Recording Industry Evolution Kills Record Stores

[GhostShip]

This interesting article sheds light on an drastic side effect of the music industries attempts to evolve their business model

http://www.rrstar.com/apps/pbcs.dll/article?AID=/20051013/BUSINESS06/110130023/1019

Much of the innovation that threatens traditional retailers comes from an unlikely source: the recording industry itself. Jenni Engebretsen, a spokeswoman at RIAA in Washington, D.C., said record companies are aggressively responding to the high-tech threat.
“We have seen a true explosion in ways for fans to enjoy music online and to do so legally,” Engebretsen said. “From the download model, you have iTunes and Wal-Mart,” and subscription services such as Napster and Rhapsody.

Indeed, Warner Music Group in August revealed a new “e-label,” in which selected artists will sell music strictly over the Internet, versus CDs and tapes. Universal Music Group made a similar move last year.
But when record companies stop manufacturing traditional music products, where does that leave local record stores?

This is unfortunate for the local retailers and many will close in the next few years if this trend is followed.
After being fed the usual line that the market is being stolen by infringers, the real truth may slowly be sinking in.

Digital downloadable products requires a tiny fraction of the packaged variety of product and will generate substancial revenues for little outlay, this then is the market that is being sought and its just a matter of time till the attraction of this overcomes the traditional model of ownership.

[Lysander]

...So?

What's wrong with that?

It's supply and demand. People want downloadable music, people want cheaper music, and it makes more sense for bands to sell music electronically as it keeps costs lower. Record stores, meanwhile, will still be able to cash in on those who don't ahve the internet, or want a CD. I don't really see the issue here. I think that the way ITunes is run is much more worrysome than how the next step in music evolution is shutting down record stores.

[GhostShip]

Indeed there are many issues that need to be addressed but its only fair to inform users of what may be happening in their towns or malls, change is often worrying for many.

[..Ñøßߥ..]

This isnt at all new Ghost, this began years back when the record companies began cutting supplies to the smaller retailer and providing discounts and other incentives to the larger stores, HMV, Virgin and the like.

My local record store went out of business in 1998, this was mostly due to record companies canceling their ability to operate a Sale or return policy on the major labels, this was and is something still done for the major chains.

This forced the store into basically running a mail order service, whereby customers would come into the store and pay for their item, the shop would then order it specifically, as they couldnt risk holding the item in stock as they may get stuck with it. The record companies soon put a stop to this by slapping on a big delivery charge on small order, and ensuring deliveries were less than prompt, let face it when u hand over £15 most folks want their cd then and there anyway!

My point being the major record companies dont make as much profit when dealing with small stores, hence they effectively put them outta business, the birth of online music, will simply nail the coffin shut.

[Scyre]

The horrible side effect is gonna be many people out of work in an already strained job market.

From the stand point of the label, it is a wise move, and I am suprised it took this long. But from the perspective of the employees all around the world this isn't good news

Be Good,
Scyre

[GhostShip]

I hadn't looked at it in such a way before but it seems that its an inevitable change we must face  

Efficiencies do not equal a gain for the community in general as a job lost and a store closed lead to an erosion of folks sense of wellbeing, that being said progress seems to halt for no-one.

[..Ñøßߥ..]

I am afraid this is a simple product of the customers push for cheaper, better quality products.

The same sort of situations have been taking place with supermarkets for years..

Tesco and others are guilty of putting many many small shops out of business, the result? Cheaper goods, more choice of lines, and all the little bits they through in, club points etc, plus ofc you can buy all your goods in one place, just ask WHsmiths and boots all about it, they are feeling the pinch right now.

Think its just a fact of life.