Last year the music industry saw the death of the MP3, the longtime digital format used to store music files that revolutionized the way we store music. This year we will likely see the death of another famous music format. Best Buy will stop selling compact discs on July 1 in its stores across the country.
The CD took vinyl's place in the '80s as the go-to format for storing music.
The End Of An Era
Streaming music has been the norm and is now getting people to pay for music. With the death of the MP3, and people shelling out cash to use streaming services, the sale of physical copies makes even less sense for retailers.
Best Buy told music labels that it will pull CDs from its shelves on July 1. It was once a dominant force in the sale of CDs but now its offering pales in comparison due to the lack of interest from the general public.
Best Buy will still be selling vinyl for the next two years. Physical music sells well worldwide but the sales are lagging in the United States, where CD sales went down to 18.5 percent causing some retailers to give up on the format altogether.
CD sales are currently making around $40 million annually. Convenience using streaming services has made consumers flock to those services. Streaming services made up 62 percent of the music market in the first half of 2017, according to the RIAA.
Target Reevaluating
If that wasn't a hit on the labels, another large retailer is re-evaluating its position on CD sales as well. Target wants to change the way that it pays suppliers for its CD inventory.
Currently its system relies on taking inventory risk by paying for the CDs it gets within 60 days. Target then pays to ship back CDs that weren't sold for credit. Target wants to change the system to shift the inventory risk to the music labels. It won't pay the labels for the CDs until the customers buy them.
Target told labels that it no longer wants to take inventory risk on the sales of music and video last year. It gave the music labels the deadline of April 1 or May 1 to agree to the terms.
Target also gave the same demands to DVD suppliers, where it would only pay after the DVDs are sold. Music labels still aren't sure whether to accept the deal with Target and are waiting to see what movie studios do with Target's demand for DVD sales.
