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November 2003 NEWSLETTER A n E n t e r t a i n m e n t I n d u s t r y O r g a n i z a t i o n The Retail Climate: Uncertainty, Mergers and Diversification 50th Anniversary by David Hirshland The big new s in the music electronic games - to the unexpected The President’s industry this month of course is – toys and candy . The idea seems Corner about the five majors shrinking to to be that if they can’t beat the Best three. No one seems to seriously Buys of the world they should join Teri Nelson Carpenter doubt this will happen as BMG and them. The ironic twist of course is Sony annou nced join t venture dis- that Best Buy sells CDs at a October's dinner meeting provided us cussions had begun and Warner discount, unfairly low, record re- with a view as to what is currently hap- Bros and EMI moved inextricably to- tailers claim, in order to sell bigger pening in "O, Canada". David Baskin of ward some kind of merger. Amidst ticket items such as appliances. Tra- the CMRRA and Paul Spurgeon of all of the speculation as to what ditional record stores, on the other SOCAN had us laughing a good part of hand, are simply seeking new ways the time but were still able to present exactly this will mean for the busi- many updates as to m ech anic al co l- ness – with the Los Angeles Times, to get people to the racks to pay a lection and music licensing in Canada. among other publications, declaring bit more than they would at the They were quite a sh ow. it rather apocalyptically a last ditch appliance stores. We honored Steve Winogradsky, Mo- attempt at survival – there are of An article in Billboard last week derator for the October panel and a course numerous functioning record by Chris Morris on this subject Past President of the CCC, who spoke companies (sales are up for this emphasizes that retailers are simply of his experience with the CCC. Steve period compared to a year ago), finding it impossible to make money served two terms as President and artists are touring and record stores merely selling CDs. With programs continues to support the C CC by re- such as Universal’s JumpStart the maining very active with the Board of are selling product. And even Directors. though several of these labels will independents in particular face a It's that time of yea r, and the C CC is announce or have announced a double-edged sword. They recognize celebrating the holidays with our annu- fresh round of layoffs, the Christmas the need to offer product to the al Holiday Party. Las t yea r we s old out, season is upon us and everyone, es- consumer at a reduced price but see and it was a great time for a ll. So we pecially at the retail level, is hoping their margins consequently disap- encourage everyone to make your re- for the best. pearing. Given this reality with servation early and sen d in your check There have been several high selling major label product, many of as soon as possible. I know all who at- profile stories recently about how the independent stores have formed tended last year would s ay th at th is was certainly the Party of the Year! retailers are shifting their focus to coalitions to buy independent pro- Tonight, we have a panel discussion accommodate the tastes of baby duct at better rates than they could on “Record Retail” presented by one of boomers who are apparently less get acting alone. These coalitions our newest board members, Darryl wont to go on-line and download also seem to allow the “mom and Franklin, from Interscope Records. free music than their children (see pops” to move more quickly than the Darryl is an engaging personality who accompanying article). Even more major chains a t provid ing ha rder to is well versed on the subject of to- dramatically, retail outlets, especial- find product. In a way it seems like night's discussion. He has put together ly the “mom and pop” variety are the equivalent of a class system may an impressive panel. We welcome increasingly offering products other be playing itself out: the major la- Darryl to the CCC boa rd and wish him well w ith h is firs t pan el. than recorded music to lure custo- bels stocking the major chains who mers, from the obvious - DVDs and (Continued on page 3) At Sea With MP3's, Boomers Buoy Struggling Record Industry By Chris Nelson Beyonce Knowles and 50 Cent "Adults like music, too, and and there is a chemistry and magic have two of the best-selling albums they're underserved," said Will Bot- that is appealing to the public," said so far this year. Nonetheless, when win, the president of Sony Music En- Clive Davis, chairm an of BMG's RCA Borders Books & Music recently re- tertainment's Columbia Records, Music Group, whose J Records label designed the layouts of the music which released the albums by Ms. produced both of Mr. Stewart's sections in its more than 420 super- Streisand and Ms. Midler. "And collections. stores, the CD's from these and they're starting to get served." Even better for the music in- other young hit-makers were booted It's not as if the historically dustry, these fans actually pay for from prime browsing display space strong youth market is melting the music. "We feel like we're losing in favor of albums from the likes of away. The biggest-selling album of less sales to file sharing" on albums Rod Stewart, Sting and Barbra the year is expected to be the rapper by older artists, as well as those by Streisand. 50 Cent's "Get Rich or Di e Tryin'," younger artists who appeal to baby The rearranging proved according to Geoff Mayfield, boomers, like Ms. Jones, John prescient, as the release of the la- Billboard's director of charts. Mayer and Josh Groban, Mr. Botwin, test Billboard top 200 albums chart But adult buyers are increasing- of Columbia Records, said. demonstrated. While Clay Aiken, ly making their presence known in "From Discs to Downloading," runner-up in the most recent the industry. Last year, shoppers an August report by Josh Bernoff, "American Idol" contest and no hip- over the age of 40 , who tend to gra- principal analyst for Forrester Re- ster himself, took the top spot with vitate to graying artists, bought search, bolsters Mr. Botwin's file- his debut album, "Measure of a more than 35 percent of all units sharing thesis. The report found Man," Mr. Stewart finished second sold, according to the Recording In- that while one-half of consumers with "As Time Goes By The Great dustry Association of America. Ten ages 22 and younger use file-shar- American Songbook Vol. II." years ago, they accounted for 22.6 ing software, only one in nine New releases from Ms. Strei- percent of all sales. people ages 23 years old and older sand and the Eagles also landed in Some of the sales spurt can be do so. the Top 10. All told, artists over the attributed to a staple of the music The recent success of some age of 40, like Bette Midler, Van industry the never-ending repackag- television advertising campaigns for Morrison, Michael McDonald and Si- ing of golden oldies. The Eagles new albums is also likely to inspire mon and Garfunkel, held 11 of the have already released two volumes copycats. Until recently, the major top 50 spots in the Billboard chart. of greatest hits, not to mention a labels rarely used television adver- In the same week last year, seven boxed set. But that did not stop tisements to drive music fans to baby boomers finished in the Top Time Warner's Warner Strategic stores, content to leave the air- 50. Marketing label from releasing a waves to the direct marketing pur- The growing success of albums double CD of "The Very Best Of" on veyors of schlocky compilations like by older artists and of singers like Oct. 23. The album sold 162,000 K-Tel. Norah Jones, who appeal to less copies, and finished third in its first That began to change in 1999, cutting-edge tastes offers some so- week on the charts. when the Universal Music Group lace to an industry mired in a three- Elvis Presley's "Elvis 2nd to created UTV Reco rds to sell compil- year sales slump. Record executives None" and "The Essential Simon & ation albums and single-artist retro- are desperate for any hopeful sign, Garfunkel" also made strong show- spectives through television adver- even if it com es from people wi th ings on the chart. But shoppers are tisements. The new label has issued more wrinkles than tattoos. also buying albums of vintage stars compilations from Tom Petty, the The record labels have placed recording tried-and-true songs. Mr. Bee Gees and Kiss. most of the blame for the decline on Stewart, a long way from his "Da Ya "The adult market is out there; the file-sharing networks on the In- Think I'm Sexy" days, now croons they just have to be marketed to," ternet, and have sued or threatened classics like "As Time Goes By" and said Kevin Gore, executive vice to sue hundreds of people for "Bewitched, Bothered and Be- president for sales and marketing at illegally distributing free music wildered" (a duet with Cher), and Warner Strategic Marketing.

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