Fourth Quarter Business...

[From New York Times]

CD's Crowd Holiday Market
By LYNETTE HOLLOWAY
November 18, 2002


Stung by an alarming decline in CD sales, record executives began releasing an unusually heavy blitz of big-name artists last week in hopes of drawing big holiday sales.

In the largest release schedule of major artists in recent memory, label executives are rolling out more than two dozen releases through Dec. 17, music industry experts say. The danger is that the strategy could end up being counterproductive. An executive at BMG, the music division of Bertelsmann, said that there was a glut of new releases and that he hoped they would not cancel each other out.

The five major record companies are struggling to gain ground in a market that has shrunk in part because of free Internet file-sharing and a sluggish economy. Total music sales are down 12.9 percent so far this year compared with the same period in 2001, according Nielsen Sound-Scan, which tracks music sales.

Holiday marketing has traditionally been important to the music business, but a sales decline during the season last year has prompted the industry to become particularly aggressive this year, music executives said.

Some executives are using creative promotional campaigns. Def Jam, a unit of Universal Music Group, a subsidiary of Vivendi Universal, is offering buyers two discs for the price of one with the purchase of Jay-Z's new release, "The Blueprint2: the Gift and the Curse." Elektra, a unit of Warner Music Group, is promoting Missy Elliott's new release, "Under Construction," by offering consumers a chance to win $1 million through a worldwide wireless telephone contest. Some labels have included a DVD with their releases.

Street teams are out in force. The teams consist of young men and women whose job is to persuade D.J.'s at hot clubs to play new singles and generate street buzz.

Besides Ms. Elliott, the list of female artists includes Jennifer Lopez, Whitney Houston, Mariah Carey, Faith Hill, Shania Twain, Ashanti, Shakira and TLC. Besides Jay-Z, the male vocalists include Snoop Dogg, DMX, Ja Rule, Nas, Phil Collins, Elton John, the late George Harrison, Paul McCartney and Justin Timberlake. Eminem still dominates the charts with singles from the "8 Mile" soundtrack, which was released early in the fourth quarter. Several groups will release albums, including U2, B2K and Dru Hill.

Sylvia Rhone, the chairwoman and chief executive of Elektra Records, said that Ms. Elliott's release was the label's "big event album." Last week, Ms. Elliott's single, "Work It," was No. 1 on Billboard's Rhythm & Blues and Hip-Hop charts.

"There are an unusual amount of platinum-plus artists being released at around the same time," Ms. Rhone said. "The retail traffic will be stimulated by the new releases."

This year's list of big-name fourth-quarter releases is long compared with last year, when the only major female vocalists, or "divas," competing for sales were Britney Spears and Madonna. The list of bands included Creed, No Doubt and Aerosmith.

Last year, fourth-quarter sales were 31.9 percent of the music industry's total sales, compared with 32.5 percent the previous year, according to Nielsen SoundScan. Though the drop was slight, the industry took notice.

"The fourth quarter for us begins in August," said Julie Greenwald, executive vice president of the Island Def Jam Music Group. "We put together a plan. We say, `What's the album? What's the single? What's the video?' You want to drop all of your big boys and girls to get the sales."

Gone are the days when artists could release an album, sit back and watch sales roll in. Many must appear on television and visit radio stations to produce sales. They also need to be popular enough to appear on the covers of major magazines and have their names dropped in gossip columns, industry experts say.

Jay-Z, for example, went on a coast-to-coast radio talk show tour last Wednesday, the day after his album was released, Ms. Greenwald said. She said Mariah Carey would be interviewed on "The Oprah Winfrey Show"; Sum 41 would be interviewed by David Letterman and appear on Mad TV, a comedy show on Fox; and Shania Twain, the country singer, would be interviewed on a Katie Couric special.

Even divas cannot rest on their laurels. They must constantly reinvent themselves, and the field is crowded this year, industry experts say.

Ms. Lopez, who sings for Epic Records, a unit of Sony Music, will give her fans something different from her usual hip-hop genre, and industry experts expect good sales results. On her new album, "This Is Me . . . Then," scheduled for release on Nov. 26, she will offer more ballads, music industry experts say.

But with Ms. Houston and Ms. Carey both trying to make comebacks, sales are a little more uncertain, the industry experts say. Both have had trouble securing radio play for their new singles. Representatives from their labels are working aggressively to get them to stand out. Ms. Houston performed at the MTV Music Video Awards in Europe last week. Ms. Carey has been making a concerted effort to be seen in public.

The divas are not the only ones jockeying for position. The managers for Justin Timberlake, the lead singer for 'N Sync, who just started a solo career, said that they hoped that he could continue to dominate the charts after a strong debut on Nov. 5. Last week, his album was No. 2, behind the "8 Mile" soundtrack, selling 439,000 units, according to Nielsen SoundScan. Music industry experts said that he could get lost in the shuffle of new releases.

However, "We're not worried," said Ken Sunshine, Mr. Timberlake's spokesman. "I think his first week's sales were extraordinary in a sales quarter reserved for superstars."

NEWSFILE: 18 NOVEMBER 2002