I read an interesting article that the value of music sold online is expected to increase from $ 29 million dollars to $ 3.9 billion, or
8 % of global sales, in 2005. But an increasing amount of the music sold online will be via digital delivery from companies like a2b and liquid audio and from record companies themselves. Along the same lines:
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LIFE
Are CDs obsolete? Not quite yet
Bruce Haring
07/08/98
USA Today
FINAL
But some in the music industry, hearing the promise of reduced
distribution costs, are looking to turn the Internet into a big jukebox. All that's missing is the right equipment in the right places. When the compact disc was introduced in stores in 1983, it was heralded as offering perfect sound forever. Now it may be headed for
obsolescence.
One year ago, music became commercially available for download over
the Internet. This breakthrough led some in the music industry to foresee a world where consumers would one day download highly compressed files of digital music directly to computer hard drives. Listeners then could create or "burn" their own CDs using a recording device, or simply play that music on the PC.
Today, that scenario is under debate.
Now some prognosticators envision a world in which listeners no longer
need physical carriers such as CDs and tapes. Instead, they see music
being delivered via an audio signal that sends the music on demand --
"streaming," in Internet-speak -- and requires users to pay a subscription fee for listening to sound files or blocks of programming.
This vision admittedly involves portable music listening devices that don't yet exist and high-speed pipelines not yet available everywhere. But the benefits -- consumers having music available whenever they want it and music companies maintaining control of their artists' works -- make such a future plausible.
The CD is dead, says Paul Stark, owner of Minneapolis' Twin/Tone
Records, "as soon as you have high-bandwidth access. There's no reason
for you to store anything. If you can dial in and see any video, any movie, any sound, any album at any time, there's no reason for storage."
Next month, all Twin/Tone releases will be digitized and sold on line,
Stark says, and only the CDs currently available in stores will remain in stores.
This move by the independent label -- the original recording home to
bands such as the Replacements, Jayhawks, Ween and Soul Asylum --
marks the first such step by a brand-name entity. If music is available to consumers whenever they want it, they will no longer need a physical carrier such as a CD -- and will have no reason to capture the digital codes on a piece of software. That's the key to streaming's potential victory in the war over which method of electronic delivery will prevail.
Issues of copyright protection are the music industry's biggest concern. In a digital world, code is inevitably broken, unleashing the potential for piracy on an unprecedented scale.
The Recording Industry Association of America and other publishing
entities have lobbied Congress for stronger digital copyright protection. The Senate has already passed one such measure, and the House Commerce Committee revisits the issue this month.
Until protections are created that satisfy all concerns, major record
companies are extremely reluctant to move forward on presenting their
most valuable works in new digital forms such as the CD's linear
descendent, the DVD, or digital versatile disc.
"When you allow consumers to download a song, you no longer control
the destiny of that song," says Jim Griffin, the CEO of OneHouse, a
consulting firm that advises intellectual property companies on digital issues. "But if you allow consumers to listen to a streamed version of that song, you still control to whom it goes and when it goes there."
In fact, Griffin, former head of technology at Geffen Records, says he
firmly believes that physical carriers will be viewed as quaint in the future. He cites the convenience of streaming as its big advantage.
"If I'm to download a song, first I have to click," he says. "I have to wait for the entire song to download. Then I have to locate the file that I've downloaded, and I either have to move it to a CD or play it by using some kind of a player. With a streaming song, where the player is already loaded on my computer, I just click and it starts playing. I mean, the difference between those two is dramatic."
Seagram president and CEO Edgar Bronfman Jr. has said the potential
profitability in the electronic delivery of music is a primary reason his company, which already owned Universal Music, agreed in June to spend over $10 billion to acquire PolyGram Entertainment, making the
combined entity the largest record company in the world.
Universal Studios Inc. chairman and CEO Frank Biondi Jr. says his
company expects to conclude a study on electronic delivery this month.
Biondi isn't sure whether Universal's report will favor streamed delivery rather than allowing consumers to retain a piece of product.
"That is the thing that is very much up in the air at the moment," he says. "They're actually going back and forth. Obviously, we would like to make the (product) as ubiquitous as possible but, at the same time, as protected as possible. And that is both a delicate and delicious conundrum."
One barrier to a streaming music world without CDs, or DVDs or some
other digital music format, is portability. "Until we have a streaming
Walkman, your streaming car radio and your streaming whatever, it's
basically going to be a combination of streaming and downloading," says Ted Cohen, the head of Consulting Adults, a music industry adviser.
"I think people are always going to want to have certain things that you can reach for and touch and feel," Cohen says. "But there's going to be certain things that you won't have as much of an emotional attachment to, and if you have a streaming radio channel that gives you the kind of music you want, what do you need a record for?"
Twin/Tone is being forced into the digital realm by economic factors,
Stark says. "For me, manufacturing costs, dealing with my distributor,
who takes 25%, dealing with returns, which run anywhere from 40% to
60%, I pretty much spend 60% to 70% of my money on just that system.
So if I eliminate that, I'm a lot better off."
Jack Logan, whose 1994 album, Bulk, won widespread critical praise, is
one of the artists distributed under the Twin/Tone umbrella that will be affected by a move to digital.
Stark says digital delivery will be perfect for Logan.
"He's never really going to be destined for a major label," Stark says. "He writes quirky songs with great lyrics, and he writes lots of them. He usually comes up with about 10, 12 songs a week. Five or six of them are just junk, and two of them might be gems. He's just going to put up one or two songs every week. We won't have to wait for an album, and he's really not going to think in terms of albums. He's going to think back in terms of singles again. And a lot of groups are going to enjoy that."
Logan acknowledges that the prospect of not releasing a full album of
music on a physical disc scares him.
"The big jukebox thing is not for everybody," he says. "But for me, I think I've got enough good leftovers that might interest the very kind of die-hard fan that wants to hear pretty much anything you put out. I'm kind of like that about some artists, you know. I'd listen to Keith Richards gargling or whatever and pay for it."
Still, Logan says, there's something special about an album release, where songs are presented in a certain order and with specific artwork. "If that comes to be the norm, where it's just this big cyberjukebox, you will lose a lot."
This time last year at the Intel Music Festival's Plug-In conference in New York, N2K head Larry Rosen startled the music industry by announcing that it would immediately begin offering the first commercially available downloads by prominent artists. Nonetheless, Rosen says the CD has a future. He points to the coming boom in home PCs capable of recording CDs and also notes, "Streaming isn't portable."
"I don't think we're anywhere even close to that at this moment," Rosen says. "That would either have to be satellite-delivered or in some way through the airwaves, and it has to have these devices that could receive this information. I really think we're a ways away from that."
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