Long Live the Record Store

June 29, 2007 — -- Clark Benson, CEO and founder of the Almighty Institute of Music Retail, loves his CDs. For Benson, as well as many hardcore music lovers, perusing the racks at the local record store is an art, a pastime lost on today's younger generation of iTunes addicts.

It's a trend that distresses him and makes him wonder whether today's technology has gotten ahead of the music industry, something he's trying to bring attention to through his organization, which provides information to record labels and retailers.

"There is no question that there are less [sic] record stores now than there were five to 10 years ago … and that's OK," he told ABC News. "There doesn't need to be five record stores in every town or two in every mall, but what we don't want to see is the time when there are no places to go -- outside of Best Buy or Wal-Mart -- to buy music."

Even with dwindling CD sales, down 20 percent from 2006, and scores of record store closings, an average of 550 per year since 2003, Benson stresses that the health and future of the music industry rests on the shoulders of the pure-play music retailers.

"If the average record store can't stay open, it is really going to hurt the music industry faster than the music industry will be able to adapt to the digital medium," he said.

A Warning to the Industry

He recently wrote commentary for Billboard Magazine and warned the recording industry was too quick to shift its allegiance to the digital medium.

Getting rid of CDs and music retailers before new infrastructure and development methods are set up, he cautioned, will leave record labels with insufficient income to fund new, upcoming artists and groups, thus limiting their catalogues and narrowing the kind of music executives are willing to spend money to produce.

As it is now, Benson points out, there are several factors that are accelerating the demise of the CD store -- high prices, digital and big-box exclusives, packing too many album releases in the industry's fourth quarter, and overlooking collectors and audiophiles.

At $17 to $18.89 a pop, CDs are not exactly cheap, especially when compared to the $9.99 to $12.99 sticker price of most online albums. Increased costs turn off consumers as well as retailers, since high list prices mean record stores have to charge customers more in order to make a profit, thus deterring consumers from buying their CDs.

"The consumer these days is expecting and happy to pay about $12 to $13 for a CD," said Benson. "Obviously, the retailer can't make any money on it if they're paying [the record label] $12 for it and selling it for $12 or $13. That's a losing proposition. The record labels that have not yet lowered their list prices -- which is most of them -- need to immediately cut the really high list prices out of the equation."

Another factor responsible for the demise of the CD, according to Benson, is digital previews and big-box exclusives. He argues that digital release-date windows and big-box exclusives gives preference to the digital format by allowing consumers to buy first online and then in the stores, thus leaving retailers high and dry, without the first-day buying frenzy when the CD is released a few days, or even weeks, later.

Season Songs Hit Low Note for the Economy

For the past few years, a "disturbing trend," said Benson, has swept the music industry as artists and managers have tried to squeeze the release date of their records into the last quarter of the year in order to benefit from holiday sales.

"This causes a glut of new product during October, November [and] December, and almost nothing during the first quarter of the year, which means there is nothing driving customers to record stores for nearly half of the year," said Benson. "Studies show that this does not make economic sense anymore, because a lot of the hit stuff gets shrouded by other hit stuff."

Finally, Benson believes that record label's cannot afford to simply overlook collectors and audiophiles -- "the kind of people who buy a minimum of five CDs a month or five albums a month, or some configuration or another."

Instead, he suggested, music executives must cater to these consumers, offering incentives, bundling CDs with free DVDs, generating better CD artwork, and other perks to entice music fans to continue with their purchasing trends.

"It is also really important that the industry understands that the hardcore audiophiles, the people with really expensive sound systems, can tell the difference in a heartbeat between an mp3, which sounds fine on a boom box but flat on a really nice high-end stereo, and a CD sound quality. Until there is a digital file format that's comparable to CDs in sound, you're not going to find the audiophiles embracing digital," he said.

While Benson understands people's desire to convert all music to the digital medium, he insists that this transition does not need to be all or nothing. In his mind, there is room for both CD and digital formats in this market. In fact, Benson believes that providing consumers with a choice of formats actually benefits the music industry.

"There's going to be different ways of enjoying music for the different kinds of music consumers," explained Benson. "It's probably actually going to be more healthy than it was 10 years ago, as far as the quality of music versus what you're looking for as a fan."

In the end, no matter how much the music industry changes, for music lovers like Benson the record store will always be a sacred space, a place for discovery and experimentation mixed with passion and history.

"You don't discover music in Best Buy or Wal-Mart," he said. "You discover music when you browse through a Virgin Mega store or a Tower Records, where you spend an hour in those stores and are turned on to just as much music as you would if you spent an entire night clicking on MySpace links."