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Sales Off a Little . . . No, A Lot

Why are the record sales down so much?

Neon signs, neon, record shop, rock, lps, cassettes, singles

Neon signs indicate the various sections of a large record shop. Circa 1985.

f8 Imaging/Hulton Archive/Getty

How’s the U.S. record business doing these days? Don’t ask its official trade group, the Recording Industry Association of America (RIAA) – unless you can make sense out of its latest misleading and contradictory answers.

The confusion began after the RIAA released figures in early April indicating that, while sales of recorded music continued to slump for the fourth consective year, the rate of decline was easing. According to the RIAA, net shipments of records and tapes in 1982 were down only about three percent from 1981 (from 594 million units to 575.6 million units); dollar value, calculated at retail list prices, was down a mere one percent (from about $3.63 billion to $3.59 billion); and, rosiest of all, dollar volume at the wholesale level was only off by a negligible $17 million (down to $1.97 billion from just under $1.99 billion in 1981).

These figures made for nice reading, but they were wrong. As such industry trade magazines as Billboard were going to press, editors received an eleventh-hour surprise: a terse notification that the comforting 1982 figures had been arrived at by using a new market-research methodology. In other words, comparing the newly devised 1982 figures with the 1981 figures was very much like comparing apples with oranges.

The RIAA glumly admitted that, had the same method of calculation been used for both 1981 and 1982, the resulting figures would have revealed a less comforting drop of nine percent in both net unit shipments and retail dollar value and a corresponding decline of eight percent at the wholesale dollar-volume level.

As it happens, the RIAA does not have a complete statistical handle on the U.S. recorded-music industry. Most labels report the annual volume of their shipments to the RIAA, but a significant number of smaller companies do not. In the past, the RIAA has estimated that these maverick firms constitute about ten percent of the total industry, and has made its calculations accordingly. However, for 1982, the RIAA drew on data compiled by NPD Research, a company based in Port Washington, New York. NPD sends out monthly consumer diaries to 13,000 households across the country, requesting its respondents to record all commodities –— records and tapes, among many other things —– that they purchase. The RIAA saw this as a statistical breakthrough.

“Consumers say they bought an album, and obviously they bought it on a certain label,” explained Steven J. Traiman, executive director of the RIAA. “So, using a computer run of these labels, and just limiting it to U.S. labels, we’re able to get a much more accurate percentage of what consumers are buying . . . . It showed that we were undercounting the industry, because the nonreporting companies represented fifteen percent of the total industry, rather than ten percent. “

It’s a little confusing,” Traiman added.

So were subsequent statements by Stanley Gortikov, the president of the RIAA. Gortikov told Variety that the NPD research had enabled the RIAA “to identify sources of product that are sold at retail which we didn’t have a handle on in times past.” According to Variety, Gortikov then went on to enumerate these sources as imported records, unreported small-label releases and such illicit items as bootlegs and counterfeits.

This, of course, was clearly absurd: What conceivable role could imports play in U.S. record-industry volumes? And who could claim to know how many bootlegs or counterfeits were being bought?

As it turned out, there had been a misunderstanding, which Gortikov hastened to clarify. “Industry totals always have included both retail and direct-marketing [club, TV, mail order] units and dollars, but have never included imports or counterfeit, pirate or bootleg products.” Gortikov could not be reached for further comment.

So there. But so what? Despite some encouraging reports for the first quarter of 1983 (CBS Records, for instance, registered a 101 percent increase in earnings), the U.S. record business is still hurting —— no matter how one calculates the damages. Or miscalculates them. Why not just be candid?

“The reason we didn’t just change all the 1981 figures,” Traiman said, “was that, obviously, we’re in the home-taping battle, and they would say, hey, we’re trying to make things look worse than they are.”

But making things look better than they are? Perish the thought. The incomplete press releases? An oversight. Gortikov’s discovery of imports and illicit products? A misunderstanding. The RIAA does the best it can. Unfortunately, it is forced to make its calculations without the benefit of some crucial statistics. Like: How many records and tapes do people actually buy? And how many U.S. record companies are there, actually? The RIAA doesn’t know.

Asked about the possibility of determining the number of records actually purchased by consumers — —as opposed to the number of records shipped out by manufacturers –— Traiman said: “We never try to do that. Consumer-purchase data is excellent for trends, but there are too many variables, too many built-in biases of a mail panel, as opposed to a focus panel or a phone panel. It was felt that it wasn’t really valid to project this to a total-sales figure. Someday we may be able to, but not right now.”

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