Byron Williamson, president and CEO of Worthy Publishing, talks with Bill Hearn, president and CEO of EMI Christian Music Group (EMI CMG) about changes that have affected both the book and music industries. EMI CMG remains healthy despite shifts in retail distribution, illegal downloading and digital-music buying. EMI CMG represents dozens of leading artists, as well as distributing films, books—including titles from Worthy Publishing—and other ancillary items in addition to music.

In the mid-90s when big box retailers like Wal-Mart, Target, Barnes & Noble and Best Buy caught on to the fact that a majority of their customers were Christians, they started stocking and promoting Christian products. Sales began to shift there from independent Christian retailers. That was tough on the CBA retailers. Did that shift have the same impact on music as it did books?

Yes, in fact that shift of Christian music into mainstream and big box retail might’ve come a little bit ahead of books. It came right when we sold Sparrow to EMI, which was 1991 or 1992, at the height of the launch of Steven Curtis Chapman’s career. I remember there was a big promotional emphasis by Wal-Mart and Kmart.

Wasn’t it the same period of time that Target sponsored Amy Grant’s tour?

The shift began right after that. Amy was already successful for her crossover record. I’m specifically talking about how big box stores set up Christian sections in the music department, which had never before happened. We had been stocked with greeting cards and old gospel records, but no contemporary Christian music was available at that time. With that wider distribution, Steven Curtis Chapman went from selling 250,000 to 750,000 units. Some of that growth was because he became more popular and got more radio play. But some of that growth was from wider distribution. In the early days of the retail shift, it helped Christian retail because the overall sales increased, including their share.

The same thing happened on the book side at about that same period. At Word, Max Lucado was introduced into Sam’s Club and that year his book sales doubled. CBA sales weren’t affected that year—they were about the same as they had been in past years. However, eventually the awakening of mass retail began to seriously damage Christian retail, despite efforts to support the CBA.

One of the elements of our vision statement at EMI CMG is to impact popular culture. Our job is to get our music distributed as far and as wide as we can, so we engaged with Wal-Mart and Kmart, as well as with Christian retailers—and we still do.

A few years later the music industry was hit by the digital revolution. What year did you first experience the impact and what factors came into play?

The generation of peer-to-peer downloading—stealing music—started in the late ’90s with the advent of Napster. That flowed into the early 2000s with the creation of iTunes. Most people don’t remember this, but when 9/11 happened, there was no iTunes. It’s hard to think that in that such a short period of time, we’ve had such a radical change in the music business. That revolution was really about getting music for free and easily and then getting songs for 99 cents as opposed to having to buy an entire album. That’s really where the financial model turned itself upside down. It wasn’t so much the big boxes. You can go back to 20 years ago to the record clubs. Remember, the retailers didn’t like the record clubs; you could get 14 CDs for a penny if you joined the club. Everybody was scared of that. However, clubs didn’t really do harm to retailers.  But Napster and iTunes did serious damage to everyone.

So the iTunes model devalued an album and devalued the music industry?

Yes. It devalued music and that’s really where the impact happened on retail. Even the Wal-Marts and Best Buys would say the same thing. They’re having the same issues as Christian retail stores are having, which is, “How do I compete with digital?” What we have overall as an industry is the question, “How do we compete with free?” You can get music for free on the Internet a whole lot easier than you can movies or books.

We’ve talked about the impact the digital revolution had on Christian retailers and on mainstream retailers, for that matter. What impact did it have on artists, songwriters and record companies?

Everyone is making far less money because music is selling at 99 cents per single as opposed to $15 albums. It’s a matter of, how now do we monetize the consumption of music more effectively. The fact is, music is being listened to at an all-time high in the history of our business, but people aren’t paying for it. Only 42% of the music that is consumed every year is paid for now, 58% is acquired free—either streamed over the Internet or stolen peer-to-peer. That impacts everybody: songwriters, artists, record companies and retailers. The whole supply chain is being impacted.

How much smaller is the Christian music industry since 9/11?

Approximately half of what it was in 2000. The peak of the industry was 1999-2000 or 2001.

So this has been devastating to everyone in the chain?

Yes, freight companies, roadies, guitar techs, producers, studio engineers, record companies, artists, songwriters—everybody.  Today at EMI Christian Music Group we have about 48% of the number of employees we had in 2003. 

That is sobering. A decade later, has the decline in music sales stabilized yet? Is there hope it will grow again?

Our core music business, outside of the distribution of video and Christian films and ancillary products, is on a single-digit annual decline, but it’s not the double-digit decline it was in the mid-2000s. We’re still struggling to stabilize music sales, but the decline has slowed dramatically. As legal digital alternatives have come available—such as iTunes, Rhapsody, Spotify and others—our ability to license music and monetize the consumption of music outside of the sales of the physical CD is growing exponentially. At EMI CMG, we’re turning into more of an A&R, product development, licensing and marketing company that also sells physical products and digital products through retailers.

The book industry entered the digital age with the introduction of Amazon Kindle in 2007. Since that time, as many as 100 devices have been introduced, including the Kindle, Nook and iPad. Depending on the publisher and genre, somewhere between 5% and 50% of all books are now e-books. Overall, digital sales are 10%-15% of industry sales, and that percentage is growing. But, the good news is that people are still reading—maybe more than ever before, and they’re still buying books in one form or another. Yet, there are signs that it will find equilibrium. The bad news is that Christian retailers are being hurt by this innovation because material volume is shifting to digital and away from physical books and brick-and-mortar stores. From your point of view, what can be done to reinvigorate the CBA retail channel that we both so badly need to be advocates for our authors and artists? What are things you’re doing to shore up CBA retail?

First of all, Christian retail is still our number-one channel for artist development. The way we do that is through Christian radio and Christian retail. We need strong partnerships with Christian retail. We work with them on merchandising and programs that allow them to carry a large depth and breadth of selection. There are still consumers out there who want the retailer’s help as they sort through new artists and new releases. Shopping on the Internet is tough—how do they know how to filter through the thousands and thousands of choices? Consumers need someone to help them. Christian retailers can do that if they keep the right selection, the right amount of product and keep their original commitment to serve consumers and their local community. We can help them with great product, great music, pricing initiatives and programs. I need to be able to get it now, and if retailers have the product and give the service, then that’s a retail environment I’m going to come back to.

Ironically, little things like getting authors and artists into stores to connect with consumers, and connect with retailers, as well as hand-selling and restoring the link between the retailer and local churches—all those old-school things are probably more important than ever.

I think fundamental blocking and tackling is vital. You’re not going to compete with iTunes or Kindle or Amazon as an independent local retailer, but that doesn’t mean you can’t have a viable business and you can’t give your community a place to go when someone needs something. And I think you can be successful in that. Sales are starting to stabilize on the physical side. My job is to create the best, highest-quality, compelling music ever so that people want to come in and find it. At the end of the day, my number-one competitive action against all of this piracy and the problems that we face as an industry is creating great songs that people have to have to change their lives. That’s what I’m trying to do every single day.

Whether we’re talking about books or music, content is king. If you can bring to the marketplace compelling ideas, compelling messages, things that really matter to people, then I believe God is going to continue blessing what we all do. It’s got to begin with the artists and the authors and our focus on content. If you have great product, then distribution will take care of itself. Right?

I agree. People will find it. If you make it available, people will find it.

If there is one thing you can say to Christian retailers to encourage them about the future, what would that be?

The same thing I say to myself every day when I walk into my office: “What I do is changing people’s lives.” That’s all it should be. Focus on the fact that the end result of your work makes a real difference in people’s lives. We’re not selling widgets. We’re in the business of making a difference in people’s lives, so if you go to work every day and remember that, then you should be encouraged. Books and music are being consumed at an all-time high. We have the opportunity to globally communicate the messages that God has given our artists and our authors. We should all keep that in mind and be encouraged every day we have the opportunity to come to work.

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