Record Store Revival

How indie record stores are vying to still matter in the digital-download era

On stage, Scott Miller offers a few apologies then begins singing about sin in Indiana—the crowd responding with hand-claps and a few laughs as he plays the song's irresistibly hooky guitar lines. It's standing room only (no chairs), as fans crowd the aisles for a show that's far more intimate than one of Miller's dates at the Bijou Theatre (acoustics notwithstanding). Bearded old record collectors mingle with coffee-shop hipsters in a gathering of the local-music faithful to celebrate the new independent album release of a Knoxville hero.

It's a scene you won't find online. Furthermore, the managers at Wal-Mart and Target probably have no idea what's going on here at The Disc Exchange on a Monday evening, and wouldn't allow such a thing to happen in their stores even if they did. But it's also a scene that's becoming increasingly rare as brick-and-mortar record stores face a seismic shift in consumer buying habits that's still rocking the entire music industry—forcing local mom-and-pops as well as national retail titans like Tower Records and Virgin Megastores to close their doors.

Can local record stores survive the onslaught of Apple's iTunes Store, which became the number-one U.S. music seller last year?

"As long as there are still people (and there are) who want to hold an actual CD and look at the artwork, then record stores are still important," writes Scott Miller in an e-mail. "Besides shows, stores like The Disc Exchange are vital to what I do. Whatever is going to happen with the music ‘biz' is surely nothing but beneficial to independent musicians, hence why I left Sugar Hill (a good label) and struck out on my own. I can reach my fans directly without lots of middle men taking their cut. That's nice. Surely record stores can find a niche in there. And will."

That's the aim of around 1,000 independent record retailers around the world as they unite behind Record Store Day on Saturday, April 18, a concerted effort to raise their public profiles. Participating stores, including The Disc Exchange and Lost and Found Records, will be highlighting what they do best with day-long in-store performances, special sales, and exclusive records from artists ranging from Bruce Springsteen to Jay Reatard. Their message is simple: We still exist, and we're still cool.

"A lot of times in the press it sounds like we're in the last throes of this whole industry here," says Disc Exchange co-owner Allan Miller, who founded the business in 1987 while a student at the University of Tennessee. "But that's not the case. So this is a way to remind everybody in the country that there are music stores that are doing quite well. And if they haven't thought about it, they should go back and check things out."

With Record Store Day, indie retailers hope to stake a claim for their continued relevance with consumers, which has taken a beating in recent years. According to the Recording Industry Association of America's year-end shipment statistics, CDs saw a nearly 25 percent drop in units shipped between 2007 and 2008, continuing several years of steep declines. In the same time frame, downloaded album sales were up almost 34 percent. Last month, market research company NPD Group released its annual Digital Music Study—with more bad tidings for CD retailers. According to its sample survey of 4,000 consumers, there were nearly 17 million fewer CD buyers in 2008 compared to 2007; meanwhile, purchasers of digital downloads increased by just over 8 million, to 36 million Internet users.

And those are just the legal downloaders—there are probably millions more illegal music downloaders using peer-to-peer file sharing or simply swapping hard drives. But digital downloading is just one problem facing indie record stores—they also have the music industry itself to contend with, which has turned to department store chains for help, offering them subsidies and "exclusive" releases from the likes of AC/DC and Prince.

"One of the biggest impacts has been the loss-leaders at the big-box stores," says John Bevis, The Disc Exchange's CEO. "What we make a living off of, they're using to draw people in to buy refrigerators and microwaves. And the music industry did it to themselves on this one, they got into bed with these companies and were feeding them advertising dollars—and they were taking those advertising dollars and selling stuff for $9.99. We all pay the same amount for these records, but they were making up for that loss with advertising money."

Piling onto record-stores' woes were the loads of crappy albums released by major labels in the past decade with only one good radio single; since CD singles became almost nonexistent, it forced consumers to buy expensive full-length CDs. "It was giving people more of a reason to go download that one song for free," says Bevis. "Why would they buy the whole record when there's only one good song?" Worse, the loss of CD singles closed an avenue to new buyers.

"The industry itself has pretty much shot itself in both feet by eliminating singles," declares Jay Nations, former owner of Raven Records, a store still fondly remembered by local collectors despite closing in 1994 after nearly a decade. "The immediacy of getting the hot track and having a physical thing to listen to and collect—I think that's what used to get kids hooked on collecting and interested in music anyway. There are so many distractions now with video games and Facebook and MySpace—so many things that chew up your time besides going to the record store."

So, how can independent record stores fight for their survival against such forces? One bright spot has been vinyl; years after being superseded by the "perfect sound" and convenience of CDs, old-fashioned LPs, EPs, and 45s are hot again. In that 2008 RIAA shipment report, LP and EP sales zoomed up 124 percent over the previous year.

"Vinyl is essential," Nations says. "There are a lot of younger kids coming in, and there's so much more information on collecting now than there was 20 years ago. I mean, I have kids coming up to me at record shows that know more about original pressings of Jimi Hendrix records than I do. It's really cool!"

Vinyl diehards Mike and Maria Armstrong at Lost and Found Records have been selling LPs since 1990 when the husband-and-wife team opened their first store on Kingston Pike. After a four-year interlude of selling only on the Internet, they decided to go back to a real storefront in 2006 with their current smaller location in North Knoxville.

"When we first started, the majority of people were dumping their records because they had decided that CDs were the biggest, best thing," Maria Armstrong says. "That's when we decided to open the store—Mike said, ‘I think as long as we can get good records, people will always buy them.' We always knew we couldn't compete with the big-box stores, so I thought I'd find something that nobody else is doing, which is records."

It's been a steady business ever since, and now the Armstrongs are selling a lot of records to the same people who dumped them in the '90s. ("Probably daily I have somebody tell me, ‘Oh I wish I never sold my records.'") But they're also seeing a whole new clientele of buyers who weren't even alive during vinyl's heyday. "My youngest customers are probably about 13 years old—we have a lot of young people coming in who are getting their parents' turntables out of the attic," Maria Armstrong says. Likewise, The Disc Exchange has built an entire room devoted to vinyl within its store to capitalize on the renewed interest.

Meanwhile, in a more modern effort, a consortium of independent record stores (including The Disc Exchange) is about to launch its own iTunes competitor, Years in the making, it's a belated yet promising entry into digital downloads on behalf of brick-and-mortar stores. With a focus on local and independent artists, it will offer more of a record-store clerk's perspective on what's cool than the more mainstream iTunes. Each store will get credit for sales generated by its customers; tracks are $1.11 each (iTunes song prices have crept up to $1.29 for major artists), and songs will have a 320 bit rate for better sound quality compared to iTune's standard 128 bit. Allan Miller expects the site will help boost the Disc Exchange's overall online sales.

"We've just recently nailed down our used inventory on our site, and I think that's a big deal," he says. "We sell music all over the world; we shipped some to South Vietnam yesterday. And I think our download site will put us in the same league as iTunes—we'll at least be in the game."

Beyond hoped-for online sales and higher-margin boutique items like T-shirts and posters, record stores have also been turning to one other feature that may give them a competitive advantage: a love of music. This comes in the forms of clerks who actually know what they're talking about, and owners who support local musicians with shows and sales.

"The retail outlets that are going to make it will have a strong community component," says Nations. "Having live shows, promoting live shows, just being really in touch with the local music community is a big part of it. Because the really successful shops—like Harvest Records in Asheville and Grimy's in Nashville—both promote a lot of shows and they're keeping their names out there that way. And they just really have a strong, loyal clientele."

The Disc Exchange has been doing just that with shows like Scott Miller's launch party, and Bevis cautiously says he thinks the worst of the CD shakeout is behind them.

"I think we're at a point now where the surprises are out of the way, I hope," Bevis says. "We can see there is an ability to co-exist; only the strong will survive, and we hope that we're one of the strong ones. I think there's always going to be room for physical goods and digital goods, and you have to find that balance to survive."

But what if the forward-thinking futurists of online forums are right, and we will soon live in a world without brick-and-mortar record stores?

"Oh, man that'd be awful! Terrible! Let's not think about that," groans Nations. "Gosh, that'd be a true depression. The world would be a sorry place without record stores. It's just an essential part of a real city—you've got to have a record store!"