Music CDs Near Dead; iPods Fade

| Ted Landau's User Friendly View

A rumor says that music CDs may soon gasp their last breath. In related news, the current sales decline of traditional (non-touch) iPods is likely to continue.

Music CDs

Music CDs will eventually join the dodo bird on the extinct species list. This is hardly shocking news. Everyone expects this. The only question has been exactly when this will happen. A rumor recently reported in Side-Line Music Magazine answers this question. If the report can be believed, the death of music CDs is coming sooner than you might have thought. Very much sooner. As within the next twelve months:

“The major labels plan to abandon the CD-format by the end of 2012 (or even earlier) and replace it with download/stream only releases via iTunes and related music services.”

Before you jump out of your seat to jeer or cheer, bear in mind that this remains unconfirmed: “EMI, Universal and Sony…all declined to comment.” Still, Side-Line is sticking by its guns, noting in an update that: “We were approached by several people working with major labels, who indeed re-confirm that plans do exist to give up the CD.”

OK. But “plans do exist” and the actual execution of such plans are not the same thing. I remain skeptical. However, I’m not ready to dismiss the story out-of-hand. Sales of music CDs remain in the dumpster with no sign of recovery. If the amount of shelf-space that stores such as Target devote to CDs gets any smaller, the CD format may vanish from sight even if the labels keep churning out discs. Every time I see CD display at a store, I think to myself “dead format walking.” It happened to 45’s, LPs, 8-tracks, and cassettes. Why not CDs?

Many of us (including myself) have long ago given up on CDs. I have several friends that no longer pay for any music at all. They’re not pirates. Rather, their music listening comes entirely from what’s available at public libraries (many of which now offer music online) and free commercial services such as Pandora and Spotify.

Although this cannot be welcome news for music companies, there is a potential upside. Rather than a future that depends entirely on services such as iTunes, labels might seek a new delivery system that affords them a form of copy protection — such as the UltraViolet cloud-based system. One attraction for users here could be higher quality sound than available from MP3-format online sources. If this shift worked, labels could wind up with more control and profits than they currently have with CDs. Still, this is far from a sure bet. I’m not seeing any chickens hatching yet.

The biggest potential downside of CD’s demise for users, especially if MP3 files remain the dominant alternative format, would be the elimination of the higher quality sound available from CDs. However, you can also get excellent sound quality from online sources. Apple’s iTunes Store, for example, supports a 256 kbps AAC format that many people find superior to CD quality [Note: Read my comments below for a clarification of this point]. The tie-breaker here is that most people probably don’t notice the difference in quality among these different formats.

iPods

The transition from CDs to online services as the primary source of music has been incredibly swift. The introduction of MP3 files together with file-sharing services such as Napster played the most significant early role in this shift. However, Apple sealed the deal when they came out with the iPod and iTunes. It’s almost shocking to realize that it was merely ten years ago (2001) when Apple first released iTunes and the iPod. It wasn’t until 2003 that the iTunes Store first opened. And it was that same year that Apple first expanded iTunes to the Windows platform. It took less than eight more years for CDs to be on the verge of demise while the iTunes Store basks in being the number one music retail outlet in the world.

Yet even Apple has had trouble staying ahead of the curve of progress. While iPods have almost completely crushed any MP3 player competition, iPod sales are on a downward slope of their own. According to the latest Apple quarterly figures, iPod sales showed a 27% decline year-over-year. As over half of those sales were iPod touches (which, as an iOS device, I consider more appropriately grouped with iPhones and iPads than iPods), the actual decline for “real” iPods is likely even greater.

Perhaps in recognition of this trend, 2011 was the first year since the iPod was introduced that Apple did not bother to change the iPod hardware in any way. The iPod classic, nano and shuffle are all identical to what was introduced in 2010. Even the iPod touch models remain the same (except for the availability of a white touch).

So where have all of those lost iPod sales gone? Mainly to the iPhone. It makes sense. Virtually everyone in the market for an iPod has a mobile phone. So why not make your mobile phone an iPhone and save yourself the hassle of having to carry around two devices when one will do? I can think of a few exceptions to this logic: some may not want the more expensive contract of an iPhone (or any smartphone); others may prefer the smaller size of iPod for some activities, such as exercising. But the vast majority will go with the iPhone. Those that don’t may still get an iPod touch.

Symbolic of this shift, the word iPod no longer appears on the home screen of iPhones. As of iOS 5, Apple dropped the iPod app in favor of separate Music and Video apps, matching what has always been true for the iPod touch.

Traditional (non-touch) iPods aren’t going to disappear for the foreseeable future. However, iPod sales might soon decline to the point that iPod’s qualify for the endangered species list. Oddly, this could be exactly what Apple hopes will happen. Apple’s current big push is iCloud. If Apple is successful in making iCloud the dominant storage site for users’ music, iPods must inevitably be left behind — as they do not sync to iCloud. The upside, if this happens, is that Apple should more than make up for the lost iPod sales with increased sales of iCloud-friendly iOS devices.

The Bottom Line

What’s the take-away here? This is all pretty much business-as-usual for today’s digital world. The pace of change continues to accelerate. The past ten years have seen transitions that would have taken twenty years or more to accomplish back as recently as the latter half of the 20th century.

For business, the recurring moral is that nothing, and I mean nothing, is safe from becoming obsolete in an instant. As Steve Jobs said: “If you look backward in this business you’ll be crushed. You have got to look forward.” Now more than ever.

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21 Comments Leave Your Own

Andrew

You’d be hard pressed to find anyone who prefers the quality of mp3s to CDs. At most you’ll have people listening on low quality equipment saying they can’t tell the difference.

You also fail to mention the re-emerging market for LPs. I think that they will continue growing in popularity and eventually become the main alternative to buying digitally.

Mike

While it may be a fact that CD sales are at an all time low, this does not mean that they are completely dead. Many people that listen to music do not have an iPod or similar portable device, though most that would have read this article do.
I have worked in various record stores for over 15 years now and everyday people ask for cassettes. Cassettes! No major label has produced an album on cassette since 1998.  LPs aren’t dead either, with more being produced now than 10 years ago.
While digital media is great for portability, they still have not reached the level of fidelity available from LPs or even tape, nor does digital offer the same ritual of the listening experience that so many of us enjoy.

Ted Landau

You?d be hard pressed to find anyone who prefers the quality of mp3s to CDs.

Not sure if you’re suggesting that I said this. But just to be clear, I did not. Apple’s iTunes Store format is not MP3, but AAC. I have read comments that this Apple format can be superior to CD because it can start with a higher quality master than a CD.

YodaMac

Sure, cassettes and LPs (and CDs) aren’t really “dead” if you want to count the tiny population of audiophiles who adore using them and making sure other people know that they use them.  Because they are tiny compared to the rest of the population who just want to listen to good tunes for fun.  For us, digital is the only way to go.  It sounds just as good blasting away in your car, headphones, etc.
Sorry, but it does.
LP and CD are dead formats.  Of course they will continue to linger on, as do all useless things, but they are not coming back.

Lee Dronick

Our local Barnes & Noble Bookstore recently did a big renovation. The completely removed the music and video section and are not selling any in the store. I don’t know how well that part of the business did, the prices were not competitive and there didn’t seem to be too many shoppers. However, I have found occasional good deals on mark-down or two for sales.

The Nook nook was increased to be the prominent part of the store. In fact it looks like an Apple Store in that it is spacious, well lit, and nicely appointed.

LPs resurgent? Somewhat, but they are too unwieldy, not portable, take up too much space, and too much of hassle to rip into iTunes. Audiophiles like them, but for my ear digital is fine and much more convenient.

Tiger

LPs are indeed re-emerging. I have a 17 year old niece in one of the top high schools in the US and she said the thing for high school students is now LPs. They buy them by the dozens at a time, collecting classic tunes and displaying the album covers. Do NOT underestimate this market. They have a lot of money and the ability to spend it how they please.

Musictyp

Wow I guess I’ll pack up my bags….my job must be over….

Oh wait a minute !!! Over 44% of sales are still in CD’s and music sales in 2011 are actually UP versus 2010 !!!

No company is walking away from 40% of their sales…not even “The Lone Mac Observer”

....Guess I’ll keep my job a little longer

Jamie

Actually, you nailed a good point, Ted: part of the problem has been that music isn’t mixed for MP3 in the studio; when CDs first debuted, they were made from masters mixed for analog, and they too sounded like poo at that time (ditto the first digitally mixed albums, also riding the poo train). Additionally, good equipment does indeed make a difference, a lot of nuance is lost with bad speakers etc.

As an audio lover, I definitely prefer AAC over MP3 (whither the middle range? And forget Ogg Vorbis. That ship has sailed, methinks) for lossy compression, although I would take lossless formats instead in a heartbeat. FLAC is good, but the support isn’t there. Apple Lossless is decent too, but not on offer, and I don’t understand why we haven’t made this transition as bandwidth had been the previously stated obstacle - we can endlessly stream HD video to our devices but not offer downloads for lossless audio? That doesn’t make much sense. wink

Anyway, buh-bye, CD. We will think of you and smile (and then remember your scratch-a-bility and short shelf-life and ability to be thwarted by a thumbprint or a speed bump and-and-and-and-and-and . . . somebody get me a kleenex).

Addendum: It is indeed heartening to see the re-emergence of vinyl, with, y’know, the kids. You just can’t etch a secret message into the surface of an iTunes track. wink

TitanTiger

Anyone that thinks a 256k AAC is superior to CDs needs new ears.  It’s good sound quality, but it is not even CD-quality, much less better.

Ross Edwards

Anyone that thinks a 256k AAC is superior to CDs needs new ears.  It?s good sound quality, but it is not even CD-quality, much less better.

I was going to say the same thing about anyone touting the illusory higher-than-anything sound quality of vinyl.  That “warm” sound is loss of dynamic range, hipsters.  And, by the way, PBR is swill.

Ideally, lossless digital is the way to go, and mixed for it from the outset.  Your point about CDs being a consumer source of exactly that is well taken.  But for practical purposes, I have long since conceded archival duties to others, and I am content to have a library of 256k AAC songs.

Ted Landau

Anyone that thinks a 256k AAC is superior to CDs needs new ears.? It?s good sound quality, but it is not even CD-quality, much less better.

I’m no expert here…and I haven’t done any comparisons myself. But I’ll try to respond.

I believe this is an apples-to-oranges comparison to some extent.

That is, if you take a CD recording and convert it to an AAC format, it will certainly not improve the sound. AAC is inferior, even if most people can’t tell the difference.

However, if you compare a CD (which may be based on a mediocre original) to an AAC file of the same music directly made from a superior master (which can be the case for music in iTunes Store), the ACC version can sound better. Or so I have been told.

I saw this come up in a discussion of iTunes Match, where some people were claiming that, when they replaced the CD versions of some of their albums with matches from iTunes, the iTunes version sounded better. Replies offered this as the explanation.

Lee Dronick

Anyone that thinks a 256k AAC is superior to CDs needs new ears.? It?s good sound quality, but it is not even CD-quality, much less better.

Yes, I could use new ears, mine will soon be 61 years. These days I probably could not tell the difference between music played from a CD and 256 AAC played from a hard drive. I still occasionally buy CDs and rip them into iTunes, but most of my music purchases are digital downloads.

JohnnyO

Both “near death” and “fading” are inexact words.  I wonder just how long the tail will be.

Between my wife and I, we have 3 iPods that are updated weekly, and another 2 that are used occasionally.  Only one of these iPods is less than three years old. 
That is in addition to my iPhone.  In the car, I still prefer to have a dedicated iPod for audio so that I can continue to use my iPhone simultaneously. In the gym, I want a tougher, less expensive device.  I don’t think I’m alone with these requirements, as you pointed out in the article. 

I’d guess that the iPod sales are down because everyone (in the USA and Western Europe, anyway) who wants one or two already has them.  They are not failing often often to keep sales up.

As someone who spends many hours a week away from Internet access (either 3G or WiFi), I certainly hope Apple realizes that there needs to continue to be an option that does not require an “always on” network connection.


John

kevinlane

Interesting, well-written article.  However, I disagree with you on one point.  You stated that the iPod Touch should not be grouped with the non-iOS devices.  To me, the iPod Touch is simply the ultimate version of an iPod.  It stores and plays media, just like previous iPods.  Ok, so it connects to the internet.  It’s still an iPod.

Also, while other will certainly disagree with me, I consider my iPhone to be my main iPod.  I certainly use it to play music as much as I do any other function.  When you lump iPhones in with iPod sales, you get a very different picture.

Paul Goodwin

Per Wikipedia, 300,000,000 iPods have been sold. I’m not sure what percentage of thenworld’s population are music lovers enough to buy an iPod, or have the economic ability and opportunity to buy one, but I can certainly understand the downward trend in sales as the market saturates. The things last forever. I’m still using my 2002 and 2004 models. I don’t need another one until I upgrade the stereo gear in my car to be USB iPod compatible.

Even my rock ‘n roll 60s and 70s, and jet engine noise damaged ears can hear the difference between the sound of a CD and a 256 Kbps AAC or mp3. My big regret is that the lossless format wasn’t available until after purchasing thousands of songs at the lower bit rates.

MrEdofCourse

Hi Ted,

Love your articles.  As someone working with digital audio since the late 80s, maybe I can offer some clarity around the 256kbps AAC versus CD issue.

First, there’s an issue of what a person may prefer to hear.  I refer to this as the “yummy” quality.  It turns out that many people, in many situations, will prefer the inferior format because it sounds “yummier” (more on that later).


If you take a source sound “A” and record it in format “B” and “C”, the real quality test of the formats is to do a double blind test comparing the difference between A and B with a score that compares to A and C.  Most people compare recording B to recording C and determine one sounds yummier to them without determining which sounds most like the original source.

In the iTunes case, you’d compare the source used to master the CD to the CD and to the 256kbps AAC, assuming it was created by the same source that was used for the CD.

As you’ve pointed out, the CD may have come from an inferior source than what was used for the 256kbps AAC from the iTunes Store (or iTunes Match).  Apple tries to get the best source masters available and as a result, this can often be the case.

So the question can then become, does a CD sound closer to the original recording than a 256kbps AAC from a remastered source?  This is hard to answer since unless you have access to the original recording, it’s impossible to do an A:B:C test.

However, if you’ve done extensive A:B:C tests and can have an understanding of the effect an 256k AAC encoding will have, it does become possible to compare B to C (CD to AAC) and have a qualified opinion of which is likely to sound closer to the original recording.  This is pretty easy actually with low bit rate encodings, but at 256kbps for AAC, it’s going to be very hard to catch any compression artifacts if properly encoded.

To complicate matters, not all encoders are created equal.  So a lot of people taking a CD and encoding a 256kbps AAC where the CD was made from the same source as which was used for the iTunes Store, may find more yuminess (albeit slightly) with the new iTunes Matched version since Apple is using better encoding methods for the files in the Store/Match.

Dennis Volz

I, for one, really like my iPod ‘touch wheel’ version.  I guess it’s the sensory feedback that I get when I’m walking or exercising.  I can skip songs, replay, adjust volume up or down without having to look at the “screen” as I get some feedback from the tactile nature of the traditional iPod.  Took my iPhone on a walk the other day and had to take it out of the case every time I wanted to make any adjustment.

Lee Dronick

I, for one, really like my iPod ?touch wheel? version.? I guess it?s the sensory feedback that I get when I?m walking or exercising.? I can skip songs, replay, adjust volume up or down without having to look at the ?screen? as I get some feedback from the tactile nature of the traditional iPod.? Took my iPhone on a walk the other day and had to take it out of the case every time I wanted to make any adjustment.

I can relate to that. I do frequently use the ear buds that came with my iPhone so that I can use the controls. I am pretty sure that statement will bring a comment about the quality of Apple supplied ear buds the quality is “okay,” but the feature I most meed at those times is the mic.

However, I also have a 3rd generation iPod Shuffle, the tie clip design, I bought after my iPod Classic died. I have two gadgets for it with volume and track controls that to let me use 3rd party ear buds/phones. One os the Scosche TapStick and the other is a Belkin Headphone Adaptor which also works with the iPhone.

Andrew

Not sure if you?re suggesting that I said this. But just to be clear, I did not. Apple?s iTunes Store format is not MP3, but AAC. I have read comments that this Apple format can be superior to CD because it can start with a higher quality master than a CD.

Whoops, I meant to put AAC, not MP3. I tend to consider all the compressed formats more or less the same though. I did not know about apple starting with a higher quality master than CDs.. I assumed all formats would be made from the same master? Mr Eds comment seems to confirm from someone in the field that there may be multiple masters.

I can certainly understand that some people would be reporting that their iTunes Match versions sound better than their old rips. Who knows what settings they may have used when making their own copies.

Anyway, thanks for the interesting article, it’s given me something to research today (multiple masters for the same album) instead of just staring at my desk waiting for thanksgiving!

As for the LP discussion above, of course they’re clunky, unwieldy, and hard to move around.. but so are CDs. After I got my first iPod I never carried another CD anywhere with me again. If I’m going to have media permanently at my house anyway, I’d rather it be substantial and the best quality possible. Having an LP copy of an album you love gives you much more feeling of ownership than a little CD.  Of course, for the convenience you cannot beat digital distribution. Thankfully, many new-release LPs I’ve been buying come with a free download code.

mrhooks

However, if you compare a CD (which may be based on a mediocre original) to an AAC file of the same music directly made from a superior master (which can be the case for music in iTunes Store), the ACC version can sound better. Or so I have been told.

The problem is, this situation has nothing to do with the formats themselves, as your wording suggests.  The article states some people find the AAC format to sound superior, which simply is not true.  It is the recording which is superior, not the format.

Also, the prevalence of this situation is very low.  It’s hardly a selling point.

And personally, as much as I might not like the physical space it takes up in my house, I value having a hard copy of the music.

Tim

Not sure if you?re suggesting that I said this. But just to be clear, I did not. Apple?s iTunes Store format is not MP3, but AAC. I have read comments that this Apple format can be superior to CD because it can start with a higher quality master than a CD.


Apple would do things better if they offered their music alternatively in a lossless format for the people who like their audio to not sound like compressed crap.

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