By Beverly Keel

DECEMBER 14, 1998:  As the country music industry wraps up a lackluster sales year, many label heads are predicting that the next 12 months could be even worse. This is a turnaround from just a few years ago, when country music experienced an unprecedented boom. But now the climate has changed, and executives are having to rethink how they do business. "We hope it will come back, but we can't conduct business like it already has," says Doug Johnson, president of Giant Nashville.

While Garth Brooks, Shania Twain, and the Dixie Chicks are still ringing up hefty figures, they're about the only ones doing so. True, country sales are up 12 percent from last year, but that number doesn't carry the same weight when you consider that Brooks alone accounts for 15 percent of country records sold. In fact, many of the industry's top acts, including Wynonna, Reba McEntire, and Brooks & Dunn, are seeing their current albums underperform compared to previous releases. Many mid-level acts are faring worse. And given the amount of money that goes into making and promoting records these days, mediocre sales can spell disaster for a label.

"The handful of artists at the top are selling tremendously, then there's this huge gap between the few top artists and the rest of the artists," says Johnson. "That middle territory has almost disappeared. Either an artist is doing terribly well or just modestly well at best. A lot of mid-level acts are doing as well as they are ever going to do, and that's a dangerous area because it costs just as much money, if not more, to keep those artists visible."

Not everyone, however, believes that sales will continue to drop in 1999. "For the industry, I think it will be a better year," says Allen Butler, president of Sony Nashville. "For country radio, it could be a worse year, because they will continue not to excite their listeners enough to get them to stay and listen to their stations. The labels will develop alternate ways of developing the artists to help expose them to the consumer and not be so totally dependent upon radio."

Butler's comments aside, the prevailing mood on Music Row seems to be one of cautious pessimism. What concerns the labels most right now is the lack of breakthrough acts. These performers are the lifeblood of the industry because they represent the future superstars who will one day provide the bulk of the bottom line. To get a sense of just how poorly new acts fared this year, consider the fact that The Wilkinsons were the only new act in 1998 to have a No. 1 record; they've sold a mere 116,571 units so far--not enough for Giant Records to break even.

Executives stress that while the current situation doesn't spell "doom and gloom," they are "concerned and worried" about 1999. The upcoming year will be a time of transition, likely bringing a reduction in artist rosters and operating costs, a conservative business approach, and possibly even layoffs. "Desperate times call for desperate measures," says Luke Lewis, president of Mercury Nashville Records. "As people get more desperate, people will either panic and close up, or [they'll] take more risks."

For his part, Lewis doesn't like the idea of giving in to desperation. "If we take more creative risks," he says, "we are likely to pull out of this much more quickly than otherwise. So if you are thinking about next year, you ought to be rooting for the risk-takers. It's not just signing new acts--it's allowing the artists to bring their vision into this pile, because they are the ones most likely to break us out of the doldrums."

What labels can't change, however, is the nearly million-dollar cost it takes just to try to break a new act. "You can't afford to cut back," says Evelyn Shriver, president of Asylum Nashville. "If you cut back, you are no longer a player. You can cut back on some things--a tremendous overhead, a large staff, or indulgences--but on a financial level to compete, you can't afford to cut back."

Lewis observes that flagging sales can be traced directly to country's lack of "hip" credibility these days. As a result, he says, the music has lost a huge portion of its male audience. "I don't know that we are making records for men. A lot of that comes back to an inclination to play it safe with radio, [which is] programming to females. You look around and wonder where the outlaws are. The edgiest two things to come out of this town in the last few years are probably Shania Twain and the Dixie Chicks."

Due, no doubt, to many of the same factors, country has also lost many of its young listeners. "That's a cyclical thing, and they will be back," insists Bruce Hinton, chairman of MCA Nashville Records. "I don't anticipate them being back in the next year or two, because when we got them the last time around, pop music was doing its part to push them over to our side.

"The big question for me is, will pop music lose its way again and help us speed up the process?"

For the last few years, the industry has been song-driven, meaning that many acts' careers were launched by a memorable song. The downside of this, Shriver says, is that few stars have been created in the process. "Every time you go out there, it's like, 'Will they remember?' A few years ago, once you had a hit, it was so much easier when you came back with the second song. Now there's not that kind of branded loyalty to anybody. That second album is tricky; fans aren't hanging in there."

Giant's Johnson says labels will respond to the slump by signing fewer new acts while also scrutinizing their rosters more closely. Those acts that the label cannot fully commit to will likely be released--and many of them will be highly recognizable names. "By having fewer new acts signed, everybody is totally committed and willing to bet their own careers on the artists they represent, which is fair to the artists," he says.

At the moment, record companies are correcting their business plans to take the current sales environment into consideration. Now expectations are much more realistic: Instead of planning for a new act's first single to break the Top 10, labels might hope for a Top 20 debut. "It may take two to four singles to really have an artist visible enough to sell records," Johnson says. "It may take a little longer to set up those artists."

While next year's transition will be painful, Johnson insists that it's just what the industry needs, because the music will have to improve if it is to succeed. "Absolutely great music has always been the answer, and it will always be the answer. The number-one challenge is, can the music be greater? Can the songs be greater? Can the performances be greater? We can't save our way to greatness.

"You are already beginning to see it--people taking longer to cut records, cutting more songs to make sure they have the right album. That it's all good. If we end up with fewer artists that have greater music, that's good for everybody."

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