CDs spinning on borrowed time

 

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By Asavin Wattanajantra

Posted on 22 Dec 2008 at 15:27

Music retailers need to move their attention away from pre-recorded CDs and fully concentrate on online distribution, according to Gartner.

Gartner is urging the music industry to stop relying on pre-recorded CDs as a revenue generator before next Christmas.

The research firm claims CD revenues peaked at the turn of the century, but sales are now dropping rapidly in markets worldwide and would never again regain market share.

The transition from physical retail CDs to online distribution is already in motion, with evidence that retailers are reducing the floor space dedicated to CDs.

The uptake of broadband, Wi-Fi connections, netbooks and mobile phones worldwide offer different possibilities when it comes to marketing, promotion and distribution.

Mark McGuire, research vice president at Gartner, says that by propping up the CD business, rather than fully investing in online distribution, the music industry has neither stamped out piracy nor recreated old successful business models.

"Music labels should instead emphasise 'digital first', making all new releases and catalogue issues via digital [download] services and moving CD to an on-demand publishing mode," he says.

Gartner says that retailers could eliminate the cost of CDs by applying a new burn-on-demand model. This means that labels would no longer need to anticipate demand and could reduce shipping costs.