The manager at the front door of the Apple Store in the Grove shopping center in Los Angeles was smiling broadly late Friday afternoon. It was the day after Thanksgiving, the store was swarming with customers and, he said, sales of iPod digital music players were doing very well.

“It’s been a very good day,” said the manager, who declined to identify himself, citing a company prohibition against speaking to the press. “It’s probably a good day for all retailers.”

Not necessarily. While Apple shoppers were banking on music’s digital future and availing themselves of one-day bargains on iPods as low as $228, things weren’t looking merry and bright for conventional music retailers on “Black Friday” – the traditional opening shot of the Christmas shopping season.

This holiday season will be critical for the music business. After experiencing some gains beginning in late 2003, the industry has sagged again recently. Album sales for the year to date have increased just 3.2% over last year, according to the most recent figures from Nielsen SoundScan.

Traffic was thin at some of the larger music stores in Los Angeles. This in itself was not alarming: As Sharon Vitro, operations manager at Tower Records’ flagship Sunset Boulevard store, noted, business will “explode on (Dec. 14). When you can’t find something else for somebody, you can find music, and that’s when they come to us.”

The grimmer news for music retailers was on display in end caps at mass merchants in the area, where music stores were getting clobbered by the big-box stores’ traffic-building loss-leader pricing of hot new titles.

The damage had already been done at the Best Buy store in the West Hollywood Gateway center at La Brea and Santa Monica. There, a clerk said, copies of U2’s highly anticipated new album “How to Dismantle an Atomic Bomb,” priced at $7.99, had sold out on Tuesday, its first day on sale.

Best Buy’s price was $2.36 under dealer cost of $10.35. It was also $3.25 less than Tower’s sale price of $11.24, and $4 less than Virgin Megastore’s sale price of $11.99.

At the West Hollywood Gateway Target store, a clerk said the last two copies of the new Nirvana boxed set “With the Lights Out” had sold that morning. The store was offering rain checks to consumers.

Target had priced the three-CD/one-DVD Nirvana set at $27.99, more than $10 under its dealer cost of $38.09. Best Buy was selling the set at $39.99; Tower and Virgin were pricing it at $49.99 and $44.99, respectively.

Tower’s Vitro said angrily of the price-slashing mass merchants, “They’re trying to kill the record business. Why do we cooperate with them at all?”

Still, she added, Tower’s sales for the previous week were “awesome” because of the influx of strong new releases, and she added, “I think December’s going to be good.”

Business was visibly slow at Virgin Megastore’s Sunset location. An employee there, who asked to remain anonymous, said the store’s sales would come in the future: “This weekend’s for the Targets and the Macys. Our industry’s about the last-minute purchase.”

He added that pre-Christmas business seemed to be better than last year, but added, “Will it make the industry land on its feet? I’m not sure.”

The anomaly among local music merchants was Amoeba Music, the massive store at Sunset and Cahuenga. At 4 p.m. Friday, manager Jimmy Henderson estimated 1,000 people were shopping there.

Ironically, Amoeba boasted the highest prices on the hottest new releases. The U2 album was priced at $13.98, and the Nirvana box cost $52.98. But customers appeared galvanized by the music-friendly environment.

Amoeba co-owner Karen Pearson acknowledged her store is different from the chain retail outlets: “Traditionally, music is a late gift. (But) going to Amoeba is like an outing. … It’s like going to Disneyland.”