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Music Industry in a Funk as CD, Audiocassette Shipments Are Down and DVD-Audio Has Stalled on Takeoff
As the nation's music retailers head to San Francisco this week for their 44th annual convention, DVD-Video is one of the few areas of their business that is not plagued by problems.
The audiocassette is headed for extinction. CD sales are down for the first time since 1997, the year of the music industry's last great shakeout. And DVDAudio, touted as the great hope at last year's National Association of Recording Merchandisers (HARM) confab, sputtered and stalled on takeoff. Some analysts had predicted sales of as many as 40 million DVD-Audio discs in 2001; in actuality, total shipments came in at a meager 300,000 units.
"The only place we're getting any growth is DVD," said Russ Solomon, founder of the 100store Tower Records and Video chain of West Sacramento, Calif. "Thank God for DVD, because it made up for all the slacking off that's happening in the music business."
Larry Gaines, president of the 406-store Wherehouse chain of Torrance, Calif., said he doesn't think "anyone's enjoying success" with music. But Wherehouse stores open at least one year are posting "triple-digit gains in DVD sales."
Analyst Derek Baine of Paul Kagan Associates said music retailers "are looking for anything which will move traffic.""With DVD taking off, packaged music sales [being] soft and record com panies launching MusicNet and Pressplay, the future of the retail music industry looks weak in comparison to DVD," he said.
Solomon said DVD-Video now accounts for more than 10 percent of his chain's business; video overall is approaching 20 percent, an alltime high for a company that built its stake nearly four decades ago with music. "It's pretty remarkable," he said.
At Wherehouse, DVD now accounts for 15 percent of revenues,"and we expect that to go up, Gaines said.
What works for big music chains like Tower also applies to small independent operations like Crow's Nest Music, with three stores in the Chicago area.
Manager Brad Hathaway said Crow's Next began...