Bleak days ahead

[brownie]

From Billboard, via Reuters.

BLEAK FRIDAY BEGINS HOLIDAY SEASON FOR MUSIC RETAILERS

By Ed Christman

Sat Dec 1, 12:33 AM ET

Disappointing sales performance during Thanksgiving weekend has merchants feeling pessimistic about music's prospects for the holiday selling season and worried about what will happen to CD sales in the new year.

Merchants reported a comparable-store music sales decline ranging from 15 percent to 25 percent for the weekend that begins with Black Friday, although they said robust movie and videogame sales helped soften the blow.

Nielsen SoundScan data backs up those merchants' reports. Album sales totaled 13.9 million during the week ended November 25, an 18 percent decline from the 17 million sold last year during the Thanksgiving weekend.

Merchants cited the lack of hit releases as the main reason for the decline. "If the labels had put out a new hit CD for the week, sales might not be down so much," Newbury Comics head of purchasing Carl Mello said. "You have to put something out to get people to buy music."

Mello wasn't the only merchant feeling frustrated by the release schedule.

"I can't remember a Thanksgiving that didn't have any superstar releases on the Tuesday before," Value Music president Rob Perkins said.

'DREAMING' PAYS OFF

At the 25-unit, Brighton, Mass.-based Newbury Comics, CEO Mike Dreese reported that "our biggest new release during Thanksgiving was OneRepublic ("Dreaming Out Loud"), which sold 489 units." But during Thanksgiving week 2006 at Newbury, he said, seven new titles -- by Jay-Z, the Beatles, Killswitch Engage, Tom Waits, Brand New, U2 and Snoop Dogg -- exceeded that figure.

Even the Latin market suffered from a lack of releases, said Ritmo Latino president David Massry, who called the holiday weekend "very disappointing."

Not everyone had a bad holiday, however. Label executives said Best Buy, Circuit City, Target and Wal-Mart had strong music sales -- at least on Black Friday, if not for the whole weekend. Wal-Mart's combined sales for top hit titles were up nearly 50 percent, sources said, but that apparently was largely due to its Eagles exclusive and Garth Brooks' "Ultimate Hits." Wal-Mart is traditionally the No. 1 seller of Brooks titles, even when it's not carrying a Brooks exclusive.

Online merchants also enjoyed a Thanksgiving bonanza, according to Alan Tuchman, CEO of Alliance Entertainment Corp., the largest music fulfillment wholesaler for online stores. "Our overall online business was up significantly during the weekend, beginning Thanksgiving day," he said. "We were up about 15 percent."

By store type, album sales at chains (including merchants like Trans World, Best Buy and Barnes & Noble) were down 40 percent, indies were down 22.6 percent, and mass merchants were down 6 percent. However, nontraditional outlets were up 17.7 percent.

A lot of attention goes to the post-holiday "Cyber Monday," but Tuchman said Thanksgiving Day itself was huge. "When people didn't have broadband at home there might have been a Cyber Monday," he said. "But nowadays people are at home on their PCs and laptops looking at the Black Friday advertising deals and buying away."

SOFTWARE SHINES

The biggest-selling title at most traditional music stores was Josh Groban's "Noel," which scanned 405,000 units last week, according to Nielsen SoundScan. The No. 2 title was Alicia Keys' "As I Am," which scanned 349,000.

This year, however, only 11 titles topped the 100,000 mark, compared with 19 titles last year. Overall the top 20 of the Billboard 200 produced nearly 2.9 million units, a 23.8 percent decline from the 3.8 million units that albums in the top 20 scanned in the same week last year.

Regardless of new releases, hit albums were scarce and couldn't stand up to other entertainment software products.

"The holiday weekend may sound like a sales disaster, but that is only if you are worried about music," Newbury Comics' Dreese said.

Other product lines helped make up for some of the music shortfall, as merchants reported that overall comparable-store declines ranged from 4 percent to 10 percent.

At the 10-unit Exclusive Co. in Oshkosh, Wis., for example, general manager Stephanie Huff reported that DVDs were up 216 percent Thanksgiving week. TV shows drove the DVD surge, she added.

Such videogames as "Guitar Hero" and game platforms also pushed traffic into stores. In fact, Nintendo's Wii system is already out of stock at most stores, and it looks as though skimpy product allocations will keep customers roaming from store to store to find the item.

Value Music's Perkins said the calendar could help retailers this year. "There are 32 days between Christmas and Thanksgiving," he said. "That extra day is humongous and will give us a positive impact at the end."

But another merchant said the weak music performance so far leaves him worried about next year. "It ain't looking good," he said.

Reuters/Billboard

[J Larsen]

Merchants reported a comparable-store music sales decline ranging from 15 percent to 25 percent for the weekend that begins with Black Friday, although they said robust movie and videogame sales helped soften the blow.

This may be nitpicking, but if you are worried about the future viability of the format, I'm not sure that comp-store sales (dollar value of sales in stores in a given period in stores that were open last year divided by the dollar value in sales in those same stores last year) is the right figure to look at. I think total units this year divided by total units last year and total dollar value of sales this year divided by total dollar value of sales last year would be more interesting. Weak same-store sales indicates that there is likely to be shake-ups on the retail level, but doesn't have to mean that demand for the product is waning. However, I will admit that in this case it is probably both effects.

[vibes]

I don't think that comp store sales are very valuable for entertainment categories. They're helpful for measuring the results of one or multiple retailers on the whole, but not as helpful at the product category level, especially in categories that are driven by the creation of new art, as opposed to technologically-driven. I think the major callout here is that people aren't buying what the industry is creating and trying to sell, which suggests that the industry is out of touch with consumers, among other things (shocking, I know).

[Matthew]

Merchants cited the lack of hit releases as the main reason for the decline. "If the labels had put out a new hit CD for the week, sales might not be down so much," Newbury Comics head of purchasing Carl Mello said. "You have to put something out to get people to buy music."

Honestly, there is nothing new that is being released this season. How can the majors complain about sales when they don't put anything worth while out? Jazz & Rock especially are yawn inducing in their releases (well except that Brotzmann Die Like A Dog box set), if it wasn't for wanting to complete my Grateful Dead collection, I wouldn't be buying anything this season. Next year, I fear, is going to be the year the cd died.....

Edited December 1, 2007 by Matthew

[montg]

Next year, I fear, is going to be the year the cd died

Next year may be the year the major labels died--or at least abandoned the music bidness. Hopefully, the vaults will open to some specialty companies like Mosaic as the majors give up the their vain, greedy fight.

[The Magnificent Goldberg]

I thought this bit was interesting.

Online merchants also enjoyed a Thanksgiving bonanza, according to Alan Tuchman, CEO of Alliance Entertainment Corp., the largest music fulfillment wholesaler for online stores. "Our overall online business was up significantly during the weekend, beginning Thanksgiving day," he said. "We were up about 15 percent."

Alliance Entertainment is, I believe, the firm that owns Concord (at least, they bought it a decade or so ago). If they're doing well, there's hope for the Fantasy catalogue.

MG

[The Magnificent Goldberg]

Next year, I fear, is going to be the year the cd died

Next year may be the year the major labels died--or at least abandoned the music bidness. Hopefully, the vaults will open to some specialty companies like Mosaic as the majors give up the their vain, greedy fight.

It might be nice, but I can't say I'm optimistic.

MG