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Friday, January 27

Thanks Tiger

The arguments from the labels involved seem to boil down to something along the lines of "We have to sell to chain stores because our bands require it to hit certain sales goals."

I would like to reiterate that nowhere have I argued against chain sales. We all know the perils, like higher return rates, that come with those kinds of sales and the potential benefits. But last I checked, I've never seen Borders, Barnes & Noble or Tower put stuff out below wholesale cost, or as was pointed out, at half of normal retail sale price. I don't claim to know everything about what goes on in those stores, but am I wrong on that? I hazard to speak for our retailers, and from the hundreds of notes I've read over the last week it's obvious that they're all more than capable of eloquently and stridently speaking for themselves, but I doubt that very many of them would deny indies the right to sell there either. I'm sure they'd much rather everybody shop independent retail, but I don't think many can make a great argument that indie labels should never sell to chains. Could be wrong but I doubt it.

To restate again, the central arguments here are:

  • first, against playing the coop game with a retailer that has a long, long history of predatory sale pricing that allows them to offset their loss, making a loss leader a break-even leader,
  • and second, against selling large volumes of stuff to Best Buy (which is the only volume they know) that will later be returned at a rate over and above regular chains, as BB further expands their indie stock in their refound "commitment to indie music."

The coop argument is already in play and is how we all got here in the first place. It remains to be seen whether the second part plays out, but I'm waving a warning flag now. Beforehand.

The other part of the label argument seems to come back to the bands and what they are owed by their labels, which is sales, damn the torpedoes! As unfair as some of the labels seem to feel to have the failure of indies laid at their feet, which is a huge extrapolation of my point but whatever, extrapolate away, you will anyway, and it's your right as an American and a blogger, it feels unfair to us that the whole impetus for the Best Buy Evil Coop is being laid at the feet of the bands. And it struck me this morning at 5am, after the dog woke me up (thanks Tiger!), that I can't say whether this is an unfair passing of the buck or not.

We have heard from labels and distributors and man have we heard from retail, but we haven't heard from any of the bands involved. I don't know any of them directly, but obviously people visiting here do. I would love to find out if the bands were consulted on a coop deal of this size, and on this one specifically. And if they were, were they told the possible consequences of such an ad buy? That while you can't discuss sale price with BB, that they have historically lowballed their sale pricing? Do they know their stuff is selling in Best Buy at half retail? Do they know what that 50% split on the ad buy that will hit their royalty statement is doing to the retailers that put them there? Have Arcade Fire, Antony, Chan, and Broken Social Scene actually come and said to the labels that this is what they want? I wonder, and would I love to have some of them comment about this because if they were not asked, or did not understand, then I'm wondering how they feel having their labels stake their defense of this program on them and only them? Seems to me either they signed off on it or they are being used as human art shields.

Before I try to get back to some real work to start my day, I would like to say "Welcome" to the traffic that we've had from BestBuy.com over the last 24 hours. We'd love to hear your comments on this as well but I'm pretty sure we won't. As a new BB One Stop customer for your sale items, I'd also like find out if we can get off of Credit Card and move up to 60 Day Terms? Credit references available from people you know! And are new releases returnable at 60 days or do we have to sit on them for 90? As a distributor, shouldn't we get an additional discount, say like 10%? We could really Move Some Units with pricing like that! Please let me know. Also the New Store Smell in Best Buy #814 is awesome! You should bottle it. But work on that customer service a little bit. Thanks for a weird week.

13 comments:

  1. Regarding whether Antony & the Johnsons asked to be sold in Best Buy, the answer is yes. The majors and quasi-majors have wanted to get involved in "I Am A Bird Now" as well as his upcoming projects since mid-2005. Because our relationship with our artists is at the top of our hierarchy of loyalties, we naturally take such offers very seriously and discuss thoroughly with artists when labels come sniffing. We made it clear to Antony that we are committed to running a scalable ship and can reach an audience that we would otherwise not be able to reach by just selling to the stores at which we and our primary customers prefer to shop. We made a commitment to the artist to make his record available AND visible to folks like my aunt, to people who maybe only buy 6 records a year and for which we need to make it easy to find (at Borders, Target or Best Buy). While they may not have the same consumer tendencies as most of the people reading and posting to this blog, we agreed with the band that this was a special record that could reach out beyond our normal customer base.

    Though it's not without its political, aesthetic and financial trappings (as are being discussed here), part of our commitment to Antony & the Johnsons was to be able to get these records into the big box shops and make them visible. For us, this is the most loyal way we know to be with our artists, to respect their individual needs and to act on them without compromising our integrity. The way I'm reading it is that Patrick feels that by engaging in big box co-ops that we may be compromising our integrity. Rather than try to argue the opposite (I think Mac and Gerard have done a good job making just such a case), I'd like to pose a philosophical question.

    Which of the following scenarios would indie distributors like CTD and indie shops prefer:

    * Indie label and artist mutually agree that the most appropriate way to reach a broad fanbase for a special record and artist is to license it to a major that has absolutely no discounts or reverence whatsoever for indie shops. So after 9 months of both the label and the mom & pop's pushing the record, the record "upstreams" to a major label thus making it available to indie shops only through major label distribution and not available at all to indie distributors.

    * Indie label does not license the album to a major and ignores the artist's wishes to reach a broader audience through a more dynamic range of retail availability and visibility. No effort is made to understand that not everyone shops at mom & pop's and by maintaining a policy of aesthetic and political retail exclusivity, indie label successfully keeps the record out of big box shops, or at least off the end caps. The cost is that the label does not feel like a good fit to the artist for the next album, as the label is not able to help the artist meet its goals. The natural result is that the artist goes to a major or another indie that is willing to reach a dynamic range of retail options. Next album is available to indie shops only through major label distribution and not available at all to indie distributors.

    * Indie label does not license the album to a major, and, by reaching a broad audience for the record in a fiscally-sound manner (as per the artist's mandate), the album in question remains available to indie shops at a competitive rate and still available to indie distributors at an equally competitive rate.

    We do our best to tackle questions like this on a pragmatic case-by-case basis, thus we feel the last approach is best. To pose the question in a slightly different manner: Is your indie shop/distribution company for the better or worse as a result of Matador's pragmatic approach to keeping big-selling artists like Cat Power and the New Pornographers, or Merge's ability to keep Spoon? I'd argue that the indie landscape is richer for their ability to retain artists who have some commercial viability, for their willingness to work with a broad range of retailers. Had they not been willing to do so, I highly doubt your indie shop or distribution company would have the same broad reach it does. Then again, I don't run an indie shop. I know it's probably a little rough and there are intense pressures. You can hear the hoof-beats at all times of bigger goliaths wanting your customer base. We, too, hear a hoofbeat, though a different one. As a label, we hear the hoofbeat of bigger labels with bigger money, staff and distribution. We hope that at the end of the day we can compete with them, probably in the same way you hope to compete, through better service, a focus on relationships and an intense zeal for the music.

    Best,
    Chris Swanson

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  2. Patrick,

    not everyone is "defending the program" as you put it. As I stated previously, we were unaware that Best Buy was going to sell our titles for $7.99.

    Did Chan Marshall ever come to us and demand that her CD's be sold for $7.99 at Best Buy? Of course not. But we have had a number of bands and managers over the years get on our case over the years about their presence at the chain level. And Best Buy has been mentioned more than once.

    Everyone we work with hopes to sell as many records as possible --- some are more versed in the ins and outs of how it is accomplished than others. But no one -- label, artists, etc.--- wants to do so at the expense of the independent retailers who have supported us since day one.

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  3. a couple of additional points ;

    our host seems rather convinced that shipping a large quantity of CD's to Best Buy is a virtual guarantee of a high percentage of returns. Much as I appreciate the constructive criticism (always nice when someone else with greater insight is looking out for our welfare), I'll reiterate something I've stressed earlier : this is why you don't see every new release from Matador, Merge, SC, etc. sale priced at Best Buy or prominently displayed in said stores. There is some internal deliberation about which titles are most likely to succeed in that environment, and said criteria is a loose mix of sales history and what kind of crazy stuff might be happening with an artist after the release comes out (TV appearances, airplay, mainstream press, conviction for murdering the president, etc.)

    So in other words, while there is always an element of risk, it's a calculated risk. For an artist that has already sold 100,000 + CD's (and perhaps as many as 20,000 of those at Best Buy), it isn't exactly a foolish gambit to have a ton of copies of the subsequent release available at Best Buy the day it comes out.

    Are there indie titles that have been front loaded enmasse into chain retail that are no doubt coming back in droves? Most certainly. But it isn't my place to name them or to disect other labels' strategies.

    None of that, however, is meant to condone any practice that undercuts the real music retailers that are our lifeblood. We try to demonstrate our commitment to said shops every single day and shall continue to do so.

    The claim that a Best Buy program is charged back to the band is also not entirely correct. Not every label has the same sort of contract and definitions of what is or isn't recoupable vary from deal to deal.

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  4. >>>We have heard from labels and distributors and man have we heard from retail, but we haven't heard from any of the bands involved.

    It doesn’t appear that you heard from your average consumer either. Okay, so I own a rock club (Local 506 in Chapel Hill) so maybe that makes me above (or below!) average…

    From my perspective as a third-party consumer, everyone here seems to be making the assumption that a sell at Best Buy is a lost sell for the indie store…and I can attest with first-hand knowledge that that isn’t true.

    Unaware of this post (and this pro-test,) I, for one, happened to notice in my Sunday paper that I could buy the new Cat Power for $7.99 at Best Buy, plus some other titles that might interest me. Now, I’ll be honest, the last Cat Power album is one of my favorites of all time so I’d been happy to pay more.

    However, in the process of buying that album, I ended up walking out with five others. Five albums that I had no interest in buying before Sunday; not to mention, albums that I probably would not have picked up at $9.99, much less $13.99.

    One of which, Antony and the Johnsons, I bought even knowingly not liking what I had heard…but thought, fuck it, it’s cheap enough, I’ll buy it and spend more time with it and see if I get it…(and I will say I’m coming round to it just two days later!)

    Anyway, the point is I spent $48 dollars on CDs, $40 of which I hadn’t planned on spending…and all on indie labels! Based on what I read, those artists and labels made as much off my purchase as if I had bought them from CD Alley. That can’t be entirely bad, can it?

    As I’ve mentioned to people before, the music industry is having a hard enough time selling CDs as it is, and now some people want to tell the shrinking consumer base exactly which stores they can or cannot buy the albums at?!?!

    And, like most music fans, I haven’t stopped supporting the local indie store. In fact, I just walked out of CD Alley with a $32 Toy Love import as well as local release Hotel Lights (which I probably could have scored for free if more patient.)

    glenn

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  5. all points taken.

    however, does this program best buy has created - gerard, chris, whomever -negatively effect the indie store, indie label, or indie artist?

    if bbuy continues with these low prices and their stock of indie increases in great numbers while keeping with the extra low pricing...will this drive the indies either out of business or close to it?? (im talking over time)

    isnt it a yes or no answer?
    you who work with bbuy - does this concern you at all or is it just business as usual. i take no sides just sincerely curious.

    thanks,

    edgar
    interested party

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  6. I also have a question - what do you think is worse, Best Buy selling new CDs at $7.99 potentially cutting the independent store out of the equation OR the independent store selling used CDs for $7.99, cutting the artist and label out of the equation?

    Just curious (as someone who often peruses the used bin for a CD before purchasing it brand new.)

    glenn

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  7. Edgar,

    much as I like the notion of good music reaching a wider audience at a low price, very little good can come of the nation's real record stores being undercut. While there's nothing illegal about popular CD's (or video games or DVD's) being used as a loss leader to bring consumers into a large department store, we're super aware of the position this puts smaller retailers in.

    the short term benefit of selling a ton of one or two specific hot new releases through a big box retailer is more than outweighed by the impact on the rest of the retail community. But we've spent a good chunk of the last 17 years cultivating relationships with that particular community...and while we've been caught off-guard by a pricing scheme we weren't consulted on, we're also not going to stop selling CD's into chains.

    Will Best Buy continue sell these sort of titles for $7.99? I have no idea. Probably depends on how successful this campaign was and how much traffic it brought into their stores. Though I wouldn't envision their selection of independent titles increasing beyond say, something they were pretty confident they were going to sell (or beyond what a label had paid to put on the shelf), that's their call, not mine.

    I don't see how the above conditions, however, wouldn't have an effect on the bottom line for smaller stores.

    We have a burden right now to try and think of ways to make the records we sell really stick out and feel like something special. Something that you'd pay $12 or $13 for instead of burning a .30 cent CDR or downloading it. Is that effort undermined by someone charging $7.99 for the same item? Or if the same people who supported an artist since day one can't stay in business long enough to share in their hard fought success?

    I think you already know the answer.

    We're all trying to reach those elusive "people who only buy 6 records a year". But we can't blow off the people who buy 60 records a year or the only stores they'd prefer to shop in. The former group aren't cheap to reach out to, and that's why we pick our spots.

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  8. to comment on patrick's (who is one of our oldest/best accounts) plan of opening with Best Buy as his new one-stop...

    hell yeah! i think that's an amazing idea and encourage him and all the indie stores to do it! its possibly the most indie-friendly move y'all can make for the next week...

    for the label, the coop - right or wrong or whatever - is currently a sunk cost...its done, no refund on this program...

    but the icing is, its a loss leader for Best Buy...they're losing over $1.50 on every CD that gets purchased through this program....

    thinking about it now, its a great plan:
    • go to BB with a 0% credit card (better terms then you're going to get anywhere else) and buy as much at $7.99 as you think you can sell within the next 6 months (no interest!)

    You'll be:
    1) getting a better price at better terms
    2) reducing (possibly eliminating) the Best Buy competition for you and your accounts on these titles
    3) able to provide better pricing & terms for your customers
    4) sticking it to Best Buy and their "predatory sale pricing" at no extra expense to the labels and bands involved...

    Everyone wins!

    post pictures! i want to see that stack of CDs and know that for everyone that you got, Best Buy lost $1.50...we'll keep a tally...

    for better or for worse, we already made our bed, but you and yours might as well reap the benefits...

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  9. I don't have the fine print in front of me, but I'm pretty sure Best Buy limits the quantities that can be purchased by one person. Of course, I'm sure there are loopholes to that similar to how scalpers still score plenty of hard-to-get tickets...glenn

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  10. I was able to buy $250 worth of stuff on Tuesday at 2 different stores, cleaning them out of Antony, BSS, Arcade Fire. All they said was, "wow. you must be a big fan!" or "what a shopping spree!" go for it.

    Retailers who've been at this BB game for years probably have different experieneces. YMMV.

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  11. well i have too much to say to post it all here. it's a several thousand word essay and i'd bore you all to tears. i do, however, have a few points i'd like to make.

    1) this whole thing about the snotty kid behind the counter. carl and i are between 30 and 40. our friends who help us here (they work for free records because we don't make enough money to pay them actual cash) are all between 30 and 40. we have one 16 year old girl who files lps and rolls sleeves and basically does grunt work, but she does not answer the phone or work the register. we honestly tell customers if we like a record or not. there is no attitude about it unless they want to make it up in their head. we do our best to help people find good new music through reviews and occasional in store play copies. we don't get coop dollars, and we don't get many promos (for many of the labels we carry we don't get promos - they only send them to direct order customers and since we don't sell many pieces at one time, the cod and ship charge make it unaffordable for us to order direct) so we rely on things we read and the handful of promos we get from someone like ctd. we don't have an attitude here unless you are a BAD customer (people who swear at us for not carrying rap cds, for not buying their stolen dvds, or they pee on our office door because we told them we did not have a public restroom, ect). we do our best to help people who love music find good new music. that is why we have a store. not to get rich, not to be popular (in fact, we were told last summer that our store was better stocked and cooler looking than other music, but that we were not packed with customers because we were not 20-something metrosexuals).

    carl and i have always loved going to the record shop. since we were little kids. it has been the place to go to hear new music, to see posters of cool bands, to get flyers for upcoming shows and see bands play instores. we opened our own store to create the kind of place we've always loved, and so we could help others find great new music that was worth their time. i'm almost 34 now, and i have ALWAYS only worked at a record store. i started at 16 years old. this store is a dream i've had for most of my life, and it's the same with carl. we work hard every day all day and at least 5 days a week work from home, too. we're not well off financially, but we love our store and we appreciate working for ourselves. the attitude you will get from us is one of love and excitement about great new music. we esp work hard to help the women in our community feel comfortable buying music here, because as a woman in this industry i have gotten attitude for years (you're a girl, how can you like music? how can you know anything about music? - try that for 18 years, both from customers and people i've worked for) and the women we deal with certainly have told us how much nicer it is to buy music here compared to some of the other shops in town.

    2) we don't get coop dollars. in our 6 1/2 years we have only run 2 coop ads, and they were for detroit bands, and they each paid for 1/2 of an ad in a local paper. glen, from here in the detroit area (he posted up above) runs a collective of shops here in detroit that occasionally gets coop dollars. sometimes the label says they will pay for an ad, and then they never do. the stores are stuck paying for it themselves. glen wrote to one of the labels involved in this best buy thing, and asked to have some coop advertising for the detroit area. he was told, "the budget for retail promotion is small and often alloted to nationwide programs". how can these labels say they are supporting indie stores when they have just admitted there isn't the money to do ads with them? very disapponting.

    3) the original post from patrick mentioned that best buy is interested in expanding the indie selections they carry. this is especially scary to me and carl. caroline is one of the labels involved here, and caroline distribution represents over 50 diff labels. so are we facing the chance that those 50 represented labels will also end up in best buy at $8 each? that list would include Fat Cat (animal collective), Warp (boards of canada), Southern Lord (sunn o))) ) and DFA (lcd soundstystem) and all the Astralwerks stuff (air, ect). the bands above make up a large amount of what we sell that is new, and while i don't want to admit i've been priced out of carrying Spoon or Cat Power, i'll be screwed if best buy gets the core of what we sell and prices it at $8.

    4) detroit is a very financially unstable market. it is mentioned in recent articles as the poorest city in the nation. we have some customer loyalty, but often that is for harder to find things, like nurse with wound or keiji haino. the people here cannot afford to pass up a half off sale, and we've already lost these stores in the past few years -
    Repeat The Beat (3 locations)
    Plymouth Rocks
    Rubber Soul
    Desirable Discs (3 locations)
    Harmony House (38 locations!!)
    Funhouse
    Off The Record
    Sam's Jams
    Young Soul Rebels
    Wendel's

    plus a ton of record towns and musiclands. the 38 harmony houses went under after best buy was allowed to use the extreme Loss Leader sales strategy (they used to price things cheaper than harmony house, but it would be an $11 price tag, not $8) and then 38 stores worth of people, and a whole warehouse of workers, who had families and health insurance and had worked for a company who took care of them for years and had opened in 1947, all lost their jobs. DIRECTLY BECAUSE OF BEST BUY. because best buy is all over the detroit metro area, and because they do sell big items that make them money, and because their business strategy is such that they have no comminuty vision - they are just a profit monster.

    adding walmart to the mix did not help any - the company who does not pay their employees enough in wages to afford health care. they are doing much of the same thing. so detroit has only a few stores left who sell these new indie titles, and there is a good chance that in the next 3 years they will all close up. we are very much on the brink of only being a used record store, because we keep getting pushed out of the market. and really, why should be carry any indie titles at all when we can just buy used records from the people who have lost their jobs here in detroit and are selling everything they can to pay their mortgage, and then turn around and sell those records on ebay for a much better profit than we'd make on indie sales? we carry the indie stuff because it is music we love, and music we want to help people discover, but if the labels are not going to support us with ad dollars, not send us promos, and then let best buy sell our best selling indie items for 1/2 of what we have to charge for them, why should we support any of those labels at all? why keep supporting labels who refuse to acknowledge the hard work we put into selling their wares? we pay our customers good money for the used records they bring in, and then we make good money on them online (and i can honestly say we pay well, because we've worked for people in the past who would only pay a dime for a record worth $500, and we refuse to ever treat someone like that - we pay 30% to 50% of what an item is going to resell for).

    so after all these years of supporting indie labels and helping to spead the good word of great music, after seeing our dream come true to have a great indie store that actually does good things for our community, we're being squashed by the labels we've cared for, the labels we've worked hard to promote and sell. and most of them don't seem to be worried about that. i still say, "yes, sell records at best buy and target, etc, but make them price compatible with what we have". so either demand the best buy price is marked at what the local stores will have it at, or offer the merch for an even lower price to the indie shops so when we add in the couple of bucks to cover our heat and electricity and maybe part of our wages, then the prices at best buy and our little indie stores are the same. because even if all indies go to best buy and pick up the 2 or 3 copies we're allowed each (the best buys we've shopped at have always limited our quantities) at $8 each, we still have to mark them up to make it worth selling them.

    i've really had enough of getting pooped on in this situation, of caring as much as i do but being such small beans as to pretty much get passed over for promos or ad dollars or big discounts. it's hard to not see this as a final nail in the coffin. i don't want to just be a used record store, and i don't want to just sell on ebay, but here in detroit that is the difference between stores that are still open and stores that have closed. those of us who sell used records on ebay are still open, and every day it looks a little more like detroit, MOTOWN, the birthplace of SO much amazing music through the years, will only have indie stores that carry used records and sell on ebay. it looks like the days of the classic indie store are over for us.
    windy

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  12. Not even sure where to post this, but my college roommate (who is not involved in music) just sent it to me and i thought it was too on-point to not include it somewhere.

    >>do you have the new P.E.?  i saw it for $6.99 at best buy and figured it must not be very good!

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