Yesterday we reported that Sony Music is closing a CD manufacturing plant in New Jersey. This is more than just a reaction to the current woes of the CD format. Sony's move out of CD manufacturing is just the latest example of major music companies shedding their manufacturing businesses.
Believe it or not, this has been going on for nearly a decade. In 2002, Universal Music International sold its Blackburn CD manufacturing business to Disctronics. The following year, AOL Time Warner sold Warner Music Group's DVD and CD manufacturing and distribution operations to Cinram. Ã¢Â€Â¨EMI chose to outsource its CD and DVD operations in the Netherlands and Jacksonville, Illinois in 2004. The following year, Universal Music Group sold its CD and DVD manufacturing and physical distribution facilities in North America and Central Europe to Glenayre Technologies. Also that year, Toshiba-EMI sold its manufacturing division to a consortium of businesses.
This aspect of music companies' transition is often overlooked and it flies in the face of accusations that record labels are stubbornly wedded to a dying format. While the CD is still an integral part of labels' and publishers' revenues, the fact is that that majors long ago understood the lifecycle of the CD. Digital strategies may have been imperfect over the last ten years, but these companies were wise enough to scale back their physical operations.