Gloom hard to shake for music industry, sales keep on dropping

This year`s top-selling album from bullet-ridden rapper 50 Cent could easily be the motto for the struggling music industry -- "Get Rich or Die Tryin`". Despite scoring big time with the rap hit, the world`s biggest music company Universal Music signalled this week that the industry is limping more visibly than many expected, putting added pressure on labels to cut costs and do deals to survive.

The industry gloom is bad
timing for the music giant which is being considered for sale as part of
an auction of parent Vivendi Universal`s U.S. entertainment assets. It
also does not bode well for smaller companies such as Warner Music and
BMG. Sources close to the companies said the two were pushing on with
talks to merge their recorded music arms and Warner Music is also seeking
to wrap up a deal to sell its CD/DVD manufacturing unit in the next month
or two.

The industry has seen three
years of decline, ravaged by a lack of hits, fans downloading music for
free and an obsolete business model that relies on rolling the dice for
mega hits. Universal Music, also home to U2 and rapper Eminem, estimates
industry sales sank 12 percent in the first quarter, dashing hopes for a
less steep decline in sales this year.

Admittedly, the release of
new albums was thin in the quarter -- normally a weak period after a busy
Christmas, making it an unreliable indicator of the rest of the year. All
the same, it has not been a good start and Universal`s figures suggest the
industry could top the five percent decline in sales predicted by industry
body the IFPI in April.

"I would think a fall of
about eight percent this year was more likely. This is a market in
historical decline and the decline could accelerate this year," said Phil
Hardy from Music & Copyright which publishes market share
data.