Economic hurdles slow greening of CD packaging

NEW YORK (Billboard) - During the past few years, many record labels devoted considerable resources to creating CD packaging that has less of an impact on the environment. Suddenly, it's no longer as high a priority.

"We're thinking about another kind of green right now," says Duncan Browne, COO of the 27-unit, Brighton, Mass.-based Newbury Comics chain. "We're seriously committed to green of the dead president kind."

That's because U.S. album sales continue to fall. As of the end of first-quarter 2009, album sales are down 7 percent from the corresponding year-earlier period, according to Nielsen SoundScan.

"Green packaging is way down on my list right now," says the head of one U.S. independent distributor, adding that there are "bigger problems to worry about."

Three of the four major labels say their progress toward green packaging -- and away from polystyrene-based jewel boxes -- stands at much the same point as it did last year at this time. Only Sony, which had lagged behind the other three majors, says it's offering significantly more sustainable packaging. Its measures include using 100 percent recycled paperboard for its Legacy Records Playlist series.

All four majors are now using eco-friendly packaging for some catalog albums, but they still release most new albums in jewel boxes.

SETTING STANDARDS

The majors are, however, making moves toward standardization. The National Association of Recording Merchandisers (NARM) and the Recording Industry Association of America's joint Sustainable Packaging Working Group concluded that a six-panel recycled paperboard package produces the least greenhouse gas emission. The study also recommends minimizing the weight of packaging and using 30 percent recycled paper.

Minimizing packaging weight would reduce fuel costs in shipping and could also help solve the problem of shrinking store space for music in the long term. "If CD packaging shrinks by 50 percent, I can get 50 percent more product into stores," says Trans World Entertainment director of merchandising operations Ish Cuebas.

But this process still faces stumbling blocks. Sources suggest that Anderson Merchandisers -- the Wal-Mart rackjobber, or distributor, that changed the course of the packaging debate when it jumped aboard the green bandwagon -- says it wants any new packaging to have the same size, weight and shape as current packaging. That's because modifying its automated sorting equipment would cost millions of dollars, other retail sources say. (The Amarillo, Texas-based company didn't return calls for comment.)

Universal Music Group, which has moved to eco-paks with paperform trays for much of its catalog, confirms that the lighter packaging often "comes shooting out of the machines because they are not stout enough," according to Universal Music Group Distribution president/CEO Jim Urie.

"Even the inclusion of an o-card wrap-around (for) the jewel box makes such packaging unsortable," Cuebas says. But if the industry creates a new packaging standard, he says Trans World will spend money to retool its equipment.

That seems unlikely in the short term because of the potential cost of the change, although the differential between standard and eco packaging is decreasing, as is the cost of recycled paper. Music industry executives say the price of making jewel boxes rose last year along with the price of oil but has yet to drop accordingly.

PRICE GAP CLOSING

"It used to be economical to migrate toward conventional CD packaging," says Ric Sherman, national account sales manager for Charlotte, N.C.-based disc manufacturer Optical Experts Manufacturing. "But the gap is closing because polystyrene has generally gone up while companies have been getting more efficient in managing green packaging."

And there's more to packaging decisions than cost. "We are making a marketing call," says Jason Boyd, senior director of national sales at the label EMI, "if the artists have a particular environmentally friendly agenda."

If the industry converts en masse to standard paperboard packaging, a new process could be automated, Warner-Elektra-Atlantic executive vice president Mike Jbara says. But the NARM/RIAA study acknowledges that declining revenue makes it difficult for many companies to adapt.

That's definitely the case if there's a lack of encouragement at retail. "I did a couple of green packages and nobody gave a s--t. Wal-Mart didn't even order it," says the president of one indie label. "It cost a lot more, maybe 30 cents more (per unit). So much for that."

(Editing by Sheri Linden at Reuters)