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Re: [ARSCLIST] Good idea, dumb business model so far -- soapbox

Ben Torre wrote:
At 10:02 AM 2/12/2009, Bob O wrote:
The tech sector press keeps repeating this mantra yet the fact remains that there is simply no evidence I'm aware of that reducing the price of recordings increases sales volume. It isn't like this hasn't been tried by both retail stores and labels.

Over the last 10 years or so, I have been a regular at the East Stroudsburg, PA Wal-Mart. This particular store is what they call a "Supercenter", meaning it sells everything under one roof including food. Nowadays, I get out there once every three months or so.

I have kept an eye on the CD section. CDs went from fairly brisk movers (enough to warrant a section by itself) to a small section within the home theater section.

Put a $5 DVD in front of them and a $12 CD, and they will take the DVD every time.

Right now NOTHING is selling at our local Wal-Mart, and there are no other stores with audio or video retail for 50 miles! But beyond Wal-Mart, the most important force in the field is Best Buy, and let me give my observations on them. They opened in Lexington, Kentucky in 1995 and immediately changed everything. They were across the highway from the major shopping center in town and immediately killed Camelot and a couple of other mall stores. What was amazing was how DEEP their CLASSICAL stock was. Not only were their prices routinely one to three dollars lower than every other store, they had a separate room for classical which had a deeper catalog for just this category than the standard mall store had for their entire store. But they never promoted it. They only advertised their pop rock new releases. CDs were loss leaders. They used them to draw people into the store and hoped they would also buy a refrigerator or toaster oven. Kids buying rock CDs don't buy refrigerators. But adults who buy refrigerators also might buy classical or broadway or easy listening, which Best Buy had good stock of but never promoted. Adults coming in to buy a refrigerator ACCIDENTALLY discovered the great non-pop CDs, but that was the only way they found out it was there. They never advertised non-rock CDs. This was ironic, because across the highway was a great independent book store, Joseph Beth Books, which had recently opened a classical and broadway CD section. It did great business inspite of being higher priced than Best Buy because adults didn't know Best Buy also sold classical and even had a better stock and lower prices than Joseph Beth. But the pop CD chain stores in the same shopping center died because of Best Buy competition. Then suddenly, Best Buy closed all their classical departments across the country. It was a major news story on the classical internet lists at the time. The classical rooms remained empty in many stores -- about a year later they put office furniture in ours. Joseph Beth has expanded and even does better in all areas than the Barnes and Noble that came into town a few years ago.

About a year after killing classical, Best Buy started stocking DVDs. They had never stocked LaserDiscs and only stocked two model LD plaers but couldn't sell them, but now started putting in one row of DVDs in their large VHS department and pushed DVD players. Over the years that followed, the DVDs started crowding out the VHS, then also started crowding out the pop CDs,. They once had twice as many CD isles as video, now it is the opposite. The CDs are still up front in our store here in Kentucky, but in the Brooklyn store the CDs are in the back along a side wall beyond the car audio section, almost unnoticed, and maybe only one quarter the size of the DVDs. The price of DVDs dropped so quickly after introduction that it became obvious that they were a better buy than CDs which were becoming more expensive instead of less. Even BluRay disc prices are dropping below the level of CDs. The amount of opera and classical videos being released now are astounding, especially at their relatively low prices. I wonder if this might be the only growth area in the AV media.

Mike Biel mbiel@mbiel>com

Same thing happened when VHS tapes were selling for $10 and CDs $15-plus. CDs sat idle in the music section to the point where I could wipe the top layer of dust/dirt off with my fingers! This isn't what you call an indication of product that moves quickly!

Add to this, over the last 5 years I have seen a mass-ditching of exceptional old stereo gear. I have received, free-for-nothing, all manner of old receivers, turntables, cassette and open reel decks, FM tuners, speakers, etc. Brands have been Marantz, McIntosh, Pioneer, Sansui, Kenwood, Lafayette, Teac, Sony, Panasonic.... can't BEGIN to tell you how many LPs and CDs have been flat-out given to me. As a teenager, I couldn't have imagined a windfall like this in my wildest dreams! I've made a habit of getting the stuff up and running, and typically passing it on to musicians who appreciate good sound. The rest of the general population? For them it is car stereos, iPods, and computer speakers.

Based on my observation, people don't want big stereo rigs, nor do they want to be bothered with media copies. They also won't pay more for audio-only when there is a video available at generally half the price of the audio-only medium. I don't like this change at all, but I cannot ignore it.

I *have* seen some CD movement at the local K-Mart... but that was with CDs priced at $2.99 each. Strangely enough, those were amongst some of the best-sounding CDs I ever heard! Was a real thrill to hear The Byrds so cleanly and without a lot of compression doing Tambourine Man. Ditto for Jose Feliciano and a few other titles I picked up.

If you ask people what they think, they'll tell you everything on the planet is overpriced but when they actually want a recording bad enough to reach for their wallet, the argument falls apart in the real world of commerce.

Given the current economic situation, I suspect music will be a tough sell when the real choice is between losing your home or putting food on the table. The music biz is competing for the same disposable income that the Hollywood gang is, and that amount is shrinking every day.

In fact most stores sell budget classics for a dollar ABOVE list price!

Maybe that's because they are the only thing in the entire store worth listening to?

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