Las Vegas Business Press :: News : Latin soul, frigid market

Latin soul, frigid market

Despite population growth, music sales shrink as piracy mounts

BY ARNOLD M. KNIGHTLY

Eddie Hernandez has spent his young life around the Latin music business. His family currently owns the local music chain Casa Latina Records and owned similar stores in Southern California in the early 1990s.

The 22-year-old University of Nevada, Las Vegas student is, however, seeing a change in Latin music industry that may spell the slow demise of the family business.

As technology becomes more widely available, and youngsters of all ethnic and economic backgrounds gain greater access to computers, downloading and piracy are starting to slow the family business.

Jeferson Applegate | Business Press
Marcos Hernandez shows off the highly varied offerings of Casa Latina, ostensibly a record store, but a source of many other Latin-themed products besides.

PIRATES OF THE CARIBBEAN

"You just start to see it all around," Hernandez said. "My friends now have computers where they didn't a couple years ago. It's (technology) catching up everywhere."

After working for years in all aspects of the family business, Hernandez is now applying for jobs outside it, even preparing for an job interview while discussing piracy problems with the Business Press. He is also studying history at UNLV, having switched over from business.

National trend numbers reflect Hernandez's concerns about what he sees all around him. According to numbers tracked by the Recording Industry Association of America, Compact disc shipments of Latin music to retailers declined 23 percent for the first six months of 2006, while the music industry as a whole declined 14 percent.

The double-digit decrease is in sharp contrast to the double-digit increases the genre had shown the previous two years: 13 percent in 2005 and 24 percent in 2004.

According to Rafael Fernandez, vice president of Latin music for RIAA, while piracy continues to affect the industry and music downloads are becoming more prevalent, immigration also had an impact on the industry, following record years.

"People are more uncertain about their future," Fernandez said. "Families are sending more money back home or just saving it, which means they spend less on music."

According to numbers provided by the RIAA, Latin music makes up 5 percent of all music shipped in the United States every year. While digital downloading through Web sites such as iTunes has increased slightly, an unusually high percentage of pirated CDs recovered by law enforcement feature Latin artists. Judging by seizures, 38 percent of pirated compact discs come from Latin genres. That is really hurting the industry.

ONE STORE'S ODYSSEY

Latin music started gaining popularity in Las Vegas as the Hispanic and Latino population began to swell in the late 1980s. While small, independent music stores started opening to tap into the growing market, it was when the now-closed Odyssey Records on Las Vegas Boulevard started expanding its Latin section in 1992 that the genre took off locally.

"It was just having the wherewithal and the knowledge of years of responding to customer requests," said erstwhile Odyssey Product Manager Chris Wilson. "It was finding what was available to you by doing a little trial and error. Hardest part was finding out the people that mattered, bringing in the artists and some of their catalog, and seeing what flew."

Wilson, who worked at Odyssey from 1978 until the store closed in 2004, said the demand grew so large that 15 percent to 20 percent of the store's $4 million-a-year business was in Latin music, in what had been a predominantly rap- and urban music-oriented location.

That growth, Wilson added, was possible because large retailers such as Best Buy and Wal-Mart had yet to enter that niche. Others, such as now-defunct Tower Records, were tardy in recognizing the draw of Latin music. Now however, even Wilson's current employer, Borders Books, carries a selection of Latin music, which further dilutes the market.

The slowness of Best Buy and Wal-Mart also provided the opening for the Hernandezes to launch Casa Latina in 1993. Hernandez believes his family has now reached the maximum growth potential for the family stores, the last one of which opened in 2001. Casa Latina currently has four Vegas-area locations.

aknightly@lvbusinesspress.com | 702-871-6780 x316

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