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


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. 

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