August 18, 2005
Oldies are now singing a new tune - Music stores go digital
by Susannah Calahan - New York Post
Half of Americaís independent record stores have closed since 2003, and a handful of music retailers in the tri-state area are trying to reinvent themselves to make sure that they arenít next.
Pioneering on what may be called a trend, Scottiís Record Shop in Summit, N.J., the oldest independent chain music retailer in the country, survives by appealing to the 20 million iPod users.
This past March, Gary and Jeff Scotti, brothers and co-owners, began the "Buy it, Burn it, Return it" policy, allowing people to purchase a CD and return it for 70 percent in-store credit as a cheaper alternative to Appleís iTunes digital-music service.
"Everyone in and around New York has an iPod, and theyíre walking around with this hand-held computer that stores and organizes music," says Gary Scotti, "Itís really opened up a new market for us; we just have to learn how to use it." And so far it seems to be working. "Iím maintaining customers, getting them to keep their money local and take a chance on new music," he says.
In other steps forward for independent record stores, Touch-media, a company who provides digital media product to retailers, created the Touchstone, a digital media platform that sells products with the help of digital downloads. The Touchstone downloads music and burns CDs with a touch of a button.
This is good news in the face of dwindling CD sales and increased pressure from digital downloading services.
In 2004, while album sales at mass merchant music outlets were up 10 percent compared to 2003, sales in independents were down 10 percent, according to figures gathered from Scoop Marketing.
And Josh Bernoff, vice president of Forrester Research, says that in this year alone, album sales have lost $500 million to digital downloading. And he predicts that itís only getting worse.
"The record industry is going to shrink," Bernoff says. "Itís just so much more convenient to buy your music down by the wire than to walk down the street." But independent record stores arenít giving up just yet. Overall price point dropping, increased reliance on used CD sales and stocking of music related merchandise have kept many independent music stores afloat.
Within the splintered community of independent music retailers, there are forums for record stores to have a voice.
CMJ ó College Music Journal ó profiles independent record stores and provides a "Speak Out" section for stores to share their marketing stragies and complaints, including the new Starbucks exclusive deal with
Bob Dylan. And Almighty Institute of Music Retail helps record stores and labels better communicate with a database of all U.S. music retailers and distributors.
Many retailers straddle the fence between old and new, placing iPod cases alongside turntable needles and selling rare LPs on their Web sites.
These tactics, which try to work with music downloaders, are working for the moment, but will music stores survive or go the way of the dinosaur?
Tony Spennato, owner of Sound Track record store in Brooklyn, believes that "everything will be easily subscribed to online in 10 to 15 years . . . CD stores will become like rare bookstores."
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