Wal-Mart Squeezing Record Labels to Cut CD Prices 910
Raindance writes "RollingStone.com has a revealing article detailing how retail giant Wal-Mart is making loud noises about throwing its weight around in order to get significantly better bulk prices on CDs. Says one industry executive, 'This wasn't framed as a gentle negotiation, it's a line in the sand -- you don't do this, then the threat is [your product is dropped].' This is the first time a big player has attempted this sort of hardball move on the labels, and the labels may be forced to deal, as Wal-Mart sells 1 out of every 5 retail CDs. Monopoly one, meet monopoly two."
My eyes are filling with tears for the labels... (Score:3, Insightful)
How about making the customers happy? Personally, I can't believe that 1 out of 5 CDs are sold in Walmarts. I can't stand their stores. I absolutely DREAD entering one. They aren't clean, they aren't friendly after you pass the greeter, and they aren't someplace that I want to shop for music as it's just usually a mess and full of people.
Why not concentrate on making music available for less money somewhere that I might want to buy it instead of worrying about making sure Walmart is happy.
Virtually no industry executives would publicly comment about their company's relationship with Wal-Mart. But off the record, many record-industry executives shared their concerns. "I don't think there is a music supplier in America who really enjoys doing business with Wal-Mart," says one major-label rep.
Awww, are we supposed to feel sorry for them? Am I supposed to shed a tear from the corner of my drying eyes that they don't like something? Here's the river... Notice it's dry.
I don't like dealing with either company and I certainly don't think that Walmart is going to bat for the consumer. They are only doing this to make themselves richer. We aren't exactly benefiting by buying a $10 CD.
Wal-Mart is like no traditional record seller. Unlike a typical Tower store, which stocks 60,000 titles, an average Wal-Mart carries about 5,000 CDs. That leaves little room on the shelf for developing artists or independent labels.
I was at Walmart recently buying something I couldn't find at Target. I happened to stop into the electronics section while my fiancé did some shopping elsewhere. Perhaps I wasn't looking in the right spots but I wasn't finding anything by developing and independent artists. If anything it was most older music that wasn't exactly getting radio play. I saw the typical teenybopper crap but nothing that I would consider new and exciting.
"When you're buying CDs for twelve dollars and selling them for ten like Wal-Mart, it makes the rest of us look like we're gouging the customer, when we're not," says Don Van Cleave, head of the Coalition for Independent Music Stores, a retail consortium. "It's supertough to compete with that price point."
Most independent stores I have gone to shop for music in are charing $16+ for a CD. If you're buying it for $12 and making $4+ a CD I seriously believe that you are gouging us. I don't feel bad for you.
"They proposed it to a bunch of artists and managers, but everyone was worried that we are sending a message that instead of the sixteen-track album we sold, those nine extra songs were filler," says a label executive.
You sent the message when we bought your shit music for $16+ and found that 14 of the songs were filler. Walmart didn't help to spread that message... Your crappy albums did.
Re:My eyes are filling with tears for the labels.. (Score:5, Insightful)
If you're buying it for $12 and making $4+ a CD I seriously believe that you are gouging us.
Making a profit on a 33% mark-up is gouging? Sheesh, I had no idea that CDs should be sold for one penny more than they were purchased.
Re:My eyes are filling with tears for the labels.. (Score:4, Informative)
Re:My eyes are filling with tears for the labels.. (Score:4, Interesting)
They can compete another way. If Walmart even sells Eminem, it would be the censored, clean lyrics version. They're run by Bible-thumping prudes. They wouldn't sell music with explicit lyrics no matter how wildly popular it was. Of course, you still won't have enough customers in a rural area to support an indie record store, but there's always mail order like Amazon or just downloading.
Re:My eyes are filling with tears for the labels.. (Score:4, Interesting)
Re:My eyes are filling with tears for the labels.. (Score:4, Insightful)
Where are you getting your numbers?
33% is most certainly not gouging.
I think the above statement is a misconception. Who is to decide what numbers are "gouging" and what numbers aren't? Why are we even talking about "price gouging" regarding such a luxury item?
33% is wildly high for some businesses, and very low for others.
Buying from a major label is sort of like buying name-brand clothes. You aren't really getting something better, you're just getting something more popular. The music is good because the radio and all the clubs overplay it, not in spite of that fact. Serious musicians don't care about that, but to the average person (myself included) the pop music is kinda catchy and gets stuck in my head. There are many similar examples, like how people will pay a lot for diamonds, but if de Beers flooded the market nobody would want diamonds anymore.
Price is not some arbitrary value which should be manipulated. It's the indicator of the current supply conditions and current demand conditions. A hotel room during a disaster (like a flood or hurricane) is highly demanded, but the supply is relatively low. When the price rises, it forces a more efficient use of the resources available. Those in need of space will be more likely to stay with friends if they can, leaving the hotel space for those more in need. Large families who might normally reserve two rooms might get one instead, leaving a room open for another family. Families might get the necessary portions of their house fixed and move back faster (again leaving room for another family), without waiting for their house to be restored to perfect condition.
Of course, all the efficiencies mentioned above would be called "price gouging". When the government steps in and prevents the price from rising naturally, it becomes a race to see who can reserve hotel rooms the fastest, and creates a shortage. Then, the families most in need might be left on the streets while families who could be staying with friends are enjoying a two-bedroom luxury suite.
Re:My eyes are filling with tears for the labels.. (Score:3, Insightful)
I think it depends on where you're at. Most of the Walmarts I use are Super-Walmarts in Wisconsin. They are always clean, pretty friendly, and very spacious. Yet when I was on vacation in St. Louis, I was in a normal sized Walmart that was at least 10 times over capacity. They
Re:My eyes are filling with tears for the labels.. (Score:3, Funny)
Walmart has a monolopoly on the Third dimesion. If my house could store 10 times its capacity than I would be rich as them. Those b*s!e^#s having a monopoly on such a comondity - it should be FREE!
Re:My eyes are filling with tears for the labels.. (Score:5, Informative)
By contrast, in the larger cities, the necessary goods are in closer proximity to one another so that going from one store to another is much less cumbersome. This also creates greater competition for shoppers' dollars, and the stores (on the whole) have a greater variety in order to distinguish one from another. In addition, bigger cities are actively trying to fight back against suburban sprawl and make better use of nearby land. The sheer size of Walmart runs counter to those goals. Therefore, Walmart is disdained in the big cities because it takes up an enormous amount of valuable space and does not stock the high end products that are locally available.
Re:My eyes are filling with tears for the labels.. (Score:4, Insightful)
Do you honestly think that a mom and pop record store is buying discs in the same volume at the same price as the largest retail juggernaut in the history of this planet?
Re:My eyes are filling with tears for the labels.. (Score:4, Informative)
Re:My eyes are filling with tears for the labels.. (Score:5, Insightful)
Assuming they want to stock enough to not lose sales to the store-next-door if they sell one of those 55,000 albums of which they only stock one, they need to tack on another $660,000 in stock. If you were to go try and borrow that kind of money, it'd cost you all your profits just to pay the interest!
I seriously cannot believe you fault indie-er record stores for charging what they charge, man. It's really, really pathetic.
Re:My eyes are filling with tears for the labels.. (Score:5, Informative)
The thing is, nearly 1 out of 5 *anythings* are sold by Walmart. They are big on a scale most people can't imagine.
We view "entertainment" industries as big, but really, companies like Walmart dwarf them. They just aren't in the news every day like the movie and record industry. They chug along making billions of dollars without drawing attention to themselves.
Wal-Mart has 3500+ domestic stores, and nearly 1500 international units. They pull in over $60 BILLION dollars per quarter and $2 billion of that is PROFIT.
Walmart has so much purchasing power with wholesalers that this current story is just everyday business. However, this time they happened to target a branch of the media, who tend to yell and scream louder than most industries when *anything* happens to them.
Re:My eyes are filling with tears for the labels.. (Score:4, Interesting)
Keep in mind that the music market has historically operated with small costly stores (in malls and such) that stock a wide variety of albums (to get people in the stores) but make their money on say the top 200 selling albums that turnover (sell through inventory) much more rapidly than the others. Walmart tries to stock only the albums that sell (letting online sellers fulfill the remaining orders) and sells them below cost (also to get people in the store) in order to make money on all the high margin items they are selling. Nearly every business does this they sell certain things cheaply in order to increase sales of higher margin items. Fast food joints give away the burgers to make money on soda and fries. Fancier resturants try to break even on the food and make their money on wine. In software the real money is made on maintenance contracts rather than licensing. What surprises me is how much music Wal-Mart sells when so many titles are edited. Seems kinda pointless for Wal-Mart to even have a rap section, but I guess you never go broke underestimating American smarts.
WALMART: ONLY MARGINALLY PROFITABLE (Score:5, Insightful)
They pull in over $60 BILLION dollars per quarter and $2 billion of that is PROFIT
Now, while 2 billion bucks is a load of cash, 58 billion was spent in search of it. That's a margin of only 3.3%. It is NOT a profit of 33% as a post farther up claims with the illustration of a $12 CD being sold at $16. Walmart makes all of its money on razor thin margins. Yes, 3.3% is razor thin. Compare to, say, Intel, who pulls in a whopping 22.7% profit margin. Now THAT'S a huge margin of profit. Not Walmart and their piddly 3.3%, nevermind how many billions that 3.3% adds up to. Say what you want about the monolithic nature of Walmart and their heavy handed tactics with supplies but you cannot knock it on gouging or otherwise extraordinary profits.
Re:WALMART: ONLY MARGINALLY PROFITABLE (Score:4, Insightful)
PS - In case any nitpicky economists or financiers want to argue with my subject line, while "marginal" in economic terms simply means per each additional unit, it also means "barely within a lower limit" in plain English and that's what I was intending.
Re:WALMART: ONLY MARGINALLY PROFITABLE (Score:3, Insightful)
"lower the prices" is simply their business model.
Their business model is mean to benefit them. The fact that it also benefits you is just a side effect.
Re:WALMART: ONLY MARGINALLY PROFITABLE (Score:3, Insightful)
The entire reason that capitalism has been beneficial to the country is because of competition between businesses. When they manage to rid themselves of competition (the natural progression of capitalism) then the system is no longer beneficial to the country.
Re:My eyes are filling with tears for the labels.. (Score:5, Interesting)
They say, "Oh, we're out of soda
Walmart is ubiqitious in some parts of the country. They're the second highest employer in the country, behind the government. Frankly, I'm surprised it's not a higher ratio.
Re:My eyes are filling with tears for the labels.. (Score:5, Interesting)
Consider this: you have one company that provides for all of the needs of the citizen in the town, and a lion's share of the citizens work for that company. How is this not a commune? Its like communism's evil twin!
Re:My eyes are filling with tears for the labels.. (Score:4, Insightful)
Seems more like Feudalism [wikipedia.org] to me. Big king in far-off castle, store manager as vassel, serfs working the land (that only the king actually owns any of). Yep, Walmarts in small towns are fiefdoms.
Re:My eyes are filling with tears for the labels.. (Score:5, Insightful)
Maybe so. But they've also changed the marketplace so that lowest manufacturing cost is the only consideration for success. Consequently, they've created a gargantuan flood of imports that we've paid for with IOUs. Low inflation over the last 15 years has been bought on loan.
Since with current demographic trends we're never going to pay those IOUs off at current values, there's probably going to be a huge surge of inflation in the future while the government prints money to devalue our foreign debt. So really what WalMart is doing is just pushing the inevitable inflation into the future, where it's going to hit us all at once.
It's like they've handed us a credit card, and we as a nation have become lazy and quit working to earn the stuff we buy. We just keep charging more stuff on the credit card.
Re:My eyes are filling with tears for the labels.. (Score:3, Insightful)
I saw the typical teenybopper crap but nothing that I would consider new and exciting.
This is the same demographic that made Titanic the box office "phenom" that it was.
I wasn't finding anything by developing and independent artists
I don't think the masses of America buy stuff by developing and inde artists. So I can see how 1 in 5 are sold at walmart.
see your quote below to reinforce that many people buy music from walmart.
it's just usually a
Re:My eyes are filling with tears for the labels.. (Score:5, Insightful)
Why not concentrate on making music available for less money somewhere that I might want to buy it instead of worrying about making sure Walmart is happy.
While much of what you say about the stores are true, you should feel sorry for the folks trapped working there. I've worked at one, appalling is about the only word that comes close to describing how management treats employees. Many of the people there can't find other work, or Wal-mart pays more than anything else they can find. Wal-mart knows this and abuses it. I fully expect there to be lots more class-action lawsuits against the company in the near future, even with current ones they're getting worse if anything.
But the 1 in 5 figure is quite believable. While Wal-mart might not have as large a selection, their core customer base isn't looking for one. The CDs sell like proverbial hotcakes at even smaller Wal-marts, bigger ones move so many it's scary. Around here (Tennessee) there are very few chain record stores left. Of the two malls in the closest large city to me, there's one record store apiece. There are a few small retailers, but the biggest of those is a local used-CD chain (two locations).
On this one you're both right and wrong. Wal-mart is indeed wanting to make more money, but their entire business plan is to buy low and pass along the savings, keeping profit margins lower and making up their money by selling tons of the stuff. Anything Wal-mart can get cheaper will benefit consumers because then the consumers will get it cheaper. Granted Wal-mart's not doing it because they're some grand benefactor, but the end result helps consumers a bit. Actually I suspect that Wal-mart is pushing for this because the overwhelming consensus of their customers is that the CDs cost too much, even at Wal-mart's prices. (I worked in Electronics, you hear this constantly, although people still buy.)
I was at Walmart recently buying something I couldn't find at Target. I happened to stop into the electronics section while my fiancé did some shopping elsewhere. Perhaps I wasn't looking in the right spots but I wasn't finding anything by developing and independent artists. If anything it was most older music that wasn't exactly getting radio play. I saw the typical teenybopper crap but nothing that I would consider new and exciting.
Umm, did you not read the sentence you posted? It said it left little room, which is exactly what you found to be true. Wal-mart's not big on new and exciting though, they're big on selling decent stuff cheap and lots of it. Independent artists and developing artists don't fit that so it's no surprise they're absent.
It is interesting to note that Wal-mart doesn't handle the merchandising of the CDs itself, they hire a company that does it, so I'm not sure how much direct control Wal-mart has over exactly what is on the racks.
While it's hard to understand t
Re:My eyes are filling with tears for the labels.. (Score:4, Insightful)
Those outsourced factory jobs everyone is blaming on Bush? A goodly number of them can actually be laid at the feet of Wal-Mart and it's predatory practices. Look what they did to Levi-Strauss, and L-S bent over and took it to gain acess to Wal-Mart.
This story [fastcompany.com] about Wal-mart frightens me greatly, and it's just one of many.
Re:My eyes are filling with tears for the labels.. (Score:5, Interesting)
Umm. It's obvious you've never run a business. This markup barely covers overhead and people expenses. What do you expect them to pay their people with? Dorito's?
It's funny listening people complain that the Independent record stores are disappearing and then think those same stores should give their stuff away for free.
Money from heaven I guess.
Re: Comparison to Chain v Indie Bookstores (Score:5, Insightful)
After college I worked at a great independent bookstore for about 3 1/2 years, just at Burns Ignoble (Barnes & Noble) was starting to drop store everywhere.
More than once UPS, USPS, etc dropped off the wrong box in the shipping room, intended for B&N, we'd be opening boxes quickly usually and didn't always notice until we looked at the invoice. The discount a place like B&N gets over the independent is significant, like 8-12% more. This is a similiar situation with record stores.
When you're running close margins to begin with and your comptetitor is getting stock for 8-12% less than you, THAT's huge, and it's d*mn hard to compete. Sadly, that bookstore, after 45 years in business, closed this summer.
Also before you complain about costs, think about what independent media places (records & books) tend to offer; people who love their product, are knowledgeable about it, and MOST importantly, they support small presses/publishers/labels than the uber stores won't touch (including Target by the way, not just Wal-mart)
As independent record and book stored closes, so do the many small presses & labels. The store I worked at bought some great books from indie pubs, many of those are now out of business since Target, Wal-Mart and the like won't even talk to them. Those books are no longer available and those people lost their jobs.
Seriously, thing hard about where you buy things. Yes, I understand $2-3 more is a lot to some people, however, you are ultimately reducing your the choices and varieties of the music you hear and books you read. Sometimes being a consumer involves more than just the price of an item.
My 2 cents
Re: Comparison to Chain v Indie Bookstores (Score:5, Insightful)
I imagine that if you could have received the same price breaks as B&N then you would have jumped at the opportunity. Then you would sell them at a lower cost to the consumer.
Assuming that's true, then you are doing what you counsel against. As a bookstore you are a consumer buying from distributers, but you always look for the better deals, just as the end consumer does.
The next argument usually made is, "We would have to just to survive," which is also made by the end consumer. If I can buy the same product for less, is it in my best interest to buy it for more? The store has to make the same decision, and the result is the same - it's not in the store's best interest to buy from a higher cost distributer, and it's not in the consumer's best interest to buy from a higher cost store.
This is capitalism. It's nice to believe in a rosy utopia where everyone gets what they want, but the reality is that our economy does not support that model.
To paraphrase the GPL people, "If you don't like it, invent your own currency and enforce your own economic model. You have the tools."
-Adam
Re:My eyes are filling with tears for the labels.. (Score:5, Informative)
A 30% markup for a specialty store is not unreasonable. You act like some asshole is just taking the $4 and putting it in his pocket. You should try to run a business. The owner of the store probably invested a good bit of money up front to get started. You have to fill the store with racks, buy inventory, and plan on running at a loss for the first few months as you grow your business. The owner is probably paying back the debt incurred at startup for a long time or they risked a lot of savings just to get started.
Once you get past that hurdle you have to pay rent, taxes, insurance, hire employees, pay unemployment tax, workers comp, social security. You also have to pay to advertise your business, pay your accountant to file your taxes, possibly hire a book keeper to help you keep up with the sales tax that you must pay. It is endless. $4 per CD doesn't go very far. You have to sell a lot of CD's to break even. Making a big profit off of such a business isn't a trivial thing.
I'm not saying that you should feel bad for business owners. Just realize that it isn't all that easy. If you go into a store that you really enjoy that has a wide selection, knowledgeable employees, and a great atmosphere with good customer support, you should appreciate it for the gem that it is. Someone has really had to put a lot of thought and strategy into pulling it off right. They probably also took a lot of risks just to get it started. It isn't all that easy.
Re:My eyes are filling with tears for the labels.. (Score:4, Insightful)
When are /.ers going to realise: the purpose of commercial entities is not to spread knowledge of music, but to make profit.
There are two perfectly valid business strategies to do this:
Target a consumer segment that wants to buy a wide selection of music, which necessarily cannot be limited to the current top radioplay/chart list.
To do this, you have to hold a much higher level of stock. To do this profitably, you have to have a higher gross margin to maintain a livable net margin.
The trouble is, unless you can carry a truly huge stock and shift it very fast (Hello, Amazon), you won't be doing the volume to have the buying power with the distributors. Therefore you must add your higher margin to higher costs. Result: high consumer prices.
Target a consumer segment that only cares about what's in the charts/on the radio.
This is a much bigger segment, and it's a much smaller set of product. Therefore, you can be much more efficient with your supply chain processes, you'll need less real estate for shelving, and you'll shift more volume so can negotiate more robustly with suppliers. You can therefore offer lower prices and still make respectable net margin as your costs are so low.
Both of these strategies are viable, and are only somewhat competitive. You're a consumer who likes non-chart music, so do you go to WalMart to find it? No, of course not. The existence or otherwise of WalMart is entirely irrelevant to your music buying habits. You worry about all those teenagers who only go to WM only finding chart music? They shop where their needs are met - if they wanted anything else, they'd go elsewhere.
But I think the biggest trap you've fallen into is the High Fidelity one - mistaking selling CDs for loving music. If you're a retailer who does it because you love the music and don't have a profit motive, then you have a hobby, my friend, not a business.
Amazon are very smart about this. They explicitly do not target people who love *read* books, but those who love to *buy* them.
Wal-Mart don't care about the music. It's just business - they supply a need profitably to provide a maximised return to their owners. This isn't A Bad and Evil Thing: their owners (ie the stockholders) legally require them to behave like this.
And this is the case for pretty much everyone involved: The people who press the CDs, the people who design the covers, the people who ship the CDs, the people who provide catering to the studios - everyone. Even among professional musicians, the strongest desire of all is to be paid, or didn't you notice the existence of the Musician's Union...
Re:My eyes are filling with tears for the labels.. (Score:3, Informative)
I'm too broke to NOT shop at Walmart.
cheers.
Re:My eyes are filling with tears for the labels.. (Score:5, Insightful)
No offense, but having a strong opinion is not a crime. You're certainly not going to change that opinion by throwing around insults, either. The guy may have his problems (or he may not, I don't know), but intelligent discourse is a much better way of getting him to change his mind. For all you know he may be a very intelligent person who you would often agree with, or at least enjoy debating with.
Sorry to interrupt, carry on.
Re:My eyes are filling with tears for the labels.. (Score:4, Insightful)
2. The OP has offered very little by way of evidence of being an intelligent person who makes rational arguments. "I don't like the music sold at walmart, therefore it is all crap and they must be lying about the fact that 1 in 5 CDs are sold at walmart"
This guy is best ignored... but insulting him is probably more satisfying
Re:My eyes are filling with tears for the labels.. (Score:3, Funny)
Incredibly priced dog shit is still dog shit.
Re:My eyes are filling with tears for the labels.. (Score:5, Funny)
Sure, but if you ever have a need for dog shit, why should you have to pay full MSRP?
Re:My eyes are filling with tears for the labels.. (Score:5, Insightful)
I guess you aren't one of the people who miss the days when Levi's were the best jeans you could buy? Wal-Mart forced them to "cut the fat" so they would be able to offer the product at a reduced price every year. From jeans which could hold together while being pulled by two horses, to jeans no tougher than three ply tissues.
The consumer quest for rock bottom prices has also lead to rock bottom quality.
You don't mind that Wal-mart is essentially a sweat shop that pays below average wages? That they lower the standard of living in the neighbourhoods they are set up in? That it's up to the government or the spouces benefits package to make up the difference? You may save up front, but at what cost? Every consumer that shops there is contributing to the problem.
People get up in arms when workers are exploited overseas, but don't care when it happens to some extent in their own backyard as long as it saves them $0.50 on toiletpaper?
You're right, no one has to shop there if they don't want to. I don't like what Wal-Mart stands for; I think they lead to a social net loss. So I don't shop there. And I discourage others from doing so as well.
No, I don't mind. (Score:4, Insightful)
If you're just going to show up to work when you're told and do a job *ANYONE* can do, you deserve the crap pay you're getting. That's life.
And, Americans agree with me, based on how they vote with their wallets.
Re:My eyes are filling with tears for the labels.. (Score:5, Insightful)
Telling people that anyone who disagrees with you and attacks you is a troll after you post a comment full of attacks - attacks on the record industry, attacks on Wal-Mart, attacks on its staff, attacks on people who buy the music that it stocks, attacks on independent music stores - is a bit rich.
Let moderators decide for themselves how the comment should be moderated. If I've noticed anything in six plus years of reading Slashdot it's that people with mod points aren't shy of moderating down even the slightest personal insult.
In the meantime though, I suggest you learn to appreciate a few things, including the fact that Wal-Mart does just fine selling CDs you don't want to buy, that other people have different tastes to you and that's not a crime, and that independent stores sell CDs for $16 because that's what they need to do to survive.
Re:My eyes are filling with tears for the labels.. (Score:5, Funny)
Re:My eyes are filling with tears for the labels.. (Score:5, Insightful)
(This is why you never see those 'explicit lyrics warning' stickers at Wal Mart -- they just don't give you a choice and force their censorship on you without your knowledge or consent.)
Apparently, Wal-Mart is doing just fine with these CDs on their shelves. It seems that theer is a large enough market for these censored CDs that they turn a profit on them. That's all well and good.. but if you're not happy with it, don't shop there. Simple as that. Don't complain about a company because they do something you don't like. Voice your opinion by disposing of your cash reserves elsewhere.
Re:My eyes are filling with tears for the labels.. (Score:4, Insightful)
It seems that theer is a large enough market for these censored CDs that they turn a profit on them.
I doubt that. If these CDs were actually upfront about being censored, that would be fine, but they're not.
Re:My eyes are filling with tears for the labels.. (Score:4, Insightful)
If you don't like what they're selling at Wal-Mart, DO NOT BUY IT. If you don't like their pricing, DO NOT SHOP THERE. If you don't like their attitude, the color of the store, their stance on not carrying lesbian porn, DO NOT FREQUENT THEIR ESTABLISHMENT.
All I ever hear about Wal-Mart anymore is how damned evil they are and how the store sucks and their music is unfairly censored and blahblahblah. If it's so damned bad, why are they making money hand over fist?
Frankly, I love what they've done for supply chain management, I love how they slap their suppliers into line, their prices are incredible, watching white trash is funny as hell, and I don't buy music there because I want to hear Jay-Z say 'fuck.'
Anybody else actually have a problem with Wal-Mart they can express intelligently?
Re:My eyes are filling with tears for the labels.. (Score:3, Interesting)
Comment removed (Score:3, Interesting)
Re:Good (Score:5, Insightful)
Me too. I listen to internet radio and look for nice mixes around the web and all of them are indy. I could care less about the RIAA. They are goons. The RIAA operates like Jimmy Hoffa's Teamsters once did; oppression by coercion. The Teamsters took a beneficial idea (a trade union) and turned it into a money grubbing business front for organized crime. It's the same thing the RIAA has done with music, perhaps without the organized crime, but you never know. Music used to be free, but then the Metallica bands came along with their business plans. Metallica are sellouts. Who wants to put more cash in their pockets? I would much rather support a starving artist with new ideas.
Re:Good (Score:4, Funny)
CD prices are down!
CD sales are down!
(Clearly it's due to piracy. [slashdot.org] - whatever will we do?)
Stop, thief! (Score:3, Insightful)
Of course, you realize that's "stealing" (by the RIAA's) definition. They have a right to your money, and by denying them your hard-earned cash you're just plain evil.
Now if the RIAA were intellectually honest (stop laughing, I'm trying to make a point) they would revise their annual "loss due to piracy" (e.g. "we lost 3 billion dollars to internet pirates this year...) statements downwards due to the lower retail costs. Of course, that
Well, what do you know? (Score:5, Funny)
Evil Empire 1 (Score:5, Funny)
meet Evil Empire 2.
Make it difficult to know who to BOOOOH! at!: Ugly Sister 1 (speciality: cutting wages to the bone and destroying local stores) or Ugly Sister 2 (speciality: suing young children and pensioners).
Re:Evil Empire 1 (Score:3)
Soundclick.com can get you some pretty good music (yeah, you gotta wade through all the goobers who think the world is holding its collective breath waiting to hear them croak out some lyrics while a midi file plays near their microphone... but amongst the chaff is some pretty tasty wheat)... there are other places, as well, to find music that's got nothing to do with the RIAA.
Then there are Wal-Mart's competitors. Use them. Shop
As my mummy always said... (Score:3, Insightful)
Re:As my mummy always said... (Score:5, Interesting)
Vlasic pickles is one fine example of their ruthlessness. Wal-Mart basically forced Vlasic to make the big size containers with more pickles in them than most humans should eat within a reasonable amount of time. Wal-Mart basically forced a price structure on them too with this giant jar of pickles. As a result, you the consumer have a choice. Pay for the giant jar and end up throwing away the vast majority of the pickles, or buy the more expensive jar in the grocery store. Joe Consumer buys the giant jar with the rockbottom price. As a result, Wal-Mart has now forced Vlasic to cannibalize themselves and they end up having to file bankruptcy.
Wal-Mart has a well-established policy of forcing sellers to sell their products for cheaper prices year after year if the product does not change. Wal-Mart argues that if your product does not change, then production costs level off and you should then be able to bring your product to them for a lower cost. Ever notice how many gazillion different kinds of toothpaste and toothbrushes there are at Wal-Mart? That industry has figured that they cannot afford to not be sold at Wal-Mart but yet they have to maintain a certain price structure. Therefore, they "innovate" with toothpaste and toothbrushes. Now you have cinnamon flavor, cinnamon flavor with whitening, cinnamon flavor with tartar control, cinnamon flavor with whitening and tartar control and so on. This will not stop. What is next? Cinnamon flavor with bladder control???? Wal-Mart forces this "innovation" because of their business tactics.
I could list many more examples and this is to not even mention that it is nearly impossible to actually earn a living working at Wal-Mart. They are basically an American sweatshop except they don't actually produce anything. They just peddle stuff and drive competition away.
So as much as I would like to see the RIAA suffer for their deeds, this issue transcends them.
Re:As my mummy always said... (Score:5, Insightful)
Will they continue to do so once they have wiped out all the competition? Probably not, but I don't think that Walmart will ever be competition free.
There will always be conscientious objectors to the big W, and they will shop somewhere else. There is Target, which has made some very smart decisions on how to carry a very similar product line, yet be compelling. They are price competitive on most items, but they also market to a higher class customer, and tend to have more trendy goods than Walmart (their home decor is especially telling). I think target is here to stay. They are avoiding the mistake of Kmart, and not trying to imitate Walmart to closely (which is what killed Kmart, largely--there was little to differentiate the two, and Walmart consistently beat them on price).
Is Walmart perfect? No. I hope they get slammed in the current class action suit under Title VII (gender discrimination in wages). They deserve it.
Can people earn a living at Walmart? Probably not until you get to the Management level. This means that you need to either work your way up, or move on. It makes the perfect job for high-school and college kids trying to make a few extra bucks. It doesn't work for anyone with the desire to work there for the rest of their lives, unless they can make management.
Re:As my mummy always said... (Score:3, Interesting)
They are sucessful for 2 reasons. 1) They stock everything. Many people have the philosophy "If they don't sell it at walmart, you don't need it" 2) They capitalize on poor, younger and middle aged, people and other penny pinchers, by offering them the illusion that "You can get more for less!".
First, I've never ever known someone that has ever "saved" money by paying less for something. All the people that I know that talk all the tim
Re:As my mummy always said... (Score:5, Funny)
Yes, maybe they could preserve them somehow, like.. maybe they could.. pickle them...
Walmart a monopoly? (Score:3, Insightful)
You are missing the bigger picture... (Score:5, Interesting)
Some of those stories details how Wal-Mart abuses its position as the largest, wealthiest and subsequently most powerful retail chain in the world.
They have squeezed their suppliers enough that many suppliers have had no choice but to shut down all manufacturing operations in the United States and move those operations into foreign markets where they can continue to stay in business.
The option is either lose their largest customer and possibly enough revenue to shut down completely or shutdown all US Factories, put anywhere from a few hundred to several thousand American factory workers out of a job and stay in business. Business-wise, they have no choice but to comply with Wal-Mart. Unfortunately, that isn't good for the US workers that just lost their jobs.
You can say things like, "Well, those American workers should have learned to live with earning less money."
It's not all about just the money paid to an hourly worker. It's about the cost of benefits, cost of mandatory operation fees, like licenses, worker's compensation, unemployment office fees and a number of additional aspects that raise the cost of production in the US.
Then, you also have to take into account the minimum wage law. If you can have something produced overseas by workers that are fine with making, over the couse of a single day, the same amount that a highly skilled American manufacturing worker, like a Tool & Die Maker (Which is between $19 and $25 an hour), is paid for one hour. As a business, what are you gonig to do? Stay in business or go out of business?
Wal-Mart has done more to help decrease the number of available manufacturing jobs in the United States then most people think.
Re:Walmart a monopoly? (Score:5, Insightful)
Walmart is not a monopoly - but they have ruined their share of small businesses. They also treat their employees like garbage, and don't give back to the communities that they overtake. That is why many communitites protest and try to keep them from setting up shop there.
But realistically, in the end, people want the best prices on things. Walmart can offer the lowest price (usually) because they have such a huge operation and their costs are lower. Note the deal that they have with the RIAA - I am sure that nobody else gets that kind of discount. They aren't a monopoly, but they are one of the largest forces in retail. 5 of the top 10 richest people in the country are from the Walton family.
I have talked to people who have marketed products to Walmart. They are hard-asses about accepting your product into their stores, and they take a huge cut. It is very much like record labels - you give away the lion's share of your product sales in hopes that they'll stock your product on their shelves.
Walmart is (just) a money pump (Score:3, Insightful)
Now, without Walmart we'd probably have far more locally-owned mom-and-pop businesses in small towns. But there would b
Re:Walmart a monopoly? (Score:5, Informative)
Heh (Score:5, Insightful)
Ironically, if they give in and sell cheaper it will probably result in MORE money for all involved, since people will be able to buy more CDs without feeling quite so ill at the prices.
Can't say I'm real happy about Walmart having so much power though. Frankly I don't trust any business with so much power. But I will say I'm inclined to worry about Clear Channel more than Walmart, since for most of Walmart's products the barrior to entry in the market isn't unthinkably high.
No news here. (Score:5, Informative)
walmart means moving product (Score:5, Informative)
Standard Operating Procedure (Score:5, Informative)
While I don't agree with this practice, I am glad to see it getting turned on the record companies now, since they've been ripping me and other consumers off for years. Let the jackals tear each other to pieces...
Damned if you do... (Score:4, Insightful)
To do business with Wal-Mart is to invite death."
I think I saw it in a Wall Street Journal article at some point...
Walmart could kill the music industry (Score:4, Interesting)
Re:Walmart could kill the music industry (Score:5, Funny)
Suddenly, radio stations are folding because they can't afford to pay the Walmart prices, Clear Channel has to start playing independent bands selected by live DJ's, and the only place you'll hear the Britney Spears is at her live concert in a Walmart parking lot.
Wait, nevermind, that's a great idea! Get Walmart into the music industry ASAP!
*DOES NOT COMPUTE* (Score:3, Funny)
I hate the RIAA's price fixing...
I like cheaper music prices....
*Head explodes from the logical paradox*
Walmart is not a monopoly (Score:5, Insightful)
Monopoly one, meet monopoly two.
You are completely misusing the word. Walmart is a leader in the incredibly competative retail sector. They got that way by being maniacly efficient and offering low prices on goods people need. They compete with other strong retailers (Target, Sears, Home Depot ...) everyday
to the benefit of everyone. To make money they require
volume. To create volume Walmart
must offer low prices. The RIAA is under
the same market pressures as any other Walmart
supplier.
Re:Walmart is not a monopoly (Score:5, Interesting)
Re:Walmart is not a monopoly (Score:5, Insightful)
Who do you think used to work at the manufacturers that were driven to source from China by Walmart? Do you think it was the educated urban elite? White collar technology workers? No, and no. It was the same working class people who are now finding themselves jobless or taking much worse jobs at lower pay than their old factory jobs, because the factories don't exist anymore, in large part due to Walmart and big box retailers disrupting the old supply chain.
You are free to think this is ultimate good or ultimately bad for the country and its citizens, but it's hard to deny that the working class has been complicit in their own demise in much of the country by being such steadfast patrons of Walmart, and active supporters in many cases. Ever talk to a person from rural Alabama and suggest to them that Walmart is bad for the country? Damn, that pisses them off, and for all the wrong reasons - they think Walmart could never do anything like this, because they employ nice local people and have senior citizens smiling and greeting you when you walk in the door. How could Walmart be costing them jobs, when you see how many people each Walmart employs? They just don't get it.
Re:Walmart is not a monopoly (Score:4, Insightful)
No, Walmart sells products that are made with machine tools though.
How about computer motherboards? No again?
Yes, they sell computers that contain computer motherboards. It's only one step away on the supply chain, and a very short step at that.
Steel sheet, bar, plate, tube, and specialty shapes? No luck, Huh?
Well maybe they sell iron castings. Ummm, guess not.
Well how exactly do you think the injection molded plastic parts on every gizmo at Walmart are made? Who casts the molds? Who mills the steel or aluminum? I'm sorry, but your point makes no sense. Do you think a blender company exists in a vacuum? The blender company bought blender blades and steel sheeting, and injection molding machinery, and plastic materials, and mold-making services, and mold-patterning services, and so on. Yes, I do know about the consumer products business as I'm quite involved with a company in that space. And these days, if you are getting something assembled in China, you usually source all your components in China too, since you lose the real cost savings otherwise, which means not just the blender makers, but everybody involved in the supply chain of all the components used to make the blenders.
As to whether EPA regulations have something to do with pushing manufacturers overseas, I have insufficient knowledge to comment, but I believe you that it is a factor. I never said "this is the _only_ reason jobs are moving overseas", I just said that this is _a_ reason that blue collar jobs have moved overseas, and the working class makes their own situation worse by buying into it and being the biggest patrons and defenders of Walmart.
Re:Walmart is not a monopoly (Score:4, Insightful)
In most instances, such as the music industry, the producer can't afford to lose 20% of their market, and Walmart is famous for being strict on their tactic of "our way or the highway."
But so what? (Score:4, Insightful)
Probably neither, why should we care.
Just two big behemoths fighting over a scrap of plunder
Why CDs are $15.99 (Score:5, Informative)
$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead
Re:Why CDs are $15.99 (Score:3, Insightful)
Re:Why CDs are $15.99 (Score:5, Funny)
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead
Getting the album for free off the internet? Priceless. :-)
$15.99? You were lucky! (Score:3, Insightful)
That $15.99 quoted is 8.90 GBP according to XE.com's converter. Clearly our CDs are better quality than yours? No?
That $9.72 quoted as Wal-mart's price equals 5.41 GBP. At that price I for one would be buying lots of CDs, but all you can get for that price in the UK is the broken stuff in the remainder bin.
Differential pricing and price pointing are the scourge of modern retailing. I'd love to see Asda (UK arm of Wal-mart) ta
Re:Why CDs are $15.99 (Score:5, Informative)
A simpler view of the same data...
- $1.70 for packaging and distribution
- $1.77 to the musician / artist (split among author, performers, and union)
- $4.69 to the retailer
- $7.83 to the publisher / label
Draw your own conclusions.Some thoughts on the article (Score:3, Insightful)
WOW! Is it ever. Apparently Walmart marketers understand the music biz better than the music biz people.
At Wal-Mart, we're a commodity and have to fight for shelf space like Colgate fights for shelf space."
Which is why people go to walmart. Walmart is like a commodity store. Are we going to sell the new Eminem CD based on the "Intrinsic Value" of the liner notes or the number of hits on the CD?
Then the article says:
Unlike a typical Tower store, which stocks 60,000 titles, an average Wal-Mart carries about 5,000 CDs.
and then
. "When you're buying CDs for twelve dollars and selling them for ten like Wal-Mart, it makes the rest of us look like we're gouging the customer, when we're not," says Don Van Cleave, head of the Coalition for Independent Music Stores, a retail consortium. "It's supertough to compete with that price point."
Well, Don Van Cleave, there you go! Your message to consumers needs to be, your prices are higher, but they have to be because you carry a much larger inventory and your large selection is a service your store is providing. Have tastes that go beyond the top of the charts? Well guess what, your music is in our store, and for the selection we have our price while still not the best, they are very fair. Now you're not selling a commodity. You are selling a service. You are selling expertise that perhaps your music staff has. But instead, you people try to do the same thing - push the hits.
My girlfriend took a temporary position at a cocunuts store here in town. And let me tell you, they don't get the sell based on value thing. They push the hits, hits, hits. The kind of CDs you will listen to for a month or two and then forget. How is that kind of CD worth $15? It's not. She has pretty diverse tastes, and has broken "company code" by playing other "non-corporate approved" kinds of music,a nd has had a lot of sucess selling it. She figures every time she plays something, even if it's old, she has 5 or 6 people that ask "What is this?It's interesting". And a lot of them buy it. Now imagine what could happen if the whole store's marketing was geared that way. You could sell a good amount of that older or lesser known stuff, for a higher price. And you could still take the hits, and trim the price way down, as a loss leader, to get people in the first place. Maybe you can't go sub-cost like walmart, but you can get down close.
Kudos to Walmart for beating the record industries margins down. As long as they only stock 5000 cds in each store, independent retailers should have no worries if they figure out how to position themselves correctly. The beauty of this is it could also force the record companies to sell to distributors and record stores for a lower price, actually helping the smaller guys.
Typical of Wal-Mart (Score:3, Insightful)
From a CD-purchasing-consumer's perspective, this may sound great, but my problem with this is that it is easy to get caught up in anti-music industry sentiments while overlooking the fact that Wal-Mart can do this in just about any other industry too. Don't like the price of tires? Just threaten to drop the product. Don't like the price of milk? Just threaten to drop the product. Never mind that the price is already competitive with other, smaller businesses that don't have the leverage to "force" lower prices.
The hidden cost to the public of Wal-Mart jobs (Score:4, Interesting)
Use of Safety Net Programs by Wal-Mart Workers in California
Arindrajit Dube
UC Berkeley Institute for Industrial Relations
Ken Jacobs
UC Berkeley Center for Labor Research and Education
from http://www.dsausa.org/lowwage/walmart/2004/walmar
A Study for the UC Berkeley Labor Center
August 2, 2004
Wal-Mart is the largest employer in the United States, with over one million workers. It is the largest food retailer and the third largest pharmacy in the nation. The company employs approximately 44,000 workers in California, and has plans to expand significantly in the state over the next four years. Wal-Mart workers receive lower wages than other retail workers and are less likely to have health benefits. Other major retailers have begun to scale back wages and benefits in the state, citing their concerns about competition from Wal-Mart.
We estimate that Wal-Mart workers in California earn on average 31 percent less than workers employed in large retail as a whole, receiving an average wage of $9.70 per hour compared to the $14.01 average hourly earnings for employees in large retail (firms with 1,000 or more employees). In addition, 23 percent fewer Wal-Mart workers are covered by employer-sponsored health insurance than large retail workers as a whole. The differences are even greater when Wal-Mart workers are compared to unionized grocery workers. In the San Francisco Bay Area, non-managerial Wal-Mart employees earn on average $9.40 an hour, compared to $15.31 for unionized grocery workers--39 percent less--and are half as likely to have health benefits.
At these low-wages, many Wal-Mart workers rely on public safety net programs-- such as food stamps, Medicare, and subsidized housing--to make ends meet. The presence of Wal-Mart stores in California thus creates a hidden cost to the state's taxpayers.
This study is the first to quantify the fiscal costs of Wal-Mart's substandard wages and benefits on public safety net programs in California. It also explores the potential impact on public programs of Wal-Mart's competitive effect on industry standards.
Main Findings:
* Reliance by Wal-Mart workers on public assistance programs in California comes at a cost to the taxpayers of an estimated $86 million annually; this is comprised of $32 million in health related expenses and $54 million in other assistance.
* The families of Wal-Mart employees in California utilize an estimated 40 percent more in taxpayer-funded health care than the average for families of all large retail employees.
* The families of Wal-Mart employees use an estimated 38 percent more in other (non-health care) public assistance programs (such as food stamps, Earned Income Tax Credit, subsidized school lunches, and subsidized housing) than the average for families of all large retail employees.
* If other large California retailers adopted Wal-Mart's wage and benefits standards, it would cost taxpayers an additional $410 million a year in public assistance to employees.
For the complete study (840 KB pdf file):
http://www.dsausa.org/lowwage/walmart/2004/walmar
Walmart - the only record store in town (Score:3, Insightful)
This can NOT be viewed as a good thing. If Walmart gets what they want, the independent record store will dissappear everywhere where Walmart is. They simply won't be able to compete, their revenues will continue to drop until they go out of business.
And since Walmart is well known for exercising "editorial control" over goods sold at Walmart, you will no longer be able to buy any records with explicit lyrics or controversial topics. Certain types of music will simply dissappear or become even more expensive in areas where Walmart dominates.
Welcome to Fahrenheit 451 21st century style.
Don't like it, vote withyour wallet (Score:3, Insightful)
I don't like the RIAA's CD pricing and 'CD copyprotection' methods so I buy exclusively from iTunes Music Store or I download it from Limewire if iTunes doesn't carry it.
You hold the power, it is in your wallet.
Walmart and Low Rate of US Inflation (Score:5, Interesting)
Walmart is so powerful it's scary.
Comment removed (Score:3, Informative)
For further reading... (Score:4, Informative)
Walmart is not evil (Score:3, Interesting)
The artists... oh the artists will suffer... NOT! (Score:4, Interesting)
I predict people will definately buy more CD's if they are $10 or less. Also, since the CD's will be so cheap, the labels probably won't be able to afford to license copy protection for the CD's. Note to self, sell stock in companies that license CD protection technologies.
The race to the bottom has begun and now the slick record label exec's in their $3000 suits are about to feel the pain. However, the exec's shouldn't worry too much if they should lose their job, George W. Bush is creating jobs that pay $5/hr. or less every day
Welcome to the free-market monopoly!!!!
I call this "The Frogurt Imperative" (Score:3, Interesting)
It's Wal-Mart - Home of the Censored and Creatively Limited Music Selection -- that's bad.
Why does the iTunes Store charge $9.99 per album? (Score:3, Interesting)
0.17 musicians unions
n/a packaging/manufacturing
0.8 publishing royalties
n/a retail profit
0.15 credit card fees
1.6 artists royalties
1.7 label profit
2.4 marketing
2.91 label overhead
0.15 retail overhead
9.88 total
Music stores going out of business (Score:3, Interesting)
This ISN'T the first time. (Score:4, Informative)
"This is the first time a big player has attempted this sort of hardball move on the labels."
Not true in the least. Slashdotters have Wal-Mart to thank for the record labels being punished for price fixing (as in the popular Slashdotter refrain, "the record companies are evil! They've been busted for price fixing!"). Here's what happened, in a nutshell:
- Wal-Mart started selling CDs at sub-par margins or as a loss leader to get people into the stores to buy other high-margin items.
- Record chains like Tower Records freaked out, as their primary business was selling CDs and they couldn't compete with a Wal-Mart which had a huge store of fishing rods and cheap clothing to make up the bulk of their business.
- The record companies helped fund the advertising for Tower as well as two other chains (TWE and MusicLand, I believe) in exchange for Tower et. al. agreening not to display prices in those ads that went below a certain point. FWIW, this is called a "MAP program," for "minimum advertised price," and is prevalent in tons of other industries.
- Wal-Mart got all pissy and threw their weight around with the government.
- The government told the record companies to stop, and to send checks to consumers.
- Lots of other industries, including the computer peripheral industries, still happily continue MAP programs... until that point that Wal-Mart tattles on them, too.
- Tower Records subsequently declared bankrupcty. Enjoy buying your music at Wal-Mart, folks.
That's about as hardball as you can get.Re:Monopoly? (Score:3, Insightful)
Re:Monopoly? (Score:3, Insightful)
Monopoly has a lot of definitions, not all of which apply in all cases. Walmart often has a monopoly in a market area. They drive out the Mom & Pop businesses in small towns, removing any competition. In the area I live, central NJ, there are enough people that they their tactics aren't completely effective. But small towns, isolated from larger metropolitan areas, are areas that they have certainl
Re:Uh? (Score:3, Insightful)
Not that simple. Since Wal*Mart is responsible for 20% of the whole sales, RIAA must consider. It's suicide to cut 20% of the sales, specially considering that there are other ways to get music besides buying it at stores.
RIAA has nothing to complaint about. They have doing the same thing with us for years, but now they have found somebody as big as they are.
I really, really, really hope Wal*Mart gets what it wants.
Hah! (Score:4, Insightful)
Have you ever lived near a Wal-Mart? It's NEVER stocked a wide range of music. It's never stocked a wide range of anything. It sells anyway because Wal-Mart (a) is everywhere, (b) is sells what's most popular, and (c) what it does sell, it sells cheaper than anyplace else, including Internet retailers.
Remember, the key word in "popular music" is "popular". So what if it's not a wide selection? If 95% of all shoppers save money on the 5% of all CDs Wal-Mart stocks, then thay will. The other 5% of all shoppers don't HAVE to take Wal-Mart seriously as a music store. Wal-Mart, in many non-urban parts of the US, is nearly the only place you can go to buy CDs anyhow, and if there is another music store in town it's vastly overpriced by comparison.
Don't think like a music connoisseur, think like a capitalist. The 95% that buys what's popular is all that matters to Wal-Mart's bottom line, and it's the same 95% that the record labels have built their entire industry around. If Wal-Marts across the country refuse to stock a label's new CDs, then those record companies lose a big chunk of their business. Certainly not enough to cripple them, but enough to hurt their quarterly sales. Wal-Mart has played this game of Chicken plenty of times before, and it's always the other guy that blinks.
Comment removed (Score:4, Insightful)
Re:Uh? (Score:3, Interesting)
Re:Good! (Score:3, Funny)