I guess it's a matter of defining the "loss-leader" concept. You can offer me Monk?Trane Carnegie Hall for $1.99 and if I don't ever go into your store, what does it get you from me? At best, just a $1.99 sale, at a loss to you. Congratulations, sucker.
If, otoh, you got some, say, Odean Pope CIMPs in the store for a fair price, you get those sales plus the Monk?Trane Carnegie Hall at whatever sale price you have it on for. Then you make money off of me. My pleasure, actually.
Obviously, the model will out of necessity vary from city to city, and from store to store, but an urban store that positions itself as a "go to" place for "good music" should take these things into consideration. They used to, and now, I don't think that they do, generally speaking. Is that the entire reason why they're floundering? No, of course not. But it's definitely a factor. If you have a diverse enough consumer base, then diversity is a strength. Play to it!