What’s the Business Model for Next-Gen Record Stores?

Closed

In the past month, I’ve been busy upgrading my stereo Hi-Fi. I’ll underline the word ‘stereo’ there. As in two channel. CD’s, LP’s. Not video. Not home cinema. Hi-Fi. I love music. I am an audiophile. But now, it seems, I am to be a dispossessed music loving audiophile.  

For many years, I’ve been tinkering away at my Hi-Fi hobby via the good graces and enthusiasm of a local retailer. He’s a one man band operating like a store within a store. It’s my local RetraVision; purveyors of fridges, stoves and vacuum cleaners, all of dismal Chinese descent. But way up the back, my local Hi-Fi man has been keeping a store of Hi-Fi bits; some extraordinarily brave – like turntables and stereo speakers (speakers for stereo, not the usual Home Theatre super 8.1surround thunder-in-a-box-for-$599.99). And he’s the keeper of the keys as an agent for anything I might ever want to order in. Which I have been doing. Furiously. For the past two weeks. Why? Because no sooner had I put my order in for a new CD player, he announced that this business was, well, out of business. Closing down. Finished. After 30 years. So, I’ve been measuring my orders against the final closing day. Because after that, the nearest retailer is 550km away. My last pair of bookshelf speakers are due to arrive at 4pm Friday, one hour before final closing time…

Now all we’ll have left in this town (Armidale, New South Wales) are two mega chain purveyors or mattresses, Home-Threatre-in-a-Box, hair dryers and digicams for the purposefully undiscerning, without the bit up the back selling Hi-Fi gear. 

But we do still have a record store! Which is for sale. 

So why is there, apparently, no demand for music playing gear these days? What happened to the record industry. What happened to Hi-Fi? Who cares? 

Culture shifts come and go. Once we had pyramids for Pharaohs. Then we had the penny farthing craze. We had mini skirts and punk. Cravats and bear baiting. Hula hoops and Lady Gaga. But is the wholesale disappearance of proper audio equipment really a culture on the move? Over the past 100 years, we’ve had plenty of shifts from one manifestation of music reproduction to the next, but the basic game stayed the same: the reproduction of music in as realistic a manner as possible. Always getting better; in perpetual pursuit of the perfect sound. 

But now, for the very first time, the fidelity of music is on the decline. These days, the demand is for lo-fi MP3 downloads, preferably for free. I suspect that the latter is more important than quality for most consumers of such stuff. Free has become the key here. This is the culture shift. It’s almost as though it’s an insult to suggest that someone should actually have to pay for recorded music these days. Twenty somethings raise their eyebrows in dismay, if not incomprehension over the prospect for actually paying for the recordings they demand. An entire generation has emerged that has never, ever, heard music played to a standard that could be called Hi-Fi. And that applies even if they actually did attend a live show, where the music is now so loud that it’s almost impossible to hear. Fidelity has been redefined. Where once we received music via vibrations in the inner ear, now the demand is for our whole bodies to vibrate. And then pass out. 

So, what’s the business plan for a Hi-Fi retailer these days?

What’s the business plan for a record store?

What’s the business plan for making penny farthing bicycles?

There are multitudes of frantic business people searching for answers here.

These days, the default for sellers of stuff such as this is to hope for a landing in a nice cushioned niche.

You can observe that reaction from the shifting nature of record stores (amongst the few that remain). Way back in the 50’s and 1960’s, the record store was usually a small,  local, independent family run affair. Every shopping centre had at least one. There were even specialists (one for Jazz, one for Classical, and one for Rock and Pop). When I was living in Sydney back in the 1980’s, I would do a weekly traverse of my local classical retailer only a suburb away. Then I would hop on a train to visit the big city Jazz store. The local shopping centres catered for all the rest. 

Then came the mega store.  Virgin/HMV, Tower Records and an entire floor in the Meyer Department Store. In 2003, you could spend all day browsing across any conceivable genres, with CD’s stacked from ceiling to floor. CD’s by the million. There were five stores within 5km in the Sydney CBD. By 2009, they were all gone. Every last one. 

From 2010 the trend was to go all ’boutique’. Interior decorated with wood panelling for the classicals and glass and metal for rock and roll. They were trying hard. And failing all over again. 

Then came the shift from physical retailing to one-time record stores selling on-line. But that rarely, if ever, worked. Site after site went down to follow demand. 

Now  the record companies are trying to direct sell via their own web-stores, when they are not selling direct through the global behemoths like Apple’s iTunes store, Amazon and now Google. Even artists are getting in the game. Hi-Resolution audio files to cater for the audiophile and MP3’s for all the rest. You can now purchase virtually anything on-line. But how much business now happens this way? Is this the final niche? Has the industry now entirely dispensed with the wholesale/retail game? 

So, what happens to those few remaining record stores? What’s their business plan? Now they even seem to have been deserted by the record companies, if not entirely by the customers they once had. And if no one’s buying records, there’s going to be even less demand for gear to play it on. 

Is Apple Inc the final player in the music game? With both players and media tied together in the Apple Store, what’s left for anyone else? The entire industry has restructured itself out of wholesaling and retailing. It’s now all about direct sales. 

From the consumers’ point of view, our needs are still covered. I can spend extraordinary sums on a high-end DAC (Digital Analogue Converter) with an asynchronous USB interface to my Mac. That connects me to some seriously great Hi Resolution download files (via sites like HDTracks.com). Instant downloads and instant gratification. I can even listen to previews on-site. I can download from my favourite record labels as well. Chandos and Hyperion to name but two. Music itself is not going away.  

But, what’s gone is the community of search and discovery that we once got at our local record store. What’s gone is the independent view and advice. What’s gone is the artistry of display and the tactile sense of something hard and real. What’s gone is the atmosphere. The intentionality and dedication of purpose to travel to a record store. The thrill of finding a bargain, of discovering something entirely new. Web based search is just not the same. Even iTunes can only display a handful of new releases at any one time. My old HMV had an entire floor of stuff that rotated through the release cycle. Touch, sound, atmosphere. Noise, overheard customer critiques. Box sets. Imports. Special deals. I miss the condescensions of the record store man… ‘You want what? You can’t be serious…’ or, ‘These guys are vastly better… try this one out instead’. Sometimes, I’d be in the front row for an hour long lecture on the latest performing style, or on why Havergal Brian is the next Big Thing. Or why, over his dead body, he’d never be selling albums by Yes in his store… I miss all that. Like a cherished, now dead, friend. How can I argue and cajole, rail and declaim, if I am just shopping on line? Having a two hour argument with a record store clerk is much more fun than inserting a comment in a chat box or posting to a forum of people I’ve never met. So now I’m set to become a music recluse. Shut off behind ear buds attached to an iPod. Alone in my listening room.  It’s all too much like going underground. In a bunker. After the holocaust.

So is there a way of capturing the social dimension of record collecting and audiophile fanaticisms to keep a physical shop on the street? Perhaps this is the core for a 2012 record store business plan. I rather think this might be the key. That’s the essence of the recent Record Store Day movement (for example check out Record Store Day Australia), but this model can be extended further still. Let’s celebrate our physical record retailers. Put celebration into the shop. Live bands, events. New release celebrations. Celebration is the key. It seems that we need to turn record retailing into a show. 

Borders tried to merge book retailing with latte-sipping and a newsstand. They failed. But it was worth a try, that’s the right direction to go. We shouldn’t assume that the socialisation of retailing in the music game is necessarily going to fail because a few corporates failed a similar test. There were other reasons to underpin their demise, not just falling sales. 

I am hoping for a new era of what might be described as a Music Campus Store. It seems to me that the prospect is for a synthesis of social hangout, record retailing, audio equipment retailing, live music making, maybe even instrument lessons and associated teaching. Let’s have a Music Campus in every town. In other words, bring together everything that on-line music retailing cannot provide. Live instruments and good audio gear. What a combination to reconnect our youth with music and the fidelity of sound. What a combination to extend horizons and reintroduce diversity outside the Lady Gaga commercial mainstream. 

It’s either something along those lines or just hanging out for the next closing down sale. 

Adventures with a Manic Managerialist

Check box

I always expected my interaction with the local council (Armidale Dumaresq in Northern New South Wales, Australia) would turn to frustration and anger, even before the journey began. Years ago, I supervised a PhD project that traversed the slopes of ‘expertocratic’ planning at the local government level. More specifically, this show was all about how the ‘expert’ mindset of local council professional planners was a real impediment to meaningful community engagement and genuine partnerships between community and council as the foundation for a sustainable future. The ‘I am an expert’, machine-management culture of Planners had become a disease endemic to the Planning profession. Our project was all about how to escape the debilitation of top-down management with which nearly all local councils have become thoroughly contaminated. 

Some councils are better than others. Some Planners know that working with community should be fundamentally different to working on people like some kind of clay on a potter’s wheel. You don’t have to apply the heat of law and adversarial process when you have genuine engagement. You don’t have to spend all your time in court when you work with, rather than against your constituency. Plus, and here is the biggie, when you have meaningful colaboration, you get a synergy of intellect to apply to problems and issues. More minds working together in harmony can often apply a more detailed understanding of the issues at hand and work towards finding solutions that are as robust as possible across the greatest possible diversity of interests and positions. In other words, better collaboration leads to more resilient communities. 

The place to start is to try and persuade those in charge that they do not, in fact, know everything. That the world does not work like a machine, and that the Planners’ job is not one of a mechanic working on the machinery of their local community to achieve some desired outcome. Planners are not ‘cog tinkerers’, mainly because, in nearly every possible planning scenario, at least some of the cogs and the mechanisms that drive any situation at hand are unknown or at best poorly understood. You can’t wrench on a machine if you don’t know how that machine works. But that mechanic analogy is a very tight fit to the way so many Planners operate. 

Once upon a time I was involved in a project to open up local government planning to creative community collaboration. The context for the work was an explicit recognition, on the part of those who funded our work, that the old engagement models of command and control were inappropriate for at least environmental and sustainable community work. So we set out to work with lots of communities on community visioning and the like with a view to articulating processes for meaningful engagement that might then underpin some re-writing of Planning guidelines and underlying rules. The whole show really started to shine via some extraordinarily positive community enthusiasm and endorsement. So much so that it soon became apparent that local communities, when meaningfully engaged, really do have a terrific capacity for creative futures planning. I use the word ‘terrific’ intentionally here as terror became increasingly obvious by way of reaction from the upper hierarchies of the Planning profession as our work progressed. it became ever more evident that effective community engaged planning would mean ever greater devolvement of planning activity and responsibility to the communities involved. If the processes of engagement, or the methods of collaboration are effectively managed, what you end up with is a highly creative, synergy driven super intelligence of talent through which to identify, understand, manage and organise local issues. Which implies the beginning of the end of the old machine manager mentality of conventional, old-school Planners and their bureaucracy. The first victim of creative community engaged planning is top down management. That is quickly replaced with what could be termed ‘discursive’ deliberative democratic process and associated governance. The feedback loops of information and communication weave right around all levels of the Planning show via a breathtaking complexity of animated engagement. Top to bottom engagement becomes meaningless. No one is in charge anymore in the old ‘Top-down’ command and control sense. No wonder, then, that the State Government level Planning department sponsoring our collaborative community planning work soon pulled the plug and disowned our work in short order. I have never seen a project divested of official support so quickly as that. The local authorities even stooped to the level of sending out a letter to the legions of community members who had participated in our work to suggest that we had ‘gone off the rails’ and that the future of that particular project was under ‘new management’. That work never went anywhere. The communities have never heard a word since. 

Our experiences and insights definitely do not spell the end of the expert. Rather, the role of the expert is transformed. The discipline of Planning and the discipline of management is just as important, but these disciplines are differently organised and differently implemented under genuinely collaborative planning process. Indeed, there is a key need for a new discipline to be added to the Planning portfolio: the discipline of engaged community facilitation. Facilitating community engagement is most emphatically not something ‘anyone’ can do. There are profound skills involved, including a thorough grounding in sociology, psychology and philosophy. This skill set needs its own university degree and accreditation programmes. I am always stunned by the abject ineptitude of Planners appointed to the facilitation of community engagement tasks. Usually, we get a suited expert equipped with a clipboard and an enthusiastic aid manning a flip board of butchers paper seeking to list audience needs and wants to be followed by some kind of communal prioritisation of the ensuing lists. This is an abjectly dysfunctional way of going about a task such as this. For starters, you will never, ever, get any kind of meaningful community representation in gatherings such as this. Next, those with the loudest voices (and or those with the most to gain/loose) will shout their contributions to such lists over the top of any and all other potential interests in the room. But, worst of all, this listing process completely, and artfully, dodges all possibilities for the creative synthesis across the points represented in such lists. The possibilities for merging and synergising across different individual’s priorities and concerns are lost. The possibilities for really getting to know and understand why it is that two different people or groups can have such opposed viewpoints is a difference to be explored, not sorted via arbitrary voting protocols. Why do two people hold opposite viewpoints? What are the fundamentals of these differences? We have found, time and time again, that seemingly opposite viewpoints often become simply two ways of expressing the same set of preferences once those differences are systematically explored. ‘Systematic’ is the keyword. There is a process and skill set involved in managing a conversation such as that. The expert with his flip board assistant may not have the ideal skill seat to catalyse that kind of infinitely revealing dialogue. 

To foreshorten a book that could be written around these themes and my experiences in this regard (which I am, indeed, currently writing), I would simply say at this point that the old command and control, machine manager mentality of Planning is alive and well in the Planning community and, particularly, within the Council with which I have recently had ‘dealings’. 

My particular dealing was over a simple rural residential development application. Nothing could be more straight forward, I had thought. If ever there was a rubber stamp to be applied this particular exercise would be the most likely candidate. But we all came unstuck when the Planner-in-Charge discovered that the historical road that would access the new house site also services the residence of one of our rural neighbours. Though the road is entirely on our land, our neighbours had managed  (50 years ago) to derive a ‘residential benefit’ exclusive to themselves. Which implies that we could not use that road to access our new house, even though the road is on our land. Though there was no objection from those neighbours of any kind to us using the road ourselves, our Planner-in-Charge decided that there could be contestation over access (even when there was no contestation of any kind) so denied our application unless we chose to build a new access road. My proposal to build a new road exactly parallel to the existing road, with a metre or so separating them, was not interpreted as the sarcastic response I had intended. 

The point to be made here is that, once again, when faced with even a slightly complex issue, all possibilities to determine a solution via engaged collaborative process were dismissed by this Planner with a dismal incapacity to even notice shades of grey between the ‘pass’ – ‘fail’ check boxes of his planning routine. Indeed, the only possibility for engaged discussion across all parties involved was, apparently, one of full legal adjudication. A process of discussion across already amicably disposed parties (us and our friendly neighbours) was not considered to be a meaningful foundation for  resolution. Rather, our Planner-in-Charge could conceive of no other possibility than pushing parties inclined to simple negotiation into the adversarial setting of the legal system. What were once a group of neighbours, if not friends, would be put to each other’s throats and into the cess pit of outrageously expensive legal arbitration. Why should two parties be forced to arbitrate over an issue that had not been an issue before this Planner became involved. At no stage did this Planner or his Planning cohort suggest or even, I suspect, conceive of the merest prospect that simple discussion across all involved parties could resolve what really is a very trivial problem. 

My simple development application case study reveals an endemic dysfunctionality in the Planning profession. The context of my group’s larger community planning work suggests the problem is a culture of managerialism at work within local government Planning. Managerialism is a disease that inflicts managers with an incapacity to understand real world systems as being complex, and as such, as being something more difficult to manage than the mechanisms of a clock. The invocation of the command and control perspective of management over people-involved planning situations is a tragedy given the modern political and bureaucratic rhetoric that would raise the necessity for ‘community participation’ in policy and governance to the highest possible priority. Indeed, the necessity to work effectively with communities of all kinds is actually embedded in the core planning legislation that governs Planning and policy making at local, state and federal levels. The simple problem here is one of mismatching professional capabilities with the job at hand. A manager with a command and control mindset should be appointed to tasks no more complex than the organisation of departmental coffee breaks or the organisation of the executive staff Car Park. They should never be unleashed on the public, particularly within the context of a job description that actually demands sensitive and effective collaborative engagement as the setting through which to transact client interaction. 

But most perversely of all, this council with which I have had such a frustrating engagement is one that had won a planning award for the machine-management system of check box planning that their chief planner had instituted late last century. I always delight in suggesting that the ultimate outcome of effective machine management is management by machine. Thus rendering those very machine managers redundant. 

Facing the Crisis

Tv2

I wasn’t there when they first invented the TV. But I do recall once watching an early era black and white set before colour broadcasting began. I remember the wooden box-like set. I remember the small glass screen. I remember the single mono speaker and the big fuel tank  filler cap-like channel switcher. I remember the turned cylinder legs and the flower pot permanently planted on the top. I do definitely remember that all this felt so amazingly modern. And I do not ever recall thinking that all this technology would be in for much in the way of change. Colour was not something that ever occurred to me. Yes, that little Pye set was bigger and better in every way than its predecessors that more resembled a gramophone set with a window than a Jurassic Home Theatre array. But progress felt… gradual. Not frantic. We didn’t purchase on the knife edge of fast paced imminent redundancy. We didn’t worry that what we might purchase today would become an antique the very next day. 

Which is how I feel when I buy a TV these days. Which is exactly how I feel two days after installing the one I have just bought. Two days after purchase, that model has been deleted. But it was current two days before. So now, apparently, I have an antique…

But it’s not just TV’s that give me this riding-a-technology whirlwind feeling these days, And that’s not because I am some kind of grumpy technologically outpaced old man either, I might add…

This latest model Macbook Air I am using here was fresh for five days. Then Apple added USB 3. So now I am a legacy user disconnected from the world of high speed devices to which, it seems, every other Mac user now has access, except me. Now I’m stuck with USB 2.0.  One day I was on the cutting edge. Now I am in the dust. Feeling like the victim of technological assault. Inadequate. Left behind. Old. Which is all very odd because before the latest Macbook update, USB 2.0 was just fine. I was happy using the equivalent of black and white TV serial bus technology. USB 3.0 was for PC users and I wasn’t one of them. And that was just fine. 

Which is why, and I am sure I am not alone, so many folk are having such fun with LP records once again. Vinyl has become a concrete barricade of protection from the howling gale of technological change. We can tinker and enjoy without any fear of becoming out-of-date. Indeed, in those Jurassic vinyl grooves is a sound that even the highest end computer audio would  find it hard to match. But I digress.

If you are a person subject to techno-adadequacies or insecurities of this kind, the whole world becomes a little unsettling. We seem to be tuned to the pace of being left technologically behind. Most of us know that what we have today is not going to cut it by some time mid next week. Some of us don’t care at all (to a degree that improves the closer we get to the nursing home), some are mildly unnerved. And some are in a perpetual state of panic (like those who choose to queue every time Apple releases a new iPhone). 

My bandwidth of concern is pretty wide. Relishing, as I do, the technological resilience of bicycles and vinyl LP’s, I can drift off to an island of unconcern. But when it comes to computer IT, I dread every upgrade. I am, after all, that guy who bought into DCC and MD (remember those?) only to watch both music formats completely disappear within a space of two years, along with the media needed to keep that equipment in use. Go on, try to buy a Digital Compact Cassette these days. Go on. Try. I feel like I have been robbed. Dropped. Ditched. Redundant without redundancy pay. And no one cares…

All of which explains why I seem to be permanently carrying a back pack of worry around whenever I enter some kind of electronics store, or search for a new car, or search for a new ebook to download. Will I be left with unusable stuff all over again? It’s like carrying a permanent virus, or having to live with a permanent limp. All the while knowing that, really, it’s all self-inflicted and induced by the evils of modern marketing and a raging culture of consumerism. Which is why it’s so great to know that I can aways drift off to that moated barricade of bicycles and vinyl LP’s when ever I like. In that place, I can overtake anyone’s million dollar cutting-edge super car when all that oil-fuming technology trickles down to a sludge in congested city streets; and from where I can nuance away all I like to the nth degree of fidelity on my LP’s while the techno buffs are all reinventing bit rates and DAC codecs in a battlefield mess of unsettling audio attrition. 

But all this presents a context through which to frame every visit I choose to make to my local bookstore, my local record shop, or even to my local newsagent. I pick up a book and find myself Amazoning the price of its ebook counterpoint for my iPad. I pick up a magazine and check out the price of subscriptions on Zinio. The latest issue of Peloton magazine is $15.99. An annual sub for my iPad is $12. Knowing these choices makes it so hard to commit. Which translates into a non- commitment to the continued existence of these stores dancing their death throes on the tipping point of relentless change. Every time I buy an ebook, my local book store is one page closer to that final closing down sale. I can’t enjoy buying the latest cycling ezine without reflecting on the abject economic disaster about to dump on my friendly local newsagent. What’s life going to be like without those local stores? Is our community to become an array of disconnected social recluses all hardwired to the internet while the village green transcends to jungle and unemployment reaches 100 per cent?

Stop the bus. It’s time to get off. 

I’m done with all those awkward silences of unsaid condolence I feel whenever I visit my newsagent, bookshop or that last, assaulted record store. Is it time to become a technological recluse? 

It’s hard to listen to music on my bike with a LP turntable strapped to my handlebars. I want the latest toys but want the social infrastructure of community commerce as well.

It’s hard to put my head in the sand. But I don’t want to put a knife into those gentle decent folk who run their Last Stand book/record/newsagency stores, waiting for the vultures to finally swarm the poverty of their final days. 

Where do they all go in these days of 10 per cent plus unemployment and global recession? Too young to retire, too old to begin again. Do they all just go off and die? Do they all just go off to live under a bridge? What happens to the human-centred purveyors of technologies-left-behind. Who’s going to provide the spare parts for TV sets rendered obsolete when the product cycles cycle around to less than a week? Who’s going to service anything when all commerce is transacted by faceless drones in cyber space. What happens when the economic efficiency of technological improvement leaves us all unemployed? Do we only ever reflect on such things when the impacts hit us hard in the face?

Of course, the world these days is not just transmitted in black and white. Fortunately there are lots of shades of grey in between. But I do fear that it’s that grey scale that’s the real issue under assault. Are those shades reducing to a five tone scale? At one end, we have the Made-in-China globalised cess pit of the economic rationalist’s  sado-massochistic perverted world view. On the other end we have us cyclists and LP lovers ignoring the assault. But in the middle are all the struggling record stores, magazine sellers and book store purveyors bleeding tears as they reconcile their tills at closing time. I can see a time when the technologies of the recent past reduce to be serviced by niche markets of residual cranks and luddites perverse in their pleasures from stuff from the past. Like readers of paper books and magazines. And cyclists eschewing the bestialities of e-motors and even stupider electronic gears. What’s the ideal market size for a niche of paper books and plastic compact discs? One store per town or one store per million of population? Who’s going to catch a plane flight to visit the nearest record store? What’s the business plan for my local newsagent these days? Or worse, for that local record store? We know that technologies get left behind (remember the Digital Compact Cassette and Mini Disc?). So stuff will fail and markets will crash. They can’t all be sustained by niche markets for the hardcore. The grey scale between no market and the global market place is going to get really thin. And we all need to consider this final point. How many local jobs will there be when the global market place has entirely diverted to an exclusive serenade between the Chinese shop floor and their faceless, country-less global corporate sponsors? 

Which is why, maybe, this current post- Global Financial Crisis Crisis is a good thing after all. When the world economy slows to a crawl, the wheels of commerce slow and we get time to work out a better plan. There are some economists who have given this process a name: Creative Destruction.

Which is why, in turn, I have that unsettled feeling of impermanence and insecurity when it comes to making technology choices these days. We are in a world just like we were when black and white TV became mature. We are sitting on the edge of a great tipping point. The grey scale is about to turn into colour. Hopefully the next spectrum of our economy will be displayed in something better than VGA. Hopefully, the middle will fill out and niche markets will return to a broader base; just like the LP industry these days where more and more and ever more people are re-introducing themselves to the latest technical iterations of the good-old turntable and the latest grades of heavy weight vinyl. And, yes, as more and more people discover the whole-of-life enhancement of cycling as a wondrously steam punk synthesis of the old and the new, cycling and re-cycling all over and over again.