CDs down but not yet out, say music pundits

CANNES, France (AFP) — CDs may well be seen as 'yesterday's' technology by young digitally-savvy music lovers, but there's life left in the shiny discs for some years to come, leading industry executives said Sunday. Plummeting CD sales worldwide have been blamed for many of the current woes of the global music business as new digital music products and services continue to grow and seduce consumers. But that is only part of the CD story.

"I believe there will be sales of physical (CD and vinyl) products for many years to come," Jean-Bernard Levy, who heads up Universal Music's parent company, entertainment giant Vivendi SA, told a music conference at the MIDEM music mart, the world's biggest music industry event taking place in this Riviera seaside resort. Many consumers are still buying CDs in supermarkets, retail stores or from online stores such as Amazon, Levy said.

His view was echoed by another leading music executive, Thomas Hesse, who heads global digital business at another record major, Sony BMG. "Physical is a business you shouldn't talk down," he said. Thirty percent of Americans don't have Internet access, for example, and still buy music, Hesse noted. And of the 18 million copies of superstar Justin Timberlake's new album that sold recently, three million were CDs, he said.

CD sales, however, have been declining steadily over the past three to four years as digital music explodes onto a host of devices and online music download stores. According to the IFPI, the industry body that represents the international recording industry, physical sales, which are virtually entirely made up of CDs, dropped from 21.5 billion in 2004 to 17.5 billion in 2006 and slumped further to an estimated 15 billion in 2007. Digital sales have soared by comparison.

Record company revenues from online digital music sales climbed 40 percent to 2.9 billion dollars (1.9 billion euros) in 2007. But the jump still failed to make up for the drop in physical sales, which companies blame largely on rampant online music piracy. CD sales also seem to increase when artists include added value, such as extra tracks or information about the band along with the CD, industry experts said.

The concept of delux packaging has attracted at least one entertainer -- Genesis rocker and digital innovator Peter Gabriel, who told the influential US music magazine Billboard he has been looking into the concept for some time. The festive period also gave a shot in the arm to CD sales, according to industry analysts, which had a good Christmas in Britain.

AFP