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The Miami Herald
Latin Music Sales Slow Down In U.S., While Piracy Heats Up
By Cara Buckley and Jordan Levin
May 9, 2003
May 9-It sounded like the same old song: Music sales are down, online rip-offs are up, and record labels have yet to strike a balance between slashing budgets and unearthing artists whose market appeal outweighs piracy's threats.
To hear it from music executives at the annual Billboard Latin Music Conference, which ran through Thursday at the Eden Roc Resort in Miami Beach, the biggest difference between this confab and last year's was that U.S. Latin music sales have finally flatlined, after narrowly beating the slumped general music market for two consecutive years.
Even though Latin music has managed - just - to hold its own against poor general music sales, Latin labels still had to cut bonuses, whittle staff and pay artists less.
Industry watchers say the belt-tightening is needed to deflate bloated salaries, but executives counter that their creative latitude has also been cut.
"All these economic problems - with the Internet, with radio - minimize the company's efforts," said Carlos Maharbiz, vice president of artists and repertoire for the Universal Music Group.
"The No. 1 effect is you don't launch so many artists or as many new artists. You have to lower your production budgets. Everything has to come down to the reality of the marketplace."
Mauricio Abaroa, president of Emilio Estefan's label, Crescent Moon Records, said he was on the lookout for singer-songwriters, essentially artists who satisfy two industry needs in one.
John Echevarria, president of Universal Music Latino, stressed the need to "go back to music's roots" by finding seasoned artists with their own following rather than hand-fed pop starlets, a wish he expressed at the same panel last year.
This year's conference drew 1,100 delegates and was capped with an awards show Thursday night at the Miami Arena. One new note was sounded: The formerly underground genre of reggaeton, a fusion of rap and reggae that has caught Puerto Rico by storm, has begun to turn heads at the major labels.
Though reggaeton's following is still limited, the conference devoted a panel to the genre and two nighttime showcases included the acts Hector Y Tito, who flirt between reggaeton and pop, and Tego Calderon, a Puerto Rican whose wild stew of hip-hop, reggaeton and salsa had industry heavyweights abuzz.
Still, with Latin-record profits teetering between red and black, several label heads are trying to walk a thin line between not taking too many risks and coming up with new sounds for an apathetic public.
"It's obvious that what we had doesn't sell like it used to," said Jorge Melendez, executive vice president of Sony Discos.
According to Nielsen SoundScan, an industry tracker, U.S. Latin-music sales dipped 0.03 percent to 23.7 million units last year. And while the genre is faring better than overall U.S. album sales, which fell 10.7 percent to 681 million in 2002, label heads in Miami say piracy could deepen the trough.
Piracy accounts for up to half of all music sold in Latin America, according to the International Federation of the Phonographic Industry. In the United States, between 30 and 40 percent of the Latin music sold is counterfeit, according to the Recording Industry Association of America, compared to the U.S. industry average of 10 percent.
The RIAA recently pledged $2.5 million to fight Latin music piracy in the States, but some Latin-music executives fret that too much anti-piracy attention has been devoted to fighting illegitimate street sales instead of defanging downloading.
"I think we made a mistake when we said the major problem in the Latin industry is physical piracy," Echevarria said. "Now we're seeing young Latinos behaving like young non-Latins and downloading songs."
Jose Tillan, vice president of music and talent for MTV Networks/Latin America, said major labels ought to develop bona fide talent and craft albums filled with solid songs, a combination he believes would sidestep piracy because Internet freeloaders tend to download single songs.
Unlike one-hit wonders, Tillan said, strong artists, and strong albums, result in strong sales. He pointed to artists like Norah Jones, Coldplay and Juanes, a Latin rocker whose latest record, Un Dia Normal, recently passed the 1 million sales mark.
"Good artists need to be developed," said Tillan, adding that this cultivation takes time. "But when there's a demand to produce profits quarter by quarter, that's very hard."