Monday, February 24, 2003

Even the New York Times seems to have got the message about the CD: it is an obsolete product.

Still, there is no question that other activities are taking up listeners' time, thanks to the growth of electronic games and multichannel cable and satellite television. Perhaps most threatening is the popularity of the DVD, which emerged in the mid-1990's. By 1999, DVD players had gained mass-market appeal, and they now cost as little as $50, about the same price as a portable boom box. In some retail stores, DVD sales have surpassed those of CD's.

"The DVD is moving into the bedrooms of the next generation of young kids," said Gary L. Arnold, senior vice president for entertainment at Best Buy, which announced in January that it was closing 107 stores. The next generation of young people has no affinity for the compact disc. For them, he said, "it's about gaming and PlayStation."

There are even one or two comments in the article suggesting that parts of the music industry are actually getting close to reconnecting with reality

DOUG MORRIS, chief executive of the Universal Music Group, said: "We are definitely in the middle of a transition. It was always a packaged-goods business, but that is changing. We are slowly moving forward."

Compact disc sales have slipped for several reasons, not all of them related to piracy or online music swapping. Critics complain that there is a dearth of blockbuster acts these days and that those with hits, like Britney Spears, often have short-lived careers. And with the average price of a compact disc at $14.21, they contend that music is simply too expensive for frequent purchases.

Or perhaps not

But Hilary B. Rosen, chief executive of the Recording Industry Association of America, countered that a recent study by the association found that only 3 percent of the consumers polled said they were buying less music because prices were too high.

I think the music companies are doomed. Charles Mann said in Wired last month that he wasn't sure the big music companies would last out the year, and although I am probably not quite that negative on them, the more I think about it, the more it looks to be something like that to me too. The only reason for a small number of large monolithic music companies to exist is because distribution was formerly a hugely expensive business, which was why a packaged-goods model could work. This is clearly no longer so. All the other things that the music business does (recording, promotion etc) is probably better done by a much larger number of smaller companies. And it may be that music will exist as a stand alone product for much longer. It may be something that is more usually integrated into the other things you buy, be they DVDs, video games, or whatever. Certainly the state of affairs where you buy a predesigned package of a few songs is now a thing of the past. As the article alludes, the biggest issue may be the unwinding of the enormous legal legacy that goes with the status quo. However, this must be done. If it doesn't, new music that is licenced by different rules may simply overwhelm what is there already.

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