Walmart Phasing Out Music Sales...And That Revenue Isn't Coming Back

Peter Kafka | August 18, 2008 8:27 AM

AC_DC-pack.jpgComing soon to Wal-Mart: The new AC/DC album. Not coming to Wal-Mart for much longer: Most other music.

Following in the footsteps of the Eagles and Journey (and Garth Brooks, too), Sony's (SNE) AC/DC will sell its next CD exclusively at Wal-Mart. The WSJ notes that this has worked very well for both the retailer and the handful of artists that have cut deals with the chain. But the paper also notes that Wal-Mart, like the rest of the big box retailers, no longer sees the value in selling music in general, and is cutting back on the rest of its offerings:

But even as it strikes novel deals with a handful of artists and labels, Wal-Mart is preparing changes in its approach to selling the vast majority of music. It is unclear what the upshot of those changes will be, but one likely scenario involves cuts in the number of music titles the chain carries... Wal-Mart executives, frustrated by perennially declining CD sales, have been quietly exploring changes in their approach to selling music. The company has described different versions of its potential new strategy to different players in the music industry.

This is a trend that's been developing for some time, and one we wrote about last year: All of the big retailers have been cutting back on the amount of space they're dedicating to music sales.

But a retail cutback could be much more damaging than any single year revenue decline. In a worst-case scenario, and one we think is quite likely, a cutback sets off a self-fulfilling prophecy: Retailers stock less music, so consumers have less to choose from, and then buy even less, causing retailers to stock even less. Repeat.

But isn't this good news for Amazon, iTunes and everyone else who sells music online? Won't people who can't get a CD at Wal-Mart head to the Web to instead? We don't think so.

Wal-Mart (WMT), Target (TGT), Best Buy (BBY) sell the majority of music in this country, but they're generally not selling it to people who are looking to buy music. They're at the store to buy a refrigerator, or socks, or whatever. Reduce the amount of floorspace you dedicate to music, and those sales go away. And they're not coming back, period.

See Also: AC/DC Takes Verizon Money, On iTunes In 8 Months

Music Decline To Accelerate In 208 With Retail Cutbacks
Starbucks Dumping CDs

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32 Comments

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That's why they've decided to sell ads on Walmart.com
Ian (URL) said:
DVDs are going the same route at WalMart. and BluRay isn't the savior for movies as was hoped. they're reducing shelf space and promotions for dvds/bd. even walmart acknowledges the digital download age is here
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this article is an insult to retailers. music piracy is destroying music, not wal-mart. read the rolling stone multi issue article on piracy from last summer to understand the real problem.

you would think a digital media writer would be aware of impact of illegal downloading of hundred of millions of cd's annually. does this person's editor know about Napster? anyone at silicon alley ever hear of peer to peer file sharing?
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