(Business 2.0) - In the demolition derby that has become the digital-age music business, no one has taken more of a beating than traditional retailers. Tower Records and Wherehouse are rebounding from recent bankruptcies; Minnesota-based Musicland has shuttered nearly half of its 847 Sam Goody outlets since 2003 and announced in December that it will close all of its 61 Media Play stores.

But Musicland, for one, still believes that shopping for music at the mall can be more exciting than scanning aisle after alphabetized aisle of overpriced CDs while the smell of Cinnabon wafts in from the food court. In October the company unveiled a new store-within-a-store concept called Graze--a 1,000-square-foot mesh-enclosed lounge packed with couches, a see-through video wall, a sound system, even a scent machine that pumps in the smells of chocolate and citrus--at 14 Sam Goody outlets in the Minneapolis and Philadelphia areas.

Musicland execs are betting that the new ambience will persuade mall shoppers to linger, listen--and buy. The lounges sell singles à la carte on custom-made CDs, as well as T-shirts, posters, and cell-phone ringtones and wallpaper. Nearby displays promote the kinds of gadgets most record stores rarely dabble in: cell phones, digital cameras, and portable videogame players. If the pilot stores show promise, Musicland plans to roll out Graze at Goodys nationwide.

The Experts Sound Off

MIKE DRESSE CEO, Newbury Comics, a chain of 26 record stores in New England

We installed a disc burner in one of our stores, but we needed salespeople to walk customers through the process. So it's expensive. If this had launched six years ago, it would have been interesting. But now iTunes is significant competition, and it's unclear that you need a bricks-and-mortar middleman.

PACO UNDERHILL Founder, retail consultancy Envirosell; author, Why We Buy: The Science of Shopping

A problem with something like this is that it's very cool the first visit, possibly the second, but the 10th? The question is, Does it go far enough? Shouldn't they also be including an ice cream parlor, a coffee shop, or another way of generating income as they're attracting people to hang out there?

TED SCHADLER Analyst, Forrester Research

With Napster, music stores stopped being a place where you go to discover music. So this could bring in some of what you get online--a sense that it's a place to find new songs and artists. But it's hard to have the environment create the experience. It needs to be an organic thing. If other cool people aren't there, why would you go?

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