Has the music stopped for the broken record business?
Pearl Jam and Gregg Allman may have new albums out Tuesday but with CD sales of chart toppers historically anemic the first weeks of 2011, record companies can't rely on old faves to keep beating the declining odds.
“No other industry will go through as much change as the music industry will in the next six months,” a major-label senior executive told TheWrap.
What exact form that change will be is still taking shape but some hard realities in the trouble industry are apparent. The industry’s death knell has rung louder each passing year since CDs sales peaked at the turn of the century.
Today the downbeat biz is financially shrinking, reshaping structurally and upending leadership at a combined tempo perhaps swifter than at any time since freely-shared files and 99-cent digital singles began to disrupt age-old record-label economics a decade ago.
Last year, according Nielsen SoundScan, album sales at retail fell almost 13 percent, . Translation: The sheer 326.2 million CDs purchased in 2010 were, for the fourth straight year, 20 percent fewer than the year before. While the numbers are not known yet, the value of record-label shipments industrywide undoubtedly fell in 2010 from 2009’s $7.7 billion, which was 12 percent down from the year before.
In the early weeks of the New Year, Taylor Swift held onto the chart top spot with 52,000 copies of “Speak Now” purchased, the puniest sales for a No. 1 album in 20 years of SoundScan tracking. On Sunday, the blog FutureHit.DNA posted an obit on an entire genre, rock, blaming the figurative fatality on the music-business environment.
“The business of selling music is over as we knew it," a former label chief said to TheWrap. "And the future of it is yet to be determined by anyone.”
On New Year’s Day, though, an ongoing changing of the industry guard propelled CEO Lucian Grainge to Universal Music Group helm with a mandate to cut “a lot of fat…without hurting muscle and bones.”
Anxiously, the world’s largest music company--where Lady Gaga, Kanye West and Justin Bieber record—now is bracing for Grainge’s projected hit list of cost-cuttings totaling $50 million to $90 million all the way to a remarkable $400 million. Those cuts will include dozens, if not hundreds, of jettisoned music workers, according to three senior insiders who spoke to TheWrap.
One highly placed Universal insider insists it’ll all be done discreetly and surgically, with a series of back-office meshing, a dozen employees quietly lopped here, 15 or so there. The budgeting for picking talent and hits will be exempt. Like other labels have already, Universal Music will drum up new revenues by expanding into new services, including managing artists and promoting their tours, not just the dismal business of putting out records.
Doug Morris, out as Universal Music’s CEO but left in place as the figurehead chairman until yearend, is negotiating an early escape to lead Sony, the No.
