Reuters needs some math lessons and/or a thesaurus. In an article on the music industry, found at CNN.com, Reuters interprets the findings of a Forrester report this way: "Music downloads will render compact discs all but obsolete in the next five years."

Read the Forrester report summary, however, or pay $895 for the whole enchilada, and you'll see that the five-year outlook is this: 33% of music sales will be from digital downloads. Hey, Reuters and/or CNN. Do the math. If you take 33% out of 100%, then subtract a few percentage points for cassettes and vinyl--and I'm going to assume Forrester is not including streaming revenues--then you get about 60% attributable to CDs at the lowest. Does 60% qualify as "all but obsolete"? Or are you exaggerating the claims of the report for your own ends? Everybody loves to read about an industry in peril, so Reuters does what it can to add drama and intrigue.

Jackasses.

At first I thought Forrester analyst Josh Bernoff had gone off the deep end. But it's just Reuters (who provided the article to CNN.com) being silly.

Reasons the CD will not be virtually obsolete within five years:

1. The music industry, as we've seen, moves at a snail's pace. Multi-billion-dollar entertainment industries have a tendency to shy away from changing a standard business model. Five years is much to optimistic.

2. Retail will fight to the bitter end. Best Buy and other mass merchants have built up a market share that they will not soon give up. Smaller indie retailers will service the niche markets.

3. People like to shop. They like to browse around a store. Ever been to the Virgin Megastore at Times Square? It's quite a shopping experience. Consuming via the Internet is not as satisfying an experience. Proof? The perceived value of a digital download is much lower than that placed on a physical CD purchased in a physical retailer. Consumers place a higher value, and attach a higher sentimental value, on music purchased in an exciting, stimulating retail environment. If people didn't care about a retailer's environment, janitors would be out of business and customer service wouldn't exist.

4. Cassettes. If people are still buying cassettes in the year 2004, they are certainly going to be buying CDs in 2009.

5. Rhino Records has a business model that works. Few are going to buy a box set as a download, and not everybody will want to buy a remastered album on the Internet. They want liner notes. They want high quality and/or innovative packaging. On the Internet, it's all zeros and ones. You can't touch it, feel it and place it on a bookshelf and admire it.

6. Analysts--and especially reporters--too easily overlook the power of the older generation's purchasing power. The youth of America may be doing all the downloading, but older consumers will continue to purchase music in familiar configurations.

If I'm wrong, please feel free to track me down at the end of 2008.

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