NY Post Accuses Def Jam of Soundscan Scam

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December 6, 2002 -- Independent music retailers are fabricating numbers reported to Nielsen Soundscan, inflating the number of albums sold by music labels such as white-hot Island Def Jam, The Post has learned.
It's not clear who is behind the scheme, which involves shipping boxes of albums for free to some independent retailers, according to well-placed sources.

The retailers reap all the profits from the sale of the extra albums, and in exchange report bogus figures to Nielsen Soundscan, the standard reporting agency for the record industry, the sources say.

The record labels do not receive any income from the sale of the albums shipped free, nor do they profit directly from the bogus figures reported to Soundscan.

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Labels could benefit from the bogus numbers, however, if they served to propel a record up the charts, boosting radio play and sales. Industry sources say Nielsen Soundscan numbers are typically factored into bonuses. But a spokesperson for Universal, the parent of Island Def Jam, said its executive compensation is not linked to the numbers and never has been.

In one example of the sales inflation, an indie retailer in the Southeast recently reported to Nielsen Soundscan that it had sold roughly 3,000 percent more copies of Jay-Z's new album, "Blueprint 2" - an Island Def Jam release - than it actually did, according to sources both at the retail level and close to Universal.

The scheme was verified by another indie retailer in the Southeast, which typically reports to Nielsen Soundscan triple the amount actually sold. For example, this store sold roughly 50 copies of Jay-Z's album recently, but scanned 150 for Nielsen Soundscan.

This source says the practice has been ongoing for about three years, and is not limited to Island Def Jam releases.

The Jay-Z album has lately been one of the nation's hottest. When it debuted in November, it knocked Eminem's "8 Mile" soundtrack out of the No. 1 spot.

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News that Island Def Jam's Soundscan figures may have been inflated could dent the prestige of the label and its parent Universal Music, the largest and most successful record company.

In a statement, Island Def Jam said: "We do not respond to such unfounded speculation and innuendo . . . Claims of this type degrade the hard work and accomplishments of our artists and we will protect them from such erroneous claims."

Rumors have run rampant in the music industry that Nielsen Soundscan's numbers could be manipulated. The Los Angeles Times reported in July 2001 on speculation that the major music companies were distorting the numbers.

The music industry is in the midst of both a sales downturn and a fight against piracy, and record companies are aggressively trying to keep their numbers afloat.

Executives at Nielsen Soundscan were unavailable for comment, but a company spokesperson insisted that its reporting methods are secure.

"Soundscan has an extensive and secure checks and balances system that catches any reporting irregularities that you're suggesting," said Larry Solters, a spokesman for the company.

While the music industry has been in the doldrums, Universal and Def Jam have thrived. BMG's Arista Records has done well too.

According to the most recent figures, Universal has carved out more than 28 percent of the market, compared with its nearest competitors - Warner Music, with a 15.8 percent share, and Sony, with a 15.6 percent share.

Island Def Jam itself, meanwhile, has seen its market share grow from about 5.4 percent in 1999 to more than 8 percent today, and sales are expected to rise about 25 percent this year.


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[teecee]

Ya, i did this post already Cliche, i think in the other forum