Out Of The Tower, And Into The Frying Pan
by Sean Carolan
According to an article that appeared yesterday in the L.A. Times, Tower Records is in danger of declaring bankruptcy. Exercising a significant amount of due diligence, the reporter for the Times quoted the remarks of several industry sources, in a fairly lucid account of the retailing slump that is affecting music retailers nationwide.
Among the issues cited, industry sources pointed at price trimming and loss-leader pricing by competitors (specifically referencing the $10.88 CDs bought at wholesale that are being sold for $10 by electronics retailers, as a way to drag people into the store to sell them a new CD player, too.) Also cited: competition from online retailers, a weak-selling current slate of releases, and competition for entertainment dollars from things like video games (which are, by the way, currently making more money than any other facet of the entertainment industry, which is why we now have movies based on video games.)
The article, overall, was well written and well researched, which is why the announcement is fairly telling in one particular way, if you pause to stare at it long enough...
...they didn't blame Napster specifically, nor did they blame online music trading in general. And, in the face of such a complete article, one expects that's because among all the sources contacted and industry reps quoted, none of them had online music trading on their radar.
They're retailers. They know their audiences, and when their audiences don't show up, they know why. They know that if Ricky Martin, Aerosmith, and Depeche Mode had put out decent albums, they wouldn't be in quite as bad a mess as they're in. (Of the three, it's the latter that's the biggest shame..."Dream On" is good, but that's pretty much it for the Exciter album, which is only exceeded in flaccidity by the new REM album. Sorry.) They know they'd probably be in a more competitive position if, week-in and week-out, they didn't have another retailer hollowing out their bread and butter in a cynical floor traffic grab.
They also know that when people want a record, they buy it, regardless of whether they can download it for free or not. People who buy CDs buy them because they want the CD, not just because they want the music that's stamped on them.
The retailers also know they could probably move a lot more units if they could buy the discs at a reasonable price. $10.88 is more than the retail price for an LP used to be, and it's far cheaper to produce a CD now than it was to produce an LP toward the end of its tenure (if you're the sort that thinks the LP's tenure is over.) Retailers know that their position is in jeopardy because the music industry has pushed music purchases up into a different strata of item, cost wise, and their customers aren't necessarily following it so readily.
The point here is that music is downloaded by people who wouldn't be caught dead spending money on the stuff, and who would have done without if there hadn't been a way to get it for free. That's the dirty secret that the retailers know, and that the folks at the record labels would prefer not to communicate too loudly. Kudos to the retailers, even in this hour of their dwindling fortunes, for not bothering to bat around the recording industry's favorite whipping boy, and instead choosing to lay out the facts as they most likely exist in the real world of retailing.
©2001 Sean Carolan