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CDs still rule in music industry
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Somehow, someway, the compact disc has managed to become the cockroach following the nuclear blast of digital music. Sure, CD sales have dropped significantly over the years, but they still account for 80 percent of total music sales.
Perhaps our friends in the recording industry can explain why. In a report released in the summer of 2007, the Recording Industry Association of America touted the new average price of CDs to about $14.90. Seeing as CDs started retailing around $21, the drop of about 8 bucks seems like a good deal.
Except that, of course, that figure is only impressive if you don’t buy music. For the consumer who ends up in a store in a non-holiday season, the most popular albums are often between $16 to $19 and will make up the bulk of CD sales.
Then there are online prices. Ninety-nine cents a track or between $8 to $10 per album from iTunes, or as low as 30 cents a track from eMusic. Napster lets you transfer unlimited songs to your MP3 player for $15, but burnable tracks will cost you extra.
And then of course, there’s the very accessible black market.
Yet, the CD market hasn’t collapsed. It holds most of the music market. And they cost more on average? So what’s so great about the CD?
While most people buy individual albums based on their personal tastes, the value of music itself comes down to a few factors. We’ll assume that after meeting a certain threshold of vocal and instrumental competence, quality isn’t a factor in price.
Demand is. However, and this seems to have been the main force for driving prices up to this point. Bigger bands release bigger albums, and the labels plaster all the MySpace accounts, billboards and radio stations with promos for that album. In fact, when you spend that much on advertising, you have to charge a higher price just so your return pays off.
While that accounts for the higher end of prices for albums, it doesn’t explain why the average price is still so high compared to digital sales. RIAA may tout lower prices now compared to 1983, but the fact is that despite the precipitous fall in demand for CDs since the advent of Napster and the MP3, CD prices have increased about $2 on average and real prices adjusted for inflation have only dropped 9 percent since 1996.
And yet, album prices on iTunes have hovered at the same $9.99 average since its inception.
So why is that price gap not closing? Some might argue that physical purchases still hold more value than MP3 files, but they’re only half right. It’s not a matter of art or liner notes as the old vinyl enthusiasts would harp about.
In reality, true demand and, thereby, price, is determined by music’s portability. And right now, CDs are far more portable than MP3s.
I know what you’re thinking: You’re full of shit. iPods are everywhere and you can’t walk down a busy street without finding someone with buds in their ears.
And yet, CDs still account for 80 percent of all music sales. Who can you blame that on?
Well, Apple, for one. The iPod has saturated the market and easily became the dominant MP3 player. But even if you make the songs cheaper, you’re still paying a significant amount to have that format of portability. And for most people who buy an iPod, it’s not about buying and playing MP3s — it’s about converting their CDs to MP3s and having everything in one pocket-sized form. In that sense, Apple needs to focus on making its iTunes store more accessible, and demand for digital sales and iPods will increase.
But consumers still have those CDs. And those CDs, unlike vinyl or tapes, are transferable. And there are still plenty of formats ready to accept them and convert them.
And while portable CD players are being outsold by iPods and the like, most American cars still come with CD players and omit any port for an MP3 player.
But the fact of the matter is that CDs are pricier right now because it’s a hassle for most Americans to truck around digital music when older consumers don’t quite know how to do that. As the populace becomes more computer literate, this concern will drop off somewhat, but that won’t render compact discs obsolete, just less attractive.
The only way that digital music increases its market share or prices is if the supporting industries, such as automakers, audio hardware makers and retailers, make the switch themselves. And right now, no one is in the mood for a massive shift in business models — even if they should be.
Jason Smathers (jsmathers@badgerherald.com) is a senior majoring in history and journalism.
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I think you are a little out of touch if you think most of the music on a person’s iPod is ripped from CDs.
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As has been the case with much of the music industry’s mistakes concerning the downloading of music, this journalist suffers from a lack of foresight.
Yes, many cars have a CD player with no iPod port…for now. My 2006 care has an iPod port. I would wager that it is quickly becoming standard practice for any new model to have that as an option.
CDs may account for the majority of music sales, but therein lies the problem. The majority of music on a person’s iPod hasn’t been bought. It’s been downloaded for free via Limewire or something of that nature. So the idea of a CD outlasting the digital invasion is based on limited information. How do your numbers stack up against sales vs. downloads in total - paid or not?
The largest selling CDs for the past few years either cater to 12 year olds who need their parents’ permission to use iTunes (High School Musical soundtracks, Miley Cyrus) or older folks who don’t care to fiddle with a new technology. (AC/DC). You’ll also notice how this is reflected in the realm of live music in the fact that “heritage tours” *Genesis, etc.) have had the largest draws. The ages of 13-35 that the industry used to rely upon for money get their music for free. In fact, you have generations coming up who don’t know that recorded music is something to pay for. Let that be the first step of your foresight. How will you cater to that generation?
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I have 16,102 songs on my iPod all ripped from my formidable CD collection. Very few (less than 30?) are from MP3 download sites. I still like the art and liner notes that come with music…
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A few things right off the bat. The most popular new albums can quite easily be found online, or even in major record stores…those few that still exists, for around $12, or a lot less if you buy used (which, in the case of CDs, means no difference in the listening experience). Try Amazon, try Virgin Megastore (if you live in LA like me). There are tons of places to go, online as well as in your nearest sizeable city. Re-issues sometimes cost more largely due to increased content and more elaborate packaging. Yes, one can question the pricing of some major re-issues on major labels, and the possibly large profit margins these labels enjoy on a release for which the recording costs have already been paid. However, there are a lot of other costs involved with re-issues, like re-mastering, and most re-issues are released by speciality labels that do not operate with huge profit margins but actually provide a very important service to true music fans.
Almost all new cars these days come with mini jack hook-ups for portable audio players, even my wife’s cheapo PT Cruiser. Calling them mp3 players btw is a misnomer since most all of them can play audio in several different formats, including loss free formats such as .wav and .aif.
Wow…why should one ‘blame’ anyone for the fact that CDs still represent 80% of music sales in this country and, I guess, in most other countries as well. That is a good thing! Until 100MB/s+ fiber optic internet access is readily available to most people, CDs, SACDs, or vinyl, are the still the most attractive alternatives to anyone with half a sense of hearing left. But, I guess, therein lies the problem. What’s scary in our society today is the upcoming generations of people that hold no regard for (audio) quality, only quantity, of music, that wants it to be free and happily blast their little eardrums to oblivion by playing edgy, distorted and low rez mp3s way to loud on their iPods.
Thankfully, there are still a lot of people who appreciate, and collect, the many great re-issues appearing on CD, often in elaborate packaging with added DVD content that become treasured possessions for many true music fans. These people, me included, wouldn’t even consider listening to this music in the form of mp3s or any other lossy format. Never mind the few huge, corporate behemoth label conglomerates, the fact is that 99% of record labels or record distributors on this planet are businesses driven by a passion for music by people who are trying to present talented (at least in their A&R dept’s belief) artists as creatively and successfully as possible. This costs money. Heck, making music costs money! If a release sold digitally in a lossy format, like 128k mp3s for instance, for $9, and the CD version of the same album sells for $11.99 to $14.99 (which is the case with most, major new releases and many re-issues), the difference in price accounts for physical production, shipping and storage, record store margins (to pay those great and helpful record store employees for instance)…and I could go on and on. Plus, the CD sounds and looks better, and is more informative, so it is a superior way of presenting the music. Of course it costs a bit more! You simply have absolutely NO idea of what you are writing about.
You seem to suggest, between the lines, that CDs are still being priced artificially high, that some overly rich record label executives and shareholders are lining their deep, fat pockets. This is, at best, an uneducated remark. The vast majority of CDs that are released come from smaller labels or independent artists who put 1,000s of dollars and tons of creativity and imagination into creating the best possible presentation, on all levels, of their music and visuals to increase their fan base.
An album in the form of a collection of low rez mp3s, or any other lossy format, does not hold the same value as a CD and therefore should, and does, cost less. You will find websites that sell loss free, or even high end 24bit 88.2/or/96kHz, music files at a premium price, bringing the album price up on par, or above, the traditional CD.
Long live the well made CDs, SACDs, long live vinyl (selling more these days than in many years), quality sound and quality artwork printed on recycled paper! Noise pollution is a serious problem in today’s society. Most people are simply just not aware of it. The younger generations’ hearing gets worse and worse over time, with their eye sight diminished by statically steering at screens for way too long at a time (and no, I am not an old person at all, just aware). Step back, sit down, relax for a few minutes and listen to your favorite music in a loss free format on a decent system…take in that artwork of the special, artfully crafted re-issue. You should appreciate the difference…
For you, back to school and this time…learn something!
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CD’s outshine MP3’s simply because the sound quality is far better. MP3’s sound horrible because of the high compression, so does anything you buy on iTunes since it’s still overly compressed for almost the same price. I for one will continue to purchase CD’s simply because the quality is 10 times better than a MP3 (average wav file on CD = 50 meg, same song in MP3 = 5 meg = crappy sound) Until there is enough bandwidth to support uncompressed wav files as easily as MP3’s CD will continue to rule
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It’s all about the sound quality for me. An mp3 turned up loud in my car (I have a nice stereo w/ great speakers)sounds like an over-compressed, distorted pile of doo doo. I’ve gone back to cds and will stay that way until technology releases a format that convince my ears otherwise. Good music deserves to be heard in the right context; otherwise, what would be the point?
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You were very unfortunate on your opinions in this article (out of touch indeed). Most people already set you straight so I’ll leave it at that. Cheers!
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i actually read the verbose post a couple above me, and he’s totally right. and we who care about quality should always vote with our wallets & buy CDs. it’s most definitely worth the extra money, since most mp3s sound like crap. when itunes comes up with a true loss-free format, i’ll buy downloads.
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MP3 and other comrpessed formats are absolute rubbish for me a classical listener. CD player sales are up 50% now in the UK, according to the Daily Telegraph today. Even stores which stopped stocking them have had to start selling them again. Fantastic sound for so little money. The consumer had decided. Ipods are for the tone deaf.
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It’s funny how people think that CDS are dead or how people don’t care to buy them anymore, but I have sold CDs on eBay and I made a lot of money on rare titles.I don’t care if people think that CDs are dead or laugh at people like me who still buy them, even after people quit making them I will still be listening to them.One day I might own an iPod.But someone is buying those CDs, and I wonder how many CDs used or new get sold on those independent record labels.