CD industry lacks formula for success

Did you get a CD in your Christmas stocking this year? The recording industry sure hopes so.

But even if you purchased some of the 624.2 million CDs sold in the United States as of Dec. 22, record labels and retailers are not happy with you. Not happy at all.

Holiday numbers notwithstanding, the industry saw album sales drop at least 9 percent in 2002 - following a 2.5 percent drop the year before. These are the first years in which sales drops have been recorded since Soundscan began tracking in 1991.

The recording industry blames its falling sales on illegal CD copying, or "burning," and Internet swapping of digital music files known as MP3s. The music business hasn't seen a decline like this since blank cassette tapes became available in the '80s - an innovation that allegedly was going to cause its doom. The CD was seen as the industry's salvation - till the arrival of this latest copying technology.

Digital copying has certainly had an impact, say analysts like Geoff Mayfield, who oversees the charts at Billboard magazine. But other factors, from the weak economy to a dearth of good music, are definitely "contributing to the malaise that the industry felt this year," says Mr. Mayfield. He for one, sees another parallel with the 1980s besides the home-recording ogre: "We had a lousy economy in the early '80s, and we don't have a great one now."

But independent publicist Bob Merlis, a former Warner Bros. Records staffer, says "there's no doubt that [copying has had] a huge impact among a certain demographic." A friend of his who owns a record store in the college town of Eunice, La., reports that computer-savvy college kids are no longer buying CDs, a comment echoed by others.

Still, that doesn't explain the experience of alternative-country band Wilco, whose David vs. Goliath story neatly contradicts claims of CD burning and Internet piracy as the main culprits in the current slump.

After being cut loose in 2001 from its contract with Warner Bros., which deemed the band's "Yankee Hotel Foxtrot" unworthy of release, Wilco posted the disc on the Internet. The album had been distributed free online for months by the time Wilco, in an ironic twist, was signed to Warner subsidiary Nonesuch, which released "Yankee" in record stores in April 2002.

As Wilco manager Tony Margherita puts it, "The damage done by that? Well, the band had its highest chart debut ever - No. 13 with sales of 56,000, more than two times better than its previous release - and Wilco now has a record that has outsold everything they've ever done by a good margin: now at approximately 500,000 worldwide."

Mayfield, however, says Wilco's success is more the exception that proves the rule.

Page: 1 | 2