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| From | Not Lame <popmusic@notlame.com> |
| Subject | Best Buy/The Thorns |
| Date | Tue, 20 May 2003 13:32:30 -0600 |
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> So I see this week they are offering The Thorns for $7.99.
>
> Is this practice less offensive when it has the potential to bring exposure
> to the kind of music we enjoy talking about here? Admittedly, The Thorns is
> a little MOR, but if it is a modestly sucessful seller, could this result in
> the domestic release of Sweet's Kimi Ga Suki (which today would cost me $32
> to own...)?
To make it official in terms of a more 'local' impact on Best Buy to this
list and the absolute insanity and borderline illegal methods, Not Lame's
cost on this cd is:
$8.35
Lovely, huh?
Generally, retailers have to have a gross margin between 30-40% on releases
to keep in step w/ covering all the overhead a store has....rent(which is
significant for most), salaries and taxes(ditto but 'times' 5!), web site,
merchandising, marketing, phones, on and on......
You have to pick and choose which *type*of releases you'll squeeze on a
higher end of your desired gross margins and attach them the type of terms
you receive from your various suppliers(net 30, net 15, consigned, COD--each
one is different......). We tend to push a higher gross margin a release on
a cd that has tighter, more restrictive terms to recoup some of the risk and
straing on cash flow and resources. But then again, that's not the case a
lot of times, especially on the few major label poppy type of releases that
we carry where we have to wrestle w/ online retailers that are pretty much
selling at cost, as well. (well, less so recently w/ the amazons and
cdnow's of the world)
More than you may need or want to know, but it's a big issue what places
like Best Buy do as they undercut, literally the knees, smaller retailers.
Are killing them......it's very real the stores that have gone of business
because of such tactics over the years. And continue every week, across the
USA. If you talk to any major distributor sales manager(steve schnee, care
to comment), they will confirm these trends in a very empirical fashion.
More: For large music retailers, when selling Dixie Chicks(or maybe not
now...for the record, I find what happened to them to incredibly
hypocritical.....all they did was voice an opinion albeit a poorly framed
one.....), 50 Cent, Celine Dion........(we don't carry mass marketed music,
as most of you know, I would hope), they sell these types of releases on a
lower margin for a variety reasons. There's a lot of competition on price
w/ such releases, so to remain competitive, they'll sell a release that they
know they can at least do a lot of volume on for, say, a 20% margin(or
less). But guess what? Sell enough of those at that kind of margin, you
will be out of business, because you are not making money, only barely, if
at all, covering your overhead.
I'm tend to be moderately conservative when it comes to a lot of things,
actually(there are plenty of exceptions, though).....and when it comes to
government regulation on controlling business and markets, that is the case.
But, there are exceptions.
While I have obviously have some (very, very small)stake in such
intervention on Best Buy's tactics as it relates to my own business, the
simple fact is that what they are doing is *wrong* and should not be
allowable and since they will not self-regulate(and others as well),
something needs to be done, whether it's a class-action or whatever. I
would gladly participate in such an action, for the record.
Bruce @ Not Lame
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