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Monday, January 30th, 2006

I'm Working But I'm Not Working For You

This Best Buy ad has sparked off some really interesting debate about the dilemma the larger indie labels face when large retailers (like Best Buy, Wal-Mart, etc) sell their titles at loss-leader prices, and what that does to the indie stores who have supported the labels over the years, enabling the label to muster the resources to break the larger acts in the first place? And while it’s certainly the label’s duty to ensure that their artists reach as wide an audience and sell as many records as possible, what do they do when this can potentially hurt their own retail base, to whom they also have an obligation? This is one of the trickle-down effects of indie crossing over to the mainstream that lots of people (myself included) had probably never thought of, but as you’ll read, the potential impact of no longer flying underneath the radar of popular culture can be considerable. There’s a lot to read in the following links, but it’s worthwhile to do so if you’re got the time (and the inclination).

Merge honcho Mac McCaughan is offers his POV at their own message boards and at the blog of mail-order house Saki Store where representatives of Matador and Secretly Canadian also weigh in. Read the posts in order starting here, then here, over to here and finally here, with an epilogue of sorts here.

I guess I’m lucky in the sense that there are no big box retailers I could get to from downtown Toronto, even if I wanted to, so that temptation to take advantage of their loss leader tactics isn’t really there, though I have to wonder if these marketing strategies really work? I mean, has anyone really gone into a Best Buy to pick up a cheap CD and walked out with a microwave oven? Furthermore, the good folks at Rotate This and Soundscapes here in Toronto will almost always sell for less than any of the big stores on Yonge St, so I can get a good price and clear consicence for supporting the independents. But if I were still a ‘burbanite with a Future Shop on the corner selling a title for half the price of what the local, low-volume indie store (if such even exists) does, well I honestly don’t know what I’d do. It’s one thing to spend an extra buck or so to buy indie, but if you’re going to be saving six or seven dollars a title, well dang – that adds up. What’re your thoughts on the matter?

And sorry about the relative lameness of today’s image. I wanted to find something like the Best Buy mascot being suplexed by Cat Power, but curiously Google Images came up empty.

And while I’m talking Superchunk, it’s exciting to note that the band are ending their hiatus to play SxSW in March, probably snagging the 1AM slot at Antone’s on the 18th to close out the Merge showcase and the festival itself. I doubt I’ll be willing to spend the time in line the ensure getting in to that one, but it’s certainly an option. And the band has been posting rarities on their website that didn’t make it onto their Cup Of Sand compilation from a couple years a go. Here’s the current one:

MP3: Superchunk – “Kicked In” (acoustic)

And there’s a lot more good stuff on their audio page.

Know how I said a couple days ago I didn’t know when Rainer Maria’s new one Catastrophe Keeps Us Together came out? Scratch that – it’ll be in stores April 4 on Grunion Records. Yeah, I don’t know who that is either. CMJ has a little info.

The Pitch talks boxing with Aimee Mann, who has begun an acoustic tour that will bring her to the Mod Club on February 6 with Chuck Prophet (via Largehearted Boy). Artvoice also has a feature and The Rocky Mountain Bullhorn finds out what she’s been listening to lately – nothing.

Harp reflects on the artistry of Jason Molina’s Magnolia Electric Co, who are in town March 25 at Lee’s Palace with Destroyer and Nedelle.

Howling Bells are finally streaming a new song on their website. “Wishing Stone” will be the band’s next single and is due out on Bella Union on February 27. There’s already a video produced and circulating out there somewhere – if someone finds it online, please share.

The Washington Post floats some new lingo to peppen up the category names in the Bloggie Awards. Tomorrow’s the last day to vote, so if you haven’t yet, please do so (for me as Best Canadian, natch) and if you’re stumped on some of the other categories, might I suggest Photojunkie for Best Photography (but NOT best Canadian… sorry Rannie!), Said The Gramophone for Best Writing and You Ain’t No Picasso for Best Teen?

np – Tanya Donelly / Beautysleep

By : Frank Yang at 8:56 am
Category: Uncategorized
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  1. Sean says:

    Here in St. Catharines all the indie record stores went out of business this past year… I think it was the coming of HMV that really did them in.

    To be fair, none of the stores ever really did anything to stay on top of new releases. It was always the same stock all the time. So anyways, if I can get indie albums from Best Buy for $7.99 there’s no question where I’ll be buying them from.

  2. cassie says:

    Uh, what the heck is "loss leader"? Is this an obvious bit of terminology that I’ve just never heard?

  3. Frank says:

    a "loss leader" is a type of promotion where a retailer will advertise and sell products at a loss, like these CDs Best Buy is selling below cost, in order to draw customers into the store in hopes that while they’re there, they’ll buy more expensive goods which will offset the losses. I’m not a businessperson, but I’ve never been convinced that this strategy works. Which isn’t to say I haven’t taken advantage of it before…

  4. dontneedanything says:

    unfortunately, we dont even have indie record stores around here. i have no choice, since i have no credit card, to go buy from best buy and walmart and all. i went in trying to find a copy of "rabbit fur coat" this week and came out without it because they didnt even have it. god i hate kansas city some times!

  5. Jesus Christ says:

    I didn’t create Wal-Mart, but I know the guy who did.

  6. Torr says:

    Frank (or anyone else) do you know of a website for the Toronto band Boy? I’ve heard ’em on XM’s Canadian music station and they’re pretty good. They’re playing SXSW. However I can’t find their site since they have such a google-challenged name. Let me know, thanks!

  7. Frank says:

    Torr

    Their website is:

    http://www.boytheband.com/

  8. Sandra says:

    Wow, there was sh*tloads of stuff to wade through on that series of links. I tend to think that Bestbuy’s foray into "indie" will probably fail in the end. Big question is the impact it’ll have on indie stores in the meantime. I don’t see the surbarban box stores siphoning off too much business from the indie retailers which are almost always located downtown, although obviously there is an impact. But just read the copy for that ad. Talk about dumbing down! Granted some of those artists have more universal appeal than others, but, in general, I don’t they’re not going to turn someone perusing the top 40 section into an "indie" fan by virtue of a lower price point.

    And if as you point out, people go in expressly for the purpose of buying those cds (which is especially the case for online shopping), Best buy only stands to lose money. I chuckled when I read that the people against this move were clearing the shelves of their stock – to prevent legitimate purchases while ensuring that Bestbuy lose $1.50 per cd. Brilliant!

  9. Eric says:

    Is ‘Left of the dial’ that common of a term? I would hate to think the best buy ad had a Replacements reference in it.

  10. Merry Swankster says:

    I’ve posted a response to this practice on my site. For the record, this is not a "new" tactic by the bix box retailers. New releases, especially from developing artists have been way cheap for years now.

    http://www.merryswankster.c

  11. Dave says:

    "I mean, has anyone really gone into a Best Buy to pick up a cheap CD and walked out with a microwave oven?"

    Really can’t imagine that this happens more than once in a blue moon.

    However, the reverse — walk into Best Buy to pick up a cheap microwave and walk out with a microwave and a couple of cheap CDs — has to happen all the time (a variation of it happened to my wife yesterday).

    Unless there is some other form of loss leadership in mind — lure with the cheap CDs, hope they buy some overpriced CDs or DVDs as well? — the reasoning has to be something more nefarious.

    Like driving the competition out of business and monopolizing what is left of the dwindling CD market?

    Nah.

  12. Eric Grubbs says:

    As a former employee of Best Buy and as someone who still shops there, along with indie stores, I felt I should blog about this.

    My story is up on here:

    http://themeparkexperience….

  13. douglas martin says:

    this is kinda ironic, because i bought cat power’s cd at best buy for $7.99 the day it came out.

  14. hanson says:

    working for and getting paid by The Man means i can still support independent record stores, even if it means paying a couple bucks more for each cd. here’s to me not losing my job!

  15. thomaus says:

    Jeez. You got me excited about this until I finally figured out the sale is at Bestbuy.com. Not .ca. I’ve guiltily bought discounted indie CDs at Bestbuy and Future Shop instead of my local indie stores. If they actually had the sale discs in stock. Many times the ad might list the CD–but it actually wasn’t in the store. My current guilty purchases have been from emusic.com. Their into offer sucked me in, and now i’m on the 40 tracks per month plan paying US$10 for non-DRM MP3s. The selection is way better than the big box discounters — 80% of the chomewaves best of 2005 albums are available. And they don’t take up shelf space. Way cool. Hopefuly the artists make a bit of coin from them.

  16. Toby says:

    Best Buy isn’t losing any money on these cds, so there is no "loss leading". They’ve negotiated a deal with prospective labels where Best Buy purchases MASSIVE quantities of cds by these bands at a temporary wholesale price reduction. For them it’s "Do we sell 200 of this band’s cd a week at a $3 over cost and profit $600, or do we sell 20,000 at $.25 over cost and profit $5000.

    For the label it’s great promotion. They get their band in millions of Sunday paper ads, and they get endcap marketing in-store. Plus, Best Buy will purchase more than they can sell during the promotion, so it ensures premo display space long after the sale.

    Also, contrary to popular belief, labels do think of the future. This is why you could buy The Killers cd for $6.99 for most of 2004. The labels maybe didn’t make as much money on the first Killers album, but they’ll make an ass load on the next one.

    Don’t cry for Best Buy or the labels. Neither do anything intentionally that doesn’t make financial sense. Buy while the buying is cheap.

    PS – How anybody is making money off selling at emusic is beyond me, but you’re damned sure I’m signed up for 90 songs a month ;)

  17. Kevin says:

    The funniest (saddest?) part of this ad is this line: "Choose from 20 impress-your-friends selections … " Because, really, that’s the only reason to listen to indie music.

  18. cbotwell says:

    http://photos1.blogger.com/… hahaha

  19. Merry Swankster says:

    Toby – You clearly have no idea what you are talking about. Yes they do lose money on the CDs, but they think of it as advertising…a way to get a customers foot in the door and maybe they’ll buy something else. Its rather brilliant. Check out my post on the subject – http://www.merryswankster.c

    As for eMusic – they also make money! Check out my post and link to the eMusic CEO article from mp3.com – http://www.merryswankster.c

  20. Charlie Shill says:

    Besides, most of these ‘loss leaders’ don’t really cost the retailer much profit. If you see it advertised, the item has probably been co-opped by the label and the retailer given special cost reductions. Best Buy, Wal-Mart and their ilk are not going to spend money on any music product to advertise and sell below an acceptable profit margin.

  21. Ryan Waddell says:

    Note: there’s a Futureshop at Yonge & Eglinton, which technically is a big box store accessible from downtown. :)

  22. Frank says:

    re: future shop – do they sell CDs there? I’ve never been to that one. I live a few blocks from the Yonge/Dundas one, but they’ve got nothing.

  23. Taylor says:

    Wow, I am excited to hear that Rainer Maria has a new album coming out – I had wondered what happened to them.