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Soundscan Reports U.S. Music Sales Rose in January

U.S. album sales rose 10.4 percent in the first month of 2004, Nielsen Soundscan reported, welcome news to the music industry after a three-year slump marked by costly litigation, rampant piracy and consolidation.

The uptrend began late last year, a development hailed by Sanford Bernstein analyst Michael Nathanson in a recent report. But he said he was hesitant to say declines were over.

Other analysts note that comparisons were easy with last year when U.S. album sales fell. But many saw signs the music business – led by big record labels at Time Warner, Bertelsmann AG, EMI Group Plc, Sony Corp and Vivendi Universal – has started to turn the corner.

Nielsen Soundscan said total album sales rose 10.4 percent from a year ago to 46 million units for the four weeks ended Feb 1. Chicago rapper Twista debuted at No. 1 in the latest week with his new release, “Kamikaze,” while Outkast’s “Speakerboxxx/The Love Below,” ranked No. 2.

While CD sales fell 2.1 percent in 2003, it was a smaller drop than the 8.7 percent drop in 2002, helped by a strong fourth quarter.

But the latest month’s total was still below the 47.4 million units sold during the same period in 1999, before the downturn began.

Nathanson said lawsuits against file-sharers may be boosting CD sales. “That (lawsuits) could be driving former pirates back to the physical product,” said Nathanson, who also said sales benefited from lower CD prices at mass merchandisers like Wal-Mart Stores Inc and Best Buy Co Inc.

Industry insiders say labels are now offering more diverse and better quality material than they did a few years ago when they churned out products to cash in on trends like the success of teen acts like Britney Spears and the Backstreet Boys.

“I think… the industry got away from making the music the public wanted. Now they’ve responded with more real music by artists like Norah Jones and Alicia Keys and that is one of the reasons the bleeding has sort of stopped,” said China Danforth, chief executive of DKG Music, a new urban label.

“Instead of every label trying to break the next big pop or R&B act, the music industry is releasing a wider variety of acts and these acts are actually selling,” Nathanson said.

A marketing blitz for legitimate online services like Apple Computer Inc.’s iTunes store has also helped renew the public’s interest in music, analysts said. Recent sales also benefited from a shift in the date for the prestigious Grammy awards from late February to early in the month.

This year’s “Grammy Nominees” album, usually a big seller, was released earlier than usual, and ranked No. 8 on the charts in the latest week ended Feb 1, selling 59,000 units.

The Grammys, set for Sunday, Feb 8, in Los Angeles, will be broadcast on CBS. The network on Tuesday said it would use a longer tape-delay for the telecast after being criticized when singer Janet Jackson’s breast was exposded on Sunday during a Superbowl halftime show duet with pop icon Justin Timberlake.

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