Digital tracks now dominate music industry

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NEW YORK -- It sounds like a horror movie: a beloved friend is callously exterminated, then reincarnated in a different form to wreak havoc on the killer.

That's the nightmare currently facing the music industry. Almost a decade after virtually eliminating 45s and cassette singles, thereby forcing fans to spend more money on whole albums, the digital single is largely responsible for the industry's woes.

Consumers no longer need to buy an album if they want that cool jam they heard on the radio -- and in growing numbers, they're choosing 99-cent downloads over $15 CDs.

Some worry this trend is worsening the quality of albums as a cohesive musical work, and that label executives are more and more interested in quick hits than lasting music or artists.

While the vast majority of music consumers still buy CD albums, they are buying less of them, while digital tracks are exploding: According to Nielsen SoundScan, sales of physical CDs this year have declined 20% from the same point in 2006, from 112 million to 89 million. Digital tracks are up to 288 million from 242 million at the same period last year. And that's not counting the millions of singles that are illegally downloaded.

"Now, we're in a very difference place in terms of the single business," Jim Donio, president of National Association of Recording Merchandisers, said in an interview. "The single business is alive and well, and it's in the form of track downloads."

The same cannot be said, however, for albums. Even counting albums that are downloaded along with physical CDs sold, album sales are down 10% from the same period last year, according to Nielsen SoundScan, continuing a decline that has been growing for several years.

The industry's hard times are evident in recent label consolidations, widespread layoffs, reduction in budgets and an overall air of belt-tightening.

In 1996, music companies shipped more than 1.1 billion units -- all physical product -- for a value of $12.5 billion, according to the Recording Industry Association of America. Ten years later, despite a decline in physical product sold, they industry has "shipped" approximately 1.6 billion units -- but its value is down by a billion dollars, to $11.5 billion.

"There's probably a fair amount of purchases that would have been albums but are now individual track sales instead," said Geoff Mayfield, director of charts at Billboard magazine.

And at 99 cents or so, singles bring in much less profit than albums (which is why iTunes has been pressured by record companies to raise their prices).

Other signs show of the singles-driven market: One of the most consistent album chart-toppers is the blockbuster "Now That's What I Call Music!" series, which features a compilation of the hottest tracks of the season and routinely debuts at No. 1.

And of course there is the enormous popularity of music download services like iTunes. Recently, iTunes introduce its "Complete the Album" feature, an enticement which gives credit for songs purchased from an album toward purchasing the rest of it.

The question remains whether consumers are as interested in completing the albums as they used to.

Ciara hopes so. The 21-year-old's latest platinum album, "Ciara: The Evolution," on La Face/Jive Records (a unit of Sony BMG Music Entertainment, a joint venture between Sony Corp. and Bertelsmann AG) wasn't designed to provide just hits, but as an entire experience about her development into a woman, complete with interludes between the tracks.

"For me growing up, there was nothing like listening to an album that you could literally sit down and listen to from the beginning to the end," she said. "It can't just be about singles. That's the purpose of an album, it's almost like a story within itself."

Avril Lavigne, 22, whose latest album "The Best Damn Thing" on RCA (also a part of Sony BMG) debuted at No. 1, is also still in love with the album: "I'm so all about going to the store and buy a CD."

"(But) times are changing," she added. Someday "people aren't going to do records, they're just going to do singles, probably."

That would have been hard to believe just a few years ago, given that the single -- which gave birth to the recording industry and dominated it for decades -- was virtually phased out at a time of huge industry profits. While there are still physical singles in stores, the numbers are so minute that Nielsen SoundScan doesn't even track them.

"We tried to stop selling a commercial single because people were making great, great records and albums were selling like hot cakes," says longtime music industry executive Steve Rifkind, founder Street Records Corporation, home to platinum singer/producer Akon, and Loud.com.

But removing the option of purchasing a single may not have helped the album much, either -- and may have actually boosted the original illegal downloading services like Napster, says Mayfield.

"The notion that someone would jump to an album-length purchase because they couldn't find the one song they wanted available was a naive one," he said.

Rifkind acknowledges that "we are definitely in a singles market," -- but blames the problem on a lack of creativity and "lazy" executives.

"People are going after one hit. They are not really caring what the album sounds like ... They are not into artist development anymore. If us as an industry went and started developing talent again, and not worrying about one hit, it would be more than a singles-driven business again."

In a recent interview with The Associated Press, Jay-Z, the superstar rapper and president of Def Jam Records, also blamed the quality of the music for the current climate.

"We're making disposable music. You can't make disposable music again and again and again and again and not expect anything to happen. We have these huge radio records ... and then won't sell any records," he said. "If you're making just songs, they'll listen to it in the clubs, that's great, they'll listen to it in their car, that's beautiful. Will they buy it? No."

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