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POP MUSIC : Rock 'n' Roll Revolutionaries : SoundScan's Mike Shalett and Mike Fine have shaken up the record industry with a radical concept: accurate sales figures

December 08, 1991|CHUCK PHILIPS | Chuck Philips is a frequent contributor to Calendar. and

What do these people have in common?

Elvis Presley and Chuck Berry.

John Lennon and Paul McCartney.

Bob Dylan and Jimi Hendrix.

Prince and Madonna.

As you roll through the decades of rock, it's not hard to identify the real revolutionaries in the music business.

Now add the names Mike Shalett and Mike Fine.

Shalett and Fine?

These two marketing analysts from New York can't carry a tune, but their SoundScan company has turned the music industry on its ear in the last six months by bringing a "shocking" new element to the weekly sales charts: accuracy.

For the last 30 years, Billboard magazine, the nation's leading pop trade publication, relied on record store employee estimates as the basis for its weekly album charts. The problem is those estimates were open to manipulation and error.

Record companies, eager to hype their latest product, often found ways to influence employee estimates. At the same time, many of the employees took the Billboard chart divisions too literally. They reported, say, country and R&B sales only on the country and R&B charts--instead of also including them on the wider and more influential pop charts.

SoundScan's system takes the human element out of the loop by using a computerized system that registers a sale every time an album is passed through the bar code scanner at a check-out stand. The company tracks an estimated 5 million transactions per week in about 9,000 retail outlets--more than 50% of the records sold in the United States. The data is transmitted to SoundScan's offices and tabulated each week and then sold to music industry businesses.

The new system has resulted in some remarkable changes in the pop charts--and produced some eye-opening data for record company executives, radio programmers and concert promoters, all of whom rely on the charts to help them determine which acts to push.

Among the most dramatic discoveries since SoundScan was instituted: There is far more fan support around the country for non-mainstream acts--including country sensation Garth Brooks, gangsta rappers N.W.A and various metal bands--than was believed in the industry previously.

Given this information, the ultimate result of SoundScan may well be a dramatic change in what records we hear on the radio and even what acts are signed by record companies.

Jimmy Bowen, president of Capitol Records' Nashville operation, believes the SoundScan information is giving record companies and radio programmers a truer picture than ever about what kind of music American consumers want to buy.

"SoundScan is the best thing that's happened to the music business in 37 years," he says. "The real statistics that these two guys give the industry have completely overhauled America's perception of what a pop hit is."

In designing SoundScan, Fine and Shalett felt their raw data, which tracks the sales of hundreds of albums on a city-by-city basis, would be so invaluable to record companies--who used to have to literally guess at what their records were selling each week--that the firms would pay big bucks for the information.

And sure enough, the men signed contracts last summer with three of the nation's largest record distributors--Sony Music Distribution, Bertelsmann Music Group and PolyGram Group Distribution--to supply this data. The price tag for each company: about $800,000 per year.

Though the remaining major companies were quite outspoken in their opposition to this new computerized system, all three--CEMA (which markets Capitol and EMI Records), MCA (MCA and Geffen) and WEA (Warner Bros., Elektra, Atlantic and Virgin)--will reportedly sign similar deals within the next two months.

And Fine and Shalett are now going beyond the record companies to sign up other subscribers.

* Radio: SoundScan signed an agreement in October with ABC Radio Networks to distribute regional weekly chart rankings of the top-selling singles and albums to more than 1,500 of the nation's 10,000 radio stations. Jeff Pollack, chief executive of the Los Angeles-based Pollack Media Group, a leading worldwide radio consulting firm, thinks the ABC pact may be reflected in changes in what is played on the air.

"These guys have managed to put the credibility back into retail sales numbers and as a result, programmers are being forced to pay attention to Nirvana and other unknown bands that are proven sellers," he said.

* Concerts: Last month, 12 of the nation's largest concert promoters signed contracts with SoundScan to obtain regional sales figures on the top-selling acts in the markets where they put on shows. Cost: about $5,000 a year per company. Brian Murphy, president of Los Angeles-based Avalon Attractions, believes that SoundScan's precise sales data gives promoters an edge in negotiating fees with touring acts.

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