In a move to become the industry's backroom on CD distribution and fulfillment, Anderson Merchandisers has acquired CD distribution from Sony DADC, the company that supplies pick, pack and ship services to the Universal Music Group, EMI Music, and Sony Music Entertainment. The other major label, the Warner Music Group, is manufactured and distributed by Cinram.
Anderson Merchandisers has a vested interest in the survival of the CD as a music carrier, since it supplies music to Walmart, Best Buy and the Army & Airforce Exchange Services, which is more commonly known as AAFES. Anderson executives have continually reached out to the majors to support the format by lowering its price, and releasing CD versions of music day-and-date with the digital format. Last year was the first in recent years in which CD sales didn't fall drastically, dropping only 5.7% as opposed to the 18%-20% annual declines the format had been suffering from 2007-2010.
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The Anderson Merchandisers acquisition ensures a place in the industry for the rackjobber, as the CD continues its long journey into history while laying the groundwork for two inevitable industry trends: it will move the industry closer to more efficient distribution by packing entertainment product from multiple suppliers in one box, provided that retailers upgrade their inventory systems to handle that; and it readies the industry for the day when the majors will allow third-parties to manufacturer and distribute CDs, while the labels focus on digital distribution. In buying CD distribution rights, Anderson is one-step closer to becoming the music industry's backroom, but if it wants to become retail's backroom, it will have to cut a similar deal for DVDs and Blu-Ray.
Sony DADC retained the CD manufacturing business for UMG, EMI and Sony as well as handling video and video-game distribution for the former two majors.
As a result of the deal, Sony will shutter its distribution centers in Fishers, Indiana, which will close in September, and Carrollton, Georgia, which will close in the first quarter of 2013. Consequently, 248 employees will lose their jobs at the Fishers DC while and 105 employees will be terminated at the Carrollton warehouse.