×

The music business needs a hit collection.

The industry closed out its third quarter at 297.9 million albums sold, down 12% from last year, according to Nielsen SoundScan.

That means it will have to log 200 million sales before Jan. 4 to break even with 2007’s total of 500.5 million. Last year the industry did nearly 33% of its business in the final quarter; to stay the course, that percentage would have to top 40% this year.

It’s yet another dire situation for an industry that has been affected by piracy and shifts in individual tastes, specifically the transformation of the marketplace from one centered on albums (including digital and physical), which retail for between $9 and $16, to one built around the digital single, which goes for about a buck.

September is chockfull of single releases from albums that will appear in the fourth quarter; the hope is that the first releases sell well and whet the appetite for the full album.

Among the singles from fourth quarter albums already doing well at online retailers and on radio are Pink’s “So What,” Kanye West’s “Love Lockdown” and Taylor Swift’s “Love Story.” If a single stiffs, it’s highly unlikely the album will perform.

The fourth quarter is the one time of year when the top 10 boasts a list of six-digit sales figures per album and physical CDs make up a significant portion of the total units sold. In addition, retailers continue to see a rebirth for vinyl; sales have doubled to 1.3 million LPs sold, according to Nielsen SoundScan, although that’s still a drop in the ocean.

In the last year or two, major brick-and-mortar retailers have been shutting their doors, making Wal-Mart, already the No. 1 music retailer in the country, an even more important venue for the labels to market mainstream releases. With Virgin largely out of the retail picture, this holiday season will be big box-centric, with the indies filling in the niches.

The big problem is that Wal-Mart, Target and Best Buy have reduced inventory and floor space for recorded music. And Circuit City could be the next to join the recently shuttered Tower Records: Its stock has fallen 82% this year, and it may be looking at bankruptcy if there is no rebound in the fourth quarter.

The big-box retailers have for the last several years used exclusive releases to pull in consumers, and if Best Buy can get Guns N’ Roses’ “Chinese Democracy” into its outlets before Dec. 1, it may have one of the most lucrative draws of the holiday season to itself. If it’s released prior to Dec. 23 — rumors are focusing on Thanksgiving week — the move will be among the important factors in whether the business can curtail its drop from last year to single percentage points.

The fourth quarter began Tuesday with releases from T.I., whose “Paper Trail” is expected to top a half-million sales in its opening stanza; Jennifer Hudson (200,000-plus); and Robin Thicke (150,000). The quarter’s big guns don’t roll out until Oct. 20 and 21, when AC/DC’s “Black Ice” is released exclusively at Wal-Mart and goes up against the “High School Musical 3” soundtrack and Kenny Chesney’s “Lucky Old Sun.”

After that, a baker’s dozen superstar releases come out between Oct. 28 and Dec. 16, with only one Tuesday (Dec. 9) minus a superstar debut. That does not count releases from the two “American Idol” finalists nor Christmas music releases, which this year will come from Faith Hill and Aretha Franklin, among others. Last year, Josh Groban’s “Noel” sold 3.7 million copies between its Oct. 9 release and the end of the year to become 2007’s biggest seller. If there’s a candidate to duplicate that success, it’s Hill’s “Joy to the World,” which was released Tuesday.

The biggest horse race of the quarter occurs Nov. 18 when Nickelback’s “Darkhorse,” Beyonce’s third solo disc and Il Divo’s “The Promise” hit stores along with the self-titled debut from “AI” champ David Cook. It would be surprising at that point if anything not released in the fourth quarter even makes it into the top 15.

Regardless of the statistics, the perception of whether recorded music has bounced back may well hinge on the performance of just two releases, Britney Spears’ “Circus” (Dec. 2) and Kanye West’s “808s & Heartbreak,” which the performer wants moved into November from its current Dec. 16 release date. Spears has the potential to be the comeback story of the year; West is the rare performer whose first- week sales tallies can be counted on to hover around seven digits.

The biz would get another boost if Dr. Dre and Eminem release albums that are reportedly finished and ready to go.