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ITunes, Wal-Mart, Springsteen Killing Off the Independents

December 31, 2008

al normanAl Norman • Operation Itch Contributing Writer header

read all posts from Al Norman

Just after Christmas, my daughter Winter took a bag of 30 used CDs to our local independent music store in Greenfield, Massachusetts to see what she could sell the lot for. The store owner offered her a very low price, and when my daughter expressed her surprise at the offer, the merchant angrily threw the CDs back at her and shouted: “I’m losing my store. I’m not going to be here next year!”

The next day I came across the tale of Tape Town, a music store in Morganton, North Carolina. Owner Roy Lowdermilk probably thought that locating his store next to the Wal-Mart in Morganton was a great idea.

The Wal-Mart on Burkemont Avenue in Morganton is probably the largest retail store in this community of just over 17,000 people. But Lowdermilk’s store, Tape Town, never benefited from its location in the shadow of the giant retailer. According to the Morganton News Herald, Tape Town turned off the sound for good on December 27th.

Lowdermilk and his wife opened up their music store in 1972, sixteen years before Wal-Mart came to town. But now their store is dark. “It was a combination of things,” Lowdermilk told the newspaper. He blamed the sinking economy, and the internet as the two main reasons for his loss of sales. One customer in Tape Town told the News Herald that when he couldn’t find music at Tape Town, he didn’t bother going next door to Wal-Mart. Another shopper said he liked shopping at Tape Town over big box stores because it catered to his musical tastes, had reasonable prices and great service. “They’re willing to help,” the customer said. “If I can’t find it here, they’ll help us find it somewhere.”

But great customer service could not save Tape Town, just as it has not saved hundreds of small music stores across the nation. The independent music stores have made some efforts to organize. The Coalition of Independent Music Stores (CIMS) was founded in 1995, but its current membership is made up of only 59 stores in 21 states. Hardly a threat to Wal-Mart.

Lowdermilk claims that during his 36 year run “the loyal customers have kept us there.” Over the years, his store moved several times in Morganton. But in 1988, Tape Town moved right next to Wal-Mart. “Me and Wal-Mart opened on the same day,” Lowdermilk recalls. But the fact is, the Wal-Mart next door helped to kill Tape Town. It didn’t happen overnight, but Wal-Mart turned out to be one of Tape Town’s biggest threats.

And Tape Town was not alone. As of January 2008, the Apple iTunes Store was the largest retailer of music, with 19% of sales. Number 2 was Wal-Mart at 15% of the market–counting sales at both its stores as well as its website. Best Buy cornered 13%, Amazon 6%, followed by companies like Borders, Circuit City, and Barnes & Noble. ITunes being a digital-only retailer indicates how much the music industry has shifted over the past 10 years.

Digital downloads are up, while sales at stores like Tape Town are down—way down. According to the NPD Group, 48% of US teens didn’t buy a single CD in 2007, compared to 38% in 2006. People using digital downloads will select one or two songs from an album that they want–but not the whole CD. By contrast, the music stores rely on sales of entire CDs. In 2007, there was a 10% drop in overall music spending, according to the NPD Group. According to Enders Analysis, physical sales of CDs, as compared to digital sales, will fall from $35 billion in 2001, to $15 billion in 2012. This continuing loss of sales will come from a lot of independent stores like Tape Town across small town America.

Last August, Wal-Mart announced an exclusive release contract with the band AC/DC, whose album was produced by the same person who has produced Bruce Springsteen in the past. Just before Christmas, it was announced that following its success with the “Black Ice” album, Wal-Mart had signed an exclusive deal to sell Bruce Springsteen’s “Greatest Hits,” starting Jan. 13, 2009. The Boss has signed on with the Retail Boss, much to the chagrin of his many fans, who saw Springsteen as the voice of the disenfranchised. Now he’s just another Walton commodity. Born in the U.S.A. meets China-Mart.

Back in Morganton, if Roy Lowdermilk wants to understand where many of his loyal customers went, he can walk next door to Wal-Mart and pick up an AC/DC or Springsteen album. Tape Town tried to ride the crescendo with Wal-Mart by its side, but ended up with a less than grand finale instead.

For Roy Lowdermilk, the music has died.

Al Norman is the founder of Sprawl-Busters. He has helped grassroots citizen’s groups stop big box stores for the past 15 years. His website is http://www.sprawl-busters.com.

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One comment

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