Documents from Gilberto Gil's Private Archive

Credited With The Region's Largest Market, Brazilian Music Industry Is About The Future BY JOHN LANNERT na year that witnessed a steep downturn for most st of the recording industry in Latin America, Brazil has risen from inflationary ashes to become the largest record "And it won't be a surprise il, next year, Brazil becomes the sixth largest market in the workel,"cleclares Manoel Camero, president of Brazil's recording trade association, Associação Brasileira dos Produtores de Discos (ABPD). Brazil's rapid return to regional prominence has taken place despite the Brazilian government's decision to impose tight- money policies in February. Creclit suddenly became prohibi tively , th two sol music-the veneratonpelling store chain Mezbla and wholesaler/retailer Colombo e Colombo-to apply for a concor data, a Chapter 11-type protection from creditors. That the Brazilian record industry has not only withstood, but also prospered, under yet another instant economic adjustment by the national government suggests that the domestic record business is in better shape than ever. hough many retailers in Brazil are still in arrears to the domestic record labels due to the credit-tightening measures, nearly all record execu- government's tives in Brazil wax optimistic about the future of the Brazilian record market. T And as the government slowly crops interest rates, the labels are betting the market starts heating up just in time for the usually hectic holiday season. Apart from the majors, there are several indies who have thrived through specialization, such as Paradoxx (dance) and Velas (MPI), while other indies benefited from major-label distribution The following are capsule profiles of Brazil's most important major and indie labels (listed alphabetically), as well as com- mentary by executives from these companies regarding the Brazilian record industry. BMG Label MD Luis Oscar Niemeyer foresees a 15% to 20% increase in the Brazilian market in 1995, with continued growth in 1996. Though concerned about past-clue payments from retailers, he's hopeful the situation will improve, since the Brazilian government loosened interest rates Nonetheless, Niemeyer cautions, "We have to be careful September Everything looks good, but we don't want to sell more than the clieni Gon allord. We also need to pay attention to the govern ment, because things can change very quickly." 52 IMPRESSIVE NUMBERS Camere expects the revenue generated by the Brazilian record industry in 1995 to reach $700 million whopping 25% increase over 1994. He adds that his revenue projection is based on anticipated sales of more than 70 million units and says 85% of the sales will come from CDs, with the balance being generated by the fast-disappearing vinyl (8%) and cas- settes (7%). The average price for a CD in a record store is $20 to $25; in a department store, it's $14 or $15. The average price for a Cassette is about half that in both types of outlets. Further, album sales by domestic acts compared to interna- tional artists have grown from 60% to 65%. Romantic samba and dance are the best-selling genres, says Camero, although some labels have been making commercial headway with rap, reggae and hip-hop Like last year, PolyGram and Sony were battling for the lead in market share as of September. And like last year, Sony's strong slate of fourth-quarter releases was expected to propel Las Opinions Brazilian Execs Sound Off On Music And The Economy BY ENOR PAIANO AND JOHN LANNERT BMG's best-selling acts in 1995 have been romantic samba aict Só Pra Contratar and veteran pop/rocker Lulu Santos. BMC has just released a new album by So Pra Contrariar ("O Samba Não Tem Fronteiras") and one from another big- selling, romantic samba act, Grupo Raça ("Pura Emoção"), plus the label's annual Carnaval-themed multi-artist compendium entitled "Samba De En redo/Escolas De Samba." Other prominent acts signed to BMG are super- star Gal Costa, Chico Buarque, veteran vocalists Fabio Jr. and Joanna Bahian act Chiclete Com Banana, rock group Engenheiros Do Hawaii and irreverent humorist Falcão. As in the rest of Latin America, Los Del Rio's "Macarena has become a big hit in Brazil. Lulu Santos CID This veteran indie label located in Rio de Janeiro has more Continued on wege 56 BILLBOARD SPOTLIGHT the label into first place by year's end. While acknowledging that the domestic record business had been hampered for six months by creclit-related bad debt, Camero allirms, "The labels are collecting now, so the man ket) is normal again. What happened is that most stores were not prepared when the government tightened credit. But I'm buying onher things, but they still build ople may not be Still, most label executives, such as Luis Oscar Niemeyer, MD BMG Brazil, fret that delinquent debt remains uncom- fortably high. "Nowadays, we are being very selective as to whom we will sell." says Niemeyer. But he points out that despite the uneasy credit environment, le expects the comes tic market to keep growing. Alter several years of sub-par performances caused primar ily by unrelenting in llation, the near-moribund Brazilian record industry finally came to life last year, after the govern ment introduced its anti-inflation program called the Real Plan. Almost overnight, the monthly inflation rate plummeted from 50% to 5%,and, suddenly, Brazilian consumers had real Romantic samba and dance are the best-selling genres, although some labels have been making commercial headway with rap, reggae and hip-hop. purchasing power, Brazil's record industry boomed, Ironically, the skyrocketing domestic consumption resulting from the Real Plan prompted Brazil's finance minister, Pedro Malan, to put on the brakes. omy will allow the record business to continue to expand in Camero opines that the underlying stability of Brazil's econ 1996, albeit at a slower pace, say around 5% The lone blemish on the rosy scenario painted by Camerois piracy, particularly involving cassettes. While he offers no specifics as to what the Brazilian record industry would do to combat counterleiters, Camero assures with avuncular firm. ness that the labels are pushing to identify and prosecute the most serious ollenders. With their eyes and cars faithfully cast toward the govern ment's economic initiatives, Brazil's record executives are equally sanguine as Camero. BRIGHT FUTURE Apart from piracy and bad debt, most label heads are expressing optimistic views about the industry. Many point to the entrance of U.S. wholesaler Alliance Entertainment and the stateside rackjobber Handelman Coas an important step in the development of Brazil's wholesaling and retailing intra structure, which is often described by industry insiders is incl. ficient and unprofessional. Almost all label brass eagerly await the arrival of international retailers to further upgrade the Brazilian market "If someone is selling hamburgers and McDonalds comes along, that person will have to adapt to the business practices of McDonalds in order to GM/president Roberto Augusto y espetitive," says Sony Tower, HMV or Virgin comes to Brazil. The Brazilian retailers will have to adapt to remain competitive." Perhaps there is a final element to the current success enjoyed in the Brazilian record industry unity among the labels themselves. Recently, the labels banded together to end jelvi, or payola, to radio stations. The record companies are planning an anti-piracy stratagem, as well. Augusto adds that the financial executives of all of the labels et on a weekly basis to monitor the fiscal state of the record of ings," stys Augusto, "is that we don't want to lose the market." Such proactive dialogue among the labels will go a long way toward preserving that objective. I BILLBOARD DECEMBER 2, 1995