Accidental Deaths

Wars between the electronics giants are killing Dallas' independent music stores

Sound Warehouse, the biggest of the chains, was later consumed by Blockbuster Entertainment, which decided music sales would fit nicely with the marketing strategy that had made it the Titan of home-video rentals.

The advent of huge, national chains was tough, but independent stores managed to survive by offering customers variety and music savvy not available at stores pushing Top-40 hits.

Josh Venable, co-host of "The Adventure Club" on KDGE-FM 94.5, is a longtime patron of the independent stores, even though he once held a job selling CDs at a Best Buy store. "Indie stores hire people based on what they know [about music]. At Best Buy, I was never asked a lot of music questions on my application. I mean, it's obvious by the people who work there," Venable says.

"But then you go to Bill's [local indie store] and you say, 'I want Carter's [Carter USM] first record.' And they go, 'Someone over here is looking for 101 Damnations. Do we have it on vinyl or CD?' They know what you are talking about."

Expertise is one thing. Price is another, and starting in about 1989, Best Buy and other chains began to win the battle for the wallets of music customers, despite their employees' suspect credentials in music lore and trivia.

Ironically, even Blockbuster Music--once considered the 800-pound gorilla of music sales--is now looking like a scared chimp.

Prospects looked much brighter for Blockbuster Entertainment when, in 1992, the company paid almost $185 million for the Sound Warehouse and Music Plus chains. The company later acquired the Super Club Music chain, completing its full-scale invasion of the retail music business.

The company counted on the kind of success it had achieved in the video-rental market. But Blockbuster Entertainment apparently wasn't prepared for the cutthroat competition it would face, says Don Kulak, president of the Independent Music Association. Within three years, Blockbuster Music's cash flow had dropped nearly 30 percent to $33.1 million. The chain was compelled to close 34 stores in Texas in 1995, leaving it with 78 in Texas and 510 in its chain.

The company is still battling rumors of its imminent demise or sale.
Earlier this year, Tom Dooley, deputy chairman of Viacom Inc., Blockbuster's parent company and home of Paramount and MTV, announced at a media conference in Paris that the company was searching for a buyer or partner for its retail music operation.

A Viacom spokesman tried to shrug off the announcement, saying Viacom "had no plans of selling at this time" and that the announcement "was taken out of context."

But in what context would that kind of statement sound positive?
The business community has long expected Blockbuster Music to fail. Since Viacom bought Blockbuster Entertainment in September 1994, business analysts have predicted the music operation--which accounts for less than 2 percent of Viacom's total business--will be eliminated. Blockbuster Music regularly pulls in the least money among Viacom's 10 major business markets.

Such gloomy predictions are adamantly disputed by representatives of Blockbuster Music, who say the company is doing better than ever. "Those are just rumors," says Mariesa McClafferty, director of public relations at Blockbuster Music's company headquarters in Fort Lauderdale, Florida. "Business is going good. We are opening new stores in new markets."

Blockbuster employees apparently can relax--for the moment. The Internal Revenue Service recently gave its approval for Viacom to continue spinning off its cable systems stock, a deal which could bring the company $1.5 billion in cash.

This windfall could be used to pay off debts, making it less urgent to jettison Blockbuster Music.

Even if the IRS had vetoed the deal, Viacom chairman Sumner Redstone reportedly isn't the type to accept a defeat such as folding the music division. With the retail music industry in an overall slump, Viacom isn't likely to find a solo buyer for Blockbuster Music right now, anyway, although there's nothing to stop Redstone from splitting up Blockbuster Music and selling it off in pieces.

As Blockbuster Music's future appears uncertain, selected chart-topping CD titles have started showing up in Blockbuster Video stores, indicating that the company may be thinking of merging the music and video operations.

Having Blockbuster Music join their ranks would provide little solace for the smaller, mostly independent music-store owners who have failed in the past few years.

Some of the blame for the shakeout in the industry can be pinned on the country's changing musical climate. In the 1980s, underground bands played in rented VFW halls and abandoned warehouses, and fans shopped at stores like VVV.

In the green-hair-and-nose-ring 1990s, "underground" bands play in 15,000-seat venues. Popularity means bigger sales numbers, and bigger numbers catch the eye of large chain stores.

The edge independent music stores used to have over national chains was wide selections and savvy salespeople--owners like Neal Caldwell who knew their merchandise.

But national chains are getting better at the game.
Now, in almost any store that carries music, shoppers will find a wide variety of titles. The music sections in Barnes & Noble and Borders Books & Music are bigger than many music stores. Best Buy stocks more than 65,000 CD titles.

The past few years have been tough for all music retailers, says Bob Roberts, vice president of marketing for the North Canton, Ohio-based chain, Camelot Music. "The music industry, for the past 18 months to two years, has seen the number of stores devoted to the music category dramatically increase, and for the first time ever, in 1995, there were flat sales in music," Roberts says. "Retailers who entered into the business during this time expended a lot of dollars and basically got no return on their investment. This is the cause of a lot of heartache in retail."

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