Posted on 12/23/2002 7:22:24 AM PST by GeneD
Despite efforts by record executives to stanch declining CD sales by releasing a cavalcade of big-name artists during the critical Christmas shopping season, early sales figures show an already struggling industry may now be in even worse shape.
In the five weeks since mid-November, when the record labels began their biggest holiday blitz in recent memory, compact disc sales were down 12.9 percent compared to the period in 2001, according to data from Nielsen SoundScan, which tracks music sales.
That poor performance comes even as new CDs from artists like Shania Twain, Mariah Carey, Jay-Z and Paul McCartney have sold well, and has pushed overall sales for the year down further. Through the week ended Dec. 15, the record industry is off 10.8 percent, compared to a year earlier. On Nov. 10, the music business's tally for the year had been down 10.5 percent from 2001, according to Nielsen SoundScan.
Unless there is a crush of last-minute shoppers and bargain-hunters in the week after Christmas, the industry's flood-the-market strategy will have failed, music business analysts say.
"Given the level of star power that's out there, the sales are disappointing," said Michael Nathanson, an analyst at Sanford C. Bernstein. "It's a worrying thing. It doesn't bode well for next year. I can't imagine a line-up like this for next Christmas. It just says that next year is going to be bad."
Industry executives blame the decline on Internet file-sharing and counterfeiting, while consumers complain of a lack of exciting new talent and uninspired music from older artists. Further, a weak economy has forced people to become choosier about how they spend their money and some have decided to spend it on video games and DVD's, music industry analysts say.
Holiday sales have always been important to the music industry — with more than 30 percent of the industry's sales coming in the fourth quarter — and the decline in sales during the season last year prompted executives to be particularly aggressive this year.
But the holiday onslaught appears to have helped only two of the big five record labels increase their overall market share. The Universal Music Group, a subsidiary of Vivendi Universal, has bolstered its already commanding lead and improved its overall market share. During the five-week period ended Dec. 15, its market share rose to 31.2 percent from 28.4 percent for the week ended Nov. 10, according to Nielsen SoundScan. And BMG, a unit of Bertelsmann, increased its share to 17.2 percent from 14.6 percent on Nov. 10.
The news is not so good for the other three major labels. The market share of Sony Music Entertainment, a division of the Sony Corporation, has fallen to 15 percent from 15.7 percent. Warner Music Group, part of AOL Time Warner, has dropped to 14.2 percent from 15.9 percent. And the market share of EMI Recorded Music, part of the EMI Group, has fallen to 7.2 percent from 8.6 percent on Nov. 10.
Despite the glut of music, some artists have prospered. Ms. Twain, the pop country singer, has been one of the biggest successes this season, selling 7.7 million copies of her album, "Up," since its release on Nov. 12. Jay-Z's "The Blueprint2: The Gift and the Curse," on Universal's Roc-A-Fella/Def Jam label, has sold 1.1 million copies between Nov. 12 and Dec. 15. And record buyers have snapped up 462,000 copies of Mr. McCartney's double CD, "Back in the U.S. — Live 2002," on EMI's Capitol records since Nov. 26.
On the diva front, Ms. Carey, on Universal's Island Def Jam label, and Whitney Houston, who records for BMG's Arista label, are also doing decently. Without significant radio play Ms. Carey's album, "Charmbracelet," sold 240,000 copies during its first week — her second biggest debut — and Ms. Houston's comeback album, "Just Whitney," sold 207,000 copies in its debut week.
One surprise hit has come from the R & B singer Aaliyah, who died in a plane crash last year. "I Care 4 U," her collection of hits and unreleased material, sold just under 280,000 copies during its first week of release.
A carefully chosen single has helped propel the album. "We were going to go with a Marvin Gaye remake," said Kedar Massenberg, the president and chief executive officer of Motown Records, a unit of the Universal Music Group. "But when I heard the single, `Miss You,' I told them to switch the single. It was perfect. It's subliminal. It's one of the first times that we had an artist who passed away who was singing about missing you."
One other feature of this year's music season has been a stepped-up effort by the Recording Industry Association of America to combat piracy and bootlegging. The association has increased the number of investigators scouring the sidewalks for illegal street vendors and of those monitoring the Internet for piracy activity, said Hilary B. Rosen, its chief executive.
"We're throwing more at the problem this year than last," Ms. Rosen said. "We are doing seizures at flea markets, stores and universities."
But the trend lines are not providing much holiday cheer. Ms. Rosen declined to speculate if sales would pick up over the next two weeks, but she said that she remains hopeful.
"I'm always going be as optimistic as I possibly can," Ms. Rosen said of the holiday's sales. "There is great music in the stores and these are critical weeks."
The biggest problem with the music industry is that it is a cartel whose products are immune to normal price fluctuations related to supply and demand. The first record label that releases a first-rate CD with a price tag of $4.99 will run all of its competitors out of business.
Last new DVD I bought was The complete Monterey PoP Festival.
I know I am a throw back and just got tired of spending twenty bucks a pop for something that I didn't know if it would be could, when I know they could produce it for under five bucks and sell for seven and still make an obscene profit.
BTW tried of replacing my music with a new media every ten years.
Because of the industry attacks on venues like Napster and Kazaa I wonder if better way to get around the reach of the music industry and copyright law would be to open an internet based library.
Members would pay to join. They could post the titles of the music they own. They would rate one another according to their speed and reliability, etc. Their email address would be posted allowing other members to contact them to arrange the purchase, trade or loan of their CD. How they accomplish the exchange would be up to the agreeing members. It could be through the mail, or electronically.
Because the exchange would take place offsite of the internet library, the site would have no "knowledge" of any transactions.
The only way the music industry could compete would be to offer music at prices too competive to justify the effort and lesser quality.
When CD's first became popular in the early 1980s, the average CD was $17.98 and a CD player would set you back several hundred dollars, at least. Nowadays, you can get a basic CD player for well under $50. In fact, some of the cheapest personal CD players (with headphones) are available for about $25. The price of a CD just hasn't fallen very much however. List price is still $14.98 to $15.98 which is astonishing when you consider just how cheap a CD is. You can now buy a stack of 100 blank CDs for $20 which comes to 20 cents a CD. And that's retail. Mass producers of pre-recorded CDs are buying them in lots that brings the price of a CD down to mere pennies.
The consumer is being ripped off bigtime.
Consider that when VHS videocassettes came out, the price of a video was over $100. Now they are in the $10-15 range (even for most DVDS).
Had the price of a music CD dropped as much, they would cost around $2. Which is a fair price to pay. If the consumer could buy pre-recorded CDs for $2, they would buy them by the bucketload. Sure, people would still download the MP3s, but if they like what they hear, they will simply buy the CD so that they can get the superior sound quality and the liner notes, artwork, etc. It will be too much of a hassle to burn your own CDs from MP3s with that pricepoint (People stopped recording movies off HBO when the price of pre-recorded videos dropped to affordable levels). Besides, homemade CDs just don't sound very good and without the liner notes and artwork, it just isn't the same anyhow.
Actually, $5 is the magic pricepoint for me. Once they get down to that level, I will buy them by the hundreds once again. As it is, most of my CD buying these days is with the classical NAXOS label. Their classical music CDs retail for under $5 and they is a tremendous value. The sound quality of these CDs is excellent and it is possible to collect all the essential works over time on a shoestring budget. I usually buy one at lunchtime whenever I am in the area of the local record store that sells them.
That's precisely the economic problem being faces by the industry -- digital is the first medium that doesn't wear out in a person's lifetime. As long as CDs are not copy protected, you can move them to the next generation of media.
I have hundreds of vinyl LPs that I never intend to play because of the clicks, pops, and distortion caused by wear. A few that have never been released as CDs have been transferred to CDs by me. There are probably a dozen more that will get this treatment.
But digital recordings will never degrade, so even if the CD format dies, they will still be available. Just keep those old CD players and burners around in the event they ever perfect copy protection.
DING-DING-DING...we have a winner! The average American, burdened though they are with a cro-magnon intellect, has taken notice of a CD's TRUE price. If one can buy a stack of blanks for twenty bucks, and knock off a boatload of tunes with a burner, then WHY does the music industry charge so much for only ONE? It doesn't help that most of the music released since 1985 or so is borderline crap.
Well said! Truer words were never spoken.
Why not buy a membership on a legitimate website and download all the music you want for $10 a month. The artists get paid for what belongs to them and everyone is happy.
Exactly right. At $5-$7, convenience outweighs any other medium. MP3 sound sux, BTW. Most of my classical music library is on LP, but Naxos delivers the goods on CD and at a reasonable price. Most of my classical CD library is on Naxos, with a few exceptions - for example, the Reference Recording label delivers sound quality worth paying a premium price. Check them out sometime.
Interesting side note: today's phono cartridges deliver a far less noisy result than earlier designs. That, and a good record cleaning regime will get you some great sound. I use a combination of a Linn Sondek LP12 turntable with the usual upgrades, Linn's Ittok LV II arm with a ClearAudio Virtuoso cartridge. This runs into a Krell KPE phono preamp - with this musical bliss can be achieved.
???????? Homemade CD's should sound identical to the original. If they don't sound good, then neither did the original.
BTW, if you have a lot of stuff on vinyl, you CAN clean it up and then xfer it to CD. There is an old radio-station trick I learned that gets rid of a lot of clicks, pops, etc...for a short period of time, which is usually long enough to transfer them. WASH the LP in water and LEAVE IT WET. Put it on the turntable and record it into your computer, using an editing program. There are many many of them out there. You will notice that the LP sounds a lot cleaner when played WET. You'll want to then dry it off with lint-free towels and store it.
In the editing program, you may then explode the editing scale, where little pops, clicks, etc., will be easily resolved as little spikes in the audio waves. You can edit out these sounds with ZERO discernable impact on the audio when played at normal speed. It's a time-consuming process, but when you're done, you'll have a scratch-click-pop-free copy of your classic. We used to do the same thing at radio stations, copying a tune to 30-ips noise-reduced mag tape. Then, we'd razor-blade out the imperfections, and the result was plenty good enough for air.
Michael
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