Best Buy Says Goodbye To You, CD Music

Music CD
Video may have killed the radio star, as The Buggles so famously put it nearly four decades ago, but what the band couldn't have predicted at the time is that digital streaming would murder physical media. Best Buy is now an accomplice—the retail electronics chain recently told music suppliers that it was pulling CDs from its stores this month.

If you walk into a Best Buy location, there is a good chance you will no longer see rows of music CDs. When communicating its decision to music suppliers, the company said it was yanking them on July 1, this past Sunday. This led to reports that Best Buy was done with music CDs altogether, though that's not actually the case. While Best Buy is saying goodbye to having rows music CDs, essentially giving physical media the Patty Smith treatment, it will still offer a small selection.

"The way people buy and listen to music has dramatically changed and, as a result, we are reducing the amount of space devoted to CDs in our stores. However, we will still offer select CDs, vinyl and digital music options at all stores," Best Buy told a local CBS affiliate in South Carolina.

Best Buy's decision to drastically scale down its CD selection underscores the tectonic shift that streaming music caused. There was a time when Best Buy was the biggest seller of music merchandise in the United States. It's a markedly different landscape now, with music listeners primarily getting their groove on through services like Spotify, Apple Music, and Google Play.

This is certainly the case in the US, where CD sales dropped 18.5 percent last year. Interestingly, Billboard claims that physical music sales still perform relatively well globally, even as digital music continues to rise. Still, digital music is having a big impact on domestic sales.

"In 2017 revenues from recorded music in the United States increased 16.5 percent at estimated retail value to $8.7 billion, continuing the growth from the previous year. At wholesale, revenues grew 12.6 percent to $5.9 billion. Similar to 2016, these increases came primarily from growth in paid music subscriptions which grew by more than 50 percent. This is the first time since 1999 that US music revenues grew materially for two years in a row," the Recording Industry Association of America (RIAA) said.

It's not just Best Buy that is moving away from CDs, either. Target has told music supplies that it only wants to sell CDs on a consignment basis. As things currently stand, Target pays upfront for physical media, and whatever doesn't sell, it has to ship back on its own dime for credit. By moving to a consignment model, the inventory risk would shift to music labels.