Amoeba Music

Business Week Online

Marc Weinstein says his record stores thrive despite file-sharing and chain-store rivals because they focus on the basics: Product and customers.

 In 1990, vinyl records were thought to have gone the way of the dinosaur -- and indie record shops were said to have gone with them. But Marc Weinstein believed music aficionados would always need a home. So he co-founded Amoeba Music in Berkeley, Calif. Today, the shop that Weinstein expected to be "a little local record store that earned us a living" has blossomed into a $50 million business, with spin-offs in San Francisco and Hollywood. Arguably the world's largest independent music store, Amoeba sells one of the most extensive, eclectic, and coveted collections of new, used, and out-of-print records, CDs, DVDs, and posters.

Staffed with knowledgeable music lovers like Weinstein, the stores manage to remain intimate and, well, groovy, despite taking up more than 25,000 square feet of retail space. Collectively, Amoeba stocks over 2.5 million titles spanning every genre, from rock to Pakistani qawwalli. "We're a giant superstore with the personality of a neighborhood store," says the 47-year-old Weinstein, who has worked in a record store in some capacity since his high school days in Buffalo, N.Y. And although Weinstein doesn't own an iPod and has never downloaded music, the Internet remains central to his company's growth strategy. BusinessWeek Online reporter Stacy Perman recently spoke with Weinstein about his counterintuitive approach to business, and staying independent in the era of record-store chains. Edited excerpts of their conversation follow. Q: You decided to open Amoeba, an independent shop, at a time when the big record chains were taking over. Why? A: My plans weren't based on the industry trends but on my personal life. I had been managing Streetlight Records in San Francisco for seven years and I had gotten to the point where I had the money and a good partner. I always felt that I knew what the customer wanted, and there was no model that correlated to that anywhere around me. Based on my experience and my idealistic view of what a record store should be, we created a model based on a trading-post approach -- collectors wheel and deal at the front and we trade in a huge inventory of new and used records. Q: Music sales overall seem to be in a slump. How do you account for your continued success? A: We know our core customer. They are musicians and fanatics with an encyclopedic knowledge. They may be niche, but we cater to all areas of interest covering a lot of ground. People are into music for different reasons. We make absolutely everything available. When you group together all of them, there is a huge number of niche customers. Q: What makes Amoeba unique? A: We have a depth of inventory that you can't find even in the superstores. Here, it's an exciting place to be, on both sides of the counter. There's a passion produced that's unparalleled in the world. We aren't selling vacuum cleaners. We're selling art. Unfortunately, the chain stores lost that electricity in the air. They follow the bottom line and took away the heart and soul of the business. Q: You say the energy and enthusiasm of your employees is essential to your success. What do you look for when hiring? A: I'm always looking for a type of person who is self-motivated, into our collective credo, and are socially adept. They can cut loose and figure out what needs to be done in their own way. We don't have a typical management hierarchy. Q: How have you managed to translate and maintain Amoeba's culture while opening new shops in new locations? A: Each store is run independently, based on the community they're in, even though they're similar. It's an almost magical culture. We believe in independent music and we spread the word to the world. There's so much great music that you're not hearing. You should hear it. That's what our ethic is based on, and it's carried through everything we do. We're on a mission. Q: Will you continue to add new stores? A: No, we will focus online, growing our Web site, so that people all over the world can take advantage of who we are. We've been offered great locations but we aren't too excited to spend our lives on airplanes. When I think of expanding, it's a question of maintaining a personal life. Q: How has the whole digital-downloading phenomenon impacted your business? A: In the short run, it has actually helped us. Our most knowledgeable customers use it as a tool to do research. The computer is chock full of information. File-sharing services are known as places to steal music, but often people use them to find out about music and other artists. If, in the long run, people stop making CDs and it's all digital downloading, it could impact our business in a negative way, but we'll be poised and ready. Then we plan to be selling downloads online. We have a lot to offer in the way of advice and we can position ourselves down the road. Q: What happens when people come in to sell their records? A: Well, we've found many incredible things in the record sleeves. People tended to hide things during the '70s in their record jackets. We found naked pictures of a guy and his girlfriend in a Lynyrd Skynyrd album. And there are certain notorious records. For instance, 50% of the time when we open up the Allman Brothers' Live at the Filmore East, we find stems and seeds. The fold-out jacket opens up and it was the perfect place to roll a marijuana joint. Q: What are you listening to now? A: I'm mostly into jazz, and I'm an improv music lover. Right now, I'm into Sufjan Stevens' [Greetings From] Michigan. It's an incredible mix of styles, rootsy to progressive hip hop. I'm also listening to Meshuggah -- they're Swedish, the fastest prog [progressive] metal band on earth. And John Zorn's Smith/Ibarra/Zorn: Birthday Series Vol. 8, a series of CDs celebrating Zorn's 50th birthday.

Edited by Rod Kurtz