Album sales dropped more than 11 percent last year. Forecasts predict they will dive another 6 percent this year. The internet is partly to blame; the record industry says 2.6 billion music files are downloaded from the internet each month, many of which are burned to CDs. Music is also facing competition from other forms of entertainment, especially among teenagers, who are spending more money on DVDs and electronic games.
Radio consolidation hasn’t helped either. Companies like Clear Channel, which owns 1200 radio stations nationally, have sharply reduced the number and variety of songs once heard on local stations. A play list at a Clear Channel station might include fewer than 30 songs. People are hearing fewer songs and buying fewer albums.
Meanwhile, mass merchandisers like Wal-Mart, Target, Circuit City, and Best Buy are selling new releases for less than the wholesale cost, using hot new albums as loss leaders to draw shoppers into their stores. Mass merchandisers now capture more than one-third of music sales.
All of this has threatened the survival of music specialty stores. Big regional and national chains, like Tower Records and Sam Goody, are closing outlets and struggling to stay afloat. About one-third of independent music stores have closed in the last five years, according to Hits Magazine. Independents now account for just 12 percent of album sales.
But, while many have failed, some independents are finding that by banding together, stocking a deep and eclectic selection, and working with new artists, they can survive and even thrive.
"I can’t even begin to quantify how successful it’s been," said Paul Epstein, owner of Twist and Shout in Denver, referring to the Coalition of Independent Music Stores (CIMS). He credits CIMS with helping to put his store on the map. In just a few years, Twist and Shout has grown from a small store on a back street to an 11,000-square-foot landmark on the national music scene.
Founded eight years ago by a handful of independent store owners, CIMS now includes 35 businesses with 74 stores in 24 states. CIMS original purpose was to secure funds from record labels to promote bands simultaneously in dozens of independent stores. The chains had been doing this and capturing most of the labels’ promotional budgets.
CIMS has accomplished that and more. According to record labels, CIMS stores have emerged as an influential and critical gateway for breaking and developing new bands. CIMS stores select bands to promote through in-store play, in-store performances, discounts, giveaways, and other events. The record labels pick-up the tab.
"Selling Celine Dion is not much of a challenge. Wal-Mart can do that. Breaking a new artist—that’s a challenge," said Epstein. By focusing on new and emerging artists, CIMS has helped its members establish themselves as destination stores for music fans around the country.
An even more important benefit to CIMS membership, according to Epstein, is getting advice and sharing strategies with other independent store owners. CIMS has limited membership to one store per market area. Members gather once a year to share insights and discuss strategy.
CIMS has grown about as much as it can manage and is no longer taking new members. Promotions are expensive, explains Epstein. Adding more stores would raise costs above what labels can pay to promote a new band.
But the coalition’s success has inspired two similar alliances. The Music Monitor Network includes small, independently owned chains (companies with 3 to 30 stores). The Association of Independent Media Stores formed in January with 30 members and plans to play a similar role to CIMS by networking its members and coordinating promotions.
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