The major labels plan to abandon the CD-format by the end of 2012 (or even earlier) and replace it with download/stream only releases via iTunes and related music services. The only CD-formats that will be left over will be the limited edition ones, which will of course not be available for every artist. The distribution model for these remaining CD releases would be primarily Amazon which is already the biggest CD retailer worldwide anyhow...
The news doesn't come as a surprise to those who have been working in the business. In a piece that was published in a q&a with the Alfa Matrix people back in June 2011 in the 1st issue of "Matrix Revelations", our chief editor Bernard Van Isacker said the following when asked if a CD would still exist in 5 years: "Yes, but in a different format. Normal CDs will no longer be available because they don't offer enough value, limited editions on the other hand will remain available and in demand for quite a few more years. I for one buy only limited editions because of the added value they offer: a nice design, extra bonus gadgets, etc. The album as we know it now however will be dead within 5 years, if it isn't even sooner. I predict that downloads will have replaced the CD album within the next 2 years. I don't see that as something negative, it just has run its course, let's leave the space to limited editions (including vinyl runs for bigger acts) and downloads instead."
It's a move that makes completely sense. CD's cost money, even when they don't sell because there is stock storage to be paid; a label also pays money to distributors when CDs get returned to the labels when not sold and so on. In short, abandoning the CD-format will make it possible to just focus on the release and the marketing of it and no longer focus on the distribution (since aggregators will do the work as far as dispatching the releases to services worldwide) and - expensive - stock maintenance. In the long run it will most surely mean the end for many music shops worldwide that only stock and sell CD releases. In the UK for instance HMV has problems paying the labels already and more will follow. It makes the distribution of CDs no longer worth it.
Also Amazon will benefit from this as it will surely become the one and only player when it comes to distribution of the remaining CD productions from labels. Packaged next to regular album downloads via its own Amazon MP3 service it will offer a complimentary service.
The next monument to fall? That will be printed magazines as people will want to consume their information online where they also read most of the news...
CD-format to be abandoned by major labels by the end of 2012