Streaming Is Killed The CD - And It's OK
May 5, 2018
Music Think Tank in Business, CD, spotify, streaming
Earlier this year, US-based supermarket chain Best Buy announced it will no longer carry music on physical support - CDs, mostly - due to its dwindling record sales. According to sources speaking to Billboard Magazine, the chain was making a mere $40 million a year from record sales, a sum that’s apparently too small to carry on. Best Buy plans to completely eliminate CDs from its stores by July 1st, the sources say, but it will continue to sell vinyl for at least two more years (albeit it will likely move them next to the turntables it sells).

Evolution and convenience

Technology is evolving at a fast pace - and the recording industry does the same, mostly to cater to its consumers’ needs. Gone are the days when you had to buy a CD and rip/encode the music from it so you can listen to it on your iPod or mobile phone. Today, you tune into your music streaming service of choice and listen to whatever you want for one flat monthly fee. And, let’s face it, this is the easiest (and often the cheapest) way to listen to music today.

Recognition

This switch to streaming affects more than just retailers, of course. Actually, it has made its presence felt in all areas except maybe for the awards business. After all, the way the music reaches the listener doesn’t affect its artistic value, and the most prestigious awards (except for Billboard, of course) are focusing on that. The phrase “without regard to album sales, chart position, or critical reception” is part of the description of all Grammys; this is probably one of the few things people don’t know about the Grammy awards. Artistic excellence remains the same no matter if the creation in question is distributed on CD, vinyl, memory card or through the airwaves.

The numbers

Music streaming has reached a “tipping point” in 2016 when, for the first time, its revenues have overtaken physical record sales as the main source of income for the music industry. And it has the potential to reach people otherwise intangible for the business, too. Thanks to streaming - namely Spotify - becoming available in several Latin American countries has not only shaped the tastes of people around the world (Luis Fonsi and Daddy Yankee’s “Despacito”, with a bit of Justin Bieber added to the mix, was the most streamed song in 2017) but it has led to a double-digit growth in the Latin American music markets’ revenue (the global average is 5.9%). In the year 2000, almost 950 million music CDs were sold in the United States. By 2017, this number has decreased to under 90 million. The same has happened to vinyl back in its day - its sales have peaked between the late 1970s and the early 1980s, and to audio cassettes in their time. Streaming did kill the CD just like the CD killed vinyl, just like vinyl killed the phonograph cylinder. It’s the survival of the fittest if you like.
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