Everybody says the CD is doomed, but local retailer is expanding

Twenty-two years ago, a pair of Eastside techies (no, not those guys) had a vision.

From that point forward, they said, music would be delivered exclusively on a mirror-surfaced new format called the compact disc. Putting their dollars where their dreams were, they financed the first CD-only record store in the region and one of the first in the nation. They opened it in a modest Bellevue mall and dubbed it Silver Platters.

Record-label reps told them they were nuts not to carry vinyl. But within seven years, the LP was history, and Silver Platters had four outlets.

Several tidal waves have washed over the music industry since then, notably the iPod and Amazon.com, which helped vanquish brick-and-mortar retail giants like Tower Records and Musicland. You can't pick up a newspaper without reading about the impending demise of the CD. Yet, just two months ago, without much fanfare, Silver Platters expanded into the deserted shell of the old Tower Records, at the southeast foot of Queen Anne Hill.

Other CD stores like Easy Street are doing fine in Seattle, but none has been so daring as to take on an additional 42,000 square feet of retail space.

Does this spunky little business know something no one else knows — again?

It just might.

Small rules!

Though the music industry is in a dramatic slump and the CD is probably doomed, small chains like Silver Platters are filling the vacuum left by big ones, said Ed Christman, Retail Track columnist for the music trade magazine Billboard.

"A small, independent operator running his own store is the best record retailer out there," he said. "They are going to be the last man standing."

Silver Platters may be standing tall. With the owners reporting no debt and a strong profit history, it has the flexibility and customer service typical of small chains. Recent shifts in management have sparked some aggressive moves. The warehouse-style Queen Anne store looks pretty much the same, but changes are afoot, and the neighborhood is about to explode.

"There's always going to be a need for CDs in Seattle — in this location, especially," declared Silver Platters president Paul Grant.

Setting records

Really? According to Nielsen Soundscan, which measures such things, since the CD format peaked at 706 million units sold in 2000, the slide has been relentless, down to 586 million last year. In the first three months of 2007 alone, there has been a 20 percent drop over the previous year.

With the demise of Tower, the Seattle area has only one CD chain, FYE — unless you count book-and-music retailers Barnes & Noble and Borders — and even FYE did only 45 percent of its business in music in 2006, making up the difference in such products as movies, video games and consumer electronics.

Grim, to be sure. But the mini-chains see some silver linings.

For starters, the CD may be fading, but it's far from gone. The format accounted for 94 percent of all music sales last year (with downloads at just 6 percent, despite the hype about them), and musicians keep rolling out those shiny discs at an alarming rate.

According to Grant, Silver Platters sold 111,586 music and movie titles in the past year.

"When I started buying here [in 1989], I brought in about 9,000 new releases for the year," said Silver Platters co-owner and buyer Mike Batt. "In the last couple years, it's been 45 (thousand) to 50,000."

"Selection and service"

What's really gone, said Batt, isn't the CD, but artists like Michael Jackson and Fleetwood Mac, who could sell 10 million units, numbers that lured big-box stores like Wal-Mart and Target to take on the record chains in the first place. Now that the chains are gone and the box stores are retreating from music, stores like Silver Platters can clean up.

With their lean overhead, hand-picked staff and flexible response to customers, mini-chains like California's Rasputin and Amoeba, Portland's Music Millennium and Seattle's Easy Street and Sonic Boom are sitting pretty.

"Selection and service, service and selection," Batt repeated like a mantra, sitting on an old stuffed couch in the helter-skelter back office of the gigantic Queen Anne store. "Those are the two things that keep people coming back."

Musical multitasking

Balding, slight, passionate and a natural salesman, Batt (pronounced "Bott") graduated in graphic design from the University of Washington in 1986 and started at Silver Platters the following year.

Grant, who is English, moved here when he fell in love with a Seattle woman he met at a London wedding. Grant and Batt are now minority co-owners of the chain. (The majority share was purchased from the original owners by two silent partners in 2000.)

Hired in 2004, Grant had a retail background but no experience in music, and had previously managed only a handful of employees. Silver Platters has 63.

Boldly self-assured and staccato, but diffident in a British sort of way, Grant said he has turned a profit at the chain the past two years and plans to keep it that way.

"Our overhead is low," he said, noting the Queen Anne store has 14 employees, including one manager, as opposed to the 24 staff and multiple managers Tower maintained. "We end up doing 15 different jobs each."

"Paul spent yesterday fixing the phone system," said Batt.

Pretty big, for a small chain

Batt, the sole buyer for Silver Platters stores, says he can be more responsive to customers than a chain with centralized, computerized buying.

Silver Platters has wisely kept on board 11 former Tower staffers, which includes manager (and jazz aficionado) Herb Sieler and the widely respected Rob Weltzien in the classical department.

Jazz accounted for 12 percent of the chain's sales last year and classical 7 percent, figures well over national averages of about 3 percent each.

The new store has a whopping 58 racks of classical, 43 of jazz and 17 of world music. (A rack holds about 400 CDs.) Though it hardly seems possible, the store has even more discs than the cavernous old Tower — more than 120,000 CDs and DVDs — making it by far the largest retail CD store in the city. DVDs, which make up 20 percent of Silver Platters' trade, fill the center of the store.

Along with an enormous, diverse election and knowledgeable staff, Silver Platters operates a "Silver Certificates" program — a sort of mileage plan in which accumulated purchases net buyers free CDs — which has kept customers coming back as well.

A new view on used CDs

According to Grant, the company was past due for a change. In addition to the expansion, he is targeting some specific profit areas, in particular used CDs, which have a much higher markup than new product.

"We want to own the used CD market in Seattle," he said, eventually integrating new and used discs in the racks.

This can't be good news to his closest record retail neighbor, Easy Street, which does 25 percent of it business in used discs.

"I forecasted a real strong year with Tower's demise," said Easy Street owner Matt Vaughan. "I have to say I wasn't thrilled when I heard [Silver Platters] was moving into the old Tower location."

Grant says there is room for both — "for now."

Riding the wave

The lively neighborhood can't hurt.

A new retail and office complex has risen nearby (on a former Tower site), with a QFC grocery store poised to open; the Hampton Inn is across the street; popular restaurants like Crow and Sushi Land are doing great business; and the Gates Foundation has broken ground for its new headquarters across Mercer. Even better, Silver Platters has a parking lot.

With its concrete floors, warehouse lighting and rock posters, the store itself hasn't changed much from its Tower days, with the exception of the hand-painted sign over the door that says, "fiercely independent" and some attractive flat-touch screens with earphones and staff picks. Inside, the odd empty rack and some hand-lettered signs testify that the store is still a work in progress. The magazine section and most of Tower's extra-musical paraphernalia are gone. A fine new 12-by-16-foot stage for in-store performances stands at the back.

There are also signs advertising a 10 to 30 percent-off sale, meant to get people into the store.

Will they come? Or will the digital revolution eventually render all this a merely nostalgic gesture?

Batt and Grant are bullish. Even if the CD goes the way of the LP, said Batt, a new physical format will take its place. And Silver Platters will be there to sell it.

"There is something in human nature to want to own and hold and have the package in your hand," argued Batt.

Others in the retail industry strongly disagree. One former Los Angeles retailer noted that a new Britney Spears album used to sell 350 the first week, whereas the new Fall Out Boy sold 10. The moment a big star issues a download-only release, the game will be over.

"I have to accept the reality that the music industry is not growing," admitted Grant. "But there will still be a market for tons of years to come. Other people will be dropping by the wayside, but we'll still be here."

At least for now.

Paul de Barros: 206-464-3247 or pdebarros@seattletimes.com