Sony this week said it was shuttering one of its largest CD manufacturing plants - citing the impact of digital downloads and other economic issues.
The plant, which is in Pitman, NJ and has been in operation for some 50 years, first producing vinyl records, will close on March 31 and about 300 people will lose their jobs. The 500,000-square-foot warehouse began producing vinyl LPs in 1960 and moved to CD manufacturing in 1988. At its capacity, the plant was making 18 million CDs per month, according to its website.
The closure is a reflection of the seismic shift that has been going on in the music industry for years. In the first half of 2009, CD album sales were down about 18% to 110.3 million units from 134.6 million units during that same time last year, according to Nielsen SoundScan. Vinyl record sales actually have been doing quite well, over the past four years. In 2009, 2.5 million albums were sold in the US, up from 1.88 million in 2008, according to Nielsen Entertainment.
According to a recent Computerworld article: Record company revenues fell by 7.2% to $17 billion in 2009. At the same time, sales of digital music formats -- such as MP3s -- rose by 9.2% to $4.3 billion, which is 10 times what they were in 2004, according to the International Federation of the Phonographic Industry. Physical album sales -- made up of CDs, tapes and vinyl albums -- fell by 12.7% globally. Digital music sales now account for 25.3% of all trade revenues to record companies. In the U.S., digital sales account for nearly half -- 43% -- of the recorded music market, according to the IFPI.
This isn't the first media producing plant Sony has eliminated. In 2010, it shut down its data storage magnetic tapes facility in Alabama that had operated for more than 30 years.
According to a Philadelphia Inquirer report, Sony is consolidating the production of music CDs and video DVDs in a plant in Terre Haute, Ind.
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