Target Threatens to Pay Labels for CDs Only When Customers Buy Them

From Billboard:

If the majors don’t play ball and give in to Target’s new sale terms, it could considerably hasten the phase down of the CD format.

Even though digital is on the upswing, physical is still performing relatively well on a global basis — if not in the U.S. market, where CD sales were down 18.5 percent last year. But things are about to get worse here, if some of the noise coming out of the big-box retailers comes to fruition.

Best Buy has just told music suppliers that it will pull CDs from its stores come July 1. At one point, Best Buy was the most powerful music merchandiser in the U.S., but nowadays it’s a shadow of its former self, with a reduced and shoddy offering of CDs. Sources suggest that the company’s CD business is nowadays only generating about $40 million annually. While it says it’s planning to pull out CDs, Best Buy will continue to carry vinyl for the next two years, keeping a commitment it made to vendors. The vinyl will now be merchandised with the turntables, sources suggest.

Meanwhile, sources say that Target has demanded to music suppliers that it wants to be sold on what amounts to a consignment basis. Currently, Target takes the inventory risk by agreeing to pay for any goods it is shipped within 60 days, and must pay to ship back unsold CDs for credit. With consignment, the inventory risk shifts back to the labels.

Link to the rest at Billboard and thanks to Dave for the tip.

13 thoughts on “Target Threatens to Pay Labels for CDs Only When Customers Buy Them”

  1. They aren’t going to get it me thinks, it’s been decades since I paid the too high asking price for new CDs so I’m one of the many many reasons this is going bye-bye.

    • B&N already did, they could return unsold books.

      If you’re talking the little shops, no, they don’t have enough ‘power’ to force it to happen.

      And the labels can’t back down, lest they then have to back down to everyone else.

    • Given the OP, it sounds like CDs work the same as books. They pay for them, but they can return them if they don’t sell. Target is trying to reduce the amount of money tied up in stock.

      If books were to go the same way, Publishers would insist on more control over what was ordered and stocked, at least for smaller bookstores. It’s one thing to be able to return them for money back, it’s another thing to not have as much skin in the game.

Comments are closed.