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Re: Universal music still sees future in CD market
CANNES, France - A music company executive says it's too early to write the epitaph for the CD.
The CEO of Universal Music's parent company, Vivendi SA says the death of the CD is not upon us, despite the rapidly growing popularity of online digital music.
Jean-Bernard Levy told a music conference in the southern French city of Cannes that he expects the market for CDs to last for "many years."
Record companies are reeling from the decline of the CD market, fuelled by music piracy, according to industry group the International Federation of the Phonographic Industry, or IFPI.
But in a question and answer session with delegates at the Cannes conference, Levy said he still believes there is "a big market to sell records physically for many years still."
"It's not the migration of one physical format to another, I think it's a transition into very diversified business models of which CDs will remain a part. I don't believe at this stage for the next few years we will see a complete showdown (elimination) of CDs," he said, speaking in English.
Record companies' revenue from online digital music sales rose 40 per cent to US$2.9 billion in the past year, but the growth has thus far failed to cover losses from collapse of the CD market, the IFPI said last week.
CD sales fell 11 per cent between 2005 and 2006, and are likely to drop further in 2007, according to the industry federation. Digital downloads now account for 15 per cent of the world's music sales, with more than 500 legally licensed music sites selling around six million tracks of music, according to the federation.
Asked about moves away from copy-protection safeguards on downloaded digital music, previously championed by the recording industry as a bid to prevent piracy, Levy sounded a cautious note.
"We are still testing it - but I want to recall our policy that is still we are strongly attached to DRM, especially for advertising-based models and subscription-based models," he said, referring to Digital Rights Management, which includes software coding that prevents copying downloaded music.
DRMs can frustrate consumers by limiting the type of device or number of computers on which they can listen.
Last year, Universal Music began testing an unlimited music download service in France offered through broadband provider Neuf Cegetel. It is also giving Nokia customers a year's unlimited access to millions of songs.
"We don't want to make too many comments at this stage," Levy said of the trials.
