Wal-Mart to Record Industry: We sell CDs for less than $10, or else

[MindGoneHaywire]

Weird tale here, one giant of industry going up against...an entire industry, and they win either way (Wal-Mart does not need to sell music to make money). Wal-Mart carries something like 1/12 the amount of titles that a Tower would, but what can you do. They come off looking good in the populist 'we're looking out for our customers' sense, and the industry looks awful. In reality, both have their negatives & positives. In this case I see the negs on both sides as far outweighing the positives, but it's an interesting staredown.

This article is the best article about the music biz I've seen in Rolling Stone in a long time. I think it's essential reading for anyone who buys CDs, even if you don't buy 'em at Wal-Mart...on the forum where I first saw this article, someone had a great page of links to illustrate their anti-Wal-Mart stance...which I put up on the General board at AA, where someone posted a link to this article. But over there the links aren't enabled, so I'll re-post them here when I have a chance to go back & find it. In the meantime: thoughts?

[Stone]

The article is here. Someone posted it on the CMJ board.

I haven't read it yet, and I can definitely see some negatives coming out of this too, but if it drives down the cost of CDs (everywhere, not just at Wal-Mart) then the posturing could be a good thing.

[MindGoneHaywire]

Wow, I forgot the link! Shame on me. Thanks, Stone.

Here's the stuff I didn't have before. It's, um, biased, but even if you have a problem with that I think it's more than worth taking a look at.

***********************

Here are some other things you should know about WAL MART:

a) Wal-Mart has expressed interest in joining the music industry:

http://p2pnet.net/story/1126

b) Wal-Mart is a Conservative Christian outlet
that markets/yields to Conservative Christian agendas (including censorship) or People Who Just Love That Jesus:

http://www.forbes.com/2003/09/15/cz_cc_0915wmt.html

http://www.forbes.com/forbes/2003/1208/090_print.html

http://www.pbs.org/itvs/storewars/stores3_2.html

c) Wal-Mart is regarded as a bastion of family-values (in spite of it's curious hiring practices) and American decency.
George W. Bush and Dick Cheney send their thanks and regards:

http://headlines.agapepress.org/arch...afa/22003a.asp

http://www.whitehouse.gov/news/relea...0040503-7.html

d) They carry a book called, "The Protocols Of The Learned Elders Of Zion"...

http://www.adl.org/misc/wal-mart-protocols-ltr.asp

e) Wal-Mart gives generously to the GOP AND they have their own DC lobbyists (well, who doesn't?):

http://www.msnbc.msn.com/id/4363393/

http://www.arkansasnews.com/archive/...au/126757.html

http://www.usatoday.com/money/indust...-walmart_x.htm

f) SOME PEOPLE ARE SAYING THAT (by crushing their opponents) Wal-Mart wants to take over the world; and can force change based on its size:

http://fastcompany.com/magazine/77/walmart.html

http://www.alternet.org/story/17895

http://www.votenader.org/issues/index.php?cid=47

http://www.museum.tv/archives/etv/C/...untrymusic.htm

g) People love country music and Wal-Mart:

http://www.museum.tv/archives/etv/C/...untrymusic.htm

h) Guns? Yes! Sheryl Crow? No. Hilary Clinton a former lawyer for Wal Mart? Aww..
(concise WM overview)

http://www.nationmaster.com/encyclopedia/Wal-Mart

I know it would it be too much of a leap to suggest that if the recording industry capitulates to WAL MART, it is in effect, helping to promote a Conservative Christian agenda, Presidency, and ultimately "The Rapture".
That would be "crazy-talk". And a waste of time.
You give in to those cheap cds, they will have you by the balls,
and you'll still lose, because "the kids" will continue to download anyway.

Wal-Mart Blows:
http://www.walmart-blows.com

Stop Wal-Mart:
http://www.walmart.clcr.org/index.php?&MMN_position=1:1

OH! And don't forget, WAL MART SHOPPERS -
it's never too late to prepare for "The Rapture"
http://raptureready.com

[Dusty Chalk]

Bizarre. I really don't know who to root for...erm...for whom to root...whatever...

[Mr MidFi]

It's a bad thing. Wal-Mart is bad for America in a lot of ways that I don't want to get into on this forum. (If you want to see my political side, lurk the fark.com political threads and look for "Mr_Fabulous".)

But from a strictly music-business point of view, this is not good news for the consumer. Wal-Mart only carries a few thousand titles, but is by far the biggest sales-generator in the industry. That means the industry HAS to service it with the narrow type of product it sells...think Brittany Spears and Toby Keith.

Thousands of regular, old-fashioned record stores have gone out of business throughout America and the world because of pressure from "big box" retailers. I don't know about you, but I don't like that. I'm an old record-store guy...worked in one for years, and used to hang out around them to get to know what's new, what's good, and what's happening. Those days are all but gone.

Seriously, has anyone here ever bought a CD from Wal-Mart? Do they even have Porcupine Tree or The Fiery Furnaces? What about catalog titles, like Ritual de lo Habitual or In Utero? Would they ever even consider carrying used titles?

Your local record store is going out of business. Please support them.

BTW, MindGoneHaywire...The Protocols of the Elders of Zion?!?! Are you farking serious?! I wonder if they keep it next to Mein Kampf. These are, indeed, strange times we live in. I'm getting a little more nervous every day.

[Stone]

It's a bad thing. Wal-Mart is bad for America in a lot of ways that I don't want to get into on this forum. (If you want to see my political side, lurk the fark.com political threads and look for "Mr_Fabulous".)

But from a strictly music-business point of view, this is not good news for the consumer. Wal-Mart only carries a few thousand titles, but is by far the biggest sales-generator in the industry. That means the industry HAS to service it with the narrow type of product it sells...think Brittany Spears and Toby Keith.

Thousands of regular, old-fashioned record stores have gone out of business throughout America and the world because of pressure from "big box" retailers. I don't know about you, but I don't like that. I'm an old record-store guy...worked in one for years, and used to hang out around them to get to know what's new, what's good, and what's happening. Those days are all but gone.

Seriously, has anyone here ever bought a CD from Wal-Mart? Do they even have Porcupine Tree or The Fiery Furnaces? What about catalog titles, like Ritual de lo Habitual or In Utero? Would they ever even consider carrying used titles?

Your local record store is going out of business. Please support them.

BTW, MindGoneHaywire...The Protocols of the Elders of Zion?!?! Are you farking serious?! I wonder if they keep it next to Mein Kampf. These are, indeed, strange times we live in. I'm getting a little more nervous every day.

I agree it's a bad thing if Wal-Mart is the only one to benefit from the (potentially) lower prices. However, if the price drops for everyone, it could benefit all involved (save for the majors).

I buy 90-95% of my music and a local independent store, and I'm with you: it's a wonderful thing. I know the people that run the store and work there, they go out of their way for me, and they try to keep the prices down as much as possible. If Wal-Mart, and only WM, gets a break on the price of CDs, it will certainly hurt the little stores to some extent. However, there is probably very little overlap between the titles at Wal-Mart and the titles at the store I frequent, which caters to the indie crowd. Generally speaking, people are going to continue to go to that store because Wal-Mart doesn't have the new Fiery Furnaces.

I'm not defending Wal-Mart or so naive to think the Wal-Marts, Best Buys, etc. haven't had (and continue to have) an effect on the mom and pop stores, but I just don't know how much Wal-Mart getting a break would affect them. I would think it would affect the regional chains and mall stores more because there's much more of an overlap in titles stocked.

[Davey]

It's a bad thing....Thousands of regular, old-fashioned record stores have gone out of business throughout America and the world because of pressure from "big box" retailers. I don't know about you, but I don't like that. I'm an old record-store guy...worked in one for years, and used to hang out around them to get to know what's new, what's good, and what's happening. Those days are all but gone.....Your local record store is going out of business. Please support them.

No offence intended, but don't you often post about your latest purchases at Best Buy, another of those "big box" retailers that shares much of the responsibility for driving those same local record stores out of business

[Woochifer]

WalMart's entire business model is based on continually squeezing their suppliers for price concessions. They treat every product that they sell like a commodity -- go for the lowest common denominator and aggressively distill the value equation down to price.

The growth in influence that WalMart has had on the music industry is a double edged sword. On the one hand, they have put much needed price pressures on a music industry that had lived large on inflated CD profits for years (remember that the music industry assured consumers that CD prices would go down once they got a handle on production costs -- of course they never did even after CD production costs fell below cassette and LP production).

On the other hand, WalMart almostly exclusively stocks the best selling new releases and is known for predatory pricing aimed squarely at eliminating competition. This practice takes away a primary revenue source for music stores (i.e. new releases), and makes it more difficult for them to stay afloat, even though they stock a much deeper catalog than WalMart. Since the type of music I listen to isn't typically found at WalMart, I have a personal stake in propping up those stores that DO support my listening habits. That's why I don't care that I can find something at WalMart for one or two bucks cheaper. Low prices are nice, but not when they predatorily price their products in order to drive out of business those stores that are more dedicated to supporting a wide range of music without censorship. (WalMart's prices differ from store to store depending on the local competition that they need to wipe out) Why support an entity that's out to limit my choices in the market?

Personally, I think it's a dangerous trend any time a single entity can exercise the kind of market power that WalMart has. With DVDs, WalMart has been putting pressure on the studios to roll back DVD prices. Good for consumers? Not for those who like the two-disc special editions and bonus features, and not for those consumers who prefer widescreen.

Basically, WalMart wants DVD to function as a replacement for the VHS market -- cheap, commodified, P&S, no extras. This means that they've been pressuring the studios to standardize their catalogs around movie-only P&S releases only. This is because not having to maintain dual inventories is a cost savings for their operations and they're simply centering their purchases around the lowest common denominator for what their customers buy. They don't care that the rest of the market is more pro-widescreen than their customer base. (Although that's supposedly changing, since I read that the majority of Star Wars DVD sets sold by WalMart were the widescreen version)

Considering that they single-handedly sell 1 out of every 5 DVDs sold in the U.S., they exert a lot of influence. Good for consumers? Not if you're one of the 4 out of 5 who buys their DVDs elsewhere.

[ForeverAutumn]

I don't usually shop at Wal-mart. The reason being that I find stores of this nature too big, too crowded, too long to check-out, and too generic. I don't want to spend 10 minutes walking to the other end of the store; 10 minutes walking back to the checkout; and 15 minutes standing in line to pay. My time is precious. If a store wants my business, their mandate has to be to get me in and out as quickly as possible. Not a good marketing plan for a retail outlet, I understand that. But when I walk into a store, I have a purpose. I know what I want and I don't want to spend an hour making the transaction. But that's just me.

Here's my question. The article implies that if Wal-mart stops carrying CD's that people would stop buying them. Do you think that's true? The folks here certainly wouldn't fit into that category, but we're a different breed than the average music consumer. If a "normal" person wanted the newest Madonna CD and Wal-mart didn't carry it, would that person not go somewhere else? Do you think that they would never buy that CD? It seems to me that Wal-mart's threats to stop carrying CD's is an idle one.

Am I wrong?

[Woochifer]

Here's my question. The article implies that if Wal-mart stops carrying CD's that people would stop buying them. Do you think that's true? The folks here certainly wouldn't fit into that category, but we're a different breed than the average music consumer. If a "normal" person wanted the newest Madonna CD and Wal-mart didn't carry it, would that person not go somewhere else? Do you think that they would never buy that CD? It seems to me that Wal-mart's threats to stop carrying CD's is an idle one.

Am I wrong?

They would either find a different distribution channel or they would put their discretionary income into other forms of entertainment. If WalMart stops carrying CDs, they'll still get millions of shoppers every day, and some consumers will find other sources for their music. But, given that music stores are disappearing fast, WalMart no longer carrying CDs would simply erect yet another market barrier to consumers buying music. WalMart's not solely to blame for chains like Tower and Wherehouse filing for bankruptcy, and thousands of independent stores closing shop, but they have helped to accelerate the trend. If WalMart eliminates their music sections (would not be unprecedented since Sears stores used to have music sections), then you might see some recovery by music stores, but a lot of consumers very well might simply buy less music.

The other thing to watch out for is simply consumers choosing to shift spending to DVDs and video games. If you look at the losses in the music market, you'll see that they correlate with the gains made by DVD and video game sales. Those entertainment forms are still relatively new and to a lot of consumers add a lot more value to the experience than the 22-year old CD format.

The music industry's getting hit from all sides right now. You can't pin the blame for the industry's woes on any single factor -- whether that be the shift in music retailing, lack of fresh new music genres, DVDs and video games, downloading, changes in radio ownership, etc.

[Mr MidFi]

No offence intended, but don't you often post about your latest purchases at Best Buy, another of those "big box" retailers that shares much of the responsibility for driving those same local record stores out of business

Hmmm...I'm not sure if "often" is the right word, but I'll concede the point and declare myself busted as a hypocrite. But only partially busted, as there really is no independent record store of any kind in my hometown or anywhere near my place of employment. And that, of course, is my main point...at one time, there was an independent record store in Batavia, Illinois (or so I'm told). It's not there anymore. I'd frequent it if I could. But now I have no choice.

The last CD purchases I made were from a Coconuts store I found in a strip mall about 20-25 minutes from my home. I was delighted to find they even had some used titles there. But like many, many people, a lot of my purchases these days come from online retailers like Amazon.

Anyway, if ALL retailers will ultimately reap the benefits of lower CD prices across the board, then sure...I'm all for it. I just have a suspcion it's not going to work out that way.

[JDaniel]

Somebody has too, right? First off, I haven't read the aforementioned article. I can't link to it from here. But I think I get the gist of the story from the posts.

I for one like Wal-Mart. Two main reasons: (1) It is more convenient for my large family to go one place and get most of what we want/need. Simply put, convenience = less time and stress = better for my family; (2) Most things are cheaper, and with six of us and one income, that's important to us.

Do I buy my music there? No, because like most of us here, they don't sell our type tunes. Would I buy it there if they sold it, and sold it for cheaper than I can get locally or on-line? Absolutely. I do buy music for my kids there, and we've purchased more than a few DVDs there.

In an "ideal" world, I'd love to shop at local mom & pop stores for most things (bookstore, butcher shop, farmers market etc.). The reality is that will never happen. So I for one am not going to feel guilty about shopping a mass-merchant and getting the best price I can on an item.

My guess is most here at RR don't visit/spend most of their money at local music shops anyway. I may be wrong there. But I bet most of us order on-line. I know I do. And doesn't the internet give "mom & pop" stores a chance to have a world-wide market if they develop and promote their website?

And I'm a diehard capitalist. If someone else can make more money or squeeze more profit, they have every right to do so. Just like someone who oposes that has every right not to shop there.

But I also recall many threads here at RR where someone has discussed that if the music industry would drop the price of cds to a reasonable price of say $10, illegal downloading would be curtailed and they may in fact make more money because people would buy more cds. And the reality there is that no matter the price, there will always be illegal downloading.

Just my 2cents worth. And since I couldn't read the article, this post may have nothing to do with the original topic.

JD