Why the music business would be mad to let the CD die

The global music business is fixated on the promise of streaming platforms like Spotify, and it’s easy to see why: in the UK last year, despite significant declines on all other formats, streaming’s popularity meant the overall recorded music industry’s value only dropped 1.6%.

It hopefully won’t be long until real recovery, and annual fiscal market growth, transpires.

But new analysis from Music Business Worldwide suggests that the recorded music industry should be extremely wary of letting the CD album perish: in the last few years, the format has beaten the odds to show real signs of stability.

To appreciate why the CD is so essential to the future health of the UK and US music business, conversely, first we have to understand the destruction inflicted upon CD album sales in the past decade.

On the face of it, it’s terrible news. Annual CD album sales in the US have plummeted 78% over the last 10 years, from 651m in 2004 to just 141m in 2014.

Or to put it another way, the US CD albums market has shrunk dramatically to just a fifth of its size in the space of a decade.

The UK has treated the CD slightly better, but it’s still taken a kicking: CD album sales dropped 66% between 2004 and 2014 – down from 162.4m to 55.7m.

The steep declines in the graphs below say it all.

USCDalbumsales

UKCDsales2014
So how can such a damaged market play a vital role in the future of the music business – especially with the brave new world of mainstream streaming knocking on the door?

To answer that question smartly, we need to ignore unit sales for a moment, and focus on the percentage of the album sales claimed by CD in recent years.

Because, make no mistake, the CD is still king of the album. And it’s showing very little sign of giving up its throne.

The relatively gentle declines in the percentages charts below say it all.

UKCDpercent2014  USCDpercentage2014

The digital album had a good go, but it never managed to topple CD’s dominance.

Now it looks like it never will: the declines in CD’s albums format market share in the last few years have largely been negligible.

Indeed, in the UK  (if you omit ‘Track Equivalent Albums’ and ‘Streaming Equivalent Albums’, which are essentially a way of smooshing together people’s individual track plays as ‘albums’) CD’s percentage of total album sales declined by just 0.46% in 2014, taking 64.1% of the total market.

In the US, the CD claims a smaller chunk of today’s albums market. But the pattern of a marked slowdown in its decline is one again apparent.

In 2014, the drop in CD’s US albums market share was just 3.7%, as it claimed 54.9% of total album sales.

What this suggests is that CD may have found its level for the next few years – around 60%-65% of the albums sales market in the UK, and around 50%-55% in the US.

And that means that if the album itself is to have any kind of future, it will almost certainly be reliant on the fortunes of the CD.

The industry must surely be careful not to accelerate CD’s decline by focusing all of its energies on the exciting evolution of access-based music.

(Pictured: Take That, whose III was the 10th biggest-selling album in the UK last year according to the Official Charts Company. Around 90% of sales were on CD.)Music Business Worldwide

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