Wednesday, June 11, 2008

Wal-Mart Sings, Music Industry Dances

The tail continues to wag the dog in the music industry. This week Wal-Mart announced an exclusive deal to sell the new AC/DC album. But more importantly, the company also announced a plan that could be the next step in the demise of the Physical CD. CD sales have fallen 16.5% this year according to Neilsen Soundscan. This follows a consistent pattern of double-digit losses for the last five years. WAL-MART ACCOUNTS FOR ABOUT 30% OF ALL CDS SOLD IN THE US(!) That alone is a scary statistic.
Now Wal-Mart says that they are considering extensive cuts to the catalog of music they carry in their stores. All these old CDs are taking up valuable floor space that could be used to sell toilet paper.
Maybe I have to be like Tim McGraw, and set up a partnership with Frito-Lay to get my CD sold at Wal-Mart. His last CD was packaged with a custom flavored snack called "Tim McGraw's Spicy JalapeƱo Fritos" in a combo pack that sold for $12.00. Hmm... maybe I can hook up with Pepsi Cherry Jazz soda - a free CD with every 12 pack! I dunno.
Meanwhile Handleman Co., one of the largest rack jobbers in the business (they service the catalog at Wal-Mart stores) is selling the business - the CEO Al Koch says, "In the short term, it's not possible to downsize as fast as revenue is declining."
I hear the sound of the physical CD going the way of the long playing record...