Digital music rocks industry

Online buying, downloading and portable players force change in music corporations

Bloomington music store feels digital impact By Kate Soderberg J201 reporter By the numbers Music bounces off the dimly lit walls, lined with new and used CDs, music DVDs, records, and accessories. The rows of discs are mesmerizing, as is the rhythm coming from the speakers around the store. Japanese ‘punk-mood music' fills the air, which is cool from the breeze that filters in through the front and back doors.   In one corner, two young men sift through the used ‘M' section, searching for some of Modest Mouse's' earlier, hard-to-find CDs. Around the corner, a middle aged woman compares the backs of two newly released jazz compilations. In the far back, a smiling, wrinkly old man flips through ancient, dusty records, looking for hidden treasures from his past.  Subconsciously, everyone nods along in time with the Japanese music filtering through the air. Photo by Kate Soderberg A sign telling of a sale on lesser-known albums and CDs highlights the stacks at Tracks. Thanks to digital music,the 20-year-old Bloomington staple has seen business plummet.   Simple, harmonious scenes like these in Tracks, a local, independently owned music store on Kirkwood in downtown Bloomington, Indiana, run the risk of extinction in the near future. Due to the surge in internet music purchasing and downloading over the past year, stores like Tracks have become an endangered species in the music retail world.   Tracks has been a local staple in Bloomington music for nearly 20 years. It provides its customers with a wide selection of new and used CDs, DVDs, records, and more.   With cheap prices for newly released CDs, and special bargains for buying a certain number of used CDs at a time, the store has developed a local customer following, and always attracts new business. The store itself is littered with bright orange signs displaying the current bargains, and the storefront window promotes the latest deals.   Still, Anna Finders, an employee for 5 years and a recent graduate of Indiana University, has noticed a severe decline in the store's sales. “When I first started working here, we would bring in around 3 to 4 thousand dollars a day. Now, a good day brings in about $2,000.” Finders says she usually hears people in the store saying they will either burn or download copies of the CDs they are thinking about purchasing.   A clear sign of the business' hardships is the fact that the Tracks in Bloomington is the last of seven stores in the chain to survive. Owner Andy Walter has closed stores in places like Indianapolis, South Bend, and West Lafayette due to declining sales. And in Bloomington, All Ears and Karma, two other independently owned music stores, closed earlier this year.   Finders places part of the blame on the popularity of music devices like iPods, and the increasing availability of music online. Her co-worker, Jason Stall, agrees, but also blames record corporations for increasing the prices of CDs dramatically over the past few years. Photo by Kate Soderberg Shoppers at Tracks can find an ecclectic arrangement of CDs, records and DVDs. Shopping for music and media off-line has become almost rare. “Down-loading music isn't all bad, if it can help get the word out about smaller time bands. But the reason people are down-loading is because it's cheaper, and it's hard to blame them for that.” Stall says that downloading has not only had a negative effect on stores like Tracks, but also on the emotional aspect of music in general. He remembers purchasing CDs primarily for the artwork and lyrics, even after he learned he could download the music for free. “Downloading creates an emotional gap between the artist and the listener, and that's a problem that goes far beyond just our store.” Stall began working at Tracks a little over 6 months ago. He started out as a customer, when he began shopping there after his favorite music store, Streetside Records, closed in 1998. Since then, he has been a regular at the store, and began to form friendships with the store's four employees, and many of the regular customers. Finders, on the other hand, just began her fifth year as a Tracks employee. After graduating from IU in August, she decided to continue working at Tracks, even though other opportunities arose. She manages to hold down two other jobs, (a waitress at Mother Bear's Pizza, and an aide at Options for Better Living), and works at Tracks primarily because of her love for music and her coworkers. As for the future of Tracks, all the employees prefer not to think about it for the time being. Closing is a reality that may eventually need to be faced, but Finders thinks all music stores will be replaced in the future. “CDs won't be around forever, and you can tell the industry is getting nervous by all the releases of CDs with bonus tracks, live DVDs, special editions, things like that.” While these strategies are fairly effective right now, the packaging can only help CDs survive for so long, she said. “Business is OK right now,” says Stall. “The people who still appreciate CDs and who love music are going to keep coming here, and are going to keep buying CDs. And the true artists who make art (music) because they have to, they'll keep making it. But that can only last us so long.” By the numbers 1.8.....millions of people who bought digital music in 2004 (3.3 million will buy in 2005) 4.5.....billions of dollars that global sales of pirated music generated 2003 13.....billions of songs available for download on peer-to-peer networks 16.....millions of digital music and satellite radio subscribers by 2008 36.....millions of Americans that download music and video 46.8.....millions of digital music players sold in 2004 (132 million will sell by 2009) 200.....millions of music tracks downloaded legally in 2004 900.....percentage, in 2004, that worldwide legal music downloads were up 25,000.....CD titles that sold fewer than 1,000 CDs in 2004 -Statistics courtesy www.itfacts.biz

Photo by Kate Soderberg

A shopper at Tracks, a Bloomington music shop, thumbs through some hard-to-find records. Stores like Tracks have suffered declining sales due to the influx of online music availability and have been reduced to switching sales pitches.

By Kate Soderberg

J201 reporter

It's a typical Monday afternoon, and lines of students squeeze past each other in crowded stairwells and hallways. But most of them use tiny white headphones to block out the sounds of shoes squeaking and people chatting. Nearly half of the students in any given hallway are listening to music.

In a local used CD store, two students flip aimlessly through rows of music, discussing potential purchases. After about two minutes of browsing, the search is over, and one has located what he came for. His friend asks if he's going to buy it, and the potential consumer laughs, responding with what has quickly become a retailer's worst nightmare: “Are you kidding? I'll just download it.”

Right down the street at Best Buy, a middle aged man gazes warily at a package label on a newly released CD. “Ten dollars for twelve songs, a live DVD, and three bonus tracks?” He comments to a sales associate next to him. “That can't be right!” As the sales woman confirms his disbelief, he heads toward the cash register, new CD in tow.

Digital music is the thread that ties these three scenes together. The face of the music industry is changing rapidly due to an increase in the online purchasing and downloading of digital music, along with technological advances in the portable music player realm. Evidence of change can be found all over, whether it's in student life, music store's CD sales, or record corporation's promotions. Regardless, the music industry is being forced to change its ways in order to stay alive.

The rise in success of digital music tracks has been rapid, with more than 140 million tracks sold on the Internet in 2004, compared with only 20 million sold in 2003. An effect of this on the music industry is the steady decline of traditional revenue.

More consumers are deciding to purchase music online and listen to music using portable devices other than CD players. In fact, sales of CD players declined 17 percent during 2004, and although CD sales increased by 2.3 percent, the sales at chain record stores and at independent record stores took a dive, according to Neilson Soundscan's year-end music report.

Photo by Kate Soderberg

A display of digital music players is what visitors to the Bloomington Best Buy store are greeted to near the entrance. Sales of the players have reached astronomical figures and have largely impacted CD sales.

The primary reason for the surge in downloading and purchasing music online can be attributed to the increased variety of portable music players. With Apple leading the way in terms of popularity, the technological market is covered with MP3 players of all shapes, colors, and sizes. The iPod has become the leading digital music player, with Apple reporting nearly 5 million sold during its last quarter.

The amount of music available for purchase or download has also increased, with more servers providing consumers with chances to buy music than ever. Most consumers are choosing this route due to its ease, convenience, and cheap price.

“Why pay for a CD, when I can just download the songs I want on the Internet for free?” said senior Sarah Germann, a music lover who has turned to downloading for multiple reasons. “It's just easier than driving to the store and hoping they have what you want.”

But the retailers who are trying to keep the music business and their own businesses alive think otherwise. Traditional businesses, including independently owned stores and large, nationwide chains, are suffering due to the rise in online music sales.

An example of a store in need is Tracks, an independently owned music store on Kirkwood in downtown Bloomington.

“When I first started working, we would bring in around 3 to 4 thousand dollars a day,” said Anna Finders, an employee for 5 years at Tracks. “Now a good day brings in about $2,000.”

Tracks has been part of Bloomington for nearly 20 years, and is the last of a chain of ten stores across Indiana. Owner Andy Walter has been forced to close stores in places like Indianapolis, South Bend, and West Lafayette due to declining sales, and he and his employees fear the future of not only their store, but of the music industry in general.

“Business is OK right now,” says Jason Stall, another Tracks employee. “The people who still appreciate CDs and who love music are going to keep coming here, an dare going to keep buying CDs. But that can only last us so long.”

Stall, who was a regular customer for six years before becoming an employee in 2004, described Tracks as more than just a place to buy CDs.

“I buy a CD not just for the songs, but for the artwork, the lyrics, the case. And you can talk about that stuff here (at Tracks). You can't do that when you're downloading single songs.”

Even in widely known stores like Best Buy and Sam Goody, discussions arise concerning the falling CD sales, and the possibility of an all digital music industry in the future. Darin Bagley, a Bloomington Best Buy employee and supervisor, noted the store's recent partnership with Napster and Rhapsody music.

“Customers can get access to these websites on computers in our stores, and can purchase downloading subscriptions in our CD department,” Bagley said.

This is no secret when a customer walks into the store; there are signs, a blue banner, and a large kiosk to catch consumers' attention.

But signs for the music kiosks are not the only signs Best Buy is using to attract customers. In response to the surge in digital music sales, traditional retailers and the music industry in general have had no choice but to fight back. In stores like Best Buy, customers are bombarded with signs promoting sales, special edition CDs, music DVDs, and more.

The average CD price fell below $13 this year, according to research by the NPD Group, a New York market research company. And Best Buy began a promotion offering more CDs for $9.99 or less in an attempt to attract customers. The demand to lower prices comes not only from frustrated customers, but from the music industry itself. Online sites like iTunes and Napster offer songs for $.99, and CDs for around ten dollars. Businesses like Best Buy and Tracks can't compete with these prices, and have been forced to respond.

A positive reaction to this change has been the rise in music DVD sales. These DVDs often contain live concert footage, but can also include exclusive interviews, footage of the artist in the studio or on the tour bus. As of Dec. 26, sales of music DVDs rose more than 25 percent from 2003, according to Billboard data. Tracks has an entire section of their tiny store devoted to music DVDs, and employees have noticed an increase in customer's interests in them.

“Just the fact that we have a whole section for them (DVDs) says a lot,” said Finders. “The artists who are releasing DVDs are the smart ones; they'll make it.”

DVDs are just one note of an industry that is beginning to sing a whole new tune. Artists are beginning to repackage previously released CDs with bonus tracks, live recordings, interviews, and rare concert or studio footage. These deluxe-edition CDs usually cost $5 to $10 more than the original, but account for about 20 percent of a title's sales, according to Billboard.

While many retailers seem excited about this development, others remain skeptical. Finders views the situation as a desperate response by a struggling industry.

“CDs won't be around forever, and you can tell that the music industry is getting nervous by all the releases of CDs with bonus tracks, live DVDs, things like that,” said Finders, who feels that although these strategies are fairly effective right now, special packaging can only help CDs survive for so long.

The concept of a ‘CDless' society is becoming more of a reality every day, as more and more consumers turn to digital music. Sophomore Jodi Murphy uses her iPod daily, and isn't quite sure what she'd do without it.

“It's a lot easier to use when I workout, when I drive, even when I walk to class,” she said, turning down the volume as she studies in the Indiana Memorial Union with her rectangular silver and white companion. “And buying music on iTunes is even easier; it goes right on my iPod.”

Digital music does have many positive aspects, despite its affect on the music industry. MP3 players, and programs like iTunes, help music lovers keep their collections organized and in one place. Even Stall agrees that downloading and purchasing music online isn't all bad: “It can help get the word out about smaller bands,” he said. And Stall does admit that the prices are unbeatable online.

And while Murphy does purchase songs on iTunes, she claims that she “will never download music. You have to give the artist credit, and I think buying music online still does that,” she said. “And I'll always buy CDs.”

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Do you downoad music? Have you given up on CDs and opted instead for digital music? E-mail Kate your story at ksoderbe@indiana.edu.

Page designed and edited by: Aaron Organ

Last updated: May 1, 2005