Music CDs Near Dead; iPods Fade

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.


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.