Music CD sales plunge 20 percent
Cory Bergman March 20th, 2007
In the last year alone, due to iTunes and other digital music stores, reports the WSJ. “Sales are so down and so off that, as a manager, I look at a CD as part of the marketing of an artist, more than as an income stream,” says Jeff Rabhan, who manages several artists. “It’s the vehicle that drives the tour, the merchandise, building the brand, and that’s it. There’s no money.” Here’s an easy Lost Remote prediction: the same will happen to DVDs in the next 2-3 years (although you could argue that high-definition video may delay the inevitable a bit longer. But not by much.)
Adds Michael in comments: “Personally, I think years of overpriced CDs are driving this as much as anything else. Is it me, or do DVD prices go down much faster much quicker? It’s nothing for me to see a 2-year-old movie for under $7 at Target. No such luck with CDs. Considering the DVD starting price is usually higher ($12, $14, $18), that seems odd. Maybe it’s just me.”
14 Comments Add your own
1. David Johnson | March 21st, 2007 at 7:55 am
dunno if i am on board with that prediction, but i am interested in watching it play out. certainly, the market will change as new distribution patterns become viable, but it takes a lot for a given technology to completely replace another, e.g. while we send a lot of e-mails today and less handwritten notes, the backspace key hasn’t replaced the need for erasers on top of a pencils. from that far-fetched example back to the topic at hand, discs still have a lot going for them over downloads.
discs are convenient means for distributing large files as well as playing them quickly and relatively hassle free. they are also a very cheap, low-profile, stable and hearty storage medium. plus, you can lend them to people and resell them without DRM hurdles. also, my discs may get scratched individually, but they don’t crash wholesale and lose my whole investment at once.
sure broadband is everywhere, and storage and processing power are cheaper, but downloading files in the DVD movie range of 5-6 GB will suck your bandwidth for a good while and also consume the processing resources of the downloading vehicle.
in music, i’m looking at how the downloading culture shift is pulling us away from album-oriented material (once LPs) back towards singles (once 45s). there is a lot we can talk about there in terms of the relationship to artists, content, publishers, marketing and distribution, and a lot of that discussion is going on in sites that focus on digital music.
for our purposes though, let’s say that record labels and AR-men who packaged albums with one or two “hits” and filled the rest with mediocre b-side material, covers or filler, helped create the current on-demand download market for singles. newer bands have responded by including cramming an album’s worth of hooks and riffs into one song, knowing that they have an ever-shrinking window of listener attention — attention that also translates into how devoted a given listener may be in waiting to download a whole album.
no one is making records like Bowie’s Ziggy Stardust where we used to drop the needle and listen sequentially from start to finish because it was intentionally put together to be heard that way. CDs are a waste of time today because the likes of Jeff Rabhan and his ilk are creating products where 80 percent of the material is filler and the audiences, which are now empowered with more selective tools to filter and customize their consumption, aren’t willing to pony up for it.
so in terms of video, as long as youtube is a disruptor of america’s funniest home videos with a top 500 full of camp, cams and crotch shots in digital short formats, yeah, downloads are king and the market for a dvd length compilation will be pretty small. i think things are working for itunes in small format movies and hour length series. but i think discs still have shelf life, and a lot of value for years to come.
2. G Man | March 21st, 2007 at 9:30 am
I agree with David.
Too bad no one seems to craft good ‘albums’ anymore. That was some skill to have something to listen too straight through. But I think CDs with their easily selected tracks and shuffles started that demise.
I will hang onto my CDs forever - kinda like you vinyl people. (I have some of them too.)
And another thing to go into history is album art. On top of having to plan out your track list, you had to put a pretty picture on the CD/album to make it attractive. And some got really creative. I framed a few of my favorites.
3. G Man | March 21st, 2007 at 9:34 am
Another thought after I posted that - anyone remember the “long box” and the ‘controversy’ that created?
4. Michael Gorman | March 21st, 2007 at 11:54 am
Personally, I think years of overpriced CDs are driving this as much as anything else.
Is it me, or do DVD prices go down much faster much quicker? It’s nothing for me to see a 2-year-old move for under $7 at Target. No such luck with CDs. Considering the DVD starting price is usually higher ($12, $14, $18), that seems odd. Maybe its just me.
5. G Man | March 21st, 2007 at 1:30 pm
How come it’s always ‘overpriced’ CDs? And it was never ‘overpriced’ albums or cassettes? The sales model for all were exactly the same - but with CDs, you did get almost twice as much content. Whether it was all wanted content or not is irrelevent since you were stuck with all the tracks whether you bought the CD, LP or cassette.
Maybe it’s just overpriced recordings in general. But at .99 cents per song on iTunes, I bet the economics works out the same. And exposure to some hidden treasures that don’t get airplay or buzz is much less.
I’m rambling, but I spent all this time typing it out, so I figured I’d post it.
6. Safran | March 21st, 2007 at 1:43 pm
I’m going to find myself in the odd position of defending the record labels for a moment on this business of “overpriced” CDs. (Not an attack on Michael, mind you - it’s something we hear a lot.)
Basic economics: companies will charge what you will pay for a good.
Who are we to say a CD should only sell for $5 when it sells just fine for $15? If the market says it sells for $15, the market’s right. It’s not overpriced: it’s priced perfectly.
Now, you can cry “collusion among the record labels,” and that’s a different argument. But otherwise? Market rules. And if anything, the price of CDs, adjusted for inflation, seems to keep dropping.
When I got a CD player in 1983, I had to go to downtown Boston to find a boutique shop that sold CDs for about $20 apiece. That was in 1983 dollars, and that was “I was in high school” money.
Last I checked, I can buy one for about $11.99 on sale. I recall albums being about that much, give or take a buck, 20 years ago.
LR readers will know I am no fan of the record labels. And the whole concept of an album is dated and stupid - artists should be free to release a song when they want to release a song, not an album with two good songs and eight crappy ones.
But the free marketeers in the audience will have to agree: “Overpriced” is a relative term, used by someone who doesn’t like what the market will bear.
7. Emery Jeffreys | March 21st, 2007 at 2:16 pm
The other day I found a used CD bin in my favorite music store. I refuse to pay over $15 for any CD. I found The Essential Clash in the used bin for $18.99. I thought it was a misprint, but a new CD of the same title sells for $26.99… and it was released three years ago.
I tend to want to buy artists on indie labels and from podcasts. One podcast used the phrase “the best music you’ve never heard before.”
At those prices more and more people are going to look for the little guys. And the little guys appreciate it. That CD might just help pay the rent instead of limo driver.
8. Safran | March 21st, 2007 at 4:39 pm
And in fairness, “The Essential Clash” is a 2-CD set, meaning that new CD was asking about $13.50 per disc.
I can’t believe this thread has me defending the record industry. Twice.
9. thefreemusicchannel | March 21st, 2007 at 5:07 pm
In any discussion of the ongoing, inexorable decline of CD sales we must first acknowledge that once people learned they could steal music on the internet with little chance of prosecution, it was all over for the recorded music business.
10. Emery Jeffreys | March 21st, 2007 at 5:46 pm
My bad for not catching the two-CD set. I should go back and buy it for that price. And that $20 CD in 1983 would be $41.27 in today’s dollars while the album would be $24.74
11. Tim | March 21st, 2007 at 6:16 pm
At .99 a track, to download an entire album would be around $15.84 assuming a 16-track album; so the iTunes economics are in the same ballpark as a CD.
While I agree with the previous poster about finding “hidden gems” on an album which don’t get played on air or even on tour dates, I think many people just want the “hit” they heard recently and don’t care to explore.
I wonder if we have enough information to get a feel for “complete album” vs. “singles” sales in the download market?
If the future is for CDs to be marketing tools, the same will be true of downloads: why not just make them Creative Commons-licensed and give them away, reaping profits from tour tickets and merchandise? Why ride out the entire downward spiral - just shortcut to the future..
12. David Johnson | March 22nd, 2007 at 7:47 am
i believe that the major source of revenue for a musical act itself actually comes from playing live, or at least it used to be that way. back in the day when i played in bands and had some deals dangled before us (time to to play the five things you don’t know about LR bloggers game?), the standard boilerplate worked out to lock in artists to three records with the label, although there was no guarantee that those would be made unless costs were recouped on the first one. if that mark got hit, we got what worked out to pennies per player per copy sold. we also had to pay back any advances as part of making up those costs, so essentially we were paying the label for everything to get no real assurance of decent distribution.
of course more marketable (and talented) acts have weight and can probably negotiate better deals, but i don’t think my anecdotal experience is that uncommon based on corroborating anecdotal experiences of other musicians. that the artists have a shot at controlling their own distribution and can market themselves is a real shift in the balance of power. record labels have had it coming and going for a very long time.
13. Michael Gorman | March 23rd, 2007 at 12:59 pm
Steve, you’re absolutely right, I did overgeneralize by saying overpriced. I was referring to the collusion, when the record companies had to settle with consumers between 1995 and 2000.
Yes, it is right to point out what the market will or will not bear. But in my gut, rightfully or not, I’ve always felt they were padding the profits. And I would be terribly surprised to learn I was the only person who felt this way.
So now, when iTunes offers albums/CD’s/whatever for $10, singles for $1, that’s where I’m putting my money.
14. Michael Gorman | March 23rd, 2007 at 12:59 pm
Sorry, food coma ate my grammer skills.
I was referring to the collusion, when the record companies had to settle with consumers who bought CDs between 1995 and 2000.
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