Major Labels

The End (And Beginning) Of Music As A Loss Leader

image from With the news that Best Buy will be cutting the store space allocated to CDs this holiday season, it’s important to remember the reason why they’re in the business anyways. Hint: It’s not because they care about the music. All of the plastic discs they’ve been hocking over the years serve only one purpose: to sell more expensive and profitable items like stereos, car speakers, and kitchen appliances. The moment that music stops being a tool to drive traffic into their stores to sell other items, like right now, they will stop selling CDs. In the world of Best Buy, Wal-Mart, and Target, music is just another loss leader

If statistics showed that marking down another lucrative item below the costs of their competitors would bring bodies into their stores—that might consider buying something else along the way; they’ll do it. Now, in the past, that meant getting in the CD business and selling albums at a lower price than any of the record stores could sell them without going out of business and closing their doors.

The record industries got behind putting their treasures in big-box retail outlets because they aligned quite well with their strategy of selling several million copies of their pop wonder children.  Ironically, Best Buy is sort of coming out on top of this all, a decade or so later.  All those bodies that may have previously shopped at record stores and flocked to the lower prices that Best Buy offered; they're now only buying video games, computers, and flat-screen TVs.  Since music is so abundant and readily available that the idea of paying for it is almost a joke. 

Looked at from a somewhat romantic perspective one has to realize that the very consumerism that’s fueled the social epidemic of file-sharing is tied to the corporations, like Best Buy, that promoted the ideals of ‘devour more than you can possible afford without thinking twice about how you’ll be able to afford the products that are now in your possession.’ In a perfect world, local record stores promoted a degree of cultural awareness and the informal structure of community within groups of people that loved music. They didn’t, however, attempt to give us credit cards while we were there—that encouraged thoughtless consumption and hoarding. This is a stretch. But, it does seem like the ultimate bargain of handing CDs over to multinational corporations and driving music fans to their stores, whom they hoped would also buy something other than music. Now, they aren’t buying music at all, but they still want that huge TV. Mission complete.

This is the end of music as a loss leader. Record stores went out of business due to many other cultural shifts. However, at least they sold music, not high-end electronics. Yet, we’re all quite aware that this is only the beginning of music as a loss leader. The stores are just different.  Their ours. Musicians are hustling cheap music and hoping fans come into their stores and buy higher priced items—those that can’t be replicated and globally distributed in seconds. 

Course, like the record stores driven under by big-box retailers, musicians don’t sell Xbox’s and Halo Reach either; they sell music. But, if they expect to survive, they're forced to take up the very practices that corporations do—lower the price of the music and sell everything else they can. Hoping that the bodies and eyeballs add up to profits elsewhere. Not that musicians have a choice in the matter. I, for one, am not too worried about the thought of big-box retailers throwing music out of their stores entirely. Now that music has revealed itself to be a bad growth industry, the rest of us can get back to our real business and start to rebuilding it as a more sustainable and healthy digital ecology of culture.

Musicians might still have sell other things, but at least the products that their work is being used to sell is an extension of their art and not Sony electronics. 

Share on:


  1. Don’t underestimate how many people don’t use their computers to get their music. Let’s talk about country music fans who still largely buy albums as a CD at these big box stores. I do fear that these big box stores will completely do away with the CD before the audience has migrated to the internet for music. As some of your charts have shown, CD sales are in decline but digital hasn’t caught up yet. You may have people who want to buy a CD but won’t be able to in the future.

  2. I wouldn’t worry about this too much. Big box stores make every decision with their research. If a target in Montana is selling enough CD’s, they aren’t going anywhere, even if the Target in New York doesn’t even have a music section. Also, the shift to EVERYONE getting their music online will happen faster than you might expect. All it takes is some innovative little product or service, and your grandma (who has trouble getting her email) will be able to get a song and play it as easily as she turns on the 10 o’clock local news.

  3. Well spoken, Jeff.
    All stores do indeed have independent, geographically relevant market research. No one’s country CDs are going anywhere until they start getting them at Amazon (because they realize that they are way less on Amazon, and they don’t have to drive 35 miles to do their monthly shopping…lived in absofrickinlutely middle of nowhere Ohio for a looong time. The closest big box store was 40 minutes away. We made it once a month, if that. And this was before the internet.)
    Something to remember, though: although it seems like internet access is everywhere, there are still places in the middle of the country (and in the far north and south, like upstate Vermont) that don’t have internet, period. No 3G networks, no wifi, no…nothing.) There isn’t opportunity to buy things online.
    So, of course, the Target and hour away in… Burlington, for example, is going to continue to have a CD selection, until Newport, VT gets reliable wifi.
    (I’m only singling out this area of the country because I have family there who are still using 14.4 dialup that is so spotty, they don’t bother most of the time, except to start downloading email in the morning, and come back after lunchtime to read it…and meanwhile, forget talking on the phone…)

Comments are closed.