http://www.nytimes.com/2006/03/09/arts/...3739&hp&ex=1141966800&partner=homepage
Labels Halt Downloads to Increase CD Sales
By JEFF LEEDS
Published: March 9, 2006
LOS ANGELES, March 8 ? As blockbuster hits go, the R&B smash "So Sick" is hardly new territory for the 23-year-old singer known as Ne-Yo. Before crooning the song on his own album, he was a co-writer on the 2004 chart-buster "Let Me Love You" for the singer Mario.
But there's one big difference: even though fans could hear "So Sick" on the radio for the last two months, they couldn't buy it at popular online services like iTunes or Rhapsody, or anywhere else for that matter. Breaking from the music industry's current custom, the singer's label ? Island Def Jam ? decided not to sell "So Sick" as an individual song before Ne-Yo's album hit stores last week. Label executives worried that releasing the track too early might cut into sales of the full CD ? a fear that figures heavily in the music world's lumbering entry into the digital marketplace.
The results of fans' pent-up demand for Ne-Yo are now clear: his CD "In My Own Words," burst onto the national album chart yesterday at No. 1, with sales of more than 301,000 copies, easily ranking as the biggest debut of the year so far. And just as eye-popping: the digital single of "So Sick" sold almost 120,000 copies in its first week, according to Nielsen SoundScan.
There is still plenty of debate over the effect of holding off on sales of the digital single; many also note that Island Def Jam offered a discount to retailers who stocked the album, allowing it to sell at stores like Target for $7.98 last week.
But if the industry determines that restricting digital sales pays off with bigger album sales, fans may soon find the instant gratification of snapping up new songs online becoming a little less instant.
No one is talking about a wholesale shift away from the now-common practice of selling singles online ahead of new albums.
But even before Ne-Yo's big debut, some music executives fretted that they were offering too many songs too early, particularly from pop and R&B acts.
So consumers looking for some hot new songs may have trouble finding them before the corresponding albums are released. "S.O.S.," a rising radio hit from the Caribbean-born ingénue Rihanna (a label-mate of Ne-Yo), is not expected to be available for sale online before her forthcoming album. And Shakira fans will not find her new song, "Hips Don't Lie," for sale at any of the major online music services, music executives said. (Shakira's label, Epic Records, did strike a deal to sell the song to customers of Verizon's V-Cast cellphone service. "Hips" is to be included on a repackaged edition of Shakira's recent CD.)
The restricted sales are evidence that record companies are a re-examining the fledging digital music field, where consumers have become accustomed to easy ? and early ? access to new stars' work. In the early days of paid digital sales, major labels routinely refused to sell singles or albums online until well after the "physical" recording went on sale at brick-and-mortar stores.
Since at least 2004, however, record companies have been selling songs online at the same time they begin lobbying radio stations to play them ? generating a bit of cash as each song gained popularity. Holding back on new singles now, critics charge, may end up doing more harm than good in the long run, especially if music continues to be available on free, unauthorized online networks.
"The labels are shooting themselves in the foot," said Tim Quirk, executive editor of the Rhapsody music service. To the labels, Mr. Quirk advises, "every single track that you are worried about is available for free whether you want it to be or not."
"You need to take advantage of every possible opportunity for people to pay in legitimate ways," he said.
But in the case of Ne-Yo, whose real name is Shaffer Smith, the first-week sales figures vindicate their strategy, executives say. It is impossible to know how many fans would have bought Ne-Yo's single as it became a radio smash, but the executives reckon that whatever price Island Def Jam paid in lost singles, it more than made up for in extra sales of the album, which costs more.
Contrast the Ne-Yo experience with another new R&B star, Chris Brown. He had a similarly inescapable radio hit with the song "Run It!" on the eve of his debut album's release late last year. "Run It!" was available for sale online for more than three months before his eponymous CD hit stores. During that time, Mr. Brown's song sold more than 300,000 copies. When the album finally went on sale, it sold roughly 154,000 copies in its first week ? about half the sales of the Ne-Yo recording, according to Nielsen SoundScan.
Steve Bartels, chief operating officer of Island Def Jam, a unit of the music giant Universal Music Group, said the early availability of hot singles online could hurt albums of consistent quality throughout.
"If you know you have something of depth, you have to be careful about how you bring it into the marketplace," he said. "We're in the business of having consumers believe in an artist. If everything is up and gone before you have a chance to listen to the album, what do you have?"
Mr. Bartels added, however, that decisions to hold back singles are being made on a case-by-case basis, and could vary widely depending on genre. He noted that the label is already selling a single from the rock band Damone, even though its album is not expected in stores until May.
It is also worth noting that, as analysts said, the single has been still heavily traded on free file-swapping networks for weeks. Ne-Yo's "So Sick" was downloaded approximately 3.4 million times on the networks during the week of his album release, according to the tracking firm BigChampagne. By comparison, Chris Brown's "Run It!" was downloaded approximately 5.3 million times during the week of his album release last year.
Elsewhere, however, as consumers shift into a world dominated by singles, custom playlists and iPod song shuffling, there are efforts under way to preserve the old-fangled album. Fans who are still willing to shell out for a full album are rewarded with exclusive bonus items: Universal Records recently offered a downloadable coloring book to fans who bought its "Curious George" soundtrack by Jack Johnson. And fans of the made-from-television band INXS who bought its full album received an exclusive bonus track.
Industry caution about early sales of singles, however, actually comes as fans are buying individual songs at such a rapid clip that they are ? for the first time ? regularly offsetting the decline in full album sales. So far this year, album sales have declined about 3 percent from a year ago. But if every 10 singles sold so far were bundled together and counted as albums, sales would be up about 2 percent, according to Nielsen SoundScan.
Even so, some music executives insist the "unbundling" of the album ? letting fans buy individual tracks ? still spells trouble.
Tony Brummel, the owner of the independent rock label Victory Records, says he is not interested in selling individual songs from his albums, though he may give them away to build buzz. The label this week captured the No. 3 spot on the chart with the new album from the emo-rock band Hawthorne Heights. The band's CD sold about 114,000 copies ? a solid figure for an independent rock band, but somewhat less than expected given the label's shipments of roughly 800,000 copies. A rock album, Mr. Brummel said, "is a work of art."
"If you're buying a Picasso," he continued, "you can't just buy the upper right-hand corner."