What's on the Flip Side
Of That CD? Increasingly, a DVD
By ETHAN SMITH
Staff Reporter of THE WALL STREET JOURNAL
March 21, 2005; Page B1
When Bruce Springsteen's "Devils & Dust" arrives in stores next month, it will be more than just the singer-songwriter's 19th album. It will also be a milestone for DualDisc, the music industry's first major new physical format since the introduction of the compact disc more than 20 years ago.
The album will be the biggest title to date released exclusively as a DualDisc, which plays like a CD on one side and like a DVD on the other. The discs vary in price but generally cost around $1 more than CDs.
If it catches on, the format will make relevant again the question: "What's on the flip side?" Virtually all DualDisc titles use the DVD side to offer a surround-sound mix of the album, plus 28 minutes or less of video footage. In addition to a surround-sound mix, "Devils & Dust" will carry video footage of Mr. Springsteen performing several songs from the disc and discussing them.
The surround sound mixes can be played on standard DVD players through the same "5.1 surround" systems that DVD home theaters use. Establishing DualDisc would be a victory for the music industry, which has in the past few years failed to get a foothold for new high-end formats like "Super Audio CD," or SACD, and DVD-Audio. Both formats have been hobbled by high pricing and low penetration of the hardware to play it back. DualDisc, on the other hand, doesn't require any new hardware equipment.
Since an initial handful of DualDisc titles were released last fall, the new format has seen some success, including "Still Not Gettin' Any," from the pop-punk band Simple Plan, which has sold nearly a million DualDisc copies.
Now, however, the floodgates are open. Sony BMG Music Entertainment, the joint venture between Sony Corp. and Bertelsmann AG for which Mr. Springsteen records, is leading the charge. The company has released or plans to release more than 40 DualDiscs this year, from classics like Miles Davis's "Kind of Blue" and AC/DC's "Back in Black" to new releases like Jennifer Lopez's "Rebirth."
[Double Duty]
"The CD is a fading technology that has lost some of its appeal," says Andrew Lack, the chief executive of Sony BMG and one of the most vocal proponents of DualDiscs. "We had to come up with a way to give consumers a compelling experience."
Mr. Lack says he envisions a day, possibly not too far from now, when all new music releases come out on DualDisc.
Jon Landau, Mr. Springsteen's manager, cautioned that he didn't view the release of his client's newest album on a DualDisc configuration as a broader endorsement of the format. "We had a concept we thought our fans would like" -- namely, the film of Mr. Springsteen playing, Mr. Landau says. He and Mr. Springsteen considered including the movie as a separate DVD in the same package as a CD, until Sony BMG executives explained the DualDisc concept, which he says happened to be "perfectly suited" to their current plans.
Mr. Landau says Mr. Springsteen was issuing "Devils & Dust" only as a DualDisc because the singer insisted the disc cost no more than it would as a regular CD. "So there was no reason to release a CD; it became redundant," Mr. Landau says. But, the manager added, "When [Mr. Springsteen] does his next album, there could be no DualDisc."
Vivendi Universal SA's Universal Music Group and Warner Music Group Corp. have each issued a handful of titles, while EMI Group PLC says it is currently deciding which titles to include in its first batch of DualDiscs.
Few people working in the music industry are harboring illusions that the DualDisc will fuel the kind of sales boom that the introduction of the CD did in the early 1980s, when people began replacing their old vinyl records in large quantities. "That's not where my head is," Mr. Lack says.
Paul Bishou, vice president of marketing for new formats at Universal Music Group's eLabs division, says he envisions DualDisc as "part of the product mix," along with online downloads, ringtones and other new ways to hear music, rather than as an outright replacement for the CD.
But many hope that by giving consumers a significant extra, the new format will at least serve as a bulwark against the rampant online and physical piracy that has helped decimate CD sales for the past five years. In addition, consumers have at times griped that CDs seem like a poor value proposition next to DVDs, which offer not just a movie but also bonus features.
"This is what they need to release if they want people to keep buying their products," says Joe Nardone Jr., who owns a small chain of music stores in the Philadelphia area. "This is infinitely more valuable than any download."
Also in April, Matchbox 20 singer Rob Thomas will issue his first solo album, "Something to Be," as a DualDisc-only release. The DVD side of the disc will include a 22-minute documentary about the making of the album, plus a photo gallery.
Some titles, including Ms. Lopez's most recent album, have been released simultaneously on CD and DualDisc, at slightly different prices. In those cases the DualDiscs have generally sold about half as many copies as the CDs.
The record labels have declined to discuss their wholesale pricing of DualDiscs, but retailers say that Sony BMG generally charges 50 cents more for the new discs than they do for CDs, while Warner Music charges the same amount for both. Universal doesn't include the new format in its JumpStart program, which charges significantly lower wholesale prices in exchange for certain concessions from retailers on fees music companies often pay for placement.
Manufacturing a DualDisc costs as much as 60 cents more per disc than making a CD -- nearly double the cost -- and the capacity to make them is currently limited.
There have already been some hiccups in the rollout of the new format. For one, calculating royalties on the discs is complicated by the fact that music publishers consider the stereo and surround-sound mixes of each song as separate reproductions of the songs, meaning that they should collect twice as much in royalties as they do for normal CDs -- and even more for songs that are also included in music videos. Record labels have said that is an unrealistically high price.
So far the issue hasn't been resolved on an industry-wide basis. But EMI Music Publishing and Sony BMG's recorded-music operation -- the biggest and second-biggest players in their respective fields -- reached a blanket agreement to license their catalogs for the new format. Terms of the agreement haven't been made public. The publishing industry is set to try to hammer out a broad voluntary agreement in June
