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February 17, 2003

Smithsonian Folkways Dusts Off Titles With New Technology

By CHRIS NELSON

The major music companies may fret over falling revenue, but one label saw its business jump 33 percent last year — thanks in part to the recordable compact discs that the industry says are hurting its sales.

The label, Smithsonian Folkways Recordings, is using recordable CD's, or CD-R's, to ensure that each release in its extensive catalog is always available. And in doing so, the label best known for dusty recordings by Woody Guthrie and Lead Belly is taking initial steps toward creating a 21st-century "celestial jukebox," where nothing recorded ever goes out of print.

The Folkways inventory includes 2,168 titles dating to 1948. Some of those are collections by familiar troubadours like Pete Seeger and Phil Ochs. But many more are obscurities like "Music From Western Samoa: From Conch Shell to Disco" (1984) and "Folk Songs of the Canadian North Woods" (1955).

Most recording companies, if they would ever release titles like that to begin with, would let the master tapes languish once a first pressing was sold out and initial interest had waned.

The notion of any recording falling into history's dust bin was said to gall Moses Asch, founder of Folkways Records. Dan Sheehy, director of Smithsonian Folkways, recalled that Mr. Asch used to ask if Q would be dropped from the alphabet just because it wasn't used as much as the rest of the letters.

When the Smithsonian Institution bought Folkways from the Asch estate in 1987, the museum agreed to keep every title in print. Initially, requests for rare, out-of-stock albums were fulfilled with dubbed cassettes.

Now, music fans hankering for "Burmese Folk and Traditional Music" from 1953 can pay $19.95 and receive a CD-R "burned" with the original album, along with a standard cardboard slipcase that includes a folded photocopy of the original liner notes.

The Recording Industry Association of America, a trade group representing the major music corporations, worries that CD-R technology aids music piracy. Rather than buy new CD's, the theory goes, people will burn downloaded music onto CD-R's or burn a copy of a friend's CD.

In 2002, 681 million CD's were sold, down from 763 million the year before, according to Nielsen SoundScan. But Smithsonian Folkways Recordings has been using the CD-R technology since 1996 to sell its obscure titles, essentially creating a just-in-time delivery model for record companies. Every time an order comes in, a Folkways employee burns five copies, one for the customer, and four for future requests.

Last year, the company sold 13,467 CD-R's, accounting for 6 percent of its CD sales, said Richard Burgess, director of marketing. Over all, Smithsonian Folkways had net album sales of almost $2.9 million in 2002, up 33 percent from 2001, despite its cutting its advertising budget more than 50 percent.

Interest in Smithsonian Folkways has jumped since the bluegrass-flavored soundtrack to "O Brother, Where Art Thou?" (2001), from Universal, won a Grammy for Album of the Year and went platinum six times over.

But it is not just rustic American music that Smithsonian Folkways is selling.

A 2002 double-CD set of Middle Eastern and Asian songs called "The Silk Road: A Musical Caravan" has sold 7,800 copies, according to Nielsen SoundScan.

Though that is just a fraction of the sales for Eminem in a single week, it is a respectable figure for a museum label that makes no videos, places few ads and deals primarily in music recorded by artists long dead, or in foreign languages, or from locales most Americans will never visit.

"Getting rid of inventory, which is what this custom on-demand stuff is about, is a huge step in the right direction toward making even low-selling albums into a business," said Josh Bernoff, principal analyst at Forrester Research.

Industry analysts say it is also a step toward making all music forever available, one the record business has yet to take successfully.

In 1999, Alliance Entertainment's RedDotNet subsidiary unveiled kiosks that would burn discs in retail outlets while customers waited. But that program failed, in part because the company was not able to secure licensing agreements with major labels, according to Eric Weisman, president and chief executive of Alliance.

Echo, a new consortium of retailers including Best Buy, Tower and Wherehouse, is considering development of in-store stations that would allow customers to download music onto portable digital music players like Apple's iPod.

While the Smithsonian Folkways CD-R operation allows the company to fulfill its obligation to keep everything in print, it is a labor-intensive solution that would be inefficient for the higher-demand catalogs of the major labels.

But Smithsonian Folkways is also venturing into just-in-time delivery for more popular titles. Last fall, the company enlisted the print-on-demand company Americ Disc to manufacture CD's, which are expected to sell significantly more copies than typical CD-R's, but fewer than full-blown retail releases. These Collector's Series discs come with full-color booklets and are identical in quality to commercial releases, but are sold only through the Smithsonian Folkways Web site (www.si.edu/folkways).

The first CD in the series, "Bells & Winter Festivals of Greek Macedonia" proved so popular through mail order that the company quickly made it a regular retail release.

It is hard for some to ignore the irony that as Smithsonian Folkways uses CD-R's to further its business, much of the industry hopes to limit the technology's use.

"It's almost like a little bootlegger's operation going on," said Dean Blackwood, owner of Revenant Records, an esoteric Americana label.

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