1. Archive

New products keep music sales booming

In an era in which it has become increasingly difficult and expensive to promote new music groups, record companies are aggressively broadening the product lines for the singers they already handle. Two new products _ the cassette single and the music video _ are gaining wide acceptance.

For example, the music video Hangin' Tough Live by the pop group New Kids on the Block has sold 1.25-million copies, making it one of the best sellers of late. And cassette singles of five recent songs by the New Kids have sold 2.5-million copies.

The "cassingle," as it is sometimes called, has become an attractive impulse purchase for younger shoppers, industry executives say.

For about $2.98, a cassette single provides two to three minutes of music. A maxi-cassette single, which offers two or three versions of the same song, can run as long as 25 minutes and sells for about $4.98.

The music-video business also has become more sophisticated. Nearly every large record company produces music videos, said Al Teller, chairman of MCA Music Entertainment Group.

Cassettes and videos have helped spur surprising growth in industry sales for the first half of 1990. The Recording Industry Association of America reports that sales for compact discs, cassettes and records rose 10.8 percent, to 424-million units, and the dollar value of those shipments rose 15 percent, to $3.5-billion.

More than 45-million cassette singles were shipped to stores in the first half of the year, a 39.3 percent increase from 1989. And 4-million music videocassettes were shipped in the six-month period, nearly twice as many as a year earlier.

The overall rise in sales can be traced in part to the shift from long-playing records to compact discs.

Industry executives also note that the big record-store chains, with their wide music selections, have expanded over the last five years. Musicland, for example, the nation's largest record chain, increased to 942 stores, from 682 at the end of 1988.

Still, there is widespread debate in the industry as to whether the sales growth will continue. Some industry executives said they believe the Recording Industry Association's numbers were too high.

"Those numbers were a real shockeroo," said Russell Soloman, owner of the Tower Records chain.

The figures raised so many questions that when they were first released several weeks ago, Time Warner Inc., which owns Warner Elektra Atlantic Records, sent a representative to the Recording Industry Association to review them.

Jay Berman, president of the Recording Industry Association, argues that its figures are accurate but acknowledges that sales in July and August were poor, although no industrywide figures will be available until next year.

David Geffen, who heads Geffen Records, remains optimistic. He expects the fourth quarter, usually the biggest, busiest period of the year, will be very strong.

"There is a lot of Christmas product coming out," Geffen said.

But many analysts have their doubts. Emanuel Gerard, a partner with the New York investment firm of Gerard Klauer Mattison & Co., said the industry's growth rate will inevitably slow as consumers finish replacing record albums with compact discs.

The only factor he believes could offset that decline would be lower prices for compact discs.

The music-recording business is also running into difficulties because radio stations have been changing to more conservative formats, with music aimed at older listeners.

Radio stations have historically been the leading outlets for introducing new singers.

But Teller argues that the situation has changed.

"As demographics shift, advertisers want to reach the older, more affluent audiences," he said.

The result is that fewer stations are willing to present young groups aimed at the teen-age audiences.

"Radio stations are basically ignoring rock records," said Irving Azoff, who heads Giant Records.

"They are playing stuff that people just do not go out and buy."