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May 30, 2006

CDs Rn't Us? 

I don’t know if it was when I looked over at the last remaining stash of barely touched CD’s in the basket next to the television and remembered the even larger CD collection in the closet behind them. Perhaps it was a recent Saturday, when I held a garage sale and this fellow in the shiny black Mercedes pulled up in front. He asked if I had any albums, and then 7 albums, 7 dollars and 7 minutes later he was gone.

But it was undeniable when I drove past the once hoppin’ CD store in my neighborhood, which also rented video tapes, and once had 7 cash registers going and a roped-off entry line. This hot Friday night meeting place is now shuttered and features a bedraggled “For Lease” sign.

Exactly 2.3 seconds of searching on google uncovered the fact that in the year 2000, the music industry sold $40 billion worth of music, while last year it only sold $31 billion. That’s a 25% decline in sales at a time when music is more popular than ever,

I can tell you it was around the year 2000 that my excess cash stopped being eyed by my teenage sons, and when they got lucky, walked directly over to the now-shuttered CD store.

And why did my excess cash get relief? Because of Napster. These same kids had figured out how to download music for free, create their own mix and burn CD’s for when they wanted to listen in the car or on the bus. The idea that a single CD essentially burnt a $20 bill – and the presumption that you wanted to listen to every song on the disc – were notions in abrupt decline.

The music industry’s legal response to Napster is history, but the melody lingers on, especially in the minds of these kids. Now, iTunes has fixed the price of a single song at 99 cents, so even if you’re of a mind to steal some music, you haven’t scored much for your trouble.

And just as the music industry has settled into licking its wounds, another technology shift is happening, and the monetizers of music are staying up nights figuring out just what the numbers might be.

The new technology in town is the expanding capabilities of today’s cell phones. You like that favorite song? It can be a ring tone or sent to your phone in its full length, studio edition, all to the tune of 2 or 3 dollars. That’s double or triple the iTunes’ price for essentially no more work. For the music companies and the mobile telecom providers, this is their lucky day.

The cell phone is less convenient as a device to host Napster-like file-sharing schemes and the whole idea of Mobile Music – heck, Disposable Music – is real. Pay once, pay again. Change phones? Download a new batch of music. And there are so many more cell phones than there are personal computers or iPods and other music players.

The economics of all this in the months and years to come is unclear. iTunes may soar or fade. The music industry may be able to put the skids on its plummeting income, but its $40 billion year may be referred to in the future as its heyday, even with the potential of mobile music. The numbers just aren’t there.

And the fellow in the big black Mercedes? He couldn’t be less interested in my CD collection. You gotta figure he knows something.

I'm Moira Gunn. This is Five Minutes.

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