Music Lovers, Prepare to Say Goodbye to the CD

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Music Lovers, Prepare to Say Goodbye to the CDYou had to know that the CD wasn't 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.

If the article is accurate, we'll be down to simply limited-edition CD releases restricted to the top-selling artists after 2012.

Farewell, Physical Distribution

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. 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.

Let's play a game. Think of the largest mall in your town. It surely had a dedicated record store or two several years ago. Is there still one there now?

The fadeout of traditional record stores didn't have to be fatal. Walmart, Best Buy (BBY), and Target (TGT) stepped up as leading retailers of music CDs. However, don't be surprised if you find that your local Walmart or Best Buy keeps hacking away at the shelf space devoted to compact discs.

Light media is being challenged on all fronts. Borders liquidated earlier this year, as bibliophiles who once swore that they would never abandon leafy reads finally come to terms with the ever cheaper e-readers. This is shaping up to be the third year in a row for declining video game sales, as console downloads and casual gaming smartphone apps eat into the once-brisk sale of gaming software on cartridges and discs. Hollywood is bellyaching about sluggish DVD sales, just as streaming video is booming as a primetime obsession.

Everywhere you turn, physical distribution is passing the baton to digital sprinters.

But I Love My Record Collection

Change isn't easy, but it's evolutionarily inevitable. The same people that bucked the migration from vinyl to compact disc -- arguing that album liner notes and the warm tone of a needle on grooves of wax could never be replaced -- are now going to resist filing change of address forms for digital digs.

I remember the resistance well. I was fortunate enough to have my band -- Paris By Air, don't fret if you blinked and missed us -- signed to a major label in the late 1980s. Our first single was released on vinyl and cassette in the summer of 1989. By the time Columbia Records issued our second and final single with the label nine months later, CDs were the media of choice.

The next time you hire a DJ for a music outing, don't be surprised if his gear consists solely of an MP3 player and a mixing console. It's the new way.

It doesn't matter if you have never even owned an iPod.

Amazon.com, Apple, and Google (GOOG) have rolled out cloud-based music storage services this year. Wireless phones and tablets are making music portable for those that don't see the point of dedicated MP3 players. Digital music stores are beefing up the quality of their tracks.

If you don't feel it now, wait until you see how few 2013 model cars will come with CD players. As music streaming gets easier and more seamless, the percentage of music fans that don't have access to digital music will continue to shrink.
You may not like it now, but you will probably understand later.

From Foe to Friend

Record labels dreaded digital distribution at first, largely because it consisted of rampant piracy on peer-to-peer networks. They didn't like Apple drawing a line in the sand at the 99-cent price point for singles and $9.99 for complete albums, a move that turned album buyers into cherry-picking consumers of individual tracks.

However, the industry has come around. It didn't really have much of a choice.

Digital delivery makes sense on the surface. Labels can save money on manufacturing discs, shipping them out, and bracing for the eventual retail returns. However, it also threatens the very viability of major labels.

I needed Columbia Records 22 years ago to promote my music to radio stations and get my records in stores. That talented kid of yours probably doesn't in a world of YouTube, Facebook, and a handful of sites that can get garage bands on to all the major digital distributors in a matter of days for just a few bucks.

See, not all change is bad. Embracing the inevitable is the first step.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, but his band Paris By Air was signed to Columbia Records from 1987 to 1991. The Motley Fool owns shares of Apple, Best Buy, Google, and Walmart Stores. Motley Fool newsletter services have recommended buying shares of Apple, Amazon.com, Walmart Stores, and Google. Motley Fool newsletter services have also recommended creating a diagonal call position in Walmart Stores, writing covered calls in Best Buy, and creating a bull call spread position in Apple.




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407 Comments

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Gabrielle

Amen, sister!

November 23 2011 at 2:09 PM Report abuse rate up rate down Reply
JIM

Give me a good turntable and vinyl any day.

November 23 2011 at 2:07 PM Report abuse rate up rate down Reply
badace100

Hearing the news that the CD is now becomming obsolete made A few people upset!! These companys make these products tell us we must have it. So we all run out buy the product. Now we need to buy A whole new systems so we can use these new items!! We have to spend Thousands of dollars!! A couple of years later they tell us this new item is obsolete !!!That BUGS the HECK out of people!!!

November 23 2011 at 1:41 PM Report abuse rate up rate down Reply
Stephanie

The only thing that has always worried me about digital music collections is this: What happens when your computer crashes with no backup and all that music that you've been collecting for years just DISAPPEARS?? I have a good number of albums that I bought online through various different retailers, and what kind of a pain would it be to just suddenly LOSE it all? :-(
I like CDs because then I actually OWN something TANGIBLE and can replace any lost digital music... It will just be a shame to only own some bytes in the cloud somewhere as far as your music collection... :(

November 23 2011 at 1:22 PM Report abuse rate up rate down Reply
1 reply to Stephanie's comment
KIRK

i have 2 external hard drives to save all my music----1 backs up my computer and the other backs up that external hard drive. it is a pain,but not as bad as losing all the music!

November 23 2011 at 1:49 PM Report abuse rate up rate down Reply
Michael

progress sucks...
I have four VHS players and four DVD players and many VHS tapes and DVD's
I have a great Reel to Reel tape player (Sony 230) and many reels of tape
I have a great record player and many vinyl records
I have three great cassette players and many cassettes
I have three awesome CD players and many CD's not counting the ones in three computers
I have a great working 8 track player and at least 20 8 track tapes....now that I have all these things progress wants to delete yet another type of entertainment so they can over charge ridiculous prices for new products like they do for the former free music online sites...... that's OK though ,I can simply search the world over to find what I want or need and not worry about things they no longer make as SOMEONE somewhere has it.

November 23 2011 at 10:07 AM Report abuse rate up rate down Reply
pfjw

Well... given that the average 'listener' these days uses earbuds and listens in a high-loss medium and thinks this is good (!!), hard-copy media are threatened.

However, as both vinyl and analog tape survives, so will the CD as one of the few practical low-loss media presently extant.

November 23 2011 at 9:16 AM Report abuse rate up rate down Reply
Phil

Nobody cares ...

November 22 2011 at 10:27 AM Report abuse +2 rate up rate down Reply
otegonuns

No doubt this is true. However there are still numbers of us in third world America with only dial-up access to the internet and so far no real programs in place to change that. Here in our monastery we are grateful for this slow to non-existent "progress" as it has given us time to decide, like our Amish friends, that we don't have to use everything just because it is there. However it is nice to know you could use it if you wanted to! Our neighbors got together and petitioned the local cable company to bring the cable out beyond the 6-mile hiatus we live in -- they came out, measured, drove around and sent us all a letter saying for $77,000 we could have cable. So for us, this kind of access to music or much of anything else is pie in the sky. I've been to the Palestinian West Bank where they have better internet access. Looks as if at least some of us will continue to use CDs for the foreseeable future. We're just curious to know whether we will we have an alternative before their final demise?

November 21 2011 at 7:51 PM Report abuse rate up rate down Reply
Jeepy

This guy is utterly clueless. First of all there still are records stores (that's why there's an international Record Store Day), vinyl has made a comeback and you can buy a large percentage of new music in the best sounding and best packaged format (vinyl)--everything from Michael Buble to The National, to Of Montreal to Drive By Truckers to Justin Timberlake, to Animal Collective, to The XX to Pat Metheny and Ry Cooder---you name it and you can probably get it on vinyl today--even Taylor Swift (big vinyl fan). Secondly, MP3 is a travesty. It ruins the experience. If this guy is going by the numbers only, then guess what? Good food is dead too because McDonald's et.al outsells all gourmet restaurants by overwhelming numbers. So what? However, don't confuse downloads with MP3s because you can today also download 96K/24 bit and even 192/24 bit files that are studio master quality and sound incredible---and certainly better than the flawed CD format that's neither perfect nor forever. And of course SACD limps along, but today there's more new music issued on vinyl than on SACD--and by a lot. CDs will become a niche market, like vinyl, because once you can download everything at high resolution, the sound will be better than CD and files are more convenient...plus CD packaging has always been poor. A spinning digital disk (CD) was born obsolete. In fact, a CD isn't really "digital!" The disc contains pits and land surfaces that are ANALOGS of the 1s and 0s so actually CDs are an analog format representing a digital format--a mess to begin with and as everyone has already found out, if you don't handle carefully, hardly "forever."

November 21 2011 at 12:53 PM Report abuse rate up rate down Reply
1 reply to Jeepy's comment
Josue

Completely agreed. I used to be completely against buying music, largely due to the fact that i spend so much money as it is on concerts. But wow the vinyl makes the difference. Its funny you mention I actually have of Montreal, The National, Animal Collective AND the Xx on vinyl xD
Im slowly but surely building up my record collection, and cannot wait to hand it down to my kids one day.
Worth the money.

November 23 2011 at 7:24 AM Report abuse rate up rate down Reply
Al Quaglieri

Bogus. The CD isn't going away anytime soon.

November 21 2011 at 1:11 AM Report abuse rate up rate down Reply