In April, EMI signed a multimillion-dollar contract with Carey and agreed to give the singer a $20 million advance per album, a $6 million music-video production fund and about $1.5 million to promote four singles.
Carey was unable to do much of the advance promotion for Glitter after she suffered a nervous breakdown in July.
According to the Times EMI has spent more than $10 million to market and promote Carey's Glitter, but the album has only sold 2 million copies domestically and overseas. By comparison, Carey's 1993 album Music Box, released by Sony, sold more than 20 million copies worldwide.
Many record labels sign multimillion-dollar pacts with the hopes that megastars will create a body of work that will sell long into the future. Older albums represent a higher profit for companies because of the low cost associated with repackaging them.
But the cost of doing business is spiraling out of control.
"We're the ones that say yes to the pricey deals, we're the ones that say yes to the independent [radio] promotion, we're the ones that say yes to the cost of making videos," a label chief told the Times on condition of anonymity. "We all got cold water thrown in our faces this year. And everyone's feeling vulnerable."
Analysts point out that labels gambled on an act's longevity at a time when the marketplace was growing more fickle. Some even suggested that the music business is reverting to the one-hit wonders of the '50s, when pop stars rocketed to fame on the popularity of one song only to fade into obscurity.
Irving Azoff, a former president of MCA Records, agreed this was a terrible year for the record business.
"There's a single-song mentality that's going to force redefining of what the record business is, and that's got everybody petrified," he told the Times. "The labels claim they're going to be more risk-averse. But if you've got something they want, it's the same old feeding frenzy."