Can the Vinyl & CD Business Survive Coronavirus?

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Facing the COVID-19 pandemic, music shops are shuttering -- and struggling to survive -- and Amazon is focusing on household goods. What's in store for physical retail?

In the week ending March 19, Niall Horan sold 26,000 physical copies of his album Heartbreak Weather -- which made it both the most popular physical album of the week and a sobering sign for the future of physical music. Stores are shutting down to stop the spread of the coronavirus, and in mid-March Amazon announced it would not re-stock records and CDs until at least early April. As CD sales continue to decline and the high-margin vinyl business faces manufacturing and distribution problems, can the physical business survive?

Retailers were already having a rough year. Problems at Direct Shot Distributing have made it hard for stores to get releases promptly, and in February a fire destroyed the Apollo Masters plant, one of two facilities that make the lacquer plate needed to press vinyl. "It's hard not to be a conspiracy theorist and wonder if the powers that be in the music industry are trying to get rid of physical music," jokes one indie label owner.

Most music retailers that spoke to Billboard said that they can continue to cover their payroll and rent for weeks -- but not months. And if too many physical stores are wiped out, will labels continue to manufacture physical products? "That is the great unknown," says Dean Tabaac, who runs Alliance Entertainment's indie distribution arm, AMPED. "We are all in new territory."

Before the weekend of March 21, at least 120 U.S. record stores had closed because of a government mandate or social concern about spreading the virus. Some are selling music online, and a few others are offering curbside pickup.

"Every day there is something new from the government, whether that be local, state or federal," says Duncan Browne, general manager of Newbury Comics, which has 28 stores in New England and New York State -- 23 of which have closed temporarily. The Bull Moose and Silver Platters chains have closed all of their shops but continue to do business on their websites and through retailers like Amazon Marketplace.

"I am resigning myself to the fact that the city and state are going to make decisions on how my store can operate," says Silver Platters owner Mike Batt.

Already, Washington, New York, California, Illinois and several other states have ordered all non-essential businesses to close. And as the virus spreads, retailers are also worried about the possibility that manufacturing plants and distribution centers will shutter. So far, Alliance Entertainment's distribution facilities in Pennsylvania and Kentucky are still running.

Amazon, which is thought to account for about 15% of the vinyl business, has said it will not buy more product from music vendors until April 4, in order to focus on selling household goods, but the company is still fulfilling orders for music it has in stock, and Alliance is filling others when Amazon directs it to do so.

Until recently, this year was shaping up to be strong: CD sales are down 8.3% compared to the same period last year, a far slower decline than in recent years, and vinyl sales were up 45%, even amid distribution problems. Retailers believed that this year's Record Store Day -- now postponed from April to July -- was going to be the biggest ever, and retailers are still putting in big orders, according to several labels and distributors.

Consumers still want to buy vinyl, even if many of them may not have as much money to spend for a while. "The absence of vinyl records for several decades wasn't a death sentence for that format," says a sales rep for a CD manufacturing plant. "The landscape of who's left and what they do will surely change, but that doesn't mean there won't be other ways to twist a pipeline to get consumers what they want."