According to figures released by the Recording Industry Association of America (RIAA), 1985 was full of mixed signals. But one thing was clear: Without the booming compact disc market, the industry would have posted significant losses last year. As it was, the value of shipments (at suggested list price) was $4.4 billion, a minuscule increase of 0.4 percent from the year before.
In terms of unit sales, cassettes, which have in recent years become the dominant configuration, climbed only 2 percent (to $339 million), against 30 percent and 40 percent gains in the previous two years. The RIAA also noted a corresponding decline in cassette player sales. There was an 18 percent decline in the net shipment of LPs (to 167 million units), while singles slipped 8 percent. All this despite the fact that the number of new titles on LP (2,360) represented a 9 percent increase over 1984, the first such growth in six years. The record industry's peak year was 1978, when 4,170 new titles were released.
Singles increased 11 percent in 1985; 12-inch singles increased 29 percent. Reissues were up too, 32 percent. And the 65 platinum certifications and another 138 gold were the highest totals in four years.
On the CD front, there was good news and bad news. Sales of CDs jumped to 22.6 million units, a 291 percent increase over the previous year. But the number of new CD titles marketed was flat, reflecting the ongoing problem of insufficient CD pressing plants. Currently, the supply does not meet the demand, and industry observers note that it may not catch up until 1990. The problem is with production. There is only one CD pressing plant in the United States right now (Sony), though Capitol and WCI expect to have plants in operation by the end of the year.
Industry analysts forecast CD sales this year in the 35- to 60-million-unit range, and between 100 million and 180 million by 1988. The record labels are gung-ho on CD for several reasons, including the fact that they command twice the wholesale price of albums and tapes and that, as a new medium, they stimulate catalogue sales. But don't expect prices to go down; expensive manufacturing techniques and the high cost of factory start-ups will keep CDs costly.
Consumers may, however, have to accept higher prices for records and tapes in the near future. According to Billboard, increases of up to 75 cents on the most common $8.98 list albums and 10 cents on singles are expected in the next month as a consequence of 3 to 5 percent price hikes to retailers by the six majors -- CBS, WEA, Capitol, MCA, RCA and Polygram.
The major casualty will be the $4.99 discount special of $8.98 albums; look to $5.99 as a best price in the near future, and for $6.99 as the average. And although the labels haven't had any major price increases for several years, they have been releasing more and more records, particularly by major artists, at $9.98 list, so that the effect has been gradual but definite. Is the Bloom Off MTV? Martha Quinn's not panicking yet, but it has been reported by Nielsen (and vehemently denied by MTV) that the cable service ratings have been dropping over the last year. At the same time, MTV has lost its cutting edge and moved closer to becoming a video equivalent of Top 40 radio, playing the big hits more frequently while cutting back on exposure for new, developing artists. Ironically, it was such exposure that made MTV an attractive alternative to radio when it started four years ago.
Like MTV, most local broadcast and cable video programs are mimicking Top 40 radio, and the record labels, which once seemed so eager to provide new videos, are starting to cut back as they question the importance of videos in the hit-making process. CBS, for one, has cut back to an artist-by-artist, song-by-song situation. And costs have become so high that only established artists can produce quality videos.
And while rock videos have proved they can sell records, they have had a much harder time selling themselves (with the exception of those by superstars like Michael Jackson, Prince and Madonna). The problem, of course, is demographic: Teen-agers buy records, adults buy videocassettes and seldom do the two camps agree on what they like. Which may explain why MTV's VH-1 channel (geared to older viewers) is watched but considered to have minimal impact on record sales.
A recent British study showed that producers of rock videos would be lucky to get back 5 percent of the estimated $15 million they spent on production. The study covered about 500 videos produced at an average cost of $30,000 for multiusage (TV shows, home video, video jukeboxes, theatrical screenings). Everyone admits that the actual income is small compared with the promotional value, but as that promotional exposure becomes increasingly limited, companies are rethinking their investments.