Does Betting On The CD Still Make Sense?

from the depends-on-who-you-talk-to dept

Wed, Jan 17th 2007 9:57am — Mike Masnick

With so much focus on the digital distribution methods of music these days, it's interesting to see that many are still believers in the good old fashioned CD. It's true that CDs are still a huge (the vast majority) portion of how the recording industry makes its money, but that doesn't mean it will always stay that way. It's interesting to see, though, in two separate interviews, claims that the CD is here to stay. First, JD Lasica has an interview with Russ Solomon, the founder of Tower Records, the legendary record store that's closing up shop. As we noted when that announcement came through, Tower's biggest problem was not recognizing that the market had shifted out from under them -- and it wasn't just digital distribution that was the issue. It was the fact that music, on its own, had become a loss leader for other goods, and if you were just in the business of selling music, you were in trouble. However, Solomon insists that there's no end of an era. He still believes CDs make good business sense, and it sounds as though he's even interested in opening up yet another CD store.

Solomon's comments are echoed by Patrick McNamara in another interview (found via Wired's Listening Post blog), saying that, while digital is the future, there will "always" be people who want "to hold a CD, to read the liner notes, to build a traditional music collection." If anything, though, that should be viewed as an opportunity, not a threat. If the retailers stopped thinking of themselves as being in the business of selling tangible things with music on it, and focused on selling the overall music experience, they might have more of a future. Certainly, there are some record stores who have figured this out and have adjusted their business models in a way that offers new opportunities. Betting on selling "CDs" doesn't seem like such a good idea. However, selling a more complete service of providing a musical experience will always have some potential.

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42 Comments

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Bumbling old fool, 17 Jan 2007 @ 10:21am

Tower's biggest problem
Towers biggest problem is wholesale CD pricing.

If it was a reasonable price (like it was when Tower was first established) then they would still be doing wonderful business. Unfortunately, the Studios are pricing their own retailers out of business.

Why on earth would a CD be a loss leader? Because consumers will not pay enough to purchase it. The consumers have spoken, the consumers are speaking. The shit is overpriced, and they dont like it.

I ctually have sympathy for Tower. They are a victim of the RIAAs greed. (but I abandoned the music industry)
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Patrick, 17 Jan 2007 @ 10:26am

Cds are going nowhere
I too believe that CDs are not on the way out as much as some would like to think. Until there is a real reason for me to go all digital I will still go every tuesday to buy my new music. The current download model is still flawed in that the only real benefit to buying online is either instant gratification or the desire to only purchase one song and not an entire record. I have endulged in both types of purchases but the vast majority of my music dollar is still spent on entire albums. The current download structure provides me no incentive to purchase electronically. I get no art no cd, nothing solid at all and the cost is the same. Basically I am helping the record companies with higher margins but what exactly do I get out of it. Until download prices drop enough to overcome my desire(and I am sure I am not alone on this) to have a tangible CD I think CDs are safe. Record stores on the other hand are a thing of the past.
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- Dave, 17 Jan 2007 @ 11:30am
  
  Re: Cds are going nowhere
  When you buy mp3s online you actually do get a digital image of the album artwork. You can also get pretty much any song lyric you want off the web too. So, why should we should chop down our forests for your liner notes, and create more smog by producing the plastic that makes cd's? Also, itunes offers albums at about $10 each, but cd's are closer to $20 each.... so its half the price, you save the environment, and you get all the extras like liner notes and album art. CD's on the other hand are not safe now that there is spyware on the copy-protection. Plus, CD's are bad because they scratch, peal, and get lost all the time. CD's have already gone the way of tapes. By creating more of an mp3 culture, and distributing (legally) music over the web, we can destroy the record industry, which has been stealing money from hard working artists for decades. With free production, distribution, and marketing, there is no need for these companies. Without them prices will drop and the artists will get their fare share.
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- DittoBox, 17 Jan 2007 @ 11:40am
  
  Re: Cds are going nowhere
  I still buy CDs because they're —for the most part non DRM'd— lossless audio versions in decent quality (44khz isn't bad...24/96 would be better but most people don't even have 24/96 capable equipment)
  
  If studios began selling FLAC versions I'd go that route instead, and I'd likely spend *tons* more money on music (like 10-20 times as much).
  
  128kbps, DRM'd iTunes AAC songs just suck...that's marginally a preview copy if you ask me. Not playable in anything but an iPod even un-DRM'd. A buck a song for something that sounds like it's being played out of dead cat? I think not.
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James, 17 Jan 2007 @ 10:26am

Of course CDs are still good business...
..they dont' cost much to manufacture and they are still HORRIBLY over-priced.

My guess is.. ppl still buy them because even w/some form of moronic DRM (which if you have any sense at all can be avoided), they are the easiest to RIP into MP3s and do as you wish w/them where as anything from crAPPLE and others in digital form is basically crippleware.

Therefore they are the most desireable (read least annoying) of the choices available.
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The infamous Joe, 17 Jan 2007 @ 10:30am

Thanks, Mike.
Way to go calling CD's old fashioned and making me feel old.
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Michael Long, 17 Jan 2007 @ 10:30am

Enough?
There may always be people who want "to hold a CD, to read the liner notes, to build a traditional music collection." But that brings us rather quickly to the question, "Are there ENOUGH people who want to do so?"

I mean, fundamentally, this is the the reason that Tower went out of business in the first place. A bricks and mortar store requires that you have a large selection at decent prices, with a good turnover. Leave out the first two and people won't go. Leave out the later and it's impossible to make a profit.

Or is this to become that oft-fabled place where we no longer really buy the CD, and the future "Tower" becomes nothing more than a band's t-shirt distributor...
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Ron, 17 Jan 2007 @ 10:37am

Still Buying
Until I can get my music collection into a form that works in my truck, where I spend several hours a day, I will still be buying CD's. I can't play my iTunes collection in my truck; it only has a CD player. Can't listen to my MP3 player because you can't wear headphones while driving (and you shouldn't even if you could). Plus, I get liner notes, a wider selection than is on any one music service (I get a lot of used CD's of things that were only marginal successes but show lots of talent). It's a shame Tower lost out. I enjoyed going into the Columbus and Bay store in SF when I was in high school. A great selection of interesting music.
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- TX CHL Instructor (profile), 17 Jan 2007 @ 11:01am
  
  Re: Still Buying
  "Can't listen to my MP3 player because you can't wear headphones while driving"
  Get yourself a converter that plugs into the headphone jack and transmits to your FM radio. The are available for around $20.
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  - Derek, 17 Jan 2007 @ 11:08am
    
    Re: Re: Still Buying
    "Get yourself a converter that plugs into the headphone jack and transmits to your FM radio. The are available for around $20."
    
    You may need to geekify it by upping the transmission power. Otherwise general radio static often overpowers your transmitter if you are in an area with quite a bit of radio noise.
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  - whargoul, 17 Jan 2007 @ 11:18am
    
    Re: Re: Still Buying
    I haven't tried one, but I've heard that they're not very good. Luckily my truck has both a CD changer and tape player, so I went out a bought a cassette-converter that plugs into the head-phone jack of my MP3 player - so far it's been the best investment I've made since the MP3 player.
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    - Bumbling old fool, 17 Jan 2007 @ 11:26am
      
      Re: Re: Re: Still Buying
      I keep both in my truck. The transmitter is better until the battery runs out.
      
      other than that, the cassette deck thing is ok... It just locks up alot and spits out the tape.
      
      I've never had a reception problem.
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      - Derek, 17 Jan 2007 @ 11:29am
        
        Re: Re: Re: Re: Still Buying
        Where I live and work there is a lot of radio noise from unshielded oilfield equipment, crappy radio towers, etc. I geeked my transmitter and it started working beautifully (usually).
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    - Corrupt, 17 Jan 2007 @ 2:30pm
      
      Re: Re: Re: Still Buying
      The quality is better than that of FM Broadcast radio, and near cd quality. Isn't that good enough?
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    - Karl, 17 Jan 2007 @ 11:16pm
      
      Re: Re: Re: Still Buying
      There are decks out there that have aux imputs on tjhe faceplate. Or you gan get a deck that plays mp3 formated cds holds around 200 songs depending on bitrates. most cd players have that ability now.
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- Corrupt, 17 Jan 2007 @ 2:29pm
  
  Re: Still Buying - FM Transmitter
  If you have an FM Radio just get a FM Transmitter for an Mp3 player.
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- get digital, 17 Jan 2007 @ 2:49pm
  
  Re: Still Buying
  I burn the music I want to hear in my van, to a CD. I get a much wider selection, get just the songs I want to hear and don't have to listen constantly to one band. I can also frequently get many more songs on a CD than comes with a 1-band only purchased CD.
  
  Whether I get my songs from a puchased CD or from ITMS is really immaterial to how I listen to the music afterwards. Back when cassette was popular, I bought everything on vinyl and then copied what I wanted to tape.
  
  To claim that you have to buy CDs to play them in your pickup is just foolish. Why would I want my "masters" to get scratched up with normal handling?
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Botch, 17 Jan 2007 @ 10:49am

I Love Albums
For any artist or album that truly enjoy, I will buy the CD, *even* if I can listen to it on my Rhapsody account. I do enjoy the insert, the info, the art, the hard copy, etc.

That said, new CDs are insanely overpriced. I buy a lot of albums used or on discount.

I guess I'm looking forward to the time when CDs are still around, but priced more compellingly.
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mmrtnt (profile), 17 Jan 2007 @ 10:55am

I Like CDs
I'm one of those people who likes having the CDs. I make mixes and put them on my MP3 player and take them everywhere.

Over the course of a year, I'd probably buy hundreds of new CDs if they were ~$5 apiece.
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PhysicsGuy, 17 Jan 2007 @ 11:16am

another continuous loop of links... both the links on the page lead to the previous article. you can keep clicking forward and cycle through this and spanktravision :P
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Ron (profile), 17 Jan 2007 @ 11:45am

Sill Buying ... More
Thanks for the options. What I'd rather have is a "changer" into which I can plug 3,4,5, more SD cards, each with a pile of MP3 albums. The I could select across a pile of music. Or, maybe a way to carry my iTunes library into the truck. But, you still don't get liner notes, artwork, etc.
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comboman, 17 Jan 2007 @ 11:56am

CDs as backup
My music CDs are in a box in my basement. They're not being used, but they're also not going away. I consider them by backup after having copied them to MP3s several years ago. If I need to recreate those MP3s or switch to some other format (Ogg, AAC, WMA, whatever) then I have the CDs as a backup in an uncompressed format. As for artwork/liner notes, CDs pale in comparison to LPs.
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- Dave, 17 Jan 2007 @ 1:16pm
  
  Re: CDs as backup
  You can back up digital music to CD in digital format, and save space. A single digital music CD can old the from 2 to 7 or more standard music CDs.
  
  If you use DVDs, or other formats you can get even a higher physical space savings
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Cerberus, 17 Jan 2007 @ 12:11pm

Liner notes? Are you serious?
Seriously? People buy CDs for liner notes? WTF? It's music that I buy, not a book. I could care less what the artist has to say about his friends, what he was thinking when he wrote the song, where he was when the lyric popped into his head, etc. As for needing something "in hand"...burn your downloads to CD. I have started buying MORE music because of a digital. I hated buying CDs that had 2 songs on them that I wanted, so I wouldn't. I'd rather risk the RIAA than to pay $15 for 2 songs. Now, I buy the songs I want and they are actually making money off me. I still buy entire CDs digitally, but even they are usually cheaper than a CD bought in a store. $9.99 for most albums on iTunes beats the heck out of Best Buy's $14.99 price for the same CD.
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Rabid Wolverine, 17 Jan 2007 @ 12:28pm

CD's
I still have vinyl...

Complete with white noise, pops and scratches.

They still sound better than a D@$# CD!

Something about music being analog...
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- OD, 17 Jan 2007 @ 12:46pm
  
  Re: CD's
  I still buy new vinyl. I rarely buy whole CD's, but I do see the point in having something tangible in your hand. Until the record companies start going to a digital delivery system that either gives you an electronic package that contains something that you can't get from downloading, I don't see CD's disappearing. Even a universal card (ie. SD cards) with accompanying printed material may hold some merit.
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- Aaron, 13 Jun 2007 @ 12:36pm
  
  Re: CD's
  Right on, I love vinyl records, I collect them, almost any I can find anymore I buy, because they are so hard to find
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Boris, 17 Jan 2007 @ 12:34pm

I buy cds for the music, not the artwork. Uncompressed sound means a lot to me. Also having a hard backup is nice too.
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Not Dave, 17 Jan 2007 @ 12:35pm

Dave is going nowhere
Last time I checked iTunes gives you MP3 formatted songs that you have to stock on your harddisk and back up and make sure you dont loose it which means burning to disk and then labeling said disk and putting it in a case to protect it

So iTunes has not saved anyone anything and the format is lossy
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- Corrupt, 17 Jan 2007 @ 2:32pm
  
  Re: Dave is going nowhere
  Uhh, last time I checked iTunes gives you music in AAC with DRM (Copy Protection). So it won't work on other computers or anything but an iPod. Not to mention many digital audio players only play mp3 (thus the name).
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Chris I, 17 Jan 2007 @ 12:46pm

CDs for portability
I buy only cds that do not contain DRM. If I buy something new, I can usually find it for $9.99 - $14.99 (this is Canadian funds). I'm not sure why everybody else pays so much more than that (in US funds, i am assuming).

For used, you can usually get three or four albums for $15.99, which is really an unbeatable deal. Most of the music available through a used music shop is not available to a Linux user with a portable ogg vorbis player (iriver), if available in digital format at all (The Beatles, for example. Although this has changed, i think)

As with comboman above, I keep all cds in a box in the basement, just in case I need a new format some day. Although discs lately I have been storing on an external hard drive as FLAC, so a short script could batch convert them to any future format.

Why would I pay the same (or more, compared to used) for iTunes music I could only play on my Mac, and not on my portable player?
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Anonymous Coward, 17 Jan 2007 @ 1:34pm

I don't understand why people are so hung up over CD's. First, they are NOT lossless. They are encoded at an extremely high (and wasteful) bitrate. Most people that know the difference between CD's and MP3 are also aware of the fact that there are a number of other music formats, such as DVD-Audio, SACD, etc. All of which are "more lossless" than CD's, but are still not equivalent to the original.

There is loss from the microphone being used to record the music failing to respond to every little nuance of sound 100% accurately. There are losses in the digitization of that sound, etc etc.

What it boils down to is what is ACCEPTABLE loss in music quality. 128kbps AAC is considered to be acceptable quality for a lot of people. Personally I dislike AAC, and despise DRM of any form. I keep my music at 320kbps MP3, which to my ears (which are better than most everyone I know) is indistinguishable from CD's, at least on my sub-$1000 playback equipment. As for headphone or car-audio, even the best equipment has too much distortion and lack of fidelity to tell the difference. I don't care how much car-audio buffs want to dispute it, but even a $50,000 car audio system sounds like its being played in a tin can...because it IS. Concert hall and mixing studio aside, 320kbps MP3 is as good as CD. And you can still store 7-8 CD's on the same space as one, and if you back up your collection as I do, in WinRAR, splitting the files to exactly the space of 1 DVD and burning it onto DVDs at dozens of CD's per DVD.
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- SFGary, 17 Jan 2007 @ 4:54pm
  
  Re:
  I would take an educated bet that over 95%, possibly over 98% of people would not be able to tell the difference if I did a blind demo of 128AAC vs CD/PCM in a sound room with high quality audio gear. I have been in demos of codecs against PCM where recording artists and recording engineers would claim to hear the difference but identify the wrong source.
  
  If the source of the audio is excellent the output will be excellent but garbage in is also garbage out, faithfully compressed.
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Mr. Live Recorder, 17 Jan 2007 @ 2:25pm

Until CDs become easy to record live music on (like tapes are) they are in danger of becoming a dinosaur. At my job, I have a lot of instances where I need to record something casually, spur of the moment. It's annoying that a cassette tape is still my best option.
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- Corrupt, 17 Jan 2007 @ 2:35pm
  
  Re: Recording on the spot
  I recommend getting an iRiver or similar mp3 player with recording. They have a built in microphone and line-in capabilities. They let you customize the file they record to, but usually they allow mp3 or wav. Much more convenient than tape and far easier to get on the computer.
  
  Personally though, I hate cassette tapes. I think they degrade too quickly and sound crappy when being recorded by anyone but a commercial production machine.
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|333173|3|_||3, 17 Jan 2007 @ 5:18pm

iTunes
AAC is better than a standard MP3 for the same bitrate, but iTunes has an export function which allows you to export to MP3 if you need to (for use on a second MP3 player perhaps) Also the statement that only an iPod or iTunes can play AAC encoded M4A files is not true, since there is also pod player, which plays off and iPod, and is not such a memory hog as iTunes.
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Joe Schmoe, 17 Jan 2007 @ 8:40pm

"...but iTunes has an export function which allows you to export to MP3 ..."

Does not. It will only export mp3's as mp3's. iTunes purchases must be burned as a standard CD and re-ripped.
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Joe Schmoe, 17 Jan 2007 @ 8:43pm

I take half of that back. It'll probably export AAC's that you've ripped from your CD's back as mp3. Confirm eh?
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Anonymous Coward, 18 Jan 2007 @ 12:25pm

I still have vinyl...

Complete with white noise, pops and scratches.

They still sound better than a D@$# CD!

Something about music being analog...

am glad to hear im not the only one :-)

i do buy cds too but theres something about vinyl that i enjoy so much more.

The sound quality, the packaging, the varied presentation of the disc itself (coloured discs, picture discs, etchings on one side etc) all give it a special quality you'd never get from an mp3.

One particular album i own (sad as it may be) i could spend a good few minutes just looking at before even considering pulling out the first disc and playing it. It comes in a lovely book style package with 3 discs, one of which has an etching on one side and the artwork is amazing. Beats trawling through huge lists of text to find an mp3 anyday. The second i finished listening to the album on vinyl for the first time i immediately removed the mp3 copy i'd downloaded to try before i buy as it's an insult to the package as a whole.
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Bob (profile), 20 Jan 2007 @ 4:36am

CDs will be around for a long time
It's amazing how many people are not even aware that what they buy through iTunes and other music download sevices is NOT CD quaility music.

There is a certain convenience to music downloads from your home, and the flexibility to buy only one song instead of an entire album is nice.. But at a buck or more per tune, it's no real deal over CD pricing if you shop carefully enough.
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buymp3iscool, 6 Feb 2007 @ 3:09pm

i think the best way to buy music is emusic.com , no drm, CHEAPER music and relativity good audio quality.

for the price, is very, very good.
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joly, 6 Feb 2007 @ 9:28pm

tower's demise
If you actuakky watch the inteview with Mr. Solomon. He explains quite succintly what led to Tower's demise. Rather than going public to finance expansion, they borrowed. They heavily invested in certain foreign countries, like Argentina, where the economies tanked. They had to sell off good earners like Japan to keep up debt payments. The USA stores couldn't cover the remaining debt. The banks put in dumbass management that centralized control, robbing the stores of the local iniative that had been their main asset. And the record labels ceased issuing singles, and kept CD's too expensive, pricing out the kids upon which the business' growth was traditionally based.

He suggests the effect of digital downloading was minimal. It still represents less than 10% of the whole business.
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