"This isn’t really about the technology; it’s about being able to deliver an experience to the consumer that carries value and is something that they want to buy."
——John Trickett, 5.1 Entertainment Group


An exclusive HITS NARM report by David Simutis
File-sharing and CD-burning are killing the industry. Now, where have we heard that before? DVD sales basically doubled in 2002 vs. 2001. OK. On average, DVD buyers purchase up to 16 titles per year. DVD sales saved a lot of people’s bottom lines last year, if not entire companies. All of which isn’t news. But put down your iPod for a second and think about how this can be a positive thing for the music business.

There is a pair of new and emerging music formats that should be given a long, hard look: DVD Audio (DVD-A) and Super Audio CD (SACD). The two formats are not compatible; SACDs play on SACD players as well as CD players, while DVD-A discs play only on DVD players. Wait, don’t turn the page just yet. With copy protection and multiple-channel surround-sound, they both sound waaaaay better than CDs and MP3s. (Note to the three geeks with a technical interest: they’re each mastered at a higher sampling rate than Redbook CDs and can hit a frequency response of 100,000 Hz and a dynamic range of 120 dBs, contrasted with CD’s 20,000 Hz and 96 dB.) You don’t have to have surround sound to use either, but it does help, and it is the main selling point of SACD.

DVD-A also has room for all the goodies that DVD movies offer, right there on the television—artist commentary tracks, behind-the-scenes movies, videos… They aren’t so much value-added features as they are items that DVD users demand. It’s a newer take on a now-familiar format. And then there’s that little matter of how CD-burning, file-swapping, inexpensive DVD movies and re-playable video games are eating away at consumers’ perception of how much a CD is worth.

Says 5.1 Entertainment Group CEO/President John Trickett, whose company develops and manufactures DVD-A discs, "The value of a CD in the eyes of the consumer has been progressively diminished—not the least of which is getting them for free. The CD has reached its 20th birthday and there’s been a lot better technology out there for a long time. But this isn’t really about the technology; it’s about being able to deliver an experience to the consumer that carries value and is something that they want to buy. Retail gets the fact that DVD is a format that is presenting an opportunity for growth both in revenue and for getting more customers into the store. Up until now, you’ve really only had concert videos that were available on DVD; now you’ve got records available in DVD."

In the SACD corner is Sony Music Entertainment VP Business Development Leslie Cohen, an expert on the Super Audio CD format. It’s her belief that consumers are being conditioned to expect markedly improved quality sound from their shiny discs, not the crappy, limited fidelity of MP3s. Voila, in steps Sony with CDs that play in surround sound.

"All the people who went out and bought surround sound for their home theatres have grown accustomed to all six speakers working," she says. "So when they pop in their CDs and only two speakers are providing sound, it’s not enough. There is a perception that more speakers and more channels are better. We’ve been able to deliver that with a wide range of music and we’re happy with the way the format is taking off. We’ve had good response from retail and consumers have been giving us a lot of positive feedback.

"It’s not just home-theatre owners who can take advantage of DVD-Audio; there are more than 100 million DVD-compatible players already in homes (including PlayStation 2 and Xboxes), so there’s a huge user base of people familiar with the ins and outs of DVDs. It’s a matter of getting people to understand the difference between CDs, DVD-A and DVD movies. To that end, DVD hardware manufacturers and labels are working hand-in-hand to raise consumer awareness of the individual formats.

"We’ve done a lot of promotional campaigns between several record labels, with hardware manufacturers and retail all working together," Trickett says. "We’ve put together promotions, for instance, where if you buy a home-theater system with a DVD player, you get three free discs with the purchase—two of ours, one of Warner Bros.’ There’s really a high level of cooperation, working with a common goal in mind. I’ve never actually seen it before in this industry."

The warm, fuzzy feeling is great, but the real question is whether or not DVD-A can make inroads in the marketplace to a point where people actually buy albums again. Most importantly, are the bonus features and improved sound quality enough to get consumers excited? Or is it just another Quadraphonic, MiniDisc, DAT, DataPlay…?

"We’ve all been there," agrees Trickett. "I got the LP, then I got the cassette, then I got the CD…. Who wants to buy the Beatles’ White Album all over again? There has to be a reason to do it: and because you’ve got surround sound and all the bonus features, there really is a reason to spend more money—you get more."

So far, consumers seem to be agreeing, with sales rapidly increasing year to year. Labels are also investing more in the format; Rhino has done a wonderful job with goodies on classics such a The Band’s Last Waltz. And it’s not just catalog. They’re issuing new releases on DVD-A the same street date as the CD; Linkin Park’s Meteora, for instance, will street in both CD and DVD-A.

"With what we’ve seen in terms of the market so far, it’s really the tip of the iceberg," Trickett enthuses. "In 2002, we doubled what we sold in 2001, and the way that 2003 is going so far, we’re right at the beginning of the hockey stick curve [of sales increases]. As CD sales decline, sales of DVD Audio are going through the roof. It’s not dissimilar to when DVD video was first launched."

But can either format be the savior of the industry? Or will one emerge triumphant, like VHS over Beta?

"I’ve been saying that for three years and I still believe it. It adds value, it’s not just a copy-protected CD that a) doesn’t work all the time and b) you can’t copy. It shouldn’t surprise people to hear that most hardware manufacturers have stopped producing CD players. A DVD player plays a CD anyway. But I don’t think CDs are going away anytime soon… Hey, we still buy cassettes," laughs Trickett.

Cohen is more realistic in her assessment of SACD’s chances. "Accounts certainly realize another format won’t give them the home run the DVD video did, but they’re interested in formats that will get people back in the stores and buying discs," she says. "New formats provide that opportunity. Plus, you can’t really download surround sound music. Fortunately, that’s pretty damn impossible—for now."

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