News
 

Bookmark and Share

(0) 

The music industry must move away from the retail CD as its primary revenue generator before Christmas 2009, according to Gartner. Gartner said that reliance on revenue from the sale of prerecorded CDs is hindering the music industry from fully embracing online distribution opportunities.

In 2007, online distribution represented about 23% of revenue in the U.S, and about 15% worldwide. Gartner said that while the music industry’s reliance on the disc worked well from 1985 though the U.S. market’s revenue peak in 2000, CD sales are now dropping rapidly in major markets worldwide and are unlikely to regain market share. As a percentage of total revenue in the U.S. market, physical media (CDs, LPs, DVD-A and so on) have gone from 91% of revenue in 2005 to 77% in 2007 and there is also evidence that physical retailers are even reducing the physical floor space dedicated to CDs.

Enabling the transition away from retail music CDs toward online distribution is now in sight, given that 77% of U.S. households (a total of 96 million connections) will have broadband connections by 2012. Beyond these consumers, the alternative distribution afforded by Wi-Fi-enabled notebooks and rapidly improving media-enabled mobile phones pose opportunities that provide multiple paths for marketing, promotion and distribution outside the consumer’s home.

“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,” said Mike McGuire, research vice president at Gartner.

By eliminating the cost of the CDs through a new burn-on-demand model, labels could cut out the expense of trying to anticipate demand and reduce costs associated with shipping. Songs or albums would always be distributed online first, leveraging the burgeoning social network sector as awareness and promotional tools to drive sales at online sites, and the growing number of mobile music services.

“The industry's comfort with past marketing and promotional practices centered on CD launches is ingrained and difficult to give up. But the reality is that digital natives and immigrants are more interested in convenience and choice,” said Mr. McGuire. “This is not to say that the physical CD would disappear altogether. Rather, it could shift to being a promotional tool to be sold or given away at concerts for example.”

Tags: CD

Discussion

Comments currently: 0

Add your Comment




Latest News

Monday, April 14, 2014

8:23 am | Microsoft Vows to Release Xbox 360 Emulator for Xbox One. Microsoft Xbox One May Gain Compatibility with Xbox 360 Games

Tuesday, April 1, 2014

10:39 am | Microsoft Reveals Kinect for Windows v2 Hardware. Launch of New Kinect for Windows Approaches

Tuesday, March 25, 2014

1:57 pm | Facebook to Acquire Virtual Reality Pioneer, Oculus VR. Facebook Considers Virtual Reality as Next-Gen Social Platform

1:35 pm | Intel Acquires Maker of Wearable Computing Devices. Basis Science Becomes Fully-Owned Subsidiary of Intel

Monday, March 24, 2014

10:53 pm | Global UHD TV Shipments Total 1.6 Million Units in 2013 – Analysts. China Ahead of the Whole World with 4K TV Adoption

10:40 pm | Crytek to Adopt AMD Mantle Mantle API for CryEngine. Leading Game Developer Adopts AMD Mantle

9:08 pm | Microsoft Unleashes DirectX 12: One API for PCs, Mobile Gadgets and Xbox One. Microsoft Promises Increased Performance, New Features with DirectX 12

3:33 pm | PowerVR Wizard: Imagination Reveals World’s First Ray-Tracing GPU IP for Mobile Devices. Imagination Technologies Brings Ray-Tracing, Hybrid Rendering Modes to Smartphones and Tablets

2:00 pm | Nokia Now Expects to Close Deal with Microsoft in Q2. Sale of Nokia’s Division to Close Next Month