Wal-Mart Wins, Best Buy Loses

Recs

6

It's a battle of the bands, as AC/DC's Black Ice slugs it out with Guns N' Roses' Chinese Democracy.  

It's a battle of the brands, as Wal-Mart (NYSE: WMT) and Best Buy (NYSE: BBY) have respective exclusivity of the recently-released studio albums.

The Wall Street Journal took a look at both releases earlier this week. It's not even close.

First two weeks on the market

CD Sales

Black Ice

1,055,000

Chinese Democracy

318,000

Source: Nielsen SoundScan.

The rub for Best Buy is that it already paid for 1.3 million copies of GNR's album in the deal to secure initial retail exclusivity. Sales fell sharply in the second week and are unlikely to recover unless the record scores a commercial hit.

That is certainly possible. There are a few GNR-style rock ballads that sound radio friendly on the disc. I would also be shocked if "Better" doesn't get released as a single soon, since it's a much better choice than the title track, commercially speaking.

However, going by today's report card, we can probably begin wondering why Best Buy dropped the ball here. It didn't necessarily bet on the wrong horse. Neither band has had a stateside radio hit in ages, so both releases were gambles.

This doesn't mean that Best Buy shouldn't learn from what Wal-Mart did right. More than just a CD release, Wal-Mart went all out to promote the exclusivity. It raised the stakes by loading up on AC/DC apparel to sell and even teamed up with Viacom (NYSE: VIA) and Electronic Arts (Nasdaq: ERTS) to stock an exclusive AC/DC expansion pack for the popular Rock Band video game series.

Wal-Mart took a page out of the "360 deals" that venue promoter Live Nation (NYSE: LYV) has inked in recent years, cashing in on the AC/DC franchise across several revenue streams. It didn't simply tether itself to just one studio album or pin all of its hopes on a mercurial singer with a finicky sense of promotion.

In the end, Wal-Mart gets it. Best Buy may appear to devote more shelf space to music in its stores than Wal-Mart, but the discount department store that Sam Walton built is the country's leading CD retailer by girth alone.

It's no surprise to find that the company that bet on the bobbing Australian guitarist in a schoolboy outfit schooled the consumer electronics powerhouse that should know better.

Forget stocks for a moment. Would you rather go see Guns N' Roses or AC/DC live? Post your thoughts in the comment box below.

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Wal-Mart Stores and Best Buy are Motley Fool Inside Value recommendations. Electronic Arts and Best Buy are Motley Fool Stock Advisor picks. The Fool owns shares of Best Buy. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has been a music fan since birth. His band was once signed to Sony's Columbia Records label many moons ago. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 18, 2008, at 11:34 AM, TMFTom7 wrote:

    Of course, it doesn't help that "Chinese Democracy" just isn't very good, and that "Black Ice" is awesome. Few bands age well - GNR didn't and AC/DC did. :)

  • Report this Comment On December 18, 2008, at 12:21 PM, Neely2005 wrote:

    Well let's see

    "Chinese Democracy" was # 12 on Rolling Stones Top Albums of 2008.

    Black Ice was #41.

    http://www.rollingstone.com/news/story/24958695/albums_of_th...

    "Chinese Democracy" has sold well outside of the USA.

    The Best Buy Exclusive and No Promotion by the band have definitely hurt sales.

    There just aren't enough Best Buy locations compared to Wal-Mart.

    There are Only about 900 Best Buys in the USA compared to about 5000 Wal-Mart's in the USA.

    So really it's not a surprise that USA sales have suffered.

  • Report this Comment On December 18, 2008, at 1:22 PM, overkill99 wrote:

    FYI Rolling Stone is a pop music magaizine. No fan of rock n roll cares what that mag says. If you like Britney Spears than you would cite Rolling Stone. The reality is GNR was on Itunes US's #1 retail music sales) and AC/DC was not. AC/DC was #1 worldwide in 29 coutries with no walmart deal. GNR flopped world wide (#1 in 2 countries and died down the charts the next week), not even 1/8th of AC/DC's world sales. This week GNR is down to #29, in the US, AC/DC out a month eralier is #8 and sold 60,000 more units for the week.

    Bottom line - GNR is a crappy pop CD, AC/DC is a rock CD. The people listend, and the voted with their pocketbook.

  • Report this Comment On December 18, 2008, at 2:36 PM, Neely2005 wrote:

    Yeah Rolling Stone the Most Respected Music Magazine in the history of music is a pop magazine :rollseyes:

    Well by your logic I guess that Britney Spears is better than AC/DC because she sold more albums.

    "Chinese Democracy" = Musical Evolution.

    "Black Ice" = AC/DC making the same album yet again.

    Oh & BTW "Chinese Democracy" was the #1 Selling Album in the world:

    http://www.heretodaygonetohell.com/news/shownews.php?newsid=...

    It's sales are really only suffering in the USA.

  • Report this Comment On December 18, 2008, at 3:07 PM, overkill99 wrote:

    hahha - Rolling Stone ripped Led Zep in their prime - yeah GREAT respected rock magazine rips Led Zep - OMG

    2008 RS Covers - Britney (2x!!), Jonas Brothers, Obama, - yeah that sounds like a true rock magazine - lol

    One major criticism of Rolling Stone involves its apparent generational bias toward the 1960s and 1970s. One critic referred to the Rolling Stone list of the 99 Greatest Songs as an example of "unrepentant rockist fogeyism." [15] In further response to this issue, rock critic Jim DeRogatis, a former Rolling Stone editor, published a thorough critique of the magazine's lists in a book called Kill Your Idols: A New Generation of Rock Writers Reconsiders the Classics (ISBN 1-56980-276-9), which featured differing opinions from many younger critics. [16] Conservative columnist Jonah Goldberg criticised the magazine saying that "Rolling Stone has essentially become the house organ of the Democratic National Committee." [17]

    The website Shoutmouth criticised Rolling Stone for reconsidering many classic albums that it had previously dismissed. Examples of artists for whom this is the case include, among others, Led Zeppelin, AC/DC, and Nirvana. For example, Led Zeppelin was largely written off by Rolling Stone critics during the band's most active years in the 1970s. However by 2006, a cover story on Led Zeppelin honored them as "the Heaviest Band of All Time." [18] A critic for Slate magazine described a conference at which the 1984 Rolling Stone Record Guide was scrutinized. As he described it, "The guide virtually ignored hip-hop and ruthlessly panned heavy metal, the two genres that within a few years would dominate the pop charts. In an auditorium packed with music journalists, you could detect more than a few anxious titters: How many of us will want our record reviews read back to us 20 years hence?" [15]

  • Report this Comment On December 18, 2008, at 3:52 PM, Neely2005 wrote:

    http://www.rollingstone.com/rockdaily/index.php/2008/12/15/r...

    Chinese Democracy Voted the 5th Best Album of 2008 by Rolling Stone Readers.

    It's a great album if you're open minded enough to give it a chance.

  • Report this Comment On December 18, 2008, at 10:11 PM, Clint35 wrote:

    Who's the better band? No contest, AC/DC. Guns N Roses was a great band for a short time. But their not the same band anymore, only one original member is left, Axle Rose. I've heard a couple thirty second clips from some of the new GNR songs and I don't think they're that great. You can't always tell how good a song is just from a short clip like that. But none of them made me want to hear more. I haven't heard any of the songs from AC/DC's new album, but I'm willing to bet I'll love them. The main reason is AC/DC is a very good band and they don't have to actually "try" to make good music. They just play what they feel like playing and the songs usually end up being good. That's why AC/DC is a better bet and why WalMart won this little contest because they bet on the better band. And I'd definitely rather see AC/DC live.

  • Report this Comment On December 19, 2008, at 4:09 AM, PeteDODBLG wrote:

    There is a difference between a rock band and a hard rock band...AC/DC is a true HARD ROCK BAND...over 18 studio albums spanning over 4 decades, over 200 million albums sold world wide, inducted into rock n' roll hall of fame...need i say more. Real rock bands don't play piano's...they play riffs and rock the crowd!! I'm glad to see a resurgence of REAL "rock n' roll!!!

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