SoundScan Uncovers Case of Falsified Sales : Company Confirms One Retailer’s Attempt to Manipulate System Used for Billboard Charts

SoundScan, the record industry’s “tamper-proof” sales monitoring system, acknowledged for the first time Tuesday that it has uncovered an attempt to manipulate its national pop charts.

Mike Fine, the firm’s chief executive officer, confirmed a report that a small independent retailer in Raleigh, N.C., falsified sales information for four R&B; singles.

Ever since SoundScan’s monitoring system revolutionized Billboard magazine’s charts in May, 1991, the New York research firm has been on the lookout for deviations that would suggest that someone is trying to tamper with the charts.

On Feb. 2, Fine was startled by what he saw: A Raleigh retailer reported selling 20 times as many copies of an RCA single--SWV’s “I’m So Into You”--as the amount reported by massive chain stores in New York or Los Angeles.

And that wasn’t all.

Three other R&B; singles were also reported by the same store to have sold 10 to 20 times as many copies as at any other outlet in the nation. The singles in question: S.O.U.L. S.Y.S.T.E.M’s “It’s Gonna Be a Lovely Day” on Arista Records, Tisha’s “Push” on Capitol and AZ1’s “Trust in Me” on Scotti Brothers.

“It was obvious we had a problem here,” Fine said Tuesday. “We contacted the retailer immediately and warned him that we would not tolerate this kind of aberration again.” Fine declined to identify the retailer.

The issue of SoundScan’s credibility is important because one of the company’s biggest selling points in persuading Billboard magazine to use its figures is its accuracy. The Billboard charts are used by retail stores and radio stations when they buy new products or add songs to playlists. The six major record manufacturers reportedly pay SoundScan about $5 million a year for its raw data.

Under SoundScan’s system, figures are entered into a computer every time a clerk runs an album through the bar code scanner at the sales register.

Sources said the Raleigh merchant tried to boost sales numbers this month by repeatedly putting an unsold copy of the record through the scanner, possibly at the urging of RichWeinman, owner of Best Performances Inc., an independent New York marketing firm. Weinman apparently was working on his own, with no authority from the record companies involved.

Officials for BMG and EMI Music--the companies that own RCA, Arista, Scotti Brothers and Capitol--said their companies did not participate in the incident and do not condone such practices.

In an interview Tuesday, Weinman acknowledged that he had sent a letter to record companies suggesting that his firm had ways of manipulating the ScoundScan system, including working with retailers to affect their sales figures.

But he maintained that the letter contained a typographical error--and that he wasn’t offering to falsify information. He denies asking the retailer to run unsold copies of the record through the scanner.

“There was a misunderstanding,” Weinman said of the letter. “We should have proofread that memo better. I think the retailer misunderstood our intentions. Our company is not interested in doing anything deceptive. Our goal is to instigate sales fairly through our unique sale-pricing program.”

Before SoundScan, Billboard magazine had relied on retail employee estimates of sales--estimates that could easily be affected by record company promotion staffs.

This is not the first controversy involving the SoundScan system. Some eyebrows in the industry were raised last summer when major record labels began giving away thousands of promotional copies of new singles to major chains, encouraging stores to significantly discount the songs to consumers. Customers do not pay full price for those singles, yet each cassette was scanned and counted as a sale by SoundScan.

SoundScan’s Fine said his firm considers such promotions short-term marketing ploys that do not distort the total sales picture. He wasn’t so easy on those who try to supply false information to his company though.

“We hope the fact that we caught these people will serve as a deterrent to others,” Fine said. “The next time anybody tries to supply false information, they’re history.”