Wednesday, August 08, 2007

Rise and Fall of the CD

This good article details the rise and fall of the CD. Initially a great windfall for the recording industry, "giving away the master tapes" may have proved to be a bad strategy after all.
Yet in some ways the CD contained the seeds of its own destruction. One of the few industry moguls to raise his voice against the digital format in its early days was the late Maurice Oberstein, an American who was latterly head of the Polygram UK (later Universal) label. "Do you realise we are giving away our master tapes here?" he asked at an industry event. At the time, everybody was too busy counting the cash to listen. But as the advent of recordable CDs kickstarted a black economy in counterfeits in the 1990s, Oberstein was proved right.
Traditional broadcast marketing seems to have become less important in music faster than in other areas, with the chart success of the Darkness, Enter Shikari, and Arctic Monkeys being fan, not label, driven.

The article ends by noting the increase in the popularity and ticket prices of live shows. It's certainly true that CDs and concerts are complements, so if the price of one falls the quantity of the other may increase, but they are also substitutes (why go to the concert when you can just listen to the CD?) so the argument could just as easily go the other way. The increase in ticket prices could just be more efficient market mechanisms for pricing, as the cut made by scalpers goes to the venue itself through online auctions. As staging concerts becomes more profitable, more concerts would be staged, resulting in higher concert attendance as well.


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