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Saying Goodbye To The Music Industry

By Tim Gillespie

I was thumbing through Music Inc., a music industry retailers trade magazine and I was drawn to an article titled "Saying Good-bye to MI". (Music Industry).

The author has been in the music industry for 36 years, he ran a successful music retail business in Toledo, Ohio and this article was his farewell note to the industry he loves.

He talked about selling a $1,000 dollar guitar and making $1.98 on the sale. He expected to make more and has some direct answers for why he didn't. Many of his answers come from the changes the retail music industry is experiencing right now.

Over the last three to four years, several very large companies have substantially grown in the retail music instrument business. You may already know the names of the three big players, Mars, Guitar Center and Sam Ash. These are very big companies that are fighting over retail market share in most major markets in the U.S.. In the past few years these big companies have been changing the dealer landscape right before our eyes.

The traditional music retailer until a very short time ago was a small business owner and a cog in the local economy. Mom and Pop shops were very common and finding a business with more than six locations was fairly rare. These small, family-owned music shops had a long term niche worked out and a symbiotic relationship with the community. Until recently, this was a stable long term business that provided a haven for would be musicians eager for musical help.

That business model has faltered largely because of this new threat that very well may end this way of servicing musicians and communities. It is at this juncture that my business sense usually roars up about how market conditions are just a matter of fact and big companies bring economies of scale and better buying power that give them their rightful place at the top of the retail music market, let the chips fall where they may. But not this time.

Maybe it is because a big part of my business model is tied to smaller music dealers that would allow me to sell to them. Maybe it is because that is where I got my start and they determined I have the right to exist as a very small supplier. Maybe it is because the subject of music does not prosper from the formula these large scale giants bring as their strategy.

I have been humbled by some music stores I have come to know. Teachers and students of music at the same time, chiseled by the rigors of being a full time musician, a teacher and a business person every day. Quietly going about their business of turning would be musicians into respectable band and orchestra musicians and guitarists as well. Music is not a simple subject. Anyone who goes beyond the beginner stage experiences challenging mental and physical hurdles that can shape a person much like a college degree can. Only music is so artistic that special attention must be placed on the way a person develops.

Most people, at one time or another, need help with buying and playing decisions. When a needy guitar player stumbles into a great guitar shop, they have an immediate chance of engaging the subject in a way previously unavailable to them. They can be surrounded with so many good guitarists, a deep hierarchy develops. The best and most respected guitarists set the tone and the others seem to take their place according to achievement and experience. In most cities there are several good choices for shops and the decision of which shop is best for you may depend on what you play. The culture of music stores is heightened by the variety and different approaches that diverse stores offer. If you lose one or two stores, usually it is not devastating.

Because the barriers to entry were so low, a couple of people with some cash and good ideas could start up a music store. All this is changing. Big stores bring more investment and competition on a variety of fronts. They raise the barriers to entry. I have seen these big stores sell guitars below the wholesale cost of these smaller stores. Of course this does not mean these big stores are without value. Something is attracting masses of people to them. I know of several people that have gone to work for these giants. They bring their skills with them and they have always been effective. I have talked with guitarists that have been satisfied with these stores and continue to go there. But for every one of these experiences, there seems to be other stories of salespeople that dont know as much as the customer, or a sales staff that focused on sell first, help the customer second or not at all.

Maybe this is just an echo of sour grapes from displaced music professionals that now must look to something else for a living. When I had almost finished this article, I happened to glance up at the byline. I thought to myself, who is this guy? The answer stunned me. It was Ron Pullman, owner of Rons Music in Toledo OH. This is a person I knew from cold calling and asking him to try my music books. Ron is more than a name to me, he is a person that has thought carefully about this business and how to make it work. He is a person that encouraged me to continue with my ideas and publications. He encouraged me by placing orders and paying me for my work. He was a long time customer who was now saying good bye forever.

The music industry is changing. It is happening right before our eyes. Market share is being ripped away and divided up, pricing margins and economies of scale are having an effect. And there is fallout from all this. Hidden fallout. Fallout that affects all of us. Long time traditions and neighborhood stores are silently paying the price for the big business model. And like so many things this size, all we can do is sit back and watch it happen. And when they go, they go forever.

But make no mistake. We are not better off with Ron Pullman starting up some cash business where his deep experience and knowledge of the music business will be water cooler fodder. I have seen it happen in most major markets. The small music dealer is a vanishing species. The experience, the longevity, the teaching is forever gone. Ways of life are being disrupted and long term resources go silent. In its place we hear stories of business owners selling guitars for a profit of $1.98 and business models that have yet to prove they are worth the paper they are designed on. This cannot last very long. But what will replace it? Who will we go to when we need to sit down and play a new guitar to see how it feels. What will happen to pricing margins when the smaller competitors are not there to keep the big guys from doing whatever they want with prices. We know from business models of the past, their prices will go up as competitors are silenced.

Maybe I feel this way because music is not a commercial endeavor, it is not market share to be sliced and diced. Music is not based on the cheapest, quickest mass market large scale system. Music is always hand crafted. Music is an art form.

Do you agree? Here is some questions. Do you use the big chain stores? Do you like them? Do you hate them? Are they a good addition to the music landscape? Send us your comments, next month we will see what everyone else thinks.