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Ultra Peanut
04-11-2005, 07:46 AM
http://www.blogmaverick.com/

The countdown for the extinction of CDs is about to begin
Posted Apr 4, 2005, 3:56 PM ET

So Iím on the Mavs latest roadtrip. Iím walking through a mall with my Ipod cranking away. I had already decided that I wanted to pick up the soundtrack to KillBill to get the Woohoo song from the 5678s. Then I realized, I didnt have a way to deal with a CD.

My laptop I carry doesnít need a dvd or cd player because I carry everything important on an external hard drive that I just connect to my desktop or laptop. It has movies, tv shows and music, along with my business files and applications I need. Means I can travel very, very light, and if my laptop ever busts, I just connect my 160gb drive to a computer at the hotel and Iím set.

So here I was, wanting to buy music to listen to and workout to that day , but I couldnít.

I realize that I could have gone to Itunes and just gotten that 1 song, but it doesnít sit right with me to be limited on how and where I can use music I download. I realize I could go online and download the song for free, but I wonít do that. Thatís stealing. Itís wrong.

Thatís not to say I wonít ever download for free. If I had already owned the CD and just wanted it to play and it was a matter of availability, I definitely would have downloaded it for free. I will also download music to sample it, but I wonít keep it. I will buy the CD or erase the song.

I still like to buy CDs. Or at least I did up until today. I liked the idea of taking a chance and seeing if there is more music I like. I liked having the disc, so I always have a copy , in case I have to clean up a hard drive to make room for more stuff, or to convert to a new file format.

Then it occured to me, that I havenít used my CD Player, portable or at home, in a long, long time. That I rarely, if ever see anyone walking around with a portable CD player anymore. They have all been replaced by MP3 players. If everyone is switching to MP3 players, whether they are Ipods, in phones, in PDAs, in cars, whatever, then that means that everyone is going to have to go through a multistep process in order to get the music from where or how they buy it, to the place they want it.

Thatís not good for the people selling music. Particularly retail stores. Think about it. Apple has done such a great job of selling us on why we should store our musically digitally, that every one is either doing it, or on their way to doing it. Which means that 90 pct or more of music being sold is currently being sold on a physical format that the segment of the music buying public that spends the most amount of money on music doesnít want. They are being sold CDs. They want to listen to their music from hard drives or flash drives. Thatís a problem.

That got me thinking about how music is being sold, and how it might be sold in the future.

MP3 players are changing peoples listening habits. We donít carry folders filled with CDs anymore. We carry our library in our MP3 players. We donít listen to CDs. We listen to playlists that we adjust all the time. We donít burn CDs anymore, itís too time consuming. We copy all our music to our MP3 players so itís all available at our fingertips.

All of our music in a single device. Available to us wherever we are, for whenever we want it. Music how we want it, when we want it. Easy and breezy. Thatís how we want to consume music.

Thatís not how we are being sold music.

To buy music these days, I have to make all kinds of choices. If I want to buy downloads from the net, itís like trying to figure out which mortgate to take out on a house. Now because of the cost, but because of all the rules and regulations. Do I want to limit myself to 5 computers. Do I want to always keep my subscription live. Do I want to store the music in a proprietary format that only a couple devices can use. Those are all tough decisions to make when the only thing I know with certainty is that the device Iím using as an MP3 player today, is NOT going to be the device Iím going to be using 18 months from now. There will be players that have more features, or I will consolidate multiple products into a single device. I may be using my phone, my PSP or PDA or something other device for my music.

Which brings me back to CDs. At least until the music industry goes to DVD Audio or copy protected CDs, I know that with the CD, I have control over my music. I can make my own personal copies (which I realize was illegal to do, until the RIAA lawyer told the Supreme Court last week it was all Ok with the RIAA now). I can put them in apple format for my IPod, Sony format for my new digital walkman or PSP, MicroSoft format for my PC, or whatever else comes along.

Thatís the only good reason to own a CD. To deal with the hassles that you know will come from having to deal with all the different formats that MP3 players will support in coming years.

Thatís not a good sign for the music business or the current retail CD business.

It is a great opportunity for someone to start selling music to consumers, where they want it, how they want it.

There is absolutely no reason I shouldnít have been able to buy the song or CD I wanted from the FYE record store I was standing in side of , IPod in hand, ready to buy. If only I could just connect the thing and download the songs.

For less than 10k dollars, it would be EASY to put together a multi-terrabyte hard drive based multi-user kiosk that pretty much holds every song ever published. A screen to enter credit card information, swipe a debit card, enter a member number or call for assistance to handle a cash transaction, a couple USB ports, and wireless connection support to transfer the music, and you are in business. Check the music I want. From kiosk hard drive to my MP3 player at speeds that could easily do 400mbs. That beats the hell out of 250k if Iím lucky real throughput at home. It will be like going to the store to get digital prints from the camera is. Self Service, fast and easy

Loss leaders like Walmart and Best Buy can cut their music square footage by 90 pct and sell more music at lower prices. Their inventory carrying costs will go to zero. If someone wants the CD, they can go home and burn it after docking their MP3 player to their PC. Believe or not, the labels will make more money this way because they will make these big boys committ to minimum guarantees at levels they are at now, and all that money after the artist cut, will go to the bottomline.

Everything about the economics makes absolutely perfect sense for the music labels, the retailer and the customer.

The only question is who will be the first label to crack and offer this and how soon will it be. Of course the cynics will say that this wonít ever happen, but Iím not buying it. Itís too much cash up front for the labels to say no to. It also makes too much business sense.

When it happens, the music industry will EXPLODE and sales and profits will go through the roof.

Why? Because stores can be smaller, physical inventories minimal to non-existent, and an entire segment of middle infrastructure on both the label and retailer side for ordering, delivering, warehousing, duplicating, returning, and forecasting of product can be eliminated.

Most importantly, that money can be spent to develop, market and promote music so that more and more people can experience it, and also, just in case hell freezes over, be used to lower the price of music to consumers

Once that first label, or the first organized group of indies goes purely digital at retail, then the countdown for the extinction of the CD begins. T-minus 5 years from that first day, and your CDs will be sitting right next to the LPs your dad and mom collected when they were kids.

Until then, if Im a band selling on my own, Iím carrying a laptop to every show, and charging 5 bucks to drop a show on an IPod. Call it concertpodding.

If Iím an indie record store, Iím making sure that all music from the labels you support is available for direct to player. Iím offering every song as Ipod or MP3 player ready to anyone who walks in the door with their Ipod and wants to leave listening to the music.

Itís money in the bank.

m

Saulbadguy
04-11-2005, 07:49 AM
I like the "kiosk" idea.

ChiefGator
04-11-2005, 07:49 AM
Oh man, he's gonna be fined by the league for this one!


Interesting...

Ultra Peanut
04-11-2005, 07:53 AM
I like the "kiosk" idea.The idea sort of popped into my head a few paragraphs into his post, because it seems like a really natural progression to eventually have mp3 kiosks that are no more complicated than vending machines aside from having to enter your credit card number, but it makes a hell of a lot of sense and would be extremely convenient for almost everyone involved.

Ultra Peanut
04-11-2005, 07:53 AM
Oh man, he's gonna be fined by the league for this one!I bet they're going to make him work at a Tower Records store for a day...

mcan
04-11-2005, 07:54 AM
I think he's dead on... Actually I've been looking to get rich recently.... Maybe I've found my ticket.

Ultra Peanut
04-11-2005, 07:56 AM
I think he's dead on... Actually I've been looking to get rich recently.... Maybe I've found my ticket.Shit yeah. Maybe you should hit him up for some start-up capital.

mcan
04-11-2005, 07:58 AM
Shit yeah. Maybe you should hit him up for some start-up capital.


Tell him that I'd make it happen and go partners with him after he recouped all startup expenses...

Ultra Peanut
04-11-2005, 07:59 AM
Tell him that I'd make it happen and go partners with him after he recoupled all startup expenses...Can I be the President?

I wouldn't actually do anything, but I'd enjoy the office and the title.

mcan
04-11-2005, 08:10 AM
Can I be the President?

I wouldn't actually do anything, but I'd enjoy the office and the title.


NO!

Uhh, ever since my big success, all these people are trying to latch onto me... Get a job!

That reminds me of a great Deep Thought.

"If I ever get very rich, I hope I'm not really mean to poor people, like I am now."

Ultra Peanut
04-11-2005, 08:13 AM
I'm the reason for your fortune, you ungrateful whore!

That reminds me of a great Deep Thought.

"If I ever get very rich, I hope I'm not really mean to poor people, like I am now."ROFL

mcan
04-11-2005, 08:15 AM
I'm the reason for your fortune, you ungrateful whore!

ROFL


Whore?

When did we have sex? I think you mean "slut."

err... wait...

Lzen
04-11-2005, 08:38 AM
That man is on it. It's no wonder that he's a millionaire (or is it billionaire?). Great idea.

jcroft
04-11-2005, 08:47 AM
Very good blog post. That having been said, I don't think the kiosk idea is particularly new -- I believe Apple already has iTunes kiosks in some places in Europe, and I'm sure others are working on it, too...

dirk digler
04-11-2005, 08:50 AM
Great idea by Cuban. My CD collection is about dead. I had a garage sale last week and I sold 3/4 of my collection for $4 a piece. I haven't bought a CD in years and now that I have an Ipod I have no need for them anymore.

siberian khatru
04-11-2005, 08:55 AM
I remember 10 or so years ago seeing Larry Ellison talk about the impending death of floppies -- saying how ridiculous it was that info had to be stored and carried around on pieces of plastic. He was trumpeting the advent of wireless networks and the Internet, where files would be centrally stored in servers and accessed by many, whenever and wherever they wanted.

I would think the same philosophy applies here.

jcroft
04-11-2005, 09:01 AM
I remember 10 or so years ago seeing Larry Ellison talk about the impending death of floppies -- saying how ridiculous it was that info had to be stored and carried around on pieces of plastic. He was trumpeting the advent of wireless networks and the Internet, where files would be centrally stored in servers and accessed by many, whenever and wherever they wanted.

I would think the same philosophy applies here.

Well, it was seven years ago that Apple released the iMac, which was the first mainstream computer to be sold without a floppy drive...

jcroft
04-11-2005, 09:05 AM
For the record, there is definitely no reason for most people to use CDs anymore. In fact, the way I bought my first iPod three years ago was to sell my 400 CD collection -- after I ripped them to my computer, of course. :)

homey
04-11-2005, 09:20 AM
I'll go ahead and say this idea won't dominate the market. I do think there will be people who will take advantage of it, but there are some drawbacks I don't think Mark is thinking of. Liner notes? Might sound a little dumb to some people but music nerds like myself have got to have 'em. Not only that I think some people (probably me included) display their collection like trophies (sorta like books). And wouldn't having music in this format make it easier for illegal filesharing and in fact kinda encourage it? He talks about iPod like everyone has them on them all the time, I don't know anyone who does. Sure, if they're walking, running or something like that, but who carries a iPod to a concert? Shit, they're going to put iPods in our cell phones...

NJ Chief Fan
04-11-2005, 10:46 AM
i like to milk the music industry and download free music and then burn it onto a cd ROFL (i buy cds of artists i actually respect)

screw ipods that is stupid im stickin to my cds

KCTitus
04-11-2005, 10:50 AM
I'd like to see how a multi-Terrabyte hard drive based kiosk holding every song ever made would cost less thank 10k. Purchasing the music alone would have to be in the millions.

It's a good idea, but getting the music to the kiosk is the trick...

Baby Lee
04-11-2005, 10:59 AM
My biggest gripe about this is the possible effect on quality. I'm a hi-fi guy, and the economy of scale on SACD is killing a great format. Online digital has the possibility of distributing high definition audio, but it comes at a cost of bandwidth. The MP3 revolution has changed people's conception of music as art, with loving attention paid to the mix, the liner notes, the artwork, fidelity, dynamic contrast, soundstage, etc., to music as commodity, with the constant of file size leading to compressed, mid-fi, background quality processed-music-like-stuff.
DVDs are cheap because every studio on earth is putting the entire catalogs out there and we are buying it hand over fist. If there was a lower-def online option that people bought into, DVDs would jump up to $50-60 apiece when the economy of scale disappeared, and eventually just fade away.

jcroft
04-11-2005, 11:23 AM
I'll go ahead and say this idea won't dominate the market. I do think there will be people who will take advantage of it, but there are some drawbacks I don't think Mark is thinking of. Liner notes? Might sound a little dumb to some people but music nerds like myself have got to have 'em. Not only that I think some people (probably me included) display their collection like trophies (sorta like books). And wouldn't having music in this format make it easier for illegal filesharing and in fact kinda encourage it? He talks about iPod like everyone has them on them all the time, I don't know anyone who does. Sure, if they're walking, running or something like that, but who carries a iPod to a concert? Shit, they're going to put iPods in our cell phones...

What makes you think liner notes can be had in digital format?

While not everyone has an iPod or carries it with them all the time, the number of people who do is staggering. I work on a college campus (K-State) and the number of white earbuds I see is just stunning. Literally one in two students has them.

Apple and Motorola already have an iTunes mobile phone.

jcroft
04-11-2005, 11:24 AM
I'd like to see how a multi-Terrabyte hard drive based kiosk holding every song ever made would cost less thank 10k. Purchasing the music alone would have to be in the millions.

It's a good idea, but getting the music to the kiosk is the trick...

Presumably the people making the kiosk (Apple, Napster, other music retailers) already have rights to store the music and distribute it. They don't need to pay for that again.

jcroft
04-11-2005, 11:26 AM
My biggest gripe about this is the possible effect on quality. I'm a hi-fi guy, and the economy of scale on SACD is killing a great format. Online digital has the possibility of distributing high definition audio, but it comes at a cost of bandwidth. The MP3 revolution has changed people's conception of music as art, with loving attention paid to the mix, the liner notes, the artwork, fidelity, dynamic contrast, soundstage, etc., to music as commodity, with the constant of file size leading to compressed, mid-fi, background quality processed-music-like-stuff.
DVDs are cheap because every studio on earth is putting the entire catalogs out there and we are buying it hand over fist. If there was a lower-def online option that people bought into, DVDs would jump up to $50-60 apiece when the economy of scale disappeared, and eventually just fade away.

The quality concern is a valid one today, but I don't think it will be for long. As bandwidth and storage increases, we'll stop storing so much music in MP3/AAC/WMA lossy formats and start keeping them in Apple Lossless/AIFF/WAV or other lossless formats. I've got a friend who already uses Apple Lossless for all his iPod's music, and he still has plenty of room on his 60GB iPod to store a ton of CDs worth of music. Once we have, say, 250GB iPods (I'd say probably by the end of the year?), this won't be an issue.

Baby Lee
04-11-2005, 11:31 AM
The quality concern is a valid one today, but I don't think it will be for long. As bandwidth and storage increases, we'll stop storing so much music in MP3/AAC/WMA lossy formats and start keeping them in Apple Lossless/AIFF/WAV or other lossless formats. I've got a friend who already uses Apple Lossless for all his iPod's music, and he still has plenty of room on his 60GB iPod to store a ton of CDs worth of music. Once we have, say, 250GB iPods (I'd say probably by the end of the year?), this won't be an issue.
I'm not concerned about the limitations of the technology. I'm worried about what people are becoming conditioned to expect.

jcroft
04-11-2005, 11:35 AM
I'm not concerned about the limitations of the technology. I'm worried about what people are becoming conditioned to expect.

Makes sense. A valid concern, I'd say.

DaKCMan AP
04-11-2005, 11:59 AM
I realize I could go online and download the song for free, but I wonít do that. Thatís stealing. Itís wrong.

Thatís not to say I wonít ever download for free. If I had already owned the CD and just wanted it to play and it was a matter of availability, I definitely would have downloaded it for free. I will also download music to sample it, but I wonít keep it. I will buy the CD or erase the song.


If I was a billionaire I'd just buy the CD too.

buddha
04-11-2005, 12:13 PM
I like having a full "album" as long as the group cares about producing something that is more than just a collection of singles. "Dark Side of the Moon" is great, not because of its top 40 songs, but because it has an overall concept and is unified from start to finish.

KCTitus
04-11-2005, 12:18 PM
Presumably the people making the kiosk (Apple, Napster, other music retailers) already have rights to store the music and distribute it. They don't need to pay for that again.

Sure, I just read it as Cuban stating this idea as if 'anyone' could do it for under 10k.

gblowfish
04-11-2005, 12:18 PM
Great. I make CDs for a living. Guess I might have to go back to doing table dancing in clubs next to Army bases. Kill me now.