EMI Only Selling CDs To Mega-Chains From Now On

farrellj writes "According to Zeropaid, record company EMI has been notifying small music stores that they will no longer be able to buy EMI CDs from EMI, and will have to buy product from mega-chains like Walmart. Independent record store customers are some of the most loyal music buyers around. You are not going to find the back catalog, what used to be the staple of the music business, at your local Walmart. One wonders when the music business is going to run out of feet to shoot?"

Comments

What the hell?

[Dexter Herbivore]

I'm obviously missing something here, how can this business model work when you're reducing your customer base? I realise that Walmart has the buying power but if they've paid for some sort of exclusivity deal then surely that adds expense back into their purchases unnecessarily?

Re:What the hell?

[Anonymous Coward]

You're missing the misdirection that the RIAA will use to claim that shrinking CD sales are due to piracy and that copyright law needs to be extended to 95 years after the death of God and that eternal damnation should be mandatory for filesharing. People. including politicians, will forget or ignore this move and go along with the RIAA's rhetoric and if any questions arise, they will claim that anyone can just buy from the mega chains like good little American consumers should.

Re:What the hell?

[maxwell demon]

Probably more important: Why would an aspiring artist go to EMI and have a limited reach when he could as well go to some competitor and be sold also to customers of small music shops? The loss of small music shop customers may not directly hurt EMI (otherwise they wouldn't have done this), but a loss of content to sell will probably hurt them. And it will not be obvious until the current hot stars are not hot anymore, and the new hot stars are with different labels. And then it's too late.

I personally think it's a bad business move. If I had EMI stock, now I would sell.

Re:What the hell?

[SoupIsGoodFood_42]

I think it's over-reliance on rules like that leads to companies like EMI doing silly things to begin with. It's the same reason why Microsoft are doing so poorly at the moment while Apple is actually doing well despite everything else. It's as if they're operating their business by treating it like some kind of machine and trying to understand it's separate parts and systems, rather than developing a more realistic overall view of the industry (perhaps like Steve Jobs).

Re:CDs?

[kspn78]

A CD is a funky mirror (at least according to my workmates)

I can't imagine that this is going to do EMI much long term good!

Legal?

[mwvdlee]

Is it even legal to only sell to certain customers and not others based on size of business?

Whacked business case

[Lucky_Luke(void)]

Prosecuting file-sharers gives better revenue than selling music. No transportation/storage/etc.. overhead, Just some greedy lawyers to be paid.

Re:Whacked business case

[fatalwall]

because they need to be able to prove that the music has some value. if its not on the market then it has no tangible value.

Well, no.

[gowen]

You are not going to find the back catalog, what used to be the staple of the music business, at your local Walmart.

Well, no. But you won't find the vast majority of that at specialist retailers either, they don't have the space. They would order it for you, but everyone knows its easier (and frequently cheaper) to get it from amazon or their ilk. The web retailer own that long-tail retail space, and that's not going to change.

Specialist records stores will have to survive solely on the quality of information and advice their staff can provide -- it's their only market advantage.

Re:Well, no.

[jhol13]

Let me see ... you go to specialist record store and the advice they give is "this album would be good but I cannot get it, buy it from Amazon" ...

No, the record stores cannot survive solely on the information they have.

Damn this would be a great business

[OrangeTide]

... if it only wasn't for the customers.

This is the motto for the music industry these days. Do everything possible to minimize the number of customers you have to deal with, I can only assume they don't like having customers.

This can only be good!

[geekboy642]

Now, when I look for music at my local store, I'll have a higher chance of accidentally finding a non-RIAA CD to take home. C'mon Sony, you go next. Make my store a better filter, it's annoying searching RIAA Radar for everything I want to buy.

And they wonder why piracy is rampant

[schizz69]

It is motions like this which lead otherwise paying customers to pirate music that they just cannot find at big chains, as they are not 'Mainstream enough'. Well done EMI, you have just inadvertently promoted piracy.

What's the big deal? This is a business...

[wbren]

From the summary:

Independent Record store customers are some of the most loyal music buyers around.

When faced with the shear numbers Wal-Mart brings to the table, does loyalty actually matter? That's the problem here. A thousand loyal indie store customers are trumped by a million disloyal Wal-Mart customers. This is a business about making money, not about keeping indie shops afloat.
 

Regardless of your answer to the above question, if I have 100 customers, and 90 of them buy my product through Wal-Mart and other large chains, I would concentrate on selling to the large chain stores. That number is just a guess, but I suspect it's fairly close. My guess is that EMI looked at their distribution costs versus the number of customers reached and decided, "These indie stores just aren't worth the distribution costs." I can't really blame them. It sucks, but I can't blame them. Distributing a physical product costs money, and what better way to cut down on distribution costs than to ship to your two or three largest customers and make the indie stores obtain your product from there, at their own expense.
 

From the article:

It's a odd turn of events for EMI, adding another blow to its physical CD sales while inversely arguing that illegal file-sharing is the real culprit behind declining revenues. If its concerned with losses then why get rid of customers? It just doesn't make any sense.

This is a rare case of the music industry--well, at least EMI--moving away from a business model we all know is outdated, and people are still complaining? And no, phasing out CD sales has nothing to do with illegal file sharing. There are better, cheaper, more convenient, DRM-free options out there, like iTunes and Amazon MP3. They aren't trying to push away their customers; they are trying to encourage people to either buy from stores with cheap distribution costs or buy from digital stores with even cheaper distribution costs.
 

I don't like the record industry, and I think the tactics they use are despicable. That said, it's stories like this that make me think they just can't win sometimes. The article makes it sound like EMI is a big mean company trying to crush indie competition, when in reality EMI is itself a business trying to keep costs down and phase out a wasteful distribution system. Give them a break.
 

Cue anti-RIAA downmods.... now.

Re:What's the big deal? This is a business...

[koreaman]

iTunes may be cheaper and more convenient, but how is buying a crippled (lossily compressed) file "better"?

Even if your ears can't tell the difference, you still won't be able to do things like transcode it to other formats, or play it on the high-quality sound system you might buy someday.

Re:What's the big deal? This is a business...

[bogjobber]

IMHO one of the main reasons the big four record industry goes through such dramatic slumps is because they do not pursue hardcore music fans. They make so much money off of blockbuster albums that they ignore building up a diverse portfolio of talented musicians that are consistently profitable but will never sell millions of records. They only market and promote music that teenagers or preteens like, or bands that are already famous. Everything else they pretty much leave alone. Even though very few artists can sell above 100,000 let alone a million, their business model relies on the albums that sell 500,000 or 2 million. It does not take into account artists that are selling 10-20,000 albums.

The "Wal-Mart" music fan is fickle. They're not going to come into the store every week to make a new purchase. They might purchase 2 or 3 albums a year. When they get interested in something else, they might stop listening to your music or pirate it instead. The hardcore fans are what keep records stores and record companies in business when the masses are doing something else.

90% of the new music hardcore music fans and critics listen to and talk about is released on independent labels. Most innovation and originality comes out of bands on independent labels. Independents are doing better financially than they ever have, and are taking market share (although still very small compared to the majors). The major labels have more or less completely stopped releasing classical music, bluegrass, folk, jazz, gospel, soul, or anything else with a small but loyal customer base. With the current strategy they occasionally get the Pussycat Dolls or Taylor Swift, where they spend a tiny amount recording an album and make millions. But when they miss with the blockbusters they get in trouble because the custoemrs they rely on the most have absolutely no loyalty.

Add to that the fact that they treat even their best-selling artists like crap (see Radiohead with EMI or Trent Reznor with Universal) and it's no wonder they have trouble making money. If they want to cut costs they should fire their terrible management and hire people that understand digital distribution, customer service, and basic human decency at a fraction of the cost of the current management.

Re:What's the big deal? This is a business...

[Joe Mucchiello]

They've been doing this for decades! Name a recent band who has a hit album as their 5th or later release from a major label. Can't be done with more than a handful of bands that first hit in the 90s or later. It started in the 90s. Bands would get good advertising and good pushes for their first three albums and then they were on their own to pull in their existing fans. Today you get one album and then the labels move on the next group. But the trend started over 20 years ago. The only "mature" bands that get lip service from their label are the ones where the lead singers also get airtime on Entertainment Tonight. For some reason people care about what Bono has to say or what Madonna is up to so U2 and Madonna gets promotion dollars from their labels. Only the media darlings get label backing.

And frankly, if the labels started selling indie artists the "hardcore music fans" would call them sellouts and find other indie artists to listen to.

Re:CDs?

[umghhh]

Well obviously you have never experienced this 'bad money replaces good money' effect in your life yet.

Re:CDs?

[sopssa]

People here seem to taking the "music industry is evil and outdated" thinking route again. However when I saw the title and summary, I couldn't but think that they're starting to see how internet distribution starts to dominate.

So now they're cutting extra costs by only delivering physical media to the largest retailers, and maybe putting that effort into online sales. If so, for me this sounds good.

Re:Meh. Don't buy RIAA regardless of who's selling

[Omestes]

I'm inadvertently boycotting RIAA labels. Their hasn't really been an album released on a "big" label that has warranted my bandwidth or money in some time. I probably would buy something from them, if there was anything I wanted. Perhaps its my age, perhaps I have odd tastes, but I still haven't found anything new or interesting on a major label in some time. I manage to support a ton of small labels "accidentally" though.

So, here is my question, what has been released on a major RIAA label lately that has been worth listening to?

Most of the RIAA member labels are the McDonalds of music, they release passable crap, but never innovate or produce anything that smaller shops can't beat. As time goes on, most of the innovation comes from smaller labels, while the large ones pick up the watered down crap. This is in part that they shun controversial bands, or bands that cater to specific tastes. They only want the stuff bland enough to appeal to everyone.

Re:CDs?

[morghanphoenix]

Now if only they'd distribute DRM Free lossless files online, and kick the RIAA to the curb so the artists can be paid more than the lawyers, they might get a customer back. But let's be honest, that will never happen.

Re:CDs?

[Anonymous Coward]

there's an inherent advantage to the read-only nature of cds...also, the data on them is lossless.

only for a few years...

Re:CDs?

[sopssa]

However, their distribution network doesn't just consist of delivering those cd's to retailers or making them. There's lots of else involved too, from actually finding the artists that could be something, providing them studio time and sponsoring them so they can get their job done, making the music videos, doing promotion, making sure the actual product is somewhat quality (yeah, quality can be argued!) to actually delivering the products to retailers, tv and radio stations and whatever other places. Lots of times people forget that record labels do lots of other work too and sponsor the bands, and they're not there just to collect money forgefully.

This is why I think the record labels will continue to exist and will be used by artists. Yes, I said used. Its not necessary for artists to use them, noone force's them to. But lets face it, all that usually needs lots of money and time and work. Not a single person can usually do so much, but go work with record labels so they can handle all the other stuff and artists can spend the time on their core thing -- making music.

Re:Think like a Music Exec (i know its difficult).

[freedom_india]

If your business was selling music CDs, you would really point your customers to a web site that competes with you and undercuts you on cost

When i don't have the product a customer wants, and there is no prospect of getting the product for him at a profit [for me], why would i want to go to the trouble of pointing that customer to Walmart or HMV store and thereby enable my competition to earn a profit at my cost.
Better that they too lose the money.
If i can't earn, why should i help my competitor to earn at my cost?
Care to explain?

MOD UP !!

[Anonymous Coward]

ÂNo seriously, for once I RTFA, and P is correct. The slashdot article, championed by samzenpus, is another example of preaching to the choir - stirring up a hornet's nest just to .. fuck , I don't know, just because he can.
Walmart and Best Buy, listen carefully, ARE NOT "ONE-STOPS", and even TFA linked from the TFA points that out.
Many independents have been using "onestops" for 20+ years already. In addition to direct sales from the majors.
The onestops don't have the depth of product that many independents seek, but this is just all a normal business response.
You can buy whatever you want from Amazon and other web stores - the entire "traditional" chain is losing profits, and everyone gets heated up because EMI rationalises its direct sales channels.
Fucking twerps - you're all happy you can buy through the web, then get all upset when it becomes harder to buy in brick-and-mortars.
Make up your fucking minds - this is NOT an excuse to pirate - this is the NATURAL consequence of e-retailing.
Dicks.

Re:MOD UP !!

[Artifakt]

Agreed, I've read the original article, the summary here is seriously skewed, and most of the comments aren't reflecting what has really happened.

      But I have to wonder about your claim this is not an excuse to pirate. As you point out, "the onestops don't have the depth of product"

      So, if I want something that's 'in the deep abyssial trenches of the mighty product ocean', it's less and less likely to be available on a physical medium in my area. If they don't want to sell item X to me, I'm not a customer for it, from their point of view, not just mine.
      Then, they want a high enough price for the non-physical version, at lower audio quality, without other support such as liner notes, album art, and preferably with DRM, they are effectively pricing that too to say "customers go away, we don't really want you".
      Some of this makes a pretty good excuse to pirate, or at least a reason for the government to stay out of enforcement. Just like region encoding. If the distributer insists on there being region encoding, and then doesn't sell the product at all in certain regions, they've basically said they don't regard those people in those regions as even potential customers - so they can't have lost any sales, can they? Even if I grant all claims that the piracy is still both immoral and illegal, if there was zero market, the pirates did zero damages.
      Where we may not see eye to eye on this is how completely this counts as a refusal by the companies to do business. A lot of people seem to think that offering digital versions at any price counts as still being interested in providing the goods to a potential customer. I don't think so. To make a bad car analogy, if gas sells for about $2.50 a gallon in your area, and you ran across a gas station that had some unusual gas formula that had some minor advantages and some major disadvantages to use, but they want $25.00 a gallon for it. I think most of us would drive past, saying "Well, they obviously don't want me as a customer", and some of us, like me, would add "... or anybody else either.". At some level, a bad enough price gouging counts as saying you have no intention of actually doing business at all, and if you're not actually in business, you've got some nerve demanding the government enforce the laws protecting your business.

Re:Meh. Don't buy RIAA regardless of who's selling

[TJamieson]

your pre-owned copies

I hate to be so pedantic, but can we all just go back to saying used instead of pre-owned?