A New, Uplifting Tune for Music Sales in 1st Quarter

Online music file sharing and other forms of piracy haven’t gone away, but a gradual turnaround in U.S. music sales that began in the fall has picked up in the first quarter of this year, resulting in the industry’s best domestic sales in years.

Overall U.S. music sales -- CDs, legal downloads, DVDs, etc. -- were up in the first three months of the year by 9.1% over the same period in 2003, Nielsen SoundScan said Friday. Album sales were up 9.2%. Sales of CDs, which represent 96% of album sales, rose 10.6%. For the first time since 2000, two recording artists -- Norah Jones and Usher -- managed to sell more than 1 million copies of their albums in a week this year.

“We’ve had a big run so far,” said Geoff Mayfield, director of charts and senior analyst for Billboard Magazine. “Because we’ve had three years of erosion, at least for the first eight months of the year, it will be relatively easy for the industry to post increases.”

The sales data are a bolt of encouragement to the industry, which was hit by a three-year sales slump it blames largely on file sharing. The downturn prompted a wave of restructuring by record companies and thousands of layoffs.

Cary Sherman, president of the Recording Industry Assn. of America, called the first-quarter figures “good news” but cautioned that the results were measured against a dismal period.

“The numbers of 2003 were down about 10% to 12% from the year before,” Sherman said. “If we didn’t have that kind of increase, it would be really terrible.”

U.S. album sales declined annually in the three years following 2000, the biggest year since Nielsen SoundScan began tracking U.S. music sales.

In 2001, sales were down 3%. The next year, sales dropped 11%. Last year, until September, sales were down 8.5%, but the pickup in sales at the end of the year narrowed the total decline for 2003 to less than 4%.

“This is an industry that is ... very cautious, because until this trend continues for a much longer period, they’re not going to take anything for granted,” Sherman said.

The burgeoning online music market accounted for the sale of more than 25 million tracks between January and March, eclipsing the 19.2 million tracks purchased in the last six months of 2003, according to Nielsen SoundScan.

Stores also saw gains. Chain stores’ music sales were up 7%, while independent music retailers saw a 3% increase. Discount chains such as Wal-Mart, Target and Kmart posted a 13% jump in sales compared with the same period last year, according to Nielsen SoundScan.

Industry observers said no single factor had driven the turnaround.

Mayfield sees similarities with the industry’s slump 20 years ago. Sales of disco music dried up after the dance scene fell out of vogue in the 1980s. In the 1990s, the Backstreet Boys, ‘N Sync and Britney Spears drew millions of teenage fans who had been out of the music marketplace, but sales didn’t keep up as the audience aged. “That music was hot, and nothing moved in to replace it,” he said.

He also draws comparisons between the loss of eight-track sales in the early 1980s and the phasing out of cassettes in this decade, a format that provided customers with a cheaper alternative to CDs.

The early 1980s and the early part of this decade were also marked by economic downturns. Conversely, the music industry was better able to weather the recession in the early 1990s because of CD sales driven by consumers replacing their vinyl record and cassette tape collections.