Upset About Beyonce Going Digital, Target Refuses To Stock New Album

from the stupidity-in-action dept

As you may have heard, Beyonce took much of the music world by surprise by launching her new album on iTunes only with no buildup. It was an incredibly successful promotion, garnering a ton of sales, and showing that she recognizes that digital is where the music world is these days. However, in a show of pure spite and jealousy, retailer Target responded by saying that it won't sell her physical CD once it comes out, because they don't want to encourage this sort of "going digital" behavior:

"At Target we focus on offering our guests a wide assortment of physical CDs, and when a new album is available digitally before it is available physically, it impacts demand and sales projections," Target spokesperson Erica Julkowski tells Billboard.

She continues, "While there are many aspects that contribute to our approach and we have appreciated partnering with Beyonce in the past, we are primarily focused on offering CDs that will be available in a physical format at the same time as all other formats. At this time, Target will not be carrying Beyonce's new self-titled album 'Beyonce.'"

This reminds me of the petulant and childish response of movie theaters when filmmakers started trying to release films online at the same time they were in the theaters. Like in that situation, these "brick and mortar" guys are fighting back against the tide, looking out of touch and childish at the same time. I would imagine that the basic reaction to Target's decision is to shrug. It's likely that people care a lot more about Beyonce than they do about Target, and if Target wants to send them elsewhere to get the music they want, those people just won't shop at Target. I'm not sure how Target wins in that situation.

Where this gets even more bizarre is that, generally speaking, CDs and such are low margin, or even loss leaders, for retailers like Target. They don't make their profit there, but rather use the CDs to bring people in to sell them much higher margin goods. Yet, in this case, they won't even get that benefit, all because they think they can prevent the natural tide of the move to digital? Oh, and looking childish and petty in the process. Who at Target thought that was a good idea?

Filed Under: beyonce, digital, loss leaders, music, retail, strategy
Companies: target

Wal-Mart Plays Hardball on CD Prices

from the everyday-low-prices dept

Please note the update at the end concerning the timing of this story. Good news for consumers: Rolling Stone is reporting that Wal-Mart is using its considerable negotiating power to demand lower CD prices from the recording industry. Wal-Mart and other retail stores have been using CDs as a loss leader to get customers in the door sell higher-priced merchandise. Now the retail giant has issued an ultimatum: give us CDs for less than ten bucks or Wal-Mart we'll sell DVDs and video games on those shelves instead. It seems unlikely the labels have much leverage here. The CD market is steadily shrinking, and will probably disappear entirely within the next decade, so Wal-Mart has relatively little to lose if it cuts the space it allocates to recorded music. Of course, the labels' bargaining position might not be so weak if they hadn't spent the last decade trying to kill online business models that might have given them alternative revenue sources. On the other hand, the labels could be pleasantly surprised by the result of these price cuts. Demand for music is likely to be pretty elastic, so even if they're earning less per sale, some of that might be made up through greater volume. Update by Mike: As noted in the comments, it turns out this story is from a few years ago. I'm guessing Tim found it on Slashdot, which made a similar mistake. Either way, I, personally apologize for letting this through and will be more careful in the future. That said, I think Tim's analysis is sound, even if the original effort is from a few years ago. The fact that the situation has only gotten that much worse over the past four years shows how little the record labels have been able to come to terms with what's going on out there in the marketplace.

Filed Under: cd prices, loss leaders, music
Companies: wal-mart