Borders finally bites it. More room for indies.

This has been discussed in the music biz for nearly four years, at least as far as I am aware. We knew it was only a matter of time, as they kept getting extensions and squeaking by on payments. Still, we had pressure from labels who wanted their stuff in there because their bands did, without much thought to whether or how they would get paid. The eventual "payment" with skids of returns was not even an afterthought for them. With an eye to the longterm health of both labels and distributor, we did our best to resist this lunacy.

During times of contraction, there is always a silver lining for someone who is both looking for it and willing to take advantage of the opportunity that presents itself. In fact, if you go back to the very first post on this blog, you will find my view that the seeds of this go back to the late 80's. Sales of music have always been cyclical. For the large, soulless chains, music has cycled through times of money maker, money loser, loss leader, and back again. I have marked these cycles by watching the music bins at the big box stores move, as if under control of unseen tidal forces, which were really digit-pushing accountants, from front to back to front to back, while shrinking and expanding in size like ocean troughs. A recent walk through a Best Buy in Austin, for example, revealed a music section that was pretty hard to find, sporting far fewer racks that were themselves sparsely populated.

Through these cycles, indie shops have flourished, been eaten, scraped by, and even recently reappeared.

While much of the world laments the loss of their neighborhood-anchoring, friendly behemoth, it actually presents an opportunity for creative, music loving entrepreneurs to sprout through the cracks in those neighborhood sidewalks. Create novel dens of community. Go local. Engage the neighborhood. Take advantage off the fabulous creative talent and resources that we have all around us.

Quit whining and go do something. It's DIY time again.

Support A2IM Online Piracy Legislation!

A Note from the American Association of Independent Music:



"Call To Action: Indies Be Heard - Combating Online Infringement and Counterfeits Act



This week a bipartisan group of Senators introduced legislation that would give the Justice Department an expedited process for cracking down on rogue websites that are dedicated to making unauthorized copies of music available including the many foreign sites that have to date been outside our reach. The Justice Department would target the most egregious pirate websites, go to a federal court with the evidence, and then seize the domain name. Once a site has been seized, the Court would issue an order to intermediaries -- such as ISPs, payment processors, Internet registries and registrars, advertisers, etc. -- prohibiting them from doing business with such rogue sites.



Please click HERE to send an e-mail to your Senators and Representative and ask that they support this unprecedented legislation. It's quick and easy - just enter your home address and click "send."

Is There Anything Else Left to Say?

Well, on Thursday, Round Two unexpectedly dropped out of the sky on us like a house from Kansas when Pitchfork ran their well-written news story/editorial piece by Mairead Case on this whole fen. I have to say that while the hits on our blog were piling up, Miss Gulch passed by our insular work environment much more quietly this time around, which was welcome by all at the office. We have a lot to do, taking stuff out of one box and putting it into another, after all. Being The Gatekeeper takes a lot concentration.

Since my thoughts on this topic seem to keep coming to me at 5:30 on Saturday mornings for some reason, and since I can't jinx a dog that's already gone by writing at this hour, I figure I'll take one last last crack at the final issue that's still eating at me.

I've spent a little more time this week reading what's being written about all of this on blogs and in some of the forums from people outside the music business. I would say that most people don't care. Fine. We're not talking to you. Of those that do, many people seem to get it and generally agree with where we're coming from. A fair summary of the arguments of those opposed would be something along these lines:

• Who are you to tell me I shouldn't buy stuff for $7.99? How dare you!
• You're just mad you don't get to tell us what we can and can't buy any more.
  
• Records are too expensive.
  
• Record stores suck.
• Record stores are stupid.
• I couldn't be bothered to read everything everybody wrote because it was so long with so many words but I still have an opinion and this here internet connection God gave me and I'm going to use it.
  

Let's try to address them, though not necessarily in that order as my brain's not that linear this early. Later probably, just not yet.

First, we're not here to tell anybody where they have to shop. We can suggest that there are long and short term benefits attached to where you do shop. And we can also suggest that the sale price point for the indie titles at BB was also a consumer imperative of where you had to buy those albums for the two weeks they were on sale at that price. That's about half of the point of my original open letter. Please keep in mind that my letter was initially written to other people in the music business. Because we're all in the business of music, it would then make sense that we'd all like to see that business continue along in as healthy a manner as we can all muster. We're very protective of it. It's what we do-what many of us have given our life to doing.

So if you really don't care about it, that's fine and dandy, but why have you read this far? Go somewhere else entertaining.

I suppose the next step up the ladder from not caring, is caring about the music, but not the way it gets to you. That's fine too. I don't know the cow that gave me my milk. I wish I did because I really loved Elsie when I was a little kid, but the fact is that life's SO fast and complicated these days that we all have to pick and choose our battles.

Obviously for those of us in various parts of the business of bringing you music, we care deeply about how that gets done and we'd all like for it to be as efficiently and cheaply as possible in a method that will continue to support itself for years to come. I believe we all realize that nothing is static except your clothes on a winter day in Chicago and we struggle constantly to figure out the next right move to make buying music as pleasant and easy as possible. It's also a really cool and I think unique aspect of this business that so many music fans actually DO care about where their music comes from. They have their favorite labels and stores, and the DIY ethic that has grown up from the early SST, Touch and Go, and Dischord days is still fairly strong and shared by fans and industry nerds alike.

If you read and understand my argument that this sale could be the tip of a very ugly iceberg, then we all need to talk about it and think about it and at least be aware of possible consequences going forward. The committed music fan is already doing a lot of their shopping at indies. We applaud you. And if the music fan who wasn't aware of where her milk came from suddenly has her consciousness raised a bit and changes her buying habits to support the stores who support the indie labels, then we may have gotten a net gain out of this and that would be cool and almost as pleasantly surprising as making that right turn light at Diversey and California.

And if you love music but either hate record stores or find them irrelevant, well then I guess I feel exceedingly sorry for you. Somehow part of the argument turned to the stereotypical Surly Record Store Clerk as the source of all of our problems. Crappy service in any business leads to a bad experience for the customer who may never come back. I've experienced that and back in my retail days I unfortunately probably unintentionally dished some of it out on a bad day in a store famous for bad attitude (which I actually almost never saw once our resident coke head checked out). In my experience, for every Barry, there are four or five Robs and Dicks who are just dying to tell you what they know and share with you the next Belle and Sebastian or old Jesus and Mary Chain LP. Indie record stores and small clubs act as incubators for little bands long before they get to a level where BB or Borders or VW are interested in them. I think we're way, way past them, or me, or us, being able to act as a "gatekeeper" for music. There's an enormous gulf between Gatekeeper/Protector of the Sacred Realm and indie record store's selling, supporting and nurturing music.

I promise you that no one, not even the owners of the largest indie shops, much less their floor clerks, are getting rich off of this endeavor. Not the indie label owners and certainly not the distributors and their 14% margin. If we can make a little money, that's nice. Most of the music retail people I know are more concerned that they and their coworkers make enough to just keep paying the business and personal rent, health insurance, light bill and taxes while they do their best to make as broad a spectrum of good music available to their customers in as welcoming an environment as possible.

The days of the stupid record store owner are long gone. If a store is open right now, I guarantee that the owner and their management team spend just about every waking moment figuring out what else they can do to get people in the door and provide them with stuff they want, from music to dvds and lifestyle products. To argue that they're too stupid to change means that you haven't been in a record store in a long time. They have and they are. But the crux of what they, and we, do is SELL MUSIC. The only reason that most of us got into this in the first place is because we love music. We spend much too large of a percentage of our paychecks on it just so we can have more of it with us even when we leave work where we've been around it all day. We live it and breathe it and think about it and have it around us just about every waking moment, even during Grey's Anatomy (which has terrific and frequently daring soundtrack choices, imho).

So if you say to record stores, "Adapt or die," I say they're doing that every day or else they wouldn't be in business, and if you'd been in one lately you'd already know that. But if your idea of adapting is expecting them to turn into a home electronics store, video game palace or nail salon, or perish, I think most stores would instead close up shop and hit eBay or the beach. And when something comes along that strikes at the core of what they/we do, perhaps damaging it irretrievably, then part of our adapting damned well better be to think through the ramifications very carefully. Make no mistake, Best Buy has the muscle and market penetration to force even the most progressive, well-adapted record stores out of business. Again, I don't necessarily think this is their goal, but I don't think they really care either.

And if you think the labels involved in the original $35,000 (as reported by Billboard) coop deal, the ones that bring you the music that you care enough about to read Pitchfork in the first place, don't think that the continued existence of indie retail is important, than you didn't read past my posts. READ THE COMMENTS and see for yourself in their own words.

On an upbeat note, the hip teens with whom I am in contact are buying vinyl. Yes, VINYL. You can't download that. And at least for now, you can't buy it in a chain store. Signs of hope are few but happy when stumpled upon.

The last thought of my last last thought is that we are sad we have not heard from any of the musicians involved. When people in Madagascar and the Baltic Republics are reading about this, I find it difficult to believe that none of the artists have seen it. I wish some of them had taken the time to comment on it somewhere, because in the end it's their art for sale and most likely at least 50% of their co-op ad to pay for.

Hopefully the next time you hear from us in this space, we'll be talking about our new, baby webstore, the bugs we're trying to squash out of it, and the records we love most that are offered on it. You know. Music (and commerce).

Pitchfork Chimes In

Pitchfork's 2 cents and then some.

Thanks Mairead.

And Then There's This

Best Buy Wall Numbers

¡Boycott no! (or, Perhaps it is true there's no such thing as bad press. )

I have not heard this from any retailer directly, but if the rumor I read somewhere is really true that indie stores are actually organizing some sort of boycott against the labels involved, I'd suggest waiting on that one to see how they react to the deluge of attention, unwelcome and otherwise, this miasma has gotten.

A boycott would hurt all involved and I'm fairly certain that the message to those involved has already been sent and heard loud and clear without that sort of mutually destructive step.

At the very least nobody can claim ignorance from here on out, so for whatever it is worth, I suggest everybody, even the still-two-weeks-later exceedingly angry, take a deep breath and wait and see what happens next. We will not be a party to one though. We need the sales. They need the sales. The bands not participating in this deal REALLY need the sales, as they're not paying BB to take their records.

Oh yeah, the titles involved in the "Are You Cooler Than Your Friends" indie promotion are still on sale via the Best Buy webstore for $7.99. (I'll not give them the courtesy of another link. Find it yourself, lazyass.) Looks like stores and distributors will now have to pay freight for their BB One Stop orders and I don't know what the order maximum is. Should come without price stickers on them, so that's a bonus.

What Others Are Saying

There are some good discussions going on elsewhere about this. Thought it might be useful to post links to some of them and act as a sort of clearing house for that. Some great points being made on both sides of the topic. None that have changed my mind about anything I've written, but I enjoy having to think through stuff (well...sometimes) and I'm gratified to see others working through the intricacies as well.

In sum, aside from the fact that $7.99 is an asinine price at which to allow your stuff to be sold, there's a lot of grey area to this whole thing and as I've pointed out elsewhere here, the line to my foreseen doomsday scenario is not a straight one.

These sites have longer discussions about the whole issue coming from all sides:

Chromewaves.net

Experimental Behavior

I Love Music

K Records Forum

Merge Records Forum

Metafilter

Zoilus

Some other blogs who've just pointed to the discussion, some with thoughts of their own:

Bradley's Almanac

Camera Obscura Records

Creativeville

Culture Bully

Dale Baker Drummer

Digital Audio Insider (who has a link, but some edifying info on digital audio pricing in general)

Dronepop

fbihop

Her Jazz ("Legal racketeer." Ouch. Thanks. We love you, too. I always though racketeers actually made money, but maybe we're just in the wrong racket or are too stupid. One or both are certainly possible and one is at least probable.)

Indie Anthems

Indie HQ

Perfect Porridge

Reference Tone

San Diego Serenade

Spinme.com

The Minor Fall, The Major Lift

Worst Weather Ever

Consumer Thoughts

Hi. I'm back.

I've been contacted by the very thoughtful and unfailingly polite Mairead Case over at Pitchfork and they're thinking about running a small news item on this whole mess next week sometime. In response to some questions from him, and with some prodding from elsewhere, I put down some additional thoughts about all of this that might be more applicable to music fans and consumers and not just industry geeks like most of us participating in this dialog. Here's the text of what I wrote for them, with many thanks to Mairead and Phil for their questions that helped me focus myself on this from a slightly different angle.

--------------------

The 2 open letters that I originally wrote to the labels involved in the Best Buy co-op ad were not really written to music fans, but to music business folks-label, distribution and retail people in the music business who already had some idea what I was talking about. From email that we received, comments that appeared, and links to our blog, it quickly became clear that people outside of this industry group were making their way to our discussion, and that they weren't exactly sure what some of this stuff even meant, so I did my best to try to be a little more explicit in what we're talking about here. And I guess some of them were interested enough to actually think and talk about it amongst themselves, which was somewhat surprising to me. And though a lot of the peripheral discussions were along the lines of "I can't remember the last record I bought at Best Buy or anywhere because I burn all of my music," there were others from folks who were more thoughtful about all of it and concerned enough to think about some of the possible ramifications.

For music fans, outside of the morbid curiosity of watching an industry flame war like that car crash on the side of the road from which you can't look away, I think that it probably boils down to two salient points:

First, I don't see really any way you can put the blame on the customer here. I might have felt a little differently at an earlier time, but hell, what decision is a consumer supposed to make, assuming that they actually WANT to pay for their music, when faced with a $7.99 vs. $13.99 CD? I mean, I think that you can ask for and expect a little indie loyalty if the difference is $1-2 per disc, but 1/2 off means you get to buy an extra CD for the same money. I can't imagine too many people expecting anybody to pass that up. I'll speak only for myself here and say that I don't. I also don't think you can blame Best Buy. It's what they do and you can't shame the sociopath, so what good does it do to try? In my humble opinion, the blame here falls on the labels and bands who are participating in this co-op advertisement deal with a company that has historically used music as a loss leader and has used co-op ad dollars from the labels to help make up that loss. By doing this advertising deal, the labels have given the stamp of approval for all of us to buy their stuff at Best Buy at bargain prices, so who can cast blame on the consumer for spending their music dollars wisely? Most likely they should be praised for spending their dollars on music in the first place instead of stealing it.

• As an aside, I got quite a few emails from blog readers asking what a co-op deal is. It is an advertising program run by a store, where the label buys into the program and for this ad buy, they are given "price and positioning"-prime, high visibility positioning in the store (usually on an end-cap at the end of a row), a sale price, and advertising of some sort, in this case, the Best Buy flyer and web page ad. In return, the store will do a "buy in" where they agree to purchase X amount of units of the CD (and as gross as it sounds, we are talking "units" at this level-might as well be headphones or CDR spindles or Monster speaker cable by the foot) so that they have available stock for consumer purchase because of the added sales they will supposedly gain from the ad. Sometimes a listening post is also part of the deal. Not the case at Best Buy that I am aware of.
• What frequently happens is that a few more sales happen and a load of the extra buy-in that was supposed to offset the ad buy goes back to the label/distributor in returns and the store pockets the difference. Loads of stores, not just Best Buy, play the co-op game. Money from co-op advertising has helped a lot of stores stay afloat in the current atmosphere. The difference with Best Buy is that they have a 10+ year history of using music as a loss leader to get people in the door and sell them other stuff. The difference between a $10 or $11.98 sale price on a $14.98 list price CD and BB's $7.99 sale price on a $14.98 list price. And it appears from the outside that what the co-op ad buy-in from the labels is actually paying for is for the difference in the sale price and the regular price. The labels are helping to cover the loss on Best Buy's loss-leader and helping them absorb that hit. In reality, they're paying for Best Buy to undercut their core retail base.

So the second thing music consumers can probably take from this mess is that it appears to me that it is possible that if this program expands, and if as I have heard through the grapevine BB is really going to commit to independent music (see also the BB/CD Baby partnership which is a different issue altogether but could be a harbinger of further expansion into this market), which to me means buying in a lot more than the few titles that were on sale recently, then I can see these labels helping to lay the seeds of their own destruction. Indie retail is no doubt in a rough spot right now for a multitude of reasons, but BB is a big enough presence to do to music retail what Wal-Mart has done to just about everything else. Best Buy's first go round at this 10 years ago helped kill a lot of independent retail shops and a second round could finish many of the rest. It would not necessarily be their intent, but it could be a happy enough bonus result for them. If there is no indie retail to help build new bands, we are left with MySpace and the unfiltered internet and ad/tv/movie placement to introduce people to new bands. Retail would be left to the BB/Starbuck's axis. That's not too appealing of a scenario to me and I'm sure not to your readers either. It is easy enough to dismiss indie retail and if you already don't pay for your music, then why not and there's probably not much hope for those people to care about this in the first place, but if indie retail disappears completely where are the baby bands going to develop into the bands large enough to appear at BB or to sell a song to an ad or The OC? Where do the hip kids who devour Pitchfork and Punk Planet and Venus looking for their next cool band find that band if nothing exists to support smaller bands in the first place? Under that scenario, who will find and nurture and shout from the rooftops about the next Devendra Banhart or Death Cab or BSS or Deerhoof or Animal Collective or Clap Your Hands and Say Yeah? I can't answer that question. Maybe somebody else can or will, but I don't know.

Even two years ago I would have said that this scenario was far-fetched and that I couldn't honestly see the possible end of the physical distribution system from where I was standing at the time, even while others were saying that retial would be gone in 5 years time. But now I feel like I can see a possible end and it's pretty sad, and not just because it's the business that I'm in, or because I'm nostalgic for some golden era of indie retail that sort of used to exist, but because it could mean that loads of albums by loads of bands that needed discovering and nurturing and promoting will not come out and the hip kids won't find them and the non-music buying public won't have them to download instead of buy because they won't be there to download and if they were they wouldn't know about them anyway because they'd most likely be on the band's website and nobody would notice. This is my fear and this is why your readers might care.

It is not a straight line from one indie label group co-op ad with BB to the death of indie retail and the evaporation of the nursery for small, quality bands and their albums. However, because of BB's past history when exactly this kind of thing did happen, and it did happen, the line is straight enough that I feel like I can see one possible, heinous path move from possible to probable without too much trouble. And it scares me and saddens me for kids who could and should be buying records long after I've decided to move on to reading history books on the sun porch with a cup of herbal tea.

Saturday Morning Coming Down

A few parting shots before I take the weekend off from this discussion. It's the eagerly awaited Royalty Statement Weekend where I get to work on spreadsheets for two days and write little checks for the little bands on my little label that happily, so far, don't have this dilemma presented to them. They and we would love to sell more records but thankfully none have demanded their CDs into Best Buy yet.

The most important thing that I'd like to say here, and I'm not sure that I've done a good job expressing this yet, is that we have this discussion out of love and deep respect for Merge, Secretly Canadian, Touch and Go, and Caroline.

I was trying to help talk a retailer off the ledge on Thursday and I was reminded about an amazing 2000 interview with a guy who has grown to be one of my heros, writer/editor/publisher Dave Eggers from McSweeney's Publishing. In this interview, he offers what I consider to be one of the most important treatises on supporting others who see the big picture and who are doing their best to make things better--people who DO GOOD WORK. There is not doubt in my mind that the folks at Merge, Secretly Canadian, Touch and Go and Caroline are good people doing good work and that they deserve our support and encouragement in that. They are also human and make mistakes and when they're big ones, like we believe this one was, then we also have a duty to point it out and open it for discussion but within a context of respect probably greater than came through in my initial diatribe.

I have heard some surprise from the labels involved at the level of anger and feedback that they received over their action. Obviously I don't speak for all of the retailers and other angered by this action, but for our part at CTD, the feeling of hurt and betrayal came because of our long respect and admiration for the way these four labels normally go about their business. As I said before, nobody is offended when the dog licks himself. I can't believe too many people felt mad, hurt or betrayed that Best Buy ran this promotion or surprised about some of the people in this coop. It is when labels and artists that you don't expect make such a move that people are hurt and that hurt comes out in anger. And that anger is understandable. But I think it's important to remember to try to express it in as constructive a manner as possible so that we can look at this, hopefully learn from it and move on and keep trying to do good work.

I made phone calls yesterday to most of the people I've listed to tell them exactly this and I hope that message got through loud and clear.

The last thing at which I'll take a poke is the third justification I've heard for the Best Buy coop. Like Roxy Music, it's a classic.

Everybody else was doing it.

This rationalization is usually reserved for those 16 and under, because most kids quickly realize that when searching for answers to parents and offering this up that the response is usually a quick cuff to the back of the head and off to bed without dessert. Unlike Eno, I'm not sure it works much better in the adult world than it did when we were all much younger.

Read Dave's interview, especially his answer to Question 11, and take it to heart. And while you're at it, buy one of his books. He needs the cash and he'll use it to do good work.

This feel good post is dedicated to Tiger Adams 3/16/97-1/28/06 who died very suddenly this morning shortly after it was originally posted. Thanks Tiger. You were truly a good dog and everybody who knew you (except possibly Rob Miller, who you liked very much) misses you.

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.

Can I Go Home Now?

Wow. What a weird day. Heartening in many aspects, a bummer in others, and pretty overwhelming on all fronts.

Thanks to everybody who has flooded the Inbox here. I'll get back to all of you as soon as I am able but rest assured that you have been heard.

Thanks to Mac (and Paul for the email and phone call) at Merge, Nick (and Ben and Paul for the emails) at Secretly Canadian, Windy from Stormy, and everybody else for writing well thought out and reasoned responses to all of this and posting their comments here. If you have not read their thoughts, please do so on the comments links below and please feel free to leave your thoughts as well. I've finally got it set up so you can do that. Sorry if you tried earlier and it didn't work.

I think that our point of view on this was made pretty well in my initial letter/post, but there are a couple of points I'd like to try to clear up.

First, nowhere in our letter do we accuse anybody of selling to Best Buy directly at a lower price. What is happening, and perhaps many people didn't understand the mechanism here, is that coop dollars are being used by a gigantor retailer to offset their loss when a piece is sold below cost. Tons of stores do coops. In fact, many are partially kept afloat by the extra dollars that coop dollars bring in. In exchange for cash or free cd's ("cleans"), retailers promise "Price and Position" to labels. Releases are featured at end caps or other high visibility parts of the store, titles are usually put on sale for the time of the deal, and a picture and of the record and sometimes a blurb runs in the paper. Sometimes a listening post is included for customers. 90% of those listening posts are bought, not put there by the grace of the store owner. Usually (but not always), the bigger the store, the more this is true. There's your lesson on the Coop Monster.

I have not seen the text of the deal with Best Buy. Our titles do not sell well enough to appear on their radar. However, these sorts of deals are pretty standard around the industry with a little variation. The difference in this instance is that by now, everybody knows or should know that Best Buy does not use their coop dollars in the manner that most other stores do. They are (in)famous for predatory practices and lowballing titles, and in this instance, they really lowballed. So even without selling to Best Buy at a lower price than everyone, what has essentially happened with the coop is that a large bucket of money was put in the corner that nominally had nothing to do with the pricing of the record on the invoice from ADA or RED or whoever. But for anybody in the chain of action (from artist to label to distributor) to claim surprise when that weird bucket of cash that just happens to be sitting in the corner is used by infamous lowballer Best Buy to offset their losses on selling it below wholesale cost, well, it seems a bit disingenuous to us here. Forgive our cynicism on that point, but we're from Chicago where the City That Works feeds itself on mysteriously appearing, large buckets of cash. But here only the Mayor can pretend he didn't know what it was for. (I'm shocked. Shocked!!) In the instance of the Best Buy coop, it may not be ruled illegal under US law, but that does not mean it is not wrong.

It also seems somehow to have been inferred that I was suggesting that selling these titles at Best Buy for $7.99 for one week was somehow going to kill the music industry and put every indie retailer out of business, perhaps by this Sunday. I didn't and obviously it will not. The first round of the Best Buy Merry-Go-Round (pre-MAP), happened over the course of about 3-4 years in the mid-90's. It didn't happen in one week, or one month, or even in one year. But over the course of their spree of lowballing titles and stocking large amounts of indie music, the momentum grew. Stores started dropping. Millions of dollars of returns started happening from Best Buy. You may be able to debate the direct causation of indie store closures to Best Buy pricing, but the correlation is there. What you cannot debate is the hit that every label and distributor who put titles into Best Buy's expanded music section took when the stuff just didn't sell. Pick a reason for it not selling. But it didn't. And it came back. And it hurt. A lot. And payment terms were extended and then extended again. And people went away. Labels went away. Distributors went away. (Remember Feedback? Say what you want about their management team, but their biggest customer was Best Buy and they got pounded into the ground...with the music publishers putting in the final dagger.) And now I hear that after 5 years Best Buy is again "committing to music" and expanding their music section. Great.

Labels and distributors may not tell retailers what prices they can set for their artists' work, but they can choose to play or not play the coop game with them on a case by case basis, based upon all the available information that they can muster and the short and long term ramifications of their behavior. And while labels may not be abandoning indie retailers, they can kill them just the same. Giving them water while you salt their ground will still kill them no matter how much water you pour on their poisoned earth. At some point you're wasting your water. And all that will be left is the Label and the Gigantor. Then try and grow your little bands.

So the whole point of this exercise for us is to raise some consciousness on this issue, perhaps with a spur from somebody who has been there before, has seen and felt the pain, and fears for the good of the industry that we've all helped build, big distributor down to 16 year old intern paid in records. Tons of people before us have busted tail for no money so people could hear music that wasn't filtered by the major labels and their work has led directly, for better or worse, to what we have today. And dysfunctional and dazed though the system may be, it still mostly works. And some of those people, people who I have admired from the moment I became aware of them, are a part of this mess with Best Buy. When we started CTD, one of our rules was to always examine what the people at Revolver, Mordam, and Touch and Go were doing. We did not commit ourselves to emulating them, but rather to a constant course of study and questioning of their actions and the reasons for them because they were run by people of wisdom and experience, people with their values in the right place who still managed to succeed in an otherwise abysmal hell hole of an industry. In our early years, we said over and over "If Touch and Go (or Mordam or Revolver) is doing something, then we'd better damned well know why and then decide if we should follow suit or not." And if we chose to go a different way on something, then it would not be in ignorance, but in understanding, followed by making as educated a decision as our pea brains were/are capable of making.

It pains me, pains me, to be spending my time and energy on this, questioning people for whom I have serious doubt that I could hold in any higher esteem. Some of the players in this I can mentally write off as long ago Lost Causes, succumbing to the natural way of things and growing to a point where they are beholden to others to an extent I can only imagine. Several here are not Lost, not even close, but their behavior is nearing that of the Lost. My hope is that this will at least stir some discussion in indiedom on all levels. Of course labels will still do what they will do, but at least it will not be in ignorance, their own or anyone else's, but in plain view. And others can take actions based upon those decisions that are plain to see for everyone. And perhaps, not probably, but perhaps, by dragging this ugly step child out from under the stairs, the basis for future decisions for large labels and distributors will change as the ramifications of their actions are taken into account, if for no other reason than for good old self-interest. And no one can say that they didn't know. That they weren't warned.

I've been called the Greek Chorus before, frequently not in a nice way, but in Greek tragedy the Chorus is usually ignored at the protagonist's great peril.

I'm pretty sure I'm right on the present situation, but I sure as hell hope I'm wrong about the future. You know people will ignore the warning sign that you place beside the cliff, but you put it there anyway, just in case somebody looks up and pays attention. And is not Lost.

On a more minor point, I really hope nobody seriously thought I was comparing any of us, or this mess, to MLK or the Civil Rights Movement just because I quoted him. I was no more doing that than I was comparing anybody to William Burroughs just because I quoted him as well, though a good game of William Tell does ring pretty close to our situation here, doesn't it? The point that MLK was making, as I interpret it, was one that I see as parallel to something like karma. That the arc of the universe bends toward the good, toward justice, very slowly, over time. I fear which side of this arc that we are on with this whole mess. That's all.

Metaphors for sale cheap. Below cost even!

Patrick

More Thoughts on the Indie Best Buy Sellout

I have to say that I while I knew people would be upset about this, I had no idea that I would get this kind of response to my rant, which has been kindly called an essay by a few overly generous souls. So thanks for all the words of support and encouragement. Yesterday was a bad day around here because of this whole thing and it helped tremendously. Obviously, we feel the sting and sense of betrayal right along with all of our retailers and fellow distributors.

A point of clarification on MAP. This stands for Minimum Advertised Price and was a program instituted by the majors to actually fight the loss leader pricing by the big boxes. You could only get major label coop dollars if you promised not to sell titles below a certain price. This worked to the indie stores benefit. While they still usually could not quite meet the new release pricing of Best Buy and others, they could come close enough for it not to be an insult to the consumer. Then a federal investigation decided that MAP was actually price fixing, collusion and racketeering and the majors were forced to pull their MAP programs, which led us to the current situation.

I have been asked a few times why Merge, ADA, and RED were not called out by name along with the other labels. Well, Merge was just an oversight on my part in the heat of the moment. They were copied later when this was pointed out to me. As for ADA and RED, well we have no direct dealings with them and frankly this kind of behavior, while disappointing, does not strike us as entirely out of character for them. You expect the teenager to wreck the car and the dog to lick himself. It's just what they do.

I've also been asked about solutions with recommendations ranging from law suits to boycotts and just about everything in between. Lawsuits are expensive and time consuming. Boycotts hurt the other bands on the labels, the vast majority of whom are not participating in this suicidal exercise.

I have no magic wand for a solution, but for the moment, I think something along the lines of a group intervention is the best way to go. Or as one sage called the method a long time ago, better learning through humiliation. If we spread the word far enough, publicly enough, and then focus that back to the labels and bands doing these coops, perhaps maybe possibly they'll get the message and change their behavior. Probably not, but maybe.

I have also been asked if I'm not nervous that we'll be cut off from these labels for speaking out. The thought never once crossed my mind until someone asked last night. I cannot imagine that we would be cut off. We have done nothing offensive or wrong, at least in this instance. We're just the ones pointing out the behavior and yelling "jackass!". If that gets us cut off because egos have been bruised following a really bad business decision, then I think that will reflect much more poorly on the label than on us and I'm sure they'd hear about that as well. Honestly I can't imagine that any of them would stoop to that. It's not how the operate on a day to day basis, which is one of the reasons why this whole episode is so disheartening. This sort of behavior is expected of some, but not by these folks, at least not by us, and from all of the email we've gotten on it, not by most of you either.

We offer our blog as a space for public commentary. It's not doing anything else right now anyway.

Best Buy BS

Link to Latest Best Buy ad mailer 1/24 Street Date
Best Buy BS


Pick one:

1. A bad dream that returns every time you close your eyes, no matter how many pages of your book you read in the middle of the night to try and shake it from your mind.

2. A portrayal of the myth of Sisyphus, doomed for eternity to roll his boulder to the pinnacle of a mountain with great exertion only to have it roll back down into the valley so he could begin again. Forever.

3. Real life karma in action, actually visible to the naked eye, where past acts affect future lives and where sins are punished into eternity until a lesson is learned from them enabling you to move on.

4. A manifestation of Martin Luther King, Jr's quotation about the Arc of Justice. "The arc of the moral universe is long, but it bends toward justice."- Dr. Martin Luther King, Jr.

We have been here before, and it was awful. In the 90's, labels hungry for sales (and who isn't?) rushed into deals with Best Buy, and other big box chains now since defunct, that allowed Best Buy to sell below cost with a minimum amount of pain, if any, and then make money off the folks lured into the store on their toasters and TV sets (now iPods and Xbox). Soon, indie stores all over America started going belly up. Pier Platters. Go!. Final Frontier. Rockaway. On and on and on. Remember, this was when file sharing still consisted of a chrome C90 without the holes punched.

After freeing much of America of their indie retailers, the accountants for Best Buy and the others realized the age old maxim, you can't make up for a negative margin with volume. Their margin was hurt even more when the returns started piling up. Millions of dollars of returns. Why? Because of their size, they were and are unable to pick and choose what might sell at their stores. They have no in-store culture to support indie music sales in knowledgeable floor staff, in-stores, magazines, a comfy couch, upcoming show listings, or a cool kid behind the counter to play the new stuff and talk with customers not only about what's new that week, but what's coming out next month and recommend that cool record by the Slits you might really dig if you like Bloc Party. You like Antony? Check Jeff Buckley or Van Morrison or Current 93's "Earth Covers Earth." At Best Buy, the single most frequent employee comment is "When's my next break?".

The combination of poor buying in huge quantities and their lack of ability to sell through eventually lead to so many returns that Best Buy stopped carrying indie music almost entirely. The huge racks at Best Buy that had housed music were suddenly empty, and then shortly they were gone, slowly to be replaced over the next few years by discounted DVDs and video games.

In the wake of this prolonged disaster lay cities all over the country without record stores, labels either driven to bankruptcy or crippled for years by 50+% returns on titles for which bands were already paid and saddled with enormous pressing plant bills, and a public who had finally realized that maybe music wasn't worth what it always had seemed. Maybe $16.98 was too much for a CD. Maybe $8 was the right price. That's what the labels and their complicit artists were telling them. And this dent in the collective music consciousness came at the dawn of broadband internet service and file sharing. If it wasn't worth $16, maybe it wasn't even worth $8. Maybe free was the way to go. If the stores, labels, and bands don't value their music enough to sell it at a decent price, why should the music fan feel any differently about it? So the whole industry had unwittingly conspired over three to four years to torch the value of an album at just the right time for the Best Buy shell game/Ponzi scheme to collapse in on itself, leaving an opening for Napster to tap the wired music junkie on the shoulder and take advantage.

Fast forward through rampant unchecked file sharing/piracy, MAP, oops! not MAP that's illegal, RIAA lawsuits against music fans, the boom of iTunes and Spitzer investigations of price fixing.

Why are we going back there again? Voluntarily even? Why are labels AGAIN selling to Best Buy at rock bottom prices and then buying into coop programs (billable back to the Artist of course) that allow Best Buy to break even selling their cds so cheaply-not only below retail cost, BUT BELOW DISTRIBUTOR WHOLESALE COST? At prices even below the album price on iTunes and others! So now you're all devaluing not only your packaged goods but your digital ones as well. If it's worth only $7.99 with package at Best Buy, why is it worth $9.90 at iTunes? Consumer answer: IT'S NOT.

When a distributor can buy your stuff with tax at Best Buy cheaper than from you directly, something is wrong. Very wrong.

And even better, I have heard that Best Buy is not only planning on targeting 10-20 of the hippest titles, but greatly expanding their indie offerings. That's great! They've set this up for a complete repeat of the mid-late 90's. Drive the final nail in the coffins of the remaining independent retailers, at least those savvy enough to have staggered through the first round and survived unlike their bankrupt counterparts across the country. Mortally wound the labels and their thin margin distributors with staggeringly high return rates a year or two or three down the road. Leave the bands without stores, labels or distributors to support them. And then, finally, when the bean counters with the short memories at Corporate figure out that it's not working for Best Buy, again, they slash their music sections back to a Top 40 and go back to ignoring it. Except this go round, it is entirely possible that there will not be enough of an independent music industry remaining to survive and bounce back. What's left? A rush to cash in on high volume for a few frontline hip titles leads to the elimination of the entire culture that nurtured the baby bands to the point where anybody even paid attention to them in the first place. Where they were suddenly cool enough to move out of the zines and blogs to get featured on the OC or VW commercial or the latest Farrelly Brothers movie, and then get big enough where it actually seemed to make sense to somebody that this might really sell at Best Buy. Cash in now and simultaneously salt the fertile earth that allowed it to happen in the first place, killing any chance of it happening again.



Worst case scenario? Fear mongering? Maybe. Except probably not. Because WE'VE ALREADY BEEN HERE. Sisyphus HAS rolled this rock up this very same god damned hill. Unlike Sisyphus, however, we are not doomed to hell for eternity to feed the Best Buy monster that will eventually eat us. We have choices. And we have history, RECENT history, from which to learn if we will only heed it.

And here is the saddest thing to me. Everybody in management at Touch and Go, Caroline, Secretly Canadian, even Matador, and yes Best Buy, has been at this long enough to know better. The difference is that Best Buy doesn't care. It doesn't have to. It will be around in 10 years selling, uh, whatever, HD HUDs for wireless iPod video and other consumer electronics, and if this unsavory practice continues, you and we will not be. And I guarantee you that if they even notice, nobody at Best Buy will care.

"He gives the American people the finger and barks out: 'I got mine, fuck you! Every crumb for himself.'"-William S. Burroughs "The Western Lands"

In the meantime, I'll head by Best Buy Stores #323 and #814, (aren't those great names!) on the way home tonight so I can buy their stock on titles we carry, give the kids who come in an empty shelf to look at hopefully driving them to an indie store and putting them off from the hassle of returning for future sales, sell them where we can and then return them to you at a profit.

Thanks for a great Tuesday. Thanks for your foresight. Your check's in the mail.

Patrick Monaghan, President
CTD, Ltd./Carrot Top Records, Inc.