Business News Labels & Publishers Retail The Great Escape 2016

CMU@TGE: Who the hell is buying all these CDs?

By | Published on Tuesday 28 June 2016

CDs! Vinyl! T-shirts! Who the hell is buying this stuff?

Look out for insights, advice and viewpoints dished out at this year’s CMU Insights @ The Great Escape conference here in the CMU Daily throughout June and into July. This week, some of the takeaways from the physical products strand.

In our first dive down into the ‘CDs! Vinyl! T-shirts! Who the hell is buying this stuff?’ strand, we look at the discussion that followed CMU Business Editor Chris Cooke’s presentation on the physical market – as covered in this CMU Trends article here. Speaking to representatives of both music retail and the labels, we asked why the CD market has remained stronger than expected in the UK and what the future holds.

Part of the public perception that the CD is dead has been driven by the media, reckoned BPI boss Geoff Taylor. “[The media is] only interested in what’s new, and therefore there’s such a strong narrative of digital taking over and the CD disappearing that it forgot a lot of the great characteristics of the CD. It’s not a fluke that the CD’s been around for 30 years or more”.

Although he conceded that the record industry itself should take some blame for leading people to believe that the CD was a product with no future. “The industry was criticised so badly from the early 2000s onwards for being resistant to technology and for not embracing the internet that I think our own narrative became obsessed with being seen to be progressive”, he said. “BPI were probably as guilty of that as anybody. You know, showing that the industry was preparing itself for its future. I think that was really important, but we stopped talking about physical and how great physical is”.

Of course, the narrative now is that vinyl is the be all and end all when it comes to physical product, but again this misses the core of what is actually happening in the physical market, says founder of Brighton independent record shop Resident, Natasha Youngs.

“For a lot of people, vinyl is prohibitively expensive”, she said. “People have spent years building up their collections, and by nature we are creatures of habit. I know the industry is constantly looking for new, new, new all the time, but people have collections already that they just want to add to. They’re casual buyers and they don’t want to start a whole new collection again with vinyl. We see a lot of people who are just dipping into buying and want something that they feel familiar with at a price that is really comfortable for them. You can still buy brand new CDs for £10. It’s an easy price point for people to manage”.

“A lot of music fans in this country are quite casual music fans”, agreed Taylor. “Some of them may be ready to make the leap over into £120 a year Spotify subscriptions, but not all of them. One of the advantages of physical that people tend to forget about is that you only spend money when you really want to spend money on something, and the rest of the time you don’t spend any money. There are lots of consumers who want to behave like that”.

“I don’t think there’s ever been a time when the simple sound of music was enough for people”, added HMV’s John Hirst, on physical’s continued appeal. “There’s always been an element of joining in, or buying a stake in an artist you love or a label you love, and digital quite simply comes up short on that front. For a lot of people, and particularly young people, that’s still very important”.

“It’s a process of building up an identity for young people”, continued Proper Music Distribution’s Vangel Viaski, on the same point. “We forget the psychological element of projecting outwards your personality, what you like, what you dislike, and belonging to a tribe as well. It’s identity-forming, and I think the physical element of it is quite crucial”.

Viaski also added: “I think as an industry we should stop the divide in the perception of digital music and physical music. We’re always talking about how physical is fighting digital in terms of percentage and market share and all that, but I think it’s one big landscape that’s very symbiotic”.

While people maybe building physical collections alongside digital consumption, there’s still the matter of what drives CD sales. Taylor and Hirst both suggested that this Christmas could be a big one for music, as the rise of film and TV services like Netflix has had a more profound effect on DVD sales than music streaming has had on CDs and vinyl.

“A huge part of the industry is people buying CDs for other people”, said Hirst. “Q4 is such a huge part of the industry and people aren’t buying CDs for themselves there, so when Little Mix sell 200,000 CDs in six weeks, the majority of those aren’t self purchases. It’s as much about what people think their kids want, as much as what kids want themselves. If kids were disappointed [by this], it would have stopped by now, after ten years of kids being disappointed people would have learned not to give their kids CDs”.

“I think it’s an opportunity for people to be part of the fans’ campaign, where they physically hold something in their hand”, said Youngs. “If they download the album they don’t feel that they are physically part of that band. I still see masses of it, people coming in on the day of release or over the weekend, and they are so excited that they can be part of the release of that album, and they can do that through a CD”.

Changes to how retailers operate – both on the high street and in independent stores – has also had a profound effect on the market. HMV’s administration triggered something that should have happened long previously, said Hirst: shutting down stores that weren’t pulled their weight. Had rivals also seen this, they might also be around today too.

“The big change for HMV [since administration] is the attitude that we will manage our estate in line with the performance of the market, and I think that’s something that the industry didn’t really do”, he said. “The impact of those shops going, particularly Virgin, I think accelerated the decline of the physical market massively, and I think a lot of people forget about that. For those last few years, to be perfectly honest, we weren’t carrying any catalogue because we didn’t have the money to buy it. It’s only since we came out of administration that we’ve been able to carry a full range again. I don’t think it’s any coincidence that the market stabilised at the same time as that”.

He conceded that this couldn’t be put entirely down to HMV though, saying that independent shops are now far better than they used to be: “Going into an independent record shop is a much more pleasant, exciting experience than it used to be. Record shops used to be staffed by arseholes – you can’t afford to be an arsehole anymore”.

“A lot of independent record shops were kind of operated almost by hobbyists”, said Youngs, somewhat more diplomatically. “It was a thing you could do just for love really. The way that the industry’s changed now, you have to sit in front of a spreadsheet a lot of your day. That’s what running a record shop is these days. A lot of things that go with running a business now just didn’t suit a lot of independent record shops. That’s why a lot of them went. It wasn’t just to do with the industry, the change in product. It was to do with a lot of things. Including rent, which never gets mentioned. What we’re left with now is a lot of people running them as businesses and working bloody hard to do so”.

While UK music retail does seem to have stabilised in recent years somewhat, there is now a new digital competitor other than downloads and streams: the rise of direct-to-fan, with artists and labels selling CDs and vinyl direct to fans via their websites.

“Quite often it’ll be that we build the band up through singles and their first album, and then the second album is made available direct to fans online”, said Youngs. “It’s a constant battle, someone will come in and say, ‘I heard there was a blue vinyl version of this’, and I’ll have to say, ‘Well, there is, but unfortunately you’ll have to buy it from the band’s website’. We’re constantly all fighting for the same sales”.

Though this is not always the case, she said, holding up the release campaign for Radiohead’s new album in particular. “It was all inclusive, everyone got something”, she said.

Defending the labels, Taylor added: “Labels don’t see themselves as retailers, and they do want to do things in partnership, and they realise they need the expertise of the retailers. It’s really complicated. There are debates around exclusives and windowing. The labels are trying to work out what’s even the right order to release things. Two years ago, the labels were really pushing digital, but now they really understand the multi-channel nature of the market”.

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