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Analysis: Bleak Prospects for Disney Music Label’s New CD Format CDVU+
/ July 19, 2007 6:06 am

Disney’s music label Hollywood Records on Wednesday unveiled a new CD format with extra features. The company hopes that the digital magazine extras, song lyrics, band photos and other extras to boost fan loyalty will encourage compact-disc purchases in an attempt to reverse declining CD sales. But it is not the first time extra features have been introduced in order to halt the decline of a dying format and the results of those attempts have not been encouraging.

What is new about Hollywood Record’s CDVU+ (CD View Plus) format is that it combines a number of digital extras with replacing the traditional CD booklet and plastic jewel case with timely recyclable packaging.

The thinking is right – in the sense that the Disney executives are focusing on giving young music fans more value by offering content similar to the extras on movie DVDs as well as a physical products like a jewel case that you don’t get if you download the music.

However, when it comes to selling music as packaged goods, the train has already left the station, so to speak.

A jewel case is not going to reverse the fact that U.S. CD sales were down nearly 20 percent in the first half of 2007 as more young buyers digitally download music and piracy runs rampant.

A problem is that parts of the music industry still think of the business as a packaged goods industry and this move in that sense enforces backward thinking.

There have been many attempts to launch new kind of CDs and reversible CDs with music on one side and a DVD on the other side. So far, none has been very successful. Neither have the trend of throwing in lots of extras (at least when it comes to the bottom line).

Simply put, when it comes to piracy, the record labels are basically in competition with “free” music. Hence, if a kid with only a couple of dollars to spend has the choice of getting a song without all the extras for free or spending a considerable part of his/her allowance on a CD, it is hard to make a convincing argument for the latter. Unless you go after the really hard-core fans to whom extra features and collectibles have a special value.

This is where Hollywood Records have an opportunity to succeed with CDVU+ format. For example, the label has acts include Hilary Duff and Hannah Montana/Miley Cyrus. These teen idols have a huge fan base that is totally dedicated to them. Just take a look at the number of comments this article about Hannah Montana has on DMW.

But it is not a matter of reversing the declining CD-sales, at best an attempt to squeeze a little more revenue out of a dying format (the CD) before it is too late.

Jay Baage

Flickr Photo Credit: sirwiseowl


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