I'm In Love, What's That Song?

"If you wanted to buy the new Sam Cooke album, where would you go?"---Prince, from Under The Cherry Moon

When I was working my way through college in the early to mid 90's by running a record store, I would often think of how ironic it was to be busting my ass for my Bachelor's Degree when I was already doing what I wanted to do. Back then, I thought I would spend the rest of my life surrounded by dusty vinyl and racks of CDs. Ah, the dreams of youth.

I was the manager of Nightwind's Music and Video from 1991-1996, and despite low pay and no insurance benefits, it is still the best job I've ever had. Selling music is the thing I was meant to do. During those heady days, an independent record store was more than a place to buy records, it was a communal gateway to discovery. Nothing made me happier than a full house of customers rifling through our CD bins in search of that one song, that one album to take home with them and make their night. Few things satisfied me more than some wide-eyed customer coming up to me and saying, "I saw this video on MTV of this red-haired girl playing piano..." That gentleman had discovered Tori Amos, but he needed me to complete his rendezvous with his favorite new artist.

There is a great scene in the wonderful movie High Fidelity, when Rob, the owner of Championship Vinyl (played by my boy, John Cusack), turns to his two co-workers and says, "I will now sell the three EP's by the Beta Band." Cusack's Rob pops the CD in the player and watches all the customers in his store start to vibe on the sounds coming out of the speakers. Over the five years that I ran that store, I turned people on to Leonard Cohen, Chris Whitley, Ephraim Lewis, and so on, and so on. I helped to play a very small part in the breaking of Pearl Jam, Nirvana, and SoundGarden during the grunge revolution. Even better still, were the artists I discovered by working in a place that surrounded me with music. This is where I fell in love with the music of Lou Reed, The Tragically Hip, The Replacements, etc. Artists who have bettered my life and helped shape my world views. And the best thing about discovering these artists was sharing them with my customers and co-workers. In the grand scheme of things, my influence on others may have been quite small, but it certainly didn't feel that way when I put a CD by The Catherine Wheel in some grateful buyer's hands.

That's all over now, of course. Not only for me, but for just about everyone. In the Michiana area, there is only one independent record store (Orbit Music) that sells new music. There are only two independently owned sellers of used music that I know of (Michiana Media and BuyCo). During the heyday of the 90's, I can remember at least six.

There are many reasons for the death of the independent record store. While most people will point to downloading, itunes, and illegal file-sharing, the trouble started long before.

The golden period of music retail began in the late 80's and peaked in the year 2000. Since the turn of the century, CD sales have fallen by 45%. While technology has certainly fueled this decline, the mismanagement of the music industry by the record labels cannot be overstated.

When the CD was introduced to the marketplace in the early 80's, the labels promised that once the new media gained a foothold and reached mass production, that the price of the compact disc would go down. Well, they lied. Nearly year by year, the labels continually raised the list price of new CDs. By the end of the 90's, mega artists like Janet Jackson and Mariah Carey saw the list price of their new CDs start out at $19.99. This made it increasingly more difficult for indy stores to offer competitive sale prices. While big box retailers were able to buy directly from the labels and receive deep discounts due to the high volume of their purchases, indy stores would have to purchase their music from a one-stop, or wholesaler. The labels simply didn't see the value in selling directly to indy stores unless they were willing to purchase CDs in numbers so large that they would be typically unaffordable to a mom and pop store.

Now, the big box stores completely dominate the music retail market. Between Wal-Mart, Best Buy, and Target, they account for 2/3 of all record sales in the U.S. In fact, Wal-Mart is the largest music seller in the world. As these mass retailers started to penetrate the market in the mid to late 90's, the record labels began to put all their investment into these corporate monsters. They offered them the best prices, promotions, and advertising support to the complete detriment of the indy store. While this may have made a great deal of fiscal sense in the short term, the long term effects have been devastating to not only the indy stores, but to the record labels themselves.

For stores like Wal-Mart, Best Buy, and Target, music is a small portion of their sales. That's why you can seldom find someone to help you when you shop in their music departments, and if you do, you will probably end up feeling you were better off on your own. These stores often use music as loss-leaders, selling CDs below cost in the hope that the low price will increase foot traffic and lead to sales in electronics, housewares, and clothing where they enjoy better margins. This practice has been crippling to indy stores. If 90% of your income is based on music sales, then loss-leaders by big box stores completely remove your profit margins if you choose to price match, and drive customers away if you do not. Worse still, only a couple of years ago Wal-Mart started dictating to the labels the price that they would be willing to pay for CDs. Because the labels had abandoned the indy stores to the point of near extinction, they had no choice but to acquiesce.

As the indy stores began to fade away due to downloading, excessive competition from big boxes, and lack of record company support, the labels were left with no secondary market with which to sell their product. In many areas of the country, the only place to buy new music is your local Wal-Mart, Best Buy, or Target. If the labels lose any of these mass retailers, then they may as well fold up shop. And I'm hear to tell you, the clock is already ticking.

As I mentioned earlier, the impact of downloading and illegal file-sharing has had a great impact on brick and mortar stores. However, even this advance in technology was forwarded by the poor decisions of the record labels. I'm sure some of us can remember something called the CD single. The sales of singles--from 45's, to cassette singles, to CD5's--had a great positive impact on the overall health of the business. The production of low-priced singles brought young people into the fold. Since young folks typically have less buying power, the sales of singles were an affordable entry point for the youth market. As anyone can tell you, buying music is a habit. And by creating this habit at a low cost to the buyer, it would typically lead to the purchase of full length albums as these youngsters grew into adulthood, got jobs and earned a disposable income. However, the labels began to slowly eliminate the production of singles, believing that by forcing people to buy the whole album to get one song would increase their profit margins. Once again, in the short run this worked, but in the long run they lost the kids and, therefore, the future.

Now, I'm not naive, the creation of Napster and itunes would have made a massive impact on the way people purchase music regardless of the mistakes of the record labels. But, by making music so expensive, they created a vacuum that cheaper, digital music was only to happy to fill. And make no mistake, it is a cheaper form of music. I'm not just referring to price, but to quality and value. While selling songs for .99 cents (or stealing music through illegal file sharing) certainly has made music more affordable, it's also made it more disposable. It has completely removed artistic design from the selling of music, as there is no record sleeve or album cover to hold in your hands. You no longer have lyric sheets or liner notes to pore over and learn more about the artist. This method of buying music is an entirely impersonal experience. Now, new music buyers have fewer reasons than ever to connect with the artist whose music they have purchased.

It's also worth noting the lack of sound quality in these MP3's. Maybe to most, this degradation of quality is imperceptible, but make no mistake, you are listening to a thinner, tinnier, more compressed sound recording than the original source. In effect, what you are listening to is a copy of a copy of a copy. As Bob Dylan once said about the quality of MP3's and the cheap price of music, "You might as well give it away, it isn't worth anything anyway."

Of course, digital music was always an inevitability, but even here, the labels managed to blow it. They were deeply resistant to the unstoppable change that was to come. They fought it tooth and nail through the court system, and continued to cling to the system they had corrupted. By the time they got on board, millions (if not billions) of dollars were lost.

Now that digital sales have continued to increase--leading to the massive decline in the sales of physical discs--the labels are confronted with a new problem. These big box retailers--who they have so relied upon to the detriment of the indy store--have decreased their shelf space for music by 20% over the last two years. After bending over backwards to meet the demands of these corporate giants, the labels are being squeezed out by the last music sellers left. Leaving them with nothing but a desperate grip on a dying industry. When--not if--the big box retailers eliminate their footprint for music product, where will the labels go? Their best margins are still made through the sales of physical discs, and their overhead is far too large to be supported by a purely digital market, and there are hardly any indy stores to come crawling back to. Unfortunately, they have nearly--if not entirely--destroyed their market through bad business practices. Hell, even big name artists are beginning to jump ship and either create or join an independent label.

The last CDs by Prince and Pearl Jam were both independently released. Even the artists can smell what's cooking, and they've decided they'd rather like to make the stew on their own. Some are selling music from their web sites and at their concerts. Others, like Prince and Pearl Jam--as well as KISS, Garth Brooks, and The Eagles--have entered into exclusive arrangements with Target or Wal-Mart. By doing so, they have performed a nimble end around on the labels, but also on the few remaining indy stores as well. Not that I can totally blame them, they are simply reacting to the business the labels and mass retailers have left them with.

I suppose this whole column is just a rant by a dinosaur (I still buy CDs!) who longs for the good ol' days when things were simpler. Maybe I have become that guy ("These kids today and their music"). Although, I will say that things aren't completely hopeless for someone like me. There will probably always be a collector's market. Used stores, Ebay, and web retailers will most likely be selling music for a long time, and the surprising increase in vinyl sales over the last few years at least points to a specialized market that could last for many years to come. But yes, I do miss the days when someone would walk into my store and say "I heard this song, do you know who it's by?" And more than anything, I will miss the opportunity to reply, because I was born to do this, but I can't, not anymore.

Sumo-Pop
January 8, 2010