best buy controversy

the following comes from the you love/hate it clearinghouse that is pitchfork

Best Buy to Indies: Drop Dead

Mairead Case reports:
On January 24, Best Buy announced its latest promotion: a sale on a handful of albums from "left of the dial indie heroes," such as the Arcade Fire, Cat Power, Danger Doom, Antony & the Johnsons, Atmosphere, New Pornographers, and Broken Social Scene-- all listed at the obscenely low price of $7.99. Yes, that's cheaper than every other store on the planet, including iTunes. In fact, it's cheaper than distribution wholesale.

How can Best Buy get away with that? Isn't that illegal or something? Well, no. Welcome to the wonderful world of co-ops. Co-op campaigns are deals in which labels exchange money or extra CDs ("cleans") for prominent placement in stores, bulk initial orders, sale pricing, and advertising presence. Co-ops exist everywhere, from megastores to Mom and Pops alike. In other words, whenever you see some Next Big Thing featured at the end of an aisle, nine times out of ten, the label paid for that artist to be there.

This isn't intrinsically a bad thing. However, when co-op money is used to lower prices as substantially as Best Buy has, it's independent record shops that suffer the blow: Given the recent plunge in album sales over the past five years, these stores are already struggling. And while it may seem dramatic to say that something like this could make these kinds of stores extinct, the danger is very real. For many, it will be the final straw that puts them out of business.

It's no surprise, then, that Best Buy's "Artists Outside the Mainstream" program has inspired a lightning-quick backlash from small stores and non-participating labels. Tongues are lashing at Saki Store, the blog home of indie distro Carrot Top Distribution and Carrot Top Records (Handsome Family, Antietem, the Coctails, Archer Prewitt). On January 24, CTD, Ltd. President Patrick Monaghan posted a screed lambasting Best Buy and the labels involved in the program. His post inspired a heated discussion that spread across the web, with label executives and store owners joining the fray.

"I don't really see any way you can blame the customer," Monaghan told Pitchfork. "Hell, what decision is a consumer supposed to make, assuming they actually want to pay for their music, when faced with a $7.99 vs. $13.99 CD? I also don't think you can blame Best Buy. You can't shame the sociopath, so what good does it do to try? In my humble opinion, the blame falls on the labels and bands who are participating in this co-op advertisement deal."

Monaghan continued, "It's a question of extreme pricing and sale. If there is no indie retail to help build new bands, we are left with MySpace, the unfiltered Internet, and ad/TV/movie placement to introduce people to new bands. Retail would be left to the Best Buy/Starbucks axis. That's not too appealing of a scenario to me."

Mac McCaughan, Superchunk/Portastatic frontman and co-owner of Merge Records, responded point-blank: "Obviously, Merge's job is to get our artists' records in as many stores as possible, and make them available to as many people as possible who want to buy them," he commented on Saki Store. "Someone who discovers an artist because the 'popular' record is on sale at Best Buy will then hopefully be driven to find out more about the band. [Then,] they'll have to get the back catalogue at a store that sells mostly music."

According to the labels involved in "Artists Outside the Mainstream", Best Buy never mentioned the $7.99 price plan when discussing the program. The promotional paperwork specified only print circular placement, special positioning, and sale pricing, but no disclosure of how low that sale pricing might be.

In this sense, the labels, prevented from price-point negotiations under 2002 price fixing legislations, were truly blindsided. As Secretly Canadian's Nick Blandford wrote to the label's retailers and distros, "To say that [the price] was a shock to us is an understatement. Before approving the program, we specifically confirmed with ADA, Secretly Canadian's exclusive distributor, that Best Buy would not receive any sort of discount."

Matador president Gerard Cosloy told Pitchfork, "I don't deny for a second that using hot indie titles as a loss leader is a total sucker punch to mom and pop record stores. But without diminishing the significance of such an event, cool record stores should have something else up their sleeves besides using Best Buy as the bogeyman. We've used Best Buy for years, but the vast majority of our time and energy has been devoted to selling records through independent retailers. To date, we've yet to do any instores with Best Buy or any exclusive titles with a chain store or non-music retailer, and we continue to come up with specific releases [like the 99� Cat Power seven-inch and Interpol remixes] that you can't purchase anywhere other than indie retail."

So how do artists feel about the situation? "Artists have never complained to us that their record was in a chain store or on sale at a chain store," McCaughan told Pitchfork. "However, artists have often complained if they couldn't find their records in a chain store."

McCaughan was blunter on the Saki Store blog, arguing that "if [Merge] announced to our bands, especially bands that sell a lot of records, that their CDs would only be available at the cool stores and no longer at any chains, the roster of artists that Merge fans love would evaporate. If you don't think that's true, then you're living on a different planet."

"In any event," Cosloy told Pitchfork, "it should be stressed that [Matador] is pretty circumspect about which titles we choose to put into a co-op program at the chain level. Unless an artist's sales history, touring, press or airplay justifies such a thing, you won't see us trying to place 30,000 CDs on the shelves of your favorite appliance retailer."

Although the $7.99 promotion has ended, and most of the "Artists Outside the Mainstream" titles are now selling for a sensible $12.99, the principle remains: Don't take your local independent record stores for granted.