Music companies singing praises of piracy-resistant formats
DVD-audio
By David Sharos
Special to the Tribune
Published March 19, 2004
Record companies wish there were a hundred more artists like Norah Jones who can sell 1 million copies of an album shortly after it is released.
In February, Blue Note Records released Jones' new album, "Feels Like Home," and watched as cash registers sang.
But Jones' success on the heels of her debut, the multiple-Grammy-Award-winning "Come Away With Me," is rare in the music industry these days, where sales have slipped four straight years.
Compelling new artists like Jones, who can attract teens and their Baby Boomer parents, are few. And combined with the rampant spread of pirated music on the Internet, record companies are struggling to boost sales.
"The record industry needs to become competitive again," said Sony executive David Kawakami. "Sales figures have slumped, and we've needed something to create new interest in buying records."
Industry executives hope they have two new somethings to spark sales.
Major labels have begun to slowly roll out new types of music discs they call high-resolution digital audio to entice buyers with near auditory perfection.
One format, superaudio compact discs, contains layers of data, which may include a regular CD of an album plus a second layer that can be read only by a special SACD player. An SACD can be played on many regular CD players as well but will sound richer on a SACD player.
The other format, DVD-audio, is built on the same platform as a movie video and includes extra goodies like read-along song lyrics, biographies, music videos and other special features. They are also recorded to take advantage of multiple-speaker systems, such as surround sound, that are popular in home theater setups.
Prices for the new discs range from $12 to $25, depending on the format. Many SACDs, for instance, cost the same as regular CDs by the same artist.
Beyond the audio enhancements, the real key to the new products is that neither can be fully downloaded, which puts a stop to illegal peer-to-peer file sharing.
"These technologies represent a new and better audio format," said Chris Gillespie, an independent recording engineer in Chicago. "At this point, however, neither is capable of being copied with full resolution, so downloading isn't an issue."
Kawakami said developing a better product is a more effective strategy to combat piracy. The music industry's decision to sue individuals for illegal file sharing is "a Prohibition-like measure that doesn't address the real problem."
"Suing your customers is not the right approach," he said. "After 20 years of delivering yeoman's service, the CD is no longer competitive. The music industry needs to replace it with something that offers more value."
As head of Sony's SACD project in the U.S., Kawakami started working on the recording techniques that became the core technology of SACDs in 1994. Players and discs began appearing around 2000.
Sales of SACDs and the needed hardware have been slow to catch on with consumers, but Kawakami said interest is beginning to take hold.
"At the Consumer Electronics Show in Las Vegas in January, we counted 118 SACD-compatible players from 26 manufacturers," he said. "Today, there are over 1,900 SACD titles available, and the disc-replication industry is adding more manufacturing lines to keep up with demand."
By the end of 2003, an estimated 21 million SACDs had been pressed. But determining how many have sold is elusive, because SACD sales are not counted separately from CD sales. More than 600 million CDs were sold last year.
Some titles have enjoyed huge sales.
Capitol Records released Pink Floyd's "Dark Side of the Moon" on SACD last year and has shipped close to a million copies.
Columbia rolled out 15 classic Bob Dylan titles last summer, together with a box set collecting them all. Those Dylan titles have shipped more than 700,000 units.
Kawakami said these sales figures prove that SACD is providing enough benefits to compete with free or low-cost downloads.
DVD-A titles, such as reissues of Fleetwood Mac's "Rumors" and the Eagles' "Hotel California," have sold more than 20,000 copies each.
But while those numbers are encouraging, they also point to a clear problem: The artists selling well in the new formats are not found on today's Top 40 list. Rather, titles from the Police, Rolling Stones, Doors and Pink Floyd reflect the Baby Boomers' life soundtrack.
"We know that Baby Boomers are the only group whose album purchasing is actually on the rise," Kawakami said. "This is a logical place for the major labels to concentrate their interest. Being able to go back into a classic artist's catalog and mine it is critical to the health of the industry."
Marc Finer, director of Communication Research Inc., a marketing group that specializes in developing strategies to support the launch of digital entertainment products and services, believes the Baby Boomer marketing approach is a sound one.
"The back-catalog approach is the way to build a consumer base now and for the future," he said. "We know that Baby Boomers are the backbone of the market, while kids today use their PCs for entertainment. But some day, those kids will become more affluent and want better sound. And when they do, these formats will be there."
Finer and Kawakami also note that once back-catalog sales are established, more current artists will see their releases coming out in one of the high-resolution formats.
A&M/Universal did just that in the fall when it released Sting's "Sacred Love," which to date has sold more than a million copies in regular CD and SACD formats combined. Both were released simultaneously.
Pete Howard, editor of Ice magazine, a California-based CD publication, sees the new high-resolution digital audio options as part of the chain that included moving from records to cassettes and on to CDs.
"People will buy another version of an album they loved years ago if they're convinced it's better," Howard said. "If there is a dramatic new format, Baby Boomers that have the money don't mind spending $25 for something they can hear over and over, if it's one of their favorites."
Cost, Howard said, may be a factor to wider acceptance, "because $10 seems to be the psychological barrier. Once prices go over that, acceptance drops."
Alan Light, the former editor of Spin magazine who recently launched a new magazine, Tracks, said music aficionados are willing to pay the price.
"Overall, I see DVD-audio and SACDs as something for the audiophile buyer, who will purchase them as long as there are sonic improvements, and you're not asking for a paradigm shift," he said.
"With audiophiles, you're not interested in a download of a compressed MP3 file. You'll buy the best."
Major retail chains like Tower Records have established shelf space to display the new discs.
David Merrick, who manages Tower's Schaumburg store, said sales to Baby Boomers are increasing slightly each month, but growth of the new formats is being stunted by price and compatibility.
"Many of these titles cost twice as much, and another problem is that people still want to buy stuff they can put in their cars," Merrick said. "Until this music is portable, it won't sell through."
