Wal-Mart Records

Is the next generation with their iPods and piracy killing the record labels or are the record labels and their artists killing the record business?

You could make arguments on both sides, but something is killing the business of selling music.

Wal-Mart sold 710,000 of the Eagles new album “Long Road Out of Eden” in the first week. Putting aside lead singer Don Henley’s environmentalism and Wal-Mart’s – well, less than environmentally-conscious policies -- it is the only place you can buy the Eagles’ new album.

And, there’s no major record label involved. It's tantamount to Wal-Mart Records.

Wal-Mart is no Sun or no Chess, because the people there know nothing about music but Wal-Mart knows a lot about retailing.

It’s a pretty huge indictment of the icons running the four major labels that their artists are rebelling, going directly to the consumer (successfully and unsuccessfully) and shaking up the future of recorded music.

Will the day come when a future Britney Spears’ CD will be sold only at Carl’s, Jr?

Don't tempt her.

We already know that Madonna -- in a big money deal with Live Nation -- is not worried about getting future CDs into the hands of her fans. She’s focusing on the company that can help her reap large amounts from touring and merchandising.

Shouldn’t the labels be doing this?

They should. I know. I know. They're not concert promoters. Maybe they should learn. But the major record labels are content to ring up ringtone sales and concentrate on publishing rights while pissing and moaning about digital piracy and variable pricing.

My students often say, “who needs a record company?”.


Let’s see.

1. Labels aren’t the aggregators of new talent like they used to be (call it cutbacks and consolidation and maybe they've lost their golden gut).

2. They don’t have the influence with listeners who still listen to radio. In fact, the labels are pushing an effort to get their former allies to pay additional performance fees to make up the shortfall for all their bad decisions. This is really going to help, isn't it? Alienate the stations that play your music for free while the labels make the profit.

3. Their big artists are rebelling. Madonna? Big, right? Outta here. Prince – the Clive Davis wannabe – is stuffing free CDs into British tabloids to sell his lucrative concert business.

4. Radiohead fails to renew with a major label and takes it to the digital street with marginal success. Still, all this was unthinkable a few short years ago.

5. The Eagles – a group that knows how to sell CDs – turns to a big box store exclusively because it knows how to sell CDs, too. Where’s the labels?

None of what I am describing is the future of the music business – at least, in my view.

But the reality is music has been devalued by the Internet and digital transport as well as the new age desire of young people to carry one’s music with them at all times. The cell phone and iPod thus become more indispensable than, say, a radio.

The majors have contributed to the devaluation of music (i.e., what a single song or single album can get on the market). They’ve done little to hold up their end. And they have virtually no vision of the future (i.e., digital downloading).

We all know the value of a CD is currently under $10 – a far cry from the heist record labels pulled on their fans for decades.

The standard for a single is 99 cents – set by Apple iTunes store.

But as I view the college campus these days I am getting the feeling that $9.99 is not the true number any more and that even 99 cents per tune is too much.

Perhaps you can see why I firmly believe that the business value of music will continue to decline until it rivals the expense of a single text message. And why I believe that volume will make up for the present higher prices.

Nothing has convinced me the price of music will go up.

Or stay the same.

Not even Wal-Mart and its discounting of the Eagles’ “Long Road”.

CDs are loss leaders for big box stores – to get their consumers in to spend on other more profitable items.

Unfortunately, CDs are also loss leaders for record labels who are hell bent to go down with the ship that won’t take the life raft it needs – the Internet -- and dive in to uncharted waters.

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