Slowdown in Record Sales Reported

New highs in both sales and total units shipped were set by the U.S. record industry in 1989, though the sales increase was modest compared to the spectacular growth of the previous two years, the Recording Industry Assn. of America reported Tuesday.

While the $6.46 billion sales figure and 800.7 million unit mark represented growths of 5% and 3.35% respectively, the industry had registered dollar increases of 20% in 1987 and 12% in 1988. The slowdown had been widely forecast by industry analysts during recent months.

“You had a couple great years before,” said Mara Balsbaugh, entertainment business analyst for Smith Barney in New York. “But I for one have been expecting most of the growth now to come from the foreign market, which it has. The dramatic growth (domestically) couldn’t keep happening.”

Growth in compact disc sales led the way in 1989, as it has the past several years, rising from about 150 million sold in 1988 to more than 207 million in 1989 (a gain of more than 38%). Meanwhile, cassettes lost ground, from 450 million units in 1988 to 446 million in 1989, though the format still represents the largest portion of U.S. sales.

Vinyl LPs and EPs continued to slip rapidly, down 52% from 72.4 million to just 34.6 million. The largest growth came from the relatively new cassette singles, which rose nearly 240% to 76 million sold, overtaking their vinyl counterpart, which dropped 44% from 65.6 million to 36.6 million.

Some in the industry have blamed flat sales on the consumer interest peak in cassettes, coupled with the relatively high price of CDs, but Balsbaugh believes lowering CD prices has been demonstrated as ineffective so far. However, she still sees potential for renewed growth in the U.S. market.

“Getting CD penetration into the market up further is going to be meaningful,” she said. “And introduction of new format (Digital Audio Tape) is going to help.”