New Discs Click with TV Flicks

By Alexander L. Taylor III

Translation: cable television spurs a record-industry rebound

Stray Cats, Men at Work, and Adam Ant are hardly familiar names to most people over 30. Yet they are among the leaders in the revival of pop music. After a four-year slump, sales of records and tapes have begun heading up again. Says David Geffen, head of Geffen Records, one of the most successful firms: "This is going to be a good season. Things are finally starting to turn around."

The industry built on hits currently has two monster successes: Thriller by Michael Jackson, the No. 1 album for 13 weeks with more than 5 million copies sold, and Flashdance, the sound track from the hit movie, which sold 1.5 million copies in its first month in the racks. The industry has high hopes for two new sound-track albums: the Star Wars sequel Return of the Jedi, scheduled to be released this week, and Staying Alive, the Bee Gees' follow-up to Saturday Night Fever, due out in June. Record executives are also excited about a new form of danceable electronic rock known as New Music. Latest hit: She Blinded Me with Science by Thomas Dolby.

The record industry has gone from boom to blah. In 1978, estimated retail sales reached $4.13 billion with hit albums like Grease leading the way. Then the tune changed. Rising prices, fewer hits, disco, limited radio-station play, home taping, competition from video games--all were blamed for driving down music sales. Last year, sales totaled $3.59 billion, a four-year decline of 13%.

The recording industry, which had previously spent lavishly on high living and frills, has been drastically cutting back. The chairman of Warner Communications' Elektra/Asylum label was moved aside in January, and the subsidiary's headquarters was transferred from Los Angeles to New York City to cut expenses. The CBS/Records Group, which together with Warner commands 45% of the market, closed down a record-and tape-manufacturing plant in Terre Haute, Ind., and has laid off some 1,500 employees. Says Group President Walter Yetnikoff: "It used to be that if any artist said, 'I want a billboard on Sunset Strip,' we'd say, Fine.' But not any more.

While it is too early to label the recovery a sure thing, a number of trends are running in the industry's favor. With the recession winding down, consumer spending is picking up. Records now come in more economical sizes. Twelve-inch "dance singles" that feature extended versions of hit songs sell for as little as $3.49, and mini-albums that carry half as many songs as regular albums sell for about $4.49, instead of $6.29 to $7.99. At the same time, the appeal of coin-operated video games seems to be wearing off. Arcades that compete with the record industry for the spending money of 13-to 19-year-olds saw revenues fall 10% last year, and game business is expected to be off an additional 20% this year.

The most important new source of support for records is unexpectedly coming from television. MTV (Music Television), a cable channel owned by Warner Communications and American Express, has become one of the biggest hits on cable television, beaming out rock music 24 hours a day, seven days a week. MTV, which was being boomed into 9 million cable-equipped homes last December, should reach 13 million households by the end of May.

MTV and the record companies have developed a relationship that suits all of them just fine. In exchange for free air time, the record companies provide eye-catching videotapes of artists performing their latest songs. The highly stylized three-to four-minute tapes cost an average of $30,000 to make, but some can run as high as $150,000. The payoff can be huge. Men at Work were unknown before they appeared on MTV a year ago. Shortly afterward, their first album, Business as Usual, appeared on the bestseller charts, where it has remained for 47 weeks.

Since MTV is turning little-known performers into superstars, radio stations have responded by opening up their air time to less established artists. Radio Programmer Lee Abrams, who chooses records for 80 pop stations around the U.S., is now scheduling about 70% new releases, while two years ago he played 75% rock classics.

One big problem still faces the industry: home taping. A report by Warner Communications estimates that a million-selling record will spawn about 450,000 homemade copies. Overall, the industry figures that it loses $1 billion in sales annually to home tapers. A bill in Congress that would put a royalty fee on tape and recorder sales is being held up, pending a decision by the U.S. Supreme Court in the Sony Betamax case on the home videotaping of television programs.

Despite the record-industry turnaround, no one expects an early return to the boom of five years ago. Says Al Teller, general manager of Columbia Records: "We're a mature industry. The huge growth of the '60s and '70s is not on the horizon." One reason is that baby boomers, who bought many more records than their parents, are now getting into their 30s and buying fewer records. But music executives do not want to think about those sour trends. For now, they want to sit back and listen to the sweet music those megahits are making.

--By Alexander L. Taylor III. Reported by Stephen Koepp/New York and Russell Leavitt/Los Angeles

With reporting by Stephen Koepp, Russell Leavitt This file is automatically generated by a robot program, so viewer discretion is required.