right now, you come across as arrogant, hypocritical and plain old dumb. Your arguments hold little or no water because you fail to see that the world doesn't work the way that you want it to. I hate to disappoint you, but that isn't going to change any time soon.
"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg
A 30% markup for a specialty store is not unreasonable. You act like some asshole is just taking the $4 and putting it in his pocket. You should try to run a business. The owner of the store probably invested a good bit of money up front to get started. You have to fill the store with racks, buy inventory, and plan on running at a loss for the first few months as you grow your business. The owner is probably paying back the debt incurred at startup for a long time or they risked a lot of savings just to get started.
Once you get past that hurdle you have to pay rent, taxes, insurance, hire employees, pay unemployment tax, workers comp, social security. You also have to pay to advertise your business, pay your accountant to file your taxes, possibly hire a book keeper to help you keep up with the sales tax that you must pay. It is endless. $4 per CD doesn't go very far. You have to sell a lot of CD's to break even. Making a big profit off of such a business isn't a trivial thing.
I'm not saying that you should feel bad for business owners. Just realize that it isn't all that easy. If you go into a store that you really enjoy that has a wide selection, knowledgeable employees, and a great atmosphere with good customer support, you should appreciate it for the gem that it is. Someone has really had to put a lot of thought and strategy into pulling it off right. They probably also took a lot of risks just to get it started. It isn't all that easy.
Demolition Man predicts that Taco Bell will win the Franchise Wars.
"The avalanche has already started. It is too late for the pebbles to vote" -- Kosh
Wal-Mart has every right to decide what it will and will not sell, and to base that decision on whatever criteria it likes. Don't want to play with them? Don't sell at Wal-Mart. You don't own Wal-Mart; therefore, you're not entitled to sell your stuff on its shelves. It's an opportunity Wal-Mart can extend to your or not at its discretion.
"Other than that, Mrs. Lincoln, how was the play?"
The article mentions that Wal-Mart could stop selling CDs altogether, and their sales would be relatively unaffected.
"While Wal-Mart represents nearly twenty percent of major-label music sales, music represents only about two percent of Wal-Mart's total sales. 'If they got out of selling music, it would mean nothing to them,' says another label executive. 'This keeps me awake at night.'"
So what happens when the publishers don't sell to Wal-Mart?
"...Wal-Mart executives hinted that they could reduce Wal-Mart's CD stock and replace it with more lucrative DVDs and video games."
So, not as easy for the labels as it seems. If Wal-Mart "will not be taken seriously as a place to get music," they can move on with other things, having made an example of the labels to others who might try the same tactic.
The same should be true of businesses.
If WalMart doesn't stock an extremely wide range of music, it will not be taken seriously as a place to get music.
Have you ever lived near a Wal-Mart? It's NEVER stocked a wide range of music. It's never stocked a wide range of anything. It sells anyway because Wal-Mart (a) is everywhere, (b) is sells what's most popular, and (c) what it does sell, it sells cheaper than anyplace else, including Internet retailers.
Remember, the key word in "popular music" is "popular". So what if it's not a wide selection? If 95% of all shoppers save money on the 5% of all CDs Wal-Mart stocks, then thay will. The other 5% of all shoppers don't HAVE to take Wal-Mart seriously as a music store. Wal-Mart, in many non-urban parts of the US, is nearly the only place you can go to buy CDs anyhow, and if there is another music store in town it's vastly overpriced by comparison.
Don't think like a music connoisseur, think like a capitalist. The 95% that buys what's popular is all that matters to Wal-Mart's bottom line, and it's the same 95% that the record labels have built their entire industry around. If Wal-Marts across the country refuse to stock a label's new CDs, then those record companies lose a big chunk of their business. Certainly not enough to cripple them, but enough to hurt their quarterly sales. Wal-Mart has played this game of Chicken plenty of times before, and it's always the other guy that blinks.
When are /.ers going to realise: the purpose of commercial entities is not to spread knowledge of music, but to make profit.
There are two perfectly valid business strategies to do this:
Target a consumer segment that wants to buy a wide selection of music, which necessarily cannot be limited to the current top radioplay/chart list.
To do this, you have to hold a much higher level of stock. To do this profitably, you have to have a higher gross margin to maintain a livable net margin.
The trouble is, unless you can carry a truly huge stock and shift it very fast (Hello, Amazon), you won't be doing the volume to have the buying power with the distributors. Therefore you must add your higher margin to higher costs. Result: high consumer prices.
Target a consumer segment that only cares about what's in the charts/on the radio.
This is a much bigger segment, and it's a much smaller set of product. Therefore, you can be much more efficient with your supply chain processes, you'll need less real estate for shelving, and you'll shift more volume so can negotiate more robustly with suppliers. You can therefore offer lower prices and still make respectable net margin as your costs are so low.
Both of these strategies are viable, and are only somewhat competitive. You're a consumer who likes non-chart music, so do you go to WalMart to find it? No, of course not. The existence or otherwise of WalMart is entirely irrelevant to your music buying habits. You worry about all those teenagers who only go to WM only finding chart music? They shop where their needs are met - if they wanted anything else, they'd go elsewhere.
But I think the biggest trap you've fallen into is the High Fidelity one - mistaking selling CDs for loving music. If you're a retailer who does it because you love the music and don't have a profit motive, then you have a hobby, my friend, not a business.
Amazon are very smart about this. They explicitly do not target people who love *read* books, but those who love to *buy* them.
Wal-Mart don't care about the music. It's just business - they supply a need profitably to provide a maximised return to their owners. This isn't A Bad and Evil Thing: their owners (ie the stockholders) legally require them to behave like this.
And this is the case for pretty much everyone involved: The people who press the CDs, the people who design the covers, the people who ship the CDs, the people who provide catering to the studios - everyone. Even among professional musicians, the strongest desire of all is to be paid, or didn't you notice the existence of the Musician's Union...
The only thing you can accurately describe as "Scotch" is a sticky tape made by 3M. And it's
I guess you aren't one of the people who miss the days when Levi's were the best jeans you could buy? Wal-Mart forced them to "cut the fat" so they would be able to offer the product at a reduced price every year. From jeans which could hold together while being pulled by two horses, to jeans no tougher than three ply tissues.
The consumer quest for rock bottom prices has also lead to rock bottom quality.
You don't mind that Wal-mart is essentially a sweat shop that pays below average wages? That they lower the standard of living in the neighbourhoods they are set up in? That it's up to the government or the spouces benefits package to make up the difference? You may save up front, but at what cost? Every consumer that shops there is contributing to the problem.
People get up in arms when workers are exploited overseas, but don't care when it happens to some extent in their own backyard as long as it saves them $0.50 on toiletpaper?
You're right, no one has to shop there if they don't want to. I don't like what Wal-Mart stands for; I think they lead to a social net loss. So I don't shop there. And I discourage others from doing so as well.
Man, this is insane.
If you don't like what they're selling at Wal-Mart, DO NOT BUY IT. If you don't like their pricing, DO NOT SHOP THERE. If you don't like their attitude, the color of the store, their stance on not carrying lesbian porn, DO NOT FREQUENT THEIR ESTABLISHMENT.
All I ever hear about Wal-Mart anymore is how damned evil they are and how the store sucks and their music is unfairly censored and blahblahblah. If it's so damned bad, why are they making money hand over fist?
Frankly, I love what they've done for supply chain management, I love how they slap their suppliers into line, their prices are incredible, watching white trash is funny as hell, and I don't buy music there because I want to hear Jay-Z say 'fuck.'
Anybody else actually have a problem with Wal-Mart they can express intelligently?
I think it depends on where you're at. Most of the Walmarts I use are Super-Walmarts in Wisconsin. They are always clean, pretty friendly, and very spacious. Yet when I was on vacation in St. Louis, I was in a normal sized Walmart that was at least 10 times over capacity. They were in serious need of a store upgrade and a few extra stores in the area.
So you may find that different people have different experiences with going into Walmarts. Big city people will probably hate them (lots of negativity toward them here in Chicago) while the less populated areas will love them.
It also has to do with the shoppers and employees. There are about at least 10 Wal-Marts here in CT, and of the ones I've been to, they all pretty much suck in terms of cleanliness and usablility. Granted, some of it is the employees (or lack of) being too busy stocking shelves/dealing with customers to do any clean up. It also doesn't help that the customers go through the stores - especially on Sundays - like a horde of locusts on a field of crops.
If I'm in a store and my kid knocks something over, one of us picks it up and puts it back. If I suddenly decide I don't need something, I either give it to the cashier and tell them or put it back - usually where it belongs. If I'm in the store with a cup of coffee and am finished, I throw it out - I don't just leave it on a shelf for someone to find 3 hours later.
Is it just me, or does a little common courtesy go a long way?
Computer geek for hire. Reasonable rates. Email me.
Look at the breakdown in the article for the cost of a $15.99 CD:
$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead
Excluding profits for all those involved I calculate almost $11.00 in COSTS that are way out of line.
We are in an era of "innovation stagnation". Companies are not creating "new stuff", but making money by taking costs out of the "old stuff". The record industry has simply refused to accept this fact.
Wal-mart, Dell, Southwest Airlines, and other low-cost providers are not providing new and innovative products, they are providing new and innovative business models that take cost out, and therefore provide value.
If the record industry is to survive, it must either create something radically new (MP3 online distribution of every artist past and present, and DVD - SACD discs) or reduce it's costs to meet market price.
The market has spoken. $15.00 CDs are not a viable business model.
-ted
Maybe so. But they've also changed the marketplace so that lowest manufacturing cost is the only consideration for success. Consequently, they've created a gargantuan flood of imports that we've paid for with IOUs. Low inflation over the last 15 years has been bought on loan.
Since with current demographic trends we're never going to pay those IOUs off at current values, there's probably going to be a huge surge of inflation in the future while the government prints money to devalue our foreign debt. So really what WalMart is doing is just pushing the inevitable inflation into the future, where it's going to hit us all at once.
It's like they've handed us a credit card, and we as a nation have become lazy and quit working to earn the stuff we buy. We just keep charging more stuff on the credit card.
Here is a very interesting article on the way Wal-Mart works with suppliers. They have done similar things in other industries to what they're doing here, and really transformed the way business is done in some fields.
<sig>Guvf vf abg n frperg zrffntr
I'm tired of everyone bashing large companies, especially Walmart. Last year Walmart had 258 billion in revenue, paying over 5 billion in taxes. People are always complaining about unemployement.. well just think about how many jobs walmart stores create. Benefits are usually better with larger companies. I work for a small company and health insurance I pay out of my own pocket. Unless you're a communist, capitalism is good for our society. Nobody makes you shop at walmart, so if you don't like them, don't shop there. Personally, I enjoy the lower prices.
Wal-Mart's unique position makes them a monopsony rather than a monopoly. Basically, a monopsony exists when there is one buyer in the market. Since Wal-Mart is so colossaly huge, they can effectively set the price points for their suppliers. This is good for the consumers, but bad for the suppliers and their employees.
Anti-trust legislation won't work in this case because they're not harming consumers (at least, not directly).
Some good statistics and links can be found here.
Keep your friends close.
Keep your enemies in a little jar on your desk.
It seems that theer is a large enough market for these censored CDs that they turn a profit on them.
I doubt that. If these CDs were actually upfront about being censored, that would be fine, but they're not.
"We returned the General to El Salvador, or maybe Guatemala, it's difficult to tell from 10,000 feet"
The labels have been squeezing artists down to a puny 65 cents per CD or less and now Walmart is squeezing the record labels. I love it! There is justice in the world occasionally. Since the artists cut is already so low the labels will have to absorb this.
:)
I predict people will definately buy more CD's if they are $10 or less. Also, since the CD's will be so cheap, the labels probably won't be able to afford to license copy protection for the CD's. Note to self, sell stock in companies that license CD protection technologies.
The race to the bottom has begun and now the slick record label exec's in their $3000 suits are about to feel the pain. However, the exec's shouldn't worry too much if they should lose their job, George W. Bush is creating jobs that pay $5/hr. or less every day
Welcome to the free-market monopoly!!!!
I don't like Walmart, but the problem is, like most people...
I'm too broke to NOT shop at Walmart.
cheers.
This is my sig. There are many like it, but this one is mine.
The RIAA is being told by Someone Big Enough to Stand Up to Them to lower prices -- that's good.
It's Wal-Mart - Home of the Censored and Creatively Limited Music Selection -- that's bad.
Mod Karma -1: I sed bad wurds. If I cep my mouf shut, I wud be at riyses.
Most independent stores I have gone to shop for music in are charing $16+ for a CD. If you're buying it for $12 and making $4+ a CD I seriously believe that you are gouging us. I don't feel bad for you.
Perhaps you should look at this again. In the mall around the corner from where I live, it costs $5000 per month for rent on their smallest sized storefront. Assuming they need a minimum of 4 employees working 40 hours per week to cover the store, and they pay them $8/hour, you come to over $5000 in salary expenses per month. That's $10,000 per month just for these two expenses. That means you need to sell over 83 CD's per day with a $4 markup in order to cover just these two costs. A music store requires hundreds of thousands of dollars worth of inventory. Personally, I don't think a $4 markup on a CD is gouging the customer. The record comanies, however, with a cost of under $1 per CD, selling for $12, is certainly gouging, especially when you consider that the payouts to the artists is included in that less than $1 cost.
Wal-Mart does have competition in and around urban centers. I live in seattle, we have targets; sam's, k-marts; kohl's; and all sorts of specialized stores in the area. But I grew up in Oklahoma. In some of the smaller towns in oklahoma the wal-mart moves in, and everything closes. In a smaller population center, there is only room for one super store; and wal-mart almost always wins.
Jack Valenti and Orrin Hatch will be first up against the wall when the revolution comes.
Hmmm, I have one partner who is destroying all my other partners, providing no real benefits to me, and is now forcing me to wreck my margins in favor of theirs. Sure they sell a lot of my product, but record sales are actually down since they got in the game, and big deal, if they aren't selling my goods others will, and people will still buy.
It's not like if they stop supplying to WalMart they're going to lose those 1 in 5 customers. The benefits are pretty clear, they'll be doing their other partners a favor allowing them to compete (partners which provided marketing push for them) and they'll have more of their products on the selves.
I beg your pardon but someone will always be paying below average wages.
See the thing about averages is that there's a bottom, a middle, and a top. Or a left, middle, and right. Or maybe a better way to put it is that to graphically represent an average there has to be two points on opposite sides of the represented average.
If Walmart paid higher wages, then someone else would be paying "below average" wages, etc etc.
And I know some people aren't taught this, but, there's always someone at the bottom.
Low pay is not illegal, it's not even unethical. If Wal-Mart raised their pay rates, they'd have to fire people. So ask yourself, do you want fewer people making more money, or more people making "less than average" money?
Blessed be he who reads this post, Cursed be he who tells my boss.
At the end of the article, the Almighty Institute of Music Retail provides a breakdown of the $15.99 spent on a new album. What surprises me is that when you adjust the underlying model for online music sales, the numbers break down to $9.88, which assumes that the record labels maintain their $4.61 of overhead and profit. This leads me to suspect that, despite their assertations to the contrary, Apple does in fact make some money off the iTunes music store.
0.17 musicians unions
n/a packaging/manufacturing
0.8 publishing royalties
n/a retail profit
0.15 credit card fees
1.6 artists royalties
1.7 label profit
2.4 marketing
2.91 label overhead
0.15 retail overhead
9.88 total
"...What is good for General Motors is good for America." -Charles Wilson, Secretary of Defense and fmr President of GM
WalMart is the biggest monopoly ever, not just because of its number of stores and its corporate influence on justice department/politicians, but because WalMart influences everyones lives. Its a retail chain that sells everything for less, albeit by arm twisting the suppliers to sell for less and in the process killing the local economy. Not that I side with the Labels, they too are monopolistic and cold blooded killers of talent. So its good they are tasting their own medicine. What I would like to see happen is cap the number of stores WalMart can open in a county, cap the quantity of items WalMart can import from China, have a government run complaint cell where these suppliers can complain about arm twisting (that will build enough evidence for Anti Trust lawsuit) and last but not the least break up WalMart into W A L M A R T (thats 7) baby marts. I am not that afraid of the labels, because proliferation of P2P, secure P2Ps, pirated CDs, online music stores are already teaching them a lesson. -stegano
This wasn't framed as a gentle negotiation, it's a line in the sand -- you don't do this, then the threat is [your product is dropped].'
Does walmart ever conduct a gentle negotiation? They do this kind of thing all the time. I've even heard that there have been cases where they just started paying less for the stuff they bought, regardless of what their supplier was "charging" them.
~Warning!~ The above is encrypted using rot676!
Sometimes being a consumer involves more than just the price of an item.
I imagine that if you could have received the same price breaks as B&N then you would have jumped at the opportunity. Then you would sell them at a lower cost to the consumer.
Assuming that's true, then you are doing what you counsel against. As a bookstore you are a consumer buying from distributers, but you always look for the better deals, just as the end consumer does.
The next argument usually made is, "We would have to just to survive," which is also made by the end consumer. If I can buy the same product for less, is it in my best interest to buy it for more? The store has to make the same decision, and the result is the same - it's not in the store's best interest to buy from a higher cost distributer, and it's not in the consumer's best interest to buy from a higher cost store.
This is capitalism. It's nice to believe in a rosy utopia where everyone gets what they want, but the reality is that our economy does not support that model.
To paraphrase the GPL people, "If you don't like it, invent your own currency and enforce your own economic model. You have the tools."
-Adam
what dog shit? they sell things other companys make. playstations and nike shoes and movies made in hollywood. cloths and food might be the only stuff that they have that isn't just standard stuff that every store on earth sells.
-You're wasting your time. Alfador only likes me.
First the RIAA complained that people ripping CDs and distributing them was putting music stores out of business. Now, in this article, the RIAA trumpets the closure of music stores in the context of Walmart's price pressure on those businesses. Sounds like another excuse to me. Instead of whining about the changes happening to their business model, they should embrace the change and join the rest of us in the 21st century.
Monopoly one, meet monopoly two
That's precisely what makes this so interesting.
I've always been under the impression that you don't mess with WalMart. (If you're a producer trying to get your goods sold, I mean.) If they tell you to lower prices and you don't, they'll drop your product altogether. Because of their immense size, they pretty much boss you around.
On the other hand, no one messes with the RIAA, either. And WalMart has a lot to lose here: couldn't the RIAA simply stop providing them with CDs? True, it might cut into their sales, too, but the RIAA could assert its dominance.
It's like the mob, only there's two of them. And one has just given an ultimatum to the other. I want to watch this one.
________________________________________________
suwain_2
Um you're right about everything about the fast food, theres no loss leaders in fast food. I used to order stuff for mcdonalds 3 times a week. Our cost for a hamburger was 10 cents. Our cost for a cheeseburger was like 14. Cost for a big mac was I think maybe 29 cents. The most expensive thing was the filet o fish...a whole 60 cents. Trust me there are no loss leaders at mcdonalds.
Who goes to Walmart for High-End items? It's the low price on low-end items that brings people in.
Links, please? I'm so sick of "mainstream pop commercials" it's painful to even google for such sites.
TIA!
Well, your not doing a very good job of discouraging people from shopping there. It's always busy when I shop there ;)
"The independants can't afford to compete with WalMart on the hits, but can't survive only on non-hits."
They can compete another way. If Walmart even sells Eminem, it would be the censored, clean lyrics version. They're run by Bible-thumping prudes. They wouldn't sell music with explicit lyrics no matter how wildly popular it was. Of course, you still won't have enough customers in a rural area to support an indie record store, but there's always mail order like Amazon or just downloading.
Don't get me started. For a few years, I lived near a major metropolitan area. I had moved from a rural (suburban) area. The first sign of lack of courtesy at stores was everybody too lazy or in a hurry to return the carts to the provided stalls. they just leave them right beside the car, or most likely right behind the next car, and drive off on their merry way. I remember when stores didn't even provide the courtesy cart returns. Morally sound people would do the right thing and roll their carts all the way to the store front (uphill, both ways, in the snow).
When I catch someone doing that, I usually let them know about it. I "scold" them in front of the other people and tell them how uncourteous thay are. Usually, they put the cart back.
Exactly correct. Some of those jobs will never be filled by citizens, for example agricultural jobs (read: fruit picking) around the Santa Cruz area on California's central coast. Unless you're willing to live four to a room, you can't afford to live there picking fruit. However, all of the wal-mart jobs currently being filled by illegal aliens could be performed by citizens, especially if kerry gets elected and fulfills his promise to raise the national minimum wage to $7 over the course of (approximately) his first term.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Because, as usual, most people do not care about "evil" business practices. The other points you bring up are mostly a matter of taste.
How about: They make it too easy for the average uncaring buyer to take his dollars and vote for Chinese sweat shops with penny-wages and appalling work conditions.
chl
Seems more like Feudalism to me. Big king in far-off castle, store manager as vassel, serfs working the land (that only the king actually owns any of). Yep, Walmarts in small towns are fiefdoms.
"Somebody has to do something. It's just incredibly pathetic it has to be us."
--- Jerry Garcia
Hear hear!
:P
Speaking as a Brit myself, it always amuses me how the Yanks opine RIAA profits and excessive CD prices. It is not uncommon for us to pay £12.99 ($23) or £13.99 ($25) for a CD here, as you note - if prices dropped to more reasonable levels (i.e. £5 or £8), CD sales would skyrocket and remain high for quite some considerable time, I would think.
Of course, it's always been that way in the UK. You can get better prices by using mail order, which brings things down to the £7-£8 mark, but you may have to add delivery costs and will certainly have to wait some time for the items to get to you. There is none of the instant gratification of just buying the item there and then in a shop, unless you are prepared to pay twice the price for it.
Same goes for computer bits, of course. In Japan, I could walk into a shop and pay mail order prices and walk out with the product. In England, I have to pay delivery and wait at least until the next day.
Of course, fact is that the British just love to complain. We are incomplete without something to bitch about. If CD prices were lower, we'd bitch about the fact that we can't bitch about the high price of CDs.
iqu
1. The grand parent accused the OP of being a selfish, elitist prick, not a criminal. And being a selfish, elitist prick is not a crime.
:)
2. The OP has offered very little by way of evidence of being an intelligent person who makes rational arguments. "I don't like the music sold at walmart, therefore it is all crap and they must be lying about the fact that 1 in 5 CDs are sold at walmart"
This guy is best ignored... but insulting him is probably more satisfying
If you want above-average wages, go to college. Start a business. DO something.
If you're just going to show up to work when you're told and do a job *ANYONE* can do, you deserve the crap pay you're getting. That's life.
And, Americans agree with me, based on how they vote with their wallets.
paintball
It doesn't make up all of the difference but you should allow for that.
Dude, I think I can see my house from here.
Those outsourced factory jobs everyone is blaming on Bush? A goodly number of them can actually be laid at the feet of Wal-Mart and it's predatory practices. Look what they did to Levi-Strauss, and L-S bent over and took it to gain acess to Wal-Mart.
This story about Wal-mart frightens me greatly, and it's just one of many.
Incredibly priced dog shit is still dog shit.
Sure, but if you ever have a need for dog shit, why should you have to pay full MSRP?
A computer once beat me at chess, but it was no match for me at kick boxing -- Emo Phillips
and read one of the 71k articles
besides, what more evidence do you need besides the fact that 5 of the top 10 billionaires are walmart family members while virtually all of their employees are insuranceless toothless rednecks with no hope of ever digging themselves out of poverty thanks to the corporate money-caste system in power in this country
thank you for trying to justify your walmart patronage on moral grounds so i could bring you hurtling back to reality.
I'm not saying I don't shop there but I'm not deluded into thinking they're something Good (tm)
My biggest problem w/ Wal-Mart is that they don't pay their employees enough and don't give them health care, making them a burden on the state and the taxpayers and thus me. I don't want to have to subsidize Wal-Mart's low-prices by having my tax dollars pay for a Wal-Mart employee's over-priced trip to the emergency room for something that if they had health care they could have taken care of at a doctor's office or clinic.
Dude, I think I can see my house from here.
This is capitalism. It's nice to believe in a rosy utopia where everyone gets what they want, but the reality is that our economy does not support that model.
And there's the problem. Capitalism used to have natural limits based mostly on the speed of delivery and money liquidity. This allowed a lot of leeway for smaller shops to find meaningful ways to compete outside of price and supply.
Now, supply is limitless, money can be exchanged instantly and all sales are computer controlled to automatically maximize profits. As a result, wealth naturally pools up amongst the people who have enough wealth to take advantage of extreme efficiency.
Basically, capitalism is now unbridled and if you were lucky enough to amass enough wealth in the past you can now take over entire markets because there are no functional restraints in either the market or through competition law.
If you read back to the writings of early capitalists and their critics, they never envisioned a world where there was unlimited (for all intents and purposes) supply and near 100% efficiency. In fact, nearly every one of them said that situation would be to the overall detriment of society and would serve only to consolidate wealth in the smallest minority.
making money hand over fist -> must not be doing anything unethical
Am I getting you right, is that what you're saying? So DeBeers, MS, Exxon, R.J Reynolds, we know those guys aren't doing anything wrong because they have lots of money? That's the most bizarre argument i've heard in a very long time.
Anyway, as for a good argument why WalMart isn't the greatest thing since sliced bread, despite their impressive wealth you can try this article: http://www.alternet.org/story/12962
You can refer to the book No Logo also for more information.
Really, there's a wealth of damning evidence out there. I don't think you've been looking.
We hope your rules and wisdom choke you / Now we are one in everlasting peace
The problem in while creating high school and college student jobs they have destroyed many other businesses. This includes hardware store owners, small grocers, and big range of positions in factores that used to supply to these. Check out their food section sometime. The last time I was there (it has been several years) I did not find one product of any kind that was locally produced. What does that say about Wall Mart participating in the community.
Or, better yet,
why not allow that kiosk to burn the CD, print a label and a sleeve, and spit it out in 30 seconds? This way, you don't need to worry about stock -- you have a supply of any CD a customer could want that's limited only by how many CDRs you can cram in the back closet.
OR, why not allow the customer to mix-n-match those tracks, so a 10-song Albumn could benefit as many as 10 different artists! That allowance-limited teen might not have to decide between popular radio personality (I refuse to call them Artists), and as "filler" they might actually pick up something decent they wouldn't have heard of otherwise.
Or, they could just use iTunes or Rhapsody or Sony Connect or...
The more posts I read here, the more thin argument s based incorrect on generalizations I see. Many people who shop at Wal-Mart seriously need to cut their expenses and will buy wherever is cheapest in order to get by. It's nice to take a stance that you will shop else where you get that "mom and pop store" feeling; but if you are in that comfortable of a position, you are in the minority. I worked at Wal-mart for six years and found that those cheap-labor jobs tend to attract exactly those cheap-labor mentality employees...but what people blindly refute about those wages is the fact that mom and pop stores aren't exactly paying $15/hour, they are paying minimum wage. Wal-Mart also actively hires elderly and mentally handicapped workers. Wal-Mart would not be debated unless you are first a logical person willing to make logical discussion. Wal-Mart can sell things cheap because they buy in mass quantities, have low overhead costs and low payroll costs. They push smaller stores out primarily due to the fact that small stores don't buy CD's 1,000,000 per purchase order. If you want to pay $50 at another store for a cordless drill or $45 at Wal-Mart; that's your choice; but don't assume you are getting a better product because you paid more...and don't assume that you're doing some sort of justice by spending that extra money for the exact same thing. Wal-Mart sells cheap Levis, for example, under a different name so that Levi Strauss can make money and not tarnish the name of the original jeans. Wal-Mart does not sell real 501 Levi Jeans, so the argument that Wal-Mart ruined the quality of Levis is pure ignorance. Levi Strauss created a line of products to make money, and Wal-Mart is one of the stores that sell them. I find that people who work at Wal-Mart as a career are high-school-level educated and are often people that fit in well in the Wal-Mart culture. The Wal-mart employees can become a second family for many people; something you may get on a much smaller scale in a small store. If you want to complain about the wages; educate yourself, get in shape, and find some initiative, and go get a job doing something you want to do. Some people work at Wal-Mart because that is what suits them best...you aren't helping them any if you triumphantly march to another store to buy your daily goods.
"This is the first time a big player has attempted this sort of hardball move on the labels."
Not true in the least. Slashdotters have Wal-Mart to thank for the record labels being punished for price fixing (as in the popular Slashdotter refrain, "the record companies are evil! They've been busted for price fixing!"). Here's what happened, in a nutshell:
- Wal-Mart started selling CDs at sub-par margins or as a loss leader to get people into the stores to buy other high-margin items.
- Record chains like Tower Records freaked out, as their primary business was selling CDs and they couldn't compete with a Wal-Mart which had a huge store of fishing rods and cheap clothing to make up the bulk of their business.
- The record companies helped fund the advertising for Tower as well as two other chains (TWE and MusicLand, I believe) in exchange for Tower et. al. agreening not to display prices in those ads that went below a certain point. FWIW, this is called a "MAP program," for "minimum advertised price," and is prevalent in tons of other industries.
- Wal-Mart got all pissy and threw their weight around with the government.
- The government told the record companies to stop, and to send checks to consumers.
- Lots of other industries, including the computer peripheral industries, still happily continue MAP programs... until that point that Wal-Mart tattles on them, too.
- Tower Records subsequently declared bankrupcty. Enjoy buying your music at Wal-Mart, folks.
That's about as hardball as you can get.Sitting in my day care, the art is decopainted.
Another thing to put on the list of "things that are fucked up about San Angelo, Texas" is that Walmart actually has a better selection of high-end consumer cameras than the circuit city there does.
Whatever it is that people buy a lot of, of course.
I don't go to Wal*Mart much because their locations aren't terribly nearby. Every time I do, though, I find that their grocery has managed to undercut Kroger by 5-20% on 95% of the items they sell (and I'm not just buying WM brand). Doesn't sound like much, and isn't worth the drive every time. But then I don't have, say, kids.
When you're buying diapers by the crate, paper towels by the truckload, and food to fill up three teenage boys, that 5% starts to be a LOT of money. So they go to WM.
Besides, think about the median person in life. This isn't something most /.ers ever do. In all likelihood, they've met very few of them in their life. Before I got into health care, I had met very few of them - the people, for example, who gut chickens, package screws, can vegetables. The people who do the millions of boring, repetitive, miserable jobs out there. They don't have a lot of money, and they're not very bright (or they'd be doing something else). They don't have a lot of insight into the future, and though they can follow a train of thought laying out consequences, they can't come up with it on their own. All of these add up to "not a lot of disposable cash". So when they go to WM, they find a large selection of very cheaply priced and surprisingly well-made (really, compared to what they had access to before) items.
There are lots and lots of them. Probably a third of the US population has a life not terribly different from this. It doesn't matter that you don't get much money from each one - there are a hundred million of them. Make $10 off every one of them and you've got a billion.
They also card you for ANYTHING coded "Mature", and will not sell it to anyone under 18. The business model seems to work for them. As for the "developing artists", Wal-Mart isn't a specialty retailer, it's a mass marketer. It's not the kind of merchandise I'd be looking for at a Wal-Mart in the first place: for THAT, I'd be looking online, because the local record stores also shill a slightly-larger number of "established" acts and genre CDs (i.e. Folk, Jazz, Soundtracks, and back catalog items) that don't move as quickly as the latest top 40 trash. . .
Wal-Mart's markup on stuff other than CDs ranges from 30% - 50%.
Where are you getting your numbers?
33% is most certainly not gouging.
I think the above statement is a misconception. Who is to decide what numbers are "gouging" and what numbers aren't? Why are we even talking about "price gouging" regarding such a luxury item?
33% is wildly high for some businesses, and very low for others.
Buying from a major label is sort of like buying name-brand clothes. You aren't really getting something better, you're just getting something more popular. The music is good because the radio and all the clubs overplay it, not in spite of that fact. Serious musicians don't care about that, but to the average person (myself included) the pop music is kinda catchy and gets stuck in my head. There are many similar examples, like how people will pay a lot for diamonds, but if de Beers flooded the market nobody would want diamonds anymore.
Price is not some arbitrary value which should be manipulated. It's the indicator of the current supply conditions and current demand conditions. A hotel room during a disaster (like a flood or hurricane) is highly demanded, but the supply is relatively low. When the price rises, it forces a more efficient use of the resources available. Those in need of space will be more likely to stay with friends if they can, leaving the hotel space for those more in need. Large families who might normally reserve two rooms might get one instead, leaving a room open for another family. Families might get the necessary portions of their house fixed and move back faster (again leaving room for another family), without waiting for their house to be restored to perfect condition.
Of course, all the efficiencies mentioned above would be called "price gouging". When the government steps in and prevents the price from rising naturally, it becomes a race to see who can reserve hotel rooms the fastest, and creates a shortage. Then, the families most in need might be left on the streets while families who could be staying with friends are enjoying a two-bedroom luxury suite.
Social scientists are inspired by theories; scientists are humbled by facts.
Wal-Mart doesn't demand censored lyrics because they are Bible thumping prudes. Wal-Mart demands censored lyrics because they sell better. Parents, for instance, are far more likely to buy their children CDs that don't have explicit lyrics stickers on them.
You ever wonder why it is that your local CD shop carries the censored versions of the CDs? The answer is that even in a record store (which generally don't count soccer moms as one of their primary customer groups) censored CDs generally compete very well with their uncensored versions. By just stocking the censored CDs Wal-Mart cuts down on their inventory significantly and does a better job of catering to their primary customer.
Wal-Mart sells 1 out of every 5 CDs. Clearly they must be doing something right. You might like the uncensored version, but that's not true of the "average" CD consumer.
I don't find anything bad about this particular incident, but it cannot be considered in isolation.
Profit is NOT a dirty word. What I dislike (dunno about the rest of slashdot - we're hardly one voice) is when pursuit of those profits results in behavior which is detrimental to the community as a while. Big businesses seldom have any regard for things like a sense of community, and will cheerfully crush anything or anyone if it benefits their bottom line. I do NOT find this behavior either acceptable or commendable, and if others dismiss it by saying "that's the way it is, its how capitalism works" then I say capitalism has got some major problems and they should be fixed. I do not think that's how it should work. Things CAN change, you know. Just because that's the way things are now doesn't mean it's the right thing.
Making a profit, fine. No problem there. Making absurd profits via disregard for others, BIG problem. Greed in moderation is fine, but it MUST be countered by a regard for the larger community. Extremes are seldom healthy, and pursuit of profit is certainly no exception.
"I object to doing things that computers can do." -- Olin Shivers, lispers.org