Music business badly needs Eminem's "Recovery"

LONDON (Reuters) - "Recovery," the new album from rapper Eminem, could not be more aptly named for a music business facing an alarming fall in sales so far this year. The Detroit star's seventh studio album hits shelves on Monday, a day earlier than planned after tracks leaked on to the Internet. It comes about a week after the release of Canadian artist Drake's debut "Thank Me Later," which is also expected to perform strongly.

But the duo are unlikely to lift the gloom hanging over the music business for long, with year-to-date U.S. physical and digital album sales by early June down 11 percent year-on-year to 130.6 million, extending a decade-long decline.

To make matters worse, the recent boom in touring, which labels and bands sought to exploit as recorded music faded, is showing signs of weakness caused by high ticket prices and economic uncertainty, and digital download growth is slowing.

Official figures for the key U.S. market as it approaches mid-year show how tough conditions are for music companies and acts who blame illegal file sharing for their woes.

According to Nielsen Soundscan, which tracks sales, 4.98 million albums were sold in the week ending May 30, possibly the lowest figure since the early 1970s. By comparison, the record one-week tally set in December 2000 was 45.4 million.

Analysts put the low figure down to a weak lineup during that particular week, and Drake's record is forecast to be one of the largest launches of the year so far while Eminem, another "tentpole" album, follows hot on its heels.

CDs STILL CRUCIAL

Yet while major and independent labels are pinning their future on digital music, whether it is access models or actual ownership, they can ill afford to abandon physical sales which account for somewhere in the region of 70 percent of revenues.

"The physical format is in decline, but I don't think it will go away completely," said Ed Christman, who tracks music sales for industry publication Billboard.

"What you want to do, since the digital 'magical bullet' hasn't appeared, is to sustain your revenue from CD sales for as long as you can."

Although relatively small in terms of a label's revenues, digital streaming, downloading, online subscriptions and advertising are seen as key to the industry's future.

"The revenue is still small, but at least it's revenue," said one major label executive. "Don't forget, some 95 percent of the digital market is illegal. If we can grow that five percent significantly, we've got a future."

That task is proving slow going, and while a recent report from PricewaterhouseCoopers predicts that the music industry will return to growth in 2013, some analysts are less sure.

"Given the incredible number of ways a person can now listen to music for free or near free, that gap between interest and willingness to pay is the biggest hurdle in record labels' quest to grow digital revenues," Billboard said of the report.

In the short term, all eyes will be on Eminem, one of the world's best-selling artists of the last decade who has said in interviews to promote Recovery that he is over his prescription drug addiction, is sober and more tolerant than he used to be.

Whether the "nice guy" image appeals to fans is unclear.

Early reaction to the album, out on Universal Music Group's Interscope label, has been mixed.

London's Evening Standard was among the most positive with a four-star review that concluded: "After seven albums, Eminem is so far ahead of the pack he only has himself to compete with. Even by that measurement, he's winning."

The Independent was less glowing, stating: "If we're being brutally frank, I think we already know far more about Eminem's private life and his alleged mental torment than is probably healthy for us, let alone the rapper himself."

(Reporting by Mike Collett-White, editing by Paul Casciato)