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Technology Stocks : Nimbus CD International -- Ignore unavailable to you. Want to Upgrade?

To: Jim Fraser who wrote (1385)	2/12/1998 11:21:00 AM
From: Don Dorsey	Read Replies (3) \| Respond to of 1673

Does anyone know what percentage of NMBS revenues come from music CDs? Music Industry Expected to Post Drop in Sales By Sue Zeidler LOS ANGELES (Reuters) - For the first time since the death of disco, the U.S. music industry is expected to post a year-over-year drop in record sales for 1997. Year-end statistics by the Recording Industry Association of America (RIAA) are expected within days, and industry sources expect the group will report the first decline in both shipments and the dollar value of shipments since around 1980. Record labels this year cheered a rebound at the retail level, with units sold seen up by as much as 8 percent. This increase, however, was offset by a sharp drop in the direct and special marketing sector, which includes mail-order record clubs, which account for 15 percent of the $12 billion market. "Every indicator shows it was a year-to-year drop. I think the last time the industry saw a drop was around the end of the 1970s or the early 1980s when disco faded and the Walkman and CDs had not yet become true consumer items," John Ganoe, vice president member services for recording association, said. From the mid-1980s to the mid-1990s, yearly shipments in the record industry grew from $4 billion to $12 billion, with growth rates of 12 percent to 20 percent annually, fueled largely by consumers replacing old albums with compact discs and the explosion of alternative rock, rap and Hispanic music. But the boom ended about two years ago as the replacement compact disc market was exhausted and the six major labels failed to come out with consistently blockbuster selling hits. The flat sales caused massive cutbacks at those six labels and shutdowns of hundreds of stores at chains like Musicland Stores Corp., Camelot and Wherehouse. But retail sales have rebounded this past year after painful downsizing and with the help of a few big hits. "The retail base is smaller and healthier. All reports from the retail level have been very positive," Ganoe said, noting hits by acts such as Metallica, Celine Dion, Barbra Streisand and Garth Brooks sold well in the fourth quarter and were carrying over very strongly into the first. For the first nine months of 1997, Hartsdale, N.Y.-based SoundScan, which tracks sales at the retail level, reported that sales rose 5 percent to 526 million albums. Analysts expect unit sales at retail for 1997 to be up between 6 percent and 8 percent from 1996's total of 737.5 million units. "The basic market trends that we saw reflected in the mid-year numbers are mirrored in the year-end statistics," Ganoe said. At midyear, the RIAA reported overall shipments fell 10 percent from the first half of 1996, and the dollar value of shipments, based on suggested list prices, fell 5 percent to $5.2 billion. For full-year 1996, the RIAA reported overall shipments rose 2.2 percent from 1995 and the dollar value of shipments rose 1.7 percent to $12.5 billion. "Our sense is that our final numbers when released will show a continuing decline in the direct and special market segment, which includes mail order operations, the record clubs and shipments to nontraditional retail outlets, like Starbucks and Pottery Barn and which accounted for about 15 percent of the overall market," Ganoe said. "The record clubs were horrible, down by at least 40 percent," Jessica Reif Cohen, Merrill Lynch analyst, said. Analysts said the mail order market was hit by similar issues that have battered the broader market, such as a drop in demand by consumers replacing vinyl records with discs. The two major mail-order record clubs are Columbia House, jointly owned by Sony and Time Warner's Warner Music, and BMG Direct, owned by Bertelsmann AG. Music companies have reported a mixed bag of earnings. Time Warner's Warner Music Tuesday reported that fourth-quarter results plunged 40 percent. Time Warner Chairman Gerald Levin cited problems at retail and delays in releasing albums from several stars like Madonna, Seal and Anita Baker. Wednesday, PolyGram NV reported its music division saw a 17 percent rise in both sales and operating profit. "The result of our music business, which was exceptional given the softness of some markets was driven by the diversity of our repertoire, our global presence and containment of costs," PolyGram President Alan Levy said.