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Music DVD Comeback

9 May, 2008 By: Erik Gruenwedel

Music DVD is ready for an encore.

Bucking incessant declines of music CD sales and conventional wisdom, shipments of music video DVDs increased 18.6% to 27.5 million units in 2007, generating nearly $485 million in revenue, according to year-end statistics released by the Recording Industry Association of America (RIAA).

By comparison, the trade group said 2006 music video DVD shipments topped 23 million units and $451 million, which represented 31.5% and 25% declines, respectively, from unit shipments and revenue in 2005.

Music video downloads in 2007 increased 43% to 14.2 million units and $28.2 million in revenue, compared to 9.9 million units and $19.7 million in sales in 2006.

“It's a pretty good market for music retailers,” said Geoff Mayfield, director of charts and senior analyst with Billboard. “They're smaller numbers [when compared] to album sales and digital tracks, but it is a growth category and a sweet spot for [traditional] music stores.”

Mayfield said music video packaged media, while not necessarily a boon for mass merchants, benefited from a number of CD/DVD exclusives released by Best Buy.

“It gives record retailers a larger selection,” he said.

Indeed, the Minneapolis-based electronics retailer has made music DVD a signature niche following the success of its Rolling Stones Four Flix release in 2003.

The title became the No. 1 selling long-form music DVD in history, according to the RIAA.

Best Buy followed with successive music DVDs from Elton John, Usher, another Stones title, Justin Timberlake, Mariah Carey, Tom Petty and Christina Aguilera.

Best Buy spokesperson Brian Lucas said exclusivity and quality of artists is what attracted the retailer to music DVD.

He said incorporating special features that allow viewers to focus on particular members of a band during songs as well as behind-the-scenes content, commentaries and concert footage bring consumers closer to the artists.

“Music DVD, if done right, can be a real energizer to music lovers,” Lucas said. “It puts people in the front row. Anything you can do to energize music lovers is a good thing.”

Retailers are also keen on upstart Music Video Interactive (MVI), songs incorporated within a physical DVD that also enable connectivity to Web-based bonus material.

A recent survey by The NPD Group found that MVI rated favorably among younger consumers. With teens and college students the most likely to consume pirated content, the NPD found that 44% of survey respondents said they would consider purchasing an MVI album.

Indeed, at last week's 50th National Association of Recording Merchandisers confab, president Jim Donio said the industry could benefit from “an invigorated CD 2.0.”

“Doesn't it make sense to support the vitality of physical and hybrid album offerings alongside new digital-only models?” Donio asked.

Music video downloads in 2007 increased 43% to 14.2 million units and $28.2 million in revenue, compared to 9.9 million units and $19.7 million in sales in 2006. That increase came largely from such sites as YouTube and MySpace.

Not surprisingly, music CD shipments and revenue in 2007 declined 17.5% and 20.5%, respectively, to 511 million units (from 619.7 million) and $7.4 billion (from $9.3 billion) in revenue in 2006.

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