The CD is Dead

17 Aug

For some in the music industry, the statement is blasphemy. For others, it’s a statement of the obvious. For, it’s the starting point for a business plan.

by Chris Hansen

My wife tells me that I shouldn’t go around proclaiming that the CD is dead.

“It’s impolite,” she says. “The CD is definitely dying, but it isn’t dead yet. You wouldn’t say that about a person, would you?”

She cites as evidence the fact that she still archives her entire music collection on burned CD-R’s packed neatly in a trio of three-ring binders, tucked on a bookshelf in the basement. “They’re more reliable than hard drives,” she adds. And I have to admit she’s right. Amy is an attorney, you see, and at the breakfast table anyway I cede the point by way of technicality.

Afterwards, I go to work at and try my hardest to kill those stupid little plastic disks once and for all. For one thing, they are unreasonably expensive to make. For the grassroots band, it takes a minimum investment of $1k to do a standard run, which, on top of studio costs, tracking, mixing, mastering, etc., quickly balloons to a $5k investment in static inventory. That’s a lot of money by any standard. And without a clear distribution plan, that inventory is doomed to sit on a bookshelf somewhere.

My advice to new and emerging musicians is: don’t record a demo. Not unless you know what you are getting into and you’re ready to dedicate a lot of time and energy into the project. Not unless you have a publicity and distribution plan in place. Not unless you are prepared to gig in half-empty bars and chip away at that inventory for the next several years to get your music in the hands of every single listener you can find.

If your band is just starting out, you will need a self-enforced, Olympics-style training regiment to get ready for the studio. For crying out loud, don’t pay someone to mix your songs unless you’re sure you know what tempo it’s supposed to be, or how that one bridge part is supposed to go. Don’t expect your drummer to play well to a click track if he hasn’t practiced for hours to keep a steady beat. And don’t ask your lead singer to find the same emotion in her voice while performing in a 3’x3’ padded box unless she’s really built the chops for it. In short, don’t break your songs into 100 pieces and try to put them back together again until you are truly ready for prime time. Because it won’t sound the same, and there’s an alternative.

Don’t kill the messenger

According to Nielsen Soundscan, in 2009 there were 98,000 albums that sold at least one copy. Of those, only 17% sold more than 100 copies. Yet, just to make the equivalent of the U.S. minimum wage, a solo artist must sell 143 self-pressed CDs per month. Multiply that number by four if you’re in an average-sized band. The same Nielsen study indicates that only 2.1% (approximately 2,000) of albums in 2009 sold more than 5,000 copies.

It’s one thing for industry insiders to talk about the Long Tail and DIY and the Musical Middle Class, but quite another to provide a mechanism for getting emerging artists to that promised land of financial sustainability—or, for that matter, break-even. The traditional way out of this quandary has been to get a label or distributor for your band, but here’s another fun fact: according to a study by The Root, for every $1k in label-supported music sold, the average musician makes $23.40.

In reality, most grassroots musicians don’t record a demo because they think they’re going to make tons of money. They do it because they can’t afford not to. They need something tangible to validate this musical “hobby” to friends and family and, indeed, to prove to themselves that all those rehearsals really do amount to something. Going into the recording studio starts off as a concrete, achievable goal for a band. It quickly turns into an odyssey and labor of love. And at the other end of the tunnel, you’ve got twenty boxes stuffed with fifty CDs to mark the accomplishment. But there is no obvious answer to the question—what now?

So let me propose an alternative to the five-song demo.

  • Step One: Come to San Francisco. If you already live in the Bay Area, you’re halfway there.
  • Step Two: Schedule a recording session at Studios and play your five songs in front of our cameras to a live streaming audience. In fact, play your heart out. Put it all on the line for those five songs. And then we’ll do a brief interview, drink some beers, film some b-roll, and maybe even cook out on the grill if you’re so inclined.

There is no risk to the artist. It doesn’t cost anything to record in our studio. We don’t touch the copyright or publishing rights or any residual percentage of the underlying work—all that stays with the musicians, where it belongs. Instead, we enter into a licensing agreement for that five-song performance, and we split the profits 50/50. The whole process takes about three hours out of your life, and when you’re done you will have a live music video that can be embedded on any website to promote your band. The other four songs are included in the library as part of a subscription-based video platform.

Using the voluntary collective licensing model supported by EFF, Creative Commons, and other forward-thinking technologists with an interest in the music industry, we are investing in the long-term future of promising young bands. If makes $2 million in profit for a given quarter, $1 million of that will be deposited in the pool for musicians. If your band is played 5% of the time, you get $50,000 wired to your account. It’s that straightforward. Everyone’s incentives are in alignment. Increase the amount of your content in our library, and increase your chances to get plays. Help us sell subscriptions, and everybody wins.

The economics of this business model only work by abandoning the need for a physical product and offering music primarily as a service. It also helps to be a lean and mean Silicon Valley startup that can make a healthy profit off a few million in revenue, as opposed to a multinational conglomerate trying to control the entire distribution pipeline. From the moment the performances are captured at Studios, they enter a tapeless workflow and never leave the digital domain. Everything is recorded in full 1080p high definition so the content is not only playable on existing web and mobile platforms, but is also optimized for future content delivery platforms like Google TV, Apple TV, and Boxee Box. None of this, mind you, has anything to do with CDs.

Rigor mortis juris prudens

It’s nothing personal. After all, Latin is a beautiful language; but it is still a dead language. As an undergrad, I remember being awed (and perplexed) by the system of declensions that allows a speaker to place the subject, verbs, pronouns, adjectives, etc., in any order at all in a sentence and have it still retain its meaning. It was the practical language of commerce that gave rise to the flourishing romance languages of today. It is still the language of science and law, philosophy and the Roman Catholic mass. But it’s dead. Because there is no more innovation left. Because it will not evolve with the changing times in the way that English does. Because the very utility of Latin in present-day usage comes precisely from its stubborn anachronism.

So goes the CD. There is no more innovation to be found in that format, either. There will be no Version 2.0 because—why bother? It doesn’t work in a DVD player. It’s another unnecessary petroleum product that has to be shipped in trucks. People are just going to load it on their iPhones and iPads and iPods anyway. And it doesn’t even make a very good frisbee. So let it be what it was destined to be—a promotional tool, a loss leader, one part of a bundled package of products and services, a giveaway.

Perhaps this year’s release of “Dark Night of the Soul,” by Danger Mouse and Sparklehorse, which they distributed as a blank CD-R and encouraged fans to “use it as you will,” was the last great innovation of this dying format. The only thing mildly provocative left to do with a CD is the physical destruction of the disk itself.

But the death of the CD need not herald the death of all things physical in music. Vinyl will not save the industry—it still accounts for less than 2% of all music sales—but industry data suggest that revenues for the format have grown an average of 50% per year since 2007. Clearly, the large-scale artwork, the liner notes, and the sheer pleasure of owning cool stuff is a motivating factor for this resurgence. And who can deny the pleasure of spending an hour at Amoeba thumbing through endless, haphazard stacks of disks? Or the thrill of finding that hidden gem you would never even think to look for? The more fine tuned a Google search engine gets, the farther it takes us from this delightful randomness of RL discovery. The challenge of making digital music more tangible, spontaneous, and accessible away from the computer screen is the next great hurdle for the industry.

So go ahead and put that CD in a bundle and sell it. Make it a collector’s item. Give it away at your next show. Send it to your mom. Stock it at the merch table next to the t-shirts. Give Letterman something to hold up to the cameras as he introduces your band. But don’t take it personally when people throw down $10 for a vodka tonic but won’t pay the same to buy your CD.

To an emerging band, the CD is still a unit of currency as they gig around town or start their own tours. Suppose twenty people show up at a bar in Duluth for some live music, and it turns out they really like a certain band. How are they going to remember the name of that band when they wake up the next day? An iPhone app? Maybe someday. But in the meantime a CD is a little more practical. It’s essentially the new business card for grassroots musicians.

Yet, even as a promotional tool, the CD alone is sloppy and inefficient. How many times did they listen to it? Did they like it, or throw it in the recycling bin? What is their email address? Would they pay $20 to see a show at a larger venue? Could they be incentivised to tell their friends about the band? The CD can answer none of these questions.

Perhaps the answer is as simple as a promo code that unlocks HD content online. Email for content is fair trade these days. But such a system requires back-end architecture, metadata, analytics and, most importantly, highest-quality content. Digital marketing and distribution partners are emerging to help bands take that crucial step. But what if you could also subscribe to the band itself?

Give me something I can buy

Last month, Amy and I went to an album preview party for the emerging San Francisco band Con Brio, a ridiculously talented group of musicians that we fully believe in and want to see blow up into the mainstream. When we got to the apartment Jonathan, the bass and trumpet player, handed me a CD. It was a tangible moment, for lack of a better word. We sat in the living room and listened to all 12 tracks in an attentive circle. I looked at the inside jacket and was surprised to see a shout out to on the sparsely worded sleeve. And, yes, it meant a lot more to see the “thank you” printed on a physical product than posted on a webpage.

Con Brio also released a vinyl edition of their album in which they changed the order of the songs to account for the new format, with each side building to a shorter 6-song climax. If I had a record player, I would buy it. I still might, just to have them sign their names with a grey Sharpie across the cover so I can frame it and hang it on the wall. Hell, I might even buy a record player if Con Brio were selling it.

You see, we are what you might call “superfans.” So I say—please—give me something I can buy to support this band, and I’ll buy it. Give me merch. Give me VIP passes. Give me vinyl. And yes, even give me some CDs to buy and send to my friends and family. In short, give me any damn thing I can pay for, and I will do it. Seriously. Bundle it all together and sell it to me at a premium. Now, if only I could subscribe to Con Brio as an entity, that would be even better. If I could get an all-you-can-eat pass to their catalog of music, videos, merch, backstage passes, and other perks, I would enter my credit card info today and check the box for recurring billing. And I dare say we all have at least one band we’d do that for. is creating our own back-end architecture and content library to do just that, for an annual subscription fee of less than $25. You can’t buy a new release on blu-ray for that amount. You can barely get into Slim’s for that amount. I doubt it even covers the Ticketmaster service fees for a pair of Outside Lands tickets. People can afford it, and if they truly believe in supporting local and independent music they will be only too happy to see the money go directly into the pockets of the artists they listen to the most.

Whatever the eventual outcome of the current disruptive state, one thing is certain: the media and technology companies of Silicon Valley are leading the way to the music industry’s digital future. These thought leaders in the media/tech space are transforming music, entertainment, and information from a product to a service. It’s unclear to me whether my proclamation of the CD’s death will be met with controversy, or by a resounding “Duh!” from this community of entrepreneurs.

But if you’re as excited about the future of emerging artists and independent music as I am, I would love to talk to you more about’s business model and hear your perspective on the state of the music industry. We’re here to do business. We’re here to try out whacky ideas. We’re here to cross-promote, co-license, syndicate, collaborate and generally get to know the leaders of the Bay Area’s cutting edge companies. Got a different opinion about the CD? I would love to hear about it.

Chris Hansen
Executive Director


One Response to “The CD is Dead”

  1. urbantipo August 20, 2010 at 5:53 pm #

    Any artist success stories at yet?

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