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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."

43 of 910 comments (clear)

  1. Well, what do you know? by gpinzone · · Score: 5, Funny

    Two wrongs sometimes do make a right.

  2. Evil Empire 1 by CountBrass · · Score: 4, Funny

    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.
  3. Heh by starseeker · · Score: 4, Insightful

    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
  4. No news here. by artguy66 · · Score: 5, Informative

    Walmart does it to ALL of their manufacturers. Perhaps this one may deserve it.

  5. Re:My eyes are filling with tears for the labels.. by Anonymous Coward · · Score: 5, Insightful

    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.

  6. walmart means moving product by dubiousmike · · Score: 4, Informative

    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.

  7. Standard Operating Procedure by chud67 · · Score: 5, Informative
    I have heard from more than one person that this is typically how WalMart deals with its vendors/suppliers. If you have a company making widgets, for example, WalMart might come to you and place a small order for widgets to sell in their stores. Then as your product sells they gradually increase their orders until eventually they have pretty much your entire production line devoted to WalMart orders. At that point they come in and low ball you by saying, 'we're only going to pay x dollars per order from here on out, take it or leave it'. The vendor, whose entire business now hinges on WalMart orders, is forced to comply.

    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...

  8. Walmart is not a monopoly by amightywind · · Score: 4, Insightful

    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
    1. Re:Walmart is not a monopoly by copper · · Score: 5, Interesting

      Interesting fact my Torts professor shared with the class: sales at Walmart peak at the beginning and in the middle of every month as their number one customers are those people living paycheck to paycheck. Walmart's extremely low prices are a boon for this working class and thus quite a good thing for a large part of America (especially rural America).

    2. Re:Walmart is not a monopoly by Fnkmaster · · Score: 4, Insightful
      This is a myth. No, the part about the paycheck to paycheck people shopping at certain times is true, but the part about this being a "boon for the working class" is exactly the wrong conclusion. Do you know why the working class is poorer today than they used to be? Because they earn less money. Where do you think the jobs they used to have went? These people don't realize that by buying the cheaper products at Walmart they are quite literally subsidizing the loss of their own jobs.


      Who do you think used to work at the manufacturers that were driven to source from China by Walmart? Do you think it was the educated urban elite? White collar technology workers? No, and no. It was the same working class people who are now finding themselves jobless or taking much worse jobs at lower pay than their old factory jobs, because the factories don't exist anymore, in large part due to Walmart and big box retailers disrupting the old supply chain.


      You are free to think this is ultimate good or ultimately bad for the country and its citizens, but it's hard to deny that the working class has been complicit in their own demise in much of the country by being such steadfast patrons of Walmart, and active supporters in many cases. Ever talk to a person from rural Alabama and suggest to them that Walmart is bad for the country? Damn, that pisses them off, and for all the wrong reasons - they think Walmart could never do anything like this, because they employ nice local people and have senior citizens smiling and greeting you when you walk in the door. How could Walmart be costing them jobs, when you see how many people each Walmart employs? They just don't get it.

  9. Re:My eyes are filling with tears for the labels.. by LetterJ · · Score: 5, Informative

    "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.

  10. Re:My eyes are filling with tears for the labels.. by Alzheimers · · Score: 4, Interesting

    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.

    They say, "Oh, we're out of soda ... I need to run to the Walmart". "Oh, we need a new TV ... I need to head up to the Walmart."

    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.

  11. Re:As my mummy always said... by overbyj · · Score: 4, Interesting

    As much as I would like to rub the RIAA face in the dirt with this one, the issue is really much much bigger than just the RIAA. Wal-Mart is a ruthless competitor that rivals, if not surpasses, that ruthless competitor in Redmond. They have such retailing clout that when they make you an offer, you have no choice but to take or suffer the perilous consequences.

    Vlasic pickles is one fine example of their ruthlessness. Wal-Mart basically forced Vlasic to make the big size containers with more pickles in them than most humans should eat within a reasonable amount of time. Wal-Mart basically forced a price structure on them too with this giant jar of pickles. As a result, you the consumer have a choice. Pay for the giant jar and end up throwing away the vast majority of the pickles, or buy the more expensive jar in the grocery store. Joe Consumer buys the giant jar with the rockbottom price. As a result, Wal-Mart has now forced Vlasic to cannibalize themselves and they end up having to file bankruptcy.

    Wal-Mart has a well-established policy of forcing sellers to sell their products for cheaper prices year after year if the product does not change. Wal-Mart argues that if your product does not change, then production costs level off and you should then be able to bring your product to them for a lower cost. Ever notice how many gazillion different kinds of toothpaste and toothbrushes there are at Wal-Mart? That industry has figured that they cannot afford to not be sold at Wal-Mart but yet they have to maintain a certain price structure. Therefore, they "innovate" with toothpaste and toothbrushes. Now you have cinnamon flavor, cinnamon flavor with whitening, cinnamon flavor with tartar control, cinnamon flavor with whitening and tartar control and so on. This will not stop. What is next? Cinnamon flavor with bladder control???? Wal-Mart forces this "innovation" because of their business tactics.

    I could list many more examples and this is to not even mention that it is nearly impossible to actually earn a living working at Wal-Mart. They are basically an American sweatshop except they don't actually produce anything. They just peddle stuff and drive competition away.

    So as much as I would like to see the RIAA suffer for their deeds, this issue transcends them.

    --
    No trees were harmed in the composition of this; however, numerous electrons were inconvenienced.
  12. Why CDs are $15.99 by ChaosMt · · Score: 4, Informative

    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

    1. Re:Why CDs are $15.99 by HarveyBirdman · · Score: 4, Funny
      $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

      Getting the album for free off the internet? Priceless. :-)

      --
      --- Ban humanity.
    2. Re:Why CDs are $15.99 by po8 · · Score: 4, Informative

      A simpler view of the same data...

      $1.70 for packaging and distribution $1.77 to the musician / artist (split among author, performers, and union) $4.69 to the retailer $7.83 to the publisher / label Draw your own conclusions.
  13. Re:My eyes are filling with tears for the labels.. by AKAImBatman · · Score: 4, Insightful

    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.

  14. Re:My eyes are filling with tears for the labels.. by tekunokurato · · Score: 5, Insightful

    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.

  15. Re:Good by mfh · · Score: 4, Insightful

    I'm still not buying any more RIAA CDs, Walmart or elsewhere.

    Me too. I listen to internet radio and look for nice mixes around the web and all of them are indy. I could care less about the RIAA. They are goons. The RIAA operates like Jimmy Hoffa's Teamsters once did; oppression by coercion. The Teamsters took a beneficial idea (a trade union) and turned it into a money grubbing business front for organized crime. It's the same thing the RIAA has done with music, perhaps without the organized crime, but you never know. Music used to be free, but then the Metallica bands came along with their business plans. Metallica are sellouts. Who wants to put more cash in their pockets? I would much rather support a starving artist with new ideas.

    --
    The dangers of knowledge trigger emotional distress in human beings.
  16. Re:My eyes are filling with tears for the labels.. by Anonymous Coward · · Score: 4, Informative

    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.

  17. You are missing the bigger picture... by cnelzie · · Score: 5, Interesting

    ...in recent months there has been a cornucopia of stories detailing how Wal-Mart does business.

    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?
  18. Re:My eyes are filling with tears for the labels.. by Pxtl · · Score: 4, Interesting

    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!

  19. Re:Walmart a monopoly? by tekunokurato · · Score: 4, Informative

    There's a difference between anticompetitive tactics and actually being a monopoly. Both are covered under antitrust laws, but WalMart is only the former.

  20. Re:Walmart a monopoly? by gosand · · Score: 4, Insightful
    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.

    Walmart is not a monopoly - but they have ruined their share of small businesses. They also treat their employees like garbage, and don't give back to the communities that they overtake. That is why many communitites protest and try to keep them from setting up shop there.

    But realistically, in the end, people want the best prices on things. Walmart can offer the lowest price (usually) because they have such a huge operation and their costs are lower. Note the deal that they have with the RIAA - I am sure that nobody else gets that kind of discount. They aren't a monopoly, but they are one of the largest forces in retail. 5 of the top 10 richest people in the country are from the Walton family.

    I have talked to people who have marketed products to Walmart. They are hard-asses about accepting your product into their stores, and they take a huge cut. It is very much like record labels - you give away the lion's share of your product sales in hopes that they'll stock your product on their shelves.

    --

    My beliefs do not require that you agree with them.

  21. Re:My eyes are filling with tears for the labels.. by Maestro4k · · Score: 4, Insightful
    • 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.

    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).

    • 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.

    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.)

    • 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.

    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.

    • 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.

    While it's hard to understand t

  22. Re:My eyes are filling with tears for the labels.. by ktandaeo · · Score: 5, Interesting
    "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."

    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.

  23. Re:As my mummy always said... by DarkSarin · · Score: 5, Insightful

    I have a very different take on Walmart. They are successful for one reason-they market what consumers want. This is what makes them different from the Redmond Giant. Walmart has made themselves based on extraordinarily good pricing. Their methods of getting that pricing are sometimes dubious, sure, but they provide what people want, and usually at a good price.

    Will they continue to do so once they have wiped out all the competition? Probably not, but I don't think that Walmart will ever be competition free.

    There will always be conscientious objectors to the big W, and they will shop somewhere else. There is Target, which has made some very smart decisions on how to carry a very similar product line, yet be compelling. They are price competitive on most items, but they also market to a higher class customer, and tend to have more trendy goods than Walmart (their home decor is especially telling). I think target is here to stay. They are avoiding the mistake of Kmart, and not trying to imitate Walmart to closely (which is what killed Kmart, largely--there was little to differentiate the two, and Walmart consistently beat them on price).

    Is Walmart perfect? No. I hope they get slammed in the current class action suit under Title VII (gender discrimination in wages). They deserve it.

    Can people earn a living at Walmart? Probably not until you get to the Management level. This means that you need to either work your way up, or move on. It makes the perfect job for high-school and college kids trying to make a few extra bucks. It doesn't work for anyone with the desire to work there for the rest of their lives, unless they can make management.

    --
    "We don't know what we are doing, but we are doing it very carefully,..." Wherry, R.J. Personnel Psychology (1995)
  24. Re: Comparison to Chain v Indie Bookstores by Morpeth · · Score: 5, Insightful
    "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."

    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
  25. Re:My eyes are filling with tears for the labels.. by WIAKywbfatw · · Score: 5, Insightful

    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
  26. Re:My eyes are filling with tears for the labels.. by nelsonal · · Score: 4, Interesting

    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.
  27. Re:My eyes are filling with tears for the labels.. by linzeal · · Score: 5, Funny

    When someone on Slashdot admits he is wrong, a geek loses his virginity. God bless America!

  28. WALMART: ONLY MARGINALLY PROFITABLE by magarity · · Score: 5, Insightful

    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.

  29. Re:Walmart could kill the music industry by dykofone · · Score: 5, Funny
    My god man! Keep quiet, if Walmart became a record label, it'd destroy every last shred of hope for decent music in the world as we know it. I can see it now, they'd turn to radio stations and say "pay us a ridiculous amount of money to play our songs, or you won't get to play any of our #1 hits, of which currently take up the top 40."

    Suddenly, radio stations are folding because they can't afford to pay the Walmart prices, Clear Channel has to start playing independent bands selected by live DJ's, and the only place you'll hear the Britney Spears is at her live concert in a Walmart parking lot.

    Wait, nevermind, that's a great idea! Get Walmart into the music industry ASAP!

  30. Re:My eyes are filling with tears for the labels.. by dustinbarbour · · Score: 5, Insightful

    (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.

  31. Re:My eyes are filling with tears for the labels.. by southpolesammy · · Score: 5, Informative

    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.
  32. Walmart and Low Rate of US Inflation by Carnage4Life · · Score: 5, Interesting
    I was just talking to some coworkers about how much power Walmart has in the retail world yesterday and one of them pointed out that a recent Fast Company article points out that Walmart is partially responsible for the low rate of US inflation. The entire article is a very eye opening look at the effect of Walmart on local US and the global economy. Many claim it was the catalyst for the rush to offshoring manufacturing in past years.

    Walmart is so powerful it's scary.

  33. Re:My eyes are filling with tears for the labels.. by nomadicGeek · · Score: 4, Informative
    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.

    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.

  34. Re:As my mummy always said... by Suidae · · Score: 4, Funny

    Wal-Mart basically forced Vlasic to make the big size containers with more pickles in them than most humans should eat within a reasonable amount of time

    Yes, maybe they could preserve them somehow, like.. maybe they could.. pickle them...

  35. Re:My eyes are filling with tears for the labels.. by Mordaximus · · Score: 5, Insightful
    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.

    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.

  36. Re:My eyes are filling with tears for the labels.. by matastas · · Score: 4, Insightful

    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?

  37. Re:My eyes are filling with tears for the labels.. by Waffle+Iron · · Score: 4, Insightful
    Some might say that they have been singly responsible for reeling in Inflation thru the 90's.

    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.

  38. Re: Comparison to Chain v Indie Bookstores by stienman · · Score: 4, Insightful

    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

  39. Re:My eyes are filling with tears for the labels.. by Oliver+Wendell+Jones · · Score: 5, Funny

    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