¡Adelante! - A Special Report on the Latin Music Industry

November 13, 2006
By: Adam Jacobson
Courtesy of  Hispanic Market Weekly
(Go to the end of this report for another special treat from HMW)

As the global market for Latin music has grown, so has the market within the U.S. and Puerto Rico for Spanish-language music. In the last 10 years the Latin music marketplace has mushroomed, with varieties of Regional Mexican music and the youth-appealing beats of reggaetón and Spanish-language hip-hop driving much of the sales activity.
At the same time, the Tropical sounds of salsa, merengue and bachata continue to underperform, with radio station ratings lagging and sales far diminished from 10 years ago, when Puerto Rican heartthrob Jerry Rivera's "Amores Como El Nuestro" was one of dozens of salsa records that highlighted a modern golden age for the genre.
But the brass-filled intro to "Amores" can be found on radio stations all over the globe: It's used as the introduction to "Hips Don't Lie," the global chart-topper from the woman who is quite possibly the biggest pop star on planet Earth: Shakira. "Hips Don't Like" spent nine weeks at No. 1 - in such countries as Australia, Ireland and Spain. The song was also a chart-topper in Bulgaria, Ghana, India, Indonesia, Pakistan, Serbia and a host of other countries, not to mention the U.S., Great Britain and Shakira's home nation of Colombia.
Meanwhile, another Colombian artist, Juanes, has seen unprecedented global chart success over the last year with his song "La Camisa Negra." Since mid-2005, the song has hit No. 1 in Austria, the Czech Republic, Denmark, France, Germany, Lithuania, Taiwan and Ukraine in addition to topping the U.S. Latin charts.
While those global successes are phenomenal feats, sales and airplay success in the U.S. remains a primary goal for record companies both large and small. But what challenges exist for an industry full of opportunities and full of piracy? Are sales of CDs in a retail store still the primary way in which Latinos purchase their music, or have downloads and CD buys from "click and mortar" e-retailers become more common? Is radio still relevant?
Slumping Sales From Bootleg Business. - The U.S. music industry is a billion-dollar business, and the sale of recorded music alone generates billions of dollars in revenue. But the music industry is struggling: According to mid-year shipment data for the first half of 2006 compiled by the Recording Industry Association of America (RIAA), the overall estimated retail value of the industry was $4.9 billion.
While that figure seems impressive at first glance, it belies the ills of an industry struggling to adapt to technological advances in how most U.S. consumers now obtain their music: the estimated retail value of the music industry dipped 6.1 percent from the first six months of 2005. Overall shipments of CDs, music video DVDs and other physical units to retailers slid 15.7 percent.
But digital sales are growing, the RIAA reports. The share of overall industry value for digital music doubled to 18 percent during the first half of 2006, paced by the sale of 286.3 million singles - up 71 percent from the first six months of 2005. At the same time, the sale of full-length digital albums increased 112 percent year-to-year, with 12.3 million units sold in the first half of 2006.
"The music community is embracing the digital age," RIAA CEO Mitch Baniwol said in a statement. "While we're encouraged by several promising signs, no transition happens overnight. Significant challenges remain. Online and hard-goods piracy continue to hit the industry hard and no doubt had an impact on our mid-year results."
While the Latin music segment emerged as one of the few bright spots in 2005 for struggling music retailers across the U.S., this year is shaping up to be a difficult one for Spanish-language record companies. For the first six months of 2006, sales of Latin compact discs fell 23.4 percent from the same period in 2005, to just under 20.6 million units.
Latin music sales - including DVDs, cassettes and music videos - for the first six months of 2006 totaled $290.7 million. That compares to $371.8 million for the same period in 2005. Latin music accounted for 5.9 percent of the total music market during the first half of 2006; Latin music accounted for 6 percent of the overall U.S. music market in 2005.
Are the digital delivery of recorded music and the increased use of iPod-like technology the main culprit for squelched sales in the Latin sector? Nope. The problem, says the RIAA, continues to be piracy. And, it's worse than ever. "Latin music piracy, despite vigorous efforts that made a real difference, continues to take an unacceptably high toll,” says Rafael Fernández, vice president/Latin Music at the RIAA.
Although Latin music made up less than six percent of total sales during the first half of 2006, nearly 40 percent of all pirate products seized were of the Latin genre, the RIAA reports. Even worse, Latin music represented 92 percent of all high-grade professionally manufactured pirate product.
The RIAA is working to combat the proliferation of pirated product. “Our Latin anti-piracy efforts have been surgical,” Fernández says. “We have targeted the sale and production of counterfeit and bootlegged Latin CDs with a variety of anti-piracy strategies. Pirate seizures are way up, reflecting some success, but we clearly need to do more."
On a disturbing note, Fernández adds, is the increasing abundance of professionally manufactured pirate Latin product, which he believes has the most potential to displace the marketplace. "We need all our partners in the music distribution chain to be especially vigilant," Fernández says. "If the industry is to have sufficient resources to invest in the next great Latin musical act, we must continue to protect our rights against those who pirate Latin music.”
Listening Habits. - The RIAA's sobering statistics came one day after Univision, which controls more than 40 percent of the Latin music market in the U.S. through its Univision Music Group, saw stellar ratings for its telecast of the 2006 Latin Grammy Awards.
To the surprise of no one, Sony BMG-signed Shakira dominated the evening, receiving awards for Record of the Year and Song of the Year (both for "La Tortura," her duet with Alejandro Sanz) and for Album of the Year and Best Female Pop Vocal Album (each for "Fijacion Oral Vol. 1"). The other big winner at this year's Latin Grammys? Another Sony BMG act, Calle 13. The renegade reggaetón act, which in the last year has exploded onto the music scene, took home Grammys in every category in which they were nominated: Best New Artist, Best Urban Music Album (for "Calle 13") and Best Short Form Music Video (for "Atrévete Te, Te!").
The other major winners include Sony BMG's Ricardo Arjona (Best Male Pop Vocal Album, for "Adentro"), Sony BMG's La Oreja de Van Gogh (Best Pop Album by a Duo or Group with Vocal, for "Guapa"), Musart/Balboa's Joan Sebastian (Best Banda Album for "Más Allá del Sol" and Best Grupero Album for "En El Auditorio Nacional"), Fonovisa's ConjuntoPrimavera (Regional Mexican Song of the Year for "Aun Sigues Siendo Mia") and EMI Televisa act Fonseca (for "Te Mando Flores" as Best Tropical Song).
Coverage of the Latin Grammy Awards the day after the event devoted most of their attention to Shakira, and in some instances to Calle 13. But what do Latinos really enjoy when it comes to their music, and what do they purchase? According to the RIAA, Regional Mexican and Tejano titles dominate, representing 46 percent of all Latin music sales for the first six months of 2006. Similar data was seen for all of 2005. Contemporary Spanish-language music, which includes the pop genre, accounted for 34 percent of Latin music sales. Latin Urban took in 11 percent of sales for the first six months of 2006, while Tropical accounted for just 9 percent of sales.
The most striking difference from full year 2005: the surge in the Latin Urban category, which accounted for just 4% of all Latin sales.
Reggaetón acts rank among the more prolific sales successes in 2006. Machete artists Wisin y Yandel's "Pa'l Mundo" album remains in the top 10 one year after its release and has been certified gold by the RIAA. Reggaetón superstar Daddy Yankee's "Barrio Fino: En Directo" is also a gold-certified release and has been on the Billboard Top Latin Albums chart for nearly one year. Machete act Don Omar's "King Of Kings" is Double Platinum after more than six months on the Billboard chart. Another reggaetón act, Universal Latino-signed Rakim & Ken-Y, have a platinum release still in the top 10 after more than nine months on the charts - "Masterpiece: Nuestra Obra Maestra." Calle 13's self-titled album is set for a huge spike in sales after nearly a year on the chart, thanks to the group's exposure and awards sweep at this year's Latin Grammys.
Among other genres, EMI Televisa norteño act Intocable's "X" was a huge success among Regional Mexican releases in 2005 and has been on the charts for 75 weeks. On the pop side, EMI Televisa has seen enormous success with Mexican pop creation RBD's "Nuestro Amor," a Billboard "Pace Setter" after 56 weeks on the chart. RBD was born out of popular Televisa telenovela "Rebelde," which ran from 2004 to mid-2006 and focused on Mexican adolescents who wanted to form a band. In a prime example of art imitating life, RBD have emerged as one of the most popular bands in Latin America today, with even a large fan base in Brazil.
Sales Strengths. - Purchasing Latin music has become easier than ever. Venture into any Best Buy in such Hispanic-dominant areas as the San Fernando Valley of Los Angeles and Miami-Dade County, Florida, and you'll see a vast array of Spanish-language product, broken out by genre. At Best Buy's Aventura, Fla. location, where most of the customers are Cuban-American or from South America, sections dedicated to Tropical, Contemporary and reggaetón releases take up the same amount of space as English-language pop and R&B titles. A section dedicated to Regional Mexican product can even be found in the store.
Stores such as Best Buy, however, aren't "music stores," even though they can hold great sway over the sales potential for a particular release. Best Buy, along with such retailers as Wal-Mart and Target, use compact disc sales as a loss leader to help drive sales of other more costly goods, such as a television, computer or appliance. That's not to say the "big box" retailers don't put much thought or effort into their music departments. In late September, Wal-Mart teamed with MTV Tr3s on an initiative to promote music and artists favored by younger Latinos (HMW Archive: 9/25/06. Getting The Word Out).
The pure music retailer is a dying breed, but Trans World Entertainment remains convinced that there's a future for its FYE music stores. Latin music sales are a large part of the equation for future growth.
"We've been heavily focused on Latin for the past 2 1/2 years," says Ish Cuebas, director of merchandising operations for Trans World . "We've got a marketing person in Miami and a buyer in L.A. Over the last couple of years our Latin business was up by double digits." This year, Cuebas says, Latin music sales are flat at his company's stores, whereas the Latin music industry is down more than 23 percent.
To combat the decline in sales, FYE - which has acquired the Coconuts Music & Movies, CD World, Planet Music, Sam Goody, Strawberries, Spec's and Wherehouse Music brands - is getting more involved with Spanish-language titles in its movie and music-video offerings. "That business has gone up to very strong double-digit - and almost triple-digit - growth," says Cuebas.
Approximately 125 Trans World music retailers are in Latino--dominant areas. An additional 100 stores are in areas that Cuebas says are "moderately Hispanic." In all of those stores, signage is bilingual. And, in stores where the Latin music section is large enough, genres have been broken out. Also important is the presence of Spanish-speaking associates.
Of the types of genres that sell the strongest at Trans World's music retailers, Cuebas says it's without a doubt reggaetón. "We see regional patterns when it comes to our overall sales, but over the past two years reggaetón sales have exploded,” he insists. “It was initially seen in Orlando, New York and in areas where Puerto Ricans lived. Now it is a national phenomenon. We've even gotten to the point where we're bringing in reggaetón to some of the non-Latino areas."
On the marketing end, Trans World focuses its Spanish-language efforts on radio campaigns and circulars. Specific Latino-tailored promotions such as "Reggaetón Super Explosion Month" – conducted with MasterCard - are done once a year, and other months are devoted to other genres, such as tropical music.
Inez Cortés, Trans World's marketing manager for Latin product, is also working with LaTV in Southern California and Mun2 on various promotional campaigns. Proposals to record labels on a similar deal with MTV Tr3s are also in the works, she says.
While FYE works to attract more and more Latino customers, Ritmo Latino has seen success by catering specifically to the Spanish-language music lover. The retail chain has emerged as one of the nation's largest catering specifically to the Latin music consumer and boasts 28 stores throughout California; seven stores in Texas; a Las Vegas location; two Phoenix-area stores; two retail centers in the Chicago area; two locations in South Florida; two stores in Washington, DC; a border-friendly store in Nogales, Ariz.; and one location in the heavily Hispanic community of Union City, NJ.
Ritmo Latino was launched in 1989 by David Massry , a Mexican who had seen success south of the border as the co-owner of two music store chains. Today, most Ritmo Latino stores carry a wide array of products, including many hard-to-find releases that non-Latino retailers may not have in stock. The chain's Glendale, Arizona store, which opened in summer 2005, encompasses 3,500 square feet and offers shoppers 11,000 albums, 2,000 books and 1,300 movies. All store functions and signage is in Spanish, with English serving as the second language.
As brick-and-mortar retailers adapt to a changing business model, the music industry last month saw the fall of a former icon: Tower Records. The venerable retailer once enjoyed tremendous success with strategically placed locations in New York, Los Angeles and San Francisco and in recent years had increased its Spanish-language product line across its platform of 89 stores. On October 6, a liquidation firm acquired Tower for $134.3 million. The next day saw the beginning of the end for Tower's 89 stores.
Trans World vigorously attempted to gain control of Tower. Says Cuebas, "It doesn't help to have less and less 'true music stores' out there. Not many people carry deep catalogues. We do. Borders and Barnes and Noble do. The independent stores are moving more toward boutique items, and the Targets and Wal-Marts are limited in their offerings. For us, music is our livelihood."
Yet Wal-Mart is very much on Cortes' radar at Trans World. "Wal-Mart is very much a formidable competitor,” she says “But we have depth in our catalog and we focus on customer service, product availability and store location convenience, and that helps us a lot."
The King Of Regional Mexican Music. - Univision Music Group, with offices in Woodland Hills, California and Miami Beach, Florida, controls more than 40 percent of the Latin music market in the U.S., in terms of share. Among the labels operated within UMG is Disa Records, which Univision will continue to operate as a separate imprint (HMW Archives: 11/06/06. Univision Rounds Out Its Disa Investment). UMG's other labels include Fonovisa Records, Univision Records and La Calle Records . In the case of Disa, most of the label's operations will continue to be based in Monterrey, Mexico.
Disa is largely responsible for the explosion of Duranguense music in the U.S., thanks to such acts as Grupo Montez de Durango and K-Paz de la Sierra. Other Disa acts presently on the airplay charts include Grupo Bryndis, Patrulla 81 and Lalo Mora. Palomo, Los Angeles Azules, Grupo Bryndis, Liberación, El Poder del Norte and Mexican actress and singer Aracely Arámbula are also signed to Disa. Disa is second only to sister label Fonovisa in terms of overall sales success in the Regional Mexican arena. Fonovisa's roster includes such multi-platinum artists as Marco Antonio Solis, Banda El Recodo, Conjunto Primavera, Los Temerarios and Los Tigres del Norte.
Univision Records was launched in mid-2001 and boasts a roster of Mexican and Mexican-American artists that currently includes Anais, Control, Jimena, Pablo Montero, Akwid, Jennifer Peña, Graciela Beltrán, Los Huracanes del Norte and Gloria Trevi. Univision Records head of marketing Gerardo Vergara says that while Univision's roster has plenty of Regional Mexican artists, it is the most eclectic of Univision Music Group's imprints. "Disa and Fonovisa are strictly Regional Mexican labels," he says. "Of course, our bread and butter is the Regional Mexican market. But La Calle is a different thing, because that is a more Urban-focused label. And reggaetón is a music that unites the different ethnicities within the U.S. Hispanic market. It is more about dancing and having fun, which is something that kids everywhere relate to."
Among the major projects Univision Records will be working on in 2007 are new releases from Beltrán. Peña and Anais, whose debut album spent six weeks at No. 1 in the Billboard Top Latin Albums chart. Vergara is betting on a much stronger second and third quarter in 2007, because of "the perfect storm" in 2006 that hampered Regional Mexican music sales.
"Not only was piracy a factor, but there was the immigration issue and the escalating price of gas over the summer," Vergara says. "With the immigration issue, people just stopped going out and buying things, especially in California and Texas. People were fearful. They tended to retract and be more guarded, and they kept a tight reign on their disposable income, in case they had to go back to Mexico.
"With the escalating price of gas over the summer, the difference in price per week for gassing up a car was almost the price of one CD," Vergara continues. "That was a major concern."
The Four Other Giants. - In terms of artist power, Sony BMG Norte is an absolute giant, thanks in part to the global success of dozens of artists, including Ricardo Arjona, La Oreja de Van Gogh, La 5ª Estación, Ricky Martin, Shakira, Julieta Venegas and Franco de Vita. But Sony's presence in the Regional Mexican universe continues to be minor, and most of the growth seen by an entity managed by Sony BMG Music Entertainment president Kevin Lawrie has come in the pop and Tropical genres, where Chayanne, Victor Manuelle and N'Klabe continue to see both radio airplay and sales success.
Sony's Spanish-language music operations have seen several changes since June 2003, when Sony Discos chairman Oscar Llord and EMI Recorded Music Latin America president Rafael Gil each left their respective positions due to flagging sales after several years of enormous growth (HMW Archives: 6/02/03. So Long, Farewell). Today, Sony BMG Norte encompasses the former Sony Discos and EMI Recorded Music Latin America, which maintained oversight of all EMI label operations in the region
Formerly EMI Latin, EMI Televisa has shifted much of its operations from Miami Beach to Los Angeles. The label is not only seeing exceptional sales success with Intocable and RBD but also with pop acts Fonseca, Obie Bermudez and A.B. Quintanilla III and veteran Mexican artists Ricardo Montaner and Pepe Aguilar. Several other new and established artists are on the EMI Televisa roster, including Aleks Syntek, Amaral, Ana Gabriel and Enrique Bunbury.
Among the successful acts signed to Universal Latino is Mexican pop superstar Paulina Rubio, whose song "Ni Una Sola Palabra" recently topped the Nielsen Broadcast Data Systems Hot Latin Songs chart. On the reggaetón front, Rakim & Ken-Y have expanded on their success in the New York market by expanding their fan base to the entire U.S. Mach & Daddy are another reggaetón act that have brought smiles to the faces of Universal Latino execs. Universal Latino also handles distribution for reggaetón labels Machete and V.I.
On the Regional Mexican side, Universal Latino band Alegres de la Sierra have become one of the season's hottest acts, with the sierreño song "De Rodillas Te Pido" topping Nielsen BDS airplay charts for Regional Mexican radio in the U.S. Pedro Fernández and Alicia Villarreal are other Universal Latino artists with chart success at Regional Mexican.
Rounding out the "big five" Latin music conglomerates in the U.S. is Warner Music Latina . Among the major acts signed to Warner are Mexican rock giants Maná, pop stars Alejandro Sanz and Alex Ubago and Italian international recording star Laura Pausini, who also sings in Spanish, among others.

Big 5: Who To Call at The Major Labels       
EMI Televisa   
Richard Bull,
VP of Marketing    
323-692-1141      

Sony Music Norte   
Carlos Perez,
VP of Tropical and Pop Promotion    
305-695-3500      

Universal Latino   
Albert Saladín,
Director of East Coast Promotion    
305-938-1317      

Univision Music Group    
Gerardo Vergara,
Marketing Director    
818-577-4761      

Warner Music Latina   
Angel Kaminsky,
Director of Promotion    
305-702-2200   

Strong Niche Player Fights for Sales. - In addition to the "big five," dozens of independent labels have seen various successes in recent months in a variety of Spanish-language music genres. Balboa Records is home to veteran Mexican artist Joan Sebastian and a host of other Regional Mexican artists, including Cuisillos and Los Tremendos. While such artists are Balboa's strength, the Culver City, Calif.-based label isn't exclusively in the Regional Mexican marketplace anymore: its dabbled into the reggaetón category with releases from up-and-comers KMW, Kermit, Jimmy Bad Boy and Climax. Other independent labels in the Regional Mexican marketplace include Eagle Music, home of Los Inquietos del Norte, and Three Sound Records, which lists Mariano Barba among its artists.

For smaller record companies, including Miami's J&N Records , which specializes in a variety of Tropical artists, scoring a chart hit and increasing sales is task No. 1. But several issues and concerns have overshadowed any positive growth seen by J&N, says head of promotion Raúl Escalante. Among his biggest concerns is the continued damage on business caused by "la piratería" - once a problem found on the streets that has now spread to the internet.
"Piracy in the U.S. is a problem, and it affects not only us but all of the companies that sell music," Escalante says. "The problem is that it is attractive to the consumer to pay only $3, or sometimes even $2, for a CD."
Regulating the sale of pirated CDs has proven to be a difficult task. Oftentimes a street vendor will offer a slate of copied CDs, while in other cases illegally made CDs may be sold at flea markets or even in smaller stores that specifically cater to Hispanics that have recently immigrated to the U.S..
Meanwhile, regulating the distribution of copyrighted music via the internet has become an even bigger concern for Escalante. While well-known peer-to-peer service Grokster was shut down following a U.S. Supreme Court ruling that prohibited the trading of copyrighted material, services such as LimeWire - where any member can download music - continue to give the recording industry headaches.
"These types of websites, the LimeWires, are eliminating a way for us to sell our music," Escalante says. "We are working our artists and there are marketing costs, and production costs and promotion costs." Additionally, royalties due to the record label for the download of a particular song are not being made when the song is obtained from a peer-to-peer network. In April, LimeWire began testing a content filtering system.
Meanwhile, foreign-based internet sites offering unauthorized downloads available to consumers have attempted to skirt copyright laws. A Russian site, AllofMP3.com, offers downloads of a wide array of Spanish-language music. For example, Carlos Vives' 2005 release "Romántico" can be downloaded in full for $1.98. For $2.12, AlllOfMP3 users can download the RBD album "Nuestro Amor." Don Omar's "King of Kings," released earlier this year, can be downloaded in full for $2.97. Users also have the option of purchasing songs a la carte, with costs ranging from 15 cents for a three-minute song to 23 cents for a nearly five-and-a-half minute song.
Escalante envisions a future where music vendors will legally offer downloadable songs to those with MP3 players for 75 cents per song. But for now, the frustrations of free or low-cost options for obtaining music will continue to overshadow the positive developments being seen among independent record labels. "I would love to say that everybody is out there saying how they're preparing for this album because it is going to do really well and that album because it is going to really well, but this is a grave problem that we still face,” Escalante insists. “It's difficult to speak of the positives with all of these issues that we still deal with."
Escalante's most successful act is Monchy y Alexandra, who along with Sony BMG Norte act Aventura have become the leaders in the bachata genre of Tropical music. While bachata has taken a backseat to reggaetón in terms of current growth, Escalante is convinced that the reggaetón explosion will eventually fade - giving other types of music, including bachata, the opportunity for increased exposure.
Monchy y Alexandra's latest compilation, "Exitos," was released in late September. To promote the album, the duo toured throughout California, and even ventured into Tijuana. Many of Monchy y Alexandra's songs have become familiar to people in northern Mexico because of reinterpretations. "Mexican groups have adopted the lyrics to bachata songs in order to perform them in Mexican music styles," says Escalante. At the same time, he notes  this can't be done with reggaetón, since most of the songs sound the same. "In three or four years, reggaetón will not be as popular of a genre as it is now," Escalante believes. "Bachata is much more universal. In Colombia and Venezuela, the sound of the guitar is much more accepted, and we could see a new fusion of sounds using bachata."
A Producer's View Of Where Things Are Headed. - Noted music producer Emilio Estefan Jr., chairman of the board for Estefan Enterprises, believes reggaetón has the ability to prolong its extreme popularity, so long as the music evolves and is taken to a new level. "The reggaetón explosion has impacted Latin music in a big way," he says. "Sales are strong, and radio airplay is growing."
The growth of reggaetón was also unexpected for many Latin music executives, Estefan points out. "This is something that came to the market and surprised everybody," he says. "In the beginning, the artists did it themselves in bringing it to the market, because no one would believe that it would become so big."
Now, Estefan hopes reggaetón stars "get more musical" by adding different sounds and beats. And, he hopes pop artists will refrain from freely incorporating reggaetón sounds into their own work, as it could water down the whole message of what reggaetón music represents to young, acculturated Latinos in the U.S. That's why Estefan is convinced one of his latest projects - singer/manager “Héctor El Father”, the producer and mentor for Don Omar - is poised to help lead reggaetón into its next stage of growth.
"Héctor El Father” has taken reggaetón to the next step," he says. Estefan's joint project with him, "The Bad Boy," is set for a November 21 release on Machete Music/VI. "I've known Héctor for a long time, and I always thought we could arrive at a meeting of the minds, and create great synergy." The album promises a variety of rhythms from the traditional "dembow" to R&B and Latin hip-hop.
Other projects Estefan is currently devoting his attention toward involve reggaetón act Wisín y Yandel and longtime wife Gloria Estefan, who is working on a "treatment to Cuba" set for release in summer 2007. Estefan has placed a lot of hope on ChristianDaniel, a Bad Boy Latino pop artist that has recently worked with legendary hip-hop artist Jay-Z and who just completed his first solo effort. The forthcoming release "ChristianDaniel" will also serve as the debut offering from Bad Boy Latino, the joint venture between Estefan and Sean "Diddy" Combs created last year (HMW Archives: 8/29/05. A New Venture).
The Power Of Radio. - According to Arbitron, total listening to radio continues to decline, thanks in part to satellite radio and increased iPod use. Yet the power of Spanish-language radio is as strong as ever: Spanish-language radio stations experienced a one-share gain from summer 2005’s 10.1 share of all listeners in the U.S. to a summer 2006 share of 11.1. They now rank fourth among all radio formats listened to in Arbitron's 96 continuously measured markets. That's part of the reason why a station's ability to make or break an artist is still very significant. (HMW Archives: 7/26/06. Que Suene! Hispanic Radio Grows Amid A Stagnant Marketplace ).
In New York, reggaetón remains hot with young adults in the Latino community. Ana Gómez, Research Director for "La Kalle" WCAA-FM 105.9/WZAA-FM 92.7 in New York , believes the genre is as strong as ever, with new releases from Daddy Yankee and Tego Calderón set to peak during the Christmas buying season and albums from both Wisín y Yandel and Don Omar continuing to sell well in the metropolitan area.
"Our music tests show that this music is still really popular with our listeners," says Gómez. "It really is an issue of programming and how to present the music." According to Gómez, 90 percent of La Kalle listeners are Hispanic, and most of them tend to be bilingual. While reggaetón tends to attract mostly those 12-24-years of age, La Kalle focuses on Hispanics 18-34-years old. Those are the same age groups that a Top 40 radio station focuses on, and has long been the focus of hip-hop-focused Rhythmic stations. But, says Gómez, "in the Latin music industry reggaetón has become the Top 40 format." And as popular as reggaetón and Spanish hip-hop is around the U.S., salsa has slowed and merengue has become "very street," she adds, with less traditional product being seen from 10 years ago, when the genre was yielding more hit singles.
Juan Carlos Hidalgo, program director of SBS's Regional Mexican "La Raza" KLAX-FM 97.9 in Los Angeles, can't say enough about radio's vital importance for labels targeting fans of Northern Mexican music styles. "The hits are based on repetition ... on the spins they get on the radio. That's how they make hits. If people don't hear the music on the radio while on their way to work or while at work, the band will never get a hit. I don't think a hit will be made by downloading it to an iPod or from hearing a song on television. And I think that is true for all formats."
Because of the socioeconomic demographics seen with Regional Mexican music fans, radio stations that focus on playing Regional Mexican songs tend to be more aggressive in embracing bands, especially new acts seeing exposure. According to Hidalgo, that's because the typical La Raza listener is much different than the listener to sister station "Latino 96.3" KXOL-FM.  "The KLAX listeners are not yet sold into the iPods or the internet, so the main source to hear and know about the music is the radio,” says Hidalgo. “Latin Urban or Spanish adult contemporary listeners are more user-friendly when it comes to computers. Our listeners still go and buy CDs. With our Latino 96.3 listeners, the audience is more into downloading songs and text-messaging. With La Raza, they listen to the songs on the radio."
At La Raza, and throughout much of the Regional Mexican universe, the Duranguese style of music is hotter than ever. Intocable is perhaps the biggest group at Regional Mexican radio. "The last three years saw a huge boom on the Duranguese artists, and now we're seeing the tierra caliente and Sierreño types of music, from Sinaloa. It's very guitar-based,” says Hildalgo. The No. 1 song right now is a sierreño song, "De Rodillas Te Pido," by Alegres de la Sierra. "They have become one of the season's hottest acts, while a couple of years ago they were nobody," Hildalgo says.
Looking ahead to next year, Hidalgo expects some record companies to attempt to duplicate the success seen by Intocable. "But how many Intocables are there?" Hidalgo asks. "There is only one. On the West Coast, banda and heavy norteño is so strong, and corridos are still very strong in a market like here in Los Angeles. I think we will see that popularity continue.”
While Hidalgo and Gómez are happy with their stations' ability to give the listener what they want to hear, not everyone is satisfied with what Spanish-language radio has to offer. For Estefan, radio formats are too safe. "Radio right now ... they don't get a lot of new sounds," he says. But he doesn't necessarily blame the radio station owners and programmers. "Labels don't want to take the risk," Estefan adds..
"Music is about creating," Estefan continues. "It's about reaching the new generation. If they don't have the sales, they don't have the radio exposure. All of the elements are important for making a project a success.  Radio always plays a big role."
Estefan is also critical of labels for continuing to focus on the same group of artists year in and year out, without giving pause to new acts that could become huge if given the chance. He says, "Are we liars to ourselves? We always have the same artists, and back and forth we recycle them. We have one or two new people on the charts."
Estefan continues, "When there is a 'real-deal' album, people want to buy the album. Even without radio, word of mouth will bring people. Quality is always going to win."
Latino Music Moves Online. - Ask Batanga chief executive Rafael Urbina about Latin music's presence on the internet and he says, "The movement to the digital space is starting to happen." Indeed, Apple gave the nascent but rapidly growing arena a boost by launching iTunes Latino in early November. The section of the iTunes online store features audio and video Latin music options, television shows, audio books and podcasts.
"It's all positive for the industry," says Urbina, who has created one of the most comprehensive Latin music websites in Batanga.com. What started as two internet-only radio stations targeting Spanish-language music fans has morphed into a Spanish-language music lover's paradise, with 25 prepackaged radio stations available to internet users. An additional 5,000 internet-only radio stations that are listener-controlled are also accessible. The other side of Batanga.com is its newly functional download store, which General Motors is sponsoring.
"The first thing we need to do is to make Latin music widely available online - legally," Urbina notes. "A lot of it is available illegally. Making it easy to find, and making it legal, is what we are all about."
For online music sales, Amazon.com is perhaps the retailer that first comes to mind. Urbina is aware of this, but says his company's hyperfocus on Latin music sets it apart from others on the internet. "The main reason they come to us is for Latin music," he says.
Batanga has done its homework when it comes to its catalog of material, utilizing its network of global staffers and consultants to build a universal library. "A lot of the music they find is not on Amazon; some is on a site in Spain. We have editorial people and freelancers all over Latin America, and in many cases we have had to go find a particular CD and have them ship it. It's not easy,” says Urbina.
The U.S. is Batanga's biggest market, and many of its listeners are in areas that are traditionally not Hispanic, such as Wisconsin. Meanwhile, Urbina says the time Batanga users spend on the website is about five times as much as they spend on the next competitor.
The next stage for Batanga, coming at the end of the month, will give users the opportunity to interact with other "Batangueros" through social interaction. Improved integration between music videos and the radio stations will also be seen with the website enhancements set to occur.
"We are growing as fast as ever, with 4.5 million unique visitors to our site," Urbina says. "It is growing at a tremendous pace, and people are consuming music more than ever.” In New York, when you walk down the street, more than half the people have an iPod. The problem I think the record labels are facing is that the technology was changing before they could adjust," he explains. “They have now made the proper moves, but I think it will take some time for them to catch on. Latin music will be no different."
Trans World's Cuebas agrees. "We're in the process now of moving our internet operations," he says. It is Cuebas' longterm goal for FYE to embrace digital and make it part of the overall consumer experience. "We want to give it in our stores and want to give it online," Cuebas says. "We close stores every single year and we open stores every single year. We walk away from a bad store. If a lease is up, we close it and move on to the next location."
A Hispanic website is part of the company's new platform, with a launch set for the second quarter of 2007. "Currently, you can buy Latin music on our site but it is not featured in any way," Cuebas says. "We would love to have an FYE en Español section on the FYE website."
Urbina points out that Batanga is streaming over 100 million songs and 20 million videos on its site every month. “It is not a matter of whether Hispanics are online and if they will adopt broadband. They've done that,” insists Urbina. “They are just looking for a space where they can find everything that suits them. It just takes time, and I think the underlying fundamentals of the music business have never been better. People have never been hungrier for new music."

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Comments

[Paola]

(...)and veteran Mexican artists Ricardo Montaner (...)

Ricardo Montaner isn't Mexican...

[Adam Jacobson]

You are absolutely correct. Latin pop singer Ricardo Montaner was born in Argentina but raised in Venezuela. In my notes, I wrote that Montaner was popular in Mexico and grouped him under "Mexican artists" because of his popularity there -- inadvertently placing him in with a group of artists that perform in Mexican regional formats and are from Mexico. My apologies!

[Monique]

please help me find any carlos vives videos for my husband, he loves the music and i cant find any, want it for christmas