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Tough Times for Indie Retailers

Is CD-burning killing off college record stores?

April 9, 2002 12:00 AM ET

Lots of people in the music business would like to forget about 2001. Major labels struggled to break even, radio's biggest broadcasters entered a severe advertising recession and the major-chain record stores posted losses -- Tower Records barely avoided bankruptcy. But the hardest hit might have been taken by the smallest player: the independent music retailer.

"It's the first bad year we've had," says Mike Phillips, who has run six Schoolkids Records shops in North Carolina for more than twenty years. Phillips closed one of his stores last year and says he might be forced to shut down others.

Around the country, the story is the same. "It was the worst year we've ever had," says Bob Lee, owner of Face the Music in Eugene, Oregon. "We're looking at a horrific future."

More than a thousand independently owned record shops are open for business today, and some have flourished, becoming taste-makers within the industry. They've helped create early buzz around such acts as David Gray, Lucinda Williams and Ryan Adams. "There are a lot of word-of-mouth recommendations that don't happen in the big chain stores," says Jim Urie, president of Universal Music and Video Distribution. "People will buy records they've never heard of because a guy they've known for eight years in the record store says it's good."

Yet during 2001, while the industry as a whole saw album sales slip three percent, indie retailers faced losses of eleven percent, according to Don VanCleave, who runs the Coalition of Independent Music Stores. (Record sales are down another ten percent overall so far this year.)

Indie stores have been hit for many reasons, but the biggest factor may be CD-burning. Particularly on college campuses, where indie record stores once thrived, tech-savvy students short on funds can now build their record collections for the buck or less that a blank disc costs, rather than the twelve to eighteen dollars it costs to buy the commercial product. "At one point, being located on a college campus was the perfect place to be," says Lee, whose outlet is at the University of Oregon. "Right now, though, it's a terrible place. Somebody at a frat house buys one CD and the next day eight buddies have a free copy."

That echoes the findings of a survey commissioned by the Recording Industry Association of America, which found that between early 1997 and early 2000, music sales nationwide increased eighteen percent, but that sales over that same period decreased thirteen percent at stores located near college campuses.

Now, in order to survive, a lot of indie music stores are forced to sell less music and stock their shelves with Kiss dolls, candy bars, T-shirts and lava lamps -- merchandise with better profit margins than CDs. "We haven't gone the bong-and-belt-buckle route," says Phillips. "But I will if that's how I'm going to pay my bills."

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