The music industry has changed a phenomenal amount over the last few years, with the emergence of digital media and mp3 players forcing the record labels to evolve. However, they aren’t evolving quick enough for some, prompting Gartner to call for the death of the CD, with record labels instead embracing digital formats.

The combination of the Internet and the mp3 player has meant big changes to the way music is sold, distributed and played over the last few years. Digital music formats are increasingly important to both consumers and the record companies trying to make money in the face of increasing piracy.

But at this point in time, physical formats are also still very important. While sales of the formats such as CDs and vinyl has dropped massively, from a 91 percent share of the U.S. market in 2005 to a 77 percent share in 2007, that 77 percent means most people are still choosing physical formats over their digital alternatives.

However, this may be because the record companies haven’t wholly embraced the digital revolution, trying to maintain the status quo, selling CD albums to people for a premium. This has lead the research company, Gartner, to call for the music industry to adopt a “digital first” strategy with the focus clearly on Web-based distribution.

Mike McGuire, research vice president at Gartner said in a statement:

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.

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.

I agree that the major record labels should be doing more to embrace digital distribution models, and investing more in pushing digital formats onto consumers. However, I still don’t think we have a situation where we can move CDs to the sidelines as purely an on-demand publishing affair.

There are still many people who don’t have broadband, or access to a computer and wouldn’t be able to get hold of music easily if digital formats became the standard. There are also millions of people who still like to own a physical copy of an album in their hands, even if they do then transfer it to their mp3 player.

The future, both for music and movies, is definitely digital but I think you have to let market forces dictate when any wholesale switch is made. All the while physical formats still maintain the majority share of how music is sold, I don’t think there’s the justification to kill off the CD. It will happen eventually but the time isn’t right quite yet.

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Entry was posted on Wednesday, December 24th, 2008 at 12:15 am under Music, Opinion, Technology.

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