When the compact disk was introduced to the American market in April 1983, its inventors - the Sony and Philips corporations - predicted that it would render the long-playing record extinct within a decade. The LP may not take that long to die.
In the first half of this year, CDs in all categories of music outsold LPs for the first time, according to the Record Industry Association of America. The current Schwann record catalog lists more than 20,000 CD titles of all kinds, and retailers around the country are clearing out their LP bins to accommodate the explosion of CDs.But there are some in the record industry who fear that CDs have proliferated too quickly: that after five years of a CD drought, when consumers had few titles to choose from, the market is becoming flooded.
What makes the record industry particularly nervous is that according to the Electronics Industry Association, only 15 to 20 percent of American households have CD players, and after five years of steady growth, player sales seem to have hit a plateau.
Record companies say the vigor with which they have been issuing both new titles and back catalog on CD should attract those consumers who have not changed to the new format. But given the cost of CDs - $9 to the retailer, $15 to the consumer for a full-price recording - the quick expansion of the catalogue has led many retailers to be more selective in their ordering.
As a result, even the largest chains are no longer able to offer consumers the kind of full-line service they offered at the height of the LP era. And even selective ordering has not kept slower-selling CDs from cluttering the bins.
A "CD glut," as many industry executives openly call it, has already hit the classical-music market, where current recordings of standard-repertory works are now forced to compete for consumers' attention with dozens of earlier versions, including legendary performances reissued on budget-priced CDs.
In pop, which accounts for the great majority of sales, the problem for the industry is not the repetition of a limited number of works but the fact that, as pop companies come closer to exhausting the back catalogues of their superstars, they are starting to issue disks on CD that had only marginal appeal on LP.
In both classics and pop, there is still consumer resistance to CD prices, despite the decline from their introductory high, which was as much as $30, to around $15 for a top-line recording - about $6 more than an LP cost before CDs came along. And although record labels are resisting the move, many industry executives feel that further reductions in price will be necessary soon if the format is to make greater inroads in the market.
One reason cited for the oversupply of CDs is a change in the supply-and-demand equation over the last 18 months. On the supply side, the number of CD manufacturing plants has grown from only 2 in 1983 to more than 50.
Competition among the plants for business from record labels has brought down the cost of a raw CD (unpackaged and not accounting for recording costs and royalties ) to less than $1 from about $3 in 1984.
Most labels are expanding their CD catalogs by a few dozen titles a month. But as the number of new customers has leveled off, the discs have begun to pile up.
Signs of a glut are particularly apparent in classical music, which accounts for only 4 percent of the American record market, according to the RIAA. But an East Coast regional manager for the Tower Records national retail chain - which has long prided itself on carrying full lines in all genres - says that 25 percent of the chain's sales are of classical music. And industry observers point out that CD sales trends have emerged in classics a year or two before other kinds of music.
"What often happens in any industry," said Joseph F. Dash, vice president and general manager of CBS Masterworks, "is that when you have an undercapacity, people overreact without thinking about the big picture. So we all began issuing on CD some of the wonderful performances we had in our back catalogs. And suddenly, what was a dearth has become an overabundance."
Alison Ames, vice president in charge of Deutsche Grammophon's American operations, said the seeds of the glut were planted in 1985, when labels that had been slow to enter the CD market came streaming in.
"There was a time when we and the other PolyGram labels, London and Philips, each had catalogs of 300 to 400 CDs and Angel had 20," Ames said. "Then, in a single month, Angel issued 60 discs. To me, that was the beginning of the CD glut. It meant that the classical dealer had a choice of putting all his eggs in one basket that month or spreading his budget around more thinly."
Brown Meggs, Angel's president, acknowledged that his company had straggled into the CD world, but he does not feel that Angel's quick catch-up was a bad thing.
"All we're doing is making the blades to fit the razors," he said. "Before 1984, our normal business was making 90 to 100 new recordings a year. But then someone unglued the whole business by abandoning the primary carrier, the LP. So what do we do? We are catering to a smaller consumer base. But to make up for that, we have to offer the catalog in the new format. So above and beyond our 90 new recordings a year, we have transferred to CD as much of the back catalog as we could."
Angel's CD catalog includes about 1,600 titles, and according to Meggs, virtually the entire list of Angel recordings will have been transferred to CD by the end of 1990. CBS and RCA have been nearly as prolific; and the three PolyGram labels have also increased their output significantly over the last year.
"The record companies are throwing a tremendous number of things at us, at all price points," said Paul Tai, classical manager of Tower Records's Greenwich Village store. "We used to try to keep at least one copy of everything in stock. Now we can't do that. We are only ordering what we think we can sell. And for top-of-the-line discs, we are taking fewer copies of each title."
Indeed, the move to CD has posed difficult marketing decisions for the record companies. Early on, many critics expressed the fear that the format change would drive many legendary performances out of print, and consumers began to lobby for CD reissues of their favorite performers' work.
In response, the companies dug into their vaults, not only transferring favorite LPs to CD but reviving recordings that had not been available for many years. In doing so, they have recreated a situation they considered unhealthy in 1979, when the LP business suffered a slump that was attributed, in part, to the fact that there were too many recordings of too few works in the repertory.
The current Schwann, for example, lists more than 40 CD versions of the Beethoven Fifth Symphony, a dozen of Puccini's "La Boheme" and 48 of Vivaldi's "Four Seasons."
Ames says the problem has been enlarged by the recent appearance of new labels offering licensed material at budget prices - sometimes as low as $5 a disk. In many cases, these CDs offer repertory warhorses played by unknown performers, sometimes under pseudonyms that sound close to the names of real performers.