From last weeks Business Week
In 1990, as music megastores were taking over city blocks and CDs were spinning LPs into relics, Marc Weinstein launched what seemed like the wrong company at the wrong time. Weinstein, who managed San Francisco's legendary Streetlight Records Ltd. for seven years, went ahead and started Amoeba Music Inc., a Berkeley (Calif.) record shop devoting half its inventory to used and rare vinyl
To do that, he and two co-founders pooled $325,000 from loans and savings, then took over a dilapidated 3,500-square-foot storefront used mostly by homeless people. Its first day, Amoeba took in $10,000. "We've been busy since the day we opened," says Weinstein, now 48 Amoeba's success defies the industry's malaise. Its sales grew 6.5% in 2005, to $60 million
, even as industrywide album sales fell 7.2%, according to Niel- sen SoundScan.
More than selection distinguishes Amoeba. The company doesn't take retail display allowances from record labels, so the CDs that get displayed are the ones staffers enjoy. Those 520 staffers know their stuff: Before being hired, each one must listen to a random box of CDs, then brief Weinstein on the artists. Employees make between $9 and $20 an hour, with Amoeba paying half their health insurance premiums after six months. After two years Amoeba foots the entire bill.
To launch the record label and Web site, Weinstein and his partners will be trading on their credibility as music zealots. "We can easily make money selling 50,000 units," says co-founder Dave Prinz, because Amoeba will spend much less than the majors on manufacturing, distribution, and marketing. Aram Sinnreich, a partner at Los Angeles media consultants Radar Research, agrees. "The majors have developed an inverse economy of scale," he says. "They are duty-bound to spend and sell an ever-escalating volume." Amoeba's first efforts will be an album of unreleased material by the late country rock pioneer Gram Parsons and works by emerging Gypsy jazz artists.