With a total stock of more than 85,000 albums, Manifest Discs & Tapes was a music lover's mecca in the North and South Carolina towns where it operated. And despite an industry-wide downturn in CD sales in recent years, all five Manifest stores were turning a decent profit right up until the end of 2003.

So there was shock all around when chain owner Carl Singmaster announced in late December that Manifest would close all locations and lay off all 100 of its employees. There were still plenty of consumers eager to browse the bins, Singmaster explained, but his company's prospects looked bleak and were getting bleaker.

"I felt like I needed to take this opportunity to exit," Singmaster said in a telephone interview. "Indies in the smaller markets face a very risky environment."

It's not just the indies, and it's not just the smaller markets. On Thursday the parent company of Tower Records, which has four stores in the Washington area and a few dozen more in major cities nationwide, was on the verge of filing for Chapter 11 bankruptcy, according to news reports, having failed to find a suitable buyer. In September, the bankrupt Wherehouse Entertainment chain was acquired by a company that promptly said it would close 35 under-performing stores. Mall chains such as Sam Goody are hurting, too.

As pop's superstars strut down the red carpet in Los Angeles tomorrow night for the Grammy Awards, there's something close to panic in the retail trenches of the music business. The record store is in serious trouble. Sales have been hammered by Internet piracy as well as competition from big-box retailers, such as Best Buy and Wal-Mart, which are two of the nation's leading music vendors. Online CD stores, such as Amazon.com, are gaining momentum, too -- 3 percent of the market in the most recent survey by the Recording Industry Association of America, up from zero eight years ago.

Now a new threat looms. The market for legally downloadable music is tiny today, but the success of Apple's iTunes online music store and the rush of rival services to the marketplace is expected to gobble up an ever-larger share of the pop music pie. A recent study by Forrester Research, which examines technology trends, predicts that in five years fully one-third of all music will be delivered through modems, and the CD itself will be passe, if not obsolete, in the years after. This isn't necessarily bad news for the record labels, but it could be lethal for brick-and-mortar stores.

"I tell retailers they need to get out of the plastic business," said Josh Bernoff, the Forrester analyst who wrote the report, titled "From Discs to Downloads." "Two-thirds of the people who currently download say that when it comes to music, it isn't important to them to hold a physical object. They're done with the CD. They just care about the songs."

Complete Story

Before you buy in too deeply to Forrester Research...

sucess of Itunes? it hasn't been open long enough to be a sucess. As a business owner myself (one and a half years) my store is doing OK but not a sucess yet. that takes time to get established and find the right formula.

"Two-thirds of the people who currently download say that when it comes to music, it isn't important to them to hold a physical object. They're done with the CD. They just care about the songs."

Bullshit. Pure bullshit. I know that more than that two-thirds want the CD. These are just figures they're pulling out of the sky. I'm one of their one-third that wants the physical thing, and the majority HAS to want the CD.

Most of the people who buy their music are probably kids, and that's only when they have the money.

If CDs are replaced by MP3s and the like, I'm not buying ANY of them. I'll get what's offline, thank you very much.

Forrester Research, which examines technology trends, has yet to call anything right in the music business, as far as I can tell.

I keep running into these guys' early predictions and they've NEVER been right.

undeath is right about the CD. that way it can be played in a number of different mediums. we sometimes play our cd's on the computer, our DVD player, or take them with us in a car on a trip. there'll always be a demand for CD's

Number one, that "pie" that Itunes and the other are trying to eat is SHRINKING because of the labels and RIAA's own doing. Number two, that piece that Itunes is getting? Yeah, you do realize that Apple is LOSING money with Itunes right? But Apple has other departments that do make money, and are probably getting kickbacks from the labels for doing Itunes.

As for the CDs... you need something more modern. From the record to the cassette to the CD to the DVD, you need something affordable and desirable. Right now you're still stuck with a 10 year old physical product, at unaffordable prices. So they're certainly not going to desirable.

As for "piracy"... The only form of that [incorrect usage of the] word that would make the industry actually lose money is CD burning vendors selling illegitimate copies of... guess what... CDs! P2P Free Filesharing, if you actually look at the numbers and not the RIAA's bullshit, shows the people that use it increasing in purchases. But since they're too busy suing us and forcing a boycott, they're screwing themselves on two fronts.

If the industry goes down, they have only themselves to blame.

The RIAA wants to kill the CD so they can sell downloads with DRM that forces the consumer to kepp buying the same product.

Wal-mart? WAL-MART?!?! a MAJOR PLAYER!?!?!

hello? *knock knock*
i hear wood.. where is the pink matter.
i buy from media play and best buy.
amazon is good too. i buy.. well "bought"
wherever i could.
i no longer buy american tunes. its sad and takes away from my enrichment, but what can i do when they sue 12 year olds?

i have an idea.
why not look back at the riaa rate cuts.
note that they are only for stores that can purchase in mass. this, of course, excludes small stores and indies. so while large chains can afford to cut their prices thanks to healthy riaa discounts, the indies are forced by their costs to keep their prices high.
there is your true culprit my good misguided author.

The "misguided author" works at the Washington Post.

i couldn't even finsih this. such bullshit. i mean, my friend owns a record store that he opened in the summer, selling mostly vynils and obsecure/indie records, and he has had days where he made not even one sale, however he is doing great and moving to a larger downtown location soon. I don't like an article telling me what I think, then again i coudln't finish it..

and as for CD's becoming obsolete, bullshit, i didnt buy a 300$ cd player for my car a year ago to not use it. Are they thinking that everyone owns a cd burner, or a computer for that matter? CD's are much more practical sometimes...

Well personally I'm a vinyl man myself

There is a lot to be said for acquiring music in mp3 format, if the quality is good.

But I still like CDs also, for the reasons that compmore expresses. And because you can use CDs to 'group' music into your own customized program, if you burn them yourself. There is plenty of artwork on the web to download in order to create your own jewel-case art, and plenty of programs for customizing that jewelcase art.

Finally, as gdZ has pointed out in the past, if you really want good quality, it is hard to beat a commercial CD for your source of music.

by used Cds, awehr. Wherehouse Music is a great place to find what you want, best of all riaa gets buttkiss for the resale of cds.

"A recent study by Forrester Research, which examines technology trends, predicts that in five years fully one-third of all music will be delivered through modems, and the CD itself will be passe, if not obsolete, in the years after."

If people were going to replace CDs with digital music, it would have already happened. Look at the rate at which people download over P2P.. Everything you can find in a CD store is available for free on P2P Networks, yet over 680 million CDs are still being sold every year. CDs aren't going anywhere.

Independent record stores are suffering because of big chain stores who can afford to sell CDs with only a 2 dollar markup, this just makes it impossible to be competitive. Plus, if you can purchase the full length CD online for 3 dollars less than you could if you went to the store, then what's from stopping you?

The only way independent stores will survive is if they expand into other areas of entertainment (movies, video games, books, whatever...)

But then they may as well just become another Barnes & Nobles...

Fact of life - technology advances.
At some point, the makers of horse-drawn carriage parts had an enormous market - now they're a novelty item.

Much as I generally dislike "industry prophets for hire" I said what he's saying now four years ago. The future is not that far away. The business was established when the Labels abdicated their the market in favor of trying to turn back the tide with a teaspoon (stupid lawsuits that do nothing but further anger their customer base). When asked by the owner of a small southern retail chain what he should invest in for the future, I replied, "coffee makers and a pastry case". The idea of the brick and mortar store stocked with tens of thousands of overpriced discs is done. The future store will have mutliple terminals where people can listen to and preview music (for those of you old enough, not unlike the listening booths of 50's record stores) and the customer will choose what they want and the store will burn it for them, print the art and collect a fee. If the labels had their shit together they would set these up themselves in every mall in the country. But they don't.

The one thing the brick and mortar can offer, which nearly every one of them has ignored for the last three decades is, real customer service. Knowledgable staff that truly loves and knows about music. They can offer a place for music lovers to gather and share those passions. Think of a coffee shop with computers. That, my friends, is what I think the music store of the future will offer.

The challenge is before two parties right now. With the Labels stubbornly and stupidly clinging to something that consumers still don't want and the media consolidation which has only served to make them a less valuable tool for the music consumer, the gauntlet lies before the artists and and the entrepeneurs of the future. The artists have to finally take some responsibility for their own careers not settling for a string encumbered advance and the entrepeneurs have to be bold enough to create these havens for music lovers.

At some point in the future, the quality of MP3's as a viable medium will be addressed. It's a software issue and one that isn't a terrible hurdle. The idea that "royalties" for artists could be tracked and paid is a simple one.

The real question is, bogus predictions of what percentage of the consumer market wants what, is when will enough consumers stop buying these overpriced plastic discs at mall stores and big boxes and start really turning the tide?

Tower is gone. They'll be back but it won't last as the spirit of Tower is irrelevant today. Wherehouse deserves/ed a death for adding little or nothing to the value of what they sold. The Musicland Group has been staggering along supported by god knows what, I suppose a lack of anything else for that unimaginative sector of music buyers who don't mind buying their music at prices over MSRP. The others, they're just as doomed. The used cd continues to erode as most of the indies who do it are just as self-importantly blinded to what's taking place as the big chains (in their own small way).

That's just my opinion and worth exactly what it cost you to read it.

must say, Manifest was a GREAT store, tons of indie music for any taste there is out there, when i lived in colubmia, sc used to go there all the time to search for new/interesting music...it is a sad one to see go