What's wrong with the music biz?

Napster's out of the picture, but for the first time in a decade, album sales are down -- and ticket sales are sagging too.

By Eric Boehlert

Jul 19, 2001 | With the scourge of Napster -- now in the throes of a mercilessly slow demise -- nearly behind them, you'd think that the nation's music-industry executives would be able to relax.

Too bad that their traditional cash cows of CD sales and concert tickets (the businesses most of them grew up on) are both looking a little gaunt.

Or, as renegade bluesman R.L. Burnside might put it, "It's bad, you know."

Taken together, recent CD-sales and concert-ticket surveys paint a bleak picture of an industry grappling with change, but not the technological kind.

"What we're seeing is a downward trend of the business," says one industry veteran from the touring side. "It's continuing to implode. And folks don't really have a clue. The leadership at labels, senior management of the business, doesn't have a clue where the industry is going, tech issues aside."

Why the gloom? For an industry that's been able to bank on year-to-date sales increases, business through the first six months of this year was down 5.4 percent, according to SoundScan. (SoundScan is the system, introduced in 1991, that measures album purchases at their point of sale, giving the industry precise sales figures for the first time.)

The once-thriving format of singles continues its free-fall collapse; but even if you subtract singles from the equation, album sales -- the industry's real bread and butter -- were still down 3 percent. If that trend continues, 2001 will mark the first year since SoundScan's inception a decade ago that album sales have declined from one calendar year to the next.

At this point last year, sales were up nearly 8 percent over the previous year. Worse, this year sales of current releases -- that's not counting older catalog material, just albums released within the past 18 months -- are off 8 percent for the first six months of the year.

Just look at how many copies, combined, the top 10 sellers this year have sold: 22 million. Now compare that with the same combined sales for last year's biggest 10 hits through July: 36 million. (To be fair, early 2000 basked in the release of blockbuster albums by Britney Spears, Eminem and 'N Sync.)

Of course there have been success stories this year. Groan rockers Staind, guitar upstarts Linkin Park, the mainstream Train and R&B juggernaut Destiny's Child continue to sell well. And newcomer Alicia Keys, whose debut, "Songs in A Minor," is now the country's bestselling album, shows early signs of developing a lasting career.

But the misses continue to pile up; thong aficionado Sisqo, teen pinups Jessica Simpson and Mandy Moore, grunge holdovers Stone Temple Pilots, country superstars Tim McGraw and Trisha Yearwood, and classic rockers Aerosmith and Rod Stewart are just the most recent examples of platinum-selling acts who have not been able to hang onto their audiences with their latest CD offerings.

"Retail segments have been soft for 18 months," reports Don Van Cleve, president of the Coalition of Independent Music Stores. Sales at indie, or "mom and pop," stores are down 12 percent this year, according to SoundScan.

The big music chains are feeling that sluggishness as well, which explains why venerable CD seller Tower Records, with nearly 200 stores worldwide, is battling creditors to avoid a bankruptcy filing. The company posted $34 million in losses during the first quarter. Like all the major music retailers, Tower has been hurt by disappointing sales as well as stiff competition from mass-market retailers like Best Buy and Target, which sell CDs on the cheap in order to build foot traffic.

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