Em, U2 Can't Save 2004

Despite two blockbusters, CD sales slump continues

December 16, 2004 12:00 AM ET

Two new CDs cannot save a sinking holiday season. U2's How to Dismantle an Atomic Bomb and Eminem's Encore have sold a combined total of more than four million CDs since they came out in November, but the rest of the music market continues its dismal decline, with sales down for twelve weeks in a row compared with the same time last year.

Despite massive label layoffs and store closings, record executives had been optimistic for much of 2004 that a three-year slump was over. Sales rose about seven percent during the first half, and execs were upbeat about early smashes such as Norah Jones' Feels Like Home and Usher's Confessions. Many in the industry claimed that lawsuits against file-sharers had worked, driving music fans back to the record stores. But with just one big holiday-shopping week remaining, industry reps feared 2004 will end up with a disturbingly small one or two percent increase over last year.

So why did sales drop this fall despite the big business of U2, Eminem and other post-Thanksgiving blockbusters such as Clay Aiken's Merry Christmas With Love and Destiny's Child's Destiny Fulfilled?

"Although the big hits are bigger, there were fewer records released by superstars this Christmas than any Christmas in memory," says Jim Urie, president of Universal Music and Video Distribution. Many of the biggest discs came out on just two dates -- November 16th and November 23rd -- while 2003's top fall album, OutKast's Speakerboxxx/The Love Below, came out in September and sold strongly through Christmas. Also, this year's dramatic Thanksgiving-week discounts at Target, Circuit City and Best Buy on Top Ten albums drew shoppers to buy $7.99 hits but left many scoffing at paying $14.99 for everything else.

During the past few weeks, according to a Rolling Stone analysis of Nielsen SoundScan CD-sales data, more people bought Top Ten albums than at this time last year, but fewer bought other discs. Sales for Top Ten albums jumped sixteen percent from a year ago in the week of November 16th and 6.8 percent in the week of November 23rd. But overall sales dropped during the same period by a total of 7.9 and 5 percent, respectively. "Music has just been a little bit too compacted into three weeks," says Dave Alder, chief marketing officer of the Virgin Entertainment Group. "Customers only have so much money in their pockets, so congestion in the release schedule tends to stifle sales."


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