EMI Slammed for Allegedly Abandoning Independent Record Stores to Cut Costs

EMI Slammed for Allegedly Abandoning Independent Record Stores to Cut Costs
Long-time music industry blogger Wayne Rosso is speaking out against music giant EMI after its sales reps began making calls to independent record stores informing them that, as a cost-cutting measure, the label would no longer sell its products directly. Instead, according to Rosso, the small mom and pop retail stores in the U.S. will now have to buy EMI's catalogue titles through one-stop distributors at a higher cost.

In 2004, Rosso founded Mashboxx, the first file-sharing service authorized by major labels, and has a long history of promotions and public relations for such artists as the Bee Gees, the Beach Boys, Aerosmith, Fleetwood Mac, Bette Midler and countless others. He has also served as a consultant to many of the major labels.

His recent post about EMI details the reasons why he believes the label's decision was a bad one for the retail music industry in general.

Here's what Rosso had to say in his post:

Here's a really good one for you. Last week EMI sales reps started making calls to many if not all of their small accounts, mostly independent mom & pop stores, to tell them that they would no longer sell them product!!! Were these accounts bad payers? Nope. Would they not stock catalog or new artists? Nope. Then why in God's name, you may ask, would they simply cut loose paying customers? The answer given by sales reps-cost cutting.

So let me get this straight. EMI intends to save money by not selling their CDs to independent retailers. Instead they want these retailers to go to one stops for their product. These retailers are the only ones who buy catalog anymore. You sure can't find it at Walmart and Best Buy. These are small businesses who have been loyal customers of EMI for 20, 30, 40 or more years. Like in the movie High Fidelity, these guys know every catalog number ever released. Every disk ever cut out of the catalog. They live and die by making personal recommendations to their customers-€“turning them on to new music. These shops are where music lovers go to discover and buy music. Several I have spoken with are so upset that they vow never to buy any EMI catalog again-€“or any new artist releases either. Only the certifiable hit product that they know will sell. They will no longer take chances on new EMI artists.

So I guess it just isn't worth it to EMI to take these orders over the phone anymore. Too labor intensive. And after all, they're doing so well that they really don't need the business. Small potatoes. Let 'em eat cake.

INTERESTING UPDATE: In making this policy change, EMI took the unusual step of notifying these retailers by phone instead of the standard letter. Could it be that they didn't want anything in black & white?

Also, don't forget that by being forced to buy from a one stop, not only does a mom & pop retailer pay more for his product (cutting into the already slim margins and pricing pressure from the likes of WalMart, etc.), but the one stops don't carry nearly the depth of catalog that these guys need in order to make a living. And is this really a good strategy for EMI to introduce their new artists?  Another gripe they have is that now they won't even get new and/or important releases (does EMI have important releases? Maybe the upcoming umpteenth release of remastered Beatles catalog) on Tuesdays, the new release day. It just makes it all the more difficult for them to compete and stay in business, even if it we were experiencing better economic times.