The CD revolutionized the music industry during the 1980s and 1990s but could become a thing of the past.
On Monday, Billboard announced that Best Buy would stop its sales of the compact disc July 1, and that Target is reported to be setting up new terms with the country’s music companies that could impact CD sales severely at the discount retailer.
These threats to the CD format arrive as the explosion continues in the music streaming industry. Revenues from services providing streaming music represent 62% of the entire market for first six months of 2017, shows new numbers just released by the music industry’s trade group RIAA.
Physical sales, those comprised of CDs as well as vinyl albums, represented only 16% of the entire revenues. Revenues from CD shipments fell 3% to just more than $431 million, and vinyl albums increased 3% to end the period with revenue of $182 million.
Best Buy, says Billboard, will continue offering vinyl, but as sales of CDs continue dropping, it made the decision to use floor space they take up for other products.
At the same time, Target has demanded that suppliers take on the inventory risk on sales of CDs. That means essentially that the retailer would not pay the music labels for any CDs until after they were sold to customers, contrary to the current practice of making advanced payments and then being given credit when unsold units are shipped back. The chain reportedly has set an April 1 or May 1 deadline for a response by the music manufacturers.
Should there be a decline in the record labels, Target might reduce even further its music presence. That could happen, and if it did it would be a huge blow to the CD. According to the report by Billboard, Target sold more than 500,000 copies of Reputation by Taylor Swift since November 2017 its release date.
A Target spokesperson said that entertainment has been and will continue to be an important part of the brand of Target and we remain committed to closely working with partners in the industry to bring the latest music and movie titles, as well exclusive content to our customers.
The spokesperson continued by saying the company was evaluating its operating model reflecting its continued investment in its Entertainment business.