While the Christian music industry anticipates a strong quarter with a string of big releases from top names like multi-award-winning Michael W. Smith, it continues to face major challenges.

Due to be honored for his 25-year career at a star-studded tribute in Nashville on Oct. 12, Smith sees his third worship album, A New Hallelujah (Reunion Records/Provident-Integrity Distribution), go on sale at the end of the month.

It follows new projects from Chris Tomlin and Casting Crowns, among others, that music leaders hope will give the category a holiday boost.

But the three large Christian music companies and distributors have been wrestling with layoffs and changes in direction for the industry that have seen album sales decline 10% from last year.

Among them, Word Distribution laid off eight employees in September in what it called "a small internal restructuring."

At EMI CMG Distribution, Senior Vice President of Sales and Marketing Greg Bays—who was recently appointed chairman of the board of directors to the Christian Music Trade Association, the sister organization of the Gospel Music Association—said he was "encouraged to see the rate of decline in music sales slowing down."

He noted that 2007 sales of Christian albums—physical and digital combined—were down 14% from 2006, but sales for both categories had declined only 7% so far this year. "There is no one-size-fits-all answer to solving the increasingly complex challenges faced by the music industry," Bays said.

Read more in the Oct. 13 issue of Christian Retailing.

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