LOS ANGELES (Reuters) - Rockers, rappers and record executives gather in Los Angeles on Sunday for the annual Grammy Awards, but there is little to celebrate at the music industry's biggest night.
Album sales have tumbled for the past decade, last year's viewership was among the lowest ever, and now a recession is generating more layoffs at the major labels.
The top contenders are rapper Lil Wayne with eight nominations and British rock band Coldplay with seven. But the Grammys are starting to look a little dated in their 51st year. The top award is album of the year, but the industry these days is ruled by digital singles, ringtones and ringbacks.
"The Grammy celebration is a little bit ironic because the traditional business model it has always celebrated is on its way out. It would behoove them to adjust to modern times," said Steve Knopper, author of "Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age."
Knopper and others believe the awards telecast needs to find new ways to reach fans who have long eschewed the mainstream music industry and events like the Grammys.
Last year's Grammys telecast drew 17.5 million viewers, off 12 percent from the prior year, and down 42 percent from the all-time high of 30 million in 1993.
"If the Grammys continue to hitch their wagon to the 'we're going to sell shiny little round pieces of plastic,' model they're going to find their way out of a business model like the rest of the industry," Knopper said.
The recession is just the latest woe for the industry, which has laid off thousands of workers and slashed artists during a years-long slump brought on by a faster than predicted shift to digital distribution. Like the industry it celebrates, the Grammys are also struggling with a declining audience.
"The Grammys need to be innovative, particularly with the decline of the album. There will be have to be a revamping of categories to remain part of the everchanging landscape," market," said entertainment attorney Kenneth Freundlich.
And while purchased digital singles have exploded on services like Apple Inc's iTunes, they haven't come close to offsetting the 33 percent slide in U.S. album sales since 2000.
Even EMI Group, which delivered one of this year's album of the year nominees: Coldplay's, "Viva La Vida or Death and All His Friends," which has sold over 7 million units worldwide, believes albums are becoming less relevant in some cases.
"We're moving away from the album cycle for some artists. The album isn't necessarily the most relevant mechanism for some artists to connect with fans on an ongoing basis," said Nick Gatfield, the British label's president of A&R (artists and repertoire) for UK and North America.
"It's conceivable we could get to a point of signing a 50-track deal with an artist and determine later how to bundle them (songs)," he said.
Also competing for best album is another British rock band, Radiohead, which bypassed major labels to distribute "In Rainbows" on its own Web site at a price to be determined by consumers. It later released the album through a small label owned by rocker Dave Matthews.
Another indie release is considered the favorite: "Raising Sand," an acclaimed collaboration between former Led Zeppelin rocker Robert Plant and American bluegrass singer Alison Krauss. It was released by Rounder Records, a label that specializes in roots music.
Two rappers are also vying for the prize: Lil Wayne with "Tha Carter III" and Ne-Yo with "Year of the Gentleman."
The album of the year is just one of 110 categories, with prizes to be given out in such genres as country, pop, reggae, bluegrass, polka, blues and spoken word. All but a dozen awards are hurriedly handed out before the main event kicks off at 8 p.m. EST.
As usual, the broadcast will be performance-heavy. Among the expected artists are all the album nominees; best new artist nominees Adele and the Jonas Brothers; and veterans such as Paul McCartney and U2.
Reporting by Sue Zeidler