Wal-Mart tells Record Companies "Slash your prices by 1/3rd or we drop you"

[SirFozzie]

http://www.rollingstone.com/news/sto...t_wants_10_cds

Scary thing. Wal-Mart and subsidiaries are 20% of record companies sales... CDs are 2 % of Wal Mart's sales.

It's pretty obvious who has the heavy end of the hammer in THAT relationship.

Like these quotes:

"If you don't have a Wal-Mart account, you probably won't have a major pop artist,"

"If they got out of selling music, it would mean nothing to them," says another label executive. "This keeps me awake at night."

Wal-Mart has no long-term care for an individual artist or marketing plan, unlike the specialty stores, which were a real business partner," says one former distribution executive. "At Wal-Mart, we're a commodity and have to fight for shelf space like Colgate fights for shelf space."

(whistles a few bars of "The times, they are a-changing")

[Ksyrup]

Posted Oct 12, 2004 12:00 AM


Um...?!

[SirFozzie]

Whoops! Stupid slashdot

edit: Ah, I see what happened, they brought it up again (this story is from 3/1)

http://news.yahoo.com/s/nm/20080302/media_nm/walmart_dc

NEW YORK (Billboard) - The major music companies have been resistant to lowering their price on CDs, but now they may be dragged to that point: Wal-Mart, the largest retailer of music with an estimated 22 percent market share, has proposed a five-tiered pricing scheme that would allow the discounter to sell albums at even lower prices and require the labels to bear more of the costs.

According to sources, the Wal-Mart proposal would allow for a promotional program that could comprise the top 15 to 20 hottest titles, each at $10. The rest of the pricing structure, according to several music executives who spoke with Billboard, would have hits and current titles retailing for $12, top catalog at $9, midline catalog at $7 and budget product at $5. The move would also shift the store's pricing from its $9.88 and $13.88 model to rounder sales prices.

[CamEdwards]

Wow. I had no idea Wal-Mart accounted for that much in record sales. I don't think I've ever bought a cd at Wal-Mart.

[Ksyrup]

Me, either. I don't remember the last time I've even browsed their CD racks. I don't think they'd have anything I'd want to buy, and if they did, it would probably be the "clean" version anyway.

[SirFozzie]

That's because the Tower Records type places, the audio megastores, have just gone away. The story (admittedly 3 1/2 years old ) said half of all music was sold through Target, Best Buy and Wal-Mart. That #'s gone up, not down, probably (unless places like Amazon have taken up the slack)

[Anthony]

again, in 50 years there will be no record labels. i think it'll happen sooner, but i'm being conservative.

[wade moore]

Originally Posted by CamEdwards

Wow. I had no idea Wal-Mart accounted for that much in record sales. I don't think I've ever bought a cd at Wal-Mart.

I have and never will again.

It's one thing if you won't sell CD's with explicit lyrics.

It's one thing if you censor (via bleeps, etc) CD's wtih explicit lyrics.

It's another if you sell CD's that bleep explicit lyrics without any warning whatsoever to the customer.

I almost got in a fight with a Wal-Mart manager several years ago over this until they finally saw the light and gave me my refund.

[Passacaglia]

Originally Posted by SirFozzie

That's because the Tower Records type places, the audio megastores, have just gone away. The story (admittedly 3 1/2 years old ) said half of all music was sold through Target, Best Buy and Wal-Mart. That #'s gone up, not down, probably (unless places like Amazon have taken up the slack)

I can see that. I don't even know where I'd buy CDs anymore. There's Borders and Best Buy, but for something remotely hard to find, if I wanted it on CD, I'd be at a total loss. I guess I'd check Amazon.

[stevew]

At least Target and Kmart will sell non-edited versions. Even if their selection is pretty poor.

[SackAttack]

Best Buy does too, but it's weird.

Some stuff comes in explicit, some stuff comes in edited, we never get "both" versions of any given CD in-store, but bestbuy.com will frequently sell both.

It's schizophrenic and totally absurd.

[Honolulu_Blue]

I think I can count the number of times I've ever shopped at a Wal-Mart on one hand. The last time I was in one had to be about 6 years ago when I was in Lake Charles Louisianna on business and wanted to buy a basketball so me and some co-workers could play a game since we finished work early.

If I there's anyway to avoid it, I will never shop at Wal-Mart. I don't shop to Sam's Club either. (Costco!)

That said, CDs have been way over priced for years.

[Marc Vaughan]

Originally Posted by stevew

At least Target and Kmart will sell non-edited versions. Even if their selection is pretty poor.

At least around here the Target selection is huge compared to Walmart which comprises of a huge shelf of christian stuff, a huge shelf of country stuff and a small shelf for everything else*.

*Yes I know I now live in America, but its taking a little getting used to - thank god for Itunes is all I say ...
Plus how on earth does Lilly Allen of all people manage to get her records sold in Walmart unedited? - I presume they don't understand english slang

[SackAttack]

Originally Posted by Marc Vaughan

At least around here the Target selection is huge compared to Walmart which comprises of a huge shelf of christian stuff, a huge shelf of country stuff and a small shelf for everything else*.

We have three Wal-Marts in Santa Clarita, but two of them are out-of-the-way enough I never go there.

The one that's close by USED to have a fairly robust music selection, but after cassette tapes went away, they drastically reduced the space allocated to CDs so that it basically looks like what you've described.

The leftover room went to mp3 players and DVDs.

[sabotai]

Originally Posted by Marc Vaughan

Plus how on earth does Lilly Allen of all people manage to get her records sold in Walmart unedited? - I presume they don't understand english slang

Probably not. I'm not sure exactly who determines what is explicit or not, but US slang moves too fast for whoever it is, so I doubt they even have time to try to understand slang from another country.

[vtbub]

Originally Posted by Hell Atlantic

again, in 50 years there will be no record labels. i think it'll happen sooner, but i'm being conservative.

I think you are dead on. We might be talking 15-20 years if groups can find a way to finance themselves production wise until they can become profitable. The genie is completely out of the bottle.

[Anthony]

i don't like Wal-Mart. the Wal-Marts in NY have that "this is where poor people shop" vibe. i don't feel happy being in Wal-Mart (and i've found myself in one roughly 5 or 6 times). i like the vibe of Target a litte better. everything just feels cheap and discounted and for people in a lower class than i'm in. it sounds pompous, but i don't think i'm the market that Wal-Mart is catering to. they want soccer moms and families on budgets in there. which is good for those people.

[stevew]

I would guess it will first transition to some sort of promoters/money men scenerio which should lead to a more reasonable split of revenues, since there will be a lot less hands in the till.

It also wouldn't suprise me to see a lot of the music go back to regional, at least early on.

[A-Husker-4-Life]

I really only listen to Indy musicians and most of the time you can download their album off their site for around $10 dollars. I also avoid Wally world as much as possible and couldn't imagine buying music there.

[Anthony]

Originally Posted by vtbub

I think you are dead on. We might be talking 15-20 years if groups can find a way to finance themselves production wise until they can become profitable. The genie is completely out of the bottle.

NIN and Radiohead have released albums themselves via the internet. just you wait until Coldplay does it by leaving EMI and following suit. you do need the robust marketing of the labels to get noticed, but i think once you're established you could do worse then go it alone and determine your own pricepoint. even iTunes makes it easy to get your music out, i wouldn't be surprised to see Apple/iTunes take on more of a record label approach and get into heavy marketing.

what do you need a label for? 1.) to distribute your album; 2.) to market your album. these two things can be accomplished other ways in this century. 1950's was a different story. simply aren't needed or necessary anymore. that's why i got out of the music industry. i was in royalties and i got into the industry 4 years ago when it was on its downturn and i thought things like itunes was gonna revitalize the industry. that didn't turn out so well for the labels. if people aren't downloading music for free, they're only paying 99cents for a single. no one wants a cd that much these days.

[Ksyrup]

Originally Posted by Passacaglia

I can see that. I don't even know where I'd buy CDs anymore. There's Borders and Best Buy, but for something remotely hard to find, if I wanted it on CD, I'd be at a total loss. I guess I'd check Amazon.

There are great genre-specific labels online. For metal and prog, The End and InsideOut; for power pop Not Lame. And then there's CD Baby for unknown artists of many genres. Or, a lot of artists are just selling direct. If I can't find it at BB (or online at BB.com), most stuff is pretty easy to find online, and usually fairly cheap.

[JonInMiddleGA]

Originally Posted by Marc Vaughan

At least around here the Target selection is huge compared to Walmart which comprises of a huge shelf of christian stuff, a huge shelf of country stuff and a small shelf for everything else*.

WM's (and most any of the big box retailers) are going to allocate shelf space to what is most likely to sell at a given location, based to a pretty good extent on the demographics for that store location. A quick look at the census for Rockledge, FL tells me that (as of 2000) it's over 81% white, 14% black, and 3% Hispanic/Latino. It's also quite a bit above average in household income, and quite low in percent below the poverty line.

Taking that info (and some limited past experience with WM's store set philosophy) I could have pretty much predicted the music department layout.

edit to add: Looks like your closest Wal-Mart is probably either Viera or Merritt Island, both of which have demographics that are skewed even more heavily white & equal or higher incomes.

dola edit: Looks like you're probably in the Melbourne-Titusville-Cocoa radio market, and the ratings there do a pretty good job of matching the selection you described. #1 and #5 stations are Country and those plus various news/talk formats (which often share listening with Christian formats) account for over 25% of all radio listening. And Oldies + Standards have a larger audience share than rock+alt or all the pop variations or the AC's.

[ThunderingHERD]

Walmart vs. record labels? This is like the "unstoppable force vs. the immovable object" of stuff the internet hates.

[Telle]

From what I've read, this is standard operating procedure. Make a supplier dependent on you for their sales, and then demand that they slash their prices deeper and deeper.

[Raiders Army]

Whoever thought Walmart would be the good guy?

[Passacaglia]

Originally Posted by Raiders Army

Whoever thought Walmart would be the good guy?

See the post above you. I don't think Walmart is exactly the good guy here.

[molson]

Originally Posted by Passacaglia

See the post above you. I don't think Walmart is exactly the good guy here.

What's wrong with that? Do you think record companies have some sort of moral right to Walmart space at their desired price?

[Raiders Army]

I'm looking at it from a consumer POV.

[jbergey22]

Originally Posted by Hell Atlantic

i don't like Wal-Mart. the Wal-Marts in NY have that "this is where poor people shop" vibe. i don't feel happy being in Wal-Mart (and i've found myself in one roughly 5 or 6 times). i like the vibe of Target a litte better. everything just feels cheap and discounted and for people in a lower class than i'm in. it sounds pompous, but i don't think i'm the market that Wal-Mart is catering to. they want soccer moms and families on budgets in there. which is good for those people.

Another well thought out post I see. Are you living in the 15th century? All shall be a peasant for the almight HA.

Walmart like most things are for the middle class(majority) in which most people can find a need for.

No need to worry you dont sound pompous, you sound like an ignorant fool.

I can say I dont go to Walmart much because I hate waiting in lines and it always seems extremely busy. I really wouldnt say it has anything to do with a bunch of hard working middle class people trying to save a few pennies bothering me.
You may be able to make a point on this if you didnt say it in such a demeaning way. Do 'those people' make the place stink or something?

[kcchief19]

At the risk of sounding like I'm stealing Sir Fozzie's material, this is exactly why Big Music is going straight in the dumper.

I went out shopping for some last minute Christmas presents CD-wise. It was the first time I had actively shopped for music at a store in years, since most of my music is purchased via iTunes or Amazon. I was horrified at the limited selection. Wal-Mart's selection was horrible, and Best Buy wasn't much better. I was able to find one CD I wanted at Barnes and Noble and a couple of others at Borders. And it wasn't just because it was the holidays -- several of the CDs I inquired about were "special order" only, and one of them had only been out for a month.

I don't know how the music industry can rely Wal-Mart, Best Buy and the like for CD sales when there simply isn't the shelf space to support it. How can your product succeed when the store selling 20% of your prouct carries less than 1% of your products?

Now their reliance on Wal-Mart is getting them screwed. The two most idiotic business groups in the country have to be music and airline executives.

[Anthony]

Originally Posted by jbergey22

Another well thought out post I see. Are you living in the 15th century? All shall be a peasant for the almight HA.

Walmart like most things are for the middle class(majority) in which most people can find a need for.

No need to worry you dont sound pompous, you sound like an ignorant fool.

I can say I dont go to Walmart much because I hate waiting in lines and it always seems extremely busy. I really wouldnt say it has anything to do with a bunch of hard working middle class people trying to save a few pennies bothering me.
You may be able to make a point on this if you didnt say it in such a demeaning way. Do 'those people' make the place stink or something?

well, the WMs by me have that dingy feeling. and like the electronics section (from what i saw) didn't have like the most cutting edge stuff. and as is the case with most discount places, the clothes section seemed all disheveled, the jewelery section had that aura of cheap stuff. just not my kinda place. i guess my biggest gripe is the overall presentation. yes, i'm saving a bundle on the goods i purchase from you - but don't make me feel like a Third Worlder rummaging through the general store.

[Drake]

Oddly enough, the experience HA describes is the same way I feel about Big Lots, but I don't know if this is a regional phenomenon or truly a shoddily run/branded company.

[jbergey22]

Originally Posted by Hell Atlantic

well, the WMs by me have that dingy feeling. and like the electronics section (from what i saw) didn't have like the most cutting edge stuff. and as is the case with most discount places, the clothes section seemed all disheveled, the jewelery section had that aura of cheap stuff. just not my kinda place. i guess my biggest gripe is the overall presentation. yes, i'm saving a bundle on the goods i purchase from you - but don't make me feel like a Third Worlder rummaging through the general store.

Better explanation. I would agree for the most part.

[SteveMax58]

Originally Posted by Drake

Oddly enough, the experience HA describes is the same way I feel about Big Lots, but I don't know if this is a regional phenomenon or truly a shoddily run/branded company.

Nope...I think they're all like that. My wife used to go to one close to where we used to live, but I only went once or twice. Just didnt seem like someplace I wanted to browse.

As far as WM...I've seen very nice and very bad throughout a few states. Most tend to fall closer to very bad, but I will say a few were very nice and pleasant.

[stevew]

Big lots is always shitty, but they will have pretty good deals from time to time. Usually they are worth checking out when I'm out that way.

[Anthony]

i'm assuming the Wal-Mart outside of the urban areas are more appealing. like in the heartland of the country. or maybe just not in NYC.

[zums]

this shouldnt be a big deal... walmart does the same thing with their dvds.

new releases are like $20 for a couple weeks. then there are the big racks split up into price tiers of like $13, 10, 7.50 etc... then there is usually a bin of like 3 for 10 or something.

why is there such an outrage over this when the movies have been this way for quite a while?

[Drake]

I like getting dressed up to go to the Wal-Mart. It's the highlight of my weekend.

[stevew]

I prefer to shop at Dollar land, it's a lot more casual than WalMart.

[JonInMiddleGA]

Originally Posted by Hell Atlantic

i'm assuming the Wal-Mart outside of the urban areas are more appealing. like in the heartland of the country. or maybe just not in NYC.

I'd say almost definitely "more appealing" but the degrees vary without a doubt. I seen pretty darned good ones in larger suburbs and I've seen incredibly bad ones in rural areas, so like most chains there's a lot of variance in the quality of the store's upkeep.

WM was never really intended for truly urban environments, it just wasn't part of the original design. It was focused on suburban, exurban, and rural & it's been relatively recently that they even went into larger urban areas with locations closer to the center city.

Meanwhile, on a different note (no point in a dola here), BigLots pretty much is a Third World shopping experience. There's some bargains to be had there but the experience has been borderline crap in every single one I've ever seen.

[stevew]

Our Wal Mart is one of the largest in the US, but the stuff is spread out so far it's like a half mile trek if you forget to get something like Dog Food. Still it's pretty nice, but they could easily fit the same amount of merchandise into a store 3/4ths as big, and you wouldn't feel like you were losing anything.

[Axxon]

Originally Posted by jbergey22

Another well thought out post I see. Are you living in the 15th century? All shall be a peasant for the almight HA.

Walmart like most things are for the middle class(majority) in which most people can find a need for.

No need to worry you dont sound pompous, you sound like an ignorant fool.

I can say I dont go to Walmart much because I hate waiting in lines and it always seems extremely busy. I really wouldnt say it has anything to do with a bunch of hard working middle class people trying to save a few pennies bothering me.
You may be able to make a point on this if you didnt say it in such a demeaning way. Do 'those people' make the place stink or something?

It's funny because I agree with HA on this one and I only shop at Wal-Mart now because I'm poor ( no car and it's the only supermarket in walking distance ). Doesn't bother me one bit that someone who has more money than me would see that and not particularly want to shop there. There's a Grand Canyon sized line between wanting to buy to your means and disrespecting others who do the same. HA didn't strike me as thinking the latter. Now, the people who are poor and don't shop there because the place is where poor people shop are kinda sad and I feel for people who care that much about class.

Now, do they stink? I haven't noticed and at the store I shop at there is a veritable cornucopia of hot soccer moms shopping so yeah, the place seems cheap but it's easy on the eyes.

[Axxon]

Dola,

I'm in the process of dumping the current 4 gigs on my mp3 player and load up on another 4 gigs of music I've never heard from Rhapsody. I do this roughly once a week. That costs me $4 a week. I don't get bored of it. I listen to complete CD's and I don't get pissed off or feel cheated if I don't like something. My enjoyment and understanding of music has increased incredibly since I started doing this.

I'm quite sure that I have given the music industry more money on this subscription plan than I have in any other delivery form for music.

Again, I'm probably in the minority here but this is the perfect business model for someone like me. I have recently read an article saying that CD's are dead and digital is the future of music. Once/if that happens, I'd say that the monthly one cost buys all plan is going to be way people get music. For the life of me, I can't see how this is a bad thing for anyone.

[SackAttack]

Originally Posted by Axxon

Dola,

I'm in the process of dumping the current 4 gigs on my mp3 player and load up on another 4 gigs of music I've never heard from Rhapsody. I do this roughly once a week. That costs me $4 a week. I don't get bored of it. I listen to complete CD's and I don't get pissed off or feel cheated if I don't like something. My enjoyment and understanding of music has increased incredibly since I started doing this.

I'm quite sure that I have given the music industry more money on this subscription plan than I have in any other delivery form for music.

Again, I'm probably in the minority here but this is the perfect business model for someone like me. I have recently read an article saying that CD's are dead and digital is the future of music. Once/if that happens, I'd say that the monthly one cost buys all plan is going to be way people get music. For the life of me, I can't see how this is a bad thing for anyone.

I'd like to see a subscription model supplement à la carte purchases (especially on iTunes), but I wouldn't want to see subscription-based supplant à la carte entirely.

[Ksyrup]

I posted this in the "images" thread a while back, and think it works here, too:



We do our grocery shopping at Wal-Mart. I don't love shopping there, but the difference in what we pay there versus either a stand-alone grocery store or a Target/Meijer grocery is ridiculous. Wal-Mart's fruit selection generally sucks, so we usually shop at Meijer for fruit and whatever they have on sale that week, and Meijer and/or Target for non-grocery stuff, but it's Wal-Mart for groceries. We did some informal testing, and we think we save on average $20-30 a week at Wal-Mart.

[Axxon]

Originally Posted by SackAttack

I'd like to see a subscription model supplement à la carte purchases (especially on iTunes), but I wouldn't want to see subscription-based supplant à la carte entirely.

Well, that's already in place. You can pay per song and per cd on Rhapsody. I believe it's .99 a song. I know that I have friends who have thrown me the cost of buying the CD and a couple of bucks to download and burn stuff they can't easily get at the brick and mortars.

The difference I think is that the ala carte supplements the subscription not vice versa.

[terpkristin]

Originally Posted by Hell Atlantic

i'm assuming the Wal-Mart outside of the urban areas are more appealing. like in the heartland of the country. or maybe just not in NYC.

I don't know if it's "more appealing" or what have you, but I've found that in places where Wal-Mart is the only option, people treat the Wal-Mart's better.

I used to go caving in West Virginia all the time, and as such, went to some towns where Wal-Mart was the clothing store, grocery store, auto part store, etc. I'd walk into one of those Wal-Mart's and it was clean, people were respectful, and it was a generally pleasant experience.

On the other hand, here in Ashburn, we have a Wal-Mart, 2 Target's within a 1/2 mile radius of said Wal-Mart, 2 big-box electronics stores within a 1/2 mile radius of said Wal-Mart and a number of grocery stores and fast-food chains in the immediate area. Wal-Mart here is dirty. When I walk in, it's loud, there is merchandise all over the floor (where the a-holes who knocked it off the shelf don't bother to pick it back up), and it is generally a miserable shopping experience.

The difference? Average household income of I'm guessing about 75k/year and other options in Ashburn such that people feel they can "relegate" Wal-Mart to a lower social standing. It's disgusting, really. My dad (in Maryland) considers walking into a Wal-Mart in Columbia to be like walking into a level of hell. Compared to how different it is from walking into a Wal-Mart in Elkins, WV, I can't say I disagree...


On the music subscription thing, that kind of service has never interested me. Instead of renting via download, I've found I use my satellite radio and internet radio to find new sounds, and then buy a la carte from Amazon (or iTunes Plus) or I go get the CD. Subscription services really are no different, just a different delivery method, so I can see the interest in it. Of course, though I convert all of my music to be used on an iPod, I still generally prefer to buy the CD for the higher quality rip I can do from that than from a download...

/tk

[Anthony]

Originally Posted by Axxon

It's funny because I agree with HA on this one and I only shop at Wal-Mart now because I'm poor ( no car and it's the only supermarket in walking distance ). Doesn't bother me one bit that someone who has more money than me would see that and not particularly want to shop there. There's a Grand Canyon sized line between wanting to buy to your means and disrespecting others who do the same. HA didn't strike me as thinking the latter. Now, the people who are poor and don't shop there because the place is where poor people shop are kinda sad and I feel for people who care that much about class.

Now, do they stink? I haven't noticed and at the store I shop at there is a veritable cornucopia of hot soccer moms shopping so yeah, the place seems cheap but it's easy on the eyes.

thank you for sharing this. i didn't mean to be holier than thou with my earlier posts. there's a very rich, ritzy strip mall two towns over - perhaps you've heard of it - it's called the Miracle Mile (in Long Island, NY). they have shops there that are clearly above the means of my wife and i. shops like Burberry, Hermes, Prada, Gucci, etc. that sort of thing. they also have a Gap. now, while i bought a pair of expensive rain boots for my wife at Burberry, and i clearly felt the difference shopping in there as opposed to WM (for obvious reasons). but i don' have the means to shop at these places all the time, if anything i could roll in the Gap. but the funny thing is the Gap in this mall feels different than the Gap in other malls. the ambience or aura is higher. you get the feeling of "i like shopping here, and i like being seen shopping here by the other people who are shopping here. even if i can't afford the Prada store, i can afford the Gap store in the Miracle Mile." so that's what my gripe is about shopping in WM. hey, i don't want to pay $20 more for a pair of jeans if i can get it cheaper elsewhere, i don't have money like that. but if the drawback is going to be i'm going to be made to feel like i am cheap and not deserving of a higher quality or higher calibre shopping experience than i'm not interested. my wife yells at me cuz some of my work pants are slowly getting disheveled, and tells me i need to buy clothes more often. i tell her i rather save my money, buy one nice pair of pants and feel better about myself than buy 4 pairs of pants and feel like i'm getting a handout on the breadline.

i'm not rich, but still, if i'm going to shop i'm going to make it worth it and i'm going to wait till i can afford a better buying experience. i think that's ultimately what i was getting at - i don't like the ambience and experience of shopping at WM and would prefer to wait till i can afford to shop amongst people who are a few income levels above me.

[MJ4H]

I think our Wal-Marts around here must be like something out of Star Trek to you guys. They are really pretty nice and well-maintained. Of course I live 5 minutes from the largest Wal-Mart in the universe apparently and 10 minutes from Wal-Mart corporate HQ so I guess that shouldn't be a surprise. But that is what I am used to when I think of Wal-Mart, so I'm always a little surprised by others' perceptions of it.

Seriously, though. Ours are pretty immaculate and I would certainly not say it has a lower class of people that shop there. Now if I drive about 25 minutes to the 6th street Wal-Mart in Fayetteville, I can see what you are saying entirely.

[Honolulu Blue]

I have no opinion on the original subject, but some comments on the Wal-Marts in our area. They've all been built in the last 5 years, so they're relatively new and seem well maintained. I noticed a lot more NASCAR shirts and, um, crimson throats among the customers than at similar places when I bother to go. The last time I went was about 6 months ago, and I'm not in a hurry to go back. I have lots of shopping options and Wal-Mart isn't at the top for any of them.

Sorry Sam.