This email from a Pitchforkmedia reader and indie-store owner points out some negative consequences for indie retailers not outlined in Universal's press release, and might open a few eyes to just how, as his subject line illustrates, this deal "screws indie retailers":
From: Edmund LeStrange
Subject: New Universal deal screws indie retailersHi, I work at Waterloo Records in Austin TX and am a huge fan of Pitchfork. This morning I noticed your story on Universal's price slashing, which I must admit I was very excited about. However, as soon as I got to work I realized it was to good to be true. Universal will offer CDs at much lower prices to retailers and therefore customers but the percentage mark up for retailers will be lower. Previously we had a 33% markup but now it will be reduced to 30%. The big fuck all is that in order to receive the 30% off we must abide by a few new rules. The biggest being we must devote 30% of our floor space, advertising, and listening station space to Universal products. If we don't abide by this we'll receive $12.99 cds for the fantastic discount price of $11 and change thus destroying our profit margin. We currently feature as many independent and local artists on our listening stations and recommend walls as possible but it will be virtually impossible to do so under these new restrictions. Especially if the other labels jump on this. They are also getting rid of all their COOP advertising which is what many independent retailers rely on for their budgets. The demands they are making of us are unreasonable and will eliminate the indie record store as we know it. Once the indie retailers die they can shoot the prices back up and they'll be no alternative to your Best Buys etc. I'm sure you're being flooded with emails like this and I hope you stick it to em.
- Edmund LeStrange
30% of floorspace, advertising, and listening stations in a true indie store is HUGE - it forces Universal's releases into spaces normally occupied by the music the customers really come there to buy and check out - new indie releases. So some of this reaks of "boo hoo, it's not in our favor" whining, true, but it does make obvious that this deal isn't quite so perfect as it seems. I'll be the last to say that major labels don't release decent music, but your average indie-fan often refuses to even give this stuff a chance and won't greet the arrival of Universal's new low prices with the open arms everyone else will if they have to sacrifice exposure their favorites quite often need and deserve.
Article comments
1 - The Theory
how many universal titles would your average indie record store carry? I wouldn't guess that many, however, being unfamiliar with univeral's roster/distro I can't say for sure. But for what few titles indie stores do need, i'd say it would be better to just buy the cd at $11 and make $2 and give the customer what they want than to make a big deal out of it. Now, if they carry a substantial ammount of Universal items, then maybe some creativity is in order. Take a 30% of storespace, make a nice Universal display w/all titles you carry. Then some whismical saying, like, "The Universal Bastards"
2 - Tom Johnson
But like you point out, how much space does an indie store devote to Universal products right now? I'd say it's probably far less than 30%. To suddenly have to devote that much of their racks to Universal product, that's pretty rough, and it'll limit the amount of music they can carry for those fans who come in purely for independent music. It's not like they can swear off Universal products altogether, and if they don't carry the 30% they're essentially getting penalized and can't offer the Universal products they do carry at a competitive price. Then they lose business. That's a pretty rough deal. Unless, of course, these stores already carry 30+% of Universal products. Then it's just whining.
3 - The Theory
For me, it all depends on how much said store carrys of universal products. if it's only a handful, then only making $2 on the cd is not going to break the bank. It is just giving the customers what they want. No sense in damning the store to suddenly start to order enough universal products to full 30%, when previously it was .05%
4 - ParticleMan
Thanks for the info. This is exactly what I figured would happen. Universal is including lots of fine print in their price cut. Check my other post (My take on the Universal Cuts) for some interesting comments. The indie question is an important one.
Being that I went to college in Austin, I'm very defensive of indie stores as they were my main link to new music during my college years. Waterloo is a fine example of a store that does its part in spreading the word about indie artists, and it's disappointing to hear their employee paint such a grim picture. I really hope they manage to navigate through the muck of this price reduction.
I also hope they give a big fuck you to Universal and carry none of their records. There's plenty of indie stuff that needs shelf space, and one of Austin's other major indie stores just closed, so there's a gap that needs to be filled.
5 - Phillip Winn
Either the pitchfork guy was mistaken, or lying. To get the new prices, indies must dedicate only 30% of the space normally reserved for selling major-label releases. Since Universal produces about a third of all major-label releases, it's not so unreasonable.
Repeat, no indie will have to give up even a single extra inch of floor space to major labels to get this lower price. They must merely make sure that the one shelf they have for major labels is 30% Universal. That's all.
6 - Phillip Winn
Sorry, I meant to say "the Waterloo guy." My apologies to the folks at Pitchfork Media.
Also, I checked the numbers, and it's either 27% of the total store or 33% of the major-label space. And Universal accounts for 30% of major-label sales, not necessarily title. Amazingly, all of these minor mistakes do not change the thrust of my comment, which is that this is a good deal that doesn't screw anybody, and help us get cheaper CDs.