When the Perfect Storm Hit Labels

In 2000, seven albums sold more than 5 million copies each in the U.S., with Eminem’s “The Marshall Mathers LP” selling more than 9 million.

During 2001, not a single release reached the 5 million mark, and the two top sellers will be holdovers from 2000: Shaggy’s “Hotshot” and Linkin Park’s “Hybrid Theory” are vying for the honor, but the 2001 total of each will be about half of Eminem’s from last year.

Meanwhile, where the Top 20 albums of 2000 sold more than 91 million combined, the Top 20 sellers of 2001 will total less than 70 million.

In the first 50 weeks last year, more than 717 million albums were bought in the U.S. It’s 697 million for the same period this year. The drop of about 3% doesn’t sound like much, but it’s the first time in the SoundScan era that there’s been a decrease in U.S. album sales.

In a business that lives and dies by its blockbusters, that’s a cold shock against an already bleak background. “The pie is shrinking” could be the mantra of the music industry. The recession and a changing national mood have chilled business, which even before Sept. 11 was off from last year.

At the same time, it’s getting more and more costly for record companies to get their pieces of the pie.

Two years ago, major company executives surveyed by Pop Eye moaned that a gold record (sales of 500,000) no longer guaranteed profit. Today, the same executives glumly note that with escalating production and promotion costs, even the platinum level (sales of 1 million) no longer guarantees a profit for many high-profile releases.

And this in a climate of turmoil and uncertainty, with artists in revolt over contractual issues, the nagging consumer culture of downloading and copying music rather than paying for it, and trends becoming harder than ever to gauge or predict. Meanwhile, the supposed synergy of the new generation of multimedia giants--with Vivendi Universal Entertainment and AOL Time Warner claiming nearly half the U.S. music market--has yet to have conclusive effect.

Add the global belt-tightening of the Big Five music distributors’ parent corporations, and you have a business hit by the perfect storm, an unprecedented combination of forces resulting in layoffs and shake-ups that have left it battered.

Still, there were successes in 2001. Vivendi Universal’s Universal Music and Video Distribution again dominates, with a 27.62% market share of current releases and a 26.43% share when catalog sales are figured in. (Catalog is the industry shorthand for the older titles that account for much of music store inventory and sales.)

As the only one of the Big Five to show increasing profits in the eroding marketplace, Universal stands to beat its record last year when it became the first music company to top $1 billion in earnings before interest, taxes, depreciation and amortization.

Among individual labels, Sony’s Columbia continues its success streak of recent years, with its 8.23% share of current sales giving it a razor-thin lead over Universal’s triple-headed Interscope Geffen A&M; (8.22%), and 8.18% of the overall market combing new and catalog sales (ahead of Interscope Geffen A&M;’s 7.01%).

Here’s a roundup of how the major labels stand at the close of 2001, organized by distribution groups. Sales figures are from SoundScan through Dec. 16, with rankings based on new-product market share.

Universal

Market share: new releases, 27.62%; total, including catalog, 26.43%.

Interscope Geffen A&M;

With co-founder Ted Field having left to start a new label with ArtistDirect and President Tom Whalley gone to reshape Warner Bros. Records, Chairman Jimmy Iovine has restructured, with executives Mark Williams, Jordan Schur and Ron Fair in charge of the Interscope, Geffen and A&M; brands, respectively. Limp Bizkit, Eminem associates D12, another posthumous 2Pac album, Eve, the “Moulin Rouge” soundtrack and big carry-over from U2’s “All That You Can’t Leave Behind” from 2000 were among the hits. But Bubba Sparxxx fizzled after Sept. 11 (too much of a novelty?) and Weezer faded after a great start, with Interscope Geffen A&M; overall losing market share from 2000.

Biggest 2001 album: Limp Bizkit’s “Chocolate Starfish and the Hot Dog Flavored Water,” a 2000 release that sold 2.4 million in 2001.

Number of albums in the list of the year’s Top 200 sellers through Dec. 16: 14.

In 2002, keep an eye on: new albums by Eminem and Dr. Dre.

Island Def Jam (includes Mercury, Lost Highway)

A career year for President Lyor Cohen, with Def Jam’s rap roster of Ja Rule, Jay-Z and Ludacris. And he finally hit pay dirt in the rock world--people laughed at the expensive deal with the hard-rock Roadrunner label when prized band Slipknot tanked, but then Nickelback took up residence in the Top 10 as its “Silver Side Up” sold 2 million in 14 weeks. Meanwhile, Nashville joint venture Lost Highway’s old-timey “O Brother, Where Art Thou?” soundtrack could be the story of the year.

Biggest 2001 album: “O Brother, Where Art Thou?,” 3.1 million.

Albums in the year’s Top 200: 19.

Keep an eye on: Shania Twain, who returns with a new album for Mercury.

DreamWorks

Still unable to make much commercial headway with the artistic-oriented roster it originally pursued (with musicians such as Rufus Wainwright and Elliott Smith), DreamWorks had 2001 breakthroughs with the mainstream rock of Lifehouse and Alien Ant Farm and the rhythmic pop of Nelly Furtado.

Biggest 2001 album: Lifehouse’s “No Name Face,” 1.9 million.

Albums in the year’s Top 200: 7.

Keep an eye on: A debut from Sparta, one of two splinters from much-acclaimed rock band At the Drive-In, which split up in early 2001.

MCA

The company’s best-seller of 2000 is also its best-seller this year: Shaggy’s “Hotshot,” which is dueling with Warner Bros.’ Linkin Park for 2001’s top-seller honors. Of new releases, Blink-182 remains a punk-pop franchise with nearly 1.5 million for “Take Off Your Pants & Jacket” (although that’s far less than the band’s last studio album), and Mary J. Blige’s “No More Drama” has reached 1.4 million and goes into 2002 with momentum.

Biggest 2001 album: Shaggy’s “Hotshot,” 4.5 million.

Albums in the year’s Top 200: 6.

Keep an eye on: Snoop Dogg, who makes MCA his new house with a label deal. Also watch for Icelandic band Sigur Ros, which is trying for sales to match critical acclaim.

Universal Records (includes Motown)

As at MCA, its biggest 2001 seller was also the biggest 2000 seller, Nelly’s “Country Grammar.” Afroman’s party-minded “Good Times” started strong but stalled after Sept. 11. The Motown legacy still seems adrift, with acclaimed India.Arie its biggest seller, still at less than a million.

Biggest 2001 album: Nelly’s “Country Grammar,” 2.4 million.

Albums in the year’s Top 200: 5.

Keep an eye on: Nelly--the label’s reigning sales champ is due back.

BMG

Market share: new releases, 16.72%; total, 14.5%.

Arista (includes Bad Boy, La Face)

Still shadowed by founder and predecessor Clive Davis, President and Chief Executive Antonio “L.A.” Reid can claim several 2001 successes. Pink ends the year as one of pop’s hottest acts, Usher not only sold more than 2.1 million with “8701,” but has also solidified a star presence in the market, and Dido’s 2000 release, “No Angel,” transcended its Eminem boost and sold 2.3 million in 2001. Bad Boy’s smooth soulsters 112 and teen team Dream added to the luster (1.65 million and 1.47 million, respectively). However, P. Diddy’s “The Saga Continues” is still short of a million--and Reid is expected to sever ties with his expensive Bad Boy operation in early 2002.

Biggest 2001 album: Dido’s “No Angel,” 2.3 million.

Albums in the year’s Top 200: 11.

Keep an eye on: Santana’s follow-up to “Supernatural.”

RCA

The Dave Matthews Band’s “Everyday” carried the company for the year, with strong sales from David Gray’s 2000 release “White Ladder” (on the Matthews-headed ATO sub-label), but the label is still a cellar dweller. A new signing, the Strokes, got plenty of attention and critical accolades, but the sales haven’t come yet.

Biggest 2001 album: Dave Matthews Band’s “Everyday,” 2.9 million.

Albums in the year’s Top 200: 5.

Keep an eye on: new albums from Christina Aguilera and the Foo Fighters.

Zomba Group (Jive, Volcano)

BMG makes little money from its affiliation with the booming independent group, but Zomba continues to prop up the distributor. ‘N Sync’s “Celebrity” (4.1 million), Britney Spears’ “Britney” (2.3 million and still selling strong) and Aaron Carter’s “Aaron’s Party” (1.4 million) bucked the downward trend in the teen-pop world. On Volcano, Tool’s “Lateralus” was among the year’s hard-rock leaders (1.6 million).

Biggest 2001 album: ‘N Sync’s “Celebrity,” 4.1 million.

Albums in the year’s Top 200: 10.

Keep an eye on: the Backstreet Boys. Is the lackluster performance of their “Greatest Hits” a warning sign?

J Records

In its first eight months, Clive Davis’ joint venture with BMG, formed after he was ousted from Arista, achieved three Top 10 debuts, led by Alicia Keys’ “Songs in A Minor,” a good bet for major Grammy honors.

Biggest 2001 album: Keys’ “Songs in A Minor,” 3.7 million.

Albums in the year’s Top 200: 3.

Keep an eye on: Angie Stone’s “Mahogany Soul.” Can it garner sales to match its critical acclaim?

Wind-Up Entertainment

All you need is Creed.

Biggest 2001 album: Creed’s “Weathered,” 2.3 million (and climbing fast).

Albums in the year’s Top 200: 4 (all but one by Creed).

Keep an eye on: Creed--naturally.

Sony

Market share: new releases, 15.79%; total, 15.6%.

Columbia

Destiny’s Child remains in the pop elite, but Chairman Don Ienner’s company continues to look strong from top to bottom, with 2001 million-sellers including mainstream rock arrival Train, hard-edged Crazy Town and junior rapper Lil’ Bow Wow. Meanwhile, career artists Barbra Streisand and Bob Dylan anchor a solid foundation, and Pete Yorn, John Mayer and Five for Fighting are all being built with a long-term view in mind.

Biggest 2001 album: Destiny’s Child’s “Survivor,” 3.6 million.

Albums in the year’s Top 200: 21.

Keep an eye on: Lauryn Hill. Will she deliver her much-anticipated follow-up to her Grammy-sweeping 1998 album “The Miseducation of Lauryn Hill”?

Epic

The addition of a Ja Rule duet gave Jennifer Lopez’s “J.Lo” a remarkable second wind, while Sade’s return and Jill Scott’s enduring debut sold well. Michael Jackson’s “Invincible” is dropping on the charts, and has little chance of delivering major profits in the wake of huge production and promotion costs. Incubus and Shakira have gotten off to good starts, but Macy Gray’s heavily marketed “The Id” has yet to reach 500,000.

Biggest 2001 album: “Now That’s What I Call Music Vol. 6” compilation, 3.1 million. (It’s a limited victory: The major labels partner to create the “Now” collections of recent hits, and everybody involved gets a chunk of the profits.)

Albums in the year’s Top 200: 13.

Keep an eye on: A new album from Korn due in the spring.

WEA

Market share: new releases, 14.4%; total, 15.96%.

Warner Bros.

Tom Whalley arrived as new chairman with the company on a roll. Linkin Park’s “Hybrid Theory,” released in late 2000, could end up this year’s biggest album, and Enya’s “Day Without Rain,” also a holdover from last year, has been one of the biggest hits this fall. Both are hotter than ever heading into 2002. Whalley’s A&R; presence, veteran President Phil Quartararo’s promotion skills and new head of marketing Jeff Ayeroff’s creativity give the company new confidence.

Biggest 2001 album: Linkin Park’s “Hybrid Theory,” 4.2 million.

Albums in the year’s Top 200: 11.

Keep an eye on: New albums from Red Hot Chili Peppers, Goo Goo Dolls and Alanis Morissette.

Atlantic

Uncle Kracker spun off from Kid Rock with his 1.5-million-selling debut album, the Christian-themed growlers of P.O.D. are among the hottest hard-rockers of the fall, and English soul phenom Craig David is starting to take off here. But Sugar Ray didn’t come close to past successes, and recent releases from Kid Rock and Jewel got off to sluggish starts--although they’re picking up some steam now. Stone Temple Pilots and Tori Amos each barely got past 300,000 in sales, while Bush didn’t even make the year’s Top 200.

Biggest 2001 album: Uncle Kracker’s “Double Wide,” 1.5 million.

Albums in the year’s Top 200: 10.

Keep an eye on: Brandy’s new album, due in February.

Elektra

Staind’s “Break the Cycle” is the year’s No. 2 rock album and Missy “Misdemeanor” Elliott’s “Miss E ... So Addictive” is respectable at 1.4 million--although with its ubiquitous “Get Ur Freak On” hit single, it perhaps should have sold more. But after rapper Fabolous’ “Ghetto Fabolous” at 670,000, Metallica’s 10-year-old “Metallica” was the label’s next-best seller.

Biggest 2001 album: Staind’s “Break the Cycle,” 4 million.

Albums in the year’s Top 200: 4.

Keep an eye on: a new Metallica album.

EMI

Market share: new releases, 10.55%; total, 10.62%.

Capitol

Brought in by EMI chief Ken Berry, former manager-producer Andy Slater (Wallflowers, Macy Gray) took over as president midyear with a big job to do--and the task of folding in rap power Priority added to it after Berry was replaced by Alain Levy. Catalog (the Beatles, Pink Floyd, Bob Seger, Poison) overshadowed current releases, with only Coldplay’s “Parachutes” and Radiohead’s “Amnesiac” doing well among newer titles, and neither reaching a million for the year. Capitol’s Nashville branch embraced the return of Garth Brooks, whose “Scarecrow” has sold 1.6 million.

Biggest 2001 album: the Beatles’ “1,” 2.8 million.

Albums in the year’s Top 200: 10.

Keep an eye on: New releases from Slater’s first wave of signings.

Priority

Now folded into Capitol and with founder Bryan Turner gone, the semi-autonomous Priority wraps up with a hit from Snoop Dogg--who has now also left the company.

Biggest 2001 album: Snoop Dogg’s “Tha Last Meal,” 1.3 million.

Albums in the year’s Top 200: 2.

Virgin

While some companies had bad years, Virgin’s was an annus horribilis, with true tragedy in the plane-crash death of young star Aaliyah. Mariah Carey’s emotional and commercial meltdown around the release of her “Glitter” album--the first release of a reported $80-million deal--shook the company’s financial foundations, and the loss of touted new artist Custom over alleged harassment by now-departed executive Nancy Berry further hurt morale. Janet Jackson’s “Janet” performed well, but Lenny Kravitz’s new “Lenny” is off to a slower-than-hoped-for start, and Mick Jagger’s “Goddess in the Doorway” hasn’t come close to justifying its huge promotional campaign.

Biggest 2001 album: “Now That’s What I Call Music Vol. 7” compilation, 2.8 million. (Again, not a totally in-house product.)

Albums in the year’s Top 200: 9.

Keep your eye on: Levy’s mandate for profits.

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Steve Hochman is a frequent contributor to Calendar. Jeff Leeds is a Times staff writer.