Coronavirus clobbers music retail, as Amazon halts trade orders of CD and vinyl

One of these days, MBW will have some positive news for you all.

Sadly, right now, the knock-on effects of the spread of Coronavirus (COVID-19) keep landing in the music business – and none of them are good.

The live music sector has obviously been the hardest hit, with a slew of event cancellations and postponements announced for the coming weeks and months. Typifying these difficulties, Live Nation’s share price finished trading down 6.6% today (March 17) at $33.92 – less than half the size it was just 22 days ago.

Now, serious concerns are also growing over the immediate future of the physical music sector, and the retailers that support it.

This afternoon, it emerged that Amazon has temporarily paused its B2B ordering for products that are not “household staples, medical supplies, or other high demand products” from vendors and sellers in the US and Europe.

What that means for a raft of record labels and distributors: Amazon won’t be making new trade orders of CD, vinyl and merch products into its warehouses until this “temporary pause” ends – which won’t arrive until at least April 5.

Amazon is, at least, extending delivery windows for existing agreed orders with suppliers.

(Update: In the UK, prominent indie label distributor Proper Music Group says that Amazon is continuing to take physical music orders in the wake of this memo.)

Adding to the turmoil, major physical retailers have shut up shop in major European territories.

Retail stores are already closed in Italy, Switzerland and Austria, while measures confirmed by French retailer FNAC today will see the entertainment chain’s physical outlets in France, Spain and Belgium “closed until further notice”. (Following government direction, the only retailers expected to stay open in France in the days ahead are food stores, tobacconists, chemists and petrol stations.)

Over in Germany, new rules came into force today that will see shops, malls and outlet centers shuttered in the market, as the German government accelerates a program of “reducing social contact”.

“There have never been measures like this in our country before,” said German Chancellor Angela Merkel on Monday (March 16). “They are far-reaching, but at the moment they are necessary.”

The United States is yet to see equivalent shutdown measures put in place, but the likes of retail giants Walmart and Target have reduced their opening hours in order (in Target’s words) to give staff “additional time for cleaning and restocking each day”.

And in the UK – in addition to supplier angst caused by Amazon’s rejection of new wholesale music stock – sources tell MBW that large supermarket chains are now seconding entertainment staff (and, presumably, floor space) to focus on food and other household essentials.

One senior industry source, having heard the Amazon news, told MBW today: “It really is one punch in the face after another.”

In an email to sellers sent this week, Amazon said: “We are closely monitoring the developments of COVID-19 and its impact on our customers, selling partners, and employees.

“We are seeing increased online shopping, and as a result some products such as household staples and medical supplies are out of stock. With this in mind, we are temporarily prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so that we can more quickly receive, restock, and deliver these products to customers.

“For products other than these, we have temporarily disabled shipment creation.”

According to the RIAA, physical music accounted for $1.15bn in retail sales in the United States in 2019, down by just 0.6% year-on-year.

New figures from the BPI show that UK trade revenues (i.e. money going to labels and artists) from physical formats last year stood at £215.8m ($261m), down 10.4% YoY.Music Business Worldwide

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