May 4, 2007
Music Stores Offer Downloading Alternative
It’s not a bolt out of the blue, but CD sales are in trouble and downloads from services such as Apple’s iTunes Music Store are the culprits behind the drop.
According to new research from Ipsos Insight, fewer consumers 12-years-old and up are buying musical recordings on compact discs. Fifty-one percent of these consumers bought a CD in the past six months, a 15 percent decline from 2002.
According to a report by the Chicago Tribune, record company executives and music sellers came together this week during the National Association of Recording Merchandisers convention to try and figure a way to put an end to the slide in CD sales.
One of the responses to deal with the competition from downloads are machines in stores that consumers can use to burn single tracks to a disc. Machines allow consumers to pick approximately 15 cuts from one or more artists and burn them to a CD in the store.
The Trib spoke with George Daniels who runs George’s Music Room in Chicago.
“I love the idea of this machine because it puts me back in the singles business,” he told the paper. “It will add something new to our store. A lot of people are willing to pay $1 or $2 for a song, but not $15 for a CD.”
Another retailer, Dan Kealy, said his business (Replay Music, Movies and Games) has really benefited from the four burning machines in the store.
“We’re bringing in new customers every week with this,” he told the Trib. “Once the customer uses it, they are hooked. They love creating their own compilations.”
An added benefit of the machines, said retailers, is that stores can now carry a greater inventory of product without having to use the space that would be needed if physical inventory needed to be kept on hand.
Price remains a factor for many consumers when it comes to CDs because they still need to buy the blank and pay for labeling. This typically adds on an additional $3 to the cost of music downloads (99 cents per). In the future, stores expect to offer consumers the option of downloads directly to an MP3 player doing away with this cost in the process.
Discussion Question: Can machines that download music and burn it to a CD or MP3 player help stores recapture some of the share lost to services such as Apple’s iTunes Music Store?
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Two words: CDs skip.
This format is heading towards the trash heap to join cassette tapes. Who listens to them any more? Even with a 25-disc CD player (which I sent to the resale shop), I stopped listening to them. I loaded all 400 of my CDs into my Power Mac, put them into binders (throwing out those stupid plastic jewel cases that crack and break) and stored them in the closet. With iTunes I now have my own radio station that cycles through over 5,000 songs. With iTunes I can shop for music at 3 am with a cocktail in my hand and buy only the songs I like. (Seriously, when is the last time any of us heard an album that was really great from start to finish?) The music industry and retailers just need to give up. The digital age has arrived. TV and video won’t be so far behind as you think either.
The “record” business is over, and the “hit men” of the 70s who now front the music industry giants need to get over their stale and increasingly irrelevant mindsets. (And by the way, they need to fire their copyright lawyers, who are so fixated on protecting intellectual property that they undermine all trace of consumer centric marketing.)
From the ashes of this outdated paradigm (well-stated, Race) is rising a new digital music industry, that is no longer about hits and much more about the frictionless interaction between artists and their narrower but more devoted fan bases. The big music companies mostly just get in the way, as I see it.
Let me once again call upon my Grateful Dead-head heritage for an object lesson: There are thousands of fan-recorded Dead performances in circulation among the fan base to this day, without any “rights management” or other BS to interfere with genuine fan devotion. The same fan base for decades supported one of the most lucrative touring and recording acts in the world, in the process establishing an anti-industry paradigm that has survived beautifully and profitably to this day–even outliving several of the performers.
Today there are hundreds of so-called “jam” bands whose high-quality performance recordings are freely downloadable from the Internet. Add that to the numerous indy acts who post MP3s on MySpace and other community sites and we have a truly vibrant musical scene that is rich in creativity and variety and global in scope. Who needs manufactured CDs? Apparently, only the old-paradigm record companies and their lawyers.
Burning custom mixes onto CDs sounds like an attractive kiosk concept that would fit nicely into the aisles of the local mall. (Twenty years ago, they were making cassettes like this in Sam Goody’s.) Yes, Liz, it’s a service for throwbacks–aging boomers who still collect albums. As for me, like many of my fellow Dead-heads, I prefer to roll my own.
If my son’s 12 year daughter is any barometer I think the CD business is in real trouble as all the child wants is iTunes cards to reload her MP3.
It seems to me retailers will not draw big crowds unless they can provide direct downloads to the MP3…I envision a lot of kids coming to the stores to listen to the various tracks and then going home and downloading them via iTunes or other services. Why buy the entire CD when you can get the hot single?!
Personally my purchases of CDs has dwindled since I put Sirrus in my car…CDs were a way to get music with out advertising clutter and reception issues–now I have music wherever I go!
The music industry is facing a ton of very complex issues that need to be worked out or drastically transformed. Certainly, not the fault of the music retailers per say, but the music industry has tried too many quick fixes lately which have hurt them more than helped them:
Ready, Fire, and Aim:
> Suing their strongest fans for downloading free music was not a good idea for any number of bad reasons.
> Trying to “compete” with better and more convenient technology is foolish. The industry has done little to transform itelf in line with progress of technology.
> The egregious agreements worked out with the recording publishers have hurt the music stores, the industry, and also the performers, in terms of sales. The end-results are erroneous.
> The constant attempts at controlling and censoring music expression have backfired and caused young music fans to download free music. The industry keeps fixing the symptoms, instead of the root problems.
> And More.
The machines in the stores that download singles are a good development but not a all-cure for this frustrated and misguided industry. But it’s a step, finally, in the right direction.
We assume that downloads have been the cause of the problems in the recording industry. A large-scale empirical study two years ago found this is not the case. This may shock many, but it is the best data we have.
David makes many excellent points. The recording industry conditions are the result of a number of complex issues. One of the most fundamental problems may be the production-consumption paradigm the industry uses, which was realistic in 1930 but is no longer. Paradigms are sometimes extremely difficult to change, and it can be easier and more comfortable to blame “outside” causes for your problems. The model of tightly controlled distribution through large library and production channels (a.k.a., recording companies, record stores, etc.) appears to be terminally flawed at this time.
The music retailers are behind the times. When the first iPod came out they should have reacted with more interesting, creative ways to recreate the experience. This new era of consumer is all about personalization. They want their own rings on cell phones, their own personalized covers, their own music, etc. They only thing these machines have going for them is that many consumers are lazy. So if the price is right and you can give them a personalized collection with personalized label, case, ear phones, carrying case designed especially for them…you may survive. The key point would be to become the place to go for the newest, most stylish, music stuff!
An old old story, unfortunately. I can’t remember who first said it, many years ago, but no industry can afford to forget the true nature of its primary mission, and that’s what has happened.
Western Union was in the communications business, not the telegraph business. They forgot it and lost out to telephones. Railroads confused tracks with transportation and lost out to cars and trucks. Gas companies are in the process of confusing oil and energy.
There IS no CD business–there is only a music business. The whole point of transformative technologies is they create new ways of doing things. I may be a baby boomer, but I tote my iPod everywhere, and haven’t actually played a CD in several years, though I still sometimes buy them, which is how you know I’m a boomer.
The music industry can’t save the CD–but they still could save themselves by remembering their true core mission.
The answer for the music industry seems so simple–embrace digital music as the format of the future. Trying to fight it is a losing battle–from both a time-investment and financial perspective.
As a music enthusiast, I have purchased maybe only four physical CDs in the last 10 years, which were immediately converted to mp3s. The rest of it was purchased in digital format (legally) and resides in digital format (all 40 gigs) on my hard drive and iPod. To take the time and money to convert to a disc that I have no real need for is pointless.
The music industry should be able to make money digitally–once they lose the attachment to the vinyl or plastic disc.
Not sure where to start…first, I need to think of a store as having this capability. Right now, a computer is top of mind for most people as the source for mp3s. Second, what would be the experience and information advantage that would make it worthwhile to shlep to a store? Maybe being able to hear the whole track? Maybe being able to see the jacket material? Third, I listen to music on my PC, not via an mp3 player. What would be most useful for me is to plug in a memory stick to transfer my purchase. Burning a CD is actually a pain in the butt as I would then have to transfer the music onto my computer. I think this is a reasonable path for music stores, but there is a lot of evolution left to do.
Finally! Now, the opportunity is for the music store chains, and separately, the major independent group(s), to team up with or create their own version of the Apple product.
Possible? Yes! Success will be investigated and then directed by this target user group’s response to such a product offering from the music retailers.
Makes sense! But, Hmmmmmmmmmmmmmmmm.
I really, really see no chance for this long-term. What’s the sense of building even a personalized CD collection when you don’t need the physical product for any reason and you know they are going to be obsolete soon? Can anyone say “cassette tape” or “record”?
I think DVDs will be out the door soon, too. Anyone remember VHS or Beta? There’s just no reason for music, videos, or movies to be translated into a physical product that takes up space, collects dust, and wastes energy anymore.
This machine is bananas. Why would I travel to a store to create a CD when I can do it at home? Why would I see downloading “directly onto an MP3” as an advantage when iTunes already does this for me while I’m answering email? I really don’t get it. The machine seems like a Baby Boomer’s analog solution to a digital non-problem for Millennials.
Music and entertainment retailing is (going) digital. The question isn’t how to “revive” the past (CD sales) but how to make money in the digital world (custom downloadable, anywhere entertainment). Spending time and money chasing an old model is doomed.
Categorically and unequivocally…YES! This is such a no-brainer. As a data point of one, I recently reverted to old behavior and bought two CDs based on my knowledge of 2 songs each. I like those songs. And they are the only ones of each CD I ended up liking. Such is the case with much of the music I listen to. Sometimes, I find a group I like most if not all of their effort. Then I buy the CD. In the “old days” I didn’t have the option of sampling all the songs. Now I do.
Retailers who sell music as an important category must understand that they were simply part of the distribution system for music entertainment. Digital downloads and the ability to buy individual songs economically has changed the nature of that supply chain. Drastically. Repositioning is not only appropriate, but vital.
What would a retail operation offer that an online download can’t? Service. The world is not completely populated by folks comfortable with downloading digital content and burning it to CDs or transferring it to MP3 type devices. There are a vast majority of consumers out there who are NOT.
Unfortunately, the “record stores” are probably going to need to come up with something that I can’t do on my home PC. Allowing customers to listen to the whole song before purchasing has some potential, but it’s probably limited. Allowing direct downloads to iPods, USB sticks and cell phones is a must.
Maybe they could offer some other “digital” services like printing photos from my digital camera or laptop, or testing out games before buying them. A “digital center” might work; a record store will not.
Perhaps retailers need to take a closer look at the Apple website which notified me last week that they now offer “personal trainers” to create programs customized to your level or experience. Personal training sessions are designed to move at the customer’s pace and provide the support and guidance on software or a new Mac, all for $99 per year. Personalized services may be a new venue for stores to offer.
I don’t see any of my son’s high school friends using CDs, only iPods with personalized services. They represent the future.
Interestingly, I was just at Best Buy with my teenage son this weekend. We were both commenting about how much space they had dedicated to CDs yet there were hardly any people in the aisles. We wondered why they are still wasting precious space on rows of CDs.
I think for now the machine will help, but in short order they will also have to allow downloads to MP3 players. I think the problem is that record industry has been greedy for many years and as a result, a lot of people don’t feel the least bit sorry when they download “free” music. If you think back, initially when the record industry was touting the benefits of CDs, they was supposed to bring the cost of owning music down. As it turned out, they were no less expensive than the old vinyl albums. At least this way, if you do buy a CD and put 15 songs on it and have to pay $15 you will like the whole CD. Personally, I think they need to make the cost more like $.50 per song for it to take off. Otherwise, people will continue downloading at home for $1 per song or free.
Here’s a great new technology that will revive the music business: computer generated player piano rolls! Now everyone in America with room for an upright piano can have “live music” in their own home! The CD player can sit on top of the player piano, next to the 78 rpm record player, and all 3 can provide hours of family entertainment. Tired of so much music? How about electronic downloads of silent movies? Another billion dollar business!
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Two words: CDs skip.
This format is heading towards the trash heap to join cassette tapes. Who listens to them any more? Even with a 25-disc CD player (which I sent to the resale shop), I stopped listening to them. I loaded all 400 of my CDs into my Power Mac, put them into binders (throwing out those stupid plastic jewel cases that crack and break) and stored them in the closet. With iTunes I now have my own radio station that cycles through over 5,000 songs. With iTunes I can shop for music at 3 am with a cocktail in my hand and buy only the songs I like. (Seriously, when is the last time any of us heard an album that was really great from start to finish?) The music industry and retailers just need to give up. The digital age has arrived. TV and video won’t be so far behind as you think either.
The “record” business is over, and the “hit men” of the 70s who now front the music industry giants need to get over their stale and increasingly irrelevant mindsets. (And by the way, they need to fire their copyright lawyers, who are so fixated on protecting intellectual property that they undermine all trace of consumer centric marketing.)
From the ashes of this outdated paradigm (well-stated, Race) is rising a new digital music industry, that is no longer about hits and much more about the frictionless interaction between artists and their narrower but more devoted fan bases. The big music companies mostly just get in the way, as I see it.
Let me once again call upon my Grateful Dead-head heritage for an object lesson: There are thousands of fan-recorded Dead performances in circulation among the fan base to this day, without any “rights management” or other BS to interfere with genuine fan devotion. The same fan base for decades supported one of the most lucrative touring and recording acts in the world, in the process establishing an anti-industry paradigm that has survived beautifully and profitably to this day–even outliving several of the performers.
Today there are hundreds of so-called “jam” bands whose high-quality performance recordings are freely downloadable from the Internet. Add that to the numerous indy acts who post MP3s on MySpace and other community sites and we have a truly vibrant musical scene that is rich in creativity and variety and global in scope. Who needs manufactured CDs? Apparently, only the old-paradigm record companies and their lawyers.
Burning custom mixes onto CDs sounds like an attractive kiosk concept that would fit nicely into the aisles of the local mall. (Twenty years ago, they were making cassettes like this in Sam Goody’s.) Yes, Liz, it’s a service for throwbacks–aging boomers who still collect albums. As for me, like many of my fellow Dead-heads, I prefer to roll my own.
If my son’s 12 year daughter is any barometer I think the CD business is in real trouble as all the child wants is iTunes cards to reload her MP3.
It seems to me retailers will not draw big crowds unless they can provide direct downloads to the MP3…I envision a lot of kids coming to the stores to listen to the various tracks and then going home and downloading them via iTunes or other services. Why buy the entire CD when you can get the hot single?!
Personally my purchases of CDs has dwindled since I put Sirrus in my car…CDs were a way to get music with out advertising clutter and reception issues–now I have music wherever I go!
The music industry is facing a ton of very complex issues that need to be worked out or drastically transformed. Certainly, not the fault of the music retailers per say, but the music industry has tried too many quick fixes lately which have hurt them more than helped them:
Ready, Fire, and Aim:
> Suing their strongest fans for downloading free music was not a good idea for any number of bad reasons.
> Trying to “compete” with better and more convenient technology is foolish. The industry has done little to transform itelf in line with progress of technology.
> The egregious agreements worked out with the recording publishers have hurt the music stores, the industry, and also the performers, in terms of sales. The end-results are erroneous.
> The constant attempts at controlling and censoring music expression have backfired and caused young music fans to download free music. The industry keeps fixing the symptoms, instead of the root problems.
> And More.
The machines in the stores that download singles are a good development but not a all-cure for this frustrated and misguided industry. But it’s a step, finally, in the right direction.
We assume that downloads have been the cause of the problems in the recording industry. A large-scale empirical study two years ago found this is not the case. This may shock many, but it is the best data we have.
David makes many excellent points. The recording industry conditions are the result of a number of complex issues. One of the most fundamental problems may be the production-consumption paradigm the industry uses, which was realistic in 1930 but is no longer. Paradigms are sometimes extremely difficult to change, and it can be easier and more comfortable to blame “outside” causes for your problems. The model of tightly controlled distribution through large library and production channels (a.k.a., recording companies, record stores, etc.) appears to be terminally flawed at this time.
The music retailers are behind the times. When the first iPod came out they should have reacted with more interesting, creative ways to recreate the experience. This new era of consumer is all about personalization. They want their own rings on cell phones, their own personalized covers, their own music, etc. They only thing these machines have going for them is that many consumers are lazy. So if the price is right and you can give them a personalized collection with personalized label, case, ear phones, carrying case designed especially for them…you may survive. The key point would be to become the place to go for the newest, most stylish, music stuff!
An old old story, unfortunately. I can’t remember who first said it, many years ago, but no industry can afford to forget the true nature of its primary mission, and that’s what has happened.
Western Union was in the communications business, not the telegraph business. They forgot it and lost out to telephones. Railroads confused tracks with transportation and lost out to cars and trucks. Gas companies are in the process of confusing oil and energy.
There IS no CD business–there is only a music business. The whole point of transformative technologies is they create new ways of doing things. I may be a baby boomer, but I tote my iPod everywhere, and haven’t actually played a CD in several years, though I still sometimes buy them, which is how you know I’m a boomer.
The music industry can’t save the CD–but they still could save themselves by remembering their true core mission.
The answer for the music industry seems so simple–embrace digital music as the format of the future. Trying to fight it is a losing battle–from both a time-investment and financial perspective.
As a music enthusiast, I have purchased maybe only four physical CDs in the last 10 years, which were immediately converted to mp3s. The rest of it was purchased in digital format (legally) and resides in digital format (all 40 gigs) on my hard drive and iPod. To take the time and money to convert to a disc that I have no real need for is pointless.
The music industry should be able to make money digitally–once they lose the attachment to the vinyl or plastic disc.
Not sure where to start…first, I need to think of a store as having this capability. Right now, a computer is top of mind for most people as the source for mp3s. Second, what would be the experience and information advantage that would make it worthwhile to shlep to a store? Maybe being able to hear the whole track? Maybe being able to see the jacket material? Third, I listen to music on my PC, not via an mp3 player. What would be most useful for me is to plug in a memory stick to transfer my purchase. Burning a CD is actually a pain in the butt as I would then have to transfer the music onto my computer. I think this is a reasonable path for music stores, but there is a lot of evolution left to do.
Finally! Now, the opportunity is for the music store chains, and separately, the major independent group(s), to team up with or create their own version of the Apple product.
Possible? Yes! Success will be investigated and then directed by this target user group’s response to such a product offering from the music retailers.
Makes sense! But, Hmmmmmmmmmmmmmmmm.
I really, really see no chance for this long-term. What’s the sense of building even a personalized CD collection when you don’t need the physical product for any reason and you know they are going to be obsolete soon? Can anyone say “cassette tape” or “record”?
I think DVDs will be out the door soon, too. Anyone remember VHS or Beta? There’s just no reason for music, videos, or movies to be translated into a physical product that takes up space, collects dust, and wastes energy anymore.
This machine is bananas. Why would I travel to a store to create a CD when I can do it at home? Why would I see downloading “directly onto an MP3” as an advantage when iTunes already does this for me while I’m answering email? I really don’t get it. The machine seems like a Baby Boomer’s analog solution to a digital non-problem for Millennials.
Music and entertainment retailing is (going) digital. The question isn’t how to “revive” the past (CD sales) but how to make money in the digital world (custom downloadable, anywhere entertainment). Spending time and money chasing an old model is doomed.
Categorically and unequivocally…YES! This is such a no-brainer. As a data point of one, I recently reverted to old behavior and bought two CDs based on my knowledge of 2 songs each. I like those songs. And they are the only ones of each CD I ended up liking. Such is the case with much of the music I listen to. Sometimes, I find a group I like most if not all of their effort. Then I buy the CD. In the “old days” I didn’t have the option of sampling all the songs. Now I do.
Retailers who sell music as an important category must understand that they were simply part of the distribution system for music entertainment. Digital downloads and the ability to buy individual songs economically has changed the nature of that supply chain. Drastically. Repositioning is not only appropriate, but vital.
What would a retail operation offer that an online download can’t? Service. The world is not completely populated by folks comfortable with downloading digital content and burning it to CDs or transferring it to MP3 type devices. There are a vast majority of consumers out there who are NOT.
Unfortunately, the “record stores” are probably going to need to come up with something that I can’t do on my home PC. Allowing customers to listen to the whole song before purchasing has some potential, but it’s probably limited. Allowing direct downloads to iPods, USB sticks and cell phones is a must.
Maybe they could offer some other “digital” services like printing photos from my digital camera or laptop, or testing out games before buying them. A “digital center” might work; a record store will not.
Perhaps retailers need to take a closer look at the Apple website which notified me last week that they now offer “personal trainers” to create programs customized to your level or experience. Personal training sessions are designed to move at the customer’s pace and provide the support and guidance on software or a new Mac, all for $99 per year. Personalized services may be a new venue for stores to offer.
I don’t see any of my son’s high school friends using CDs, only iPods with personalized services. They represent the future.
Interestingly, I was just at Best Buy with my teenage son this weekend. We were both commenting about how much space they had dedicated to CDs yet there were hardly any people in the aisles. We wondered why they are still wasting precious space on rows of CDs.
I think for now the machine will help, but in short order they will also have to allow downloads to MP3 players. I think the problem is that record industry has been greedy for many years and as a result, a lot of people don’t feel the least bit sorry when they download “free” music. If you think back, initially when the record industry was touting the benefits of CDs, they was supposed to bring the cost of owning music down. As it turned out, they were no less expensive than the old vinyl albums. At least this way, if you do buy a CD and put 15 songs on it and have to pay $15 you will like the whole CD. Personally, I think they need to make the cost more like $.50 per song for it to take off. Otherwise, people will continue downloading at home for $1 per song or free.
Here’s a great new technology that will revive the music business: computer generated player piano rolls! Now everyone in America with room for an upright piano can have “live music” in their own home! The CD player can sit on top of the player piano, next to the 78 rpm record player, and all 3 can provide hours of family entertainment. Tired of so much music? How about electronic downloads of silent movies? Another billion dollar business!