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The Album, a Commodity in Disfavor

By JEFF LEEDS
Published: March 26, 2007

LOS ANGELES, March 25 Now that the three young women in Candy Hill, a glossy rap and R&B trio, have signed a record contract, they are hoping for stardom. On the schedule: shooting a music video and visiting radio stations to talk up their music. But the women do not have a CD to promote. Universal/Republic Records, their label, signed Candy Hill to record two songs, not a complete album.

If we get two songs out, we get a shot, said Vatana Shaw, 20, who formed the trio four years ago, Only true fans are buying full albums. Most people dont really do that anymore.

To the regret of music labels everywhere, she is right: fans are buying fewer and fewer full albums. In the shift from CDs to digital music, buyers can now pick the individual songs they like without having to pay upward of $10 for an album.

Last year, digital singles outsold plastic CDs for the first time. So far this year, sales of digital songs have risen 54 percent, to roughly 189 million units, according to data from Nielsen SoundScan. Digital album sales are rising at a slightly faster pace, but buyers of digital music are purchasing singles over albums by a margin of 19 to 1.

Because of this shift in listener preferences a trend reflected everywhere from blogs posting select MP3s to reviews of singles in Rolling Stone record labels are coming to grips with the loss of the album as their main product and chief moneymaker.

In response, labels are re-examining everything from their marketing practices to their contracts. One result is that offers are cropping up for artists like Candy Hill to record only ring tones or a clutch of singles, according to talent managers and lawyers.

At the same time, the industry is straining to shore up the album as long as possible, in part by prodding listeners who buy one song to purchase the rest of a collection. Apple, in consultation with several labels, has been planning to offer iTunes users credit for songs they have already purchased if they then choose to buy the associated album in a certain period of time, according to people involved in the negotiations. (Under Apples current practice, customers who buy a song and then the related album effectively pay for the song twice).

But some analysts say they doubt that such promotions can reverse the trend.

I think the album is going to die, said Aram Sinnreich, managing partner at Radar Research, a media consulting firm based in Los Angeles. Consumers are listening to play lists, or mixes of single songs from an assortment of different artists. Consumers who have had iPods since they were in the single digits are going to increasingly gravitate toward artists who embrace that.

All this comes as the industrys long sales slide has been accelerating. Sales of albums, in either disc or digital form, have dropped more than 16 percent so far this year, a slide that executives attribute to an unusually weak release schedule and shrinking retail floor space for music. Even though sales of individual songs sold principally through iTunes are rising, it has not been nearly enough to compensate.

Many music executives dispute the idea that the album will disappear. In particular, they say, fans of jazz, classical, opera and certain rock (bands like Radiohead and Tool) will demand album-length listening experiences for many years to come. But for other genres including some strains of pop music, rap, R&B and much of country where sales success is seen as closely tied to radio air play of singles, the album may be entering its twilight.

For some genres and some artists, having an album-centric plan will be a thing of the past, said Jeff Kempler, chief operating officer of EMIs Capitol Music Group. While the traditional album provides value to fans, he said, perpetuating a business model that fixates on a particular packaged product configuration is inimical to what the Internet enables, and its inimical to what many consumers have clearly voted for.

Another solution being debated in the industry would transform record labels into de facto fan clubs. Companies including the Warner Music Group and the EMI Group have been considering a system in which fans would pay a fee, perhaps monthly, to subscribe to their favorite artists and receive a series of recordings, videos and other products spaced over time.

Executives maintain that they must establish more lasting connections with fans who may well lose interest if forced to wait two years or more before their favorite artist releases new music.

A decade ago, the music industry had all but stopped selling music in individual units. But now, four years after Apple introduced its iTunes service selling singles for 99 cents apiece and full albums typically for $9.99 individual songs account for roughly two-thirds of all music sales volume in the United States. And that does not count purchases of music in other, bite-size forms like ring tones, which have sold more than 54 million units so far this year, according to Nielsen data.

One of the biggest reasons for the shift, analysts say, is that consumers empowered to cherry-pick are forgoing album purchases after years of paying for complete CDs with too few songs they like. There are still cases where full albums succeed the Red Hot Chili Peppers double-CD Stadium Arcadium, with a weighty 28 tracks, has sold almost two million copies. But the overall pie is shrinking.

In some ways, the current climate recalls the 1950s and to some extent, the 60s, when many popular acts sold more singles than albums. It took greatly influential works like The Beatles Sgt. Peppers Lonely Hearts Club Band and the Beach Boys Pet Sounds to turn the album into pop musics medium of choice.

But the music industrys cost structure is far higher than it was when Bob Dylan picked up an electric guitar. Todays costs from television ads and music videos to hefty executive salaries are still built on blockbuster albums.

Hence the emergence of scaled-back deals with acts like Candy Hill. Labels have signed new performers to singles deals before, typically to release what they viewed as ephemeral or novelty hits. Now, executives at Universal say, such arrangements will become more common for even quality acts because the single itself is the end product.

With Candy Hill, Universal paid a relatively small advance described as being in five figures to cover recording expenses. Ms. Shaw, who formed the group with Casha Darjean and Ociris Gomez, said the members had kept their day jobs working at an insurance company and doing other vocal work to be able to pay the rent at the house where they live together.

If one of their songs turns into a big hit, they hope to release a full album, and to tap other income sources, like touring and merchandise sales.

But turning a song into a hit does not appear to be getting any easier.

Ron Shapiro, an artist manager and former president of Atlantic Records, asked, What are the Las Vegas odds of constantly having a Bad Day? referring to a tune by the singer Daniel Powter that sold more than two million copies after it was used on American Idol.

While music labels labor to build careers for artists that are suited for albums, he added, You have to create an almost hysterical pace to find hits to sell as digital downloads and ring tones that everybodys going to want. Its scary.

Correction: March 28, 2007

A picture caption in Business Day on Monday, with an article about the shift by consumers to digital music from CDs, misstated the name of the band that had signed a deal to record two songs rather than a full album. It is Candy Hill, not Cherry Hill.