J. Michael Bestul dissects music downloading to reveal those it really hurts: The smaller music retailer.
By J. Michael Bestul
210 west Writer [send email]
This is going to sound like an overused phrase, but trust me. The answer is, “It’s more complicated than it might seem.”
The question, asked by numerous customers who step up to the counter, is, “That ‘music downloading’ must really hurt your business, huh?”
When people ask that question (or brag about downloading instead of spending money), I want to explain just how this phenomenon works. But, the reality is that I’m behind the counter and small talk is all the rage with customers.
That means it’s time to subject you to the lengthy exploration of this subject. Feel free to insert an evil laugh. It’ll go well with my
dark goatee.
Yes, the music-downloading phenomenon is hurting my business. But only my type of business (music retail). All you idealists who think you’re sticking it to the recording companies, well, you’re just following
an empty ideal. Not only are you not doing any real damage to them, you’re also not affecting the massive retail outlets like Wal-Mart, Best Buy and Circuit City. You’re only screwing the smaller chain stores that sell music. Thanks.
Allow me to elaborate: We begin this journey with the customer base that has no inkling of how to download music. In fact, that opening question is most often asked by the average customer who knows nothing of what an mp3 is. In a general sense, this category is made up of
the baby boomer generation and older. I’m usually not one to generalize, but music downloading requires computer savvy and software availability. This means that it’s usually not the older crowd that’s going to download.
In addition, Stephen King pointed out an interesting occurrence in the
baby boomer demographic. In his Entertainment Weekly column,
he states that this generation, who once listened to challenging and creative music, has now resigned itself to purchasing music that is safe and well-worn.
I can attest to this trend. Our highest-selling release in the last few months was Clay Aiken, followed by Josh Groban. Both were usually purchased by people over 30. Our most consistent seller has been Rod Stewart’s new album, a second volume of old standards. Bob Seger was on our “Top 20” wall, and his was a greatest hits album, volume two. Even Britney and Blink-182, the masters of popular music, were trumped by the re-mastered Beatles album Let it Be that was released the same week.
Don’t think that I’m the only one noticing this trend. The record companies are definitely paying heed to it. They’re pumping out more copies of older music, and giving them to us to sell. That may be why, despite the fact that my store is in the mall—natural habitat of the young—the wall opposite “Top 20” is a collection of older and adult contemporary albums. Ick.
Meanwhile, the record companies have completely dropped any intention of promoting fantastic new albums from the likes of The Shins, Ryan Adams, and The Strokes. Even radio-friendly talents like Outkast only got a minor push. The execs simply let the two singles drive the sales for Speakerboxxx / The Love Below.
And there’s the obscured face of the music-downloading battle. We all see Napster and Metallica, the Kazaa users and the lawsuits, and the “us vs. them” mentality from both sides. What we don’t see is just how the recording industry is battling the loss of possible revenue in other ways.
The first is to pander to a different demographic. If you can’t get new customers, or are alienating them, the only way to increase sales is to get the current customers to purchase more. Hence, we see huge pushes in the uber-popular, “greatest hits,” and adult contemporary sectors.
The second is to offer rewards to those who actually purchase their music. Record companies are offering extra giveaways with big-title CDs that range from small (collector’s card with the new Britney album) to extravagant (a chance for one of four diamond-encrusted goodies with the new G-Unit album).
Third, the companies play around with the release dates. If a new album is likely to be a favorite among the downloading crowd, the labels are now changing around the release dates to make sure that the album hits before the mp3 collection does.
Fourth, they’re increasing efficiency. This takes the form of massive company mergers (such as the proposed Sony/BMG merger) or “streamlined” talent pools. You thought the big labels were already bad about cutting your favorite critically-acclaimed and semi-popular artist? You ain’t seen nothing yet. Snip, snip.
Finally, they offer “new low prices” on CDs, prices that are years overdue.
The problem with these tactics is that they may increase revenue, but they screw the customer and lover of music. If we combine efficiency with demographic tactics, suddenly a number of artists can’t make a living by making albums (does anybody else miss Pulp?). Or, if the jumpy release dates are combined with contests, we end up with cancelled contests. Just look at Jay-Z’s last album. The label released it early (with little notice), and had to tank a contest because of it.
But the recording companies are going to come out of this all right. When they switch a release date, they’re not the ones with scores of Rage Against the Machine albums that are essentially dead stock. (What, you didn’t hear that Rage’s greatest hits were out already? Neither did anyone else.) Not only that, but retailers don’t have the time to drastically alter the schedule or floor plan to suddenly put FRIDAY new releases on display. So far, the only two CDs that haven’t tanked because of switcheroo release dates are Jay-Z and Korn.
Not only are the record companies weathering this storm, so are the retail giants like Wal-mart and Best Buy. Ladies and gents, let’s clear one thing up. These companies have massive buying power, and they don’t care if a CD tanks. To them, CDs are accessories. They’re reasons to get you to come in the store. They aren’t meant to be the main sources of revenue. That’s why they can sell a CD for less than we (your friendly neighborhood music outlet) PAY for it.
Which leaves the music retailers to take the brunt of the damage for the downloading explosion. What do we do about it? Well, our administrative handlers find ways to increase sales through add-ons and rewards! (Enthusiasm definitely insincere). Remember the only two ways to increase sales? We can’t combat the downloading, we can’t combat the prices of the giants, we can’t communicate with the record labels so we really can’t increase customers. That leaves selling more stuff!
And yes, I know it annoys you when a retail employee offers you
stuff. Unfortunately, it’s no longer a thing we do for repeat customers. We need everybody to be repeat customers, and we need to get away from only selling music.
But, wait! We’re a music store? How can we say that?
Well, that’s the effect of music downloading on the retail industry.
Haass-- Two very good, and very valid points.
1) To a certain level, I concur. However, I'm noticing that companies are releasing more "safe" material, such as a "new" Rod Stewart CD. I enjoy the standards (Sinatra and Mighty Blue Kings are current favs), but I think there needs to be a certain amount of originality, experimentation, and challenge. Of course, the new music the labels push is rarely any of those three.
I think that a lot of newer music resonates very deeply, whatever it's genre. Usually, though, you have to hunt to find such CDs. And if the taste is for older styles of music, one doesn't have to resort to older material. Diana Krall and Alison Krauss are two amazing new(er) musicians whose stylings are more traditional.
2) Online purchasing is definitely a viable new-and-upcoming option. It seems more apparent that having fewer copies with a larger catalogue, mixed with other media, would be the way to go for retailers. In fact, there's a place near my apartment that sells CDs, DVDs, and games. I think a (solely) music retail outlet has become a risky venture.
Okay, J. Mike. Calm down now. I did make a poor assumption, refering to your outlet as one of the weird indie record stores, which I cannot stand. And, as a former employee of a Wal-mart Distribution, I completely agree that they are one of the most evil corporations, if not the most evil, on this planet. My apologies.
I do agree with your point concerning age demographics and would attribute, to some effect, the reality of younger people downloading songs instead of purchasing them.
2 new points:
A) I think the reason the "golden oldies" still sell so well is due in major part to the quality of their music. The lifestyle portrayed by many groups today does not ultimately ring home with the majority of Americans. Also, I think that a large majority of music being produced today is not near the caliber of days past. In other words, I think it is mostly techno be-bopping, lip-synching crap with no real message for the listener to identify with. Unless you are as weird as the people who wrote the song. Notice I don't refer to the people making the songs as "musicians." Most of them are far from.
B) Younger people want everything on the go, like iPods for their mp3's. CD's, in their current format, are on the way out, which will inevitably change the market for younger audiences and I predict a large movement towards legal selective online song purchasing. I am not sure how any record company or retail store will adjust to future changes.
I may be way off base again. Let me know what you think J.
Wow... assertions and assumptions abound.
First: I never refer to the outlet I work for as some indie shop. I happen to be a part-timer at a national store. The differentiation is between mega-retailers like Wal-Mart/Best Buy/Target, and FYE/Musicland/Tower.
Second: Record labels may take a larger sum total, but not percentage total. The labels are still profitable, while many retailers are jumping the line between black and red.
And, no the point isn't that Wal-Mart/Best Buy are the major factor. The fact that they sell certain CDs as "loss leaders" (they lose $$$ so as to attract customers and drain competitors) is evil, and has resulted in at least one lawsuit.
The point is that the retailer that focuses on music has one big advantage: selection and knowledge. We'll have a far better selection than your average Wally World. Unfortunately, it's very rare that anyone over 30 is looking for anything outside of what Wal-Mart carries.
Which means that our natural target demographic is the younger crowd. This is the crowd that has thinned mainly because of downloading, not because of Wal-Mart. Since when have you gone to Wal-Mart to find The Postal Service, Tsunami Bomb, or any unedited CD?
Perhaps you should talk with the people at different levels of the music retail before to make broad generalizations... The clues are plentiful in my world. I deal with them on a daily basis.
I think J. Michael Bestul had some interesting comments about copyrights and illegal downloading. However, I wonder which is hurting his business more, the kids out there pirating music or the fact that the Wal-mart down the road can offer the same CD as him at 1/2 the price? I think it's pretty obvious... Many local companies have bit the dust trying to compete with the evil giant created by Sam Walton. Sad, but true, J. Mike. Secondly, J. Michael should put more research into his columns, because the record industry is actually taking the brunt of the hit from illegal downloading, not the small retail stores. This is mostly due to advances given to artists who later don't sell as many records on future albums. So I pretty much think J. Mike missed the point here completely. If someone has to choose between buying a cd and illegally downloading it, I hope most people would choose the right path and buy it. However, if someone wants to buy a cd, no one is going to be dumb enough to buy it for $4 or $5 more at J. Mikes crappy shop if they can get it cheaper at Wal-mart. Walmart shoppers can also buy other "useful" items they need all in one trip and don't have to worry about getting a migraine from the smell of some local music store hippie buring a horrid incense stick. Get a clue J. Mike.