Music Merchants Hope Upcoming Albums Put Pop Into Sales Fizzle

As the curtain opens on the holiday shopping season, record retailers are nervously waiting to see whether a jammed slate of superstar albums can salvage a flat year in pop music.

With two months to go until Christmas, music stores have sold an estimated 538 million albums this year through Oct. 14, about 1.8% less than during the same period last year. Unless a roster of major releases comes to the rescue, the music industry faces the prospect of seeing CD and cassette sales slip year-to-year for the first time since SoundScan began tracking the music market a decade ago.

“We need something that has mass appeal, especially this time of year, to bring the consumer into the store,” said Michael Goldwasser, president and chief executive of the 115-store Music Network chain. “This year hasn’t been great. But it hasn’t been devastating. I say everything depends on the fourth quarter, and I couldn’t give you a prediction.”

Analysts attribute this year’s grinding slowdown to the fact that music fans are spending money on other forms of entertainment, such as video games and movies. In addition, retail executives say, Internet piracy and the spread of CD burners might be crippling sales in some markets.

Record store owners have complained about tepid sales of new albums for much of the year. But the quality of new releases isn’t the only problem for retailers. The compact disc explosion, fueled primarily by baby boomers replacing old vinyl record collections with more expensive CD versions, bottomed out years ago, and there is little consumer appetite for a new format.

Sales of CDs alone are running just 2.4% ahead of last year’s pace. A sharp decline in cassettes, which are being phased out by manufacturers, coupled with the weakening CD sales, means that record labels aren’t selling enough albums overall to increase their volume.

Moreover, the major labels are preparing to enter the business of selling music directly to consumers online, irking retailers dependent on bricks-and-mortar stores. And a continuing price war with discount houses has driven some chains to the brink, even triggering a bankruptcy filing this summer by 64-year-old chain National Record Mart.

Executives at several major record labels said this week they are uncertain about record stores being able to pay their bills in January.

“Payments are slower than ever before. Past dues [bills] are greater than ever before. The financial health of the major [retail] accounts is weaker than ever before,” said the chairman of one label who spoke on condition of anonymity.

Retailers are now becoming skittish as truckloads of new product from such big sellers as Lenny Kravitz, Madonna and Garth Brooks begin to arrive at their stores. The stakes for this holiday season are even higher, record executives say, because the labels have stockpiled more of their biggest potential hits than usual for this year’s fourth quarter.

Music merchants must sell an estimated 247 million albums before the holiday season ends to break even with last year’s volume.

But the recent lackluster debuts of anticipated hot-sellers by Mariah Carey and Macy Gray have frazzled nerves even further. Compounding the problem is the aftermath of the Sept. 11 terrorist attacks, which has wreaked havoc on release schedules and left consumer confidence a question mark.

Albums delivered by young acts such as Alicia Keys and P.O.D. have sold respectably in recent weeks. But executives are grumbling still about duds from touted acts such as Tyrese and Lil’ Romeo.

So retailers are banking on consumers flocking to stores to meet an avalanche of new rock, rap and pop albums from rapper DMX, rock band Incubus and pop icons the Backstreet Boys, followed next month by albums from such acts as Kid Rock, Creed and Britney Spears.

But there are so many major releases coming out that some retailers are concerned consumers might be overloaded.

“The problem if everything gets bunched together is there’s only so much disposable income,” said John Sullivan, chief financial officer for Albany, N.Y.-based chain Trans World Entertainment. “If you spread them out a little, you sell more.”

Even before the terrorist attacks, retail-chain buyers were growing more conservative, ordering two-or four-week supplies of albums instead of the usual six weeks’ worth or more, label executives said. That has some worried that the major chains won’t be able to replenish shelves fast enough should sales take off during the holiday rush.

In addition, some retailers have lowered their forecasts for first-week sales for one of the season’s most anticipated albums, “Invincible” by pop star Michael Jackson, saying the meager airplay received by his first single is likely to dampen fans’ interest. The top music executive at one of the nation’s biggest record merchants estimated the album would sell 300,000 copies its first week, about half the figure predicted earlier.

Overall, more records have crossed the million-sales mark during this year than last year. But at the top of the charts, this year’s biggest albums haven’t broken as big as last year’s mega-hits. In fact, the best-selling record of 2001 so far was released last year: Shaggy’s “Hotshot,” which has sold an estimated 4.4 million copies this year. Among albums released this year, the top seller so far is Staind’s “Break the Cycle,” which has sold about 3.5 million copies, according to SoundScan.

In contrast, blockbusters by such acts as Eminem and ‘N Sync had each sold more than 6 million copies by this time last year.

“The problem we’ve been having is we had a really soft release schedule this year, and everything was jammed into the fourth quarter. But I’m pretty sure it will all catch up with itself over the next couple of months,” said Stan Goman, chief operating officer of the West Sacramento-based Tower Records chain. “For the record companies, they’re banking on it.”