INDIE RETAIL FIGHTS BACK

Coalition of Independent Music Stores’ (CIMS) Don VanCleave is one of indie retail’s most outspoken individuals, but he’s never far from the mark, and he always has the music business’ best interests at heart. VanCleave talks about his recent trip to Washington with the newly coined trade association, Coalition of Entertainment Retail Trade Associations (CERTA), and encloses a missive from Naomi from a Berkeley area record store, Mod Lang.

Hello folks,

I went up to Capitol Hill yesterday and talked to U.S. congressmen about the effects of piracy on record retail. I went in conjunction with the video folks (VSDA), the theatre owners (NATO), online retailers (DiMA) and traditional record retail (NARM). There is a new coalition of trade groups called CERTA that is made up of these individual trade groups. We share many common interests and goals.

Anyway, instead of this being a beat-up session on kids who file-share, the emphasis was on having a level playing field in the world of legal alternatives. My personal stick was that indie retail wants to be able to put a kiosk in our stores to allow customers to burn whatever they want on the spot. That seems like a reasonable approach, but you can't imagine the roadblocks. There are copyright laws from 1909 (remember piano rolls?) that make it difficult for all content to be available. Additionally, there are content holders who would allow coffeeshops to do this, but not their traditional retail partners because of the fear of this new way competing with shipped finished goods.

The thing that drives me up a damn wall is that I can go on iTunes, download a single, burn it for my car and put it in my iPod. I love that. But our customers don't have the same luxury in our stores. There are quite a few new kiosk companies that are pursuing this goal and we are very interested. I hope the content holders pay attention to this plea from us. It will just get louder. We want instore burning rights and we will walk the halls of Congress until we get it.

It is tough to be an indie store right now. Although many of our CIMS partners are thriving, it is because we have been discussing how important it is to diversify inventory for years now. With DVD and lifestyle, it is easier to take some of the huge hits on the music side. No better is this illustrated than by a letter I was forwarded this morning from Naomi up at Mod Lang in Berkeley. It goes right to the heart of the issue.

I am printing Naomi’s letter below with her permission. I am substituting the name of the band with XXXX because the specific band does not matter here. The specific label does not matter. This happens every single week with numerous bands so I am not gonna just pick on one label. Read what Naomi says. No way I could have put this any better.


In a letter to a local rep, Naomi writes:

I know that you are not the one responsible for retail price structure, but the next time the higher-ups want to know how the sales are doing or try pulling the old "illegal downloads are killing retail" sob story, here is a basic example of how the Company is killing record stores and retail sales all by themselves (suicide,
basically) that you may pass along:

Sadly, as you probably know, Best Buy is selling the XXXX CD for $8.99, while our COST price through AEC is $12.09. Yes, Best Buy is selling for $3.10 below my cost, and $10 below suggested list. I don't know how much BB pays for the CDs, but as it is illegal in California to sell for below cost, they must be getting a deal that
allows them to afford this... so please, no saying there's no record company control over BBs pricing.

Alternatively, you can download the album. It's an 11-track album but there's a free download track on the XXXX label site (plus the video free online) plus several links to where you can go to download legally. Since you got the free track you should only pay for 10 tracks @ 99¢, so $9.90 to get the whole album legally. Oh yeah, and Wal-Mart has the full album download (legally, of course) for $8.80.

Meanwhile, in the land of record store retail, suggested retail is an unbelievable $18.98. ** STOP FOR A MOMENT & THINK ABOUT HOW INCREDIBLE THIS NUMBER IS.**

Put yourself in my shoes... What would you do if you were a retail store and your cost was $12.09?

I have the CD on sale for $15.98 (so I've got it $3 cheaper than list, right?). We hype it. We play it. We are supposed to convince the kids it's worth buying rather than downloading or copying. (My only real selling point here is that there's an enhanced video track, but you can watch that online), so two things run through the customer's mind:

1) $15.98?! What a money grubbing a**hole. I mean, jeez, charging the kids $7 more than Best Buy! That's almost twice as much! It means they're making $7 more on each CD, right? Man, this record store is expensive.

2) Hmmm, maybe the CD isn't that great, if I can get it online for under 10 bucks and it's already on sale at BB for under 10 bucks. They must be desperate.

Price Recap:

Three legal options below $10:
Wal-Mart download price: $8.80
Best Buy sale price: $8.99
Legal download price: $9.90

Retail COST price (AEC): $12.09
Record store retail sale price: $15.98
Suggested retail price: $18.98

Yes, hurrah! We have created an effective way to cut out retail sales completely! Huzzah! No one would be dumb enough to pay twice as much to buy from a record store than the other options!! Yahoo!! No store would be dumb enough to pay $3 more per unit at wholesale than you can buy at retail! Yay! Death to retail!!

Dumber than a brick (& mortar),

Naomi