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End of the Industry


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#1 54cermak

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Posted 18 January 2008 - 01:44 PM

Not sure if there's one of these buried somewhere, if so, feel free to link me and ignore this one. But I thought it would be good to have a place to post news articles chronicling the end of the music industry as we know it as I'm sure they'll continue to roll in all year.

Former Camelot facility being closed in Stark
By Betty Lin-Fisher Beacon Journal business writer

POSTED: 11:41 a.m. EST, Jan 18, 2008

Trans World Entertainment Corp., the parent company of f.y.e. music stores that purchased Camelot Music in 1998, is closing its Jackson Township distribution facility.

The distribution center employs 234 employees, according to a statement by the Albany, N.Y.-based company. The closure is part of the company's program to ''streamline its operations.'' The center will be phased out over the next two months and the company will continue to service its stores from its remaining distribution centers in Albany and Carson, Calif.

Trans World operates more than 800 retail stores in the U.S., District of Columbia, U.S. Virgin Islands and Puerto Rico, primarily under the f.y.e. and Suncoast names. It also has Web sites.

The company bought Camelot Music in 1998 for $450 million and moved the corporate headquarters to Albany. About 200 jobs were lost at that time.

Last week, Trans World reported a decrease of 12 percent in comparable store sales for the nine-week period ending Jan. 5. Sales for the holiday season were ''well below'' the company's expectations, the company said, and the company expected to report a net loss of fiscal 2007 in the range of $15 million to $20 million.


Mall stores may not specialize in the bread and butter of the somb, but their demise (as with Tower) are the leading edge of what is to come.

#2 r.i.p.

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Posted 18 January 2008 - 01:57 PM

From last week's Economist:


IN 2006 EMI, the world's fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.

In public, of course, music executives continued to talk a good game: recovery was just around the corner, they argued, and digital downloads would rescue the music business. But the results from 2007 confirm what EMI's focus group showed: that the record industry's main product, the CD, which in 2006 accounted for over 80% of total global sales, is rapidly fading away. In America, according to Nielsen SoundScan, the volume of physical albums sold dropped by 19% in 2007 from the year before—faster than anyone had expected. For the first half of 2007, sales of music on CD and other physical formats fell by 6% in Britain, by 9% in Japan, France and Spain, by 12% in Italy, 14% in Australia and 21% in Canada. (Sales were flat in Germany.) Paid digital downloads grew rapidly, but did not begin to make up for the loss of revenue from CDs. More worryingly for the industry, the growth of digital downloads appears to be slowing.

“In 2007 it became clear that the recorded-music industry is contracting and that it will be a very different beast from what it was in the 20th century,” says Mark Mulligan, an analyst at JupiterResearch. Last year several big-name artists bypassed the record labels altogether. Madonna left Warner Music to strike a deal with Live Nation, a concert promoter, and the Eagles distributed a bestselling album in America without any help from a record label. Radiohead, a British band, deserted EMI to release an album over the internet. These were isolated, unusual deals, by artists whose careers had already brought years of profits to the big music companies. But they made the labels look irrelevant and will no doubt prompt other artists to think about leaving them too.

The smallest major labels, EMI and Warner Music, are struggling most visibly. Warner Music's share price has fallen to $4.75, 72% lower than its IPO price in 2005, and it is weighed down by debt. EMI's new private-equity owner, Terra Firma, paid a high price for the business in August 2007. Now, having got rid of most of EMI's senior managers and revealed embarrassing details of their spending habits (200,000 a year went on sundries euphemistically referred to in the music business as “fruit and flowers”), Terra Firma is due to produce a new strategy later this month. But many observers reckon the private-equity men are out of their depth.

The two biggest majors—Universal, which is owned by Vivendi, a French conglomerate, and Sony BMG, a joint venture between Sony and Bertelsmann, a German media firm—derive some protection from their parent companies. Universal is the strongest and is gaining market share. But people speculate that Bertelsmann may want to sell out to Sony next year.

Three vicious circles have now set in for the recorded-music firms. First, because sales of CDs are tumbling, big retailers such as Wal-Mart are cutting the amount of shelf-space they give to music, which in turn accelerates the decline. Richard Greenfield of Pali Research, an independent research firm, reckons that retail floor-space devoted to CDs in America will be cut by 30% or more in 2008. The pattern is likely to repeat itself elsewhere as sales fall.

Circular arguments
Second, because the majors are cutting costs severely, particularly at EMI and Warner Music, artists are receiving far less marketing and promotional support than before, which could prompt them to seek alternatives. “They've cut out the guts of middle managers and there are fewer people on the ground to promote records,” says Peter Mensch, manager of the Red Hot Chili Peppers and Shania Twain.

Third, record companies face such hostile conditions that their backers, whether private equity or corporations, are loth to spend the sums required to move into the bits of the music industry that are thriving, such as touring and merchandising. The majors are trying to strike “360-degree” deals with artists that grant them a share of these earnings. But even if artists agree to such deals, they will not hand over new rights unless they get better terms on recorded music, so the majors may not see much benefit overall. Tim Renner, a former boss of Universal Music in Germany, says the majors should have acted years ago. “Then they had the money and could have built the competence by buying concert agencies and merchandise companies,” he says. Now it may be too late.

By mid-2007, when the majors realised that digital downloads were not growing as quickly as they had hoped, they landed on a more adventurous digital strategy. They now want to move beyond Apple's iTunes and its paid-for downloads. The direction of most of their recent digital deals, such as with Imeem, a social network that offers advertising-supported streamed music, is to offer music free at the point of delivery to consumers. Perhaps the most important experiment of all is a deal Universal struck in December with Nokia, the biggest mobile-phone maker, to supply its music for new handsets that will go on sale later this year. These “Comes With Music” phones will allow customers to download all the music they want to their phones and PCs and keep it—even if they change handsets when their year's subscription ends. Instead of charging consumers directly, Universal will take a cut of the price of each phone. The other majors are expected to strike similar deals.

“‘Comes with Music' is a recognition that music has to be given away for free, or close to free, on the internet,” says Mr Mulligan. Paid-for download services will continue and ad-supported music will become more widespread, but subsidised services where people do not pay directly for music will become by far the most popular, he says. For the recorded-music industry this is a leap into the unknown. Universal and its fellow majors may never earn anything like as much from partnership with device-makers as they did from physical formats. Some among their number, indeed, may not survive.



#3 cerebralcaustic

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Posted 18 January 2008 - 04:12 PM

IN 2006 EMI, the world's fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.

Wow, this is a perfect anecdote.

#4 54cermak

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Posted 18 January 2008 - 04:45 PM

IN 2006 EMI, the world's fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.

Wow, this is a perfect anecdote.


At the very least EMI is recognizing there is a problem. The other labels are all operating like its 1999 and the big hit is just around the corner.

#5 Dark Flame

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Posted 18 January 2008 - 07:56 PM

The idea of record labels striking deals with bands to take a part of their touring money makes me laugh. I have trouble thinking of bands that would be willing to sign on to something like that.

#6 Chronodiggity

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Posted 18 January 2008 - 11:10 PM

The idea of passing up a stack of free CDs is crazy, even if you have digital access to anything you want.
^_^

#7 MuteSuperstar

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Posted 18 January 2008 - 11:18 PM

The idea of passing up a stack of free CDs is crazy, even if you have digital access to anything you want.


Yeah I had the same reaction--unless it was all shit they had no interest in...I don't want to see CDs completely disappear but I guess it's inevitable eventually.

#8 Mitchell

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Posted 19 January 2008 - 05:18 AM

The idea of listening to music on a phone baffles me, I've never heard it sound anything other than tinny as fuck.
Nice bowl of Crunchy Nut you got here, pretty expensive as I recall.

#9 HandBanana

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Posted 19 January 2008 - 06:00 AM

my iPhone makes shit sound clear as my turntable
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#10 54cermak

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Posted 27 March 2008 - 07:51 AM

http://www.newsobser...ry/1012718.html

In college towns across USA, record stores bite the dust
By JUSTIN POPE, AP Education Writer
CHAPEL HILL, N.C. - You need a college, of course, but that's not the only ingredient in a good college town. You need quirky bookstores. Coffee shops - preferably not all chains. A diner. An artsy cinema. A dive bar.
There's one other thing you need, and it's getting harder to find: a local record store. The kind of place with poster-covered walls, tattoo-covered customers, and an indie-rock aficionado at the cash register, somebody in a retro T-shirt who helps you navigate the store's eclectic inventory.

A few years ago on just one block of Chapel Hill's Franklin Street, the main drag in what's been called America's ideal college town, four or five such places catered both to locals and University of North Carolina students.

But with the demise of Schoolkids Records, the last one is gone. Schoolkids had planned to gut it out through March, but couldn't even make through its final week and shut down Saturday. It's just the latest victim in an industry hit by rising college-town rents, big-box retailers, high CD prices, and - most importantly - a new generation of college students for whom music has become an entirely online, intangible hobby they often don't have to pay for.

Chapel Hill is hardly alone. In recent years, perhaps hundreds of independent and small-chain record stores in college towns have shut down or consolidated as music downloading all but eliminated the demand for them.

In State College, Pa., Arboria and Vibes have closed. Iowa City, Iowa, used to have BJ's, Sal's Music Emporium and Real Records.

Boulder, Colo., has lost at least a half dozen - Cheapo Discs, All the Rage, Rocky Mountain Records and Tapes, and others. Albums on the Hill, a holdout across from the University of Colorado's campus, is down from 18 full-time employees to three part-timers.

"I'm just trying to decide when I'm going to go online and close my brick and mortar," said Greg Gabbard, owner of City Lights Records in State College, near Penn State's campus. "I'm trying to stay here as long as I can because I love the people. We're all teachers."

Big record chains aren't doing much better. But somehow, customers never seem to miss them as much when they close down.

"You walk down the hall of the dorm and hear everything possible, and you will be influenced by all these people," said Ric Culross, who managed Schoolkids and has been in the business 35 years. "They've come to a store such as ours to feed off of that, just like they go into a bookstore."

But these days, most just go online. Culross said he'd hoped this year's freshmen might arrive with a revived passion for CDs and even vinyl albums, which have experienced a minor resurgence. It turns out many have never even bought a single non-digital one.

College students are the perfect market for music downloads. They have low incomes, small living quarters and endless bandwidth.

The change may be an economic inevitability, but still a loss. Colleges talk a lot about diversity, but you often find more of it browsing record stores near campus than in the cafeteria. Customers are black and white, well off and poor. You'll find cool high school kids next to older collectors, professors and students ranging from straight-laced pre-professionals to punk rockers.

"This is one of the few places I can consistently find things I'm interested in," David Crotts said as he flipped through CDs at Schoolkids' going-out-of-business sale recently. An MBA student at UNC, he first shopped at Schoolkids when he was a teenager in nearby Burlington. He has about 500 CDs, but most people he knows just download music.

"It's not surprising, but it's disappointing," he said. "You can't come into a place like this that has atmosphere anymore."

Nearby, as his wife thumbed a CD by a group called Stephen Malkmus and the Jicks, Timothy Shelly, who works for a catering company, complained about his recent shopping experience in one of the big chain stores.

"Even in their specialty heavy metal section, they didn't even have Black Sabbath," he said disgustedly.

In a town like Chapel Hill, with a good music scene, record stores also have been venues. Over the years, several bands played on a tiny stage behind Schoolkids' front window, including Tom Tom Club, a Talking Heads offshoot, and John Mayer, before he moved up the ladder to clubs and now arenas.

Like most such places, Schoolkids' walls were lined with posters - Nirvana, James Dean, Led Zeppelin, the Breeders. The rock shelves ran from Aberdeen City to Neil Young. Biggest sellers over the years ranged from groups such as Pink Floyd and Pixies to jazz musicians like Miles Davis and Latin albums including "Buena Vista Social Club," Culross said.

At their peak, around 2000, the five or so stores on the block did around $250,000 worth of business each month, he said. By the end, it was under $50,000. U.S. album sales have plummeted, declining 15 percent in 2007, while digital album sales rose more than 50 percent, according to Nielsen SoundScan.

Some independent record stores are surviving, though mostly ones that don't depend so much on college students.

There is still one independent record store in Chapel Hill, called CD Alley, though it's much smaller than Schoolkids and farther from the center of town. Owner Ryan Richardson, a 1998 UNC grad, says he has an older clientele and cheaper rent. But he's trying to drum up new business, selling turntables and hoping to get more students into vinyl records. The local college radio stations are a big help.

"We can carry all this obscure stuff because there's a good chance people will hear it on the radio," he said. "I'm hoping there's enough of a difference in what we do to keep us going a little while longer."

Schoolkids' owner, Mike Phillips, once owned eight stores, and will now be down to two - in Athens, Ga. (home of the University of Georgia) and nearby Raleigh, near North Carolina State. He said he's been getting lots of e-mails about the store closing, some of them from angry customers.

"If everybody was so damned concerned," he responds, "they should have come in and bought a CD every once in a while."


Interesting anecdote. I used to sell back CDs at Used Kids in Columbus. It was worth the 2 hour drive because they knew their music and generally bought stuff at double the rates of the best stores in Cleveland. Last year I went back there for the first time in 5 years, and despite having a pretty great selection of stuff to sell (Ms. 54 and I were combining our collections, so there were prime catalog items that would sell easily and were in great condition: Beatles, Radiohead, R.E.M., etc.) I got an average of about $1.25 per disc.

#11 theremin

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Posted 27 March 2008 - 09:10 AM

found this yesterday:

http://www.recordstoreday.com/Home

I got a little bummed about the fact that the only record store in a county of 750,000 is closing.

Hardly a day goes by that I don't hear how sad someone is that we're closing, and at the same time how they haven't been in in years, while they buy 5 cds for $10.

#12 Hero

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Posted 27 March 2008 - 09:46 AM

found this yesterday:

http://www.recordstoreday.com/Home

I got a little bummed about the fact that the only record store in a county of 750,000 is closing.

Hardly a day goes by that I don't hear how sad someone is that we're closing, and at the same time how they haven't been in in years, while they buy 5 cds for $10.


by the way, is Dog Ear Records in Libertyville, Illinois (shameless plug) gonna be open today & tmrw?
i gotta stop in and drop off yr dvds and also i need to buy that American Hi-Fi cd from you
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"After much thought into this, I have finally come to a conclusion as to why the Meet the Spartans commercial is so funny:

It is an interesting choice to have Sanjaya sing Im not gay, as his final words on earth. As he is plummeting into a seemingly bottomless pit, he does not say dear god no, I love you mom, or even simply argh. He instead takes the moment to reaffirm to the world, in spite of their doubts, that he is not a homosexual. Not only that, but he continues to sing, despite falling to his certain death. The distinct lack of plausibility of this situation is what produces giggles from our mouth. It is the antithesis to the belief that its funny because it is true.
"


#13 Jimmy TKB

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Posted 27 March 2008 - 09:51 AM

Great thread here guys, some quality reads. I am at the point where my new band is going into the studio, and we are gonna offer paid downloads for sure. We've always pressed CD's in the past, but at this point, I'm wondering if it's worth it. It's funny, when we play in out of the way places like Springfield MO or Mountain Home, AR we always sell tons of CD's, but so much less so in Chicago or Milwaukee. You can see the trends there too. I'd like to do a limited vinyl pressing actually, maybe like 300 LPs.

#14 theremin

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Posted 27 March 2008 - 11:32 AM

Hero: I'll be there at about noon today...maybe 12:30 (gotta get my fucking phone fixed) - till about 4-5 (gotta go to a funeral service.) Tomorrow about the same. Jimmy: I can't imagine that the # of people who would go to a concert and buy a CD there would be affected by the end of the industry. But, if they go to your site, they'd probably buy cheaper downloads than an actual cd. I say, sell them the cd, and give them the immediate mp3s for free.

#15 yancy

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Posted 27 March 2008 - 02:31 PM

Incidentally, and sadly, this year I will spend Record Store Day in Kalamazoo, recently chronicled as a town without record stores in the Chicago Reader's music blog.

#16 JeffTweedysFatStomach

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Posted 27 March 2008 - 03:28 PM

Anyone know of any good record stores on the far South Side of Chicago?

#17 yancy

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Posted 27 March 2008 - 03:43 PM

Beverly Records, which I've been meaning to hit for ages.

#18 JeffTweedysFatStomach

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Posted 27 March 2008 - 03:56 PM

Beverly Records, which I've been meaning to hit for ages.


I've been there and it's best if you're looking for old stuff, as I'm sure you can guess by the website if you've seen it.. Not really aware of anyplace on the SS to find newer albums though - in CD or vinyl format.

#19 Mike N.

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Posted 27 March 2008 - 05:34 PM

The conclusion: more Elvis Costello re-releases are on their way.

#20 yancy

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Posted 02 April 2008 - 01:27 AM

Tonight I tried to buy an album of MP3s using Musicane. "Musicane," you say, "what's that?" Apparently it's a service that allows bands to embed an MP3 selling widget into myspace pages and whatnot. Only it's total fucking garbage. Kept giving me some weird "transaction failed" error. So I bought the digital album at Amazon instead for a buck more. No DRM, but you have to install & use their download manager. You get one shot. If anything goes wrong with the download, you have to contact customer service and ask to try again. Of course one of the files was corrupt. It played, but it was missing MP3 tags and gave me a write operation error if I tried to add them. So I have to get customer service to re-enable that track for me. In summary, the industry isn't doing much to curb my soulseeking ways.