The lack of production from popular recording artists such as Smashing Pumpkins and Alanis Morissette,
who together boosted 1996's retail business in a big way, is being blamed at least in
part for a drop in overall record sales for the first half of 1997.
But Tower Records' Senior Vice President Stan Goman also places blame on the Recording
Industry Association of America (RIAA), which he said is ostracizing the younger record buyer
by raising prices beyond their means. "The RIAA has done everything in its power to make
sure our industry is an imploding one," said Goman, who said he also feels that a glut
in releases and unit costs and an industry-wide boom in retail outlets are to blame for the declining music market.
"Maybe the overall industry isn't growing as fast as we'd like it to," he added. "But
then again, kids can't pay $15 every week to buy new music." Any way you slice it the
Washington, D.C.-based RIAA says business is down, and down significantly in the first
half of the year, as shipments of audio and video products dropped 9.7 percent since
January, causing revenue to fall about 5 percent in the process.
The RIAA reported recently that the total number of shipped audio and video products
in the first half of 1997 fell to 470 million as compared to last year's first-half
figures of 521.2 million. Not surprisingly, then, revenue from these shipments has
fallen to $5.2 billion this year, down from last year's mid-point tally of $5.5 billion.
At the heart of the decline is CD orders. Shipments of full-length CDs, the flagship
format of the record business, fell 7.3 percent from last year, a slide the RIAA blames
on decreases in mail order and record club tallies. About 18 million fewer vinyl
singles were shipped in the first half of 1997, while the number of cassette singles
plummeted by 26.5 million during the period, a loss of more than $32 million in revenue.
Although retailers shipped about the same amount of music videos thus far this year,
their revenue has increased by about $23.5 million.
"I'm looking forward to a better second half of the year," said John
Ganoe, RIAA director of member services. Ganoe worked directly with the
accounting firm of Cooper and Lybrand and industry tracking giants
Soundscan in tallying the 1997 mid-year figures. "Sure, we haven't had
another Alanis Morissette, but she does continue to sell -- as do the
Ganoe said he discourages focusing on the overall drop in prerecorded
video and audio product numbers, and instead points out that the retail
market has shrunk over the past few years, a move which should foster a
healthier music marketplace for the near future.
On the positive side, shipments and sales of CD singles and full-length
vinyl recordings have increased, a fact which the RIAA attributes to limited vinyl
pressings of new releases and an increase in the amount of "bonus" tracks available
on CD-5s. The number of CD single and vinyl LP shipped increased by 70 million and
16.2 million respectively, while combined, the formats have collected nearly $150 million
more in sales during the first half of the year.
But Ganoe still has the drop in CDs to answer for.
"Perhaps the retail universe had expanded beyond the needs of the
consumer," Ganoe said, agreeing in part with Goman's assessment . "However, we're now
looking at a healthier and stronger marketplace for both consumers and retail outlets."
RCA Vice President David Fitch claims that slumping sales are also a direct result of
1997's lack of big-name releases. While the first half of 1996 was marked by sky-high
numbers from artists such as Morissette, The Smashing Pumpkins, Tupac Shakur and other
mega sellers, he said, 1997 has been lackluster with only a handful of platinum contenders
including Prodigy and Wu-Tang clan. Adding to the problem is U2's super-hyped but
low-selling Pop, Fitch added.
Puff Daddy, Spice Girls, the Wallflowers and Jewel have also enjoyed the big numbers
thus far in 1997, though two of those records -- from Interscope's Wallflowers and
Atlantic's Jewel -- were released in 1996. While Oasis' Be Here Now is expected
to do well at retail, the year's next biggest hyped record, Jane's Addiction's It's
My Party is made up of mostly older material. That leaves The Dance, the
Fleetwood Mac reunion album and Bridges To Babylon by the Rolling Stones as
1997's best chances for recovery.
"Just take a look at the release schedule," said Fitch, who's enjoying big years from
Wu-Tang, and, most recently, Robin. "The first half of 1997 was pretty slow. But this
is the time of the year where we'll be
seeing the amazing record releases. If Christmas were tomorrow, I think
we'd have a good holiday. But I don't know if we're out of the woods yet
-- we still have too many releases and too many stores hitting the
consumer at once. The tree needs to be pruned a little."
While Goman said business is up throughout the Tower chain, he still
feels the music industry has lost touch with the younger demographic,
giving them less products to purchase at affordable prices. What the industry needs
to do is stop preaching to the converted, he said, and try and attract new consumers.
While Fitch said it's hard to predict whether numbers will rise during
the remainder of the year, he does hope for a more active fourth quarter at
RCA. The Verve Pipe and Dave Matthews Band records are still selling, and
a new release by R&B faves LaBouche and a second single from Swedish
chanteuse Robin have him looking on the bright side.
"The independent retailers are confident," Fitch said. "The medium size
and large chains are confident, too. Retail is showing signs of turning
around. The biggest problem is the release cycle -- last year, we had
bigger names and bigger albums, and this year was kind of slow."
"One message the music industry finally received from retail," said
the RIAA's Ganoe, "is that the concentration of major releases during
the final quarter of the year was killing them. But that's changed.
We've seen a number of high-scale projects released throughout 1997 --
and there's still a new Mariah Carey record on its way, more Spice
Girls, and if the stars align properly, the new Garth Brooks record. The
remainder of 1997 looks just fine for the industry."
But while retailers are also banking on Oasis, the Rolling Stones and possibly
Pearl Jam to carry them into the black by year's end, Tower's Goman insists that unless
the industry does something to appeal to the younger consumers, they will be feeling
the impact of these times for years to come.
Making up about 25 percent of Tower's overall business, the 10-to-20-year-old record buyer
doesn't earn enough to buy music on a weekly basis, he said. And if you can't hook kids
into the market now, he added, they won't be there as adults later.
"We're asking the kids to buy a new CD, which is about $16," Goman
said. "And then, the kid is going to want to see the new movie that
week, and then bring a date and buy some popcorn. And even if they go to
the bargain matinee, that's another $12." Throw in school lunch,
clothing and transportation funds, and Goman figures that the average young person
would need about $50 a week, well over what they can afford.
"If we don't have the kids in, we have a huge blip in the population," he said. "The
RIAA is, in essence, a self-fulfilling prophecy. We already have the adults hooked.
But we're having a hard time hooking a kid without something less than $2 to take home.
I mean, what could be better than a whole bunch of kids getting together on a Saturday
afternoon to listen to new music? The only problem is that they can't do that -- it's
too expensive." [Tues., Sept. 2, 1997, 5 p.m. PST]