Will the compact disc give in to music streaming and download services

Introduction

Today, downloads of digital music exceeds CD sales. According to the Forrester Research report, the last eight years has seen a steady increase in digital music sales; which will lead to an expected $4.8 billion globally by 2012. (Quinn: 13) In contrast, CD sales are expected to drop from 80% of total global music sales in 2006 to $3.8 billion globally in 2012, a full $1 billion below that of digital sales. (France: 4) The Recording Industry Association of America (RIAA) suggests that the decline in CD sales of 21% between 2008 and 2009 is as a result of a general decline in CD shipments and an increase in digital music sales by 20.2% for albums and 9.2% for singles. (Medich: 35) Furthermore, Australia has indicated a notable 78% decline in CD sales in the period 2003 to 2008. As such, digital music is seen as the logistical mass market for the music industry. The ease of access that digital media has provided to consumers is subsequently eliminating CD sales as what once was the pre-eminent revenue vehicle of the music industry. For example, in 2006 EMI (the world's fourth-biggest recorded-music company) offered a few teenagers a pile of free CDs at a closed focus group session; only to learn that the teenagers had no interest in CDs anymore. (Hoek: 54-57) As a result, the declining rate of CD sales has prompted retailers like Walmart to begin cutting the amount of physical shelf space allocated to music. In 2008 alone, 30% of shelf space dedicated to music in the USA was cut. In South Africa the decline has been slowed by expensive internet service requirement and legislative factors. (Alderman: 7)

Discussion

You had to know that the CD wasnot going to last forever. We've seen 78s, vinyl, 8-track tape, and (for the most part) cassettes come and go. Why should the pre-recorded music CD be any different? Side-Line Music Magazine turned heads last week when it reported that the major record labels plan to abandon the CD by the end of next year — if not sooner. The online music magazine didn't get a single music company to go on the record with its bold claim, though it later updated its story to point out that several label employees did approach the magazine to confirm that plans do exist to nix the compact disc. (Hau: 6)

We should have seen this coming. The first “a-ha moment” came during the first half of 2008, when industry sales tracker NPD Group reported that Apple (AAPL) overtook Walmart (WMT) to be the country's largest retailer of music. (Allan: 18) For those scoring at home, Apple doesn't sell CDs. It's all about digital distribution through iTunes Music Store.

We had already seen the demise of the traditional record stores before that. Tower Records filed for Chapter 11 bankruptcy protection in 2004 — and again in 2006. Sam Goody parent Musicland also buckled under pressure. (Chaning: 2-3)

The fadeout of ...