Wal-Mart's 'Always Low Prices' create controversial music distribution
By Kristin Nehls, Staff Writer
April 14, 2008 | 6 a.m.
Videos may have killed the radio star, but in this generation, MP3s have killed the compact disc. Until now, the steady decline of the CD has been debatably accepted, but Wal-Mart’s new pricing plan has music fanatics singing to a different tune.
In an overall effort to lower music costs, Wal-Mart’s newly proposed five-tiered pricing plan will forever change the landscape of top forty music distribution. According to a Paste Magazine article, with CD prices as low as a mere $5 for budget releases, the highest price a Wal-Mart customer will pay for a current hit is $12. Best-selling albums will be sold at no more than $10, with top catalog titles selling at $9 and mid-line catalog titles going for $7.
Despite its library’s narrow selection and lack of genre variety, Wal-Mart is currently one of the largest music distributors with a market share of just about 15 percent, according to The Machinist. A pricing change as substantial as this one would impact major record companies, including Warner Music Group, Criminal Records and Sony BMG Music Entertainment. It is such a difference that there is speculation as to whether these companies will stay on board with the Wal-Mart corporation at all.
According to a Techdirt article, this proposal arrives mere months after Wal-Mart’s demand in December that these same companies eradicate the Digital Rights Management (DRM) technology from their MP3 catalogs. This technology helps to prevent copyright infringement and ensures continued revenue streams for these companies. With one detrimental demand after another, some record companies may have had enough.
However, Wal-Mart’s mantra is all about the customers, and in an Appalachian, economically sub-par town such as Athens, these cost reductions could be a highly successful marketing technique. This is especially true when the majority of Athens’s population is living the thin-wallet lifestyle of a college student. “[This is a] great [business move] because it is helping out the customers," said Stephanie, Assistant Manager of the East State Street Wal-Mart. "More customers are going to be able to afford music.”
In addition to the frustration felt by record companies, a downside to Wal-Mart’s plan involves the impact that its price reductions may have on smaller businesses. With independently run music retailers, such as Athens’s Haffa’s Records, located on Union Street, trying to boost their clientele just to keep up with large-scale corporations, blows such as the five-tiered pricing plan are detrimental to their own business strategies and moral convictions.
“[Large corporations] get their music cheaper than we do anyway because they have such a quantity [of items for sale]. Smaller businesses cannot even compete with that,” said Andrew Lampela, one of the managers at Haffa’s.
Stephanie, however, argues that Wal-Mart lacks the niche audiences relevant in many independently run stores. “[Small companies] have got their people that are going to come there no matter what, so we are not impacting those people or companies,” she said.
While Wal-Mart’s customer pool is interested in the top forty music chart, many independent stores, including Haffa’s, are targeting indie, folk and punk audiences, as well as actively supporting local bands while tempting vinyl collectors. The impact of this pricing plan is therefore speculated as irrelevant, as the two retailers are targeting different clientele groups.
“Regardless of whether or not Haffa’s [and independent retailers] and Wal-Mart are targeting the same audiences, this is a moral debate going on," said eleven-year Athens resident Matthew Breitinger. "How does Wal-Mart feel okay about corrupting the music industries that help keep them in business as a versatile company?”
Corruption, however, does not lie merely in the blame of large-scale corporations. College and high school students alike-- Ohio University students in particular-- are taking advantage of record labels in much the same detrimental ways as Wal-Mart. With the number of illegal music downloads rising with every tick of the clock's second hand, simply reducing CD prices may be an effective step toward reducing the number of lawbreakers and helping to make the music industry legal again.
“[This plan] will make music cheaper and easier [to obtain], and if more people are able to buy CDs, then more people will,” Stephanie said.
Looking past the concept of reduced profit for major music companies and artists, is the handling of music distribution having a negative effect on art itself? As the notion of obtaining music centers around the ideas of technological illegalities and company corruption, the value of artistic expression behind music is suffering.
“It is the small stores, the stores like Haffa’s that really appreciate the hard work that goes into making an album," Breitinger said. "[These same stores] are the ones that care about the creative process and the artistic expression of music.”
While the stores that support the creative side of music rather than the mere economical benefits are the ones most detrimentally affected by pricing proposals such as Wal-Mart’s, the future of meaning within music is questionable. “If art is not profitable, then it will no longer be a factor,” Breitinger said.
Whether its businesses strategies are highly acclaimed by financially struggling citizens or whether they are scrutinized by the passionate music fanatics, Wal-Mart’s techniques are not likely to simmer.
“It is not fair [for large businesses to overpower smaller businesses], not at all, but that is never going to stop. It has always happened, and it probably always will,” Lampela said.
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