Feeds

Last Xmas for CDs, please, researcher tells music biz

Gartner demands freedom from compilation albums?

The Essential Guide to IT Transformation

Market watcher Gartner is playing Scrooge for the music industry - or at least that part of it that is still in love with the CD as revenue generator.

The research company this week called in the music biz to leave this old optical technology behind - the CD has been on sale for more than 26 years - and fully embrace downloading instead.

Indeed, it said, it's that insistence on sticking with the CD that's preventing music companies make the most of the online sales opportunity.

"By propping up the CD business, rather than fully investing in online distribution alternatives, the major labels and the larger music industry have neither succeeded in stamping out piracy nor done much to recreate the business models of the old ‘record business'," said Gartner's Mike McGuire.

"Music labels should... move CDs to an on-demand publishing mode," he suggested.

Look at the numbers. In 2007, online sales yielded 23 per cent of music revenues in the US, though only 15 per cent throughout the world as a whole. This year's numbers aren't in yet, but they're clearly going to show both figures rising sharply. Since 2005, downloads have gone from nine per cent of music revenues to 23 per cent last year, and it's hard not to see a similarly sharp increase between 2007 and 2008.

CD sales have declined over the past three years by the same amount. That's left labels struggling even harder to forecast demand so that they can get the right number of CDs manufactured, packaged and distributed. It's Gartner's contention that they haven't done so too well. While that many not have mattered in the 1990s - retailers would 'soak' up the excess units on their store shelves - it has now become a real liability.

Contrast that with downloads where, once the source file is encoded, production costs cease no matter how many or how few are sold. Put the money wasted on CD over-production and lost through under-production into marketing online music and the business will blossom.

Throw in the ability to better monetise back-catalogue - which the labels have still to fully embrace, though that may be as much down to Apple and iTunes' willingness or ability to load up the servers with limited-interest content - and the industry can drive down costs, lower the price of entry for consumers and beat the pirates that way.

With an all-digital approach, labels are free to sell through almost any online outlet, from iTunes to social networking sites to - heck - irreverent technology news sites who happen to mention a track or an album in a review.

Now there's a thought... ®

Music Player Reviews...


Sony Walkman S

iPod Nano

Samsung Q1

iPod Touch

Build a business case: developing custom apps

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.