Hitting High Notes On The Cash Register 1992 Was A Record Year For Discs And Cassettes

Posted: June 16, 1993

What do Whitney Houston, Kenny G, Garth Brooks, Eric Clapton and Meat Loaf have in common?

If you answered that they've all had successful recording careers, give yourself half a star.

More to the point, these artists helped the U.S. recording industry generate a record $9 billion in sales in 1992, a 15 percent increase over 1991, according to figures released by the Recording Industry Association of America.

In addition to the pace-setting sales figures, manufacturers shipped out a record 895 million units of records, cassettes, compact discs and music videos. This was an 11.8 percent increase over 1991, when the number of units shipped declined 8 percent from 1990 figures.

Much of the increase in sales and units shipped came in the last quarter. Indeed, sales figures for the first six months of 1992 were only $3.8 billion, not much ahead of 1991's first-half figures.

"The fourth quarter was very healthy," said Jim Caparro, president and chief executive of the Polygram Distribution Group, which distributes albums on Polygram, A&M, London, Mercury, Motown and several other labels. Artists recording for these labels include U2, Bon Jovi, Boyz II Men and Billy Ray Cyrus. "Consumer confidence changed. People were more inclined to spend more."

This year may be even better, Caparro said.

"If the first quarter is any indication, we expect great things," he said, though he declined to give specific figures. "The momentum from 1992 is continuing."

The association's dollar sales figures are based on the suggested retail prices for the units shipped by manufacturers. The RIAA says these figures essentially represent the actual retail sales.

Industry officials attribute the business boom to several factors:

* A turnaround in cassette sales. While sales of compact discs overtook those of cassettes for the first time last year, cassette sales jumped 3.1 percent in 1992, to $3.1 billion. In 1991, cassette sales fell by 18.6 percent, a reflection of the recession's effect on teenagers and others who lacked the discretionary income for higher-priced CDs.

* More CD owners. Fifty-two percent of American families now have CD players, which helped push sales of CDs to more than $5.3 billion, or 56 percent of the market for recorded music. Both the dollar volume and the number of CDs shipped rose 22 percent in 1992, 6 percent more than the increase in 1991.

* A continued surge in sales of previously released albums, known as catalogue sales. With the growing popularity of CDs, record labels have released their past works in the new format, breathing new life into older works by artists such as the Beatles, Eric Clapton, Meat Loaf and the Eagles. Most catalogue sales are to older listeners - those with more expendable income - who are replacing their record albums' vinyl collection with CD equivalents.

* A number of highly successful new releases. The soundtrack of The Bodyguard, which features Whitney Houston, already has sold 8 million copies, Kenny G's Breathless, 4 million, Clapton's Unplugged, 6 million, and Billy Ray Cyrus' Some Gave All has sold 7 million copies.

Since only one recording in eight makes money, blockbusters such as those are critical, said Jay Berman, president of the industry association.

Ironically, some of the better-selling recordings last year were by virtually unknown artists, including the Red Hot Chili Peppers, Pearl Jam and Cyrus.

Despite the industry's gains nationally, music retailers say sales in this region didn't do all that well. Indeed, the RIAA figures say the percentage of sales coming from the Northeast has fallen from 24.8 percent of the national total in 1988 to 21.1 percent last year. Only the West has a lower percentage of the market.

"We haven't seen the increases as high as the RIAA figures," said Peter Banford, president of the Philadelphia's Wee Three Records chain, which doubled in size last year with acquisition of more than 50 stores in the Record World and Square Circle chain. "The RIAA figures are distorted and inflated." He said Wee Three's sales gains last year were only about the same as in 1991.

Eric Wood, manager of Tower Records on South Street, agreed. "The Northeast region is still kind of flat compared to 1991," he said.

Wood said cassette sales declined in country, rhythm and blues, and international music, genres strong in 1991. Even the CD increases have leveled off.

"The CD growth is more a factor of buying CD players" than anything else, Wood said.

Retailers predict a slow but steady recovery in 1993, "but not a huge boom," Banford said.

Nonetheless, the RIAA predicts another record year. "How can we top this? The way is to have great music," Berman said.

Paul McCartney and Sting have albums out this year. And new releases are expected this summer from Billy Joel, Cyrus, Neil Young, and soundtrack albums

from The Last Action Hero and Super Mario Brothers.

Aside from the potential success of new releases, the long-range outlook for the industry is mixed.

Catalogue sales make up the biggest percentage of sales, but retailers expect the impact to diminish as vinyl replacement winds down.

"Catalogue sales will flatten out," said Wood.

Yet catalogues may get a boost as new technology enables retailers to carry the software to reproduce on CD any record ever recorded. Consumers would simply come in to the store, order the title they want, and the CD would be computer-generated on the spot, Berman said. "That would change the nature of the business," he said.

Cassettes could experience another boom through the growth of digital cassette players, which bring CD-style digital sound to the cassette format. And it doesn't necessitate discarding existing cassettes, the way CDs made vinyl LPs obsolete.

"We'll see a gradual buildup of digital cassette sales over the next 18 months, then a steep incline to 1995," Caparro said.

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