In 2012, 193 million CDs were sold across the United States – with Adele’s “21” album dominating the charts. Fast-forward a decade later to 2022, with only 35 million CD albums sold, down 11% from 40 million in 2021.
The downturn in CD sales has been offset by subscription services, such as Apple Music, Spotify, and Amazon Music. Satellite radio found a way to capitalize on digital media as Sirius-XM’s 34.3 million subscribers are offered an app to create customized playlists based on their music preferences. In 2018, Best Buy ended in-store CD sales when revenue from digital music surpassed physical media.
According to market research from Omida, physical video sales worldwide dropped from 6.1 billion in 2011 to 1.2 billion in 2021. An estimated 300 million DVDs were sold worldwide in 2022, down from an average of 2 billion every year between 2005 and 2009.
THE MOVE TO DIGITAL
The move to digital impacted large chain stores, such as Target and Best Buy, along with smaller music stores like the now defunct Sam Goody, and there are collateral impacts for consumers and resellers.
Target, Walmart, Best Buy, and similar retailers adapted to the change. Walmart quickly turned its CD space into a home for cell phone sales. Target increased novelty items, while Best Buy expanded its smart home section to include the rise of intuitive doorbells and integrated security systems. College bookstores gravitated away from book sales as digital textbooks dominated classrooms and shifted towards clothing sales, accessories, and convenience items. Some campus stores shuttered as schools partnered with Amazon and similar large companies to meet student supply needs.
LICENSING VS OWNING
As people move towards digital music and media, digital books, and even digital video games, consumers are losing out on second-hand sales – both buying and selling. The Supreme Court case of Kirtsaeng v. John Wiley & Sons, Inc granted purchasers the right to sell books after use. However, digital media sale is not covered under consumer protection. If a consumer purchases an album on Apple Music, they enjoy the right to use the album following Apple Music’s terms and conditions. If the purchaser no longer wants the album, they do not have the option to sell the album second-hand. In a sense, consumers are no longer buying the physical album but rather renting media in a long-term agreement.
Along those lines, consumers risk losing purchases if the business housing digital media disappears. That is what Sony users faced in 2014 when the company could not find footing in the e-book market and exited the competition. Consumers who purchased through Sony were forced to maintain a piece of obsolete hardware or purchase another device from another company that also supported the format.
For many consumers, licensing versus owning is a paradigm shift. When a consumer visits a store and purchases a shirt, they own that shirt. If ten years down the line, the store goes out of business or the design company closes shop, the outfit does not automatically disappear from the closet. The shirt belongs to the purchaser so long as the tangible item is maintained. This is not the same for a digital download.
THE WORLD OF BOOKSTORES
The impact of digital media is felt across different markets and consumer streams. Local bookstores close at a rate of about 10% a year. In 2022, even Amazon shuttered its brick-and-mortar bookstores. Local music stores face similar closures. 2nd & Charles, a chain focused on buying and selling pre-owned books, movies and CDs, endured store closures in 2022.
The rise of digital media impacting physical media production dates back to 1988 when bookstore owners in New York began to close up shop. On the surface, closures were attributed to rent increases but according to a 1988 article in the London Letter “the fact is paperback books and discounted hardbacks have virtually eliminated a general interest in used books. It’s hard to be in the business of selling a commodity that has limited or nonexistent value.” Nearly 30 years later, we have the same questions in terms of second-hand resale.
Because digital licenses usually cannot be transferred, this shift takes away consumers’ opportunity to do anything with media they are done with. You cannot donate, sell, or even (legally) share a digital album, ebook, or game. This means that no portion of the amount paid can be recuperated when consumers are tired of their media, and purchases cannot help someone else obtain the items for cheaper. Whether this outweighs the environmental benefits and possible savings of purchasing a digital license can certainly be debated, but the rise of digital media has ripple effects throughout the country, both for consumers and businesses.
For businesses, this is similar to end-of-video arcades and video rental stores. Both were booming industries for decades that quickly became obsolete. For consumers, it means looking at media purchases differently. For many, buying movies, music, and/or books was almost like investing in art. They could be enjoyed personally and kept in a collection or potentially sold, sometimes even at a profit.
Now, consumers need to adjust their mindsets and look at media not as an investment but an experience to be enjoyed. It’s an intrinsic motivation instead of an extrinsic one, but no less satisfying.