By Hans Morgenstern
By Joseph Hess
By Peter Gilstrap
By Julia Burch
By Jeremy Essig
By Nathan Smith
By Julie Seabaugh
By Julie Seabaugh
If you've been reading the trade journals, you know that the music industry's in a state of general panic. According to the Dec. 29 issue of Billboard, total sales for 2001 were 5.3 percent lower than in 2000, album sales were down 2.8 percent, and singles sales were down an astonishing 40.7 percent. (That last stat may have something to do with the fact that record labels don't want to make singles at all; they'd obviously prefer to coerce you into buying the entire Britney CD, even though you know every song except "I'm a Slave 4 U" totally sucks.) Industry types blame the slump in record sales on free file-sharing sites such as the now-defunct Napster and spin-offs such as Morpheus and Gnutella. The suits at the major labels are the shrillest denouncers of Internet file-sharing; unsurprisingly, they also rake in the lion's share of the profits from "legitimate" sales. Artists generally make between 50 and 75 cents per CD, whereas the record company earns between $3 and $4. After the artists pay back the label's advances, they often wind up with nothing. Factor in flat sales, and everyone's in trouble: Bands are dropped, labels go under and one-stop distributors declare bankruptcy. Independent record stores such as Streetside Records, Vintage Vinyl, Euclid Records and Record Exchange suffer the consequences in myriad ways.
One challenge these outlets face is the rise of big chains and megastores, which cut into their business by offering new CDs at bargain-basement prices. "Best Buy can sell computers and big-screen TVs and make all their profit there," explains Steve Pick, Vintage Vinyl general manager (and RFT contributor). "They don't need to make the profits on their CDs, which they can sell at cost or at a loss. It hurts us when they can sell something at $9.99 that costs us $10.50 to get it into the store."
Another corporate trend that threatens to leave small-scale retailers out in the cold is the exclusive-release deals offered to favored customers. "U2 worked out a deal where their DVD was released two weeks early just to Best Buy and then to the other retail outlets," Pick says. "Now, the U2 DVD is not something that Vintage Vinyl would sell well, but it set a bad precedent." (As if fucking over Negativland wasn't enough to prove they're greedy bastards!) Randy Davis, president of Streetside Records, was irate when he heard about the U2 DVD: "We didn't think it was a fair-trade practice. I bitched and moaned to the manufacturers, and I just made sure my stores had it in stock from day one. Here's an industry that has consolidated street dates for the entire industry, consolidated pricing, and yet somebody did a deal with a retailer giving them an exclusive!"
Pick disagrees with industry analysts who attribute flat sales to online music piracy. "I think that's baloney," he scoffs. "Anything that makes people excited about music is a good thing, and online file-sharing programs are designed to do that. There is some loss in sales that's offset by gains in sales for other people. I think the big mistake that the record labels made was in attacking Napster, which was the single biggest promotional tool for music to come around in years."
As for the future of music retail, Pick is cautiously optimistic: "The record labels want it to be a downloading thing where they can cut retail out of the package entirely. I don't think that's going to happen. I think there will be independent record stores for a long time to come. For us, we'll probably shift the focus away a little from new releases and more onto used and catalog."
Joe Schwab, owner of Euclid Records, made this shift a long time ago, but that doesn't mean he's sheltered from the industry meltdown. Like many specialty record stores, Euclid deals almost exclusively with one-stop distributors to stock new releases. "Our biggest one-stop, the biggest in the country [Valley] just went under. It's pretty bad for us because we counted on them; we took a higher price on stuff because they had the deeper catalog. Now we're scrambling to try to find more obscure releases.