How do you succeed in a tumultuous industry that can't seem to do anything right and that regularly sues its customers?  Meet the heroes of the retail music industry, Mike Boyder and Marc Weinstein, co-founders of Amoeba Music, a three-store California retailer that is the self-proclaimed "largest independent record store on the planet."  They have succeeded where industry giants Tower Records (no longer in business) and Sam Goody (closed hundreds of stores), and even Target are struggling.  They have succeeded despite a recording industry dominated by major labels that no longer produce huge wins.  So how is Amoeba able to survive and thrive in the age of digital downloads?

The duo had a three-pronged strategy.  First, they recognized that independents don't have to be small, so their initial goal was to outgrow their first location in Berkeley, CA  as fast as possible. Seven years later in 1997 (speed is relative) they moved into a 25,000 s.f. facility in San Francisco that housed 100,000 CDs, vinyl records, and audio cassettes, both new and used.  Now keep in mind that at that time Wal-Mart carried on average 350 titles and Tower Records at its peak carried 60,000 titles and mostly current big label hits.

The second component of Amoeba's strategy was to make sure that customers saw the store as a music exchange, not just a music store, where they could buy and sell used CDs (they're sort of an offline e-Bay for music lovers). This strategy became an important part of their business model, giving them margins in the 70 percent range on used CDs (new ones typically have margins of 20 percent).

The third component of the strategy was to making shopping for music a social experience, so they hired people with music and communication skills who were obsessed with music. There are no corporate advertisements or promotions in their stores and the environment explodes with art, live music, and people.  They support local bands and artists through their Home Grown program and now have their own fledgling record label.

Amoeba's story proves that if you give customers what they want--and their customers still want "hard copies" of their favorite artist's work--you will have a loyal base that you can build on, even in this world of digital everything.