Music retailers struggle

CNY Business Journal (1996+), Apr 20, 2001 by Kropf, Annemarie

For Jack Wolak, the ax fell in May of last year. Napster made headlines in all the local papers, and Wolak, owner of Knuckleheads - an independent music store in North Syracuse, saw his profits nosedive.

"We lost maybe 35 to 45 percent of our sales in a week," Wolak says. "We lost 10 to 15 percent over the next three months before they just sat there."

Music stores in Central New York have been disappearing, and those who ran them say it is due to Napster and other Web sites where people swap music for free. But despite record companies' best efforts to quell Napster in court, the trickle-down effect of file sharing has music stores fearing that they'll soon be headed the way of the 8track tape.

Wolak struggled throughout the summer and fall to keep profits from slipping even more. He hoped the Christmas season would reverse the downturn, but that didn't happen. "Our Christmas season lasted only three days," he says. "We knew the end of the tunnel was coming really soon."

At the end of January, Knuckleheads closed after nearly 11 years in the business.

Wolak says that this trend is not just in Central New York, but all over the country. "Most of the independent stores are suffering," he says. "You get to a point where you could've hung in there a little bit, but it wasn't worth it."

Wolak admits that Napster played a part in his decision to close the business but says that sales had been decreasing four or five months before Napster became wellknown. "We started feeling the Internet impact about a year before we closed the business," Wolak says. "it definitely led to our downfall."

Wolak remains in the music business, however. He currently owns Rare Necessities, a mail-order company with nearly 20,000 items, and uses eBay.com to lure Internet surfers to the Web site, www.jackwolak.com.

See you in court

The court case against Napster boils down to copyrights, and the question of payment for the owners of the music. Traditionally, the artists create music and sign a contract with record companies that distribute it. A customer then goes to the store and buys the album. With Napster, however, money never changes hands. Users register at the Web site and never pay a fee to download or share music files.

Napster has earned its share of enemies. The Recording Industry Association of America has been trying to shut Napster down since December 1999 when it first filed its copyright infringement suit, but it has been independent music stores that have felt the pinch of low sales as the case has now dragged on for a year and a half.

Oliver's Records, Inc. in Syracuse is one store that decided to fight back.

Poster child

As the only music store on the Syracuse University hill, Oliver's did a pretty good business from its start in 1992, according to Charlie Robbins, the owner. He says he made about $18,000 every three weeks at the original location. When his landlord suggested he temporarily move the business to a second location, Robbins noticed a slight decrease in sales.

"I was unaware of a program called Napster," he says, "and the students who worked for me neglected to mention it."

Robbins was unhappy with the second location and tried his luck at a third location. There, Robbins says he was making only S600 every three weeks.

"My business just seemed to disappear," Robbins says. "Business was horrible and went down 75 percent over eight months."

When he finally heard about Napster and the lawsuit by the band Metallica, Robbins e-mailed the band's lawyer. "I wanted to let them know what was going on down here in the trenches," Robbins says.

It turned out that the band's manager was an SU alumnus who knew Robbins. "He said, 'We're going to make you the poster child.'" Dozens of papers featured Robbins' name and his involvement with the Napster suit.

As soon as the word got out that Robbins was against Napster, he suffered a backlash from students. "They started saying, 'He's not for us'" he says. "I've got a family to feed. I'm not for you."

The lawyers for Napster flew to Syracuse over this past summer, and Robbins testified in the Syracuse federal building for three hours. He says that Napster's lawyers had done their research and questioned him about moving his store around so much. He told them it wasn't an issue, since both locations were still in the SU area.

"When you're the only record store for a college of 12,000 and business is going down, something is wrong;' Robbins says.

By mid-September, Robbins had had enough and closed the store. "I thought, 'I haven't been doing this for 24 years to end up like this,"' Robbins says.

Currently, Robbins is in school, training to be an A-plus certified PC technician.

Making the best of it

Jane Thompson, owner of Charlie's CDs and More in Auburn, closed her store, in January. While Thompson says she isn't against the idea of sharing music, she feels the concept went a little awry with Napster.

"Business was steady until last year. The 14- to 23-year-olds dropped right out of the market," she says, "and who can blame them? If I was a kid, I'd be doing the same thing."