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| From | "bryan" <munki100@pacbell.net> |
| Subject | Re: Universal Music cuts CD prices |
| Date | Wed, 3 Sep 2003 21:16:58 -0700 |
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> You probably read all about the "death of the CD and DVD" yesterday,
> right...Here's the press release: http://makeashorterlink.com/?I38D217C5
I've just discovered this press release from Forrester Research at the link
above has been updated -- I don't have the current version (see how quickly
things are changin??:-)) -- but here's the same story from yesterday, from
CBS.MarketWatch.com:
Report: DVDs will soon be obsolete
By Jon Friedman, CBS.MarketWatch.com
Last Update: 11:40 AM ET Sep 2, 2003
NEW YORK (CBS.MW) -- DVDs and compact discs could soon be
obsolete, according to a report issued Tuesday by Forrester Research.
"CDs and DVDs will go the way of the L.P.," Forrester predicts.
File sharing is responsible for almost $700 million of the $2 billion reduction in
CD sales since 1999, Forrester says, noting that movie companies face a similar
sales threat.
The so-called "hard" media are in jeopardy, concludes principal analyst Josh
Bernoff of the Boston-based research organization. "By 2008, revenues from
CDs will be off 19 percent, while DVDs and tapes will drop 8 percent," Bernoff
said.
By the end of next year, 20 million U.S. consumers will be spending $14 billion
annually on broadband connections, the report says. Streaming and paid
downloads will drive people "to connect to entertainment, not own it," the report
says.
Gloomy trend
Forrester points out that the gloomy sales trend for CDs is already under way,
as CD sales in the U.S. fell 15 percent during the past three years. Discussing
what it ominously calls "the slow death of the disc," the research group says
broadband, widespread storage and digital rights protection will make on-demand
music and movie services more popular.
While consumers always pursue bargains and higher quality, convenience remains
the key attraction.
"The idea that you have to get in your car, go to a store and buy (an item) is really
out of touch," Bernoff added in an interview. "The on-demand and cable access
services have all the advantages. All of the content is coming to cable."
Jarring findings
Bernoff's findings could eventually jar the entertainment industry.
Compact discs arrived in the late 1980s and were promoted by labels as a
superior way for consumers to own music. The companies claimed that the quality
was far better -- even though rock and roll star Neil Young, among others, eventually
claimed bitterly that vinyl offered a clearer and more genuine all-round sound. Even
though the labels charged more than twice as much for CDs as for vinyl products,
the public snapped up CDs and vinyl labels were quickly consigned to be little more
than collectors' items.
Meanwhile, sales of DVDs have been billed as the eventual lifeblood of the movie
business. Analysts have seen DVDs as the logical progression as a revenue source,
coming after cable television distribution and such retail stores as Blockbuster.
The report's findings will affect the media and entertainment industry's largest companies,
including AOL Time Warner (AOL) , Walt Disney (DIS) , Viacom (VIA) and Sony
(SNE) .
"Movie companies are reacting aggressively and moving from talk to action," Bernoff
said. "They're making it as easy as possible for you to download a movie and pay for it."
Over time, Bernoff projected, his findings will be more vivid. "There are 10 million
people who now have video on demand and that number will be 20 million by the end
of next year," he said.
"The big winners are going to be Internet portals and cable companies who can deliver
[video] on demand," he said. "The disaster is (potentially) for retail companies," such
as Blockbuster, Virgin megastores and Tower, which would suffer. "While labels will
survive, I'm very doubtful for the prospects of big music retailers."
The solution is for the retailers to get the most out of the marketing appeal of their
well-established brand names. "Western Union is all about maximizing its brand name,
not delivering telegrams, any more," he said.
"How did we get to these crossroads?" Bernoff asked in the report. "Broadband
connections, cheap and widespread storage, and ubiquitous processing power have
forever liberated media from physical objects like CDs, tapes and DVDs. But the
same technology forces that brought entertainment companies to the crisis point
contain the promise of media's salvation -- the ability to create media services that
consumers will pay for."
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