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| From | "Jim Kosmicki" <jkosmicki@cccneb.edu> |
| Subject | best buy and discounts |
| Date | Thu, 22 May 2003 14:07:11 -0500 |
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Sorry if I'm a bit late on this,
Bruce@notlame wrote
>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.
and I wanted to share something that I saw recently.
Our local "big" record retailer is a Hastings Entertainment (we are a community of about 50K in the middle of central nebraska -- the closest Target is 45 minutes away, and the closest BestBuy is 100 miles away). We also have a mall store, but our local rekkid shops closed years ago, as the owners simply decided that they didn't want to fight the fight against the chains anymore.
I bought a copy of Uncut there a few months ago, and when I got home, I found an unexpected bonus -- their record department cycle sheets. Given the low numbers, I'm assuming that they were daily cycle sheets, as if that's all they sell in a week, they will be out of business soon too. Anyway, they had sold 17 copies of whatever the big "top seller" for that week was -- I think 50 Cent (and it was on sale for something like 12.99). The next biggest seller had sold 3 copies (I think it was Toby Kieth -- country is big around these parts). The next had sold 2, and then there were another 20 or so single sale disks.
Thus, the discounts pull people in and sell THAT album. But who can stay in business long catering to people who only come in when they are actually creating the least amount of profit? There's no loyalty there. if Wal-mart has it lower, that's where they go. On the other hand, when the local rekkid shop was open, that's where I went first, regardless of what the ads for the big retailers said. (and most of the time the local rekkid dealer would match what he could on those discounts, and I understood when he couldn't).
on a different note, I remember reading years ago about the numbers games that were played by the big labels. For example, if a CD was used in a record club 12 for a penny offer, it was counted in the total "XX millions sold" counts, but the artist got no royalties, as it was considered a "promotional" expense. IIRC, under-wholesale deals like those with BestBuy were also an example given of where the artist got reduced or no royalties. (However, the label still got their distribution fees and a profit margin, albeit less than at full retail). Is this still the deal? if so, then it hurts the artist even more, as they get even less opportunity to get into royalties beyond their advance.
I also question the relevance of these deals to actually boost sales or even reputation in the long (or short) run. The two Audities style bands that I know of that had lowered costs on their recent releases were OKGo and Phantom Planet. Did either of these albums show any life in the Top 200 charts before or after these promotions? I'm assuming that both ended up selling enough to keep the bands alive and well in their contracts, but not make them any sort of superstars yet, right?
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