What role do stores like Wal-Mart play in the industry?
Wal-Mart and other so-called “big box” retailers like Best Buy and Target have grown into powerful forces in the music retailing because they sell CDs at drastically reduced prices — a trend that industry observers note has contributed to the bankruptcy of traditional music retailers, including Tower Records. For record labels, lower retail markup might mean that that labels are able to sell more of the discounted discs. However, these larger chains tend to stock “blockbuster” discs and carry a smaller selection than traditional music retailers,. For record labels, this has been a dangerous combination, because it has meant that it is harder for consumers to find older back catalogue CDs, which have a higher profit margin because they have already been produced and marketed. For Wal-Mart and other large chains, music is one way to get customers into their stores so that they’ll buy other more profitable products. However, music sales only play a tiny role in their overall sales, as Da
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