exclusive Features April 18, 2018

The death of CDs vs Shazza in Dubbo

Brynn Davies
Assistant Editor
The death of CDs vs Shazza in Dubbo

At last week’s FastForward conference in Sydney, Ash London of the Hit Network described one listener stereotype as: “The woman we like to call Shazza in Dubbo, and Shazza in Dubbo still shops at Sanity and JB HiFi.”

It would seem that Shazza in Dubbo holds the future of the humble CD on her shoulders.

According to this week’s wholesale figures released by ARIA, physical product accounted for a “healthy 25% of the overall market” in 2017. In light of the overall 10.5% increase of the value of the Australian recorded music industry – the highest annual growth since 1996 – it appeared that maybe Shazza and co. have put physical sales back on track.

The statistic – not contextualised by how it compares to previous years – seemed to suggest the future of the CD, while maybe not secure, was stable. This was compounded by the positive context of the report and sentences dubbing physical formats a “vital part of the music business” and the demonstration of its “enduring power of reinvention and popularity.”

However, TMN has calculated from ARIA figures spanning 2008 – 2017 that this isn’t the case.

Physical product accounted for a massive 87.27% of wholesale music sales in 2008. By 2017, we were down by 62.59% to just 24.68%.

Since 2008, there has been an average 6.96% yearly decline in physical wholesale sales, despite vinyl increasing for the seventh year running.

In the last five years, streaming services have done a complete switch with physical sales. In 2012, physical product accounted for 53.7% of the wholesale market. By 2017, streaming services have taken their place at 54%.

Industry professionals around the globe have been touting the death of the music industry for over a decade, largely due to the plummet in physical sales as pirating threatened to undermine the industry, closely followed by the advent of streaming services and the decrease of downloads. The new digital music economy scared many with the realisation that the old metric of success would go the way of the dinosaur.

Businesses were restructured; efforts were redirected at working with the new streaming model; physical distribution was quickly seen as antiquated.

Recently, the marketing, sales and distribution arm of Warner Music Group, WEA, have offered a voluntary resignation to around 130 employees working with physical product in what seems to be a reaction to the decline of CD sales. They have 45 days from the date of notice to make their decision regarding the buy-out.

Mega-stores such as Best Buy in the States have recently announced that they will stop selling CDs on July 1, with Target whispered to follow.

Is it really the end of the humble CD?

If you ask someone who still buys CDs “why?” they’ll tell you it’s because it’s what they’ve always done. That they like the tactility of the product, or that the retail experience is still favoured. Over 35s remain the driving force behind physical sales, despite the renewed demand for vinyl among Millenials.

Albums like Adele’s 25 (2015) and 21 (2011) going 10x and 15x Platinum respectively; P!NK’s Funhouse (2008) at 11x Platinum; and Michael Buble’s Christmas which spent six consecutive years as one of the ten best-selling albums in Australia, show that pop is still ruling physical sales. Even Kylie’s Golden clocked up 5,894 disc sales this week, yet streaming only accounted for less than 5% of 8,745 sales units, calling into question ARIA’s streaming algorithm towards charts.

According to the 2016 Australian Music Consumers Report, while 1 in 5 ‘music passionates’ use streaming as their primary method of consumption, this only applies to 1 in 10 ‘Rest of population’. Conversely, 23% of ‘Rest of population’ use CDs as their primary method, compared to 16% of ‘music passionates’. The study found that “almost half (49%) of Australians are over 44 years old and this demographic are driving consumption through radio and CDs.”

Once you get into the 44+ demographic, the study found that old media becomes the primary method for up to 87% of consumers. However, as the Australian population matures and the current millennials and Gen Zs enter their 30s and 40s, the demand for old media will only continue to decrease. 

CEO of Media Insight Consulting and partner of the study, Chris Carey, added that “as well as new formats coming in, hardware is changing. Many laptops don’t have CD drives, many new cars don’t. The opportunity to use CDs is diminishing.”

Just over ten years ago, 200 million people globally bought a CD every month. A lot can change in a decade.

So don’t laugh at Shazza – what’s left of the demand for physical products is thanks to her.

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Recent comments (6)
Vexser
18 Apr 2018 - 12:37 pm

It is impossible to tell the difference between a 320Kbps MP3 or FLAC file & the raw WAV file on a traditional CD. There are new codecs that have even higher dynamic range than CD, using less bytes. Thus the 44.1KHz, 16 bit PCM format of CDs is fast becoming technically obsolete: far less bang for the bytes. Modern recording studios record at (at least) 24 bit, 96KHz. The content is then “down sampled” to the lower resolution CD format. This does not have to happen for digitally delivered content. Even well produced vinyl is reported to have a better dynamic range than CDs. It is really that the old 1980’s CD format cannot deliver the quality that new technology can deliver. CDs in the car are a disaster when compared with what you can deliver on a 32G micro SD card. So if it’s a choice between a CD or a better quality MP3 or FLAC file (which you can burn to a CD or DVD) along with artwork JPGs, then the file is a better cost option. The only thing that the streaming muppets don’t understand is that they need to store their MP3 files *locally* (un-DRM’d on their device) as clouds die: Eg. Pandora leaving australia. They then lose their content and have to re-buy it again. Well produced vinyl is worth it because it can be of high quality and provides nice large artwork and tactile experience. To listen to the music, use a file. To experience the music, play the vinyl.

Deb
19 Apr 2018 - 11:32 am

How degrading – “The woman we like to call Shazza in Dubbo, and Shazza in Dubbo still shops at Sanity and JB HiFi.” FYI – Just because someone PREFERS a cd to downloading/digital doesn’t automatically make them from a regional town and it certainly doesn’t mean they should be made sound like a Bogan. And for the record – people from Dubbo or even further out remote areas are not bogans!!!
If you look at Kylie Minogue’s latest album Golden – it debuted at #1 on the ARIA charts this week with 8,745 sales made up of 5,894 physical discs, 2606 digital downloads with only 245 sales allocated towards streaming. Therefore streaming accounted for less than 5% of the total sales. Perhaps Kylie is making music for “grown ups” and grown ups still want something they can hold in their hand, read the credits and enjoy as a product rather than consuming music like McDonalds like others do. I for one respect the creators and enjoy holding the product in my hand.

Sara
19 Apr 2018 - 4:46 pm

So the bad news is the slow and steady decline of CDs. But the good news is the slow and steady decline of CDs. For the past .. oh .. 15 years I’ve been told with great authority that the CD is dead and will be gone in five years. Yet here it is .. ‘still’ at 25% of the market. Having said that distribution is king: if it’s not on the shop floor it can’t sell. So if major box stores like Best Buy stop stocking it, there will be a quick drop in total sales simply because the CD buyers can’t buy it from their usual haunts. And they may not go hunting elsewhere, so could well be a lost customer for music overall. And that’s so sad.

Phil
23 Apr 2018 - 8:10 pm

Well, I guess I’m a Shazza in Dubbo then. I still don’t trust iTunes enough with all of my purchased music yet (though I still buy on there when the physical is too hard to get or if I just want a single song). And in the climate of current-year SJWism, it’s only a matter of time before Apple starts deciding some content is too “problematic” and takes it off the store, using their many lawyers to silence anyone who tries to sue them for their purchases. Laugh all you want, but I won’t be the least bit surprised if it happens.

Tim
6 May 2018 - 12:08 pm

What we need now is some clever little soul to produce a cd entitled shazza in dubbo, put it on vinyl and conputer form and get the smart listeners to determine the difference in clarity, quality etc etc

Joshmac
11 May 2018 - 3:57 pm

I am 43 and have bought CDs since they first were mass released around 1987. I am old school yes, but there is nothing as satisfying as having a tangible product. I have bought songs from iTunes. However I feel like I never really “own” the product. CD’s may be not as popular as they were in the 90s but like vinyl there will always be a place. They are a lot cheaper then they were in the 80s! when they were around $30 each! (around $50 each in todays money).

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