ITunes, Wal-Mart, Springsteen Killing Off the Independents
Just after Christmas, my daughter Winter took a bag of 30 used CDs to our local independent music store in Greenfield, Massachusetts to see what she could sell the lot for. The store owner offered her a very low price, and when my daughter expressed her surprise at the offer, the merchant angrily threw the CDs back at her and shouted: "I'm losing my store. I'm not going to be here next year!"
The next day I came across the tale of Tape Town, a music store in Morganton, North Carolina. Owner Roy Lowdermilk probably thought that locating his store next to the Wal-Mart in Morganton was a great idea.
The Wal-Mart on Burkemont Avenue in Morganton is probably the largest retail store in this community of just over 17,000 people. But Lowdermilk's store, Tape Town, never benefited from its location in the shadow of the giant retailer. According to the Morganton News Herald, Tape Town turned off the sound for good on December 27th.
Lowdermilk and his wife opened up their music store in 1972, sixteen years before Wal-Mart came to town. But now their store is dark. "It was a combination of things," Lowdermilk told the newspaper. He blamed the sinking economy, and the internet as the two main reasons for his loss of sales. One customer in Tape Town told the News Herald that when he couldn't find music at Tape Town, he didn't bother going next door to Wal-Mart. Another shopper said he liked shopping at Tape Town over big box stores because it catered to his musical tastes, had reasonable prices and great service. "They're willing to help," the customer said. "If I can't find it here, they'll help us find it somewhere."
But great customer service could not save Tape Town, just as it has not saved hundreds of small music stores across the nation. The independent music stores have made some efforts to organize. The Coalition of Independent Music Stores (CIMS) was founded in 1995, but its current membership is made up of only 59 stores in 21 states. Hardly a threat to Wal-Mart.
Lowdermilk claims that during his 36 year run "the loyal customers have kept us there." Over the years, his store moved several times in Morganton. But in 1988, Tape Town moved right next to Wal-Mart. "Me and Wal-Mart opened on the same day," Lowdermilk recalls. But the fact is, the Wal-Mart next door helped to kill Tape Town. It didn't happen overnight, but Wal-Mart turned out to be one of Tape Town's biggest threats.
And Tape Town was not alone. As of January 2008, the Apple iTunes Store was the largest retailer of music, with 19% of sales. Number 2 was Wal-Mart at 15% of the market--counting sales at both its stores as well as its website. Best Buy cornered 13%, Amazon 6%, followed by companies like Borders, Circuit City, and Barnes & Noble. ITunes being a digital-only retailer indicates how much the music industry has shifted over the past 10 years.
Digital downloads are up, while sales at stores like Tape Town are down---way down. According to the NPD Group, 48% of US teens didn't buy a single CD in 2007, compared to 38% in 2006. People using digital downloads will select one or two songs from an album that they want--but not the whole CD. By contrast, the music stores rely on sales of entire CDs. In 2007, there was a 10% drop in overall music spending, according to the NPD Group. According to Enders Analysis, physical sales of CDs, as compared to digital sales, will fall from $35 billion in 2001, to $15 billion in 2012. This continuing loss of sales will come from a lot of independent stores like Tape Town across small town America.
Last August, Wal-Mart announced an exclusive release contract with the band AC/DC, whose album was produced by the same person who has produced Bruce Springsteen in the past. Just before Christmas, it was announced that following its success with the "Black Ice" album, Wal-Mart had signed an exclusive deal to sell Bruce Springsteen's "Greatest Hits," starting Jan. 13, 2009. The Boss has signed on with the Retail Boss, much to the chagrin of his many fans, who saw Springsteen as the voice of the disenfranchised. Now he's just another Walton commodity. Born in the U.S.A. meets China-Mart.
Back in Morganton, if Roy Lowdermilk wants to understand where many of his loyal customers went, he can walk next door to Wal-Mart and pick up an AC/DC or Springsteen album. Tape Town tried to ride the crescendo with Wal-Mart by its side, but ended up with a less than grand finale instead.
For Roy Lowdermilk, the music has died.
Al Norman is the founder of Sprawl-Busters. He has helped grassroots citizen's groups stop big box stores for the past 15 years. His website is http://www.sprawl-busters.com.
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Springsteen sold out to Wal-Mart, or as the article mentions, China-Mart. If he insisted on going large company route he could have at least picked Starbuck's or even Target.
As far as teens buying one or two songs they want on a CD, in a way that's a shame. I don't know what I would do if I were a teen now (I'm 52), but often I've bought a CD for one or two songs I really liked, but would find more gems as I listened to the entire CD. I've done this for popular music and for classical music, which has been my favored genre practically since I was born. This trend of only downloading the Top 10 or so of a given genre is troubling, especially since you consider payola and the narrow offerings of corporate-owned radio stations.
Independents have their own outlets to sell their music. I am part of the electronic/dance community and believe me, we are not suffering when it comes to getting our music. Yes, the vinyl industry has diminished, but the MP3 industry has boomed. If other types of music truly want to keep their music alive just create a website to sell your MP3's, its that simple
Wal-mart has very little to do with this Al. Itunes maybe, but iTunes was because Apple had something these small indies lacked...forsight. This has been happening since the late nineties Al. The internet is what killed the indie. The ones that died was because they did not have creative management and business acumen. They often sold mainstream cds for higher prices. The ones still around focused on hard to find indie cds. But even those will struggle. The marketplace has changed, iTunes, Amazon, etc, allowed for indie artists to get national, and often international distribution without the high costs of distribution. It allowed indie artists to put old albums back in print without paying for reprinting costs. This has been great for those who know how to use it.
Lets put it this way, as an indie musician, i like iTunes, the store is available for many to post if you know how (its very easy). Technology made the industry change, I am not weaping, even best buys and wal-marts are moving away from music as a result of the shift. Complain as you might Al, and others, but you are misinformed on the topic, this has been happening for ten years, and Wal-Mart is not the real one to blame...the internet and technology is.
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Here is an anecdote I personally experienced when I once worked in record retail, though this is about a major operation:
The chain I worked for got bought out by Musicland/Sam Goody. Our chain was purely a California operation and, at the time, Oingo Boing was selling huge numbers of records (in fact, I think they went gold alone in that state) there but few elsewhere. After the takeover, we would order more Oingo Boingo albums to refill our inventory but were told by Musicland's central warehouse, and I am not kidding, "stop asking us about them, we have never heard of them."
That was great news for our surrounding competition, which included Tower Records. I quit shortly after that and the store I worked at went out of business a year or so later. It was a total cluster job, if you get my drift. Our district manager also had a major drug problem. Musicland/Sam Goody was almost intentionally lame and they weren't alone in that. I could tell you stories about what went on at other record chains, but the HuffPo word limits won't allow me.
It was record industry practices that killed small independent record stores and there were was also a practice by those independents that enabled Wal-Mart and other big box stores to dominate the market.
The reason ITunes is so popular is that people can download individual tracks in perpetuity while it used to be that the record companies forced customers to buy the LP/tape/CD by pulling singles off the market after just a few weeks. When folks took those new full length recordings home, they found that maybe there was one other good song on it (in the majority of cases) and it made them feel ripped off. That made customers CD- averse, in effect, and is one reason behind ITunes explosive growth.
However, a lot of those independents also sold used CD's, thereby cheating artists out of royalties (if you want to put the worst possible spin on it) and subliminally devaluing cd's as a commodity. Best Buy and Wal-Mart then stepped in and saw how effective that CDs as loss leaders can be in selling audio equipment to the point where they were willing to (successfully) sue the RIAA and Tower Records for antitrust violations when those entities attempted to rig prices for recorded music.
Also, the mom and pops paid higher wholesale rates than the big retailers.
By the way, doesn't the name, "Tape Town" cry out, "I'm an anachronism!"?
The story is sad, but the rhetoric is wrong. We need to stop using Die & Kill in our descriptions of the shift in retailing.
This shift has been taking place since 1947. Today an economy of scale is apparent, the manufacture-distribution-sale of goods has been streamlined, keeping prices down and variety up.
The oft heard phrase, "customer service" is a red hearing. No American needs customer service to buy music. They need a well lighted selection selection.
The downside of "big box" and Walmart dominated retailing is monoculture. When Walmart stumbles there will be no one to pick up the slack. The real issue is not about individuals, although it's always a good journalistic read, it's about diversity for sustainability. Yes, the same issues in ecology apply to retailing.
Stop with the Kill & Die journalism and focus on what matters.
"The oft heard phrase, "customer service" is a red hearing. No American needs customer service to buy music. They need a well lighted selection."
You are wrong in the main, but you are also right in that the customer service meme became a red herring only because so few record shops hired people who actually knew anything about music. They paid them burger flipper wages and so there was no reason for record retail employees to take an interest in really learning anything other than running the cash register. That led to employee turnover and it is that kind of lack of continuity that made customer service in record retail a non-starter.
"And, they did charge 15-20 dollars for an item that cost maybe one or two dollars to make." -BarryS The above statement reveals just how disconnected this country is when it comes to how things are 'made'. I really shouldn't be surprised, after all - very few of us actually produce anything. Those that do 'create' understand that it costs much more than the price of raw materials, that "value" is determined by much more than low price & speed of delivery. And that is our problem- "cheapest & fastest" has become our national motto- and greedy corporations are all too eager to scour & defile the world to meet our need to have more of everything- we don't care how it's made, who's exploited to get it to us, what poisons it contains- we want it cheap -we want it now. And these 'mountains of crap' are filling our landfills, despoiling our landscapes, bankrupting our craftsman, and leaving our souls empty & wanting.
Wal-Mart has done many things wrong, but to paraphrase "Big Box didn' kill the Independent Music" Store."
The "music store" is a dninosaur. Pure and simple. CDs and physical media are disapperaing as the Internet displaces stores as the logical and preferred delivery channel. Considering everybody uses MP3 players anyway, purchasing physical media is a substantial chore that adds several steps to the process. Not only going to the store (be it a small store or a big box store), hoping they have the CD, paying $20 for the entire CD to get the 2-3 songs you want, then driving home, loading it all into iTunes or your preferred player, choosing the few songs you actually want from the CD, etc. Now, compare that to going to Amazon.com or itunes, typing in the name of the few songs you want , paying $3 for them and having them delivered within seconds to your itunes or other music player.
Wal-Mart may be teh bad guy in some cases. This is clearly not one of them.
NOT everyone uses MP3 players. My husband, my son and I do not like them at all. I prefer my hands on CD's thank you and we still have a turntable and music on vinyl.
The record store is not dead, it will just become a niche industry. True music lovers and audiophiles will never abandon albums for MP3's. For one, there is a drastic difference in sound quality between MP3's, WMV's, etc. and WAV format audio files. There is not nearly as much dynamic range available on compressed file formats as there is with CD's, or even vinyl. Yeah, Britney Spears and Lil Wayne are going to be sold exclusively through download eventually, but people who like albums, artwork, musicianship and sound quality won't abandon the album format. Vinyl is actually making a comeback in independent music circles. Plus, independent music lovers don't want to give their money to big labels anyway. If I want to hear Springsteen's new album, I'll download it illegally, but given his deal with Wal-Mart, I'm not really that interested anyway.
Was anyone else struck by the name TAPE TOWN ? That can't help even though it probably won't matter in the long run. Why anyone would shop at Wal Mart and still claim to be a patriot is beyond me. And Springsteen...I can't believe it. I'll never buy another one of his albums again.
"Why anyone would shop at Wal Mart and still claim to be a patriot is beyond me. "
Hey, the sam epeople drive Toyotas and still claim to be "patriots" too.
The same ones who voted for Bush, support deregulation, listen to Limbaugh, watch Faux news...........etc and still claim to be patriots
Consumers were basically driven to Toyota and Nissan by the crap quality that was flowing out of Detroit. All Americans love America, but Corporate America doesn't. GM and Ford, etc were basically scam artists hustling a clueless public. And they still are. .
Vote with your feet. And your wallet.
Actually, the issue is vote with your mouse and your wallet.
"poor man wanna be rich, rich man wanna be king, and a king ain't satisfied 'til he rules everything"
seriously, bruce? hypocrite.
The corporate marketers killed the record stores in my opinion. I've hardly bought any music the past few years because most of the bands coming from the big guys are terrible. They push the "entertainers" of the business instead of the true musicians.
And don't get me started on the radio and video stations being one big blob of mundane programming...
Many independent record stores are moving upmarket in order to NOT compete with big box stores. 180g records, SACDs with high resolution mixes, and a more specialized inventory allow them to "grow" their customers' tastes. The bins at the big boxes (and the internet download sites) are filled with dynamically compressed mass-marketed music, and true music lovers are gravitating to the higher quality offerings from music specialists.
Do yourself a favor. Take the money you would have spent on a fancy new flat screen HDTV, and instead by an entry level Rega record player ($350ish) or an Oppo SACD player ($200ish, also upconverts your DVDs to HD quality). You don't need surround sound (although SACD does some amazing things with six channels) so you can still use the same stereo you already have. Your ears will thank you.
The bonus comes when your PMP breaks, or all your digital files get erased accidentally. When you own physical media, you can always rip it into the highest resolution files available. They never go obsolete, and you always have a pristine original.
Al - an insightful article. Must mention though that the music has not died. What may have died is the independent music retailer business model the way we've always known it. Applying the principle of evolution from products to service to experience - there is still room for them to innovate and make things work, rather than give up. Stop focusing on the generic stuff, create a music niche, start serving coffees, focus on music discovery...options are many. They should focus again on the customer rather than their own self - if the same CD is available next door at a cheaper price, why should any customer buy from them - unless they create an experience or some value that the customer values. Close to my place of work in London there is a small independent CD retailer and coffee shop. Customers love it. I personally have discovered music which I would have never ever found elsewhere - and that's what takes me back there, over and over again.
I think there is still hope. We just have to hang on and think beyond the ordinary.
I agree. My local independent shop has free coffee (nothing fancy, but it's decent coffee). They'll let you listen to anything in the store on top-notch equipment, they have live music in the evenings, and Mr. Scales (his real name!) has an incredible knowledge of music - he can recommend something new for anyone.
http://www.corporaterocksucks.com/
Next time you're in Charleston, SC, drop in and say "Hi!" And if you're interested in new gear to play it on, Read Bros. up the street is in its ninth decade of business. Just give them some time to warm up the tubes...
http://www.readbrothers.com/stereo.html
Look, occasionally new technology makes things obsolete. Ask the sheet music publishers, the slide rule manufactureres, the horse/hay industry, even the vinyl record makers. The transition can be painful, but it is unstoppable.
But, the record companies knew this. they already went through it a few times. And, they did charge 15-20 dollars for an item that cost maybe one or two dollars to make. The gravy train can't last forever.
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