It was yet another unhappy New Year for the music industry: Despite hits by Mariah Carey, 50 Cent and Green Day, 2005 saw album sales drop 7.2 percent as labels continued to struggle with adapting to the age of the iPod and the Internet. Overall, consumers bought 48 million fewer albums than in 2004, marking a disastrous twenty-one percent slide from the industry's peak in 2000, according to Nielsen SoundScan. And the holiday season, which typically accounts for forty percent of annual sales, was a bust. "It was arguably the worst in the music business's history," says Steve Bartels, Island Records president.
In contrast to CD sales, digital-song downloads jumped 150 percent in 2005 as consumers bought 352 million of them. "With digital technology, everyone's figured out that a business built only on the manufacture, distribution and sale of CDs has ended," says Dixie Chicks manager Simon Renshaw, echoing many other industry veterans. "The traditional model can't continue."
Where Are the Hits?
In 2000, the industry's last boom year, the top five albums -- including megahits by Britney Spears and Eminem -- sold a combined 38 million copies. The top five in 2005 sold just 19.7 million. Mariah Carey had the comeback story of the year, selling 5 million copies of The Emancipation of Mimi, the year's top album. Green Day, who sold 1.8 million copies of American Idiot in '04, sold 3.4 million more in '05. And a baby diva, American Idol winner Kelly Clarkson, broke through, selling 3.5 million copies of Breakaway.
Just below the top ten, there were signs of hope, as developing artists -- Ciara, Young Jeezy, Fall Out Boy -- all sold at least 1 million copies. But expected best sellers from Missy Elliott and Santana barely broke 500,000 copies. "Last year you had releases from superstars such as U2, Eminem, Lil Jon," says Best Buy music buyer Lon Lindeland. "This year didn't match that."
Latin music was the only genre to see increased sales in 2005. As the reggaeton-heavy "hurban" radio format grew -- taking over rock stations in several major markets -- the genre's sales leaped 12.6 percent. Sales of alternative rock fell 8.8 percent, hip-hop dropped 7.8 percent and R&B saw an 11.6 percent decline. "Consumers who used to buy a lot of hip-hop are now buying Latin records," says Virgin exec Jerry Suarez. "It's something for the younger demographic to get excited about."
