Chain Stores Dictate CD Sales

Retail chains such as Wal-Mart, Target and Best Buy are reportedly responsible for at least 65 percent of CD sales in the U.S. thanks to competitive pricing and advertising, but not all genres of music are represented on the shelves.

While label executives have turned to chain stores to sell CDs with the closing of music stores such as Tower Records, what titles the so-called big box stores will carry have now become more selective to customer preferences, according to the Wall Street Journal.

Wal-Mart doesn’t stock any album with a parental advisory sticker, so record companies must come up with sanitized versions to get the product on its shelves. The recent controversy with Don Imus, and over rap lyrics in general, have also contibuted to some stores staying away from anything not appropriate for minors.

Up-and-coming artists that have not yet become big sellers, jazz and classical music are also reportedly a long shot to be stocked.

Big box stores reportedly can get by on a 14 percent profit margin as opposed to stores that rely on CDs for the majority of its sales, which need about a 30 percent profit margin, the WSJ said.

By stocking what are considered fast-selling hits, chain stores are said to be moving tens of thousands of units a week. Best Buy senior VP of Entertainment Gary Arnold told the paper the company stocks 8,000 to 20,000 different music titles.

However, the largest of Tower Records’ brick-and-mortar locations carried about 100,000 titles, the paper said.

Arnold says the blame for diminishing customer interest in CDs belongs to the record labels only.

"Music has become a commoditized item," he told WSJ. "The CD is perceived by the consumer to be a $10 item, and the manufacturers continue to release new titles at $15 to $18.98."

Arnold told WSJ the labels should switch to simple, no-frills packaging at lower pricing for the every day music fan and save the fancy packaging for the die-hard fans.