DVDs continue to cannibalize CDs

OK, my last rant for the year about the music industry

Yesterday, we discussed the attempts to wring more dollars out of smaller numbers of music buyers. Today’s rave looks at a new fallacy gaining traction: Decreasing CD sales can be supplemented with increasing music DVD sales.

That gets it exactly backwards; its increasing DVD sales which are c ontributing to decreasing CD sales. Consider this bass ackwards NYT headline: “Music Labels Look to DVD’s as Sales of CD’s Decline.”

A more accurate header would have read: “Sales of CD’s Decline as DVD’s Soar.”

We considerd this previously in terms of DVD movies. Lately, we’ve been noticing DVDs as a music format (concerts/videos) is also kicking CD ass. Its not overstating it to say that DVD music sales have been slowly eating away at the entire CD format.

It’s no surprise why: at $15, the CD is a decreasingly attractive value to consumers versus the DVD. One contains 45 minutes of audio; the other 2 plus hours of audio, video, documentaries, interviews and additional content. Which provides a better bang for the increasingly tight consumer dollar?

The music biz marketing wizards need to face facts: CDs are a lousy deal. Indeed, the so-called free DVD given away with a CD purchase is a misnomer; buy the DVD — the more desired product — and it comes with a free CD.

As much as they desperately want to blame P2P, the dysfunctional Labels need realize that nearly all of the “old economy” media have been suffering a sales slow down: Newspaper readership is down big; Televised sports programs have seen their audiences slide; Film attendance is soft (revenues are up due to increasing ticket prices); Magazine sales have been lackluster; The Book Industry Study Group reported that sales dropped by 23 million units from 2002 to 2003.

Increased competition from many digital formats — internet, TiVo, DVD, video games, and digital music — are competing for scarce consumer time and money. Indeed, today’s NYT reported that a recent survey found that "use of the Internet has displaced television watching and a range of other activities. Internet users watch television for one hour and 42 minutes a day, compared with the national average of two hours."  Time is hydraulic, the study’s author noted. "Time spent on the Internet is time taken away from other activities."

Why is it that only the music industry gets to blame the P2P boogie man for its woes?


Music Labels Look to DVD’s as Sales of CD’s Decline
Robert Levine
NYT, December 27, 2004

Is Hollywood to blame for the music industry’s woes?
Meredith Amdur
Variety, March 31, 2004

Internet Use Said to Cut Into TV Viewing and Socializing
John Markoff
NYT December 30, 2004

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What's been said:

Discussions found on the web:
  1. shiva commented on Dec 31

    A problem remains, however, in that the music recorded on a DVD is in an MPEG format, meaning it’s good, but not as good as as the AAIF format used on CDs.

    Once DVDs improve the quality of their sound, there will be no reason to buy a CD.

  2. kevin rose dot com commented on Jan 2

    DVDs continue to cannibalize CDs

    Link: The Big Picture: DVDs continue to cannibalize CDs.

  3. kevin rose dot com commented on Mar 21

    DVDs continue to cannibalize CDs

    Link: The Big Picture: DVDs continue to cannibalize CDs.

  4. kevin rose dot com commented on Mar 21

    DVDs continue to cannibalize CDs

    Link: The Big Picture: DVDs continue to cannibalize CDs.

  5. steve commented on Aug 12

    I can’t understand how a music store such as Sam Goody could still be in buisness,The price of there CDs are outrageous!I once belonged to BMG music and I used to get CDs far cheaper than Sam Goody or even Best Buy,Circuit City or even Walmart.Thanks to itunes and other online music download sites I can pay and download the songs I want without buying the whole album.I predict by the year 2012 the compact disc will be extinct just like the LP vinyl record became obsolete by 1990.

  6. NotThatMo commented on Dec 29

    I used to buy a lot of soundtrack CDs. But I buy maybe 5-10% of the old amount now. Why? It just hurts to buy a soundtrack for $18, when the DVD of the movie will cost $20-25.

  7. Barry Ritholtz commented on Dec 29

    and yet, the music industry hasn’t figured that out yet . . .

  8. ice weasel commented on Dec 29

    Well, there is no question that is another industry that has done more to insult and offend their customer base than the music industry.

    I think you make many excellent points. Cds are a horrible “value” when considering how to spend today’s entertainment dollar and everything the labels have done in the last ten years has only served to add insult to that injury.

    Add to this, an industry with perhaps the least amount of marketable talent than ever before, a disintegrating promotional structure and mamagement so concerned with collecting their next bonus that they’ll sink a label into insolvency to do it, and well, you have what you today.

    Though it was an industry that long payed my rent and one I truly believed in as a positive thing (well, music at least being a positive thing) now I only long for the death of this parasitic group of greedheads. Hopefully, whatever replaces it, whether it’s Steve Jobs or someone else, will have the brains to manage it a bit better than the people now in charge are doing.

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