Why Are Music Sales Dropping? Because It’s Hard to Buy Music
by Peter Kafka
Posted on December 2, 2008 at 4:34 AM PT
Digital is the future, but analog is the present. Which is why CD sales remain the biggest revenue driver for the music business. But big-box retailers, who sell almost all of the industry’s discs, are determined to change that, by relentlessly cutting back on the amount of floorspace they allocate to CDs.
Latest example: Borders Group (BGP), the struggling book chain, has cut its music inventory by 30 percent in the last year, the company said. Music now occupies about seven percent of its floorspace, and the space it used to take up has been given over to higher-margin products like children’s books.
Borders makes up a relatively small portion of U.S. music sales, but most big retailers have been doing the same thing for more than a year. If you don’t believe me, try to find the CD section next time you visit a Target (TGT) or Best Buy (BBY) this month.
The big stores will embrace individual albums–if they have an exclusive, like Best Buy’s deal with Guns N’ Roses, or Wal-Mart’s (WMT) recent AC/DC promotion. (That’s Best Buy’s GNR promotion, pictured above. Lonely, isn’t it?) But beyond that, they are basically telling music shoppers, who bought some $7 billion worth of discs last year, to take their business elsewhere.
[Image Credit: Idolator]
Comments
In actual fact, while the gross numbers are not yet anywhere near those for CD’s, DVD’s, etc., it has become increasingly easy and quite affordable to buy music.
Along with iTunes, which I personally abhor, there are many suppliers of digital downloads. My personal favorite is Amazon, which provides good quality mp3’s very inexpensively and with a very slick download tool.
There are also subscription sites like eMusic.
iTunes is huge as everyone knows. Amazon is experiencing good growth in their downloads.
So, the future is not all bad.
Posted by Richard Mitnick at December 2nd, 2008 at 5:42 amI think another reason for the lack of sales is the simple fact that “pop” music today really sucks. The creativity has been missing for many, many years. How many times do I have to hear some old riff or sample in a “new” song today and besides, most of the “new” stuff is so digital, it has lost all warmth! You can see the same lackluster results in Movie and TV production. Hey folks, bringing back old hits doesn’t mean new sales today, get real…
Posted by Aldo Bender at December 2nd, 2008 at 5:50 amIn actual fact, I find that its a whole lot more fun to play my own music than to pay money to listen to someone else play.
Moreover, I still have never received an adequate explanation for why I am supposed to pay for “intellectual property” when the artist who created the work is dead.
Posted by john tucker at December 2nd, 2008 at 6:07 amI don’t agree that buying music is “hard.” If anything, buying music has become easier and easier. Now you can listen to a song, whip out your phone, and buy it right away. And iTunes (like them or not) has brought downloading music to the masses by making it easy, cheap, and fun. This is the future, so it makes sense that retail stores reduce their CD floorspace.
Posted by Carlos Portocarrero at December 2nd, 2008 at 6:43 amNo question that it makes sense for retailers to cut floorspace, Carlos – I wouldn’t expect them to carry buggy whips, either. And there are many reasons why the CD is in decline. But people tend to ignore the retail angle, which is more important than “anger at the RIAA” or other rationales you often hear about. And the retail shrinkage is a self-fulfilling prophecy – put less product out and people will buy less product.
Posted by Peter Kafka at December 2nd, 2008 at 7:21 amI Like iTunes for my music downloads.
Posted by Quincy Davis at December 2nd, 2008 at 7:58 amI think music is more accessible in the online age, but still much harder to buy than it needs to be; especially given the condition of the industry!
In my experience, the “DRM” management restrictions that are foisted on online vendors and consumers, often make it harder to pay for music than to “pirate” it.
Real Networks “Rhapsody” is a case in point. It’s DRM regimen is such a mess that it frequently prevents me from playing music (through Rhapsody) that I’ve paid for. So, when I find a song on Rhapsody that I want to buy, I switch over to iTunes to buy the music, often for more money, just so I won’t be stuck with all the “DRM” hassles.
I don’t get it. I happy to pay a reasonable amount, the going rate seems to be a something less than a dollar per song, to buy a copy of something I want to keep. Why do they have to make it so hard?
Posted by Michael Shults at December 2nd, 2008 at 9:28 amI agree with this notion completely. I worked for Borders when they cut their CD, DVD and book inventory. The store where I worked is in a large college town and sold classical, jazz ad other genres at healthy levels. When the cuts came they were indiscriminate ad devastated the classical section. Borders made similar cuts in books and cut sections that sold very well. The problem with book, CD and DVD inventory systems is they are not very good. When a store carries i excess of 100,000 items and sells quantities if 1 or 2 of most items, inventory replenishment algorithms require lots of computer power. Borders inventory strategy was very weak and from the look of the store now, even weaker. They don’t know what they want to sell. Case in point: They have the Sony Reader but do virtually nothing to promote it.
Posted by Paul Deblinger at December 2nd, 2008 at 11:20 am@Peter
“Digital is the future, but analog is the present.”
I am confused as CDs are digital. Analog is only the present for those few people still buying vinyl records.
Posted by Dave Barnes at December 2nd, 2008 at 1:43 pmCD’s are disappearing- just the promotional & new releases are getting floor space (and the popular classics)
Just last night I was in Best Buy, and was talking to my friend who is a manager there- and I asked “what the hell happened to all the CD’s?”
-Manager says “Guess”
I reply: “taking up too much floor space for too low of revenue dollar & margin per SKU”
-Exactly, plus they get stolen (store is high crime area of memphis) The assortment is a pain to manage, most people are buying music online, and selling CD’s doesn’t really doesn’t fit our strategic goals. So, that’s where our CD’s went.
For big box retailers like BBY, music was mainly bait to drive traffic to the store. Many people buy music pretty regularly. May hear a new song on the radio, or just like to go browse the titles. Now that one can buy a song & download in less than 10 seconds on his/her iPhone, or PC, as well as having software that recommends titles- CDs are not driving consumers into the stores like past times.
Yet, it’s really the issue of the long-tail.large and broad selection was what brought in the crowds, but today, people can find any album on Amazon.com at low price. Thus, bricks and mortar are catching the impulse buyers who want to listen to that music now.
Damn near every music-dedicated store/chain has gone under, ex Tower Records, and other names I forget, For the very few that are left, I bet their card will pulled with this economy.
Fitting that I ran across this article just after having all these thoughts run through my head last night at Best Buy
Posted by Turley Muller at December 2nd, 2008 at 1:52 pmI use iTunes for all my music purchases.
Posted by Neil Anderson at December 2nd, 2008 at 9:22 pmAldo, most pop music has always sucked. Journey back in time to any era and 90% of everything is drivel. With the growth of indie labels and the ease of recording cheaply there is arguably more good music available now than ever before – both new and reissued.
You could make the argument that albums now have to be solidly great in a way that they didn’t have to before, for obvious reasons.
Posted by Patrick Amory at December 8th, 2008 at 10:18 amRe: “Digital is the future, but analog is the present.”
News flash: CDs are not “analog.” They’re digital.
Posted by David Hall at March 17th, 2009 at 7:09 am