Best Buy

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This is Celia Hirschman for On The Beat. The latest fervor in the music business centers around the Rolling Stones. The band never ceases to find ways to create firsts. The Stones have historically made outrageously lucrative deals with organizations who "show them the money", and once again, they-ve trumped everyone. Turns out the Rolling Stones decided to make an exclusive deal with the giant retailer Best Buy for the release of their new DVD box set. The set, titled Four Flicks, is four dvds of live performance, priced at 30 bucks for the holidays. Only Best Buy in North America will be able to sell it.

As you can imagine, this has caused an uproar with the rest of music retail and in fact some retailers are returning their Rolling Stones stock in protest.

Interestingly enough, the retail reaction has made the newswires across North America giving Best Buy and The Rolling Stones the best warm up marketing campaign they could ask for. Best Buy is the largest volume retailer of music in America, but they are actually considered a Big Box retailer. A big box retailer means they derive most of their income from selling televisions and refrigerators, that is, appliances in big boxes, not music. But they understand that consumers- often walk in for a record, and walk out with a new dishwasher, so they-ve always taken an aggressive stance with their music retailing business. In fact, they-ve out priced and out promoted every other music retailer in the business, through highly competitive campaigns. Best Buy is well for making special deals directly with bands to give away exclusive cds with the purchase of another cd. And they-ve been selling new hit cds to consumers for under 10 dollars, long before Universal announced their price cuts. In fact their pricing wars are so notorious in the record business, that small independent retailers who can-t stock heavily on hit titles, often go to Best Buy when they run out of stock, to hold them over until their distributor ships more.

I have to applaud Best Buys- marketing savvy. They are really good at understanding mass market buying habits. Many in the business feel it-s unfair to make exclusive deals, but I think this is America and everybody has the chance to make a buck. And exclusive deals are not really new. 12 years ago, I helped organize a deal for Amy Grant to have an exclusive Christmas CD with the retail giant, Target. Target paid Ms Grant a sizeable sum of money for the exclusive recording rights, and the promotion came as her Heart In Motion CD was a smash hit on the charts. If you walked into a Target store that Christmas, you saw a hundred impressions of Amy Grant. Needless to say, Amy-s sales went through the roof and I-d have to say it was a win/win all the way around for A&M; Records, Target, Amy and her fans.

Best Buy is certainly a formidable force in retailing and once again has shown the music business exactly whose boss. I realize it-s not politically correct to speak out in favor of the big retailer, especially if they are crushing the small chains but I-m convinced that smaller retailers will not win by seeing themselves in competition with Goliath. Most of music retail needs to provide service, catalog and value, and the retailers that do that well have the best chance of staying in the game in the long run.

No matter what happens with this latest deal between Best Buy and the Rolling Stones, one thing is for sure. Retailers are going to have to get much better at capturing the consumers- interest and consumers are going to benefit greatly from the attention.

This is Celia Hirschman for On The Beat.