Cites & Insights: Crawford at Large
ISSN 1534-0937
Libraries · Policy · Technology · Media

Selection from Cites & Insights 7, Number 1: January 2007


The Death of the Disc?

I’m reminded of the early 1990s (and periodically since), when the death of print was being predicted regularly and with complete authority—or, more narrowly, the death of print books. That death has been postponed indefinitely

Some of us who objected to the notion did so not only on the basis that books work so well for most lengthy stories, but because new media and technologies rarely replace older ones rapidly or entirely unless the old form is seriously flawed, and maybe not even then. Radio didn’t replace reading. TV didn’t replace the movies or radio. And so on.

But “death of…” predictions keep coming. Some observers seem convinced that any significant upstart means the doom of existing methods. So it is, lately, with discs—CD and DVD alike. A few data points and comments on what’s likely to be a long story, since physical media aren’t disappearing any time soon and pundits will always be with us.

Hi-Def DVD

Sean Cooper tells us “why HD-DVD and Blu-ray are dead on arrival” in “The death of the disc,” Slate, November 16, 2006. His thesis is not that the format war dooms hi-def discs (which might be true). “No, the new formats are doomed because shiny little discs will soon be history.”

Why? First, because you’ll rent or buy high-def movies on the internet, and Cooper seems to think the Xbox 360 will be a big part of this. Never mind how long it would take to transmit a 30GB file over typical broadband; Cooper doesn’t pay much attention to that issue. Never mind, either, that the Xbox 360 only has a 20GB hard disk.

Second, there’s cable on demand—and it does seem likely that on-demand high-def will be part of the picture.

Third, “pricey hardware”: “After spending $3,000 or more on an HDTV and multichannel audio gear, nobody’s in the mood to burn another pile of cash.” Two things are wrong with that theory: You can get an HDTV for a lot less than $3,000 (and most people apparently don’t buy serious multichannel audio equipment) and high-def disc drive prices will certainly come down. The truly bizarre part of this section is Cooper’s suggestion that including Blu-ray in Sony’s PlayStation 3 (the cheapest way to buy a Blu-ray drive right now) “could sink Sony’s new console—and maybe even the new company when Blu-ray stalls out.” Sony sure had trouble selling that first half million units—and does anyone really believe that PlayStation devotees are primarily buying the game console to play hi-def movies?

Finally, there’s the “inevitable” bit: “The rise of the hard drive.” This paragraph confuses so many different issues it’s laughable. He talks about the costs of “embedding a piece of plastic with data” (that is, pressing a disc), packaging it, shipping it to retailers, and stocking it on shelves, as compared to the cheapness of downloading. But the costs of producing, packaging, and shipping almost certainly come to $1.50 a pop or less (probably a lot less). Cooper tries to support his case thusly: “On iTunes an album costs about 10 bucks—as much as $8 less than some CD retailers charge, partially because of the reduced cost of getting music to buyers online.” Right. “Some” retailers may charge $18 for CDs, but others charge $10 to $12, sometimes less. Cooper even thinks buying bunches of movies delivered on a hard disk is a wave of the future, apparently based on the bizarre New Yorker hard disk (which costs several times as much as the 9 DVDs): “In a few years, you’ll buy every episode of The West Wing on a drive the size of a deck of cards rather than on 45 DVDs in a box the size of your microwave oven.” The West Wing complete set is big because the publisher wanted it that way and provides extra materials. Even without hi-def you can ship 45 DVDs in a box less than 6x5x5" (four 50-movie packs, with a sleeve for each DVD). With two-layer high-def discs, that complete set would fit on no more than nine DVDs, which don’t require much of a package and weigh less than a pound.

From Dying DVDs to Dead CDs

The real basis for Cooper’s prediction:

[C]onsumers want it to change. Music buyers used their modems to force the major labels into the fear zone and Tower Records into bankruptcy. The same will happen to the movie studios and DVD retailers unless they curb their disc addiction.

Maybe so, but not based on the evidence cited. Music buyers (as opposed to freeloaders) still get considerably less than 10% of their music via downloads. There’s some evidence that legal download rates are no longer accelerating very rapidly. A December 6, 2006 Wall Street Journal story shows digital song sales peaking in the first quarter of 2006 and level, but a little lower, in the second and third quarters. At roughly 140 million songs per quarter, the revenue adds up to somewhere around $600 million—roughly 6% of CD sales. A Forrester survey (since partially disclaimed) suggests iTunes business is dropping.

Claims that downloading caused Tower’s bankruptcy ignore economic reality. Tower went under because it was charging $18 for CDs and full list for DVDs when other retailers were charging a whole lot less. When Tower started its going-out-of-business sale, I wasn’t the only one to notice that, even at 30% off, Tower’s prices were too high.

High-def optical discs might not make it, but “the death of the disc” is, I believe, the least likely reason for their failure.

Paul Farbi writes “For Tower Records, end of disc” in the December 11, 2006 Washington Post—again claiming that Tower’s failure means the end of physical discs themselves. Farbi says, “Anything that can be squeezed down to ones and zeros and moved around at the speed of electrons doesn’t have to be stacked in plastic cases, shoved into bins and splayed over aisles under fluorescent lights anymore. All of it’s going online.” [Emphasis added.]

Farbi mourns this supposed inevitability. He’ll miss Tower.

There will never be the same sense of wonder on iTunes, the same joy of discovery and intoxicating power of musical abundance that hit you every time you walked into even the dinkiest Tower or any comparable record store. There it lay before you—unheard! unseen! unfoundled!—potential treasures beckoning from row upon row of wooden bins.

There are two separate issues here: Whether brick-and-mortar record stores are disappearing and whether discs themselves are on the way out. After all, Amazon, (which is not bankrupt, as far as I know) and other online sites sell a lot of CDs and can indeed offer “wider and speedier access to more tunes than any Tower could ever stock”—even if they ship those tunes to you on plastic discs in jewel boxes. But it’s not even that simple. Let’s continue with Farbi’s lament—which really isn’t for the death of CDs as much as it is for the death of Tower.

I hear the music geeks whining: Tower wasn’t the cheapest place around, and it often employed contemptuous or conveniently nonexistent salespeople. It also pushed the same Top 40 pap as the marts (Wal- and K), the big boxes (Best Buy, Barnes & Noble, etc.) and the surviving chain mall stores. Yeah, yeah and yeah. And so what?

Farbi grew up near two Southern California Tower stores including the “holy pilgrimage site” on the Sunset strip. Even as he describes the kind of store that finally drove me away from Tower entirely, he evinces a nostalgia that’s nice to hear but has little to do with what’s happening. Along the way, he gets confused. One of Tower’s strengths was diversity—the bigger stores stocked a lot of music, including CDs that will never show up at Wal-Mart. Here’s Farbi’s take on that, albeit in the guise of deploring online choices:

The future portends more abundance and choice than Russ Solomon [Tower’s founder] could ever have stacked in his biggest store. But something’s being lost in this vast and unending digital banquet. Tower’s downward arc tracks the fragmentation of musical tastes into 10,000 little pieces. We’re well past the point where broad musical consensus is possible.

That means there might never be another Beatles or U2… More shocking, Tower’s fall suggests the end of “standards.”

But those arguments suggest that Tower was bad for music, since it stocked those 10,000 little pieces—that we’d be better off with payola-based radio and Wal-Mart’s top hundred so we’d all hear the same music. Just like we were better off when we all watched the same TV shows on three networks, presumably.

Price, not format

Farbi talks about Tower clinging “to bricks and mortar and $17.99 CDs.” He’s half right. Lots of bricks and mortar stores sell lots of CDs—indie record stores and the “mall chains” but also extensive selections at Target, Best Buy, and other chains that shall go unnamed. What they don’t do very well with is $17.99 CDs, not unless they’ve established special loyalties and provide great service to make up for grotesquely overcharging.

The record industry treated CDs with a level of greed it didn’t show when LPs were dominant—maybe because there are fewer major record companies than there used to be. CDs started out expensive because they were new, better in some ways and expensive to produce—although they soon became cheaper than LPs to produce and package. (For both LPs and CDs, the package costs more than the disc.) But LPs declined steadily in price as the years went on; CD suggested retail prices didn’t—and even went up.

You had to know CDs couldn’t cost much of anything to produce, given all the freebies. It didn’t take much research to learn that artists weren’t getting huge chunks of the take. There was simply no legitimate reason for CD prices not to decline—right now, $6 to $9 should be about right. (Classical fans know that Naxos has produced a few thousand high-quality original recordings, profitably, at $8 or less.) But the labels wanted $18—or more, if they could get it.

I stopped buying at Tower partly because the prices were too high, partly because the music was so loud and offensive I couldn’t stand to be in the store. I still buy CDs now and then—for example, a fair number of Sony’s two-disc “Essentials” artist compilations—but I buy them at Target ($12 to $14 for an “Essentials” package that equals four or five original CDs), secondhand at SecondSpin, via Amazon, or elsewhere. I won’t pay more than $12 for a single CD, and I believe $10 is a fair price.

Tower priced itself out of the market and made itself unattractive to us less-young folk who have the money to buy CDs and prefer a physical package with top-notch sound, but don’t like being subjected to painfully loud  music while we’re shopping.

Tower disappearing doesn’t mean CDs, or physical media in general, are done for. There’s room for downloading and CDs, just as there’s room for ebooks (where they work better) and print books.

The Celestial Jukebox

That seems to be some people’s dream of a media future. No DVDs (HD, Blu-ray, or regular), no CDs, no nothing—just whatever you want when you want it, for a slight fee. Hollywood’s only too happy to offer different forms of movies—for the right price and under the right controls. But does it work well? The September 2006 Sound & Vision includes “S&V’s guide to movie downloads,” an overview and set of test drives of three legal movie download services—Movielink, CinemaNow and Guba.

The writer, Michael Antonoff, touts the “advantages”: “With a download, there’s no need to drive to the store or walk to your mailbox. There’s no case to open, no packaging to throw away. Just point your browser…” I’m not sure how “no need to walk to your mailbox” is a big selling point unless the only mail you get is from Netflix (and the walk to our mailbox is zero steps, since it’s right by the front door)—but perhaps true couch potatoes consider opening the mailbox too much trouble. Of course, some folks might consider it mildly burdensome to have to use a PC connected to the big-screen HDTV, but you’ll get over that, right?

How did the three do? Movielink charges $20 for a current movie—the same price as a DVD, but without DVD extras. For that, you get stereo sound and an image that “reminded me of a VHS cassette.” You can burn it to a DVD, but only as a Windows Media Video file that plays on up to three computers. So you lose DVD extras, you’re back to videocassette sound and picture quality, and you’ve saved…nothing.

Movielink’s owned by a bunch of studios. How about CinemaNow, owned by one studio (Lionsgate), Microsoft, Cisco, and Blockbuster? It’s a whole four cents cheaper: $19.95 instead of $19.99. Some movies download fast (13 minutes for Fun with Dick and Jane, but then you own Fun with Dick and Jane) and some don’t (four hours for Harry Potter and the Goblet of Fire). Once again, you don’t get DVD extras (although a handful of movies come in true DVD form). While the writer doesn’t specifically comment on CinemaNow picture quality, his summation says, “[N]othing I saw came close to matching a good DVD.” Guba? Back up to $19.99—and, as with CinemaNow, there were technical issues. Unlike the other two, Guba won’t let you burn even a protected WMV file to DVD—but you can transfer your DVD-priced less-than-DVD quality no-special-features movie to an Archos AV700 portable player.

The writer concludes that these full-priced movies “could be a nice fit for the midget-screen-and-earbuds crowd” when DRM issues are straightened out. After all, on a midget screen with earbuds, mediocre picture quality and loss of surround sound and extra features won’t matter—even if you did pay the full price of a current-feature DVD.

Why not? People seem willing to pay $2 or $3 for a ringtone when a full song goes for $0.99.

My own take on the “celestial jukebox” includes the old saying, “Be careful what you wish for.” It’s typically the case that downloaded media don’t offer the same quality as physical media (although you can buy some downloadable music in lossless-compression formats). It’s almost always the case that downloaded media eliminate most fair use and first sale rights through digital restrictions (or “rights”) management; is just about the only exception I’m aware of. It’s certain that, if pay-per-use (the fundamental “jukebox” model) becomes dominant, Big Media will make sure you wind up paying more for those uses than you did to buy media. If you believe Big Media’s going to lower overall prices when it totally controls each usage, you haven’t been paying attention.

Saying prices will come down because downloading is cheaper than physical distribution ignores the recent history of Big Media. CDs cost almost nothing to produce—but CD prices only came down after antitrust litigation, and even then Tower retained artificially high prices. As for DVDs, the real cost of the medium (I’ve heard $0.06 for single-layer DVDs) can be suggested by the number of advertising DVDs and dollar-store DVDs. If you can make money selling 12 DVDs with 50 movies for $15, then the DVD itself is not a major factor in the price of DVDs. You can count on the universal jukebox being more expensive for most people, for lower quality, than physical media.

Fortunately, physical media aren’t going away any time soon, and that’s a very good thing.

Cites & Insights: Crawford at Large, Volume 7, Number 1, Whole Issue 85, ISSN 1534-0937, a journal of libraries, policy, technology and media, is written and produced by Walt Crawford, a senior analyst at OCLC.

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