Are CDs broken forever?

In 1983, Philips and Sony introduced the compact disc as "pure, perfect sound forever." But as we all know too well, nothing is forever in this fast-paced world. Even steadfast supporters will acknowledge that the CD is now on the endangered gizmos list.

When the CD first appeared, record companies had reason to jack up the retail prices, as the wholesale cost of pressing and packaging the mini-laser disc was significantly higher -- $2.50 vs. 25 cents for an LP. Plus, producers guaranteed that their new music carrier would never show signs of wear, unlike vinyl albums.

But nowadays, a CD costs 20 cents to stamp out. And even with significantly enhanced royalty terms (much deserved) for the contributing talents, there's no way consumers want to pay $15 for a CD -- especially with online stores such as iTunes sticking with mostly $9.99 album downloads.

Music has been devalued. It just doesn't loom as large in most people's lives today.

Trans World Entertainment, parent company to the FYE chain, reached that conclusion last summer and instituted a noble experiment in about 100 of its stores that established $9.99 as the everyday price point for all standard-issue (not "deluxe edition") CD releases. (None of FYE's Minnesota stores -- in the Mall of America in Bloomington, Burnsville Mall and Bemidji -- is thus far part of the pricing experiment.)

The move has brought dividends. While U.S. album sales tracked by Nielsen SoundScan were off, as a whole, by a whopping 22.4 percent in the first quarter of this year, FYE store revenues fell a mere 0.6 percent.

Of the major labels, Universal Music Group has been the heartiest endorser of FYE's reduced pricing. Universal cut the wholesale cost of CDs to $7.50 and the "suggested retail" to $10. But other labels, worrying (they said) about "antitrust" issues if they just cut prices for this retail group and not all customers, have held onto higher prices, in some instances forcing FYE to lose money on each sale or not carry an important new title.

Proposing even more radical moves is Charlie Anderson, president and CEO of the wholesale operation (Anderson Merchandisers) that puts all the prerecorded music into Walmarts and Sam's Clubs, as well as on Army and Air Force base stores, collectively accounting for about 12.5 percent of all U.S. music sales.

In his recent Billboard chat, Anderson spoke of the decline in floor space and inventory for prerecorded music at Walmart, Target and Best Buy. And he imagined a day "when they say it's just not worth it anymore. Our projection is that it could happen at the end of three more years if nothing is done for the CD."

Ouch.

Suggestions to save the CD

To keep the patient on life support, Anderson is proposing some serious mind-set changes.

Better still, this shift could encourage artists to stay current by putting out short sets every six months, rather than trying to "work" that one album for 18 months, flogging the material to death.

Other suggestions? CDs should come with a personal identification number for the buyer to retrieve a free digital copy of the material. Labels should release songs on disc the same day the music is available on iTunes. And retailers should be able to buy hard-copy albums on consignment.

Follow his agenda, said Anderson, and the CD might last as long as six years as a retail phenomenon, buying the recording industry more time to get its replacement revenue streams running.

But physical CDs might never totally bite the dust. Artists crave a physical representation of their work and appreciate how CD and vinyl versions best replicate what they heard in the studio.