Could This Company Be The Last To Distribute CDs?

While the CD has hung on longer than some might have guessed, it's decline has been steady. That said, some are still turning a profit from this outdated form of music. Here we look at Alliance Entertainment, the largest wholesaler of physical music in the US.

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Guest post Bobby Owsinski of Music 3.0

The CD is fading away, not as quickly as was predicted, but the long slow decline is occurring nonetheless. Streaming is the root cause, of course, and the decline of the importance of the album too, but for the most part, our attention is now elsewhere instead of on a round piece of plastic. That said, 38 million of the suckers have been purchased this year so far that we can count (who knows how many have been sold at gigs or by churches, for example, that weren’t scanned and therefore counted), so there is a remaining appetite that should continue for a while. That’s why Alliance Entertainment, the largest U.S. wholesaler of physical music, is still optimistic about the future of plastic-based music formats.

The company is huge, with a mall-sized distribution center in Shepherdsville, KY with $100 million worth of inventory on hand and an automation system that rivals Amazon. With revenue of around $775 million per year, about 52% of it comes from music (all forms of physical product), 33% from video, and the rest split between games and music merchandise. The company currently services over 2,000 independant retailers, with 3,700 unique customers and 16,000 Ship-To locations.

While download sales have fallen off a cliff and may become extinct as a format sooner than ever thought possible, the CD continues to hang in there. There are still some users who prefer it as a format as some purchase to help an artist that they follow, others find it more convenient, while others just prefer the sound over streaming. As of last year, CDs were still a billion dollar a year business, and that’s still a big earner for the music industry.

Alliance has indicated that it “wants to be the last guy standing” in that part of the industry, and probably will be at this point. That provides hope to artists, bands and labels that still want to press CDs, as there still will be at least one point of distribution.