Last Update: 8:38 AM ET Oct 27, 2006
LONDON (MarketWatch) -- EMI Music Chairman and Chief Executive Alain Levy Friday told an audience at the London Business School that the CD is dead, saying music companies will no longer be able to sell CDs without offering "value-added" material.
"The CD as it is right now is dead," Levy said, adding that 60% of consumers put CDs into home computers in order to transfer material to digital music players.
EMI Music is part of EMI Group PLC (EMI.LN).
But there remains a place for physical media, Levy said.
"You're not going to offer your mother-in-law iTunes downloads for Christmas," he said. "But we have to be much more innovative in the way we sell physical content."
Record companies will need to make CDs more attractive to the consumer, he said.
"By the beginning of next year, none of our content will come without any additional material," Levy said.
CD sales accounted for more than 70% of total music sales in the first half of 2006, while digital music sales were around 11% of the total, according to music industry trade body the International Federation of the Phonographic Industry.
CD sales were worth $6.45 billion and digital sales $945 million, the IFPI said.
Levy said EMI is continuing to hold talks with Google Inc. (GOOG) on an advertising-revenue sharing partnership with the community video Web site YouTube, which the Internet search giant acquired in October for $1.6 billion in stock.
EMI's rivals, Warner Music Group Corp. (WMG), Sony BMG - a joint venture between Sony Corp. (SNE) and Bertelsmann AG - and Universal Media have all signed content deals with YouTube.
"The terms they were offering weren't acceptable," Levy said, adding that EMI continues to be concerned about copyright issues.
Company Web site: http://www.emigroup.com
