Nick Mango

The Vinyl Bailout - Part 1

About 3 months ago I wrote a post called Currency of a Culture, where I discussed “Flipping”, which is one of the biggest problems currently plaguing vinyl collecting. At the end of that post I briefly talked about preorders, and why they began. Ever since then I’ve been thinking about preorders, the problems with them, how they got a bad rap, and what drives the continued need for them. As I contemplated these things, I then began to consider what preorders do to not just current music sales, but also the future of music sales. Meaning, what happens when the customer thinks the risk now out weighs the reward, and decides to not order anymore. So I thought I’d talk a little bit about preordering from the perspective of a collector, and a internet business owner. Hopefully I can provide some insight into why labels do them, why they sometimes go completely wrong, and then maybe theorize on how these things could potentially hurt the industry as a whole.

The internet has provided the independent music world with the ability to grassroots start any business they desire, and the most obvious music business to start, is a record label. A label that probably has no experience ordering complex products, a comprehensive way to handle customer service, or any pull in the industry what so ever. Good intentions and love for music they have an abundance of, but those things don’t make customers happy or get your product made any faster. But at the root of small label problems is seed money or risking seed money. Either the label doesn’t have money, but has the desire, or has the money, but doesn’t want to risk it. Whichever it is, preorders are used to rectify the problem. It doesn’t take a genius to figure that out. This is just the beginning though. Many things can go horribly wrong post preorder. Especially when you do it too early. Let’s look at some of those.

Getting down to payment

Most people forget that before a plant can even send out the test presses for approval, a whole host of other things require cash  up front. For instance mastering for vinyl and getting the lacquers made. And if the label has no cash, they might feel tempted to start a preorder early. The general consensus among collectors and customers is if you’re doing a preorder, you should at least have approved test presses. Most assume you’re in production already. But what a lot of customers don’t realize is the plant has their own money concerns, and the label may not be doing a preorder for profit. Most of the time they’re doing it for the plant’s profit. A label, especially a small one, doesn’t just call up a plant, say they need a thousand records and the plant flips a switch. They want their down payment. Sometimes they want the whole payment. This payment can really screw up a release date if the label tries to use preorder money to release a record. The most common example is if a label needed to sell 250 copies in the first week, and they only sold 100, that would shift the release date out. A release date they’ve already told the world was legit. This is why seed money is so important.

Volume & Control

Another issue that can happen post preorder is the plant could push back, or even shut down your order. Yes, it does happen. You always hear about “plant issues”. Which a lot of time is code for “We’re having cash flow issues”, but sometimes it’s volume related. If a plant gets a rush order from an important client, the small label will most likely get bumped because they don’t have the volume to scare a plant into caring about them. The label could also be on the “spare time” list. That’s the list of clients that get their job run at the plant’s discretion. If they have the time, they run it. If there’s someone more important waiting, they’ll bump you. Volume also contributes to down payment amounts. If you have volume, you might have a low down payment, or you might have “Terms”. Terms, if you don’t know, is when a manufacturer allows a buyer a certain amount of time to pay the balance. This will let a label get their product without needing to pay up front. It’s almost like preordering in a way. We both give the label something of value and trust that they’ll return something of value on the agreed upon date. So volume is a major concern for labels. Once again though, a small label is usually the one at risk. It keeps adding up right? A small label with no seed money or pull in the industry, takes a huge risk in releasing a record. So many things can go wrong.

Test Pressing Approval

Sure there can be delays that aren’t related to money. What about test pressing approval? Items get lost or destroyed in the mail all the time. Or maybe the plate was made incorrectly, and you need to reject the test presses. This is why releasing a record for preorder before you have approved test presses, isn’t recommended. I’ve seen test presses get rejected 3 times, and if a plant can’t get a plate right, how can you trust them? You can’t, but if you did the preorder already, how are you going to add a month to the release date? Customers will tear you apart. They don’t care about problems, they care about results. They don’t want explanations, they want their record. They don’t understand that switching plants is the best thing for the release, they just want you to get it right the first time.

This was just a few ways a preorder could get completely screwed up. So how does this affect the future? Well, as more and more people want to release a record, the more issues will arise, and the more pissed off customers will get. This word “bubble”, a word that I hate so damn much, could be used to describe the small label boom we’re going through right now. But credit only lasts so long. At some point, labels that aren’t spending their money, are going to have to get the money back from releases.

To put some stock into the bubble idea, I’d like to give you a theory I have concerning sales of vinyl that’s in stock, and vinyl that’s a preorder. To recap, when preorders were a new practice, customers thought it would be a great way to reserve their copy early, and make sure you got the rarest version. And there weren’t many problems in the beginning. But the combination of the internet and preorders being common practice, made the small label possible for anyone. Now preorders are mainly used in place of seed money, not cash flow. Which means more problems happen. So with this in mind, are people ordering less now that they know there’s a possibility of delays? There’s also the fact that when a label has the records in before they put them up for sale, they usually promote this very prominently. “This is NOT a preorder. The records are in, and will ship this week!” You don’t see many labels really promoting the fact that the album is a preorder. “This is a preorder! Order now and we’ll ship in a month!!” Doesn’t really roll off the tongue, now does it? So why do labels go out of their way to tell the customer that they can get their album now? Well cause they know it’s likely to increase sales. And if preorders are viewed as the less desirable way to create sales, then clearly preorders with delays would be even worse. So why not stop doing preorders and only put the album up when they have it in? Uh Duh, like I said, preorders are now about seed money, where as in the past, they were about cash flow.

Too conclude part 1 of my continuing post about vinyl in the 21st century, I think we all need to ask ourselves a question: Are we creating the vinyl industry by doing preorders? Meaning, are we in a sense giving the vinyl world venture capital to sustain itself? It’s a great question that I’d love to know the answer to. I’m from the time when there was no internet. You got your vinyl at shows or stores. Do I wish more labels had the records in stock before they put them on sale? Sure, anyone would. But I also love the fact that anyone can release a record. If the vinyl industry tanks because people don’t want to preorder anymore, a lot of great bands are going to get missed. Bands that I’ve stumbled across and fallen in love with. Not to mention all the great friends I’ve met because of trading and blogs. So I definitely don’t want preorders to die, if it means the diy label will die with it.

On that note, I will stop here and start preparing for part 2, which will consist of ways for small labels to increase sales, and avoid issues. They’ll be tips and tricks, rules to release by, and probably some theory on the amount of vinyl that should be pressed.

I’d love to hear from any labels that would like to contribute to the next post. Anything you can add as a good rule or tip, would be great. Please get in touch via the contact button at the top.