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Best Buy? OR Worst Buy? You decide!
January 27, 2006 11:50 AM   Subscribe

Best Buy to offer CDs by indie artists for $7.99. "Choose from 20 impress-your-friends selections" at below wholesale price. What does this mean to you and me? Responses from Carrot Top Distribution and Merge Records.
posted by ludwig_van (40 comments total)

 
iTunes is winning. Anyway, sounds good to me. How can you argue against cheap CD's?
posted by billysumday at 11:53 AM on January 27, 2006


If you read the Carrot Top blog, perhaps you'd know. His argument is basically that it puts indie retailers out of business, devalues CDs generally, and that people who buy these records on a whim tend to return them. Even Merge, who are part of the deal and thus not in a position to bash it, expresses some reservations.
posted by ludwig_van at 11:57 AM on January 27, 2006


"Choose from 20 impress-your-friends selections" cos, y'know, like, that's how I choose my music!
posted by slater at 11:59 AM on January 27, 2006


How can you argue against cheap CD's?

If they're selling the CDs below wholesale in order to drive small and independant distributors out of business and enhance their market share, I'd say that's a decent argument. (Leaving aside, for the moment, the empirical question of whether price gouging is an effective long-term strategy.) In any case, I doubt Best Buy is really aiming to put the indie distributors out of business, given the very small selection of indie artists available. Seems more like a classic loss-leader strategy.
posted by monju_bosatsu at 11:59 AM on January 27, 2006


Offer is valid through 2/11/06

I don't think indie record shops have to worry about Best Buy as much as iTunes. Let the kids in Nebraska have the cool indie music for cheap!
posted by billysumday at 12:00 PM on January 27, 2006


iTunes will always be in a different category because it doesn't offer a physical product. Indie artists have a track record of delivering when it comes to packaging and album art (although of course this rule doesn't apply across the board, and I always find it quite disappointing when it doesn't hold true). It's great that people all over the map can get independent music online, whether it's through iTunes, inSound, or direct from the label - I think that's preferable to retailers like Best Buy.
posted by ludwig_van at 12:03 PM on January 27, 2006


Devalues CDs? Huh? Are CDs the new Hockey Cards or something? I wasn't aware that my CDs had any value, other than what I payed for them.

To be honest, to buy most 'indie' artists at a bigger store like HMV usually costs like $24.99 CDN. I welcome lower prices.
posted by hughbot at 12:06 PM on January 27, 2006


"Choose from 20 impress-your-friends selections"

Ha! They definitely know their market.
posted by Fontbone at 12:10 PM on January 27, 2006


"His argument is basically that it puts indie retailers out of business"

I still shop at indie stores but I know it's only a matter of time before they go away. If you own an indie record store and aren't exploring new revenue sources (including online distributuion) or another line of work, then it sucks to be you.
posted by 2sheets at 12:12 PM on January 27, 2006


From Merge:

when i say i'm torn it's because $7.99 is a ridiculous price that no independent retailer can match, and i think it DOES devalue cds to a certain extent (eg someone walks into a store and sees a cd for an avg $14.99 and thinks "man i've seen cds for $7.99! $14.99 is a rip-off! i'm just going to download it..."). but i do not agree that best buy putting an Arcade Fire cd on sale for a week is bringing down the indie infrastructure.

Snark about articles and reading witheld...
posted by ludwig_van at 12:13 PM on January 27, 2006


I was about to say this didn't matter since independent record stores are pretty much non-existent already, but I'm now thinking it's a bad deal. Particularly with Best Buy involved.

Best Buy is a general pyramid scheme. They have all the glossy ads in the Sunday paper for the ungodly cheap merchandise, then you get to the store only to realize it's a piece of crap meant to lead you to the more expensive items. The only quality merchandise is priced above regular market rate. These sorts of enterprises should be bound to fail with Amazon readily available.

Indie music will now be a lure for people who wouldn't otherwise go to Best Buy to purchase their underpriced garbage or the overpriced electronics. They can afford the ridiculously cheap prices for indie records because that's not what they make the money on. Pure lure, bait and switch.
posted by destro at 12:20 PM on January 27, 2006


Right.
posted by ludwig_van at 12:22 PM on January 27, 2006


It's not a bait and switch, unless you get to the store and they have mysteriously run out of their stock of cheap cds. It's a loss leader, and most retailers use them. There's no one stopping you from buying only the cheap cds. If you don't want the underpriced garbage or the overpriced electronics, don't buy them.
posted by monju_bosatsu at 12:30 PM on January 27, 2006


monju_batsu already nailed it. What's the point of Best buy selling these CDs at break even or even a small loss? They make it up on volume? No, they got you in the door. You also need batteries or cables or blank CDs or....
posted by fixedgear at 12:33 PM on January 27, 2006


So, will Amazon drop their prices in retaliation?

Also, there's a lot wiggle room around the term "indie". There are indy bands on small labels, who do end up in larger stores (like Tower or Virgin or Amazon) and then there are the real indies who make there own CDs and either sell them themselves or through someone like CDBaby. I can't see BestBuy suddenly gaining the aesthetic sense to deal with indie market effectively (are they going to start taking buying cues from Pitchfork?).

As for independent record stores, being undercut is nothing new and the truly hip urbanites will simply refuse to shop (much less be seen shopping) at BestBuy. It's not a cool place to hang.
posted by doctor_negative at 12:42 PM on January 27, 2006


Are indie record stores really "pretty much non-existent already"? The last 3 places I've lived have all had very healthy independent or indie-chain shops.
posted by selfnoise at 12:45 PM on January 27, 2006


Low, low prices used to be what made Best Buy great.

When I was in college, we'd make 45-minute pilgrimages every semester to the nearest Best Buy, just to buy stacks of their $6.99 to $7.99 new releases.
posted by grabbingsand at 12:45 PM on January 27, 2006


There's no one stopping you from buying only the cheap cds. If you don't want the underpriced garbage or the overpriced electronics, don't buy them.

But didn't you know that Best Buy was a Big Evil Retailer, which we must oppose to the death in favor of Local Independent Stores? If you're an indie record store, and you're worrying about competing with Best Buy, or Circuit City or Wal Mart on price, then you're an idiot. These chains will always win on price because they can use CDs as a loss leader to get you in the door. Compete on selection, or service or general funkitude, but not price.

Does a loss-leader CD "devalue" CDs? Beats me, but maybe it's a karmic payback for years of the major labels playing price-fixing games to "overvalue" CDs.

If you read the Carrot Top blog, perhaps you'd know. His argument is basically that it puts indie retailers out of business, devalues CDs generally, and that people who buy these records on a whim tend to return them.

The first two arguments are probably false. The last argument is a misunderstanding of the point. The real concern the indie label has is returns in the sense of unsold wholesale purchases by the retailer. Best Buy won't take returns of opened CDs, so a purchaser who buys an indie release on a whim is pretty much stuck with it. But if BB buys 100 copies of a release, sells 25 and then is allowed to return the remaining 75, the label is worse off than if they sold those 100 CDs to 10 different indie stores, who didn't return them to the label.
posted by fochsenhirt at 12:46 PM on January 27, 2006


Indie record stores aren't non-existent, but they are fast on the decline.

And yes, Loss Leader is the more appropriate term. Lots of stores use them, but Best Buy uses it to an egregious degree and it's really annoying.

If you don't want the underpriced garbage or the overpriced electronics, don't buy them.

I don't. but i'm saying that indie labels and distributors shouldn't do business with Best Buy either for the same reason. Especially if it helps put indie record stores out of business.
posted by destro at 1:02 PM on January 27, 2006


Actually, Loss Leader isn't very appropriate for the cheap electronics either since what they're selling at a low price isn't at a loss. (although the indie records sold for $7.99 would be a loss leader)
posted by destro at 1:19 PM on January 27, 2006


As I have only heard of 7 of the bands on the BB list, if anything I have some fresh bands on my list of stuff to download off of bitorrent when I get home tonight.

Thanks Best Buy!
posted by daHIFI at 1:38 PM on January 27, 2006


Best Buy started this YEARS ago with Top 40 releases, and the indie shops have been reeling ever since. I believe there is a pending lawsuit from a coalition of indie shops suing for unfair pricing practices. However, indie shops didnt really have an argument because indie shops aren't known for their Top 40 anyway. NOW I can see a legitimate reason for the indie shops to be pissed - this is a direct attempt to completely dismantle their last remaining draw.
posted by afx114 at 1:44 PM on January 27, 2006


People still buy actual CDs?
posted by Mars Saxman at 1:51 PM on January 27, 2006


You need a list like this every once in the while to remember what "mainstream" is. Like that as popular as they are, it's not: Arcade Fire, Bloc Party, Broken Social Scene, New Pornographers.
posted by smackfu at 1:51 PM on January 27, 2006


I'd be interested in some national data of independent record stores. I tend to live in larger cities, so it never occured to me that indy stores would go away. I'm still not quite convinced that such shops are on the way out because they seem to make most of their money selling records, not CD's. CD's are very important, but the indy business is like any boutique business, they make money be having a distinctive set of both product and knowledge.
posted by elwoodwiles at 1:57 PM on January 27, 2006


And that people who buy these records on a whim tend to return them.

Good luck with that, every store that I know of doesn't allow returns on opened CDs.

when i say i'm torn it's because $7.99 is a ridiculous price that no independent retailer can match, and i think it DOES devalue cds to a certain extent (eg someone walks into a store and sees a cd for an avg $14.99 and thinks "man i've seen cds for $7.99! $14.99 is a rip-off! i'm just going to download it...").

I really don't like this thinking. The music industry (including the indies) are somewhat stupid about pricing. Movie companies will drop prices on things after it's been out a few years, but with the exception of things like the "sounds great" cds, most CDs stay at the same price. I would buy far more albums at $7.99 than I would at $14.99.

As a musician, I would rather have people buy my album at $7.99 than ignore me completely.
posted by drezdn at 2:02 PM on January 27, 2006


Hey, I work at the independent record store in Chapel Hill where Mac of Merge/Superchunk fame shops. Wonder if I'm the cooler than thou jerk he references . . .
posted by thivaia at 2:09 PM on January 27, 2006


But, as Billy Sumday pointed out, it's just a sale. In two weeks, it'll be over.

Does Best Buy not normally carry those titles? I know they carry stuff on indie labels.
posted by amarynth at 2:29 PM on January 27, 2006


Its 20 CDs on sale until the 11th. I think Reckless records can weather this storm.
posted by skallas at 2:51 PM on January 27, 2006


I wish I could just support bands that I like in a pbs kind of model and get to show off my silver jews totebag.
posted by I Foody at 2:57 PM on January 27, 2006


But if BB buys 100 copies of a release, sells 25 and then is allowed to return the remaining 75, the label is worse off than if they sold those 100 CDs to 10 different indie stores, who didn't return them to the label.

This was precisely the point of an excellent answer to an AskMe last week about running an indie label:

Returns are a fact of life in the indie label biz, and you need to manage that part of the biz VERY carefully, or in time, you will get swamped.... Later on ... people will be returning unsold inventory of old titles to pay for new ones.... They come up with 5 of this, 2 of that.... a big box of old stuff you'd been paid for a long time ago. They send that back, and that's your payment for the 100 copies of your new release. The longer you're in business, the more returns you end up taking back, and the more difficult it becomes to manage your cash flow.
posted by dhartung at 4:18 PM on January 27, 2006


What does this mean to you and me?

$3?

I still shop at indie stores but I know it's only a matter of time before they go away.

Sure, just like the indie bookshops. /scoff

I'm still not quite convinced that such shops are on the way out because they seem to make most of their money selling records, not CD's.

Well, LPs used to have a much smaller profit margin than CDs, i.e. they cost more to produce and sold for less than the CD counterpart. Now, prices are more equivalent, but I bet almost every "indie" shop still sells 10x more CDs than LPs.
posted by mrgrimm at 5:35 PM on January 27, 2006


As a former indie record store manager, let me say that we were well aware of Best Buy's (and Wal-Mart's, and Target's, etc.) loss leaders. Generally, this didn't upset my boss (the owner) as these cheap CDs were by artists who didn't make up our bread and butter. Although indie acts like the Arcade Fire certainly fits the bill, I don't think my former employer is quaking in his boots over this particular promotion. Best Buy's done them in the past and will do them in the future.

Besides, his store is a member of CIMS which gives him a certain degree of collective strength.

What does have him worried, however, is the new music retail powerhouse who threatens every record store who caters to leftie yuppies and the like.
posted by joseph_elmhurst at 6:32 PM on January 27, 2006


I work at an indie store and I'd say this not much to worry about. Someone mentioned iTunes, and that is the thing to worry about. Especially when they eventually get a deal with the Beatles and record labels like Drag City. It's the long run that you have to worry about, and when iTunes sells millions of songs everyday and our store sells maybe 100 records a day (down from hundreds), you have to wonder how much longer we're going to be in business. Things change, and sometimes it sucks.
posted by handshake at 6:32 PM on January 27, 2006


I love pop artists inside the mainstream and I love my local indie music stores, but really: Bloc Party, The Arcade Fire, etc. are outside "the mainstream"?--well, maybe outside the 40-65 mainstream. I hate advertising that tries to impress me with it's "indieness" almost as much as I hate Conor Oberst.
posted by octobersurprise at 7:37 PM on January 27, 2006


I Foody writes "silver jews totebag"


WTF?
posted by orthogonality at 8:17 PM on January 27, 2006


Yeah, this really isn't all that outside the mainstream at all- Cat Power's The Greatest is currently #11 on amazon's top seller list in music.

Though this is actually a lot the kind of music I listen to (Bloc Party, New Pornographers, Arcade Fire, etc- to impress my friends!! Hurr!) I'd still rather buy it from Manifest across town than Best Buy. Part of going to indie record stores is going to pick up LCD Soundsystem, and also finding a couple records that aren't indie-mainstream and will probably never be seen in Best Buy, and chatting to the clerks who are a walking Trouser Press of music knowledge.
posted by Meredith at 9:02 PM on January 27, 2006


My CD has always been $7.99, you know.
posted by ludwig_van at 7:32 AM on January 28, 2006


People who are going to buy these cds at indie record stores already have, and will continue to do so for new releases. I don't see it as much true competition for the same consumers.

I listen to these bands and albums all the time, but I the last two physical cds I bought for myself were Sufjan's Illinois (for the original album art) and Radiohead's Hail to the Thief. Young people like me are Best Buy's target demographic for this promotion. I saw the ad last weekend and thought that $7.99 is pretty much just low enough a price for me to go out and buy a physical copy of the Arcade Fire or Broken Social Scene album that I've already listened to 30 times on my computer or mp3 player of choice.

If Best Buy is going to use these albums as loss leaders to get people in the doors, I welcome it. The label and the artist are getting their money, which is better for them than me downloading every new release.

Carrot Top Distribution: So now you're all devaluing not only your packaged goods but your digital ones as well. If it's worth only $7.99 with package at Best Buy, why is it worth $9.90 at iTunes? Consumer answer: IT'S NOT.
Real answer: IT'S NOT. Especially with DRM and proprietary formats, but that's for another discussion.
posted by kyleg at 2:31 PM on January 28, 2006


orthogonality: this
posted by smackfu at 4:43 PM on January 28, 2006


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