By Richard Menta 10/26/10
The name on her tag said Mel. She was one of the floor people floating around my local Barnes and Noble store as I poked through the isles looking for something that might catch my eye. I was only a few feet way when she answered another patron's question about the small toy section the book chain introduced to it's stores a few years ago. "We will have more toys in a few weeks" said Mel in a voice that boomed clearly behind me. "As you can see we are ripping out our music section to replace it with a large educational toy department".
That bit of shocking news grabbed my attention immediately and as my eyes darted up from the book cover I was perusing there it was - or should I saw wasn't. In place of the rows of CDs and DVDs, which I just took for granted were still there, I found an empty space.
I turned around and asked Mel if Barnes and Noble killed music and video sales. She told me that the North Brunswick store in New Jersey was one of five test stores in the nation to replace their media departments with toys. For me it signaled more dark clouds looming for the major labels. For the record and film industry this test could have foreboding consequences should toys turn out to be more profitable.
Major label CD sales have dropped sharply since they moved a record number of units during the first half of 2002. The labels cite piracy, but as George Ziemann points out in his article The Transformation of the Music Industry in the 21st Century the independent artist - the folk who are completely ignored in the weekly SoundScan numbers from Neislen - as a core group have seen significant gains (though since more artists are splitting up the pie, independent artists are individually seeing mostly modest gains). As Barnes and Noble only sells music from the major labels the revenues generated from their music department have plummeted. This is all made worse by the fact that online retailers like Amazon sell hard CDs for much less, while iTunes dominates the paid digital download market to a point that all other services barely register a heartbeat.
The struggles of Barnes and Noble in the digital era has led the company to put itself up for sale. This only pushes the company to look to other products to boost the bottom line. B&N are probably drawn to toys simply because 2007 set a record with 4,317,000 births, eclipsing a figure set during the baby boom era exactly 50 years earlier. The toy market has the potential for growth. The music market continues to shrink.
If testing tells B&N it is time to leave the music market that will be very bad news for the major labels as there is no evidence yet to suggest that WalMart and Target will pick up the slack. The end result should be more double-digit drops in CD sales and an even quicker change in the record industry landscape. It will hurt the film/DVD industry too, though that industry is far better insulated, because of the tiered system it employs, but the record industry does not.