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CD Format Still has Value

Easter isn’t the only holiday celebrated this weekend.  This Saturday, April 19, is Record Store Day. It will be the seventh annual celebration of brick-and-mortar music shopping and, more importantly, of the enduring appeal of music in a physical format.

Nielsen SoundScan data show that vinyl records represented the only music format that increased in total sales in 2013 (up 32%), unlike drops in digital tracks (down 5.7%), digital albums (down 0.1%) and CDs (down 14.5%). Vinyl records now account for about 2% of U.S. album sales, and these figures don’t take into account the brisk trade being done in used vinyl these days.

The re-emergence of record-collecting seems like a natural response to the coming of age of so-called “digital” music. The iTunes Store is 11 years old now, and music consumers (and pirates) are quite familiar with the advantages and limitations of the digital format. Digital tracks are convenient and easy to store in mass quantities. However, collecting digital tracks lacks the visual and tactile appeal of records, as well as the physical presence of a well-curated and displayed record collection. Not many people stand around with friends and a good glass of wine browsing through a 2 terabyte hard drive of digital track titles.

More music consumers also seem to be embracing the concept of high-resolution or full-spectrum sound. There is a timeless appeal to the analog sine wave created by a record and a turntable. And Neil Young has been making waves of his own with his backing of PonoMusic, a high-resolution digital audio player that to date has raised over $6 million in crowd-sourced financing on Kickstarter.

I believe that the renewed interest in higher-quality sound and in a collectible physical format points to an eventual resurgence for the compact disc. CDs deliver consistently superior sound to most standard MP3, AAC or other “lossy” compressed digital files. The infrastructure to produce CDs is still in place, and record companies make a much healthier margin on sales of CDs than they do on digital download sales. As I mentioned in my last post, the decline in sales of CDs has begun to level out, so the format may be finding its proper place in the format landscape.

Don’t write off the downtrodden CD. I believe we are moving into a multi-format era, where vinyl, CD, and digital downloads coexist. Currently available multi-packs that provide a vinyl record, a CD and a download code for one package price indicate that we as consumers want different formats for different functions. Makes sense to me.

Happy Record Store Day…


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