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CNN Live At Daybreak

Look at What Recording Industry Up Against

Aired February 20, 2003 - 05:24   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CAROL COSTELLO, CNN ANCHOR: The Grammy Awards come back to New York this weekend. But performers and record executives alike would love to sweep the industry's woes under the red carpet. Sales are down and record companies are pointing the finger squarely at Internet theft.
CNN's Andy Serwer takes a look at what the recording industry is up against.

(BEGIN VIDEOTAPE)

ANDY SERWER, "FORTUNE" MAGAZINE (voice-over): Beneath the glitz and the gloss of this year's Grammys, there's a dirty little secret. The record business is in a deep slump. Last year, sales of CDs were down for a second year in a row. John Norris, who's hosting MTV and VH1's Grammy coverage, says part of the problem is that today's music is short on inspiration.

JOHN NORRIS, MTV NEWS CORRESPONDENT: It was for a couple of years there that the teen pop, be it the boy band phenomenon or the Britanys and Cristina kind of thing, really blew up and that kind of got all the attention. But for a while now, people have been saying what's going to be the next big thing.

SERWER: But unfortunately for the recording industry, the next big thing has been piracy, file sharing and swapping on the Internet. Sales of blank disks, which can be used for burning music off the Web, are now double that of prerecorded CDs. The recording industry is struggling to adapt.

NEIL PORTNOW, PRESIDENT, NARAS: Technology has always kind of become our friend. We're kind of dragged into this kicking and screaming. We were when the cassette was invented. We were afraid that's it, people can tape now, we're going to lose control. It didn't happen.

SERWER: The industry is trying new strategies. Last week, Universal's Inner Scope label rolled out rapper 50 Cents' debut album four days early in order to beat the bootleggers. It paid off. The Eminem protege set a record for a new artist, selling nearly 900,000 CDs in one week.

Still, millions of Web users won't pay a dime for music this year, which irks those in the biz.

NORRIS: It's a little hard for me to get around the idea that one is entitled to have something for free. But that's me, you know? I don't, I'm going to go see Matisse/Picasso next week but I'm not going to lift one of the paintings off the wall.

SERWER: Music fans who do buy CDs are finding less out there, fewer new releases, thinner liner notes, all coming at a higher price, now available at fewer music stores. Plunging profits have shuttered many Sam Goody, Musicland and Warehouse music stores across the country.

(on camera): So how does the music business get out of this mess? For one, it will have to figure out a way to beat the pirates and get consumers to pay for music online. Just as important, though, the music industry needs great new artists to create great new music.

Andy Serwer, CNN, New York.

(END VIDEOTAPE)

COSTELLO: And we will be on the Grammy scene on Sunday. CNN's Arthel Neville will be live from the red carpet at Madison Square Garden.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com






Aired February 20, 2003 - 05:24   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: The Grammy Awards come back to New York this weekend. But performers and record executives alike would love to sweep the industry's woes under the red carpet. Sales are down and record companies are pointing the finger squarely at Internet theft.
CNN's Andy Serwer takes a look at what the recording industry is up against.

(BEGIN VIDEOTAPE)

ANDY SERWER, "FORTUNE" MAGAZINE (voice-over): Beneath the glitz and the gloss of this year's Grammys, there's a dirty little secret. The record business is in a deep slump. Last year, sales of CDs were down for a second year in a row. John Norris, who's hosting MTV and VH1's Grammy coverage, says part of the problem is that today's music is short on inspiration.

JOHN NORRIS, MTV NEWS CORRESPONDENT: It was for a couple of years there that the teen pop, be it the boy band phenomenon or the Britanys and Cristina kind of thing, really blew up and that kind of got all the attention. But for a while now, people have been saying what's going to be the next big thing.

SERWER: But unfortunately for the recording industry, the next big thing has been piracy, file sharing and swapping on the Internet. Sales of blank disks, which can be used for burning music off the Web, are now double that of prerecorded CDs. The recording industry is struggling to adapt.

NEIL PORTNOW, PRESIDENT, NARAS: Technology has always kind of become our friend. We're kind of dragged into this kicking and screaming. We were when the cassette was invented. We were afraid that's it, people can tape now, we're going to lose control. It didn't happen.

SERWER: The industry is trying new strategies. Last week, Universal's Inner Scope label rolled out rapper 50 Cents' debut album four days early in order to beat the bootleggers. It paid off. The Eminem protege set a record for a new artist, selling nearly 900,000 CDs in one week.

Still, millions of Web users won't pay a dime for music this year, which irks those in the biz.

NORRIS: It's a little hard for me to get around the idea that one is entitled to have something for free. But that's me, you know? I don't, I'm going to go see Matisse/Picasso next week but I'm not going to lift one of the paintings off the wall.

SERWER: Music fans who do buy CDs are finding less out there, fewer new releases, thinner liner notes, all coming at a higher price, now available at fewer music stores. Plunging profits have shuttered many Sam Goody, Musicland and Warehouse music stores across the country.

(on camera): So how does the music business get out of this mess? For one, it will have to figure out a way to beat the pirates and get consumers to pay for music online. Just as important, though, the music industry needs great new artists to create great new music.

Andy Serwer, CNN, New York.

(END VIDEOTAPE)

COSTELLO: And we will be on the Grammy scene on Sunday. CNN's Arthel Neville will be live from the red carpet at Madison Square Garden.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com