Sales of CDs are falling faster than you can say iPod
By John Nova Lomax
Last month, EMI Music Chairman and Chief Executive Alain Levy walked up to a podium at the London Business School and told an assemblage of bright-eyed young titans of tomorrow something that, in all likelihood, they already knew full well.
"The CD as it is right now is dead," he said. As usual, the big brass at the very pinnacle of the industry seemed the last to know. Levy's remark came towards the end of a year in which the 89-store national retail chain Tower Records went bankrupt and announced that all of its stores will soon shutter. Online giant iTunes cracked the top ten music retail outlets for the first time ever, and the only places CDs actually sold well were stores like Target, Best Buy and Wal-Mart.
And yet it remains too early to say that the CD is dead, as in buried in a casket underground. It's certainly terminally ill, condemned, a dead medium walking. Indeed, sales of CDs still dwarf digital sales, to the tune of $6.45 billion to $945 million worldwide. But CD sales are sliding, a little faster and steeper every year. People tend to buy less music as they grow older, and the CD audience is pretty much exclusively aged 30 and up. Very few teenagers buy CDs, and what's more, just about every music retailer will tell you that those who do will end up burning that CD for a few friends.
CD sales fell a further 4 percent from 2005's numbers in the first half of 2006, according to figures cited in the UK newspaper The Guardian. "We figure the value of CD sales will be 50 percent less in three years than it is now," said Ged Doherty, the UK head of the Sony BMG label group. "We predict digital growth of 25 percent per year, but it is not enough to replace the loss from falling CD sales. By 2010 we will be 30 percent behind in terms of revenues. We have to reinvent."
As Fats Domino once sang, "Ain't that a shame." But the record labels brought all this on themselves. Looking back over the past 45 years, it is now plain that the move from vinyl to CD was not the bold step forward we were told it would be. CDs were not scratch-proof (as the labels had us believe early on), nor was the sound an improvement on vinyl -- indeed, most audiophiles argue that their sound is inferior. Jewel cases were ridiculously brittle -- they were rendered useless by a drop of four feet or so -- and they were hard to open, as were the huge and idiotic long-boxes CDs were packaged in well into the 1990s. Their visual appeal was almost always minimal and yet they took up what now seems like a lot of shelf space.
In fact, CDs were really just another example of how the music business has been about profit, rather than music, for a long time. The move from vinyl to CD was a top-down decision imposed on music fans and retailers, who had to spend huge sums refitting their stores. The labels saw that they could both charge roughly double the money for new music and re-release their back catalog on the new format.
"At the time, the labels owned the CD technology," says Greg Ellis, an HP contributor and 30-plus-year veteran of the music business who currently works at local label Blue Corn. "They justified their high prices with that drug company logic -- that they needed more money for 'research and development' and stuff like that, which was bullshit after the first couple of mega-hit CDs. Downloading caused them to lose control of the technology, and so they fought it until Apple showed them a way to make money off of it. Not as much money, but it was either that or nothing."
"The record labels' main business model is to sell plastic," says Garrett Kamps, managing editor at Rhapsody Music Services in the San Francisco area and an occasional Houston Press contributor. "They manufacture and distribute plastic. Of course they have to put something on the plastic to make it more appealing -- but the music is secondary."
All of this turmoil at the top can be seen clearly at street level here in Houston. The SoundWaves chain has contracted from nine stores to seven, and in some of those that remain open -- notably the Montrose location -- the CD racks diminish astonishingly, replaced by coffee bars and shelves of surfing accessories. But nowhere is the steep falloff of CD sales more apparent than in the Shepherd Plaza area. That district was once something like the Flower Alley of music retail, home to CD-heavy stores such as Cactus, CD Warehouse, Wherehouse and Record Rack, not to mention vinyl-only or vinyl-heavy stores like Black Dog and Sound Exchange, blocks away at Richmond and Hazard. Cactus's closure this year capped a dramatic five-year free-fall. Today, only Black Dog and Sound Exchange, the niche-store/vinyl specialists, remain.
In five years or less, the CD really will be dead, another music delivery system chucked on the scrap-heap with the 78, the 8-track and the cassette.
Today, CDs are selling briskly only at stores like Best Buy, where they are used as artificially priced loss-leaders to entice customers into buying some other (vastly more expensive) item. "CDs have gone from being a destination purchase to an impulse purchase," says Thomas Escalante, co-owner of Midtown record store/ gift shop/art gallery Sig's Lagoon. "Music is probably 50 percent of my business, whereas ten years ago it would have been probably 90. And within that 50 percent, there's probably only about 5 or 10 percent who call me and ask me if a CD is out and come down to get it. These days, more often, it's like they are already in the shop and they see the CD and go, 'Oh wow, that's out? I'll go ahead and get it. Or maybe I'll go next door and get a beer instead.' It's an impulse buy now -- that's why CDs sell so well at Starbucks.
"Think back to ten or 15 years ago," Escalante continues. "There used to be these record release parties at record stores at midnight on the release date, and people would come out in droves. But if you did that now, I would be surprised if anyone would show up."
While the CD's passing is not to be lamented, this is not merely the trading in of a little-beloved old format for new. Today, music is no longer something you must physically seek out and pay for, hold in your hands and feed into a machine of some sort. You no longer need voluminous shelf space, nor is there even one uniform playback device or one file format. And all of these developments, coupled with the ease of access to millions and millions of songs, have eroded music's communal nature.
Indeed, some believe that the entire world of music has been devalued by the very fact of its ease of access. A study at the University of Leicester in England earlier this year came to that very conclusion. Music psychologist Dr. Adrian North and his team monitored 346 music fans over the course of two weeks, and they concluded that music had become a commodity and had "lost its aura" of magic. "In the 19th century, music was seen as a highly valued treasure with fundamental and near-mystical powers of human communication," North told the BBC. No more: "The degree of accessibility and choice has arguably led to a rather passive attitude towards music heard in everyday life.
"The accessibility of music has meant that it is taken for granted and does not require a deep emotional commitment once associated with music appreciation."
It wasn't addressed in North's study, but a lot of people today have taken a worse than merely passive attitude toward music. Laments like this are now common: "I used to be a big music fan, but I'm not anymore. Music sucks today. All you ever hear on the radio is crap, and MTV doesn't even show videos anymore."
And there are elements of truth to some of those claims. For one thing, we really are awash in a sea of crap these days. Both the major labels and the underground are churning out lots of shoddy music, for vastly different reasons.
First, the majors are trying to service the demands placed on them by radio, which often can be boiled down to something like this: send us some more of the same crap that is sinking our whole medium, please. The people who run commercial radio have made a conscious decision to abandon musically discerning people. The managers at radio conglomerates like Clear Channel and Cumulus concede that true music fans will be listening to burned CDs, iPods or satellite radio in their cars, so today, their target audience is made up of a combination of the least-technically savvy among us and/or those who have the least interest in new music. Take a look at the ratings here in Houston. The top 20 stations are as follows: two hip-hop; four Spanish-language, one pop music; two contemporary country; and one modern rock station that often sounds stuck in the 1990s. The other ten are either news/talk outlets or "classic" stations, ranging from the solid gold soul and R&B of Majic 102 to the pop balladry of Sunny 99 to the inane '80s blather of the The Point.
Today, mainstream, terrestrial (as opposed to satellite) radio caters to rap and country fans, blue-collar immigrants and people who are some combination of poor, old, new in America or not interested in new music. The explosion of talk, sports and news radio on the AM dial is also in response to today's high-tech realities. Music's place on the radio seems destined only to shrink, and the stuff that makes it on the air is going to be very formulaic and familiar. The best places to hear new rock bands today -- at least in the old media -- are TV commercials, teen dramas like The O.C. or films like Garden State. And with each passing year, it seems more and more likely that a good chunk of America's pop, country and R&B stars will be anointed by American Idol rather than by the traditional music business machine.
The second reason for the glut of bad music is more complicated on the face of it, but it really just breaks down to simple mathematics. In any society, there are going to be a few truly talented musicians. Back in the days of vinyl and the early days of CDs (before it became ridiculously easy to make your own), for a band to have a record on the market signified something. It usually meant that they had someone in their corner who believed in them enough to help finance the recording and pressing of a record, and more often than not, it usually meant that the artist in question had some talent and had worked hard enough at developing that talent to garner a hefty financial investment from some other party. Today, any jackass with a home studio and a computer can make a record, and just about any band with a record can find some independent label to back them, and with a little luck, a blogger or two to sing their praises.
"The music industry is one of the only industries that, as the demand for what you sell decreases, production doesn't," says Kurt Brennan, co-owner of Montrose-area record store Sound Exchange. "They haven't slowed down releases or making CDs at all, even though Americans spend millions of dollars less on CDs than they did the previous year. Any other business would cut production as demand went down. And yet every ten years, the amount of music that's available increases 15 times."
"If you look in a release book for a one-stop [CD distributor], there's thousands of CDs being released every week," says Escalante. "Can you imagine if a store bought one of everything that was released every week? Within a year you would probably circle the earth with CDs, five times."
"I guess the good thing is that there's some good stuff out there that's getting ignored right now that will be discovered in ten years," Brennan says. "But we are a store that specializes in small labels and the amount of stuff we get offered every week amazes me. It's well over a thousand, every single week. And you're just like, 'Gaaah. Another band that sounds just like Bright Eyes…Another Williamsburg hipster band…' And that whole freak folk thing has gotten ridiculous."
And with the explosion of music blogs on the Internet, many of these bands are intensely overhyped. Here's my best guess on how this happens: Some blogger with some juice among the others of his ilk is having a great day -- his rattletrap vintage Volvo passed inspection, and that foxy barista he's been chatting up at Starbucks every morning for three months has finally cracked and surrendered her digits. So the blogger drifts home in a pink cloud of joy and writes up a glowing review of the first slightly-better-than-competent Williamsburg hipster clone band CD in the stack of 15 on his desk. Some guy at Pitchfork reads it and wants to stay cutting edge, so he piles on, awarding the CD something above an 8.0 on their ten-point scale. And it's Katy-bar-the-door after that; dozens of bloggers will sing hosannahs about this unoriginal hipster band's unlimited potential and reinvention of rock and roll for the new millennium, all before any of these commentators have seen them live or even have listened to their record more than three times. The band will announce a spate of gigs opening for The Hold Steady, but already a hater parade backlash will have set in, one that is no more informed than the initial wave of hype. And then the band hits the road, where they are exposed for what they really are -- a competent indie rock band, no better or worse than the five or ten bands like that in every major American city. That's when the gust from the haters reaches hurricane force, and the band is never heard from again.
And even the best bands come up with lots of mediocre music. Because a CD holds up to 80 minutes of music, many bands feel compelled to fill them up to justify their $17.99 list price. That's a mistake, Brennan believes. "It seemed like the LP was the perfect length -- 35 or 40 minutes, you got a break when you switched sides, and bands had to edit," says Brennan. "You got their best 40 minutes. But you give them 60 or 70 minutes, and you don't have to edit as much. With attention spans seemingly getting shorter, I wonder if something an hour long can hold someone's attention."
"I'm only 36, but I feel this major generation gap," says Eef Barzelay, the frontman for the Nashville-based rock band Clem Snide. "When I was about 22, my roommate had a pretty good record collection. He was really into soul. We didn't have a TV, and after work, we'd come home and get high, smoke some cigarettes, drink a couple beers and just listen to Al Green vinyl. Just listen to it. The whole thing, like side A and then side B. And then we'd just talk, and it was one of the best times of my life. And now I don't even really listen to music. It's all on the computer, but I don't want to listen to it on the computer. I got an iPod and I just didn't like it. So now I just don't even listen to music anymore."
Every week, amid this mad, headlong rush, our collective ignorance grows exponentially. "With the amount of stuff that's out there, it's really hard to wade through it all," says Brennan. "People will go on a message board and ask if some album's any good, and then somebody else will say, 'Well, I downloaded one song and it was kinda all right.' And then that's it. Especially with downloading, it seems like you just acquire all this stuff, but do people ever get around to going back and listening? Even here, with all our mountains of promo stuff, sometimes I'll stumble across something four months after I get it that is really good."
What's more, Brennan adds, the pace of pop culture is faster than ever. "Things just move so quickly, too. Even on new releases that are right up our alley, we're gonna sell 90 percent of what we sell in the first two weeks. They come out, and then they're gone. After a month or two, people either have it or they are never gonna get it."
And there's the rub. The percentage of actual musical talent cannot keep pace with the tidal wave of mediocre music and the speed of Internet culture. In this shuffle-driven world, the golden needles are a constant while the haystack grows exponentially more immense. Kids who were rock fans who grew up in the '60s, '70s and '80s had only a few hundred new records to sift through in any given year, and unless they were fans of country, jazz or blues, not much to worry about learning from the past from before about 1965. Today's young rock fan has not just all those records to get lost in, but also the thousands coming out every week.
Sadly, all too often, today's great music often goes unheard, and we'll likely never know just how much of it sinks without a trace. "There's no quality control now," Brennan says. "You just throw it out there and hope it sticks. The good thing with digital technology is that it's so cheap, anyone can release their stuff. But the bad thing is, everybody has released their stuff."
Marshall McLuhan once famously said that "the medium is the message." He's been proven right time and time again, never more emphatically than with CD-Rs. Today, people are constantly burning CD-Rs for each other, perhaps without even playing the music. And CD-Rs -- those plain, burnable jobs available by the hundred at Office Depot -- have so little intrinsic value that you often find them scratched, mud-stained and forlorn, littering the streets. The message this medium delivers is that music has become a throwaway commodity.
"It's like they have no value," says Brennan of CD-Rs. "People chuck 'em in the back seat of the car." "I treat my song files burned to CD as I would a disposable lighter," says concert photographer and KTRU DJ Rosa Guerrero. "I keep it as long as I can but concede that I will lose it soon enough."
You'd think that people would place a greater value on the files stored on the computer at home, but then again, why should they? The files are intangible, and if something happened to them, you could probably call a friend with an external hard drive and feed a few dozen gigabytes of music into your computer in an afternoon. It wouldn't be your music collection, sure, but when you are talking tens of thousands of free songs, who's counting? "While it would stink if my computer crashed and I lost my files, it wouldn't make me want to drink myself into a stupor like losing my vinyl or CD collection would," says Guerrero.
Still, others do deeply care about their files, and that brings to mind yet another of McLuhan's maxims. Invention, he said, is the mother of necessities.
No longer are plenty of shelf space and a kick-ass home stereo enough. The digital age has birthed a plethora of new "needs." People need iPods now, and the iPod has spawned a whole cottage industry of accessories. And most people with thousands of songs on their home computers are not satisfied with the factory-issue speakers, so they go out and buy an amplifier and some more powerful speakers, then some more for another room in the house and a third set for the backyard. Then there are the more high-tech gadgets like the Sonos, a $1,000 graphing calculator-sized gizmo that will wirelessly beam all your songfiles to stand-alone speakers you can install all over your property.
Then there's the booming trade in hard drives -- 10,000 or 12,000 songs take up a lot of memory, and not having them backed up exposes you to serious risks. Back in the old days of tangible product, outside of a house fire, the sudden loss of your entire music library was an almost unthinkable occurrence. Today, a virus or crash could erase your entire music library in minutes, or it could simply erode naturally over a period of years from data rot.
Local musician Jeff Balke knows that drill all too well. "I was never anal about backing up data until a few years ago when my computer crashed and I lost about 25 percent of the information on my hard drive, including critical business files, e-mail and some music," he says. Now, Balke has two external hard drives and also backs up his critical files on a burnable DVD every month. Some savvy techies have even installed DVD players in their cars, with audio but no screens, in order to have several hundred songs to choose from on one disc.
And there's one last McLuhan maxim that is very pertinent to today: "The future of the book is the blurb." So, too, is the future of music the snippet. The 30-second song clips on iTunes can determine whether or not a potential customer will download a song, just as a great three-minute film trailer can ensure the success or doom of a film's all-important opening weekend, or snappy blurbs from just the right luminaries can enhance a book's sales potential. What's more, as Brennan said, people's attention spans are getting shorter and shorter, and music fans will sample an album today based on one song. If they don't respond to that song immediately, the rest of the album will fall back in that dreaded zone of being "so two weeks ago." Snippets have to instantly entice you to buy the song, and the song has to instantly entice you to buy the album.
Did we mention it had to happen instantly?
And as far as we've come down that road in the last few years, it's hard to imagine that we still have far to go. It's still more shocking to ponder how fast it is likely to come. Already, the iTunes model of 99-cent downloads seems to be threatened by gathering clouds on the high-tech horizon.
Garrett Kamps believes that his service and the similar Emusic.com are the way of the future. With iTunes, you buy songs for 99 cents each and can then transfer those songs a limited number of times. Not so with Rhapsody and Emusic; both of these services charge flat monthly fees of around $15 or $20 for premium services and offer access in both cases to millions of songs.
"Think of it like cable," he says, "but imagine if you got not just the shows you paid an individual fee for, you get every single show that's out there on cable, but it's up to you to decide what you want to watch. It's pretty much like you could own every CD you could ever want for a $15 subscription."
Now imagine that you can do all that on a handheld personal music player. Microsoft's much-maligned new Zune MP3 player has wireless technology -- Zune owners can zap songs back and forth from each other's players, with a few notable catches. The songs that people send you expire from your player after either three playbacks or 72 hours, whichever comes first. Many in the high-tech press have mocked Microsoft for the seeming uselessness of this feature -- who wants to "own" something with those kinds of strictures? -- but others think the computer giant might soon have the last laugh.
After all, many major American cities are working toward making themselves wireless-friendly zones, with some politicians arguing that access to wireless Internet technology is a basic human right.
Kamps's hometown of San Francisco is one such. "Imagine this scenario: San Francisco, like a lot of cities, is working on becoming a wireless city," he says. "Wireless Internet will be a public utility here, and it will be available everywhere in town. And then let's put the peanut butter with the jelly -- say you have one of our players and a subscription to our service. For $15 a month, you can have all the music in the world, at your fingertips, on the go."
So there's the future -- all of us walking around, beaming the entire known universe of music into our ears. And that will have to do until the next thing comes along.
Turns out vinyl wasn't dead after all
Even as the packaged compact disc approaches death, vinyl, the music medium it was supposed to have completely destroyed, is showing signs of a small but significant and growing comeback.
"Vinyl has totally made a comeback," says Thomas Escalante, a co-owner of Midtown record shop/novelty store Sig's Lagoon. "I've seen a big increase in sales, and a lot of it is from kids who only rip and burn CDs. And there's so much stuff on vinyl that's not available on CD, and will never be available on CD."
Also, when you bought a vinyl album, it satisfied several primal human urges. One was the quest/hunt -- you left your house and went out and killed that thing and dragged it back to your lair. Another was the fact that there was a "thing" to be dragged, a tangible object to hold and gaze at. Vinyl album covers were a similar size to many of Western civilization's great paintings and/or religious icons, and some of them were worthy of hanging on your wall, whether as an erotic adornment, a hallowed quasi-religious icon, an ironic or kitschy statement, or as a dartboard. And when you shelved a bunch of them library style, they brought a warm feel to a room, as opposed to CDs and their sharp, pointy and frail cases. A collection of them on display conveys only plastic sterility.
Furthermore, the pictures on the album cover shaded your thinking on what sounds were within -- you expected defiant innocence from U2's War, sleazy rock from the Rolling Stones' Sticky Fingers and a sort of epic, sprawling grandeur from Sgt. Pepper's Lonely Hearts Club Band.
"There are many of us who remember spending afternoons after school with the gatefold album that was just released by our favorite artist," says Paige Mann, a former sales manager at music distributors Southwest Wholesale. "Looking at the out-groove and discovering that hidden message that surely you were the first to find! Nothing like it!"
Album covers and sleeves also provided plenty of information about the music. CDs did too, only the print was off-puttingly small. "What I miss most about older formats is their ability to convey visual information," says Rosa Guerrero, a KTRU DJ and concert photographer. "Stories, photos, background, addresses, discographies. Even stickers." "Exploring lyrics and artwork and memorizing all the players on every track were just part of the experience," says Mann. "While I am completely open to the digital age, I find it hard to fathom downloading a new album ever equating to a musical event like buying an album back in the day."
And most importantly, vinyl just sounds better than CD. "I like the way records sound when played on a good turntable with a good needle the best," says David Beebe, a member of local cover band the El Orbits. "The initial sound of the needle touching the record, the crackle, it is why I listen to music," adds local musician and music journalist Kwame Anderson. "People who only know CDs and MP3s are being cheated."
With all that in vinyl's favor, perhaps the comeback shouldn't be perceived with surprise. What is puzzling, though, is that it's not just baby boomers and Gen X'ers indulging their lost youth. "There's people who never did make the switch to CD, and there's people who buy both, but tend to concentrate on vinyl," says Sound Exchange co-owner Kurt Brennan. "We're seeing a lot of high school and college kids who buy vinyl from us, and it's classic rock vinyl. But they have no intention of buying that stuff on CD. I'm wondering if they're buying the CDs online or through iTunes, but they definitely aren't coming in and buying the CDs. CDs just don't seem to be good value, and there's something about vinyl -- people will spend money on it."
Perhaps it is about money -- you can buy four or five secondhand albums for the price of one new CD. Beebe sees them as a cheap way to get a great education. "The cheapest and easiest way to get into great music is to comb the used record stores."
Brennan says people in his shops even pick up and hold records more reverently than CDs. After a brief honeymoon, CDs quickly lost their spell over the buying public. "Back when CDs first came out, it was like, you know, the future," Brennan says. "Space age and all that. But now you can make your own. If you could buy a 'make-your-own-record kit' for 50 bucks, with a glob of raw vinyl, and cut your own record, maybe people would feel the same about vinyl."
Hard-core CD collectors are a rare breed, Brennan says, but vinyl fetishists are very common. "We see people all the time on the other hand who walk halfway up to the register with about three CDs, and then they slow down, they start looking at 'em again, and they put two down and just buy one. But with records, people come up with armloads of 'em."
CDs are merely a means to the end of acquiring sounds. Album collecting, on the other hand, is a hobby in its own right. "Most of the customers who come in here don't even look around," Brennan says. "They are just looking for one CD. They come in and ask for a specific Marshall Tucker Band CD, we say we don't have it, and they are out the door. But people who buy vinyl start at 'A' and go to 'Z.'"
"Vinyl will always be the format," says Anderson. "Albums are meant to be listened to on vinyl; vinyl is the most romantic form of music listening. The album cover, especially the foldout, is like the caviar experience of music. Nothing will ever beat the opening of an album, the pulling out of the inner sleeve where the lyrics are, the removal of the vinyl from the paper or plastic sleeve -- it is a priceless experience."