March 9, 2007
Internet killed the record store?
By JOHN WILEN
Trac Records is closing after 32 years, and owner Carolyn Draving has no doubts about the reason for the Doylestown store's demise.
"I'm going out of business, along with thousands of other stores being driven out of business by the illegal Internet," Draving said.
Indeed, the Almighty Institute of Music Retail, an industry research group in Studio City, Calif., estimates that 900 independent record stores have closed since 2003, leaving 2,700 nationwide.
But not everyone believes the Internet is hurting record stores. Despite the fact that sales of CDs are falling as Internet downloading — legal and illegal — grows in popularity, there is still demand out there for physical copies of recorded music. And stores that offer expertise, insight and a sense of community as well as an eclectic mix of music can still create a niche for themselves and survive, experts say.
"There are a ton of them that are thriving," said John Lyons, executive vice president of the National Association of Recording Merchandisers.
Siren Records, also of Doylestown, seems to have found a way to survive the age of digital downloading.
"We haven't seen a drop-off in sales, and we've actually expanded the store," said owner Blair Elliot.
Last fall, Siren moved from its long-time 1,500-square-foot State Street store to a newly renovated 5,000-square-foot space on the second floor of the former County Linen building. That let Elliot expand his catalog, offer a wider selection of products such as T-shirts, books and collectible toys, and stage in-store music performances.
The Internet and explosion of downloading have actually stoked interest in music in some, Elliot said.
"I think that the Internet has become a sort of a research tool for our customers," Elliot said. "I have customers who will download tracks just to figure out what to buy."
But Draving says she's lost many long-time customers to the Internet.
"I know a few of them who don't come in anymore because they just download," Draving said.
Trac has been hit as hard by legally copied digital music as by illegal downloads. Draving says her business fell by a third early in the decade, when peer-to-peer song-swapping networks such as Napster and Kazaa first caught on. But iPods and other mp3 players have cost her another third of her business, Draving said.
Warren Greene, owner of Spinsters Records in New Hope, feels Draving's pain.
"People do not buy CDs anymore," Greene said. "CDs are dead."
Greene says he saved himself from financial ruin by finding a new product to sell: T-shirts emblazoned with digital images. He bought a digital garment printing machine last year that lets him print any digital photo a customer wants onto a T-shirt. The shirts sell for $20 to $25, including the printing.
"It enabled me to produce a product which would appeal to the same age demographic and at a higher profit margin than CDs," Greene said.
Federal prosecutors recently charged Greene with criminal infringement of copyright for allegedly selling illegally copied CDs at Spinsters in 2002 and 2003. Greene said he no longer sells bootlegged music and declined further comment on his case.
"My real problem was the Internet," Greene said. "Most of my customers are in the 15 to 25 age demographic. Most of these people are now using the Internet to obtain their music."
Data supplied by the National Association of Recording Merchandisers shows that while overall music purchases increased in 2005 to more than a billion transactions from 817 million transactions in 2004, the share of those purchases that were on CD fell to 650 million in 2005, or 36 percent of total sales, from 708 million, or 39 percent of total sales, in 2004.
There was no shortage of new music released in 2005, when the total number of albums released exceeded 60,000, up from 44,500 in 2004.
Despite the downturn, Lyons doesn't think CDs will go away.
"For the heavy music user, there's something about the packaging," Lyons said.
There will continue to be a "rebalancing" between sales of physical and downloaded digital music, but CD sales will eventually stabilize, Lyons predicted.
"Most of the music on iPods is ripped from CDs," he said.
Elliott said it's tough to gauge whether downloading, legal or illegal, has hurt his business. His sense is that the many of the people downloading illegally wouldn't be buying CDs even if their downloading could be stopped.
It's possible that the music Draving specializes in - more mainstream fare such as classic rock and hits - has made Trac more vulnerable to downloading's effect. Experts say mainstream music is more commoditized: It can be found anywhere, from the grocery store to every download site on the Internet. Because Siren specializes in hard-to-find and independent music — which doesn't show up as frequently in Wal-Mart or on Kazaa — it appeals more to collectors and the younger generation.
"He's somehow captured the kid market," Draving said of Siren.
Draving has one full-time employee and two part-timers. She's running a going-out-of-business sale and plans to close by March 15.
In part, Draving's decision to close Trac is driven by a desire to get out from under the all-day, every day grind of running a retail store.
"He's a little younger," Draving laughs of Elliot. "He's got a little more energy to stay in that store all day long, all night long and all weekend."
"I feel bad," Elliot said. "I wish her well."
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