Charleston, W.Va., Area Retailers Blame Piracy, Economy for Drop in CD Sales.

By Paul Wilson, The Charleston Gazette, W.Va. Knight Ridder/Tribune Business News

Mar. 4--When Fred Tyson opened Underground Connection in downtown Charleston in 1999, he never imagined he'd phase out music sales.

Four years later, that's exactly what he plans to do, to focus on selling hairstyling and hair products as early as next month.

"At first, music sales were 100 percent, then 80 percent, then 20 percent of our business," Tyson said. "I never thought I'd do this, but our main goal is to supply a demand."

U.S. customers spent 6.7 percent less on compact discs in 2002 than in 2001, according to figures released last week by the Recording Industry Association of America, the U.S. recording industry's trade group. Sales in 2001 were down 2.3 percent from 2000.

"A major cause of the decline in 2002 includes the ongoing problems of online and physical music piracy," said Hilary Rosen, RIAA chairman and CEO.

Rosen referred to illegal Internet music downloads and the growing number of music fans who use CD burners to copy albums. Representatives of Charleston retailers agree such methods are cutting into sales, but disagree as to whether it's the primary reason.

Priscilla Pope, who has owned Budget Tapes & Records in Kanawha City for 31 years, almost fully blames music downloaders, calling them "thieves."

"Burning a CD off the Internet is exactly the same as shoplifting," she said. "It's the same as some kid walking into my store and sticking a CD down his pants and walking out with it."

Pope, like other retailers, said the depressed economy also has kept customers from buying CDs. She said big-box retail stores such as Wal-Mart and Target can sell CDs near cost during economic downturns.

Trying to compete with big retail is part of the reason Tyson plans to stop offering CDs to customers. He said he buys CDs at wholesale for $12.72 each, but can only mark prices up to $15 and compete with larger stores.

After overhead, employee salaries and other costs, Tyson said, "that's no way to make a living."

Bill Moore, assistant manager at Fye in the Kanawha Mall, wasn't quick to blame declining CD sales on pirated music. He pointed to the growing number of tech-savvy people buying DVDs. Albany, N.Y.-based Fye, which has more than 900 U.S. stores, is stocking more DVDs and fewer CDs, Moore said.

"It's the new hot thing," Moore said. "When you can see your favorite movies with a sharper image and with new features, people are going to buy fewer CDs and more DVDs."

Sales of DVD videos rose 23.9 percent in 2002 and 137.5 percent in 2001, RIAA reported.

Moore believes record companies released fewer "blockbuster" albums in 2002, which might have hurt sales. He also said shutting down the music Web site Napster might have affected consumers." On Napster, people could sample songs and come in and say, 'I want to buy that CD,'" Moore said. "The [download] quality was never as good as store-bought CDs."

Customers can buy blank CDs in many music stores and use them to copy music from Internet downloads. "Selling blank CDs is like selling the bullets for them to shoot back at you," Moore said. "I don't think retail can have too big of a fit over it if they're selling the blanks."

Dating back to bootleg-concert recorders, the music industry has dealt with piracy, Moore said. But that's little consolation to Pope.

"When you bought the tape before, at least you were buying it once," she said. "Eventually, there will not be record companies if this does not stop, but the record companies will stop this."

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(c) 2003, The Charleston Gazette, W.Va. Distributed by Knight Ridder/Tribune Business News.

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