Tuesday, October 17, 2006

It's Like Choosing Sides Betwen Hitler and Stalin

I never thought I'd say this. I'm actually rooting for Wal-Mart, here.
Less-expensive CDs are something consumers have been demanding for years. But here's the hitch: Wal-Mart is tired of losing money on cheap CDs. It wants to keep selling them for less than $10 -- $9.72, to be exact -- but it wants the record industry to lower the prices at which it purchases them. Last winter, Wal-Mart asked the industry to supply it with choice albums -- from new releases from alternative rockers the Killers to perennial classics such as Beatles 1 -- at favorable prices. According to music-industry sources, Wal-Mart executives hinted that they could reduce Wal-Mart's CD stock and replace it with more lucrative DVDs and video games.

"This wasn't framed as a gentle negotiation," says one label rep. "It's a line in the sand -- you don't do this, then the threat is this." (Wal-Mart denies these claims.) As a result, all of the major labels agreed to supply some popular albums to Wal-Mart's $9.72 program. "We're in such a competitive world, and you can't reach consumers if you're not in Wal-Mart," admits another label executive.
This has got the RIAA shitting bricks. Wal-Mart is a huge percentage of their sales. Wal-Mart could severely hurt the music industry if they cut back on their inventory. Wal-Mart would barely notice; CDs are a loss-leader to them. The RIAA (and the associated labels) is the poster child for rampant greed. Yes CDs cost money to make, but to have the price point close to, and sometimes exceeding, DVDs? That's ridiculous. I cannot believe any album incurs more costs than a motion picture. It's about time someone with more clout puts them in their place.
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.
Oh, cry me a fucking river. After your shotgun legal cases aimed at file sharing, your insane profit margins, and the gouging of the majority of your contracted artists (anyone remember TLC declaring bankruptcy the same year they had a platinum record?) I have absolutely no sympathy when you end up being the ones bending over and taking it in the ass.

Lube up boys. Time to price your merchandise fairly (or at least more fairly than before)