The Business Blog at Intuitive.com

Dave Taylor has been involved with the Internet since 1980 and is widely recognized as an expert on both technical and business issues. He has been published over a thousand times, launched four Internet-related startup companies, has written twenty business and technical books and holds both an MBA and MS Ed. Dave maintains four weblogs: The Business Blog at Intuitive.com, Ask Dave Taylor, Dave On Film, and Attachment Parenting Blog. Dave is an award-winning speaker, sought after conference and workshop participant and frequent guest on radio and podcast programs.

Wherehouse buys Musicland, like dinosaurs wrestling in the tar pits?

I'm just baffled by this maneuver: According to DNS Retailing Today, Trans World Entertainment has proffered a bid to buy out Musicland Holdings, owners of Sam Goody, Suncoast Motion Picture Co., and MediaPlay.com. TWE owns about 800 retail music and video stores under the brand names FYE, Coconuts Music and Movies, Strawberries Music, Wherehouse, CD World, Spec's, Second Spin and Planet Music. [ref - registration required]

The shocker here is that Musicland Holdings, with its 800, no, 400, no, sorry, 345 retail outlets, just moved into Chapter 11 bankruptcy last month, immediately after the Christmas season, a season that one can only conclude was less favorable to Musicland's holdings than to online merchants, who enjoyed an excellent Christmas season.

Memo to Trans World Entertainment: the number of retail outlets for full-price audio and video aren't going to change the inevitable outcome of the churn in media sales and distribution. What'll define the future are companies like Amazon.com, Apple's tremendously successful iTunes Music Store and, yes, Wal-Mart.

And then, another year or two down the road, Netflix, Microsoft's online music store, and Amazon's rumored digital media store are going to have a great effect, as is the convergence of high-speed bandwidth and video on demand.

Even walking into a Wherehouse, Sam Goody, Suncoast Motion Picture or similar is like a flashback to the early 80s, with people milling around looking at products while their iPods and MP3-capable cellphones burn a hole in their pockets, screaming "digital! buy digital media!"

I would be most interested in hearing the justification that the Trans World Entertainment management team is offering to shareholders for what seems to me like a terrible blunder, a pointless gesture that simply delays the inevitability of TWE itself fading into a memory as more and more people skip physical products entirely and continue our move to a digital world.

There's a hint in a Newsday article: John Sullivan, executive vice president and chief financial officer at Trans World, explains that "They have good store service. With us tweaking their merchandise assortment, we'll make those stores much better."

We're just supposed to conveniently forget that Musicland hasn't made a profit since 2001 and in the last five years was purchased and dumped by Best Buy and Sun Capital Partners.

Somehow, it's very reminiscent of dinosaurs fighting for territory in the middle of a tar pit, not realizing that within just a few days they'll both be dead and their territorial battles will be but a memory, a footnote in evolution.

But let me ask you, dear reader: when was the last time you bought a physical music CD or video DVD at a shopping-mall based store? I haven't even stepped foot in one for years and years...

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