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Wal-mart Cutting Back on CD Sales?

by April 24, 2007
Walmart Reduces CD stock

Walmart Reduces CD stock

According to a guy who knows a guy whose cousin married a stockholder who sits on the board of a former roommate of a guy who hangs out at Wal-mart... the store seems to be cutting back 500 feet of CD shelf space to make room for iPod accessories. This makes a couple of statements:

  • CD Sales are not as profitable as that occasional iPod accessory
  • Wal-mart is practical about monitoring its sales revenues and making adjustments as needed, despite industry pressure
  • CD Sales are simply not profitable in comparison to the typical 30% and up markup offered by most accessory-style retail products.
  • The RIAA has just lost a TON of its market positioning

This move should make the RIAA squirm, however it is uncertain what the real or practical result will be. If past history is any indication, the record industry will be reactive instead of proactive and the market will simply force its hand over time as it always has.

I for one am looking forward to the day music either takes a dramatic leap forward in technology or moves to a different medium altogether. The way it exists now, industry moguls are stuck between a rock and a hard place:

  • The rock: CDs can be easily copied
  • The hard place: Online music is DRM-controlled and, while they still only toss 10% to artists, it doesn't yet equate to the level of money they make off CD sales and inflated markups.

A possible solution? As always a two-fold approach: online music for MP3 players and people who don't care, and high resolution protected music for everyone else. Too bad they are again letting a pair of protected formats (BD and HD DVD) slip by. The failure to latch onto the well-protected DVD-Audio and SACD formats eluded me - and it looks like they are simply doing it again - and will continue to do so until they are forced to acknowledge a different, less effective move.

About the author:
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Clint Deboer was terminated from Audioholics for misconduct on April 4th, 2014. He no longer represents Audioholics in any fashion.

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