This is Celia Hirschman with On the Beat for KCRW.
It's tough being in the music business these days. Sales are way down and consumer confidence is low. In an industry built on hype and spin doctoring, analyzing our weak points is not our strong suit.
In the midst of it all, Sony and Phillips have been putting a lot of money into developing a new format for sound recordings, called Super Audio CD or SACD. It's a new configuration for music, allowing you to hear a richer playback quality with superior high fidelity. The new format requires special equipment and additional speakers to appreciate the sound. The price for this new configuration is higher than regular CD's. Sony and Phillips have licensed many of the popular records and remixed them for this new format.
At the same time, Warner Bros has been working on the launch of their own new configuration, the DVD audio or DVDA.
Again, different configuration offering superior sound, with new equipment, at an increased price. They too have licensed popular recordings and remixed them for this format.
Each of these formats is different in their technological approach, and both offer complicated explanations for how and why their sound is superior.
Be that as it may, my concern was not which system is better, but rather whether consumers actually cared at all about either. I was curious to figure out, for instance, why, in the midst of consumer demands for lower prices for music, and with MP3 files dominating the new configurations, Sony, Phillips and Warner Bros, would be investing heavily in another kind of sound?
I understand that large record labels have become very savvy at trend spotting.
With all the MBA knowledge at hand, music companies can graph the lifespan of a configuration, long before its demise, and they can tell when another configuration should take its place in the market. They can also read an annual budget with extraordinary acuity.
Add to this equation, the fact that in the 80's, the Phillips and Sony Corporations began generating enormous annual revenues from the sales of all CDs. You see, Phillips and Sony had developed the CD technology, and they earned a royalty on every CD sold.
It was a very profitable business model. But the patent for the CD expired recently, so it's really not surprising that music companies are trying to sell a new sound configuration with a royalty attached, for consumers to buy.
Also consider that these configurations offer a zero burn possibility. The record industry is tired of losing control of its assets, so these new formats produced will keep burning, ripping and file sharing to an absolute minimum.
There seems to be a bit of a dilemma in the house of music. Who do you listen to? The MBAs who want a new configuration in SACD and DVDa or the consumers who are demanding legal MP3 files to manage their music libraries in their homes, at work and in the car?
I believe marketing is as good as the need of the product, and it appears that the R&D; folks at music companies are just a little late in picking up the trend of what consumers want.
I expect these two formats will go the way of the betamax, the quad sound, the DCC and the DAT. Built by executives, and voted down by consumers.
This is Celia Hirschman with KCRW for On the Beat.