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4 Reasons Why The CD-Release Complex Is Dead

Cd At the New Music Seminar conference in Los Angeles, founder Tom Silverman opened by revealing that CDs were still 74% of sales in 2010. “CDs aren't doing so bad,” he remarked. “People still like CDs.” In other words, the format is in decline, but it still makes up a substantial amount of sales revenue. It’s important to realize though that it’s the economic engine that’s built around CDs – not the CDs themselves – that’s dying.

The reality of the decline in sales of recorded music isn’t that CDs are going away and being replaced by digital music and apps. What’s happening is much bigger than that. The record industry built a huge economic engine around the idea of CDs, and now it’s going away. The CD-Release Complex is what’s dying.

And once it’s gone, it’s gone.

The digital music consumption system will never work the way that the CD-era one did. By design, it’s different. And because to this, we’re different now too.

Digital music and the cloud won’t accelerate the decline of CDs. Instead, they – along with other technological and societal forces – will destroy the economic engine that’s dependent on CDs. Sadly, the major labels won’t have time to build another one, because there isn’t another one. This is it. This is the CD-Release Complex in all its glory. The reasons why it’s dying are varied, but well known.

These are four that I’ve chosen to highlight, but there are more. These may not even be the main driving forces that are putting this economic engine to rest.

They are, however, the ones that interest me.

Here are the four reasons:

1) The Economic Engine Is Hemorrhaging. Commercial radio, big-box retail, live music, print, and TV are what make the record industry go round.

Each of these delivery mechanisms is essential to the health of the major labels.

Radio rotates the single. Retail places it on an end cap. The venues sell concert tickets. Print and TV build awareness. The efficiency of these mass-marketing tools is waning and many are in decline. People may still listen to commercial radio, but in the next decade, the car will become an all-out war. And the fact of the matter is that radio can’t do what Pandora and MOG do. The linchpin of the record industry is going to have to evolve or die. “It’s free. It works.” That selling point of radio won't last forever. To users, radio will become just another app.

Big-box retail outlets sell TVs, not music. If CDs stop being a good way to sell more TVs, CDs will be thrown out. Print media and music-focused publications especially are hemorrhaging from the mouth. No one knows when the end will come, but we’re all aware that it’s near. The concert business is also in decline.

Ticketmaster is having troubles selling seats. Legacy acts and pop stars, most from another era, dominate venues and once they’re gone, it's going to hurt a lot.

TV is being disrupted and only a few shows move the needle.

None of these outlets can be depended on. They grow less and less effective every year. The CD-Release Complex is what’s in decline. By focusing on CDs themselves, we fail to realize that the backbone of the record industry is being broken. Piece by piece, the idea built around CDs is going away, and for good.

2) My iPod Isn’t For Sale. Major labels can buy their way onto radio.

They can buy their way onto end caps. They can buy their way into venues. They can buy their way into print and TV. Every outlet has a price. My iPod doesn’t have a price. It cannot be bought. There’s no possible way to pay to put Lady Gaga’s single into my collection. And as my iPod becomes the primary way that I consume music everything else matters less. However, it’s not just the iPod.

It’s the rise of the personalized music experience in general. There’s absolutely no way to put music into rotation on any app that I’ve paid for. By chance, one song may find its way to me, but if that suggestion is not personal and relevant to my user profile, it will be banned. I, as a consumer, can no longer be hammered with music that I don't desire to hear. That means that music marketing is no longer just a matter of cutting through the noise, it’s a matter of climbing over the eighty-foot barrier that individuals have erected around themselves. It was hard enough to sell CDs when it took hundreds of thousands of dollars to hammer music into the skull of the masses. Try accomplishing that feat when I own the headphones and the iPod attached. Sorry, my playlist is not for sale at any cost.

3) Mass-Behavior Is Harder To Change. In the field of psychoanalysis, a “complex” is roughly defined as “a combination of emotions and impulses that have been rejected from awareness but still influence a person's behavior.”

The CD-Release Complex is formed by harnessing an audience’s nature as a collective, rather than focusing the behaviors of individuals. Executives learned that if they wanted to influence the behavior of an individual they had to do so by attempting to alter the mass-behavior of the collective. Only then could they influence a person’s behavior through a combination of emotions and impulses that had been rejected from awareness of the individual. This phenomenon of behavior lies at the core of human nature, which is that, as Mark Earls argues in his book Herd, “we are a ‘we-species’ who do individually what we do largely because of each other.” You see, the CD-Release Complex is both an economic engine and an underpinning of human nature. The fact is that mass-behavior has always been difficult to change. But it’s getting even harder for major labels to influence the buying habits of individuals through targeting the collective masses.

People are becoming increasingly individualized in their tastes and interests. This means that simultaneously our copying mechanism is picking up on more trends and the more prevalent this becomes, the more difficult it is for the “Buy This New Artist” meme to replicate and spread. The CD-Release Complex is why hundreds of Metallica fans will stand out in the rain – outside of a record store – waiting to buy the Black album. Not all of those fans are there because they like Metallica, it’s because they think they should like Metallica. The flipside of the CD-Release Complex is also eroding. Both the engine and the complex drive sales and once they die, there won’t be another. That doesn’t mean that fans won’t still do things that other fans do. It just means marketing dollars will fail to ignite it more often.

4) Fans Don’t Trust Major Labels. The CD-Release Complex is built around the idea that fans discover music through the same media that major labels use to promote new music. Fans used to buy albums based on trust, a sacred bond.

They trusted that said release by said artist would be good and bought it. Now, they do a search on their iPhone and decide if it’s worth the money, i.e. risk.

Many album reviews on Amazon have a song-by-song overview of the ones that are worth buying and those that aren’t. Thus, fans cherry-pick and leave the rest.

So too, fans used to rely on specific media to discover new music and did so, because it was beneficial. They paid attention. The major labels rewarded them with music. Everybody won. This is no longer the case. There aren’t specific delivery mechanisms through which fans discover music. There are thousands.

The symbiotic relationship between consumer demand and major label mass marketing can no longer be relied upon to churn out seemingly endless profits.

This process of interrupting people with music – that they don’t want to hear – to get more distribution, to sell more albums, which makes labels enough profits to interrupt that same person again, is over. It doesn’t work that way on the web.

Major labels have lost the trust of fans and they can’t buy it back. This is the death of the CD-Release Complex, not the decline of CDs as a music format.

So yeah, the CD isn't doing so bad. But everything else around it is dying.

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