APRIL 2006 IN
RICK ASTER’S WORLD

Release Day in the Record Stores

How are record stores doing these days? I wanted to find out, so I went around to the local record stores on the release day of an important new album.

The Run-Around

I started with the nearest store, which happened to be Best Buy, a major discount electronics chain. They did not have the album I was looking for. Actually, their whole record inventory was alarmingly thin, with bins that could hold 20 CDs stocked with just two or three. This made the displays look reasonably normal, but there wasn’t much to buy. I wasn’t worried, though — three more record stores could be found a block away at the shopping mall. The largest, Sam Goody, was perhaps the most respected record store name a decade ago. When I got to the store, though, the cardboard sign taped to a pillar read, “This store closing in 6 days.” Some things in the store were already 90% off. All records were 80% off. No one sells records for 80% off, so I suspected that the merchandise was not the store’s regular stock, and I was right. Any CD you would expect to find in a record store was long gone, and eighty customers crowded the store grimly sifting through the random assortment of obscure albums from a decade ago hoping to find something of interest.

But another record store was 20 stores away. I strode there confidently only to find that store already boarded up. That left only one record store in the mall. FYE was open, but lacked the “new releases” display I usually hoped to find in a record store. There were two customers in the store, but they were on the other side of the store, looking for a movie. A clerk gazed forlornly from a download kiosk in the front corner of the store. The idea of going to a record store to download tunes from the Internet has not caught on the way record store executives had hoped. Beyond the kiosk, the pop/rock section held a respectable collection of records, far more than I had seen at Best Buy, but there was no sign of the new release I was hoping to find. Nor, indeed, could I find any new release I checked for. I am sure the store had some new releases, but perhaps the buyers had decided it would be safer not to order most new albums until they had proved their popularity by reaching the top 50 on the album chart.

My confidence dimmed as I was quickly running out of options. There was still Tower Records, a “serious” record store on the other side of town. When I got there, though, Tower Records was not what I remembered from years past. Only a quarter of the floor was devoted to music CDs. The rest now displayed videos, books, magazines, and who knows what else — I didn’t walk all the way to the far end of the store to see what was there.

Tower had by far the largest inventory of any store I had visisted. They even had a copy of the 1975 solo album by the drummer of the band I was looking for. There was nothing to be seen of the new release I wanted, though, and this store too no longer has a display of new music releases.

For good measure, I continued to the bookstore chains — Barnes & Noble later that night and Borders two days later. Again, no luck and little encouragement about the state of record stores.

Perhaps the information I had received about the release date was incorrect. I checked web sites. The recording artist and record label were perfectly clear about the release date, but some sources suggested a date one week later. Checking record stores the next week, I found one more store closed, but no sign of the new record.

A friend said a co-worker who had a connection with a radio station would possibly be able to get me the CD I was seeking. I declined the offer. This is not, I thought, the way new releases are supposed to work. The “who you know” approach works poorly enough with public stock offerings and concert tickets. It is ludicrous as a way to distribute a mass-produced consumer product such as a music CD.

The Record Store Is All But Dead

I was disappointed, of course, but this is more than a story of one shopper’s disappointment. I saw enough to say that the record store’s traditional business model is in serious trouble.

You might imagine that the operation of a record store is based on the general idea of music fans in search of music, and to a slight extent that is correct, but I am told that the majority of sales in record stores traditionally come about in three ways:

Years ago, record companies and record stores cooperated on sale prices for albums as a way to bring people into the record stores. The sales were advertised in newspapers as a way to promote both the current releases and the record stores. They pretty much gave this up in the late 1990s because they found that reduced prices and newspaper advertisements no longer seemed to bring people into the stores.

So now, record stores absolutely depend on Christmas season, blockbusters, and release days to bring shoppers into the stores. All three of these pillars of the traditional record store business model seem to be in jeopardy, based on what I have seen. I don’t personally know anyone who gave a CD as a Christmas present last year. At that time, if you recall, there were rumors and reports that Sony, one of the biggest record companies, was putting weird software on music CDs that would damage people’s computers. The truth turned out to be even worse than the rumors had suggested, and Sony was forced to recall and replace millions of CDs, while millions of unlucky customers had to reformat and reinstall their computers or replace them. At a time when music fans were already moving away from the CD format, the knowledge that a big corporation was willing to damage people’s computers in order to spy on music fans by putting malicious software on music CDs could only hasten the format’s decline — and it surely contributed to the three record store closings I encountered.

There are not many blockbusters in music anymore for the simple reason that the major record labels, the only people in music with the marketing know-how to create blockbusters, have much smaller artist rosters than in years past. With only an eighth as many artists on major labels, you would expect that there would be only an eighth as many blockbuster albums, and that is basically what has happened.

But to make things worse, music fans seem to be aware that the blockbuster albums are the ones that the major labels are most likely to mess with. All the major labels continue to insist that they are committed to copy protection for music CDs, so who knows what new tricks they have up their sleeves and what damage your equipment could suffer as a result? Perversely, this means that the bigger the record, the greater the incentive a music fan has not to buy the album as a CD in a record store. The major labels could win back consumers’ confidence over a period of a few years if they swore off copy protection or settled on a scheme that works and persuaded everyone that it was acceptable, but I see no reason to hope that either of these things could happen, and even if it could, can the record stores hold out that long waiting for customers to return?

Perhaps the record stores could still hang on if they could make release day (which happens every Tuesday) a rewarding experience for music fans, but they seem to have given up on this too. Among the stores I visited, only Best Buy had a significant display of new music CD releases, and their dozen or so featured releases were not the releases of this week, but from the last couple of months.

This tells me I was not the only music fan to leave a record store empty-handed on release day this year. But this is a disaster for the record stores! I think very few fans will trek around town looking for a record the way I did — frankly, I did it only out of curiosity. Most disappointed fans, I imagine, will go to the recording artist’s web site to try to learn where they should buy the album. As soon as this becomes a habit, the record store is irrelevant. If it is easier to buy a new record from the recording artist’s web site than it is to get it from a record store, then what are record stores for?

Records in Bookstores

To be honest, the traditional, stand-alone record store is already dead, at least in my area. Around here, every record store and every bookstore that sells records is now selling more movies than records, and their allocation of shelf space reflects this. In Barnes & Noble, for example, slightly more than half the bins that once held CDs now display DVD movies. Selling movies along with music sounds like a good way to keep a store going until you consider that the DVD movie is also a declining format. Movie fans are buying fewer DVDs, not dramatically so, but nonetheless a measurable decline from year to year that does not bode well for record stores. It seems that movie fans have started to notice that they do not have time to watch the movies they already own, and this means there is no urgency about collecting more. At the same time, Hollywood’s dismal slate of releases of the past two years is enough to dissuade even serious movie fans of their collecting tendencies.

To my mind, the best chance to have record stores in the future is to place them in bookstores. I say this despite the sorry current state of bookstores’ record departments. There is an economy of operation in having just a single clerk in the music/movie section of a bookstore, as distinguished from the minimum of two needed to operate a separate store. The resulting 50% savings in labor costs looms large — large enough, I think, to drive most of the remaining separate record stores out of business. This possibility is made more ominous by the thought that, in the ten years prior to this year, half the record stores in the area closed. Add the three store closings that I witnessed this month and countless store closings all over the United States and Canada in the news this month, and it becomes possible to imagine that every record store could close.

And I haven’t even mentioned the specter of music downloading, which could change the rules of music distribution as soon as next year. Music-download stores such as iTunes Music Store are voluntarily keeping the quality level of their music files a cut below that of CDs, but there is fundamentally nothing to prevent them from increasing the sound quality so that it is a touch above that of the CD format. And then what? How will it feel to know that the CD you are paying a premium price for in a record store will give you slightly less than the full sound quality of the music? The psychological effect on consumers could be larger than the actual musical difference. Even fans who can’t hear the difference could nevertheless have the vague feeling that they are being cheated when they buy a music CD.

No Stores, No Labels

Does it matter? The closing of record stores may not matter that much to music fans. Fans might have to wait an extra week for a new record to arrive in the mail, but the release date is a completely arbitrary date anyway, so it is hard to see that it makes much difference. The decline of the record store is a major concern for the major labels, however. The mass-publicity, mass-distribution business model of major labels is built around the release date and the record store . . . and the record charts. Record labels focus their publicity around the release date so that fans will go into stores and buy lots of copies of the album, thus giving the album a favorable chart position. With some stores closing and others no longer carrying most new releases, this strategy could fall flat. Indeed, if the record stores close, recording artists may have no more need for the record labels. Labels take a 90% cut (sometimes less, sometimes more, but always a lot) of a recording artist’s sales so they can drive the publicity machine that gets the records in stores and then draws the customers in to buy the records. With no stores, what is there for the record labels to do? If fans are going to a recording artist’s web site to find out where to buy an album, will anyone notice if the album is even on a label?

I feel sure that some record stores and record labels will survive, but the old business models will not be enough to make that happen. The record business will need to find new ways of doing business.


Fish Nation Information Station | Rick Aster’s World | Rick Aster