Music stores adjust to the changing times
CD sales decline as fans move on to digital downloads
You could choose from an almost endless list of cliché songs to talk about trends in the music industry — and overall economy — that are coming home to roost with local music retailers.
Rich Menning of Atomic Records in Milwaukee, either by choice or just an appropriate nature, leans back on Kenny Rogers when talking about what is happening with his business.
"We had to know when to hold 'em and know when to fold them," he said.
They'll fold the cards in February when the doors on one of the state's largest independent record shops close.
While Atomic is packing it in, The Exclusive Company in Green Bay says it saw sales of CDs drop last year (while vinyl album sales at both stores took off exponentially) and is diversifying to offset the difference.
"Our sales of CDs were down in '08 … every year it's persistently down," said Tom Smith, general manager at The Exclusive Company. "This year, we brought in more DVDs, and we're trying not to depend as much on the CD."
Industry wide, music sales continued to slump last year, according to year-end figures from The Nielsen Co., which indicated total album sales, including album equivalents made up of single digital tracks, fell to 428.4 million units, down 8.5 percent from 500.5 million in 2007.
Likewise, physical album sales fell 20 percent to 362.6 million from 450.5 million, while digital album sales rose 32 percent to a record 65.8 million units while digital track sales, such as those conducted in Apple Inc.'s iTunes Music Store, were up 27 percent from the previous year, breaking the 1 billion mark for the first time at 1.07 billion.
Smith, who has a quarter century of working in the music retail business, said at times he feels like an ice salesman on the brink of the refrigerator age.
"I've been doing this since the fall of '84 … and for me it's weird to not want to own the liner notes and the artwork and have something on your hands," he said. "But I think this store is run well enough that we will survive this."
Atomic's Web site cites a number of reasons for the announced closing including a long-running decline in the music industry and the recession.
"Our clientele still likes to have a physical product and to hold it in their hands, but when it comes down to it, the vast majority of people seem to be happy to not have the physical product," Menning said. "People prefer free (illegal file downloading and burning CD copies) … and they don't think of the ramifications."
National retailer Best Buy hasn't been immune to the changes, either, offering CDs, LPs and file downloads through its Web site. The company says it is paying close attention to what consumers want — both nationally and regionally — and trying offer those products.
"For years, the trend in CD sales has been in decline, so it's not surprising that trend would continue," said Brian Lucas, a spokesman with Best Buy in Richfield, Minn. "The challenge for us as a retailer is to help people have a great experience no matter how they listen to music, or how they consume music."
He said sales of CDs and DVDs are all lumped into one sales category, and despite the dip in CD sales, people may actually be listening to more music than ever.
"We're trying to be smarter about our inventory and catering it to local audiences, and understanding what the local community is listening to," Lucas said.
None of the people interviewed for this story were worried the CD is a dying breed, pointing out customers still want a tangible product complete with album art and liner notes.
"The customer is going to tell us what is a viable format and what is not," Lucas said. "There are still people that like to hold a physical product in their hands, open it up and read the liner notes, and they like to have a physical possession so we need to remember that customer as well."
As they work to change with the market, Exclusive may branch into video games and other areas. Smith said they sold Nintendo Wii game systems during the holidays.
"The whole industry isn't too sure of how this will shake out right now," he said.
It may not be symbolic of anything, or maybe it is, but one of the top selling CDs at the end of the year was the recent release of a 1968 concert by Neil Young — a 40-year-old show.
"I don't know if that's a good sign or a bad sign," he said with a laugh.
Smith is optimistic 2009 could be a better year all around after people pulled back drastically on holiday spending.
"I think that will pass and people will spend money on entertainment and things that make them happy," he said. "There could be positive things that happen in 2009."
A rocky economy coupled with the downward trend in physical music sales sounded the death knell for Atomic.
"It was an extremely difficult decision, but it's been trending this way for eight or 10 years and you can only hold on and hope things turn around for so long — or find different niches to crawl into," Menning said. "Vinyl sales were up a ton last year, but it wasn't enough to offset the losses in CD sales."
SOURCE: http://www.greenbaypressgazette.com— The Associated Press
Here is what Atomic Records (Milwaukee) said on their website (and a record store I will truly miss as it was the BEST in my area):
The Announcement: Atomic Records To Close In February 2009
Rich from Atomic Records here.
It is with great sadness and more than a little difficulty that I have to announce that Atomic Records will be closing in February 2009.
The reasons for shutting down are many -- and I'd hate to bore you with wonkish details of shifting demographics, downward market trends, changing consumer habits, etc. -- but the decade-long (and running) decline of the music industry combined with the recent economic downturn have made it impossible to continue doing what we love to do.
Thank You !
First off, THANK YOU! It has truly been a pleasure serving the music lovers of Milwaukee for the past 24 years. Much gratitude goes out to our customers. The recent words of encouragement -- the likes of "hang in there," "please don't go out of business," "what would I do without you?" -- mean more than you can imagine. I only wish we had the wherewithal to continue on. But for the next couple months the current members of Team Atomic shall keep on serving you as best we can.
-- 12/04/2008
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