Thursday, July 19, 2007

Disney tries to save the CD

Disney tries to save the CD

The once mighty compact disc is slowly but surely on its way toward joining the cassette, 8-track and vinyl LP on top of the music format scrap heap. But Walt Disney (DIS) introduced a new version of the CD in New York Wednesday that it hopes will convince more fans to keep buying multitrack discs (what we used to call "albums") instead of just downloading singles from the Internet.

Disney's Hollywood Records label unveiled what it is calling CDVU+, pronounced CD view plus, at the Samsung Experience store at New York's Time Warner Center, which just so happens to be where Time Warner's (TWX) offices are located. Disney said that its pop-punk trio, the Jonas Brothers, will be the first act to release an album in this format. The self-titled CD will be released on August 7.

So what makes the CDVU+ special? The CD will launch a digital magazine that features loads of exclusive content. Disney worked with Zinio, a company that helps magazine and book publishers deliver content online, to launch this service. The CDVU+ will also allow Jonas Brothers fans to check out videos and photos, get song lyrics and create posters.

It's an intriguing concept since it's obvious that consumers need added incentive to actually schlep to a store to buy a CD or order it online from a place like (AMZN) and then wait for it to be mailed to them. In this day and age, more and more music fans are accustomed to instantly getting music by downloading it, whether illegally for free from music sharing sites or from legal online music stores.

"While the CD is still the primary means by which people consume music, it is also true that music fans are increasingly turning to the Internet to connect, research and consume music," said Hollywood Records general manager Abbey Konowitch in a statement. "To address the changing consumer expectations, we've created a recognizable physical product that also serves as a key to unlock content that is exclusive, interactive, tailored to the band's fans, and updatable."

But it's debatable if the CDVU+ will really help stem the decline in physical music sales that is plaguing the music industry. According to Nielsen SoundScan, total album sales plunged 15 percent in the first half of 2007, led by a 19 percent decline in CD sales.

For one, many musicians and labels already offer access to online content and other extras through existing CDs. What's more, people who buy albums from places like Apple's (AAPL) iTunes often wind up receiving downloads of digital booklets with their albums as well as added content such as exclusive non-album tracks and music videos.

And at Fortune magazine's iMeme technology conference last week in San Francisco, a panel of digital music experts, including the keyboardist of the Talking Heads, the CEO of RealNetworks (RNWK) and an executive from major label EMI Group (EMIPY) all agreed that the digital music trend is not going away. Music companies have to adapt to the digital world and trying to keep the CD afloat may not cut it.

Still, it's a novel attempt by Disney. And if any record label can successfully benefit from enhanced CDs, Disney might be the best-positioned to do so since much of the acts on the Hollywood Records label are geared to younger, incredibly passionate audiences who can't seem to get enough information about their favorite musicians, be that Hilary Duff, Miley Cyrus - aka Hannah Montana - and Jesse McCartney.

There was a fairly large crowd of mostly young girls waiting for the Jonas Brothers to arrive at the Time Warner Center Wednesday. And these fans braved a pretty intense thunderstorm earlier in the day. So something tells me that this demographic may be more than willing to keep buying CDs if the discs promise all the extra bells and whistles they can't get from a digital download.

But don't expect CDVU+ to have a major impact on the rest of the struggling industry.

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