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DVD-Audio and SACD Missed Their Market, But Is It Too Late For High-Resolution Music? Print E-mail
Thursday, 15 February 2007
The story of the failure of SACD and DVD-Audio is a long and disappointing tale that has far-reaching negative impact for the music and audio-video industry alike. In 1993 the domestic record sales, powered almost exclusively by Compact Disc, were near 33 billion dollars yearly. Today, nearly a decade and a half later domestic record sales have dropped to about $9 billion per year with an additional $3 billion per year for downloads and another $3 billion for ring tones. Unquestionably, the music business has lost a lot of its luster in a very short period of time and is dragging the audiophile market segment down the drain with them. While new markets like downloads and ring tones have created over $6 billion per year in new music sales, the overall domestic record sales have suffered a tremendous attrition with the main cause of this attrition being the lack of back catalog sales on CD. Napster in the late 1990’s, taught people how to steal music yet iTunes taught them how to buy music from the Internet the right way only a few years later. Where the real problem lives is the idea that a CD for $18.99 at a record retailer somehow can compete in terms of value with a video game or a DVD. Both DVD and video games are more expensive than a CD yet people of all incomes line up to buy movies and games with enthusiasm that the music industry hasn’t seen for twenty years.

The impact of not selling music on a high-resolution format like DVD-Audio or SACD or perhaps a more relevant format like Blu-ray or HD DVD, is easy to see in the music business, but its effects on the audio-video business is equally as hurtful. More than 2,000,000 HDTVs sell each month in the United States yet even that volume leaves traditional audio-video dealers starved for profit margin. Twenty years ago, television sales were add-on sales while speakers, electronics and source components provided healthy profit margins allowing growth in both the mainstream and audiophile segments of the audio-video market. Today, with the music industry pushing an antiquated and over-priced CD or low-resolution downloads on an iPod – consumers have little reason to not spend all of their AV budget on the most expensive HDTVs they can afford with audio that simply matches the TV.

The solution isn’t as hard as it might seem however. Putting unfounded fears of anti-trust aside, the music industry must find a way to resell their back catalog music on a high-resolution, physical disc to a new, younger market. If the record executives think that a high-resolution format can be supported by Baby Boomers who are rapidly turning 60 years old (as they did with SACD and DVD-Audio) they are dumber than a bag of hammers. All four majors should band together to adopt one or both of the HD disc formats and release their top 250 best selling albums of all time in high-resolution stereo (24 bit 192 kHz) with surround sound mixes (5.1 – 24 bit) as well as HD resolution images and videos for people to use with their HDTVs. Sell these discs at a few dollars more than a download (say $13.99) and watch people line up to buy them in volume. The titles need to be selected to speak to Generation X (think The Police, Guns and Roses, U2 and Metallica) and Generation Y (look to White Stripes, Justin Timberlake, Coldplay, 50 Cent) music along with the classics (like The Eagles, Pink Floyd, Fleetwood Mac) so that people can drop a high-resolution disc in their Playstation 3 or Xbox 360 and get an audio experience that actually wows them. If the music industry can lure the kids back to an impressive audio experience at a fair price they can both resuscitate their flat-lining sales as well as create a new generation of audiophiles who will breathe new life into that stagnant market segment of hardware sales. Albeit flawed, the copy protection on the HD formats make one plug connectivity a reality thus the need for analog connections from DVD-Audio and SACD are now gone. More importantly, it is time for the music industry to ride the coattails of HDTV and video games back to respectability. There are new consumers waiting for their next amazing entertainment experience. Why shouldn’t it be with high-resolution music?

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