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Wednesday, November 9, 2011

Major Labels To Abandon The CD in 2012?

6 CDs image from Bobby Owsinski's Music 3.0 blogThere's a story being posted on news sites around the Internet with a headline similar to "CD Format To Be Abandoned By Major Labels By The End Of 2012." While it might make for a great headline, it's simply not true, and I'll tell you why in a minute.

First of all, let's look how this story got traction. The whole thing started with a small electronic music record label from Brussels called Alfa Matrix, and an article in their official magazine. In it's first issue from June 2011, editor Bernard Van Isacker said the following when asked if a CD would still exist in 5 years:
"Yes, but in a different format. Normal CDs will no longer be available because they don't offer enough value, limited editions on the other hand will remain available and in demand for quite a few more years. I for one buy only limited editions because of the added value they offer: a nice design, extra bonus gadgets, etc. The album as we know it now however will be dead within 5 years, if it isn't even sooner. I predict that downloads will have replaced the CD album within the next 2 years. I don't see that as something negative, it just has run its course, let's leave the space to limited editions (including vinyl runs for bigger acts) and downloads instead."
There's certainly a lot of truth to what he said, but his comments started the viral train rolling, which was soon picked up by the influential TechCrunch, who posted:
"It's a move that makes completely sense. CD's cost money, even when they don't sell because there is stock storage to be paid; a label also pays money to distributors when CDs get returned to the labels when not sold and so on. In short, abandoning the CD-format will make it possible to just focus on the release and the marketing of it and no longer focus on the distribution (since aggregators will do the work as far as dispatching the releases to services worldwide) and - expensive - stock maintenance. In the long run it will most surely mean the end for many music shops worldwide that only stock and sell CD releases. In the UK for instance HMV has problems paying the labels already and more will follow. It makes the distribution of CDs no longer worth it."
Before you know it, this was picked up almost as a foregone conclusion about the future even by the traditional press.

But as much as the doomsayers might like for it to happen, CDs just won't go away that soon. Why? Because last year 130 million CDs were sold in the US alone for one thing. It's still at least 50% of a record labels business and certainly the most profitable in terms of margin. What's more, there has been 20 straight weeks of increased store sales, according to Soundscan, something that hasn't happened since 2004. CDs are still a huge business that just isn't falling off a cliff at the rate that some might have you belive.

So don't believe the hype, the CD may be on a death spiral but it's not dead yet and won't be any time soon. In 5 years we may be having a different conversation, but the shiny piece of plastic still has some life in it left.
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2 comments:

charissa said...

Nice bro.. :)

David Das said...

Well said. That article was clearly poorly written and researched and went viral before it had really been vetted.

CD's do sell less than they have in the past, and major outlets (e.g. Tower, Borders, etc.) have died, but there is still an important gap filled by CD's, and near-ubiquity of optical drives in cars, computers, as well as standalone. They will still continue a while longer.

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