Can MD spin-off net some real success?

Last month Sony launched a Net-based MiniDisc to combat the rise of MP3, but it will be a struggle for a product that has never taken off.

When Sony launched the recordable MiniDisc in 1991, music industry watchers fully expected it to signal the end of the cassette, just as the CD displaced vinyl in the Eighties.

Such success appears to have eluded the MiniDisc and 12 years later, the British Phonographic Institute (BPI) reported that sales of pre-recorded MiniDiscs had dropped from &£3.1m in 1999 to a paltry &£500,000 last year – a slide of 84 per cent.

For most music fans, the CD reigns supreme, capturing 97 per cent of all album sales in 2001, according to the BPI. Other pre-recorded formats sell in negligible amounts.

But despite the collapse of MiniDisc’s pre-recorded sales and the rise of MP3 technology, MiniDisc players have stubbornly refused to roll over and die, with Sony claiming that their sales alone topped &£67m in 2001, an increase of ten per cent against the previous year.

In January, Sony launched NetMD, an extension of MiniDisc technology that can transfer music data, including MP3 files, at high speeds from PC to MiniDisc.

Sony spokeswoman Amanda Behrend claims the company is not concerned about the pre-recorded MiniDisc sales figures, arguing that consumers use MiniDiscs to make copies of their favourite albums so they can listen to them while travelling. She says: “The MiniDisc has been positioned as a mass-market digital format. Now with NetMD, it is also focusing on the younger market who are part of the Internet generation.”

A spokeswoman for BPI adds: “The pre-recorded MiniDisc format never really took off. There aren’t enough titles available and it was always seen as a niche for music buffs.”

The reason for their survival, says Dixons senior product manager Martin Crane, is that the digital quality is good and, unlike CD Walkmans, MiniDisc players do not jump.

“And whereas blank cassettes deteriorate quickly, MiniDiscs can be re-recorded a million times with no loss of quality.”

Crane also ascribes the MiniDisc’s success to the marketing support the technology received from Sony in the mid-Nineties. In 1994, for instance, Sony earmarked &£25m – both above and below the line – for the pan-European launch of four MiniDisc products.

Crane says: “MiniDiscs didn’t take off until about 1996 and, since then, have gone from strength to strength. In the early days it was necessary to achieve consumer awareness – I believe that has been achieved. At Dixons, we invest more in promoting MiniDiscs than any other portable technology, though I can’t say how much.

“Sony has invested properly in the product. It has been very serious about this.”

However, the position of the MiniDisc as a recording platform of choice is far from impregnable, as MP3 and computer technology continues to improve.

MP3 players are small portable devices that can download music files from the Internet via home computers. They cost about &£150 for 40-minute players, &£200 for 80-minute players and &£300 for 150-hour players.

MiniDiscs are much cheaper and cost about &£100 for a device that offers five hours of music. Blank MiniDiscs cost about &£1 each and can be re-used thousands of times with no apparent loss of sound quality. Most people agree MP3 technology has some way to go if it is to really challenge the MiniDisc.

But the signs are already there: in 2001, sales of portable MP3 players were valued at &£7.94m by market researchers GfK – a massive jump of over 367 per cent from &£1.7m in 2000. And although personal MiniDisc sales dominated the market at &£66.83m in 2001, sales only rose by 9.4 per cent from &£61.12m.

Even MiniDisc enthusiast Crane admits the day of the MP3 will come. “MP3 is a mixed success at the moment, but I’m sure it will eventually overtake MiniDisc players as PC technology improves. MiniDiscs will not always be cheaper than MP3 players,” he says.

According to the BPI, overall music sales rose in 2001 by five per cent, but the International Federation of the Phonographic Industry reckons that worldwide sales fell in 2001 for the first time. In contrast, according to Sony’s figures, 9.4 million blank MiniDiscs were sold in 2001, an increase of 23.3 per cent compared with the previous year.

And that, according to one music market analyst, is contributing to a piracy spree, which he argues is wrecking the music industry. He says: “CD-writers (CDRs) are the main culprit, as all new computers now come with a CDR built in. But CDRs and MiniDiscs between them provide a massive opportunity to pirate music at home and that is destroying the music market.”

By way of confirmation, in April last year, the BPI revealed the number of counterfeit CDs rose by 150 per cent in the previous year, to 2.9 million units, costing the industry &£20.5m.

To cap it all, there has been another twist in the piracy saga that, in effect, involves an unholy alliance between MP3 and MiniDisc technology: the NetMD.

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