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The loudest music biz stories of 2007

MP3 player headphones on a keyboard. The changes in the music industry precipitated by the MP3 have only continued with the rise of online streaming.

TEXT OF INTERVIEW

Doug Krizner: Every other Friday, we look at the music business with Bill Werde, executive editor at Billboard. Bill, as we close out the year, one of the big stories seems to be this move by major recording artists to leave their labels. Who stands out?

Bill Werde: You have the Eagles, who partnered with Wal-Mart in the United States to sell their first album in almost 30 years exclusively through Wal-Mart. That was a phenomenal success -- I mean, they sold more than 700,000 copies their first week at only one retailer. Paul McCartney is sort of an example of this, where he sold his album through Starbucks. And probably the big one on this list is Madonna, who announced she was leaving Warner Brothers after essentially her whole career to release her future albums through Live Nation, who's basically a tour promoter, a concert promoter.

Krizner: So how does that story fit with the other story of the year, which seems to be the real drop-off in sales?

Werde: I think one of the things that's happening on a major label level is because sales are declining, they're losing the flexibility to throw a ton of money at legacy artists. Once upon a time, when they were swimming in album sales -- particularly at the height of the sort of the CD era, when people were still replacing their vinyl and cassette collections with CDs -- they could throw that kind of money at an artist like Madonna, just to keep her, just to keep that appearance of, "Hey, we are the label that the Madonnas of the world need to record with." Now, it's a tougher world.

Krizner: What do we know about CD sales versus downloads? I mean, what are the numbers that we've seen over 2007 say about how the business is changing?

Werde: Well, in the United States, digital sales continue to grow, and physical sales continue to decline. Physical CD sales declined about 18 [percent], 19 percent. That's a phenomenal total. I mean, and this follows four or five years of declines already.

Krizner: The next time you and I speak, we're going to be looking at the new year, and I'm imagining that that trend is going to continue, right?

Werde: Well, it will continue, but one of the things that's very worrisome to the major labels is that digital growth actually slowed in 2007. So the concern in the major label realm is that that growth hasn't reached a point that it's going to off-set declines in the physical CD era.

Krizner: Bill Werde is executive editor at Billboard. You can check out more about what Bill and his colleagues are up to at Billboard.biz.

Werde: Always a pleasure.

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