December 30th, 2008 7:28pm
Gartner Says, “2008 Should Be The Last Christmas for Retail CDs”
Gartner is saying that “2008 Should Be The Last Christmas for Retail CDs”. They posit that
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.”
But before you get your hackles up, you should recognize the claim isn’t actually as extreme as it sounds. It’s not that they’re saying, “the CD is dead. Move on already” — rather, they’re simply suggesting that it’s time to start thinking about releases differently. Gartner is suggesting a move toward thinking of releases in terms of digital as the primary format, instead of thinking of releases in terms of huge warehouses of pre-fabricated plastic discs awaiting physical shipment out to points across the globe.
Music labels should instead emphasize ‘digital first,’ making all new releases and catalog issues via digital services and moving CDs to an on-demand publishing mode.
The issue will raise some nerdy technical arguments (“glass-master-stamped CDs” vs. “‘burned’ CD-Rs”), but outside of that, it doesn’t sound like a bad idea at all. On-demand publishing of CDs, DVDs, books, magazines, etc. seems to be a smart way forward for the future. Just ask any band who’s still sitting on 4,998 unsold copies of their last album.
12/30/08 7:49 pm
Matthew says:I’m all for this, it’s really the most logical and sensible thing to do given the changes in the market. It also gives artists and labels more opportunity to be spontaneous in creative ways, or in ways necessary to save their asses when things go wrong. I’m a fan of leeway.
12/31/08 2:53 am
theOCMD says:Interesting, I just read this post on TechCrunch tonight summarizing Topspin CEO Ian Roger’s thoughts on this very issue. Ian is one of the most insightful and unassuming CEOs I’ve ever met, btw! Check it out.
http://www.techcrunch.com/2008/11/19/ian-rogers-on-the-death-of-the-music-cd-business-i-dont-care/
12/31/08 9:06 am
adam says:if you’re a label and seeing 60% digital sales and 20-30% LPs, for certain artists / titles, then this would seem reasonable.
but the issue is that for a lot of labels and artists, indie retail is still pretty vital and this would basically kill them and piss off customers. besides, Indie retail is important not just in terms of selling records but generating word of mouth and developing a fan base beyond major media markets (which sell a high percentage of digital and are influenced by “blogs” etc – that is still very much the case).
the other thing is that with an only digital release (or anything), you still have to create your own demand – in both physical and digital media.
and then… say all your shit works beyond your wildest expectations and your band starts blowing up. you will piss off a lot of consumers who still buy at Best Buy, Borders, local indie retailers and they can’t find the CD. you lose those sales indefinitely because it will take you 6-8 weeks to get CDs in the market.
the on-demand stuff has to this point proven very unsuccessful. an alternative for indie retail is some kind of bin card scenario to carry full catalog, provide a digital version right away to the desktop (or phone) and then direct fulfillment of the CD/LP from the distributor. (e.g. indie retail still captures sale margin, don’t piss of customers)
but to the main thesis of this article – the industry should (and is) moving away from sale of music to licensing as the primary revenue generator.
12/31/08 9:14 am
Matthew Perpetua says:I dunno. I think this gives indie retail an advantage in many ways, because, particularly as big boxes disappear or shift focus away from stocking music, we could potentially have a situation where cds are increasingly a specialty item, and you go to a specialty store to get them. A lot of people are content to buy things digitally, but if you want to get certain things as physical items, record stores become more useful again as they stock stuff you can’t get elsewhere, aside from Amazon et al. I’m thinking of this sorta in the terms of how comics were phased out of the newstand market, but now exist primarily as something sold in specialized “direct market” comics stores. Yes, in many ways it has harmed the comics industry, limited its reach, marginalized the product, etc, but it was already kinda happening anyway.
12/31/08 10:24 am
Ryan Catbird says:OCMD– if you haven’t already, go ahead and subscribe to Ian’s RSS feed. His is a voice that you will want to keep listening to; he’s one of the sharpest knives in the Music 2.0 drawer.
Adam and Matthew– I was hoping someone from the biz would join in on this one, thanks Adam. I was already thinking what you said, that the on-demand model works, but only up to a certain artist scale. I can see it totally working for something like a Vivian Girls-size band, and totally failing for something like an Amy Winehouse (or hell, even Cat Power) sized artist — due to the delays that would arise in the retail/distribution chain. Which I think is perhaps a big part of the issue that Gartner was isolating: that a big source of pain (and cost) is in the retail/distribution chain.
Frankly, I think it’s still probably a *bit* too soon to try to effect something like Gartner’s recommendation– there’s still a sizable, and oft-underestimated group of (mainly older) consumers who do still rely on getting their music (from their local Target et al) on CD. But I also think Gartner may be offering their recommendation because it seems like a bit of a “shit-or-get-off-the-pot” moment for the industry, when you take into account not only the ongoing problems a lot of artists/labels have been facing for years now, but also the state of the economy and business in general.
And I’m actually starting to think that maybe point-of-sale on-demand fabrication may not be such an outrageous idea anymore. I’m imagining a store where the racks have the CDs out, arranged much like they are today, but instead of buying the actual CD you take off the rack, you take it to the clerk, who just fabricates one for you on the spot and then returns the ’sample copy’ back to the shelf.
1/1/09 1:10 am
adam says:i just don’t see it yet. you have a new Mogwai album that does 74% of its sales as CDs….. you’re telling me that it makes sense to *not* manufacture CDs?
as i said, for certain artists / titles… some kind of nifty format strategy makes sense but fanciness (like anything) is not a rule to live by. you have to think long-term about these things. unfortunately, armchair jockeys like Gartner live in totatlies.
and Matt…. CDs and (moreso) LPs will keep indie retail afloat so long as labels see indie retail’s value. you have a fairly contrarian way of agreeing with me here.
1/14/09 12:13 pm
Checking In On The Music Mags @ The Catbirdseat - Indie Music, Culture, and Commentary says:[...] understand there are some caveats and exceptions, but I stand by my assertion that an on-demand system for in-store fabrication of CDs, DVDs, books, magazines, and newspapers is the way to move forward. And by that, I simply mean that if these industries could cut out the [...]
1/14/09 8:37 pm
Fusion 45 says:I’ve not used LuLu yet but am convinced that’s the ONLY way to go when I publish my book. Only makes sense, for me, for you, for Warner Brothers…
1/29/09 9:56 am
The Death of the Music Mags Pt. XXXVIX: Zombies (”REEEAAADDERS! REEEAAAADDDERS!) @ The Catbirdseat - Indie Music, Culture, and Commentary says:[...] wrap your brain around the logic, but then again, maybe it’s just the publishing variation on the “think digital first, physical second” philosophy. At any rate, it’s certainly a unique move– and I’m very, very interested to see [...]