Weather | Sports | Forums | Comics | Classifieds | Calendar | Movies
LOUIS HAUIndependent music stores face a rocky reality in the age of file sharing and easy downloads. But some local store owners roll with the punches.
Fifteen-year-old Samantha Schultz, a student at Dixie Hollins High School, plunks down $29 to buy a four-compact-disc live album by Phish, a band she first heard when a friend burned her a CD of their music.
Brian Mellgren, the assistant manager at Daddy Cool Records on Central Avenue in St. Petersburg, expresses relief after Samantha leaves with her purchase.
"That one worked in our favor," Mellgren says. "I overhear quite a bit "Don't buy it, I can burn it for you,' or "I got it for free off the Web last night.' "
That has the 24-year-old Mellgren wondering what the future holds for such stores as Daddy Cool.
"I just love CDs, I love getting new CDs," he says. "I'm worried that people don't share that thrill, and that frightens me."
Mellgren has good reason to be scared. According to Billboard magazine, four retail music chains and four wholesale distributors filed for bankruptcy protection or were liquidated in 2003. The trade magazine also estimates that upwards of 1,000 music stores closed during the year, about twice the number expected a year earlier.
The recent shakeout in the industry has been so severe that just one company - Trans World Entertainment Corp. of Albany, N.Y. - now controls what remains of the once-prominent national and regional chains Camelot Music, the Wall, the Wherehouse, Strawberries Music, Spec's, Disc Jockey and SecondSpin.com. Trans World also owns FYE, Record Town and Coconuts Music & Movies.
Even pioneering music chain Tower Records of Sacramento, Calif., has been hit hard. After closing stores and liquidating inventory during the past few years, heavily indebted Tower finally filed for bankruptcy protection this month.
It's a trend that's also playing out in the Tampa Bay area. A little more than a year after taking over Planet Grooves on Gulf-to-Bay Boulevard in Clearwater, Park Avenue CDs of Winter Park closed the Clearwater store in January because of poor sales. The Music Network, the Norcross, Ga., parent of Turtle's Music, went belly up last year. Daddy Cool Records closed its Sarasota store in late 2002 and another one in October just a few doors down from its current location in St. Petersburg.
The shakeout has been toughest for music retailing's endangered species: the independent record store.
Competition is hardly new for independents. "Mom and pop" record stores have always been under pressure from larger rivals - department stores in the pre- and early-rock era and large retail chains such as Musicland, Sam Goody and Tower in the '60s, '70s and '80s.
But the competitive pressures have multiplied many times over. Big-box discounters such as Wal-Mart, Best Buy and Circuit City price many of their new CD releases at or below cost. The music is used as a "loss leader" to pull in customers who might buy more profitable merchandise such as TVs and DVD players, according to Scott Krugman, a spokesman for the National Retail Federation in Washington.
Then there's the Internet boom. File-sharing software such as the original version of Napster and the more recent Kazaa have grabbed the most headlines and have spurred legal action by record labels. But the wave of the future may be music subscription services and 99-cent-a-song downloads, led by the successful rollout of Apple Computer's iTunes Music Store. For those who don't want to burn their own CDs, sales of CDs by Amazon.com, Half.com and other online merchants present another shopping option that didn't exist in the pre-Web days.
Phil Leigh, an industry analyst who heads Inside Digital Media Inc. in Tampa, thinks the recording industry should make its peace with music downloading. Leigh points to study data suggesting that the explosive popularity of Napster in its initial incarnation as a file-sharing site was based more on its vast catalog and instant access to music than the fact that its downloads were free.
The subsequent success of iTunes and the popularity of digital music players, such as Apple's iPod, provide further evidence that consumers are ready to pay for Internet distribution of music, even if the recording industry is still wary, Leigh says.
While that may be good news for record companies in the long run, Leigh predicts it will also sound the death knell for music retailers, particularly independent ones.
"Unless they're trust babies or they've got a wealthy spouse, these businesses are not going to last," Leigh says. "All businesses need some kind of growth, but . . . growth in prerecorded CDs is as dead as Gen. Custer."
Sales forecasts from Forrester Research Inc. of Cambridge, Mass., appear to bear out Leigh's long-term outlook.
In a recent report, Forrester analyst Josh Bernoff projects U.S. CD sales will rebound from $10.7-billion in 2003 to about $11.3-billion in 2006, then begin a decline the following year, sliding to $9.3-billion in 2008. He expects rapid revenue growth in fee-based downloads and online music subscriptions as more American households connect to the Internet via high-speed connections.
"Music labels should get out of the plastic business," Bernoff says in his report. "Spend less energy on manufacturing and distributing a shrinking number of CDs and focus more on the new source of growth - downloads and subscriptions."
Verne Grant's musical idols are Al Green, Marvin Gaye, Gladys Knight, the Temptations and Earth, Wind & Fire. He's turned his passion for old-school soul and R&B into a market niche at his store, Awesome Sounds, on U.S. 301 in Tampa.
"They're like kids in a candy store," Grant, 49, says of his regular customers. "I've had people who are 50, 60 years old saying, "I've been looking for this for years.' That's some gratification. I couldn't give it up."
Grant, a retired 20-year veteran of the Air Force, thinks cultivating a specialty is key to survival for an independent music merchant.
But Grant also knows the harsh realities of the market. While he still carries new releases, many of those sales have been lost to discounters and, especially in the case of his younger customers, the Internet.
"Once they started downloading and file sharing, those same customers who had once bought two or three CDs now buy only one," Grant says. "They tell me point-blank: "I just download everything.' "
The market's daunting challenges didn't prevent Michael Martin from opening the Music Spot on S Dale Mabry Highway in Tampa in January. Martin was a former manager at Vinyl Fever in Tampa and was founder and co-owner of Music Revolutions in Tampa, which closed in 1995. The 46-year-old Martin spent about a decade out of the business as a wine consultant for Bern's Steak House and a librarian at the University of South Florida in Tampa.
But with his personal collection of about 35,000 vinyl 45s and 10,000 CDs, Martin was never far from music.
"I didn't have much money, but I had good credit and I already had half a record store" at home, he says.
Martin's store stocks new pop releases but also has a large selection of premium CD boxed sets of early rock 'n' roll and country music recording artists.
"It used to be the average record buyer was a 13-year-old girl," Martin says. "Well, now the average record buyer is a baby boomer. Those people who used to be the average record buyer are stealing or downloading it."
He said he offers not only a broad selection of old releases but also expertise a music lover won't find in a sprawling discount store.
"You need an employee who knows who Rose Maddox is or who Dexter Gordon is," Martin said. Maddox was a country music singer. Gordon was a jazz saxophonist.
But Martin is acutely aware of how tough it is for an independent to survive, much less a new store. So he's also opened a bistro adjacent to the Music Spot, with live music in the evenings. Martin also operates a separate online store, www.45archive.com that sells collectible 45 rpm singles.
Other independent music merchants are similarly diversified. For Daddy Cool owner Tony Rifugiato, his store is an offshoot of his concert promotion business, No Clubs Productions of St. Petersburg. He said he's considering adding more nonmusic merchandise that carries higher margins, such as apparel or an expanded toy selection.
Or consider the agility of Doug and Michelle Allen. They opened a book store in St. Petersburg in 1977. Within months, they started selling used records as well. When that side of the business took off, the Allens sold off their book inventory and have focused on music ever since.
By the early 1980s, their Bananas Music branched out into new LPs and CDs, which eventually accounted for nearly two-thirds of the store's sales. But the arrival of big discounters took a big bite out of sales of new music, so the store shifted back again to focusing on used vinyl records. Now, new CDs account for just 5 percent of Bananas' sales.
In addition to making nimble adjustments to their inventory, the Allens revamped how they reach customers. Bananas now sells online as well as in person. The store on 16th Avenue N has compiled an online database of about 100,000 vinyl albums, 15,000 to 20,000 CDs, 2,000 DVDs and more than 5,000 video tapes.
"You can't believe the amount of data input," Doug Allen says with a laugh, even though the online inventory is a fraction of Bananas' sprawling collection of about 2.5-million vinyl albums and singles.
Today, Bananas' Web site, www.musicfinder.com generates 85 percent of the business' sales, up sharply from the 25 percent of sales generated by the store's pre-Internet mail-order business. And the Web site, which bills itself as "the place to find used and rare records and out of print CDs," now takes orders from around the world. It ships an average of 60 to 70 packages a day.
Although most retailers don't focus as heavily on the sale of used merchandise as Bananas, secondhand CDs and records provide an important revenue stream for many independents. Even with many old songs now available for download on the Web, used CDs still command far higher profit margins than new merchandise.
Used CDs make up a large portion of sales at two mainstays of the Tampa Bay area retail music market: Vinyl Fever, which is located in Tampa and Tallahassee, and Sound Exchange, which has locations in Lutz, Brandon and Pinellas Park.
Vinyl Fever owner Lee Wolfson said his business has fared well thanks to a loyal customer base. He moved the Tampa store from S Dale Mabry Highway to a larger, redesigned location on Henderson Boulevard last year.
"When we first started, our customer was very much the music fanatic and we still cater to that customer," he says. "But now there's a wider variety of mainstream customers . . . People start younger (with us) and get older. We've grown and our customer base has grown too."
But for some independent merchants, running a music store is less about making money and more a labor of love, Verne Grant says.
"If I went into this for money, I'd have filed for bankruptcy two years ago," he says. "If money's important, you're going to be heartbroken."
- Louis Hau can be reached at hau@sptimes.com or 813 226-3404.