When Morninglory Music, a record store in downtown Santa Barbara, recently closed its doors for good, owner Stan Bernstein attributed the decision to the growing number of people who download music illegally online. But in San Luis Obispo, independent record stores see another problem: commercial retailers.
"Downloading, that happened quite a while back and it's certainly a factor, but the biggest thing that hurts independent record stores is Best Buy," said Richard Ferris , owner of Cheap Thrills record store which has been in San Luis Obispo since 1971.
Best Buy's tactic is to cut back the price of a new release to $9.98, even though it's costing them and independent record stores up to $12.98 to buy, Ferris said. Calls to Best Buy were not returned by press time.
"Nothing ruins a customer's loyalty to you like them thinking you're charging an unfair price," Ferris said, which is why he's dropped prices on new releases to remain competitive.
"We don't let them undersale us, no matter what it costs us," Ferris said. "But that isn't fair. It's not right."
Mike White, co-owner of BooBoo Records, which has been in downtown San Luis Obispo since 1974, echoed that sentiment.
"It's the devaluing of the percieved value of a CD by these companies like Best Buy, Walmart, Circut City, that are using our industry, the music industry, as their loss leader," White said.
He said the price cuts get customers in the door for a cheap CD, and out the door with an overpriced item.
"It gets you in the door, that's the point," Ferris said. "They're not making money off of music no matter how much they sell."
Ferris said roughly 3,000 independent record stores have been driven out of business in recent years, not from downloads but from commercial enterprises.
"As far as independents, we're past the 2/3 mark and headed toward the 3/4 mark of independent stores being striked," he said. "It's a pretty dark, dark scene and I don't know what the future will be."
It's a prospect White said is foreshadowing for the independent record businesses nationwide.
"It's short-sighted if that's where you're doing all your shopping, because if you're doing it all there and you're buying it cheap, then stores like us aren't going to be around anymore," White said.
One long-time independent record store supporter in San Luis Obispo County said he values the one-on-one interaction that you can't get from commercial retailers.
"You're more likely to get good advice about new music to listen to from your local record stores," said Chuck Cesena from Los Osos who has been a BooBoos and Cheap Thrills customer since 1984. "You can develop a relationship with the clerks-- they know you, you know them."
The commercial retailer problem combined with the iTunes revolution is what hurts the local record stores, owners said.
"Downloading is part of it," Ferris said. "If it wasn't for downloading, the stores would have been able to survive better."
Ferris said when the downloading wave first hit San Luis Obispo five years ago, Cheap Thrills lost 75 percent of its Cal Poly customers.
BooBoos has also experienced a decline.
"Overall, our sales remain steady, although our new CD sales are falling," said John Huffman, also a co-owner of BooBoos Records.
In recent years, the floor space allotted to new CDs at BooBoos has been reduced and replaced with more used CDs, DVDs, clothes and other accessories.
White said the problem is complicated and multifaceted.
"There are bands putting albums out that only have one good song on them," he noted. "How do you expect a kid to come in and spend $15, $16 on an album, and it's only got one good song?"
Despite the popularity of downloading online, Huffman said there's still a demand for CDs.
"I think you'd be surprised at how many people still buy CDs," he said, adding that although the MP3 revolution does detract from sales of new release CDs, the store isn't losing a profit because they have more customers now than ever.
Huffman said an individual customer who used to buy 10 CDs a year now buys four or five, but the profit is still maintained because instead of having 1,000 customers, they have around 1,500 customers.
"So now, more people buy less CDs," he said.
For BooBoos, the Internet has become more of a friend than a foe in recent years.
"We have developed an online business in the last two or three years," Huffman said. "We sell through Amazon and eBay and some of the other sites, so we've managed to expand our audience that way, too."
As far as the future of the industry goes, Huffman said it's hard to tell.
"It's funny because people still come in and ask for cassettes," he said. "And that's 20 years after the fact. . . I don't know that it'll move a lot further away from physical product."
In recent years, record labels have found ways to add value to the physical product by including a discounted DVD bonus or offering free MP3 downloads with the purchase of the CD.
Huffman said the value that comes with owning an album is what keeps customers coming back.
"There's still a lot of people out there that like physical product," he said. "They want the booklet. They want to put it in their library."
Furthermore, the sound quality of a CD's audio file is far better than that of an MP3, which is compressed to 1/10 the size of a CD file.
"Most of us can live with that when we're going for a jog with our iPod," Huffman said. "But when you're listening to it in your house, you can tell the difference significantly."
Despite the decline BooBoos has seen in CD sales, they have also seen up-kicks in other products like turn-tables, headphones, clothing, vinyl and tickets, which has kept them thriving.
Cheap Thrills has also offers more than just music by combining the record store with a comic book store.
"If you look at Cheap Thrills today, it's definitely a different store than it was five years ago and 10 years ago," Ferris said. "And I imagine five years from now we'll be different yet again as we try to figure out how to make it all work."