In Business Development Strategy

The Guardian reports on the falling profits in mainstream music. The supermarkets have got in on the act and do what supermarkets do best: they squeeze suppliers’ margins and commoditise products.

More evidence of the Individual Revolution: there’s more profit in the specialist, niche markets as Adam Webb discovers.

However, it is beyond the mainstream that things get really interesting. A few hundred yards into Soho are a score of different worlds: the specialist retailers. Take the dance and electronic music specialist Phonica. Tastefully decked out in wood and with a Perspex bubble chair in the window, it is defiantly leftfield, with 90% of its sales coming from vinyl.

These days, a small independent store dabbling in anything remotely mainstream would be commercial suicide, explains the store’s manager, Simon Rigg. “It’s moving towards small runs of collectable records, which you might only sell a thousand copies of,” he says, picking up a random CD from the office. “For instance, there’s this Map Of Africa album, which was a single LP in a nice gatefold sleeve and we sold 300 copies for £20. They’ve all gone, but if you went to HMV they’d never have heard of it. It’s very trendy and collectable, but that’s £6,000 from one record.”

“The guys here have huge passion about this music,” says Aaron Morris, a 34-year-old customer, picking up an Anders Ilar 12-inch from the racks. “What makes it special is that you have to look and you have to find. It’s come round full circle with shops like this and vinyl’s come round again. It’s like an addiction and there’s a new generation getting into this music.”

It sounds like this store discovered a niche about which they are passionate, and they leverage the permission gained through the respect for their passion and opinion to make sales to a smaller group of peers that share that passion.

Is it better to make £10 per record from the 300 records described, or 50pence per record on 6,000?

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