Marketplace Report: Boosting CD Sales
ALEX CHADWICK, host:
Back now with DAY TO DAY. The iPod has been a big breakthrough for selling music downloads over the Internet, but most consumers still buy songs on compact discs. And the music industry is not giving up on that old format. The world's biggest recording company, Universal Music, has plans to reinvent the way that CDs are sold. MARKETPLACE New York Bureau Chief Bob Moon joins us with more. Bob, a lot of people are moving toward downloading music, and CD sales are declining, so why this move to promote the compact disc now?
BOB MOON reporting:
Well, Alex, I guess it really depends on how you spin this. Sorry about that, really no pun intended there. Universal Music says this is just a way of more effectively marketing the CD, but there are some industry commentators out there who are suggesting that this is really just pricing some back-catalogue CDs inline with their download versions. They'll be about the cost of buying the songs that make up a whole album online. Universal says it's just trying not to lose sight of the fact that most of its consumers - in fact, as many as 90 percent - buy their CDs with a physical product.
This really gets down to what a lot of skeptics have said about downloading music. Some people feel more secure having that hard copy of what they're buying. I had a friend whose iPod crashed. He ended up losing all the music he had in it, and some of these downloading services put a lot of licensing restrictions on the way you can use their music, how many copies you can make, that kind of thing.
CHADWICK: Hm. So how's this new marketing approach going to be different from the way CDs have been sold in the past?
MOON: Well, I want to emphasize that a lot of these new approaches will be introduced in Europe first, but if they're successful, you can bet that they'll be showing up on this side of the Atlantic, as well. One of the ways they're going to defray the cost of the physical product is to sell some of these CDs - reissues specifically - in a bare-bones format that won't include the traditional jewel case, but instead they'll use a cardboard sleeve. That gets the price point down into a competitive range with the downloads. They're comparing this to the book industry's paperback book.
There will also be other tiers, if you will, that will include a so-called super jewel box. It'll be made out of stronger, more durable plastic, and there will be deluxe packaging for the CDs of top artists as well.
CHADWICK: So does the industry have anything else? What else are they going to try to do to keep us buying music on discs instead of downloading it?
MOON: Well, you may already own some of the newer products in high-fidelity surround-sound. There's the DVD audio, super audio, the dual-disc that includes a CD on one side and a DVD on the other side. They sometimes include concert material and that sort of thing.
Today in the MARKETPLACE newsroom, we're looking at the life and death of former Enron Chairman Kenneth Lay.
CHADWICK: Thank you, Bob. Bob Moon of Public Radio's daily business show, MARKETPLACE, produced by American Public Media.