Must a CD Cost $15.99? 586
scionite0 sends us to Rolling Stone for an in-depth article on Wal-Mart and the music business. Wal-Mart is the largest music retailer selling "an estimated one out of every five major-label albums" in the US. Wal-Mart willingly loses money selling CDs for less than $10 in order to draw customers into the store, but they are tired of taking a loss on CDs. The mega-retailer is telling the major record labels to lower the price of CDs or risk losing retail space to DVDs and video games. (Scroll to the bottom of the article for a breakdown of where exactly the money goes on a $15.99 album sale.) "[A Wal-Mart spokesman said:] 'The record industry needs to refine their business models, because the consumer is the ultimate arbitrator. And the consumer feels music isn't properly priced.' [While music executives are quoted:] 'While Wal-Mart represents nearly twenty percent of major-label music sales, music represents only about two percent of Wal-Mart's total sales. If they got out of selling music, it would mean nothing to them. This keeps me awake at night.' [And another:] 'Wal-Mart has no long-term care for an individual artist or marketing plan, unlike the specialty stores, which were a real business partner. At Wal-Mart, we're a commodity and have to fight for shelf space like Colgate fights for shelf space.'"
2004? (Score:5, Insightful)
Who the hell approved this?
Commodity? (Score:5, Insightful)
And you expect sympathy somehow? I mean, let's be serious: the music industry did all it could to make music a "commodity and throwaway product". I sorry, but what did you expect? You wanted to sell a commodity product, then you live by the rules of commodity products. Geez.... These people are obtuse...
The breakdown (Score:4, Insightful)
$0.80 Packaging/manufacturing
$0.82 Publishing royalties *e.g The rights to the song itself
$0.80 Retail profit *Poor bastards. No wonder they're going out of business.
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit *Hmmmmmm.
$2.40 Marketing/promotion *So why don't 20 year old albums cost any less?
$2.91 Label overhead *Upgrade your equipment, jesus.
$3.89 Retail overhead *Because if it weren't for music, they'd be selling crack in that space.
Oh yea...No scam here. I'm not sure if it's just the bloated nature of the business or what, but this is a steaming pile of crap from my perspective. It's a fricking dollar seventy to make it and get it to the store, but the "price" is fifteen bucks?
Breaking down the rest, we notice that all the combined "profits" amount to twice the cost of manufacture and distribution, and that the combined "overhead" is equal to more than all the profit, cost, and distribution combined...I imagine that's calcuated on the costs to maintain the machinery, the retail space, etc, that makes all the stuff possible.
The whole thing screams bloated industry to me. Overhead is 50% of the cost? There is something wrong with your model. Fricking newspapers do better than that.
Nice to see the evil of Wal-Mart being turned to a good purpose (subjugating the recording industry). Something nice about the world when two wrongs do make a right. One choice quote: "For the music industry, having such a dominant retailer is like being stuck in a bad marriage." Doesn't that sound like everyone elses relationship with the RIAA?
Consumer expectations of pricing (Score:3, Insightful)
You see this with cars and "free with rebate but only once or twice a month" computer software, where consumers won't buy when incentives are removed.
When is the last time Joe Sophisticated Consumer paid full price or for that matter anything more than sales tax for Acme Antivirus?
'bout time, music really is a commodity item (Score:5, Insightful)
surprise, surprise (Score:5, Insightful)
When you do business with Walmart, you should know that you're going to be asked to reduce your price. When you stop supporting mom-and-pop shops by not giving them the volume discounts you give to Walmart, to the point where Walmart has a potentially sufocating grip on your retail pipeline, then you're in trouble.
This is what happens when you dance with the devil... you find out he's clumsy and steps on your feet, and has bad breath to boot.
There's an op-ed piece written by the founder of Snapper that sheds a lot of light on why/how a manufacturer should choose not to do business with Walmart. Too busy to dreg up a link, but well worth the read, for anyone who cares enough to do a google search.
Memo to Record Labels (Score:5, Insightful)
Boo-fucking-hoo (Score:2, Insightful)
Tough shit if they have to do business with a smart retailer- if people wanted to pay $16 for CDs at Tower Records and Music Land, those places would still be in business.
RIAA, wake up to the internet already. There's a reason iTunes sells songs and Amazon sells lots of books- they can have a huge catalog without the need for retail space, you don't have to pay that $3.89 retail overhead charge to stock independent artists that only five people want to hear.
This is the way all brick and mortar is going- stores are a convenience. They keep the latest and biggest in stock and you can pick up and buy something there immediately. Otherwise, you go to the net and buy it for cheaper. The problem is their model, not Walmart.
Re:Proposed new budget (Score:5, Insightful)
All this tells me is that artists should market aggressively with digital format music, and keep CD sales as a small-time sideline; they could charge 5 bucks plus shipping and handling and make a ~3 bucks a pop.
Re:Commodity? (Score:2, Insightful)
$15 not enough, more!! (Score:2, Insightful)
Re:Proposed new budget (Score:5, Insightful)
It seems like they'd get just as much money per track, and cut out a lot of overhead. That sorta seems to support this push to get higher pricing on iTunes tracks is just a cash grab (surprise) by the labels.
Cheers
Re:The breakdown (Score:5, Insightful)
Artists should make the most money, not the label (Score:3, Insightful)
Re:Proposed new budget (Score:5, Insightful)
They're certainly not doing ~20% of the work that the retailer is doing, or ~13% of the work the artist is doing...Just irritates me. Artists are getting fricking screwed all the time; why do they even have a union?
News for .. ? (Score:2, Insightful)
Sincerely,
That Guy
Re:2004? (Score:5, Insightful)
All Wal-Mart needs to succeed with this is to have one record company break off and decide to join them and have $5 to $10 CDs. Which brings me to this point:
Record companies have done this. They usually repackage artists into a new "best of" and sell it for $11 or less. And Best Buy has had new releases of artists for $7 and below for many years, although that's usually limited to a single week and a handful of new untested artists.
If one of the majors breaks off and starts offering discs at below-iTunes prices, the others will have to follow. They can still follow what they've been doing by mirrorring the DVD market: sell the basic CD for peanuts, sell the enhanced CD+DVD with a t-shirt or a poster or more tracks for $20.
Re:Costs too much (Score:5, Insightful)
The CD on the other hand doesn't have that - maybe there's a concert tour, but the tour usually makes money on merch and CD sales, so we're back to the CD being the main profit center again.
Re:Proposed new budget (Score:5, Insightful)
Distribution, $0.90? $900 for a thousand CDs? No way, not for WalMart.
This is WalMart you're shipping to. You ship to them by the truckload, not one CD at a time. Any in-store costs come under retail overhead, not distribution.
The promotion costs need to shrink. Maybe we'll see the labels begging for time on webcasts. Label overhead is far too high. The labels don't really do much today except promote; they don't directly employ artists, they don't run recording studios, they don't manufacture CDs, and they don't do physical distribution and warehousing. That's all outsourced. But management overhead hasn't been cut accordingly.
As the WalMart VP says: "The labels price things based on what they believe they can get -- a pricing philosophy a lot of industries have. But we like to price things as cheaply as we possibly can, rather than charge as much as we can get. It's a big difference in philosophy, and we try to help other people see that."
Re:Proposed new budget (Score:1, Insightful)
If wholesale price is $12 then that only leaves $4 for retailer expenses and profit. However, that's not what the quoted numbers add up to. So right of the bat, we see there is some creative license going on in these numbers.
Now that 17 cents to a union, that union is RIAA, ASCAP, et el.
The 80 cents for packaging and manufacturing seems high but we can leave it be.
The 160 cents ot the artist is probably also high but let's assume it is also true.
The remaining $9.43 goes to the labels/publishers. That includes the distrubtion costs, after all the publishers do most of their own distribution in the US, so that 90 cents really flows back to the label. Also, do you really think it costs 90 cents to truck a cd to the Walmart wharehouse. They can dice the $9.43 up anyway they want to, but the majority of the money is going to the label/publisher. The breakdown is just a matter of creative accounting.
Re:Artists should make the most money, not the lab (Score:3, Insightful)
That being said, they are still pushing it a lot, as artists don't even get that.
Also a note of interest, in other fields, such as the gaming industry, the developers/artists get a lot more. But there's also WAAAAAAAY more people involved in making a videogame, than there is making a song. (Same deal with movies). So there is something to keep in mind here.
Re:The breakdown (Score:4, Insightful)
Of course that requires a business plan with a greater than 3 month outlook, and if they did that they may realize suing their customers wasn't such a good idea either... Even less overhead!
Additionally, publishing royalties + label profit should be less-than or equal to artist's royalties. If copyright law needs to be adjusted to help this change along, so be it.
This is not how a business prices things (Score:3, Insightful)
One of the biggest determiners of cost is volume of sales; for the most part your costs go down as you sell more -- you share fixed costs like your factories over more units sold of course, but even your unit costs tend to go down with sales volume. Of course in special cases you may have per unit costs go up with volume, for example when you've bought all the plastic available at a certain price for your CDs...
When it comes to pricing, what keeps greed in check is supposed to be
At least that's the way it's supposed to work.
I think the problem with the music industry is not greed -- or at least it's not just unenlightened greed. The problem is imagination.
Think about this: people sashay into Starbucks every day and plunk down $3.99 on a cup of coffee. Not that has anything to do with the price of tea in China, but it means that people do have money to throw around $20-$30 bucks a week absolutely mindlessly. In that context a $15.99 music CD is one of the greatest bargains imaginable provided that you like it enough to play it quite a bit. I have CDs from a decade ago I still play quite a bit.
The problem is in the market demand end of things. People aren't plunking down $15.99 for CDs on a whim, even though they very well could. They can blame it on P2P if they like, but if they can't manage a half dozen or so impulse buys for the average consumer over the course of a year, they've got a serious marketing problem. Even in the world of widespread "piratical" downloads, people will fork over $15.99 for a CD if it contains music they really, really want to listen to. It's not enough money to deter fans from buying a physical token of ownership. It's true that houses burn down, but people lose computer data much, much more often. If music has to be free for people to listen to it, something is wrong with the content they're selling.
So we have a marketing problem, and that includes pricing, but it also includes product definition and promotion. If $15.99 is the wrong price, but $11.35 is the "right" price, they industry is either failing to promote music people want to hear, or failing to reach people who want to hear the music they are producing, or both. I suspect both. I suspect that $11.35 might be more "right" than $15.99, but only because the industry doesn't know how to find, produce and promote music that people want to hear. It's really important to keep people in the habit of buying your product, and that's where the music industry is falling down. They'll have to accept that its not as profitable a business as they imagined it to be, at least until people are back in the habit of buying.
Re:Wait (Score:5, Insightful)
Well, stealing music [wikipedia.org] is only a misdemeanor with a few hundred dollar fine if you get caught. copyright infringement [uncyclopedia.org] is a civil matter that can cost thousands upon thousands if you get caught.
So is it any wonder that those guys steal it rather than infringe copyright?
Myself, I'd rather buy indie music on CD from the bands themselves. $15.99? Hell, $10 is too much, most of the time they'll sell me two or three CDs for ten bucks. And it cost them a hell of a lot more to get them recorded, stamped, and packaged than it costs the major labels.
No matter what you think about WalMart, they're in the right on this one. As evil as WalMart may be, the major record labels are far more evil.
-mcgrew
Re:Proposed new budget (Score:5, Insightful)
I'd hate to be a small time, MTV2 band without a union to back me up against a major label.
Re:Costs too much (Score:3, Insightful)
That depends.
For a small band... touring helps to promote the CD sales.
But for a mega band like U2... CD sales help to promote the tour.
As CD sales increase, you get more radio airplay, or at least more attention which means more people come to the concert, which means you can fill all the seats and charge more for tickets. They feed upon one another.
Re:Artists should make the most money, not the lab (Score:3, Insightful)
The burden of risk is the most expensive thing thing in the economy. It is more expensive than talent, education, good looks, and everything else. In my opinion, the system is broken if the people taking the risks don't get the most reward.
Re:Proposed new budget (Score:3, Insightful)
I agree with that, but it seems that promotion (getting airplay) is the only thing a lanbel can do for an artist.
they don't directly employ artists
Actually they do. Under US copyright law, all phonorecordings are "works for hire" thanks to the RIAA labels buying congresscritters back in the 1950s.
Does Lynard Skynard's Workin' for MCA still have the (intentional) hum at the beginning of the song on CD like it did on the LP? My CD was ripped from an LP.
Not the way things were intended to work (Score:3, Insightful)
The end result is you now have artists who never, or rarely ever perform live who want to make all their money on the recordings. You have artists who do short when we feel like it tours for a total of 20-30 dates every few years. Again do do these tours to support the recording. The model was setup the other way around.
In the last 10 to 15 years we have seen the original true promotional vehicle of the "single" fade away. This as the tie breaker in the recording company artist tug of war. It wasn't ideal, the company still saw most of the profit, but it gave the artist someplace to make money. Now its all centered on the album sale, and that album sale wasn't structured to be the profit center for the artist, and was originally supposed to be the upsale from the single, which no longer exists.
The up shot in th end is that the industry is s mess and we the consumer are getting cheated two and half times, high recording prices with attendant limited availability since older recordings can be had only at high prices due to not being available at the easiest to reach retailers. And we are being cheating in that artists don't perfrom as often. My fater tell stories of the acts when he was growing up 50's/60's that would perform multiple times a year at multiple local venues, not once every 3-4 years at the central huge mega stadium or ampi-theater which is what we have now if they perform at all.
I don't know the answer just stating the view I have developed. I definately think that artists should be performing more often, I see coming around on tour as thier job. Just as I go to a job every day they should be either working on the next album, or coming on by to perfrom in my town. I do also think that labels need to lower the price of CD's since they are still the promotional material for that tour I think the artist should be on, and lacking the singles that used to fill a larger protion of that roll the CD needs to fill some median space between old full album perpose, and the old single's purpose.
Re:Artists should make the most money, not the lab (Score:3, Insightful)
Your argument breaks down in so many ways. Here is one suitable to slashdot.
Take the sale price of a computer. At what stage do you class someone the "producer"?? - who you say is the most important.
* The miner who dug the silicon out of the ground
* The refiner who turned that into wafers
* The chip designer
* The chip fabricator
* The assembler
* etc.
It's not easy to assign who should get 'the most'. In fact it is impossible without arbitration.
Re:Proposed new budget (Score:5, Insightful)
Re:Proposed new budget (Score:5, Insightful)
Re:Wait (Score:2, Insightful)
Not when you take marketing the item into account.
How much money do these indie artists pay to a marketing team? Have they spent money trying to get picked up by Wal-Mart?
Comment removed (Score:5, Insightful)
Re:Wait (Score:5, Insightful)
As an indie musician and producer, I can assure you that successful indie bands do not sell CD's for $10, much less several. Stage-side CD sales should be for $20 or more, partly because of the opportunity to get them signed by the band, also because it's an inelastic demand - anyone willing to spend $10 on a CD at a show will typically spend $20, so selling for less does not sell more copies. It's only when there is a selection of 100's of bands that purse strings tighten.
I feel compelled to reply because I don't want folks to think they can talk any musician down to $10 on a CD. Some you can, but they probably recorded it in their garage.
And while it does cost indies more per CD to manufacture them, major labels typically have much higher production budgets. I produce for between $3k-$8k, majors are typically $50k and up. There are many hits on the radio which cost over $1M for just the one song. And if it flops, the artist(s) gets the bill!
Ironically, the least expensive component of a CD is pressing the content, the most expensive is printing the artwork. That's big motivation to go the iTunes route.
High overhead isn't actually shocking. (Score:3, Insightful)
Re:Proposed new budget (Score:4, Insightful)
I can get insurance for instruments and equipment through ASCAP without being part of any union.... Bear in mind, though, that the people in unions are not the artists. The folks in the unions are the studio session musicians, the composer/arrangers on hire by studios, etc. I see no reason that they should be a line item on the CD sales costs, though. They should be getting their money in the form of union dues from the hired musicians in question. That money should fall under the "label overhead" column. The only reason to break that out into a separate column is to make anti-union people see red. Unless, of course, the unions are actually getting money directly from each sale, in which case, the anti-union people should be seeing red.
Re:Wait (Score:3, Insightful)
Re:Proposed new budget (Score:2, Insightful)
Re:Wait (Score:5, Insightful)
That includes me, back in my teenage years, when I would spend darn near every cent that I had on "content", either as movies or CDs. Music meant so much to me back then, I would have paid 40 bucks a CD to get the latest Nirvana album if I had to. Thank the Lords of Cobol that today's teens have much better access to the true alternatives.
Marketing (aka propaganda) is very powerful, especially on those who have weak or poorly developed egos (like teens). We need to do a better job as a culture of teaching young people how to spot it (not hard, it's ubiquitous), and how to spot the fallacious logic and appeals to insecurities. The vast majority of the time, marketing is trying to get you to do something that is not in your best interest... like pay 20 bucks for the new Nickleback CD! Ugh!
Comment removed (Score:3, Insightful)
record industry as villains (Score:5, Insightful)
How is Walmart the hero? This is another story in Walmart's long history of pushing competitors out of the marketplace and then squeezing suppliers. Walmart is the ultimate middleman in that they have more leverage than either producers, consumers, or even their own workers. That said, I don't even really think that Walmart is a villain exactly (most of the time), they are just an extremely well run business optimizing their profits.
What I think is very wrong is the interpretation that anyone that screws the record industry, the movie industry, or the software industry is somehow a hero. Somehow the slashdot crowd has gotten the impression that these industries are composed completely of useless middlemen who don't deserve to make any profit from their work.
However, this is less and less true since now artists can sell their work fairly independently. This was probably never true with the software industry, where even smaller publishers like Stardock can make it onto Walmart shelves, and the movie industry where actors, writers and directors all get paid pretty handsomely.
The truth is that you can't take money out of the "record industries" pockets without taking money out of artists pockets, especially now that artists have access to smaller or self created labels and the ability to sell their stuff over the internet.
Personally, I buy products at the lowest price I can get them, but I don't go around cheering when the producers get shortchanged.
Re:2004? (Score:4, Insightful)
Record label sends out 5k-10k copies of this cd to every radiostation, music store, and website under the sun to try and get exposure. The MSRP of the cd is $18.99 which, in the label's eye means they just spent $94.95k-$189.9k on marketing. Do the math. If they send out 5k discs, that means that a cd that sells around 250k copies would have had around $2.50 in "marketing" spent on it. There is actually no marketing involved on most of these releases except for the major mainstream ones. This is one of the reasons you constantly hear these horror stories of bands putting out albums and not making a red cent off of them. The contracts are padded with so much absurdity like this it's asinine.
Re:Wait (Score:4, Insightful)
Re:Wait (Score:5, Insightful)
Because you guys probably had talent. The pros have to spend megabucks on marketing to sell crap.
Re:Wait (Score:2, Insightful)
To me, to define music as "indie" is to declare, "Our only good point is that we're not signed to a record label", rather than calling it just rock or what-have-you. Indie music fans have not helped this perception, because as I said earlier, they seem to only like something when it's under a critical mass of fans; once a band gets too popular, they decide it's lame and move on to another indistinguishable set. And no, I didn't need that karma after all.
You know, for great justice, you would have linked this [amazon.com] as an example of older music, thus Rickrolling me at the same time.
Re:Wait (Score:3, Insightful)
Re:Wait (Score:4, Insightful)
That's probably a good thing. Every king needs to be toppled from his throne now and then. It's good for the rest of us. Little rough on the kings, I suppose, but nobody cares much about them anyway.
Re:Wait (Score:2, Insightful)
You're not really making $7.50/unit. (Score:4, Insightful)
You're not really making $7.50/unit, because you're not accounting for production, distribution and marketing. If you leave those out, then of course it'll look cheap.
And don't tell me that you can do your own production, distirbution and marketing, because that just misses the point: of course you can do those things, cheaper than the labels would, and maybe even decently well (and I certainly think more musicians ought to do it); but the numbers you're giving don't account for the cost of the time you spent, unless your time is free. You didn't make $7.50 of profit per unit; you made $7.50 minus the value of the time (and equipment, materials, etc.) that you spent on making and selling your CDs.
Yes, I'm absolutely sure many people can make more money as indies than with a major label. But come on, be honest with the accounting.
Re:overhead (Score:3, Insightful)
It was of the rhetorical variety.
>>The answer is that the money goes to marketing
No, it does not. It seems that you might not have read TFA. They break down where the money goes, and marketing is it's own huge chunk, as is distribution.
So to restate my question in a way that might be a bit more pleasing to you, given that we've already accounted for profit, marketing, distribution, and manufacturing, why is the label overhead so gosh darned high? The answer is that it's the funny math that record labels use to deprive artists of income. When the movie studios do it, it's called Hollywood Accounting. Feel free to read all about it:
http://en.wikipedia.org/wiki/Hollywood_accounting/ [wikipedia.org]
Re:Wait (Score:3, Insightful)
What exactly is the flavor of the month getting out of their
major label for all of this hot air?
Re:Wait (Score:3, Insightful)
If anything, I wonder if the big box retailers haven't helped the 4 majors survive the p2p thing. Few want to make a special trip to Tower or the like just to buy CDs, unless they have eclectic tastes. And certainly no one wants to pay the even higher prices the mom and pops used to charge.
no wonder they are in trouble (Score:3, Insightful)
Other than a every few really classic albums like "Tommy" and "Dark Side of the Moon" and a few Beatles albums it's pretty much 2 good tracks and 14 tracks of filler! You can't blame the artists either, if I was locked into a contract that required my band to produce 2 albums minimum, I sure wouldn't want to blow my wad and put all my good stuff on the first album either.
Re:Wait (Score:3, Insightful)
Seriously though, most artists make pennies on the dollar for every CD sold, thanks to draconian contracts they're duped into signing when they're young, naive and can't afford legal representation. There are a few exceptions, and speaking of debauchery, the most notorious being Led Zeppelin, their manager Peter Grant being one magnificent, tough-minded son of a bitch.
What the OP said, I've been saying for years. Every time you buy a CD from one of the giant record labels, you're not only subsidizing Britney's and Beyonce's $100 million contract, you're also helping finance the fleet of lawyers who rely on making harsh examples of random individuals to keep the status quo going.
Since I've been aware of the RIAA's bully tactics, I've only bought CDs from independent record labels, in one case going so far as to keep correspondence with a band's drummer as to how acquire one of their albums - he eventually notified me when Amazon got it in stock.
Re:Wait (Score:4, Insightful)
If you have one concert a month and it sells out a 15,000 seat venue at $50 a ticket you're grossing $750,000 a month. I don't know what the venue deal is like but I'm sure you get to keep at least half the money and clearly $100,000 a month is going to be money well spent, and I'll bet most bands could do a concert a week, not a concert a month.
They don't need a dime from CD sales to cover any of that.
What strikes me is that if you go with Wal*Mart, a lot of those expenses vanish - Wal*Mart is going to buy these CDs for $9.72 to sell them at $9.72. So you should not have to pay distribution fees ($0.90), retailer profit ($0.80) or retailer overhead ($3.89). The total of that is $5.59. $15.99 - $5.59 = $10.40.
Marketing/Promotion costs $ 2.40 per CD? That seems like an awful lot. I would think that if Wal*Mart automatically gave the $9.72 CDs good positioning in the store, you would not have to pay any of that. These are going to be acts with name recognition so no promotion should be necessary. So your total costs go down to $ 8 a CD and you are actually making a respectable profit on $9.72, especially since $1.70 of that $ 8 is "Label profit" already.
So if you can sell a CD for $ 9.72 and it costs you (8-1.70) to make, then you're actually making a profit of $3.42, which is actually more than what you make on that $ 15.99 retail price.
I think Wal*Mart's position is very reasonable.
But in the mean time, the labels might consider that by not dropping prices they charge independents they have killed the independents. If they want to not have to deal with ruthless, relentless Wal*Mart, selling to independents at the same price they sell to Wal*Mart would help them exist. Then promotion consists of giving independents a few extra copies of albums to keep for themselves and recommend to customers. No way something like that costs $2.40 per CD.
If people see the same CD they could buy for $15.99 for $9.99 at Wal*Mart, they are going to buy at Wal*Mart. But I'll bet that for a lot of people if they could buy for $11.99 at an independent or $9.99 at Wal*Mart they would go for the independent because they like going there. The independent doesn't have to beat Wal*Mart, it just has to be somewhat competitive and offer a more pleasant buying experience. If you could see labels selling the music for $9, giving Wal*Mart $1 in profit and the independents $3, then that would be fine, and people would start buying at independent stores again.
D
Re:record industry as villains (Score:3, Insightful)
Well, I can't speak for the slashdot crowd, whoever that is, but, when an industry believes that a certain price per unit is guaranteed to them in the constitution or something, I'm quite happy to see them taken down a notch or two.
Really, wal-mart is just doing to the record labels what the labels have been doing to artists for decades. Get people to sign a deal based not on a mutually beneficial contract, but by being the only game in town. Wal-mart does this to all it's suppliers. As I said above, lie down with dogs, get up with fleas.
"That said, I don't even really think that Walmart is a villain exactly (most of the time), they are just an extremely well run business optimizing their profits."
I don't know when exactly maximizing profits by any means necessary became ethically ok. I think profit is great, but when you can't run your business without paying your employees a wage that keeps them in grinding poverty, I say we can do without that company.
To say that maximizing profits, come what may, deserves no ethical considerations is to legitimize applied amorality.
Never mind the fact that, if everybody took the attitude that wal-mart does ("Let other people hire employees, we'll just sell them stuff!"), what happens to your society? You wipe out the middle class, for starters.
I don't know about you, but basically everything that I like that came out of the 20th century, in terms of tech, books, movies, music, whatever, mostly came out of the middle classes. If you get rid of the middle classes, you have a society that looks more like mexico city. That sound appealing to you?