Although sales of CDs over the past decade have risen by 150%, year on year worldwide sales are starting to fall.
Along with decreasingly favourable world economic conditions and competition from other leisure products, the reasons for this decline emerge from the increased availability of free and pirated music.
One of the biggest problems for record companies is that the CD-R – a recordable form of CD - has become widely, and cheaply available. In 2001, the value of CD-R sales overtook recorded music sales for the first time.
Though these sales include CD-Rs sold for use as computer data storage as a large storage medium to replace floppy disks, figures like this are often quoted by music industry associations as reasons for the decline in sales of their music,.
Pirated CDs have a worldwide market value of US$4.3bn. In financial terms, the problem of organised CD-R piracy is considered to be at its highest in Latin America, Western Europe and North America.
In terms of market share, though, Asia has the biggest problem. An estimated 90% of CDs sold in China being pirated copies. In the legitimate market place, sales in Asia were down by around 20% in 2002.
The proliferation of music download sites on the internet has also caused problems for the worldwide market. With digital copies of CDs available to download and copy to CD-Rs, the problem is considered to be far greater than that of cassettes, to which the industry responded with a campaign claiming that ‘home taping is killing music.’
But Michael Kurtz of Media Monitor, who works with independent retailers and major record labels in the USA, says that “Customers are not dumb, they’re going to find the cheapest way to buy what they want. That’s exactly what’s happening – people have discovered they can get music for free, so you’re having a big shift as to how people consume it. Kids will buy 1 CD and burn it for 20 friends – it’s a cultural shift that definitely is happening.”
It is clear that the industry needs to do something to combat this threat to their revenue, and it is with this in mind that some recent CDs have included copy protection technology.
Early attempts at copy protection have prevented the CD from being played on a computer, and in some cases on other domestic equipment. This approach is causing problems for an industry used to being able to dictate how its consumers listen to its products.
In June 2002 a class action lawsuit was filed in California against the Big 5 labels, with the complaint alleging that copy protection has made the disc unstable, and that the record labels are misrepresenting these CDs by not declaring them protected.
In the US and many countries around the world, it is legal to make a backup copy of your CD for your own personal use, and the copy protection obviously stops this.
Additionally, CD-Rs have a tax already levied on them specifically related to cover piracy issues, a tax that is fed back into the music industry.
This makes it even more difficult for the record labels to add copy protection to its products without angering its customers, as the threat posed by piracy has already been accounted for and insured against.
It is clear that the industry needs to do something to combat the threat to its products. but it is still some way from offering a solution that is palatable to its consumers.
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