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Does 2012 bring the end of the CD?

As the music industry as a whole struggles in a down economy and direct download business models like iTunes flourish, the compact disc, which was commercially introduced in 1982, has the appearance of going the way of vinyl.

In 2007, CDs accounted for 90 percent of album sales in the United States, with digital accounting for the other 10 percent. Just two years later, the sales of CDs decreased to 79 percent and digital sales increase to 20 percent, and the remaining percentage point being made up of vinyl and other media.

A report by Side-Line music magazine has cited that a number of anonymous music industry insiders who confirmed that the major labels are planning to stop pressing new CDs by the end of next year, if not sooner.istock_000009422052xsmall

The main reason is that CDs cost money to create, store, and distribute, therefore shifting to all-digital distribution will free up more resources for marketing and other parts of the business. There is however one problem with the notion of killing the CDs. Labels are still making money off of them.

It would seem that record labels have shown no desire to ditch the CD. The format still accounts for most sales revenue. It also appears that labels have been able to encourage the development of new digital business models while enjoying the considerable revenue CD sales provide.

Digital download and subscription services may indeed be eroding away at the CD’s dominance. However, a report by Gartner predicts that CD and LP sales will still amount to $10 billion in 2015. Although online music revenue is making a big jump, it is still trailing physical media, in the form of CDs, with a projected $7.7 billion. It would appear that record labels are unlikely to kill of a major money-maker just yet.

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Address: Replication Centre, Gleniffer House, 2 Hall Road, Rochford, Essex, SS4 1NN.    Tel: 01702 530 357    Email: info@replicationcentre.co.uk