June 14, 2009
Retailing Era Closes With Music Megastore
By BEN SISARIO
The sounds of the Velvet Underground echoed in the Virgin Megastore in Union Square on Sunday afternoon, as bargain-hunting passers-by and hard-core music shoppers poked through what few items remained at the last large-scale record store in New York City.
It was the final day of business for the Virgin Megastore chain in North America, which at its peak had 23 locations but by Sunday was down to two: the 57,000-square-foot, two-level New York outlet, and a smaller Hollywood shop that was also set to close. In Union Square posters trumpeted 90 percent discounts and offered the sale of all furniture and equipment. But when the store opened, perhaps 90 percent of the merchandise had already been sold, leaving two tables of CDs and DVDs, a dozen T-shirt racks and a few other scattered displays.
With the music industry stuck in a decade-long crisis, the sight of a record store closing is hardly surprising. But for many shoppers at Union Square on Sunday the loss of a big outlet in one of the most heavily trafficked areas of the city was particularly dispiriting.
"Unfortunately the large retail music store is a dinosaur," said Tony Beliech, 39, a former Virgin employee who was lugging around an armful of CDs that he said would cost him no more than $20. "It does matter because it was also a social gathering space, and that's one thing that buying music online lacks."
Dozens of smaller record stores are still open in New York, and at least 2,000 independent shops exist around the country, according to the Almighty Institute of Music Retail, a market research company. Many of those independents have banded together to promote events like Record Store Day, which had its second anniversary in April. They are also promoting Vinyl Saturday on June 20, which will feature specially produced records by artists like Wilco and Modest Mouse to draw customers.
But the record store ranks have been severely thinned in recent years, and New York, once home to at least three large-scale music chains, now has none. Last month Virgin shut down its other New York Megastore, in Times Square. (There are still Virgin Megastores in Europe and the Middle East, but under different ownership.) HMV like Virgin, of British origin pulled out of the American market in 2004; Tower Records closed its 89 American stores in 2006. Trans World Entertainment, which operates the FYE chain, has closed at least 280 of its locations over the last two years, leaving it with about 700, but none comparable in size to the Virgin Megastore.
"It's clear that the model of the large entertainment specialist working in a large space is not going to work in the future," said Simon Wright, the chief executive of Virgin Entertainment Group, North America.
To an extent the closings are a result of the overall drop in music sales. From the industry's peak in 2000 - when some 785 million albums were sold - until the end of 2008, album sales fell 45 percent, according to Nielsen SoundScan. Even with the rise of iTunes and other online outlets, however, CDs have remained consumers' format of choice, though that advantage is slipping. As recently as 2006, CDs accounted for more than 90 percent of album sales. Last year that proportion dropped to 84 percent, and so far in 2009 it is 77 percent. As many as two-thirds of all album sales are made at large chains like FYE, Wal-Mart and Best Buy, according to industry estimates.
"The Titanic that is physical media started slowly sinking in 2000," said Michael McGuire, an analyst with Gartner, a market research firm, when asked about Virgin. "Certainly this is a traumatic event for those who worked there, but it's an expected product of the digital transition."
But the end of Virgin is also a product of business concerns unrelated to music. Its first American store was opened in 1992 in Los Angeles, and it set itself apart from rivals by developing a clublike atmosphere with booming sound systems and by offering steep discounts. "The indies learned from them and applied that to our stores," said Michael Kurtz, president of the Music Monitor Network, a coalition of about 100 independent retailers.
As CD sales declined, the Megastores remained profitable by offering T-shirts, DVDs and other items. The Times Square outlet, for example, had annual sales in excess of $50 million, according to company reports, making it by many industry estimations the highest-volume record store in the United States.
In 2007 Virgin's North American branch was bought by two real estate firms, Related Companies and Vornado Realty Trust, and in a Reuters interview last year an executive from Vornado made it clear that the chain's true value was not in its sales but in the real estate that its stores occupied. In both Times Square and Union Square, analysts say, Virgin's rent was a fraction of the going rate.
Forever 21, a fashion chain, is taking over the Times Square store; a spokeswoman for Related Companies said it was in negotiations for the Union Square site but declined to identify any potential new tenants.
At Union Square on Sunday most new and popular titles had long since been gobbled up. In relative abundance, however, were Virgin-branded black T-shirts ($1), Guitar Hero action figures ($1.39) and a variety of Jonas Brothers memorabilia. Yet there were still some hidden gems. Mr. Beliech, the customer and former employee, scored CDs by, among others, the British folk-experimental group Current 93 and the hyperkinetic Japanese band Melt-Banana.
Max Redinger, 14, who was bored walking his dog, picked up some anime books and Guitar Hero figures. He said he buys most of his music on iTunes but still likes going to record stores and mentioned that a friend had recently introduced him to an independent shop upstate.
"I don't really buy stuff from it," Mr. Redinger said, "but it's a really cool place."
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Article List• November 21, 2013 - New York Times - Records Are Dying? Not Here
• March 27, 2013 - Glendale News-Press - It's a matter of record: Burbank's Atomic Records and Backside
• December 30, 2012 - Detroit News - As one record shop closes, vinyl music plays on in another
• April 20, 2012 - Boston.com - New vinyl album releases give record stores a kick
• November 20, 2011 - Salon.com - In an iTunes age, do we need the record store?
• June 9, 2011 - NJ.com - Curmudgeon Records closes its doors for good
• April 16, 2011 - Wall Street Journal - One-Day Record-Store Revival
• February 1, 2011 - Charlottesville News & Arts - Plan 9 Changes Location
• August 13, 2010 - The Tennesean - Anita Wadhwani: Nashville indie record stores' sales spin in right direction
• January 3, 2010 - Delaware News Journal - Delaware music shops get creative to compete with downloads, chain music stores
• September 24, 2009 - Los Angeles Times - L.A. independent record shop is still in a groove
• August 20, 2009 - CNN Money - You can make money off online music
• June 14, 2009 - New York Times - Retailing Era Closes With Music Megastore
• May 13, 2009 - Medill Reports - Resurgence in vinyl helps record store in recession
• April 26, 2009 - Los Angeles Times - In a digital age, vinyl albums are making a comeback
• April 18, 2009 - Charlotte Observer - Record stores band together
• April 17, 2009 - Detroit News - Record Store Day spins profits and good beats at Metro Detroit shops
• April 17, 2009 - Associated Press - Record Store Day celebrates indie retailers
• April 10, 2009 - Detroit News - Street Corner Music moving to Oak Park plaza
• April 10, 2009 - Toledo Free Press - New record store shakes up Adams Street
• January 8, 2009 - OC Register - Closing date for Virgin Megastore at The Block
• October 28, 2008 - Reuters - AC/DC back in "Black" with global smash
• September 23, 2008 - Chicago Daily Herald - Independent music stores haven't yet disappeared from suburbia
• June 23, 2008 - New York Times - For Tom Petty Fans, the True Sound of Vinyl, Also Captured on a CD
• April 19, 2008 - Lafayette Journal Courier - For some, record stores live on
• April 19, 2008 - New Jersey Star Ledger - It's Record Store Day. Play it again, Sam!
• April 18, 2008 - New York Times - Record Stores Fight to Be Long-Playing
• April 18, 2008 - Dallas Morning News - Retailers hope Record Store Day turns up volume at mom-and-pop shops
• April 16, 2008 - Timeout New York - Platter Up
• December 27, 2007 - Los Angeles Times - Virgin Megastore to close shop
• December 16, 2007 - New York Times - For a "Dinosaur," an Exuberant Second Life (Looney Tunes Reopens)
• December 3, 2007 - Detroit Free Press - The same old song: Music store closing
• November 7, 2007 - Washington Post - Eagles soar past Britney to top of charts
• November 4, 2007 - The Ledger - Two Young Entrepreneurs Unafraid of Risk of Going on Records
• August 20, 2007 - Billboard - Almighty Taps Hans As VP
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• June 28, 2007 - Orange County Weekly - Locals Only
• June 13, 2007 - Reuters - McCartney's Starbucks album heats up U.S. charts
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• May 9, 2007 - Columbia Free Times - High Fidelity
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• March 16, 2007 - Chortler - Shout! Factory Has Revamped Its Website
• March 9, 2007 - PhillyBurbs.com - Internet killed the record store?
• March 4, 2007 - Sacramento Bee - New groove for Solomon
• February 28, 2007 - USA Today - Exclusives aim to pull music fans into stores
• February 28, 2007 - New York Newsday - Latin record shops thrive despite changes in music business
• February 23, 2007 - Montpelier Bridge - Buch Spieler Sails On Despite a Music Industry Decline
• November 20, 2006 - Austin 360 - In Austin, Niche Indies Rule
• October 20, 2006 - Sacramento Bee - Tower brand could survive
• October 15, 2006 - Pittsburgh Tribune-Review - Tables have turned on record stores
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• October 13, 2005 - Desert Sun - Music snobs rejoice: Independent record stores still thrive in desert
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• January 14, 2004 - Creative Loafing Charlotte - Manifest Destiny
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