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When was the last time you walked into an independent record store and bought an album? It's okay, be honest. I'll give you a minute to think...
Can't remember? Well, national statistics indicate you're not alone, so don't feel too bad. Or, maybe you should.
Album sales in the U.S. have plummeted 25 percent since 2000, the year in which the infamous file-sharing giant Napster became mainstream, according to Nielson Soundscan, an information system that tracks sales of music products across the globe. Since then the people throwing the loudest tantrums have been the people at the top—that is, the big-name record labels who have been losing profits, and the big-name artists who have been losing royalties.
The unsung victims have largely been the independent record stores. While the big labels are at least starting to examine new models of making money through digital sales, the little guys don’t have much to fall back on. Even Tower Records, who built a brick-and-mortar empire out of a little Sacramento drug store in 1960, recently declared bankruptcy and closed all 89 locations. At least, like Minneapolis’s Let It Be Records, they still exist online. But for small companies, it’s harder to make the online model pan out.
Mill City Scene recently spoke with Bob Fuchs, who manages the retail department at Minneapolis’s iconic indie-record store, Electric Fetus. Founded in 1968, the Fetus has become a staple of modern independent-music culture. Minnesota Public Radio called them the “pre-eminent indie record store in Minnesota,” and Bazaar Magazine said it was “one of the best places in America to shop.”
But even with its legendary reputation, Electric Fetus can see just as well as the others that the sky is falling.
“In the physical world, they [customers] are expecting cheaper product that matches up closer to the price point of what things go out for digitally,” says Fuchs. “So that’s a bit of a challenge.”
He nostalgically recalls 10 years ago, when the Fetus was doing “crazy, mad business.” They were one of the only independent stores in town, and the economy was booming.
“Now, with a terrible economy and many other options for people to find music, one of which is free, we’ve certainly seen a downturn in physical music sales,” he says.
The popularity of MP3 players led them to install a digital download station in their store. Now, Fuchs guesses that probably 30 to 40 percent of people will never buy a physical product again. While the accuracy of this estimate is hard to verify, the national statistics support it.
Even mega-giant Trans World Entertainment Corporation, the parent company to the mall stores Suncoast Pictures and Sam Goody, is not immune to the changes. In the second quarter of 2008, they posted a net loss of $19.2 million, compared to a loss of $10.1 million in the same period last year, according to their press release. Sales increases in DVDs and other products failed to offset the decline in music. And their stores are disappearing—average stores in operation dropped from 967 to 794, or 18 percent, between 2007 and 2008.
About 2,700 record stores have closed nationwide since 2003, according to the research group Almighty Institute of Music Retail.
Fuchs says about two years ago he was afraid Electric Fetus might only have another year left. The Christmas season particularly, he says, showed a changing trend where kids no longer wanted CDs or gift cards to music stores—they wanted iTunes gift cards instead.
“The used business here is getting stronger,” he says. “The new release business is down a bit, but it’s still fairly solid. There’s a lot of people who still want to take that disc and drop that into their computer and their iPod and have the artwork and the lyrics and the physical product, whether it be an LP or a CD.”
Still, certain elements of the store are getting beefed up to help soften the blow of the declines. Their gift selection has seen a jump in products. Now when you come in to buy that Timbaland CD for your daughter’s birthday, you can also get her some Burt’s Bees products, a couple candles, some incense, a book, and a Zippo. Not to mention tickets for when Timbaland comes to town.
“We’re the number one ticket seller for First Avenue,” he says, in reference to the downtown venue. “It used to be maybe 50 to 75 percent of people who came into the store actually bought something… Now we’re finding that maybe 80 percent of people who buy tickets come in and buy tickets and nothing else.”
Because of the high volume and low return on ticket sales, they’ve instituted a small service fee—$.50 per ticket—to help offset the costs and time devoted to sales. It’s still far less than the fees Ticketmaster takes, and it helps them keep afloat. They are also opening an online store in November. But even this model is hard to make competitive.
“Brian Wilson’s record at Best Buy has three bonus tracks, and it’s on sale for like $8.99,” Fuchs says. “I’m paying $11 from the label for it without the three bonus tracks… How am I supposed to compete on that one?”
While record stores have limited options to adapt to dwindling sales, many bigger artists are taking extreme measures to increase their own profits while keeping their prices low. This includes cutting out the record labels altogether, making download-only albums, or giving exclusive rights to iTunes for the first month of an album’s release.
The origins of this trend can be seen as early as 2000 when Smashing Pumpkins released the last album before their breakup, Machina II: The Friends and Enemies of Modern Music, for free on the Internet. This title seems appropriately prophetic, as we’ve recently seen bands like Radiohead and Nine Inch Nails follow suit.
“I’m effectively being taken out of my own business, and it’s happening every week,” Fuchs says. “Pretty soon your own suppliers, labels, are feeding things to iTunes first before they give it to you… Well, guess what, if I don’t even have the opportunity to sell it, I can’t sell it.”
In the case of Radiohead, they also released a special box set which includes the album on vinyl and a bonus CD. Fuchs admits they still sold hundreds of copies months after it came out, but he believes they still probably lost at least half the buyers because it was free online.
“I would love a level playing field across the board, across the country,” Fuchs says. “Same product, everywhere, same date.” | 
