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.

"For every Wilco that got helped, there's probably a dozen or a hundred artists who got hurt.

"A lot of the people who bought Wilco albums are people who don't necessarily go to the trouble of copying, and those are called people with jobs."

One of the bright spots in an otherwise bleak year, according to analysts, were veteran artists, who brought fans into the record stores in droves with both new offerings and repackaged classics.

"Could that be a result of or an after-effect of the environment that we currently live in?" asks Paul Freundlich of Paul Freundlich Associates, publicist for the Beatles and Paul McCartney, commenting on the success of McCartney, Bruce Springsteen, James Taylor, and others. "I do think that there has been a movement for more meaningful, established acts, that people want to grow with and develop with, and feel as though there is substance in the music that they're listening to."

But he also points out that music is only one way in which people entertain themselves today. With so many options, including DVDs, video games, and the Internet, record companies are competing for what he calls "mindshare" - a piece of each consumer's mind, not just their time. He regards that issue as a larger challenge than CD burning or Internet file-sharing.

As Merlis says, "You cannot listen to a record and play a video game at the same time." (Well, you can, but you probably can't concentrate well on either.)

Then there's that delicate issue of quality. Consumer perception is that most albums contain only one or two songs worth listening to. Toronto Globe and Mail critic Carl Wilson said he had a hard time compiling a Top 10 list this year because "hit-makers today aren't in the great-album business."

Baltimore-based critic Geoffrey Himes disagrees, saying great music is out there, but much harder to find because it doesn't get radio air play (singer/songwriter Caitlin Cary's "While You Weren't Looking" topped his year-end list).

Merlis, who handles publicity for the Rolling Stones' remastered and restored 22-album ABKCO catalog reissues, says collectors happily shell out for these because they know loving attention is being paid to every detail.

And that's really the way to send sales figures skyward. "Complaining about downloading and the Internet is akin to the book industry obsessing about libraries," Wilco's Margherita says. "It's just missing the point. If people in the business of making records worried about actually making more great records, packaging them beautifully, and finding a way to get them to people in a reasonably efficient and cost-effective manner ... things could change really quickly."