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RENEE MONTAGNE, host:

Our business news begins with convenience over quality in the music business.

The popularity of digital music players, like Apple's iPod, is reshaping the home stereo business. Users aren't just using the devices to store and carry around all their music; they're also using them as their main listening device at home.

As a result, sales of high-end audio equipment have taken a dive. NPR's Jack Speer reports a surprising number of consumers are willing to trade sound quality for convenience.

JACK SPEER reporting:

Greg Thomas considers himself something of an audiophile. But most of the time now, he listens to music on compressed digital files played through his iPod. He's downloaded about 10,000 songs onto the digital music player, which he says are available at the touch of a button.

Mr. GREG THOMAS (iPod user): I never have to go in my CD cabinet and cruise through there trying to find the title you're looking for. It's all right there. So I mean the iPod has completely replaced using CDs for me.

SPEER: And it's not just Thomas' CD collection that's gathering dust. The 39-year-old Maryland schoolteacher says his trusty home stereo, the one he's had for years, now sits tucked away in a closet.

Mr. THOMAS: You know, when we were in college we used to have the stereo system on one of the shelves and it was sort of like the temple in the dorm room. And you were really proud of your stereo system.

SPEER: Thomas says sound is still important to him, but he's replaced his bulky stereo with its wires, cables, and individual components, with a small, stylish, white speaker system that lets him listen to his iPod without using headphones.

Mr. THOMAS: I like something that fits into the design of my room, that doesn't take up a lot of space, doesn't look obnoxious sitting there with these huge stacks of speakers and lots of equipment, lots of lights. I mean, I don't want that look. I sort of want it to be set aside, and yet I still want to hear good sound.

SPEER: The changing listening habits of Thomas, and millions like him, are causing a profound shift in the audio market. The consumer electronics association, the industry's main trade group, says sales of digital music players tripled last year, with the value of shipments totally $3.7 billion versus just $1.2 billion for traditional home stereos--something which hasn't been lost on those who sell stereos for a living.

Mr. GARY YACOUBIAN (President, MyerEmco): It's a landscape that is fraught with peril, but also fraught with opportunity.

SPEER: Gary Yacoubian is President of Myer-Emco, a relatively small specialty audio chain located in the Washington, D.C. area. He says it's the first time ever sales of small portable digital audio devices, like the iPod, have exceeded those of home entertainment systems. But Yacoubian isn't upset about that.

Mr. YACOUBIAN: The iPod has stimulated excitement about music again, and that is actually a potential huge positive.

SPEER: Yacoubian says at first there was resistance to carrying digital music players in his stores, but now, alongside super expensive stereo receivers and speaker systems, sit small music systems designed specifically for the iPod and other mp3 players.

Some are made by PC makers, rather than traditional audio manufacturers. Unlike the thousands of dollars a high-end stereo might cost, these devices retail for just a few hundred dollars. And while some audio purists point to the fact the iPod and similar devices playback compressed digital files at a lower quality than CDs, listeners don't seem to care; at least not based on the sales numbers.

Mr. ROSS RUBIN (director of industry analysis, NPD Group): It's the curse of good enough.

SPEER: Ross Rubin is with NPD Group, a market research firm. He expects sales of digital audio players and accessories will continue to grow while demand for other audio gear declines.

Mr. RUBIN: Whether you look at rack components, whether you look at mini shelf systems, whether you look at CD boom boxes; we have just seen double-digit declines, pretty consistently, for the past two years.

SPEER: Earlier this year, Apple unveiled its own entrant into the increasingly crowded accessory market-a $350 system called the Apple Hi-Fi, which also charges a user's iPod.

Sitting in his living room, teacher Greg Thomas acknowledges the music system made for the iPod isn't perfect. It's not as loud as his old stereo, but showing off the sleek remote that goes with it, he demonstrates it's loud enough.

Mr. THOMAS: This is basically my stereo now. I can't imagine I'm going to buy another big system. So that's what I'll be using from now on.

SPEER: Okay, good. Let's hear what it sounds like.

(Soundbite of music)

Jack Speer, NPR News, Washington.

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