For record executives who have been worrying about the future of their industry in the iPod age, 2006 is shaping up as an annus horribilis. Sales of CDs have plummeted for the fourth straight year, down by 12 million units in the first half of 2006 compared to the same period a year ago. By the midyear point in 2005, 50 Cent's The Massacre had sold 4 million copies; this year's top-seller, the High School Musical original soundtrack, has sold only 2.6 million. Things hit a new low a few weeks back, when the nation's No. 1 album, Johnny Cash's American V: A Hundred Highways, recorded the lowest single-week sales (just 88,000 copies) of any chart-topper since Soundscan began keeping track in 1991. Meanwhile, digital downloads are up by 77 percent, and there's good reason to suspect that the 300 million-odd songs legally downloaded thus far in 2006 are but a fraction of the number obtained through illegal peer-to-peer file sharing and other means of online skulduggery.
Just about the only bright spot in this summer of discontent is a record titled Now That's What I Call Music! 22. Now 22 has sold more copies in its first week than any record in months, has topped 550,000 units sold, and has held the No. 1 spot on the Billboard charts for two straight weeks—the closest thing we've seen to a legitimate hit album all summer. Of course, strictly speaking, Now 22 isn't an album at all. Like the 21 previous Now CDs, it's a collection of big radio hits from recent months, slapped together and hustled into stores: a 2006 version of one of those old K-Tel compilation records—Original Hits! By the Original Artists!—minus the cheesy late night TV advertisements.
The Now series has generated little discussion outside of the music trade press, but it's one of the great success stories in the record business over the last decade. Since launching eight years ago, the Now CDs have sold nearly 60 million copies in total; all of the records have made the Billboard Top 10 and gone platinum, and eight have debuted at No. 1. In other words, these ticky-tacky compilation albums—with garish cover graphics seemingly designed by a rave kid turned loose on some clip-art software—may well be the most reliable cash-cow in pop. And they hold some surprising lessons, at a moment of intense music biz agita, about the industry's most coveted consumers.
Like a lot of other bright pop music ideas, Now That's What I Call Music! comes from England, where the series has been going strong for more than two decades, spawning 64 hits collections and numerous spinoffs: Now Dance; Now-The Summer Album; Now That's What I Call Christmas! In 1998, a group of American record executives from Sony, Universal, and EMI joined forces, dipped into their various vaults, and released the first stateside Now album. It was a business no-brainer—a dirt-cheap way to wring some extra dividends out of last month's hit records and to reach the cherished teen-and-college-age audience. (Advertising for the CDs is focused entirely on MTV, teen magazines, and other outlets that reach the young.)
Musically, the Now series is defined by the eclecticism of Top 40 radio, where thumping hip-hop beats rub up against guitar-powered rock, pop songs, and, lord help us, the lovelorn bleatings of Nick Lachey. Now 22 features a broad cross-section of current pop: Kelly Clarkson's slick, catchy "Walk Away," Keith Urban's soppy country ballad "Tonight I Wanna Cry," some Houston hip-hop, some Britpop, some loud and grumpy post-grunge rock. Adults like to imagine that they're more aesthetically sophisticated than their kids, but the Now records are a reminder that the average MTV-addled teen is by definition a musical cosmopolitan.
The real surprise, though, is that kids are buying CDs at all. According to the conventional wisdom, the CD market is being kept afloat by older shoppers who maintain a sentimental attachment to records that can be purchased in stores and other 20th-century relics. Young music fans, the theory goes, are comfortable with new technologies, are used to receiving their popular culture in virtual form, are surgically attached to their iPods and, at this very moment, are having cybersex on MySpace while downloading the new Pimp C album from a file-sharing site you've never heard of.
There's no doubting the direction in which the music business is heading. (Those spiking digital download statistics speak volumes.) But the continued success of the Now series suggests that the young and wired may be less eager to part with their old-fashioned compact discs than industry analysts suspect. For one thing, CDs are convenient. It would take fewer than 30 mouse-clicks for an 18-year-old with an Internet connection to download the songs on Now 22 to his computer, and a moderately Web-savvy youth could accomplish this task at a discount of 100 percent off of the album's retail price. But by buying the CD in the store he saves himself the hassle, and he can stick the disc right in his car stereo. Most important, unlike a digitally downloaded song, a CD is a three-dimensional object that can be held in the hand and stored on a shelf right next to copies of Now 8 and Now 17. Record buyers have always been fetishists—they want their music in smart, shiny packages—and why should Generation Y be any different? The world may be collapsing into bytes all around them, but kids today still like stuff.
So, young listeners are OK with CDs—but what about albums? If the Now phenomenon tell us anything about changing taste, it may be that collections of songs by a single artist are losing their cachet. (Prior to Now, no non-soundtrack, multiartist compilation had ever topped the Billboard chart.) The album, of course, is the supreme icon of the rock era, and albums' diminished stock may signify a real loosening of rock culture's grip on the public imagination. Or, the success of Now may simply be a response to an era of great hit singles and middling albums. After all, the Now series duplicates what kids do already: They use technology that permits the a la carte poaching of individual tracks from a given album—the so-called "unbundling" that has record labels freaking out. In the first half of 2006, there were 281 million legitimate downloads of individual tracks and only 14 million complete albums.
The success of the Now CDs also suggests one way that the beleaguered music business might respond to the shifting landscape: with more compilations. In Europe, compilations account for fully 25 percent of the record market. American major labels have invested barely any energy in compilations, but with a little imagination they might easily catch up. (For some pointers, a record executive need only hop a cab to Manhattan's Canal Street, epicenter of the thriving gray-market trade in hip-hop mixtape CDs.) As someone who listens to CDs for a living, I can attest that, by and large, comps are good value, and albums usually disappoint: When you do the hard math, precious few albums offer more than one or two decent tracks. We all might benefit—you, me, the president of Columbia Records, and the half-million fine American youths who bought Now 22 in the last fortnight—if the industry threw a little more weight behind that up-and-coming talent, Various Artists.