LP's coming back in style.

[Woochifer]

I think you're playing with statistics here. We've discussed this point before, and we think (I don't speak for the board, but this is the conclusion drawn in that thread) that the reason for the decline is two-fold -- one is that there have been fewer new releases. Something the RIAA doesn't like to admit. They'd like to blame it all on downloading. It's not.

The other reason is that what they're releasing is crap. Now, your standard sheep will still swallow crap when it's shoved down their throats, but real music buyers end up just looking elsewhere for their music. So yes, downloading plays into that somewhat, but basically, we've just become more discerning.

I think that the music industry is getting hit with a perfect storm right now. The repetitive and derivative quality of the releases coming out is only a part of an overall picture that includes changes in radio, retailing, downloading, economic conditions, and competition from newer entertainment media. I work with consumer expenditure data and I can tell you that the overall entertainment spending pretty much tracks with variations in income. Where the big changes have occurred is WHERE the spending now goes. Less goes towards music purchases, and more goes to DVDs and video games. The sales gains made by the movie and video game industries are almost a one-to-one correlation with the sales declines in the music industry, so downloading is not the sole culprit.

Now, about your conclusion (CD != entertainment dollar value), that might be another way to phrase it, but I wouldn't blame the format. The music they're releasing on CD != entertainment dollar value.

Quite the contrary, I think the format IS a big part of it when you think of what the primary competing home entertainment formats offer to consumers. For around the same price, CDs give you two-channel music, while DVDs give you picture, multichannel sound, and interactive features. For the price of about three CDs, video games give people a full interactive experience with production values that rival a lot of movies and network connectivity. For teenager or college kid, I can easily see how Grand Theft Auto or Madden football offer more entertainment value to them than three CDs. Once they pluck down $50 on that video game, then that's $50 less that could have gone towards buying CDs. Perceived value's the reason why so many new releases are now including bonus DVDs or online website keys with the CDs.

When the CD came out, it led to over a decade of double-digit growth in the music industry led in part by consumers transitioning their music libraries from LPs and cassettes over to CDs. People would never have switched over their libraries if the CD did not offer something of value to them.