Hawai'i's music industry senses better times are ahead

By Derek Paiva
Advertiser Entertainment Writer

•	Na Hoku Hanohano Awards 7:30 p.m. tomorrow, KFVE Performers include Keali'i Reichel, Amy Hanaiali'i Gilliom, Jake Shimabukuro, Ho'okena, Cecilio & Kapono, Kapena, Maila Gibson and Kainani Kahaunaele. Broadcast live from the Hilton Hawaiian Village Ticket information: 235-9424

Hit in the past five years by illegal downloading and CD piracy, industry sales of locally-produced CDs are up slightly this year compared to 2003 — one of the worst years the national and local industries faced.

Hawai'i fans have been snatching up new releases from stalwart acts such as Keali'i Reichel, Na Palapalai and Ekolu. A growing worldwide fan base continues to drop cash for longtime sales leader Israel Kamakawiwo'ole's entire CD catalog in record stores, at online sites like Amazon.com and, more recently, via Apple iTunes.

Hawai'i vendors and musicians continue to worry about a years-long downward trend in CD sales, and the suspected cause: illegal music downloading. Burned copies of entire albums and homemade local music compilation CDs have been sold at swap meets and schools for as little as $5.

But sales figures from retailer Tower Records and information provided by Hawai'i-based record labels indicate that local patterns roughly correspond to national trends — up a bit this year and saved from going under by baby boomers' continuing appetite for music.

Local music sales were up last month in all three O'ahu Tower Music stores, said Hawai'i retail director Matthew Koenig. That's a good sign, since April has traditionally been a weak month for local music sales.

Sales of Hawaiian music at Tower's main Ke'eaumoku Street store were up 14.3 percent for April 2004 compared to same-month sales in 2003. The rise overshadowed the same-month patterns in overall music sales, Koenig said, and Tower's other two O'ahu stores showed a similar pattern.

Sales of Hawaiian music accounted for 11.2 percent of Tower Ke'eaumoku's total business in April.

Koenig expects to track strong local music sales numbers in May and June, too, because of pre- and post- Na Hoku Hanohano award sales promotions and increased customer demand.

He didn't want to guess why Hawaiian music sales were up. But April sales numbers at Tower's Ke'eaumoku store show that Honolulu music buyers were particularly moved by long-awaited new releases by top-selling local artists, including Na Palapalai and Ekolu.

There was also healthy continuing demand for CDs released last year by veteran artists Ho'okena, Na Leo, Reichel and Jake Shimabukuro.

Rising sales were also registered by The Mountain Apple Co., one of the state's largest record labels and music distribution companies, as well as the worldwide distributor of Israel Kamakawiwo'ole's CD catalogue. Owner/CEO Jon de Mello and president Leah Bernstein said Hawai'i-based music has been performing better both locally and nationally, attributing the rise to more quality product and name-brand acts such as Reichel (who is on the Punahele label, not a Mountain Apple act).

"When Keali'i came out with his new CD, a lot of people were driven to the stores to buy it, because it had been a long time since his last release," said Bernstein. That CD, "Ke'alaokamaile," released in December, was nominated for 10 Hoku awards.

"When big Mainland artists release (CDs) we watch that carefully, too, because we hitch with that," said de Mello. "Something people have all been waiting for — like a new Norah Jones CD — draws people into the stores for other music."

Norah Jones provides a good analogy, because her CD sold big primarily with buyers old enough to bypass the temptation of downloading. Likewise, the large-appeal acts like Reichel and Kamakawiwo'ole have on adult CD buyers here provides an extra sales cushion for local record labels.

Younger fans sticky-fingered

But record labels and artists who cater to a younger crowd are hurting the most by illegal downloading and CD burning, observers say.

Last year was the worst of several dismal years for the record industry, said John Iervolino of Kane'ohe-based Quiet Storm Records.

Quiet Storm has worked with many musicians and labels to license about 300 music tracks for its diverse catalogue of local-music compilation CDs such as "Pure Hawaiian" and "Island Roots."

"We have a nice reach into people's financial lives," said Iervolino. "We have the opportunity to talk with them intimately and personally. So we see, fairly clearly, where people are at financially in the music business here in the state of Hawai'i."

As with Mountain Apple, Iervolino would not share annual sales figures for Quiet Storm. He did say, however, that company sales have been down since what he considered the local music industry's peak sales period of 1999 through Sept. 11, 2001.

Combine post-Sept. 11 business doldrums, five years of illegal downloading and an upswing in home-burned pirated CDs, and you've got a problem, Iervolino said.

Shawn Pimental, who manages and produces top acts Na Palapalai and Three Plus for his small Koops2 Entertainment record label, said local CD sales are probably "half of what they used to be" before peer-to-peer file sharing and CD burning came into play.

Slides in sales of youth-skewing genres such as reggae-tinged "island rhythm" or "Jawaiian" music have been more pronounced than more adult-skewing traditional Hawaiian music.

"When you appeal to an older crowd like Na Leo or Keali'i, it's just a smarter thing, because those are the people that are gonna go out and actually buy the music," said Pimental, who also plays drums for Three Plus.

"When you come out with something by Three Plus, you know there are gonna be young kids at home spending time on the computer" downloading it.

While not outright blaming peer-to-peer file sharing for sluggish "island rhythm" CD sales, Mountain Apple's Bernstein said, "When we expanded into distributing Jawaiian music and reggae, we expected to sell a little better than we did. And it's never, ever really come to that."

Home piracy hurts

A larger problem Hawai'i recording artists and record labels have been forced to contend with is outright piracy — home-burning and reselling of their music.

"(Illegal) downloading doesn't affect this market as much as the actual piracy of burning (CDs)," said Christopher Hubbard, a production services manager for Sony Music Entertainment Hawaii and piracy investigator with Pacific Investigative Services.

A grand jury indicted nine O'ahu residents last August for copying more than 200,000 CDs, DVDs and video games for sales at swap meets, schools, nightclubs and other locations.

"In the case of the swap meet, people were actually selling the CDs for $5 apiece," said Hubbard. "We did (another) sting at the swap meet where the guy didn't have something in stock and said, 'Wait, I'll go back and make you one.' "

The man had a number of CD burners in his car.

"It's widespread in the schools, too," said Hubbard of pirated CDs. "Kids are selling 'em right out of the locker. ... Guys would pull up in a van. And they were actually selling not only the music, but mp3 players."

Hubbard estimated that CD burning and reselling annually robs Hawai'i's music industry of 20 percent of sales. And with the state doing very little to curb CD piracy through policing, Hubbard said stopping the crime is next to impossible.

"I think technology started it, and technology has to end it," said Hubbard.

Meanwhile, Hawai'i musicians keep on doing what they do best and love most. Manu Boyd of the vocal group Ho'okena, nominated for seven Hoku awards this year, said he understood the concern Hawai'i artists might have over the effect of illegal downloading and piracy on the local music industry.

He himself, however, refuses to allow such worries to distract him from creating music.

"Speaking more from the Hawaiian perspective, I just say that if somebody wants to steal my stuff I'll just write something better, or I'll write more," said Boyd.

"That's not very good business sense. But I think it's kind of a typical Hawaiian thing where we're not so worried about people taking what is ours.

"If people are gonna take it, they're gonna take it."

Reach Derek Paiva at dpaiva@honoluluadvertiser.com or 525-8005.