Mass merchants offer convenience, less music choice

TROY, Mich. -- The rock band Train usually plays to packed halls in big cities, but three weeks ago the group performed on the ground floor of a light-gray office building in this Detroit suburb. Just 300 people watched the show.

"We played four songs there," said Pat Monahan, the lead singer of Train. "We want to make fans and friends of these people."

So do plenty of other acts. Hootie and the Blowfish have appeared there, as have Barenaked Ladies and Amy Grant, all playing brief shows before a tiny audience in an atrium. Other stars -- Garth Brooks, 'N Sync -- have stopped by just to sign autographs and say hello.

This unlikely hub of superstar traffic is the building that houses Handleman Co., the recording industry's least-known powerhouse. Handleman manages the in-store music departments of 4,000 retailers, including every Kmart and more than one third of all Wal-Marts. Last year, one out of every 10 albums sold in the United States was bought at a Handleman-managed store, and for certain popular titles, like Tim McGraw's "Greatest Hits," the ratio was closer to one in four.

As pop's heavyweights converged Wednesday on Los Angeles for the Grammy Awards, the clout of big music buyers like Handleman is changing the way albums are acquired in this country. Mass merchants like Kmart, along with electronics superstores such as Best Buy, are gobbling up an ever larger share of the $14.3 billion U.S. music market, offering CDs at bargain prices in the hopes of driving traffic to cavernous stores filled with more expensive merchandise.

And that, say many in the business, is bad news for music lovers. The record store was once a place to stumble across albums by emerging artists and masterpieces by forgotten greats, or a place to get a hot tip from a local maven. But a typical Wal-Mart carries roughly 4,000 titles, a minuscule fraction of the more than quarter-million CD and cassette offerings on the market. Specialty chains, like Tower Records -- which typically carry 20 times the inventory of Wal-Mart -- are steadily losing market share, and many independent retailers say they are struggling.

All of this is stirring concerns that the record business will suffer the fate that befell the retail video world when Blockbuster and other chains caught on. Consumers got low prices and convenience, but independent stores carrying quirky and foreign titles began to vanish. Demand for offbeat movies withered as people simply forgot they were out there.

"That's what will happen to enormous amounts of the music catalog," predicts Mike Dreese, head of Newbury Comics, a Massachusetts-based record chain.

These trends in record retailing also parallel trends in radio, where a handful of corporations have bought up stations and exerted national control over shrinking and market-tested playlists.

Now, scores of lesser-known acts are finding it tougher than ever to reach the airwaves or the shelves of key national retailers. Left out in the cold, too, are the back catalogs of many bygone giants of rock, like Frank Zappa or Sly and the Family Stone. Not to mention hundreds of musically influential but commercially marginal blues and jazz artists.

And for taste reasons, Wal-Mart won't carry CDs affixed with parental warning labels -- including the latest album by Eminem, which is up for the album of the year Grammy tonight.

Executives at Handleman acknowledge that carrying new or less-popular artists is low on their list of priorities, and far behind the goal of generating high sales per square foot. "We'll carry it if it's a hit, but we don't carry deeper product, or older product," explains Stephen Strome, Handleman's CEO. Anyone interested in more obscure stuff, he says, can comb through Tower or patronize Internet retailers like Amazon.

But those worried about the Wal-Marting of music say the issue isn't whether an album is available -- if you look hard enough, or have a Web connection, you can find any CD out there. But you have to know what you're looking for. Once, even in small towns, people might learn about offbeat music at mom-and-pop record stores or from a locally owned radio station that reflected the taste of a knowledgeable music director. Now, as both of those species dwindle, it's becoming harder -- especially for the millions who don't live near a city with plenty of radio options and well-stocked record stores -- to discover music that doesn't come straight off the assembly line.

By some measures, the record business has never been healthier. Sales are strong, thanks in part to a recent batch of multiplatinum-selling teen-pop acts, like 'N Sync and Britney Spears, which Wal-Mart is exceptionally good at selling. But some labels and retail competitors say the music business is headed toward a winner-take-all competition.