Could the CD could be the future of the download market
Thursday June 9, 2011
Could bundling downloads with CDs help maintain music sales on
the High Street?
We've heard lots about the impact of piracy on music sales the
past few years. We've heard lots about the shift to digital.
Less has been said about the shrinkage of retail space devoted
Yet it's no coincidence that the British buy more recorded music
per head than music fans anywhere else when historically the UK has
had the most diverse and numerous music retail market in the
Give people more places to buy music and because music is so
often an impulse buy, they tend to buy more. A lot more.
That's why music sales fall when the retail space devoted to
In other words the shrinkage of retail space devoted to music is
not only an effect of falling music sales, it's also a cause of
In the UK the rule of thumb is that when a store closes or pulls
out of music half of the shop's sales shift to neighbouring stores.
The other half simply disappears.
As CD sales continue their gentle decline and prices are lower
than ever - an average £7.86 per CD this year - retailers are
running out of reasons to maintain their commitment to the
five-inch silver disc.
Space devoted to music is set to shrink further.
If that happens, the still significant percentage of buyers who
are only interested in physical product will simply stop
Suppliers may console themselves that some music fans will
embrace digital, but the digital market has its own problems, not
least the virtual monopoly of iTunes.
At this point physical retailers have no realistic prospect of
competing with the iTunes leviathan.
Record labels find themselves increasingly exposed to a single
customer now worth more than Microsoft and Intel combined.
And those customers still wedded to physical product have no
easy bridge to the convenience and accessibility of the MP3.
No wonder there is increasing talk of creating a new hybrid
format which combines the sound quality and physicality of the CD -
and importantly can be racked on retail shelves - and the
advantages of the download.
There is already a precedent for it: many vinyl albums
come with download codes. Why not a CD with a download code? And
maybe some additional content - lyrics for instance?
The obvious counter to this is that CDs can already easily be
ripped to a PC or Mac. But why not make the implicit benefit of
being able to rip CD an explicit offer of a download.
Instead of just accepting that fans will take a copy, why not
give it to them?
With the recent Hargreaves Review suggesting private copying be
made legal, why not try and turn the inevitable into a
The compact disc is the best part of 30 years old. Since its
launch in the early Eighties there has been no meaningful
innovation. And yet year after year sales figures from across the
entertainment sector show that innovation sells. Downloads grow
faster than CD sales. Blu ray's growth outstrips DVD. Newer console
platforms like Xbox 360 and PS3 do better than the established
Could an innovative repackaging of the CD with download rights
be the key to keeping physical music sales on the High Street,
giving retailers the opportunity to compete with iTunes in the
transition to digital and offering a convenient bridge for
consumers to the benefits of the MP3 world?
It would be ironic if the future of the music retail business
had been sitting right underneath our noses these past 10 years -
the compact disc.
There will certainly be sceptics. Despite 10 years of decline,
the temptation to do nothing seems remarkably strong. Yet do
nothing and the status of music as a mass market retail product
will continue to tail away.