Tuesday, June 16, 2009

The Fall of the Large Retail Music Store

Unfortunately the large retail music store is a dinosaur. It does matter because it was also a social gathering space, and that's one thing that buying music online lacks.

- Tony Beliech, a former Virgin Megastore employee

In Ben Sisario, "Retailing Era Closes With Music Megastore," New York Times, June 15, 2009

The real estate firms that own the last of the large record stores in New York City have determined that the land is worth far more than the store sales are worth. They are consequently shutting the store and leasing the location to a fashion chain. Mundane as this reason for closing is, it does reflect the larger trend away from CDs and other physical music recordings. "From the industry's peak in 2000 -- when some 785 million albums were sold -- until the end of 2008, album sales fell 45 percent, according to Nielsen SoundScan. Even with the rise of iTunes and other online outlets, however, CDs have remained consumers' format of choice, though that advantage is slipping. As recently as 2006, CDs accounted for more than 90 percent of album sales. Last year that proportion dropped to 84 percent, and so far in 2009 it is 77 percent."

There are also still many small music stores in New York City, some even still selling vinyl records. Most album sales today are made at chains such as Walmart and Best Buy; FYE is also a factor. ''The Titanic that is physical media started slowly sinking in 2000,'' said Michael McGuire, an analyst with Gartner, a market research firm, when asked about Virgin. ''Certainly this is a traumatic event for those who worked there, but it's an expected product of the digital transition.''

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