As CD sales continue to slide, the record industry is hoping that Christmas Season (biggest sales period of the year) will reverse the trend.

Insiders and analysts believe that if the trend gets any worse major retailers will reduce floorspace dedicated to CD’s in 2008. Greenfield forecasts that retail floor space devoted to CD’s will be cut by at least 20% and possibly 30% in the next year. Retailers will scale back on profitable catalog albums and focus on high profile new releases that will be sold at a discount price.

The record industry core physical goods business (CD’s) is down more than 18% year to date. Tower Records and Musicland collapsed and Trans World (FYE and Wherehouse), the largest music focused retailer said music sales are declined 21% and comprised just 40% of its total business, down from 48% in 2006.

According the NY Post, the record industry needs to sell 150 million albums in 6 weeks to keep pace with 2006’s full year total of 588.2 million albums. Upcoming big releases include Mary J. Blige and Nelly but not enough new releases to reach the goal.