Today’s Wall Street Journal examines how the “big box” retailers–i.e. Wal-Mart, Target, Best Buy and other places you only go to when in disguise–are faring in today’s increasingly iffy music-retail landscape. The stores are facing a number of problems nowadays, including an overall sales slump (of course) and increased pressure to remove albums with “offensive” lyrics and subject matter. But that doesn’t mean they aren’t just as powerful as ever:
In past decades, deejays and music critics helped shape musical trends. Today, many music industry executives agree, the big boxes have become the new tastemakers. Even as compact disc sales fall, their choices dictate which CDs are widely available on store shelves across the U.S. Big boxes are the industry’s biggest distribution channel — and the rock, hip-hop, jazz and classical music titles they choose not to carry face drastically reduced chances of reaching mass audiences.
Thanks largely to aggressive pricing and advertising, big-box chains are now responsible in the U.S. for at least 65% of music sales (including online and physical recordings), according to estimates by distribution executives, up from 20% a decade ago. Where a store that depends on CDs for the bulk of its sales needs a profit margin of around 30%, big chains get by making just 14% on music, say label executives who handle distribution. One of these executives describes the shift as “a tidal wave.” Despite the growth in online digital music sales, physical CDs still are the core of the recording industry, accounting for about 85% of music sales.
That sizable chunk of the market, though, only affects a relatively small amount of artists: According to the article, a typical Best Buy only stocks between 8,000 and 20,000 titles, while the biggest Tower Records location featured nearly 100,000 titles–not exactly good news for emerging acts on lower-profile labels. One thing the story doesn’t address: Why the heck does Costco still use long-boxes? Maybe more teenagers are shoplifting those Ray Charles and Time-Life Singer-Songwriter sets than we realized.