Can Music Survive Inside the Big Box?

_randy_64 writes "In a story that ties in nicely with a recent discussion about the possible reprieve for Net Radio, the Wall Street Journal asks Can Music Survive Inside the Big Box? The article discusses how the 'big box' stores (e.g. Wal-Mart, Best Buy) are cutting back on space and acceptance of music CDs. With 85% of music sales still coming from CDs, maybe this is another thing to push the music industry towards better online sales models? 'Thanks largely to aggressive pricing and advertising, big-box chains are now responsible in the U.S. for at least 65% of music sales (including online and physical recordings), according to estimates by distribution executives, up from 20% a decade ago. Where a store that depends on CDs for the bulk of its sales needs a profit margin of around 30%, big chains get by making just 14% on music, say label executives who handle distribution. One of these executives describes the shift as a tidal wave.'"

Comments

In COMPLETELY unrelated news...

[Kuroji]

...the RIAA has its next round of lawsuits scaled to the amount of shelf space they're given.

Re:In COMPLETELY unrelated news...

[aichpvee]

Actually, all the evidence so far has seemed to show that people who are "lifting" all the "tunes" actually BUY more of it than the people who don't. Or maybe they're all just a bunch of whining bitches because they're making more money than they've ever made in the past.

Music might survive if ...

[tjwhaynes]

Big box retailers are interested in volume and marginal pricing. The range of music they pick, the bands that get prominent shelf space and the albums that appear in the advertising will all be driven by the bottom line.

No - if we want diverse musical forms to survive the big box stores, it will be despite them, not because of them.

Small dealers will help - but at best they can only provide small niche markets. Internet sites tied to such retailers may help a lot. For me though, the future of diverse music depends on the internet providing the resources to find out about less known bands and albums and hear stuff I can't hear on the radio. But right now, the Internet Radio station is on the brink of an extinction event. So support Save Net Radio before it really is too late.

Cheers,
Toby Haynes

I dont think it really matters

[RobertM1968]

Personally I think part of the problem big box retailers have is that carrying music requires a finger on the pulse of what is relevant. Nowadays, with so many one hit or one album for a week wonders, that isnt possible for most big retailers (that havent seemed to have caught on to the volatility of the music scene). The smaller music only shops have a much better chance here as they can "specialize" in what's relevant instead of what the industry tells them is relevant (that is then stocked in palette-fulls).

So, no I dont think big box retailers will remain relevant in the music selling industry - even if they go online (against competition such as iTunes and numerous others), and no I dont think it matters anyway. It is quite rare I buy any CD from a big box retailer such as the ones listed just due to the lack of relevance of what they usually carry.

Re:I dont think it really matters

[plover]

Personally I think part of the problem big box retailers have is that carrying music requires a finger on the pulse of what is relevant. Nowadays, with so many one hit or one album for a week wonders, that isnt possible for most big retailers (that havent seemed to have caught on to the volatility of the music scene).

The big box retailers have buyers who do indeed keep up with music, but on a more regional level. They have lots of other problems to overcome, too:

• Lead time: it can take 13 weeks or more for a buying decision to result in new products on the shelves. 13 weeks is the antithesis of volatility, but it's the result of the heavyweight distribution chain process. Once the buying decision is made, the order is placed, the product is manufactured in China, it's put on a boat to L.A., it sits on a dock awaiting customs, it's trucked to a packager and custom packaged (anti-theft labels and/or big plastic don't-steal-me frames), it's trucked to a store's distribution center, it's sorted and put on trucks bound for stores, received in the store and eventually placed on the shelf. If the timing is carelessly handled in those 13 weeks a band can disappear off the radio, leaving you with crappy inventory that you've got to mark down and sell at a loss.
• When you buy for 1000 stores, you have to purchase in large quantities so every store gets stock. Small labels without high production capacity are at a disadvantage. Labels don't pay to keep 100,000 copies of "Childish Intentions" in a warehouse hoping that some big-box store will buy them, they are manufactured only when an order is placed.
• Shelf space is at a premium. Whatever department you purchase for, you are responsible for maintaining the corporate average in sales-per-square-foot. Slip to the bottom of that pile and you're looking for a new job, so taking risks has to be compensated for by having lots of popular artists that are reliable sales. That means lots of music that sounds just like you've already heard before, performed by bands that already sell discs.
• Finding artists that are popular across a wide geographically diverse audience. Big box retailers are divided into regions. As you indicated, with a thousand stores no buyer take the pulse of a thousand individual music scenes, so they aim for the center of their region. Ship lots of country and western to the southeast, maybe more grunge to the northwest, or whatever the sales trends indicate.
• Price pressure (aka the "Walmart Effect") means that no big box is going to pay $11.00 wholesale for a disk to list at $12.00. A small band or label may not be able to manufacture and ship discs for less than $5.00 each, but a big-box may not be willing to pay more than that.

So in a perverse twist of fate, the 13 week lead time of the big box buyers can end up *driving* the Billboard charts. The record labels ship all their new albums out to the big-box buyers. The buyers make their decisions based on what they think will sell, and manufacturing ramps up. Meanwhile, the labels look at the orders for whatever discs they just sold, and plan to ship promo copies to the radio stations to coincide with the arrival of the product on store shelves. 13 weeks after a corporate buyer says "I think this will sell", you hear it on the radio.

I guess the point I'm trying to make is that the buyers at the big-box retailers do indeed care about their music, but they are expected to make profitable choices, and that means they have to limit the amount of "risky" or "experimental" music they offer.

Re:The day the CD died

[CastrTroy]

I've been hearing a lot of sensationalist stories lately about the death of music. Mostly because CD sales are falling. Maybe the large production companies will go away, but people have been making music long before the music producers, and they will be making music long after they are gone. Music isn't going anywhere. I've started listening to a lot of independant music lately, and it's a lot better than most of the mass produced big label bands. Granted I still like many big label bands, but I don't think I'd be starved for quality music if there was no big labels.

Record Store Survival

[zrobotics]

The problem is that big-box retailers are a terribly convenient way to purchase music for most people. If they don't have a lot of emotional investment in what they listen to. I'm not implying that they're shallow, or sheeples. I'm just saying that its just music to them, not a personal affirmation of identity. If they just listen to top-40 hit radio, then any song they're exposed to will certainly be available at the nearest Wal-Mart, Target, or K-Mart. The people who care enough about musical diversity to be angry about this will still seek out new music from record stores, online, friends, etc. TFA seems to claim that big-box retailers will destroy musical diversity. This is giving them far too much credit. As long as there are people who care enough, new indendent music will be created. It may not be what the masses listen to, but this isn't always a bad thing. Top-40 radio has become what it currently is because of how many people listen to it. It is run by large corporations that, because of their size, are inherently conservative. These corporations would prefer to distribute music that won't disturb the status quo. Smaller, independent music isn't restrained by these conditions; however, it would be provided it became popular enough.

Simply put, people who care enough will seek out new music from alternate sources; either to pander to their sense of individuality or through another social/politial motivation. People without this emotional/politial investment will seek out new music from a more convenient source such as big box retailers. This may be through laziness, or due to caring more about other things. In the end, neither side loses much, and capitalism is served.

Music in a box

[markov_chain]

Step 1: Cut a hole in a box
Step 2: Put the music in a box
Step 3: Make her open the box!

Tower Records

[calidoscope]

If the RIAA and associated record companies had an ounce of brains, they would have lobbied the bankruptcy court to allow the chain to keep a good number of stores open. At least they made an attempt to carry a wide assortment of music, especially before the the video department was taking up half the stores.

The problem with Big Box retailers is that they treat everything as a commodity - and music other than the current "hit" is anything but a commodity - someone looking for Tangerine Dream is not likely to pick up the latest Britney Spears album.

Kinda OT, but one of the most heartening thing that Ganz, the creator of Webkinz, did was to specifically not sell to the likes of Stuff*Mart, Target, etc.