Speaking at the London Business School on Nov. 3, EMI Music chairman and CEO Alain Levy told his audience that the CD is dead, saying music companies will soon no longer be able to sell them without offering "value-added" material. In contrast, actual CD sales accounted for more than 70 percent of total music sales in the first half of 2006, with digital (download) sales accounting for 11 percent. According to the International Federation of the Phonographic Industry, CD sales were worth $6.45 billion, while digital music sales were at $945 million.
As further evidence of the CD’s decline, Levy added that 60 percent of consumers put their discs into home computers in order to transfer (rip) the content to digital music players. Still, Levy feels there will be a place for physical media, but that record companies will need to make their CD offerings more attractive with value-added content and features. "We have to be much more innovative in the way we sell physical content," Levy said. For this reason, by the start of 2007, all EMI releases on CD will include additional material, he said.
EMI remains alone in not yet agreeing to a content deal with YouTube.com, the video-sharing Web site recently acquired by Google. Levy cited copyright issues as the reason, and noted that negotiations are ongoing. The other two major music conglomerates, Sony BMG and Warner Music Group, have both signed agreements based on an ad revenue-sharing business model.
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