On the 12th Day of Christmas
By Michael Bertin, Fri., Dec. 25, 1998
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After that day, the music industry slowly shut down. Other major releases, like Metallica's Garage Inc. and Tupac Shakur's Greatest Hits, trickled out the following week, but except for a few curiosities -- soundtracks, compilations, the uncensored Chef Aid album -- by the end of November the industry had all but closed up shop where new releases were concerned. By December 1, there were only seven LPs scheduled for release, and six of them were soundtracks, the lone exception being the oh-so-mutherfuckin' festive 10th anniversary tribute to N.W.A.'s Straight Outta Compton.
Why the stoppage? For the same reason record labels shut down every year at this time. If an album isn't on the shelves in time for the Christmas shopping season, then it won't be released until February, in all likelihood, when the music industry gets back into full gear -- since most bands are off the road, publicity departments don't have much work. So the record companies sit back and watch the product roll out and the numbers from Soundscan -- the company that tracks album sales -- roll in as Americans do their religious-cum-economic duty and spend like yuppies.
And Christmas is huge. Record companies and record retailers both depend on the holidays for anywhere between 10%-20% of their annual sales. While the suits sit back and collect, an army of clerks manning record stores around the country get to experience a bit of holiday hell.
"I mean, it's ridiculous," says Waterloo Records manager and clerk Jeff Borchman. "The phone is constantly ringing. People are here as soon as the doors open. ... The week just before Christmas just gets colossal."
Wait, people buy more music during the holidays? Unsurprisingly, the answer is yes. About the only thing that doesn't get a seasonal sales boost is freon, and maybe citronella, but the economics of music retail during the holiday season might be a bit surprising, if not occasionally nauseating.
For instance, every year another crop of Christmas albums, many of which are nothing more than yet another collection of reinterpretations of seasonal standards, inexplicably hits the shelves alongside the annual slate of mega-star releases. Actually, it's very explicable. The potential take is far too great for record companies to resist the temptation, because the numbers in which people buy Christmas albums is almost staggering.
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The Recording Industry Association of America (RIAA) has certified almost 25 holiday albums with sales of two million copies or more. The bestselling of all time, Kenny G's Miracles: The Holiday Album, has certified sales of seven million copies. And don't count on G keeping that top spot for too many more years. Tied for second on the list with sales of five million each are two different Mannheim Steamroller albums; a third release by the easy listening instrumental outfit, Christmas in the Aire, has certified sales of four million copies. Unbelievably, those three albums, along with yet another Mannheim Steamroller album, were four of the top 10 catalog sellers (that's old records to you and me) for the first week of December.
Even for a band with a finite and probably very short life span, Christmas albums are a simple way to further exploit the group's brief popularity. New Kids on the Block, for instance, have long since fallen by the wayside, but in their early Nineties heyday they racked up sales of almost two million for Merry, Merry Christmas. This year, for the week ending December 6, teen dreams N Sync had the ninth bestselling album in the country with Home for Christmas; their self-titled debut, N Sync, was at No. 3 that same week. As of December 11, after just three weeks on the shelves, Home for Christmas had sold 550,000 copies.
It doesn't even take an entire album, as one song can be enough for an artist and a label to assure themselves an annual Christmas bonus. Robert Earl Keen's No. 2 Live Dinner, not at all a Christmas album, broke into Soundscan's Top 100 sales for Austin the last week of November; that for an album that's almost three years old and for an artist with a new release, Walking Distance, that charted at number 35 locally that same week. The sudden jump in sales of No. 2 Live Dinner could have partially been due to the fact that Keen played two shows in Austin that week, but it's more likely due to the fact that the album contains a version of Keen's dysfunctional yuletide anthem, "Merry Christmas From the Family."
"Christmas specials help a lot for that, too," says Tower Records manager Dave Laczko. "I'll make one up: Keiko Matsui, Live at the Felt Forum. It's on PBS. Boom. People want Keiko Matsui. Or what was that other guy that did one? Yanni. Okay, we don't sell a lot of Yanni, but when that show came out, we had noticeable sales on that. So, Christmas specials where there are shows tied in, that generates sales also."
Mannheim Steamroller's sales numbers might be a bit of a surprise, but it might also just be a reflection of the enormous influence Rush Limbaugh has on his audience, as he plugs the group's music on his radio show. On the other hand, Garth Brooks selling albums by the crateful isn't surprising in the least. If he couldn't, that might raise a few industry eyebrows and beg an explanation. But he does. Well, sort of.
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Or think of it another way: Three of the biggest acts in the country, each selling hundreds of thousands of albums, couldn't each sell a measly 15 CDs -- the number sold by the 50th-ranked artist -- during either week in one of the country's most successful independent record stores. Waterloo Records owner John Kunz offers a simple explanation. "Things like Garth Brooks, Mariah Carey, Whitney Houston are just not Waterloo-type bestsellers," he says.
While that may be true, it's still more than just a little surprising that Brooks or Carey couldn't move a paltry 15 CDs out of an incredibly busy record store in one week's time during one of its busiest periods of the year. Randy Anthony of ABCD's, another local independent retailer, explains the lack of sales for the platinum artists out of his store as not only a reflection of his core customers' tastes but also as the results of a long-term trend.
"Over the years, the seasonal business has tended to migrate away from the smaller stores, certainly my store," explains Anthony. "Actual Christmas music, that's migrated away too. We used to sell a lot more of it. We'd sell a couple hundred Mannheim Steamrollers. But now, our clientele doesn't care about Mannheim Steamroller and there are only so many industrial or gothic Christmas albums."
ABCD's, Waterloo, and other indie stores are not making their livelihood off those Mannheim Steamroller and Garth Brooks CDs. Actually, ABCD's is not selling any of the latter because when you look in the slot marked "Garth Brooks," there's a CD jewel box with a hand drawn insert of the letter "G" with a red circle and a slash through it. "No Garth" is written on it. So, where has that seasonal business migrated?
Well, the largest retailer of music in the country isn't even a record store. It's Wal-Mart. In fact, Wal-Mart is so powerful, they were able to get Brooks himself to do a promotional in-store appearance for the release of Double Live; the retailer of everything even set a goal to sell one million copies of the CD themselves. Moreover, until recently, places like Best Buy and Circuit City utilized CDs as loss leaders, dropping the prices on music to get people into the stores to sell them video cameras and cordless telephones, and in so doing siphoned off business from the national and regional chains.
Don't think, however, the shift in seasonal business -- blockbuster releases and Christmas albums -- away from smaller, local stores to the MegaloMarts of the world has destroyed the former -- at least not in Austin. ABCD's might have lost all those Mannheim Steamroller sales, but Anthony still reports that seasonal business is increasing for the store.
"I'd like to think that it's because we're offering a fairly unique product for the Austin market," he posits, "but I wouldn't want to hazard a guess as to whether it is happening nationally."
Waterloo's Kunz is having a similar experience.
"We're still seeing an increase in our business," he notes. "So, if we're losing customers, it's happening in such a way that we are still finding new customers or taking customers away from some of our competitors."
It's probably a bit of an oversimplification, but it's almost as if there is a bifurcation of the consumer market, splits along a pretty well-defined line.
"I think a whole lot of it depends on how much of a music lover a person is," ventures Kunz. "If someone is just going to be buying a couple of CDs a year, it might just be wherever they are, whatever is most convenient, as long as they find it. Someone that really thrives on music, they don't find the selection or the knowledgeable staff at other stores."
Anthony echoes that sentiment.
"Over the years, as people like Best Buy have gotten more and more of the market; the people that don't normally buy music during the year, that's where they shop. Our customers both in preference for music and how they like to shop for it, it's more of a lifestyle kind of thing."
Two different types of music consumers, two different types of stores. Simple. There's people who thrive on music and seek out the stores that cater to their needs, and people who don't. They go Christmas shopping for friends and family, get their Furby off the shelves, then walk over to the music department wedged between baby apparel and automotive and pick up their Garth Brooks, Mariah Carey, and Mannheim Steamroller records.
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"We see so much of our Texas music sales increase a fantastic amount during December," confirms Kunz.
While local independent retailers seem to be doing just fine this holiday season without having to depend on blockbuster releases, there may be another looming threat to their livelihood and one that is growing quickly -- online music sales. People can shop for the CD of their choice, order it, have it delivered to their home -- and do it all in their underwear.
Amazon.com, an online retailer known primarily for book sales, reported a fourfold increase in traffic on its Internet site the day after Thanksgiving compared to the same day last year. That's a bit misleading, since Amazon.com didn't even start selling CDs through their Web site until June 11 of this year, but it is indicative of an increasing consumer willingness to shop online. Says Bill Curry of Amazon.com: "My reading of it is that the Internet this holiday season is becoming a mainstream alternate shopping style, from a curiosity a year ago to something that people are really embracing."
A better gauge of how many more people are shopping for music online might be CDNow, a Web retailer dealing exclusively in CDs. They reported a threefold increase in traffic at their site on the day after Thanksgiving versus the same day the previous year. And although they wouldn't release fourth quarter projections for 1998, CDNow's revenues have tripled almost every year for the least three years, which, based off of last year's figures, would put their 1998 fourth quarter revenues well over $15 million.
For all the hype of the Internet, though, the RIAA calculated that online sales accounted for only 0.3% of the $12.2 billion music industry bonanza of 1997, though they expect that number to increase substantially for 1998. Even some local record sellers have already begun using the Internet to help themselves do more business. Doug Jenks, who runs Rolling Pin records, a local store that specializes in collectible discs, is selling items through online auctioneer Ebay with good success. "Things I've had in the store for $50 that people have laughed at I've sold on-line for $75," he says.
Indie rock specialists and local merchants Thirty-Three Degrees also have a Net presence generating business from around the world. Store co-proprietor Daniel Plunkett says of the Web site, "We'll get orders from Norway or whatever. We do pretty well with that. A lot of the stuff we carry are fringe things, so people will come to us first. It's pretty good and it's getting better. We're not full-fledged with a search engine, it's just got the inventory, but we carry a lot of items that aren't readily available so people shop with us."
Even for those not taking advantage of potential online revenues, Austin's record retailers do have the luxury of another annual windfall that no other city has, one that makes them a little less dependent on Christmas. Every March, thousands of musicians, industry professionals, and music fans flock to town for South by Southwest. And when they get here, they buy records.
"Christmas is still a big part of our year," says Thirty-Three Degrees' Plunkett, "but our biggest increase is definitely during South by Southwest. We know we do better then than during Christmas."
Waterloo's Kunz says that for his store, March is also sometimes a bigger month than December, thanks in part to the store's anniversary sale falling around that time, but his sales during that period are no less impressive, considering that Kunz estimates Waterloo typically does between 10%-15% of its yearly business in December.
Nonetheless, with the music industry so dependent on its stars and the independent retailers not being able to bank upon those stars' sales, every month, not just December, is important. ABCD's Anthony explains.
"Music has such a small margin of profit compared to, say, tires or clothing, and that means volume is an important thing when it comes to surviving. And a big rush for us is when two people come in during the same week asking for the same thing. So Christmas certainly helps, but we have to depend on doing a good job the other 11 months."
