Death of the Niche Market

The death of the niche market is upon us. This has profound implications for our cultural life, which had been on a twenty year slide towards ever-greater fragmentation.

First, the background. Ever since the 1980’s, American cultural life has been fragmenting. First, with the growth of technology allowing catering to diverse and discrete tastes in television and music. Cable and later Satellite TV allowed television watchers to follow Golf, or Motorsports, or Women’s programming exclusively. Not to mention upscale pay channels like HBO or Showtime, home of Tony Soprano and “Weeds” respectively. Music too, particularly popular music, became fragmented, with Punk, Alternative, and Rap forming myriad sub-genres and cultures oriented around them. Everything from Christian Punk to “clean” Rap have fans and a following and of course, fashion and rules for belonging. The internet of course intensified this fragmentation, with first newsgroups, then forums and blogs for the like minded to discuss, say the latest obscure Manga comics, or dance bands from the UK. But all this started back in the 1980’s, as anyone who watched the interplay between Goth fans of say, the Cure, and Rockabilly fans of LA based X can attest.

Nor was this phenomena limited to the entertainment sphere. The phenomenal growth of niche retailers like Sharper Image, or Steve & Barry’s attests to both the opportunity to cater to consumers demand for unique retail institutions and consumer’s willingness to pay top dollar at such places. The growth of the mega-mall, with many small retail spaces expecting lots of passers by and traffic (generated by “anchor” department stores and/or other big draws) allowed retailers the opportunity to reach enough customers without massive advertising and marketing expenditures. Consumers, with rising wages, and lowered costs for food and energy (in real, inflation adjusted terms) were willing to pay extra to possess goods that differentiated them from everyone else.

This had an effect on advertising, much of which supports popular culture, particularly television. NBC built it’s whole strategy from the 1980’s onward towards appealing to a more wealthy audience, even if that meant sacrificing the size of the audience. Shows such as “Hill Street Blues,” “St. Elsewhere,” and “Homicide: Life on the Street,” may not have garnered great ratings, but the critical acclaim and halo effect of the “snob appeal” helped cement NBC as the network for wealthy, status-conscious yuppies in the 1980’s and 1990’s. A tradition carried on with such shows as “My Name Is Earl,” whose premise is amusing wealthy urbanites with the foibles of rural, “white trash” working class people. Think of it as a reverse “Beverly Hillbillies” where it’s Mr. Drysdale laughing at Jed Clampett.

Most of popular culture has been aimed at ever more “selective” fanbases, to paraphrase the movie “Spinal Tap.” Advertisers would pay money to reach selected demographics, mostly young people, and consumers were eager and able to pay money to listen to niche music, watch niche television, and buy niche products. All in an effort in a mass-consumer society to maintain a distinct and individual identity. Which ironically of course was itself a product of the mass-consumer society.

All of this process however, required money. Not just consumer niche spending, driving advertising spending on niche outlets, but investment capital as well. The print version of the Wall Street Journal, July 14, 2008, has a front page story on how retailer Steve & Barry relied on payments from mall owners desperate to replace absent Department Store anchors (closure of the former anchors a product of consolidation brought on by … yes you guessed it, fragmentation of consumer retail spending). It was these payments, not continuing retail operations, that fueled the company’s growth. Mall owners, heavily leveraged and victims of the ongoing credit crises, were unable to keep up the payments and Steve & Barry’s filed for bankruptcy on Wed, July 9, 2008.

Just as in my post, Gossip Girl and the Aging of America, niche plays for audience or shoppers don’t work in economic downturns. America has had an extraordinary run of more than twenty years of continuing economic growth, wage growth, low fuel and food prices, all allowing consumers spare money to spend on creating or maintaining a “niche” identity. That’s coming to an end.

The print edition of the Wall Street Journal on Friday, July 11, 2008 reports that consumers are changing their spending habits radically, altering profoundly the retail landscape. Fair use excerpt below:

“There has been a major shift in thinking by shoppers,” says Thom Blischok, head of consulting at Information Resources Inc., which tracks spending on consumer goods. “Consumers are moving away from availability to affordability.”

Wal-Mart reported it’s best monthly sales gain in four years, benefiting from bargain hunting. Coupon redemptions have increased, halting a 15 year slide. The Toyota Corolla has displaced the Ford F-150 as America’s best selling vehicle. Consumer confidence has dropped 38% from January 2007. Borders and Circuit City are reporting large sales declines as consumers, pressed by spiraling gas/energy and food prices, curtail all but essential spending. Consultants studies suggest that vitamin water, 100-calorie snack packages, and children’s lunches in a tray are being replaced by tap water, value packed snacks, and home-made lunches respectively.

Retailers and manufacturers are weeding out niche products that don’t have mass appeal. Some retailers are already dropping suppliers and products that don’t generate big sales.

OK, what does this all mean?

It means that Satellite Radio may just not be the wave of the future. Lacking enough subscribers in a recession to cover the costs of expensive contracts with the NFL or personalities like Howard Stern. Broadcast radio, free and over the airwaves, may well attract more advertisers looking to reach the masses, since the niche market simply won’t exist in many cases. Morning and evening drive time radio will be filled with broader-appealing music, and sports. Niche radio stations, particularly “Alternative” or College-radio music stations, are likely to be sold or changed over to more popular formats such as all-talk, or sports, to draw better advertiser rates. Remember, the consequence of the baby bust means that there are 8 million more seniors than young people. Alternative or College-rock radio stations in small markets are particularly vulnerable.

Musically, popular bands are going to get older. Audience wise at least. There simply won’t be enough disposable income to be spread over untried, unknown bands. Live music venues in the smaller range, the incubator of pop music innovation, have already been in decline since the mid 1990’s, with the decline of the numbers of young people and the aging of the former youth cohorts. New bands will still exist, coming into the public view. But there won’t be that many of them, and their goal will be to move towards the center where the money is, and gaining mass popularity. Likely gone are the days where cult bands could profitably cultivate a more “selective” appeal and tour across America making money. The decline of the CD and high prices relative to buying a single song on say, the Itunes store via Apple makes record sales a dicey proposition for even self-financed bands. Most bands make money touring, not by recording, and that won’t change. Just the orientation of the music, to include older fans because there simply won’t be enough money to support a youth-only cult band.

Movies, though not subject to the demands of advertisers, are still a mass medium. Sales at discounters like Best Buy, or even the local supermarket guarantee that reality. As do continued price pressure from brazen pirates selling DVDs at local swap meets and flea markets, often supplied by China or other places beyond the reach of US law. Film makers like Judd Apatow are likely to be successful, with more culturally conservative messages (carefully hidden behind profanity), while edgy/hip film makers like Steve Soderburgh will find that audiences are not in a mood to be shocked with edgy material, but will demand entertainment satisfaction. With discretionary income limited, a few movies will be mega-hits, the rest will have to eke out small box office receipts and DVD rentals. It’s likely that DVD sales of movies (and television shows) will have to be heavily discounted, as consumers just won’t spend that much money on them with essentials so pricey.

In television, the CW is doomed unless it can broaden it’s appeal beyond teen age girls. Given the strong perception that the network is not testosterone friendly, this is likely to be a Sisyphean task. Other networks will face large challenges in their fall schedules. Much of their current programming, and new fall or mid-winter shows were ordered under the old economic climate, with niche programming abounding. NBC’s “Heroes” is likely to show continued declines, with a convoluted storyline, and lack of central and compelling characters who provide an enjoyable escape from ordinary life. Even worse is Fox’s mid-season “Dollhouse,” a new offering by “Buffy the Vampire Slayer’s” Joss Whedon. It would have been a tough sell in 1997, and this is not 1997. Niche, trendy-hip posturing just won’t sell in a recession. Not with profound consumer shifts in spending and corresponding changes in advertiser spending.

Likely to improve in ratings are sports, including the NFL, College Sports, and Baseball, as people seek cheap and relaxing entertainment. Already TV viewership is up, according to the Wall Street Journal. Which makes sense. A night at home, in front of the TV, is cheaper than a night out at Applebee’s. With gas flirting at $5 a gallon, this makes sense. Men are likely to spend more time watching TV, and shows that can capture the male audience are likely to do well. NBC’s “Chuck” is likely to do quite well in this regard, as are any other show featuring an idealized “average guy” as the hero.

What is interesting is how CBS’s “Moonlight” (not to be confused with the 1980’s show “Moonlighting” with Cybill Shepherd and Bruce Willis) did fairly poorly this past season, and was canceled, with no pick up by any other network. A romance-novel copy of the “Buffy the Vampire Slayer” spin-off “Angel,” which was in turn a copy of the Canadian series “Forever Knight,” the show was too niche in it’s appeal, despite all the promotion and “buzz” surrounding the show. Men, of course, hated the show with a passion.

It’s quite likely that most other networks will avoid these niche shows as their fall lineup inevitably fails and pursue the “CBS formula” as epitomized by “NCIS” and the various “CSI,” “NUMB3RS,” and so on. A strong, forty year old plus male character leads a team that includes a strong, capable female character or characters. Fighting crime, restoring order, or something of that nature. The goal being to attract men plus women with elements that appeal to both and don’t repel either. The old strategy of advertisers and creative people slicing audiences into ever smaller fragments is probably gone for a long time. It will be a major adjustment for most creative people, who grew up in a time when it was always assumed that audiences will get both richer and smaller, ever more eager to demonstrate unique individuality.

That is, quite likely, a good thing. Lack of unified and unifying culture makes bonds across divisions, racial, sexual, class, regional, and income much more difficult. A common culture, valued and defended, protects against both usurpation of power at home by unchecked elites, be they political, cultural, judicial, or corporate, as well as a stout defense of the nation and it’s people abroad. When everyone has seen the game last night, or understands the catch phrases of the latest sitcom, or watches the same hour long drama on television, social bonds increase, as do the ability for ordinary people to band together to demand or force action on issues where they hold common ground.

About whiskeysplace

Conservative blogger focusing on culture, business, technology, and how they intersect.
This entry was posted in demographics, hollywood, more, movies, music, niche, television. Bookmark the permalink.

11 Responses to Death of the Niche Market

  1. Peter says:

    The phenomenal growth of niche retailers like Sharper Image, or Steve & Barry’s attests to both the opportunity to cater to consumers demand for unique retail institutions and consumer’s willingness to pay top dollar at such places.Steve & Barry’s was actually very low-priced, for the past several months they’ve followed a pricing scheme in which everything in the store is $9 or less. I had wondered how in the world the company was able to charge such low prices and survive. Apparently, these financial shenanigans bought it time, but eventually the time ran out.

  2. Whiskey says:

    I stand corrected, I’d never shopped there, I’d heard it was fairly niche.Low prices themselves can be a selling point, Wal-Mart made that a key competitive advantage, mostly by building an electronic inventory system that had vendors doing their resupply for them. While some of Wal-Mart’s low prices was the result of deals with cheap manufacturing in China, a great deal of it was cutting down on inventory costs. Wal-Mart has comparatively little amounts of dollars tied up in inventory, sitting around in warehouses, compared to other retailers. Not all of that is just tools either, their whole management culture is designed to move stuff out on shelves and get it sold as quickly as possible.

  3. Anonymous says:

    Fuck you nigger I’ll putt a niche in your ass homosexual butt target practice anus proving ground!-Ibod Catooga

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