Tuesday, June 3, 2008

The Music Industry Takes Another Hit

"Do you remember back in the day when we used to play those old, shiny discs... CD's... those were the good old days."

That statement is not as far fetched as you think. This week will serve a simultaneously monumental and devastating point for the music business, as we know it. One of the largest music distributors in the world, Handleman Corporation, has announced that it is exiting the music business! The Troy, MI based company has begun the sale of it's assets in the music realm and acknowledged that close to 300 workers will be laid off, due to this drastic change in their business model. In what The Detroit Free Press calls a "winding-down process that eventually will put the Troy company out of business", Handleman plans to continue to operate is video game distribution entity, Crave Entertainment Group, though the prospect of a sale has not been ruled out. Handleman President/CEO Albert A. Koch offered, "CD music sales have been declining at double-digit rates for several years, both industry wide and at our customers' stores, resulting in a sharp drop-off in our business. Unfortunately, even the significant steps we've taken over the past two years to reduce our costs have not enabled the company to return to profitability."

It kills me to hear this, since I worked in the same office with Handleman sales reps and executives, during my stint with Universal Music Group Distribution: Detroit, but I can't say it comes as a surprise. I can't blame Handleman, because no one foresaw how the music industry business model would change. Apparently, it is time for formal introductions - Hello, Digital Music Era. Goodbye CD.


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