Industry must adapt to shifts in how music is sold

With country sales down, labels explore new roads

Industry must adapt to shifts in how music is sold

By PETER COOPER

Staff Writer

This weekend, guitars are chiming and cash registers are ringing all over Nashville, as thousands of fans celebrate the CMA Music Festival during country’s most vibrant and exciting week.

But even as Music City bustles in the heat, country sales are sluggish and chilly. Forthcoming releases from superstar acts Rascal Flatts, Carrie Underwood, Faith Hill, Brooks & Dunn and Toby Keith have label executives hoping for a strong second half to 2007, a year that β€” according to Nielsen SoundScan β€” has experienced a sales dip of more than 30 percent, as of June 3.

Getting back in the black won’t mean getting back to normal. Shifts in the way consumers purchase music, changes in available retail space at big-box stores and other factors mean that record labels must make lasting adjustments.

The Tower Records chain is gone, out of business. Wal-Mart, the huge chain that country labels have relied on as the prime mover of compact discs, has cut back on music inventory. And a 227,000 increase in 2007 digital sales doesn’t come close to making up for an

8.9 million dip in CD sales.

“It’s hard to compare years as apples to apples, because a lot of it is about scheduling,” said Lyric Street Records President Randy Goodman. “But there are all sorts of things swirling around, and those things are going to have an impact. What we’re trying to adopt isn’t a mentality of fear. It’s more like, ‘Maybe this is global warming, so let’s buy a Prius.’ “

Swift shows the way

Taylor Swift is something of a Prius. The 17-year-old Hendersonville-based singer-songwriter is signed to independent Big Machine Records and is 2007’s breakout act. Swift is the year’s fourth-best-selling country artist, outpacing everyone except Carrie Underwood, Tim McGraw and Rascal Flatts and besting Keith Urban’s latest album (the albums were released within two weeks of each other in 2006) by more than 140,000 units so far this year. A child of the Internet who appeals to other computer-savvy youths, Swift personally interacts with fans on the Web. She shouted out to her MySpace friends in accepting a CMT Music Award in April.

“I’m excited about what Taylor Swift is doing on the Internet,” said Warner Bros. Nashville Executive Vice President Bill Bennett. “It’s like the digital Fan Fair, where you actually have a chance to stay in touch with the artist. If you’re going to get the story of an artist told β€” if you want them to understand who (Warner Bros. artist Lori McKenna) is, it’s going to be through MySpace and YouTube and the Web site. Country radio may be the fifth or sixth spoke, as opposed to the first spoke, for some artists.”

Radio is still top route

Radio has been the first spoke for Rodney Atkins, who rose from obscurity two years ago to a place as one of country’s top 10 best-selling artists thus far in 2007. For Atkins, and for most country artists, FM radio remains the prime means to reaching an audience. At present, radio play lists are neither particularly daring nor unduly restrictive, neither classic-leaning nor pop-leaning.

“I don’t think there’s a musical trend right now,” Sony/BMG Chairman Joe Galante said.

Wade Jessen, director of charts and operations for Billboard and R&R, praised the sonic and thematic variety at country radio, citing the straightforward country sound of Billy Currington’s “Good Direction,” Brad Paisley’s lighthearted “Ticks,” inspirational ballads from Tracy Lawrence and Emerson Drive, Toby Keith’s up-tempo “High Maintenance Woman” and George Strait’s classic-sounding “Wrapped.”

Jessen sees the ascendance of independent label releases as another positive, though he said the lack of records breaking out of small-market stations is problematic. Smaller stations used to be apt to play more adventurous material before large-market stations took a chance, but most small stations now take their cues from major markets.

“The ‘starter’ stations aren’t out there in the numbers they were before, and that’s a product of conglomerated radio,” Jessen said. “In some respect, the format is upside down in terms of where the records begin.”

Galante worries that radio programmers’ research tools are antiquated. Programmers test listeners’ reaction to snippets of each single to see what songs might cause audience members to change the station (the ultimate horror of horrors for radio), and it turns out that many songs that “test well” are dunces at retail.

“Some things are researching tremendously but aren’t scanning,” Galante said. “You’re losing an audience. People like vanilla, but they aren’t passionate about it. The biggest problem with radio today is an over-reliance on research.”

Touring is a plus

Satellite radio stations XM and Sirius provide plenty of chance-taking, but those stations aren’t yet driving sales. Digital services such as iTunes provide variety and convenience, but … you guessed it. Galante said between 15 percent and 25 percent of pop music sales are digital, while country digital sales peak at about 10 percent of total sales.

On the doom-and-gloom front, country sales aren’t helped by the current economy. A housing slowdown affects buyer habits, high gas prices affect buyer habits, and all that plus the Wal-Mart physical product cutback creates a unfavorable scenario.

“It’s definitely not as healthy as it was last year,” Goodman said.

Still, a slew of major artists are planning releases in the year’s second half, so the total for 2007 shouldn’t be nearly so bad as the current tally. And, in spite of gas prices that are running about 20 cents higher than at this time last year, Creative Artists Agency agent Rod Essig said country touring was doing as well as ever.

“We’re definitely not hurting right now,” Essig said. “We’re holding our own with last year, which was a big, big year. Tour ing is social, it’s fun, and it’s not exactly what you’d hear on the album. It’s unique. And it’s something you can’t download.”

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