By Frank Wells.
When was the last time you bought an audio or video release on physical media? Or, perhaps a better question, when was the last time your kids or other young folks you know made such a purchase? Many of us were weaned on physical media, in my case from vinyl to tape to various round shiny discs, and we retain a nostalgic preference for owning something we can hold in our hand. The artwork and information on record jackets (and, though less satisfying, CD inserts) was a significant part of the experience. Those of us in the industry are still prone to want to see producer/engineer/studio credits, but that portion of the experience seems lost on the emerging consumer. Yet, despite our preferences, I’ve noticed that in a purely unscientific survey, even seasoned audio professionals are opting into the trends towards virtual media purchases.
CD sales continue their downward trend. Recent Neilsen SoundScan numbers cite all music album sales (physical and downloads) as down 11 percent in the first six months of 2010—that’s a balance of the 17.7 percent sales decline cited for physical media (112 million units sold) with the rise in downloads of 13.7 percent (to 42 million units sold. Vinyl continues to make a minor resurgence—up 9.1 percent (but that’s only 1.3 million units). Vinyl lovers shouldn’t be overly encouraged—these numbers are only a significant trend to a minor number of players; vinyl remains a niche product for a niche market.
Single-track download sales were flat in the time period at close to 600 million tunes. Forrester Research cites overall U.S. music sales and licensing revenues at $6.3 billion in 2009—for perspective, that figure topped $14.6 billion in 1999. Unauthorized downloads now represent as much as 90 percent of the recorded music market, a figure credited to online download tracker BigChampagne Media Measurement in media reports.
On the video side, industry reports indicate that DVD and Blu-ray sales revenue combined declined 11 percent to a bit above $2.5 billion in the first quarter of 2010, even though Blu-ray sales were up 74 percent and Blu-ray rentals up 36 percent. Digital distribution in the video sector grew by 27 percent to $617 million. As with CD sales and digital downloads of music, the increases were not enough to offset the losses. Overall consumer home entertainment spending dropped 8 percent in the first quarter of 2010, according to the same reports.
Aside from the advocacy of a few industry insiders, talk of Blu-ray as a high-resolution audio format, despite its ample capabilities, is barely a whisper. Another recent report says that last year theater box office receipts in the U.S. exceeded disc (DVD and Blu-ray) sales for the first time since 2002 (disc sales actually peaked in 2004). Also, 3D-capable TVs and Blu-Ray players are all the buzz, but it’s also an insider’s buzz and even if eventually successful, 3D video penetration of the home is unlikely to be built on a physical media base.
In correspondence with an Apple fan, Steve Jobs has recently projected a future for Blu-ray similar to the history of SACD and DVD-Audio, continuing to eschew Apple support for Blu-ray in OSX. Many Windows PC owners have enjoyed Blu-ray capability for some time. Licensing issues may be in part to blame, but, based on Jobs’ comments, I wouldn’t expect Apple to begin supporting the format. Some eight million homes are now said to have Blu-ray players. Trending upwards, but again far slower than the embrace of DVD in a similar time frame.
Contrast that with the rapid penetration and ubiquity of the iPod and the iPhone, now being mimicked by the iPad (3 million sold in just 80 days and continuing to sell at a clip of 1.2 million per month, literally as fast as Apple can crank them out). If we are to learn any lesson from Apple’s phenomenal track record with portable devices, it’s that consumer convenience rules. We can also confidently declare that streaming and downloaded media will continue to gain further consumer favor. As we’ve noted here before, the only solace for providers and producers is that the public’s appetite for entertainment content seems boundless. All we have to do is figure out how to get them to pay for it.