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Ask McArdle: Are physical forms of music finally dead?

The demise of the compact disc doesn’t quite herald the beginning of a digital-only age of music. Yet.

(Peter Arkle)

(Peter Arkle)

Revenue from streaming music just passed CD sales for the first time. Are physical forms of music finally dead?

You’ll forgive music executives if they’re inclined to shut themselves in their bedrooms and blast the Doors. “This is the end, my only friend, the end of…” the CD era, intoned Jim Morrison (or not really). But he might as well have been singing of the demise of the compact disc. In 2014, revenues from streaming services like Rdio and Spotify hit $1.87 billion, a 29% increase over 2013. CD sales, on the other hand, slumped 12.7% to $1.85 billion. Ask McArdle badge

Readers of a certain vintage may recall those moments of supreme satisfaction that resulted from perfectly transferring a track on a cassette to one’s laboriously curated mixtape—followed by the supreme despair when a friend’s stereo inevitably mangled the magnetic tape beyond repair (at least beyond the restorative capabilities of an HB pencil). Back then, people in the music business were waging what Billboard dubbed “The War on Home Taping.” Many feared that 1983, the year sales of cassettes surpassed that of vinyl, was the beginning of the end for music sales.

It wasn’t, of course. The compact disc was, by then, already skipping onto the scene: Billy Joel’s 52nd Street was the first commercially available CD (allowing listeners to finally play “My Life” on repeat). By 1990, CD sales had eclipsed those of cassettes, and the music business entered a period of unprecedented growth, with many cassette and vinyl owners replacing their collections with higher-priced discs.

But the demise of the compact disc does not herald the beginning of a digital-only age of music. “We sell more vinyl than CDs,” admits Dina Young, label manager at Toronto’s Paper Bag Records, the home of sonically inspired acts like Sam Roberts Band and PS I Love You (ask your kids). “I imagine in probably three years or so—maybe even less—we won’t even make CDs. Walmart and HMV will still take them, but we get a lot of those returned.”

Like many labels, Paper Bag is attempting to make money by controlling the musical experience from end to end. So the company now has an artist-management arm and a publishing house. “I guess we hope that people streaming turns into ticket sales for bands, and then maybe at the show they’ll buy a physical something as a memento,” says Young, like a Rural Alberta Advantage record to admire as you pull up the band’s catalogue on Spotify.

Although Neil Young says new interest in LPs is “really nothing but a fashion statement,” it’s not just guys with man buns buying records these days: Vinyl revenues grew at almost the same rate as streaming in 2014, according to Nielsen SoundScan. More LPs were sold last year than in any year since Nielsen began tracking sales figures in 1991. Cassettes, meanwhile, sold a paltry 50,000 units. Now, if you’ll excuse me, my Taylor Swift mix needs to be flipped over. Side B is really intense.

Got a management concern? Need to settle a debate? Ask CB’s resident expert in expertise, McArdle: @AskMcArdle