Indy Labels Behind the Eight-Ball

Like any good columnist worth one's ego it takes to write such, I fancy myself as a sagacious sort. And though I don't much like to say it for any count of reasons from avoiding pretension to not wanting to break the spell, I even believe I am at times even prescient.

Don't know if I was reading the runes or channeling the future a few months back when I made the case for the ten buck (or so) music album, but it nonetheless seems to be coming true. Back at the end of the summer, Universal Music, the largest record company, dropped its CD wholesale price from $12.02 to $9.09, with a suggested retail price of $12.98 (vs. $16.98, $17.98 and $18.98). Or, as the internal memo on this change announced, "we believe that most retailers will be able to offer our music for less than $10.00" -- important clause here -- "if they so choose."

And with Apple's iTunes digital download service coming online with a 99¢ per song rate and others signing on following suit, you can get an album's worth of songs via the Internet for $10 to $12. Hallelujah! The future I saw (though more like the past I knew) has arrived.

Not. Or at least not so fast. Universal notes that "meaningful increases in sales" are needed to make this work. And they're going to be damn sure they get them.

But first, let's rewind -- or in digital terms hop back -- a wee bit. After my 10-buck album tout, I received a feedback email -- my first from what I write here; keep 'em coming (please) -- from reader Michael Toppe pointing out the high costs of getting enough attention at record retailers, and sometimes even getting into the stores, in order to make that final sale to the consumer.

Toppe knows of what he speaks, being the national director of sales & marketing for Caroline Distribution, a major independent distributor of smaller record labels. Ironically, I received his letter during my first week on my almost full time job (have to guard my writing time) as marketing director for a small indie label. Perhaps it was Toppe who was prescient, offering portents of what I was to now deal with.

Last year some 35,000 CDs were released with bar codes on them, i.e. for retail sale. Getting heard and then selling within that tsunami of musical product is a greater challenge than ever. And Toppe's concerns for the impact lower CD prices would have on indies -- i.e. less marketing and promotion funds -- are real.

Especially since there's a catch to the Universal price drop: Retailers must devote space in their stores considerably larger than the company's market share to be able to still buy wholesale CDs direct from Universal. As the Recording Industry Association of America lawyers sue kids and elders for downloading in bully boy fashion, Universal -- a company with strong past whiffs of mob ties -- practices something not far off from extortion with this tactic.

And scuttlebutt says that the move was also influenced by the fact that chain outlets like Best Buy already sell top hits at 10 bucks or so anyway. The Best Buy claim is that they make money doing so; the rest of the industry scratches its head at what looks like a loss leader that gets people in the doors to buy electronic equipment. And their pricing hurts retailers whose core business is selling records.

The price drop also caused confusion at record retailers. American consumers who get only half the story -- it was Saddam Hussein behind 9/11, right? -- were the sort who marched into Austin's Waterloo Records ready to now get any label's CD at 10 bucks. And some marched out in a snit when they were straightened out as to the facts of the situation, a few even saying they'll get the CD they wanted at Best Buy instead.

But I am fairly sure that, yes, the $9.09 wholesale price will be adopted by the rest of the majors. And as Toppe fears, it might well put a dent in things for indies, a number of whom are actually prospering while the major record labels flounder.

Will the 10-buck album become the standard? Will it be good for music if it does? (Will the album format survive? More on that currently pressing issue later.) On the first, I'll presume likelihood. On the second, my crystal ball is hazy. In fact, it's a big plastic eight ball that reads "the outcome is uncertain" when I turn it over. But I'll hazard a guess and say yes, in time, based on music's vitality as a cultural force, and hope I'm not wrong.

Rob Patterson is a music and entertainment writer in Austin, Texas. Email

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