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Clive Davis: Music Retailers a Bore

Posted By Barry Ritholtz On August 23, 2004 @ 8:14 am In Finance,Music | Comments Disabled

Here’s a news flash: Shopping in retail music stores is boring. So says industry impressario Clive Davis, who apparently has a penchant for stating the incredibly obvious. (No word on whether Davis thinks Oatmeal is flavorless, or “Sense and Sensibility” was tiresome and overwrought — but its even money).

As we noted some 7 months ago, one of the things which had done in Tower Records was the moribund retailing experience [1]. With Davis saying the same thing, the odds improve for something being done about it.

Of course, having alienated an entire generation of music buyers downloaders, its prolly too little too late. What the hell, watching the final death spasms of the industry could be educational for future executives to learn what mistakes not to make.

Here’s the unavoidable excerpt:

“You are faced with a major threat … competition from digital distribution,” Davis warned hundreds of merchants and recording industry executives who gathered Sunday for a conference.

The renowned chairman and chief executive of BMG North America compared the choice between buying music online or in a store to eating dinner at a restaurant or at home.

“It’s fun to shop for music … and you’re not making it a fun experience,” he said. “You have got to make it exciting.” Davis said he was impressed by Tower Records, which has staff members well-versed in music, and Virgin Megastore, which recently redesigned some stores.

Also being promoted are in-store computer kiosks that can crank out custom CDs and sell downloads. “We have to make sure CD burning becomes a commercially viable option for all of us,” said Glen Ward, president and chief executive of Virgin Megastore.

Too little, too late.

What makes this so fascinating to me is how the Music Retailers and Music Industry have each been unwitting participants in the other’s doom: The retailers vociferous objections is cited as a prime reason the industry stayed out of legit digital downloading for years and years. By ignoring what the consumer marketplace ws demanding, the industry created a vaccuum — which the market rushed to fill — hence, Napster, Kazaa, Grokster, Bit Torrent etc. was allowed to gain a toehold.

More than missing opportunities, this strategic error essentially conditioned an entire generation to quickly learn what only a handful of economists and strategists knew: The music industry is rife with business incompetents who cares very little about their customers, artists or products.

While the Retailers wherebusy sabotaging digital downloads for the major Labels, the labels were working hard at making sure the retail experience, well, sucked. They would not allow kiosks to create mixed CDs, fearing they would cannabilize singles sales; They colluded in a vast scheme of illegal price fixing, accellerating the move by customers to unauthorized downloadds. Lastly, they strived mightily to insure that there was little room for any innovation on the retail side.

Its a disfunctional relationship, and has been for at least 2 decades. The sooner both sides whither and die, the faster we can see a more intelligent business model replacing it which will be 1) better for consumers; 2) much better for artists, 3) economically more viable as an actually legal, money making operation.

Sources:
Music stores must make shopping a thrill – or else, producer says [2]
ALEX VEIGA
Associated Press, August 22, 2004

http://www.mercurynews.com/mld/mercurynews/news/breaking_news/9468796.htm

National Association of Recording Merchandisers: [3]

http://www.narm.com


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2004/08/clive-davis-music-retailers-a-bore/

URLs in this post:

[1] moribund retailing experience: http://bigpicture.typepad.com/comments/2004/02/tower_files_for.html

[2] Music stores must make shopping a thrill – or else, producer says: http://www.mercurynews.com/mld/mercurynews/news/breaking_news/9468796.htm

[3] National Association of Recording Merchandisers:: http://www.narm.com

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