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But information that's passed by word of mouth is one thing. Information that's shot electronically from a bar-code-scanning POS system straight to a high-powered database, and printed out in black and white, is something else. "[The labels] know what you're buying, but they don't know what you're selling," says Currier, echoing Ananth Raman's remarks about "fluctuations."

Besides, it takes time for information to be shuttled around the old-fashioned way. "Let's say my Sony sales rep comes into the store," says Currier. "They all get a copy of my top-selling records for the week. So if...they're seeing that it's one of their records in my top 30, they're going to probably go to the other accounts in the area and go, 'Hey, you'd better watch this record.' Now, by the time the other account reacts to it, three weeks have passed." Unless SoundScan is in play. Then it could be a matter of just days.

Yet as disturbed as Mike Dreese is at the prospect of losing his window of opportunity, he's even more bothered by the idea that SoundScan has established relationships with certain retailers--relationships, Dreese says, that the SoundScan execs had assured him were in the past. "We had done some consulting," Dreese says they told him. "We presently are not."

But when pressed, Shalett acknowledges that SoundScan is working with Handleman--right now. "We're doing work with the Handleman Co. about their sales," he says. "And we're not doing consulting work....We're trying to help them manage their inventory better, based on taking their sales and doing market-segmentation work with them. 'This sale took place in this store, the trade area is this wide, we can make a mathematical expectation that this is most likely the customer that's buying it. If I were you, for your store number 68, based on your own sales, I would have a little less of this and a little bit more of that."

One phrase in the last sentence is particularly crucial: "based on your own sales." Shalett insists that in its work with Handleman, SoundScan is getting all its information from the company itself, not from any other retailers in the various regions.

But Peter Cline tells a different story. Cline is president of Handleman's category-management group, Handleman Entertainment Resource, which supplies all the music to the mass-market retailers that the company services. Referring to SoundScan's work for Handleman, Cline says, "Oh, I know they're using other total data. It would be of no value to us if they weren't. Absolutely. We can do that ourselves."

According to Cline, in its work for Handleman, SoundScan is analyzing areas as refined as 700 or 800 families--or households--to see what genres of music sell in each one. "We give SoundScan aggregate data for all of our stores," says Cline. "We get back data on what's sold in that group [of families]. And then we can look at our stores within that neighborhood, if you will, to see how our mix of sales compares to that mix of sales to make sure that we're taking advantage of the opportunity."

For example, Handleman might look at sales for a group of 800 families in Lynn, Mass., to determine which came from the local Wal-Mart (numbers Handleman already has because it's Wal-Mart's rackjobber) and which came from all other music stores in the area. All Handleman has to do is subtract the Wal-Mart figures from the total area sales that are provided by SoundScan to know how to adjust its product mix. "What you're trying to do is to sort how much country, urban, rock, pop, gospel, Hispanic, etc., has sold," says Cline. "And then you reassort your number of SKUs [stock-keeping units] to line up with the opportunity."

So what's the story? Is SoundScan supplying Handleman with information based, in part, on numbers from regional retailers like Mike Dreese--or not?

SoundScan's Shalett hadn't responded by press time to numerous phone calls, faxes, and E-mail messages requesting that he comment on the discrepancy between Cline's statement and his own.

Make no mistake: soundscan has revolutionized the music industry. It took a ranking system that was based largely on bribes and payola and made it, basically, honest. It leveled the playing field for small, independent record labels by ensuring that their sales are counted, too.

But SoundScan--and, by extension, any information-sharing system--also has its dark side. And Mike Dreese decided that, for him, it had finally overshadowed the light. "We had lost control of our data," he says. "I'm talking about taking a region and its specific tastes and dropping your pants and letting Best Buy and Wal-Mart and people like that come in and just scoop your customer."

Dreese is an exception, partly because he can afford to be. He's big enough and has enough clout to sever his ties with SoundScan and still maintain solid, productive relationships with the labels. Other trendsetting retailers fear that if they were to pull the plug, they'd lose so much label support that they'd disappear. Moreover, they say, they put a tremendous amount into promoting new acts. And they want those efforts--for both their and the artists' sakes--to make a difference.

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