Tuesday, September 7, 2010
By "Big Box Retail" (BBR), we're really only referring to 2 companies: Walmart and Best Buy. Yes, that's what the music industry has come to in 2010: Down to just 2 major companies, neither of which specialize in music (nor much care, as CDs are a low-margin item anyway), selling the CDs that used to make record companies, and some artists, very rich.....
Decades ago, Big Box Retail sold music as an afterthought, a loss-leader to get customers in the door and steer them towards bigger ticket items like stereo systems, TV's, or a washer and dryer. By leveraging those big-ticket items, they discounted the CD to bare-bones pricing. This strategy, combined with the overall decline in CD sales, helped to drive big-chain record stores like Virgin, Tower, and Warehouse music out of business in just a few short years. Now, with no CD stores left to compete against except themselves, BBR are still using CDs as a loss leader, AND they've begun shrinking the shelf space that was once reserved for music. The simple formula of Major Record Label to Retail Record Store has all but collapsed.
This new reality has not escaped many veteran artists now compelled to bypass record labels completely and sell directly to Big Box. Artists like AC/DC, The Police, and others have offered their CDs exclusively to Walmart and Best Buy, respectively. And why not? With the state of the physical CD retail business, there is only one other possibility (okay, two if you count Target) outside of the "exclusive" retailer anyway. These artists have opted to skip the label, skip the record distributor, and simply ship CDs direct to one Big Box Retailer hub. Yet another nail in the major record label coffin...
So what's it mean for music? Unfortunately for indie and emerging artists, this new landscape in retail does not add up to a favorable situation. Most indies don't have the pull to approach BBR directly. And, with fewer outlets to sell a CD, and less labels and distributors to approach, selling a physical CD at a retail store has become that much more difficult. Despite all this, physical CDs still make up the 60% of music sold in the U.S., and although this percentage is falling every year, there are still a good number of consumers who will always prefer walking in a store to buy the CD. So does this mean in a couple more years you won't be able to get the CD anywhere? Nah, don't worry, guess which online retailer will fill this void? It’s www.thegoodzonline.com who will compete with the likes of Itunes.com and Amazon.com, whose tied with Walmart for overall sales (CD + digital) and right on the heels of Best Buy for CDs in the first half of 2010.
-Pro Music Records and Entertainment Media
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