It was only a matter of time.
This week, Best Buy announced that they would stop carrying CD’s and will be phasing them out over the year. Although they still report over 40 million dollars in CD sales, the sharp decline is forcing the doomed retailer to give up on the format all together.
Who didn’t see this coming? While the vinyl market has surged, it’s CD counterpart has shown substantial losses for several years. While CD’s still outsell vinyl in most markets, the heyday of CD’s is long gone. In fact, many in the industry have been predicting their death for many years. The writing has been on the wall, some just chose not to read it.
While we mourn the loss of any physical format, we must agree that the days of the CD are numbered. This will not end at Best Buy. Target has already made moves to phase out CD’s or move a consignment-based system. Good luck getting the labels and distributors on board with that one.
So, what happened? Why is the format that was once the mainstay of the music industry dying while vinyl and cassettes are rocketing their way back to mainstream relativity? More importantly, who is responsible?
In many ways, it’s the big box retailers who are the biggest culprit when it comes to the death of the CD. While they complain about the lack of sales driving nails into their coffin, they must realize that they are the ones wielding the hammer.
CD’s were perfect for big box retailers. While vinyl had a presence outside of record stores, it was rather limited, even at the height of popularity. While everyone from Kmart to Fred Myer carried a small selection of vinyl (something we still see on price tags impossible to remove) the vast majority of music sales took place in independent record stores. Vinyl is big, heavy, takes up lots of shelf space is quite fragile to both the elements and handling. The CD changed this. CD’s were small, portable, came protected in iron clad plastic cases surrounded by shrink wrap and giant plastic anti-theft devices. They were resilient to bin wear and handling, and took up a fraction of the shelf space of their vinyl counterpart. Where a rack of 100 records stood could hold five times as many CD’s.
However, what really got CD’s flying out of stores was the price point. Strategically located at the back of most department stores, CD’s were positioned right between the CD players, giant televisions and computers. Seeking out the latest release meant the customer must be barraged with countless other big purchase opportunities. To make it even more appealing, most retailers bought massive amounts of product, driving down the price point, and then to close the deal they would sell it at a loss.
Independent record stores simply could not compete with the big chains. There was a time when one out of every five CD’s was purchased as Walmart. With the wholesale market unfairly tipped in the big retailer’s favor, record stores simply could not compete.
Make no mistake, big box retailers played just as an important role in the massive closure of record stores as the digital download did. Sadly, the labels did nothing to stop this. Seeking only the dollar, they continued to pander the lower price demands of the big box retailers, meanwhile stabbing established record stores in the back. They didn’t learn their lesson either, the practice continues to this day.
So, what happened? If the big stores had the ideal formula, why are they jumping ship on the CD’s, or physical music altogether?
Obviously, the digital music market is the biggest factor. Downloads and the streaming didn’t just hurt the independent record stores, they put a massive dent in the larger market as well. Budget shoppers will always seek out the cheapest option, and when it’s free, they simply cannot compete.
The stores themselves hurt their future as well. While demand decreased, they removed shelf space, stopped selling CD players, and began pushing iTunes gift cards instead of physical music. No doubt they saw this coming for a long time. If you don’t believe that, look at how much floor space in Best Buy and Walmart was dedicated to music ten years ago compared to today. If you can find any selection at all, it’s sparse, limited to the mainstream pop and country releases promoted by the large labels.
While we hate to see physical music being phased out of any store, perhaps this one is for the best. Physical music has no place in big box retailers. The music customers who were loyal to the big chain stores are either gone, or what remains are senior citizens buying CD’s for their grandchildren because they heard she loves Taylor Swift. Furthermore, the employees simply don’t know how to sell physical music. The pimply faced guy behind the counter has no interest in your music likes. He doesn’t know or care about the new release out on Sub Pop, and if he does, you can’t buy it at the store. He can’t special order an album, pre-order a limited-edition boxset, or recommend a decent thrash metal album.
This is where record stores excel. Todays music consumers are looking for that personal touch, that friendly recommendation that might open their ears to something new. They are seeking direction in their musical journey that has been flooded with every major band, label and indie artist vying for their attention online.
That is why the CD still has a presence in the independent record stores. While many stores report the same dwindling numbers, they don’t compare to the big box store statistics. In fact, many stores we have visited have said that while it certainly has grown stagnant, a large portion of their income still comes from CD’s.
CD’s are surviving, although not known for how long, in the independent record stores. They are selling for all the reasons that make CD’s great. They are extremely portable, excellent sound reproduction, and while they can’t hold a candle to vinyl, they are tangible and part of a collection. The used CD market is particularly profitable to many stores. Much like the days when people were giving up on vinyl, people are flooding stores with their CD collections, sometimes selling for pennies on the dollar.
Is there a future for the CD? Likely, but it’s lifespan is limited. As great as they are, they simply cannot compare to the experience of listening to the vinyl record. Many cars today do not even have a CD player. It’s becoming easier to find a retail store selling a turntable than it is a CD player. Their appeal of portability and convenience has been shadowed by digital download. What we do know is that we will very shortly only see CD’s for sale online, merch tables, and independent record stores. As most stores rebuild their vinyl shelves, the CD racks will be disposed of.
Lastly, CD’s simply do not have the cool hipster vibe that has no doubt benefited both the vinyl and cassette markets. If the labels are simply waiting for the “CD revival,” their marketing plan is going nowhere.
No doubt we will see CD’s for many years in record stores. Labels simply don’t know when to give up, and they are consistently years behind making the practical moves that meet their customer’s needs.
Instead, they need to get back to focusing on what is selling, vinyl. They need to stop treating vinyl like a flash in the pan hipster fad and get back to marketing it as much as they promote CD’s and digital downloads. They can write their own future by embracing the format, promoting the format, protecting the format, and most importantly, focus on the remaining independent record stores who serve with their best interest in mind, rather than the big box retailers who don’t want to carry their product.