The following is paraphrased from some email correspondence I had with a close friend of mine:
"...Is the CD format dead? I have just one response: vinyl.
From the moment that (mini)cassettes hit the market, people were predicting the death of vinyl. Yes, vinyl did effectively die as a mainstream medium, but because it has unique sonic qualities; it actually changed and become much more of a niche medium. The death of vinyl was even more complete when CD arrived, or so the magazine articles said in the mid-80s. I think that, over time, CD will also become a niche medium, but it will never truly die because of the universal manufacturing and distribution technologies that underlie CDs (anyone with a computer can create and replicate perfect CD audio copies--something cassette couldn't achieve due to sound degradation), and because they're really, really cheap to make. There's more bang-for-the-buck there than in any other format right now, and it'll probably be that way for years to come (if not decades).
Even if CD were to fall as the medium-of-choice in the US and other advanced economies, it would still be a medium-of-choice in developing economies for years, even decades. It's only been within the last 5-10 years that CDs have even become available in most African markets, and cassettes are still the medium-of-choice in many emerging Central and East Asian markets.
I have no illusions that eventually the American and European markets will hit a tipping point and arrive at a medium-less mass market for musical and video product consumption. But even at that point, the CD will be far from dead, because it's so inexpensive and convenient.
The other thing that will have to evolve is the issue of transactions and payment as relates to licenses. Specifically, look at the cumbersome issues that Google and Apple are dealing with in order to launch their so-called cloud media services; lawsuits are lining up from labels, artists, and individuals regarding the mechanisms and regulations for how they get their share of the licensing pie. CDs, cassettes, and LPs are physical products so tracking--and paying for--each licensed copy is easy and is also the foundation of a huge financial market. Digital copies, and how you ascribe licensing rights for selling, duplicating/copying, and playback are murky law right now. Commercial law around these issues is still rooted in the media of the 1990s, and hasn't really even caught up with the whole Napster-era issues, much less HD downloading. You know how much fun it is trying to move music around different devices in iTunes, even when you own the original CD; no media delivery company (i.e. cloud service) has any substantial caselaw built up around how to define "license" when existing caselaw still largely ties license to a physical piece of media (one CD, one license, one person). By the strictest definition of existing law, you and I are breaking copyright law every time we upload a CD into iTunes, because by the technical definitions of the law, we're creating a new and essentially perfect copy without paying an additional license to the companies and artists who own the original work of art. No one prosecutes that level of the law anymore, but it was an issue no less than 30 years ago when the major labels sued Sony for creating blank/recordable cassettes, the logic being that copying from vinyl to cassette was illegal copying and that the record companies were owed for each tape copy of a vinyl record. It wasn't until the late 1980s that the court decisions established interpretations of licensing law regarding personal use of a particular licensed CD/LP/cassette. However, those licensing concepts are *still* the underpinning of today's media laws. CDs will become niche media, but I've not seen an argument yet that convinces it's a dying format..."
Heath and I have been close friends for 20 years. He has written extensively as a freelance talent for magazines like NME and others.
