November 20, 2006
In Austin, niche indies rule
Despite closures of record stores here in 2002-2004, new and stalwart independents have thrived
By Joe Gross
By the end of 2004, it looked as if the Austin independent record store was seriously on the ropes.
Treasured Tracks and Images, home to hundreds of old LPs and gig posters, shuttered in 2002. Drag fixture Sound Exchange closed in January 2003 after 23 years of punk and garage rock. Thirty-Three Degrees called it a day in the spring of 2004.
End of an Ear co-owners Blake Carlisle and Dan Plunkett sell esoteric punk, reggae and obscure rock. Plunkett says digital music actually helps promote record sales.
The computer downloading of songs and albums was blamed for much of this decline. By 2004, consumers could point and click for most of their music needs. Or they could always pick up the hits at a mall chain store or the nearest Best Buy or Wal-Mart while shopping for underwear.
Nationally, according to the market research company Almighty Institute of Music Retail, about 900 independent record stores (including some small chains that started as indies) have closed since 2003.
It appeared to be the end of the era of the independents.
But not in Austin.
Waterloo Records & Video and Cheapo Discs, the big boys of the local independents, continue to thrive. Much of the CD traffic in Austin for Tejano and Latin music stayed at smaller stores, many of them also offering clothing, phone cards and Spanish-language movies.
And during the past two years, Austin has seen an explosion of indies. Filled with vinyl, CDs, T-shirts and collectibles, half a dozen stores have popped up — Sound on Sound Records and Backspin Records in the north, Snake Eyes Vinyl in the east, and End of an Ear and Friends of Sound Records south of the river.
What do all these shops provide? Old-school, music-nerd customer service. Few employees. Plenty of vinyl, both cheap and collectible. In-store performances that cater to a customer base that's built by strong word of mouth.
And, most importantly, they each fill a niche that serves segments of the music-happy Austin population.
Seattle, another city with a strong music scene, also is bucking the national trend of independent record store closings. Ruben Mendez, a former Waterloo employee now at the similar Sonic Boom Records in Seattle, says the indie stores are thriving in his town, citing business expansions and new openings since Napster launched the downloading craze in 2000.
"In the past six years, we've gone from one store to three," Mendez notes. "There's a used vinyl store called Jive Time that opened a second location and a hip-hop specialty store recently opened."
Walk into Sound on Sound's East North Loop Boulevard storefront and it becomes clear very fast what this place is about: punk rock.
Flyers for old punk coat the walls. Vintage punk LPs sit above the register. Rows and rows of 7-inch singles sit next to bins of new vinyl arrivals, both new and used. For people who missed Sound Exchange, Sound on Sound (named after a song by Austin punk legends the Big Boys) was a godsend.
The store was one of the first of the new wave of indie shops to open in the wake of all the closures.
"We opened in March of '04," owner Jason "Jug" Costanzo says. "Sound Exchange closing was really the nudge I needed. For the first few months it was a feeding frenzy. Lots of people had anticipated it opening and missed something like it."
Austin's punk and heavy metal music scene is strong for a city of its size. Rebecca Hubinsky opened the metal-and-classic-rock oriented Snake Eyes Vinyl in July 2005. Her East Seventh Street store seems emblematic of the business revival in downtown East Austin.
"I love being close to downtown," Hubinsky says. "You feel right in the middle of things. There are better locations for foot traffic, but this area is developing like crazy and within a year could be completely different."
Costanzo used Sound Exchange as his model in more ways than one. "I try to have a variety of stuff that's interesting and relevant as far as music history goes," he says.
But he was initially reluctant to be pigeonholed. "I don't want to be just the punk store. But over the two years, I've realized becoming known as the punk store is probably the most effective thing to do businesswise."
Costanzo also credits what he sees as an unusual amount of understanding between stores. "All the stores in town are going after a pretty small group of people," he says. "It's been important for everyone to help each other out and sending people to each other's stores."
Costanzo is quick to note that this has not been an easy road. He's very careful with his spending and can't afford a Cheapo-level selection of a little bit of everything.
"I work almost every day and have since I opened," he says. "I only have part-time help, I do pretty much all the ordering, bookkeeping and ad design. The key is to focus your energy on the stuff that you know people want that you can provide. I also try to keep the inventory from getting overblown. I'm really selective about the stuff I buy."
That sort of "curating" is common to the newer wave of indie stores.
End of an Ear owners Dan Plunkett and Blake Carlisle opened the store in 2005, about a year after Plunkett's previous store, Thirty-Three Degrees, ran out its life span from 1996 to 2004. Like Thirty-Three Degrees, End of an Ear specializes in esoteric music for hard-core hipsters, from avant-garde composers to obscure rock to reggae to punk. (Unlike too many stores for hard-core hipsters, neither Plunkett nor Carlisle ever come off as snobbish or elitist.)
"The biggest difference between the market in 1996 and now is that it takes a lot more for labels to get people to buy records," Plunkett says. "Labels can't just put out a record and hope it sells."
But while some stores swear digital downloading ended their business, Plunkett thinks the opposite is true for his store.
"In our case, the Web is a huge help is getting people excited about records faster," Plunkett says. "People will know exactly when a particular record is coming out, and we'll sell three within 10 minutes when it arrives."
Plunkett also says decent service is something consumers still can't get over the Web, no matter how well Amazon.com's recommendation 'bot thinks it knows you.
"If you're coming to a shop like ours, you know that the people who work there will be able to say, 'Hey, if you really like this thing, here are these other things.' "
But he doesn't ignore the Web. Like many Austin record stores, End of an Ear will often put expensive albums on eBay if they fail to sell in the storefront.
"Less than 10 percent of our income come from eBay and Internet stuff," Plunkett says, "It's a good extra source of cash flow, and it's free advertising for the store. People have come in saying they bought something from us on eBay. Classical LPs just sit in the store, but we sell almost all of them over eBay to customers in Asia."
Again, the trick is niche marketing, which prevents the stores from feeding off each other. "We're all really different," he says. "One guy will be at DJ Dojo (another recent arrival, which specializes in techno and hip-hop) across the street buying a house record and then that customer will come over here to buy reggae."
Does he think that the market for record stores has reached a saturation point? "I have no idea," Plunkett laughs. "I mean, how many vintage stores can Austin support? They just keep popping up. The trick is to be real specific. Turntable Record might have lots of Texas hip-hop, but you're not going to find the new Spoon record."
Friends of Sound caters to an even more specific customer: the serious vinyl collector.
Owner Dave Haffner was a New York DJ, a record dealer and an incurable collector for years before he opened the store in April, taking over the space previously held by the short-lived Shattered Records. (Warning: The store still doesn't have air-conditioning, so it's a lot more fun to shop there now than in August.)
With the exception of a few local CDs up front, Friends of Sound features used vinyl, specializing in soul and funk as well as super-rare psychedelic albums and a steady influx of vintage reggae singles. Haffner used a good chunk of his private 15,000-piece collection to initially stock the store.
"Our business plan is to have unique records for collectors and staple records at cheap prices, like a Joni Mitchell record for three bucks," Haffner says.
Because some of his albums are so pricey — $60-$90 rarities are not uncommon — he doesn't need to move a whole lot of albums to make the rent.
"Honestly, I don't sell many records out of the store that are over $20. I use eBay for the kind of high-end stuff that might just sit around the store, but I do give them a chance to sell here first."
Niche marketing isn't just for newcomers. Musicmania, the venerable Delwood neighborhood store, has been changing with the market for years. "I was a collectible vinyl store for a while," says owner Bernard Vasek. "Then we did a lot of country." You still can find acres of country vinyl at Musicmania, and none of the used records is priced at more than $5.
"Then around '93 we got onto the Houston rap and we stayed with it. You have to have a niche in order to survive."
It's paid off. Though stores such as Turntable are known for Latin hip-hop, freestyle and Tejano, Musicmania is Austin's Texas hip-hop headquarters.
"We sold 519 copies of the new Z-Ro album the day it came out, more out of my store than all the Best Buys in the Austin-area combined. WEA (which distributes Rap-A-Lot, Z-Ro's label) told me we outsold any other store in Houston."
But big-box stores still worry Vasek. "There's a Best Buy going in a half a mile from me. That's not good."
Two independent stores in Austin still cater to most of the people all of the time: Waterloo and Cheapo.
Opened on April 1, 1982, Waterloo has grown into one of the symbols of the Austin music scene. Featuring everything from today's hits to obscure rock and jazz, a large classical section, a selective used CD section and new and used vinyl, Waterloo seems to do it all. Waterloo has been selected for the Best Retailer of the Year award in the National Association of Recording Merchandiser's medium-sized category twice in a row and six times altogether.
Waterloo owner John Kunz says that his store has managed to avoid the severe drops in sales that other big stores have suffered. "During the last five years, music retailers have experienced a 30 percent decline in sales," Kunz said. "We didn't go through that, but our growth has plateaued recently."
Kunz also emphasized Waterloo's history of in-store performances and as a home for albums such as the KGSR radio broadcast collections, new volumes of which have been the store's top-selling album for at least six years.
A plateau rather than a failure would be music to most retailers' ears, but Kunz notes that the store has had to diversify its stock to keep pace.
"We carry plenty of books, toys, T-shirts and gift items in our mix," Kunz says. "It's helped a lot and it provides some nice complementary extras to people who aren't all about just having their music digitally."
Another veteran store that still boasts a diverse clientele is Cheapo, built on a different business model than Waterloo. In addition to list-price new CDs, a small selection of new vinyl and an overstuffed rack of used LPs, Cheapo is best known for the buying and selling of used CDs. Hundreds of thousands of them.
Jason Shields opened the Austin Cheapo in 1998 after working at the franchise's original store in Minnesota. Cheapo operates on the theory that there are X number of people who have a copy of, say, the Eagles' "Greatest Hits" that they are willing to part with and X plus 1 number of people wiling to buy that same CD for more than Cheapo paid for it.
"We buy everything because you never know what people will want," Shields says.
But Cheapo and Waterloo are the exceptions to the rule. Specialize or die is the trend right now. "These days, opening a brand new all-service store like a Waterloo would require so much financial backing that it's effectively impossible," says End of an Ear's Plunkett.
There's a community aspect to the independent stores that online services and digital downloads cannot provide. Brick-and-mortar stores are still a place for people to gather.
"Part of the joy for me is turning people on to stuff," Haffner says. "That's one of the most fun things about owning a store."
"I didn't get into this thinking that it wouldn't be rough," Costanzo says. "One good thing about Austin is that all these new stores are in it for the same kind of reason: We all love these sorts of shops and being a part of the community."
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