Walmart Finding Music Hits

It appears that music labels are under assault from all sides. One of those is that digital piracy is growing while the number of CDs sold has been going down. The predictable response for most of the labels has been an attempt to urge more intense law enforcement by prosecution of individuals responsible for piracy, insistence on Digital Rights Management systems and the disruption of networks used to circulate digital music through the internet. This tough law enforcement approach is unlikely to be successful partly because it shows that music companies are engaging in policing of the internet and prosecution as opposed to spending resources to identify what music buyers would want improved.

Granted that the unauthorized copying and circulation of this music is wrong, I have disputed the assumption that it is entirely the copying and such circulation that is contributing to the reduction in purchases. CDs are in my view highly priced and part of the reason is that the labels may be taking a very large cut. In addition, the expenditure dedicated to detection, prosecution of offenders and disruption of the internet seems to me like a sledgehammer approach.

To its credit, Walmart has beaten them to it by cutting out the labels and independently distributing CDs through its stores after arrangements with the content producers. Robert Levin of the NYT site confirms here to me that there is not only the need for new models for retailing music but also that music labels may have been part of the problem. The successes of the CDs that Walmart chose to sell in its stores shows that in spite of it not being a music corporation, it is capable of providing music at competitive prices. So the problem with sales for music carried by the labels is not entirely about the internet being a facility that promotes piracy. It may not even be that at all. Given the success at walmart's stores with the albums, music labels should question their assumptions. The conventional wisdom appears to be wrong and Walmart may just be proving that there's a new way to distribute music that requires a reduction in the margin for the labels.