CD SALES UP 10% OVER '03 ANALYSTS CITE BETTER SELECTION, TECHNOLOGY.

Byline: Evan Pondel Staff Writer

Sales of CDs surged in the first half of 2004, reversing a five-year slump that continues to needle the music industry with lackluster profits.

Though sales increased 10.2 percent when compared to the first half of 2003, the increase failed to offset several years of losses, with shipments to retailers down 4.3 percent when compared with 2001, the Recording Industry Association of America reported Wednesday.

Analysts attributed the advance to a rejuvenated interest in music, mostly fueled by the proliferation of recording devices like the iPod. Labels are also improving their product, attempting to cut more records that straddle genres.

``Better technology and an improvement in quality are also pushing more people to legitimate sources. Many consumers always wanted to do the right thing, but just couldn't. And now that's changing,'' said Michael Gartenberg, vice president and research director at Jupiter Research in Washington, D.C.

Sales of DVD music videos improved to 11.2 million units in the first half of 2004, up from 5.6 million last year, according to the RIAA, a Washington, D.C.-based trade group that represents the U.S. recording industry. Overall, shipments of CDs and other audio and video music products increased by 8.5 percent in the first half of 2004 compared with the same period in 2003.

Despite the gains, top-selling albums - among the most heavily pirated - remained significantly down. Compared with 2001, top 50 albums shipped 16.7 percent less than in the first six months of 2004. And the top 100 albums shipped 19.7 percent less.

``Piracy, both online and on the street, continues to hit the music community hard, and thousands have lost their jobs because of it,'' Mitch Bainwol, chairman and chief executive officer of the RIAA, said in a statement.

To stem those losses, U.S. Attorney General John Ashcroft outlined federal plans last week to end illegal file-sharing. Since March, the Department of Justice's Task Force on Intellectual Property has stepped up efforts to prosecute both foreign and domestic intellectual property theft. But understanding the scope of piracy, especially via the Internet, has been a major source of frustration for both the federal government and the creative industries that contribute an estimated $600 billion to the U.S. economy.

Consumers are also realizing they receive far superior quality from CDs than downloaded music. ``And most of the CDs are not protected, come with liner notes and attractive covers,'' Gartenberg said. ``Artists are also paying more attention to the music that fans want to hear. And that means they are getting involved with the marketing of CDs.''

Such is the case with companies like ArtistShare. The Internet-based company helps artists develop themselves creatively without retaining the rights to their music. The musician must pay a fee upfront, usually ranging between $750 and $5,000. Then ArtistShare formulates a business model, ultimately selling the band through strategies employed via the Internet.

Evan Pondel, [phone]

evan.pondel(at)dailynews.com