The Rapid Start (& End) of the CD
When Philips and Sony first released the CD format in 1982, they hoped to sell around 10 million of them by 1985, 3 years later. In the first 18 months, EMI, the famous British record label alone shipped 2.5 million CDs. Okay. So, Philips and Sony quickly revised their expectations to 15 million CDs by 1985. Actual worldwide sales in 1985 alone was 59 million. In 1988, three years after, they sold 400 million CDs. Astounding. By 2007, over 200 billion CDs have been made and sold. The CD exploded
into the world like nothing ever before - a staggering technical and business symphony. Nobody expected it to be as popular as it was. In today's video, we look at how the CD became a world standard. ## Beginnings Going into the 1970s, the dominant sound medium was the Long Play vinyl record or “LP”. LPs are an analog sound format invented back in the 1940s. It itself has a fascinating technological history, which we unfortunately won't be able to get into here.
Basically speaking, they are a continuation of the original phonograph, capturing sound data with grooves on a vinyl disk. When playing, it spins around over a needle at around 33 revolutions per minute ... Same as Bolivia.
Today, the vinyl LP is enjoying a bit of a hipster-driven resurgence. But nearly half a century ago, the music industry felt the time had come to retire vinyl for a number of reasons and concerns. Since the LP was analog, any damage on it like a scratch or accumulation of dust can negatively affect the sound. Even extended use can cause wear and tear that hurt the disk's sound quality There were concerns about dynamic range - the range of sound frequencies that the vinyl disc was capable of supporting. Moreover, other consumer audio technologies were shrinking in size, particularly the magnetic tape formats with the 8-track and compact cassettes. These big vinyl discs cannot be similarly downsized.
In 1969, a researcher at the Dutch electronics giant Philips, Klaas Compaan, suggested the use of the optics to store pictures. Researchers began throwing around the idea of tracks with bits or pits, finding their way from there. ## Video Long Play A few years later in 1972, Philips announced the Video Long Play or VLP disc format. The name is supposed to evoke the VCR machine, a tape-based medium which was by then a well-established way to record video off a television.
But they were loosey-goosey with the names, they also called it the Video Laser Player. If you are interested in VCRs, I recommend watching another video on this channel. Anyway, this is how VLP worked. To make the disc, Philips used a laser to record an analog color video signal onto a special disc. This "master"
disc would then be used for consumer mass production using injection molding. To read the disc, inside the machine there lurks a laser firing on the 633-nanometer wavelength. The laser light passes through the disc's transparent protective coating and hits its surface. On that surface, we have a series of deep pits, and flat areas called "lands". The pit's depth is about 160 nanometers or a quarter of the laser light's 633-nanometer wavelength. So when that light hits a pit, it interferes with itself and diminishes in power. If it hits a land, then the light reflects at full power, and the reflection is sensed by a photodiode receptor in the machine. The receptor then converts the light into an electrical signal.
With this setup, the disc and the reader would never physically touch. And no touching means a longer life. ## Market Failure Philips released the VLP format in 1974, and it was an indeed a technical triumph. Yet customers mostly did not care. 200 of the first 400 video players sold were eventually returned by customers, who apparently thought that the device could also record video onto the discs. Customers also complained that the discs were big, heavy, and less reliable than VCR cassettes. After two years, Philips pulled the product off the market.
A few years later, a division of the media conglomerate MCA - MCA DiscoVision or just Discovision - collaborated with Philips and used the VLP technology to sell discs and players into the United States. The collaboration was troubled. The system first rolled out in 1978, the players so expensive that Philips lost money on each one sold.
Discovision's disc production processes experienced terrible yields. They blamed each other. Vibes were immaculate. Movie enthusiasts did love the disc's high quality video and stereo sound. But most normal people opted for the VCR's overall ubiquity, long video playback, and its "good enough" image quality. Nevertheless, the LaserDisc became a niche success overseas. The Japanese company Pioneer
eventually bought into the format and stabilized it, selling it as LaserVision or LaserDisc. It became quite popular in Japan, thanks to heavy subsidies that put it on parity with the VHS. ## The Compact Disc As the VLP was failing out of the market, Philips' technical director of audio industry Lou Ottens, inventor of the cassette tape, asked his team if it was possible to use its technology to store and play four Hi-Fi audio signals on a 200 millimeter disc.
Having four audio signals was seen as better than stereo, which had just two. Four is bigger than two, you heard it here first. A team at the Philips Research Laboratory NatLab in Eindhoven got together on a project they called "Audio Long Play" or ALP. A small team, since everyone assumed that an audio-only implementation would be cake. Their first implementation would be analog-only, but they soon discovered several problems. With the VLP, engineers leaned on the fact that successive video frames look similar, masking out the errors. But with audio, scratches and dirt still caused audible clicks or drops. By the end of 1975, they concluded that an analog system would be no better than an ordinary vinyl LP at delivering high quality sound. The only way around this was to go digital.
## Going Digital Meaning to encode the audio data with discrete signals called bits. Like the Video Long Play disc we talked about earlier, these bits are put onto the disc as a series of etched pits. James Russell invented the concept of digital audio on an optical disc back in 1965, and later received a patent on it five years later in 1970. Other riffs on the idea have been patented too. So the idea is not too original. But Philips' implementation had a series of new and innovative tricks to raise the "signal to noise" ratio and deliver sufficiently good sound. First, a nifty optical trick. The disc’s protective transparent coating was made to
be about 1.1 millimeters thick. The width of the laser beam reading said disc was 1 millimeter. The width of the laser beam being smaller than the depth of the information layer meant that dust and small scratches on the protective coating would be out of focus and end up blurry. This preserves only the data we actually want. However, this nifty - and very well patented - trick was not enough to raise the "signal to noise" ratio to a sufficiently high level. Additional powerful error correction and concealment techniques were needed.
Error correction means burning redundant information onto the disk for correcting errors. Error concealment kicks into effect when the system receives an error signal from the disc, hiding an error by extrapolating what information might have been there. Philips called it the "Compact Disc" to piggyback on the success of the Compact Cassette, an earlier Philips product first introduced in the 1960s. Their prototype was done by 1979. ## Taking It to the World In 1977, before the team finished the CD, they brought their product to the Philips Board of Management. The Board's first piece of feedback was that the sound quality had to be further improved until it was better than a vinyl LP. Their second was that Philips had to make their format a global standard.
You cannot have a repeat of what happened with television, where three separate format standards emerged around the world - NTSC, PAL and SECAM. This meant bringing on partners. On March 8th 1979, Philips held a press conference in Eindhoven announcing the CD format, calling it the "music box of the future". They explained to the press they were looking to partner with someone in the industry to create a global standard.
After that, they went to a number of companies in Japan to demonstrate the system and ask for their support. On the last day of that trip, Sony President Akio Morita called Philips’ general director of audio, saying that he would like to cooperate. ## Sony Sony had been working on their own digital optical audio format for several years - among them a 30 centimeter platter idea with 13 hours of capacity - so why collaborate with Philips? Despite working on similar products, the two companies were friendly with one another. They collaborated on the audio compact cassette together in the 1960s, and Sony's backing of the format helped Philips defeat competitor Grundig. That earlier effort let the high-level managers at both companies to get to know each other.
Future Sony president Norio Ohga was very friendly with the Philips audio technical director Ottens. Ottens extended to Ohga a standing invitation to visit whenever the latter was in Europe. In a few ways, the two companies were similar. They both owned record businesses of their own. Sony shared a record business joint venture with CBS called CBS/Sony, of which Ohga oversaw as president, and Philips owned half of the music company Polygram. This would matter a great deal later on.
Both companies had recently tasted bitter losses in the market. Sony with the VCR, losing to JVC and Panasonic. And Philips, the failure of the Laservision video format. Neither wanted another format war and teaming up will take a potential competitor off the board. Last but not least, the two also recognized that they can bring different things to the potluck. Philips knew optical and servo-mechanical systems while Sony had expertise in digital, particularly digital error correction. So while there was a faction inside Philips that wanted to join with Matsushita Electric, the Sony and Philips tie-up made the most sense. The two companies agreed that if either of them
could not produce something sellable, then they would donate their designs to the other. Once final products came out, the two companies would return to being competitors once more. Though in practicality, the two companies being on different continents made head-on competition unlikely.
## Collaboration The two companies' teams attended six meetings from 1979 to 1980, comparing each other's disc standards and building up the CD standard in something called the "Red Book". One core item was the code for error correction. Philips proposed one type of code which Sony later came back with a better implementation. Philips accepted the inclusion. Another item was the sampling frequency. When we go from analog to digital, we are approximating a continuous signal with a series of discrete digital dots.
How frequently we sample that analog line to produce the digital dots is important. CD's audio sampling frequency is quite famous, 44.1 kHz. It was chosen because the primary tools for converting analog to digital are PCM adaptors, which were based on analog video tapes for quality reasons.
Because the CD had to be compatible with the NTSC and PAL analog video formats, the only sampling frequencies available were either 44.056 or 44.1 kilohertz. They chose the latter literally just because it was easier to remember. ## Beethoven The most famous core item was the size of the disc.
This directly influenced the playing time. A 5% increase in disc size increases disc area and thus playing time by 10%. The final Compact Disc is 120 millimeters wide. And very famously, it started off with a total playtime of 74 minutes.
74 minutes and 33 seconds to be precise. Why 74 minutes? If you Google around for a few minutes, the most popular stories - including those told by Philips itself - say it is because of Beethoven's Ninth Symphony. Prior to the CD's invention, the longest Ninth Symphony recording lasted for about 74 minutes, a legendary performance conducted by Wilhelm Furtwängler in 1951. So one story goes that the wife of either Akio Morita or Norio Ohga loved Beethoven's Ninth. Whichever wife it was thus wanted a disc with enough capacity to fit the whole symphony recording. Another version of the story claims that the Symphony length decision came from Norio Ohga himself, who chose 74 minutes to suit the classical music space. Indeed,
Ohga was a passionate musician and sometime conductor. Yet Another story says that Sony and Philips consulted musicians and the time was chosen by the famed conductor Herbert von Karajan, again because it was his favorite piece. Von Karajan and Morita were good friends, and swam nude laps together in Morita's private, indoor pool. Karajan later conducted a recording of Richard Strauss's "An Alpine Symphony" that later became the first ever CD test press. He became a huge advocate of the CD, which probably explains why many of the CD's first adopters were classical musicians. However, a later retrospective by a member of the Philips team and Emmy winner Kees Schouhamer Immink insists that these Beethoven stories are all incorrect.
At the start, both companies' disc prototypes were estimated to go for about 60 minutes ... But the Philips' disc width was originally 115 millimeters, while Sony's was 100 millimeters. How can the discs be different sizes but have the same playing time? This discrepancy, we will talk about later.
The Philips top managers chose 115 because that was how wide the 1962 compact cassette tape was diagonally. Since that had been so successful, they felt like the CD shouldn't be much bigger than that. But during a meeting in May 1980, the disc size was moved up to an even 120 millimeters. The meeting's minutes give no reason for this change, which came from Sony. There was a reason, but it had nothing to do with Beethoven's Ninth Symphony. Why? Well, if all that stuff was true,
then why did Sony originally propose a 100 millimeter disc with a 60 minute playtime? Also, the actual final playing time could not have been known when the disc size was decided. This was because the channel code, how Sony and Philips were going to encode the bits onto the disc, had not yet been decided when the disc was upsized to 120 millimeters. And channel code plays a huge factor in the final length time. Channel code would not be decided for another month, when Sony reluctantly agreed to adopt Immink's channel code, Eight-to-Fourteen Modulation or EFM. EFM offered an information density boost at the cost of additional complexity - Sony had to squish 500 integrated circuits into just three. This indeed pushed the playtime up to the final 74 minutes. Immink has since made it clear that why Sony sized up was that Philips was already building a 115 millimeter CD plant in Germany. Sony had no such plant,
so agreeing to 115 would have given the Dutch giant a head start in the market, and Sony did not want that. 120 millimeters was a neutral size that gave both companies an even start. Sony and Philips jointly published the Red Book in June 1980. The final meeting between the two companies was held a few months later in August 1980. ## Market Introduction Companies can introduce new standards all they want. But will people adopt them? The CD format faced formidable competitors. Telefunken had this
Mini-Disk format that offered some manufacturing continuity with Vinyl. And CBS was offering their Compatible Expansion technology or CX, which would have integrated with LP players to cut noise and improve sound quality. And JVC had an "Audio High Density" technology that used magnetic tape. Compared to those guys,
the CD offered something completely different and incompatible with what came before. Yes, both Sony and Philips owned music companies. They can undoubtedly convince those subsidiaries to adopt the CD. And indeed, 97 of the first
107 CD titles were either from CBS/Sony or Polygram. But that would not be enough. So they submitted the CD standard to the Digital Audio Disc or DAD Committee, a committee of 29 electronics manufacturers sponsored by Japan's Ministry of Industrial Trade and Industry or MITI. Its goal was to set a world standard in digital audio disc systems. The DAD committee was holding a conference in April 1981. So Philips and Sony published the CD Red Book in June 1980 to give everyone enough time to review the standard and decide whether or not to adopt it. Other submissions came from Telefunken and JVC. Before the conference started however, Matsushita Electric - which didn't officially change its name to Panasonic until 2008 - announced on January 1981 that they would adopt the CD standard.
This was despite Matsushita being JVC's parent and Sony's rival during the Betamax-VHS wars. Again like as it was before during that legendary format war, Panasonic's decision tipped the balance. Having three of the world's biggest consumer electronics companies on board with the CD ended the game. The DAD committee later approved the CD along with JVC's Audio High Density standard - which never took off. In October 1981, Philips and Sony presented the first prototypes
at the Japan Audio Fair. By the end of 1981, 30 manufacturers had signed on. In 1982, the first CD players started to hit the market: Sony's CDP-101, priced at $700, and Philips' Pinkeltje, it's the name of a friendly gnome in a Dutch story in case you were wondering. ## Success Everyone hopes that they can make something that other people would like. Immink himself remarked that, having recently gone through the LaserDisc experience, he had not been sure at the time whether the Compact Disc would be a success or not.
And audio format changes are always a big hassle for customers, because it means they have to go buy their whole music collection all over again - essentially a double-dip. Surprisingly, Philips and Sony had a hard time convincing its musicians to take on the CD. Jerry Moss, president of the independent A&M Records record label, argued - somewhat presciently - that the CD's perfect digital masters invited piracy. Many musicians resisted it for many years thereafter. So imagine how surprised they were to find that it was such a success. Sony America's entire 1984 profit came from its CD production plant in Indiana. There are a few reasons why the uptake was so good, so fast.
First, the CD's audio quality really was superior to that of LPs. Did it have perfect fidelity? Not so sure about that. Audiophiles did and still complain that their vinyls sounded better. And maybe theirs did, but quality depended on how they were played. Most vinyls of the era played on cheap turn-tables that sounded terrible. Your average CD sounded far better than your average vinyl.
Second, CDs lasted far longer than LPs. Vinyl records did indeed crack and fall apart with lasting use. Tape cassettes too. CDs did not suffer this deterioration over time, though you did have to carefully handle them. Third, the CD didn’t have fight a format war like with Betamax and VHS. The backing of the Japanese government helped. But in 1981, the CD was already so far ahead on commercialization, potential competitors like Audio High Density never even hit the market. It helped too that Philips and Sony charged very low licensing fees. Sony was then still
fighting the Betamax and VHS war, and did not want to start another one. And Philips had a history of making their standards very affordable. So the two agreed to make the Red Book available for licensing at a very favorable rate. In 1982, Philips made something like 3 cents for each disc sold in the US, which retailed for like $16.95. Of course there were other fees too but on the whole, very reasonable. And finally, the CD gave consumers more control over their listening experience. Someone listening to a CD can skip over a bad song in an album or play their favorite song on repeat over and over and over and over.
Whereas with the tape cassettes, where you have to do this rewind-stop-play thing - ask your parents, kids. Or with Vinyl, where you have to delicately fiddle with a phonograph arm - ask your grandparents or local hipster, kids. The CD offered a better consumer experience for listening to music. And that, ironically enough, was the harbinger of what would end the CD's glory days. ## The Computer The CD's first few years, it was entirely an audio medium. But people quickly grasped that the CD medium can also be adapted for computers. So Philips and Sony teamed up again and in 1984 published the "Yellow
Book" standards for the Compact Disc Read Only Memory or CD-ROM. Then in 1985, the big computer makers plus Microsoft, Sony and Philips met up at the High Sierra Hotel and Casino in Nevada to hash out a format for storing files on the CD. Released in 1988, ISO 9660 set the international standard for storing and organizing files on a CD. The first PC peripheral CD-ROM drives started coming out in 1990. These drives became really popular after the Taiwanese and Koreans entered the market, crashing prices from $300 per unit in 1990 to $100 by 1995. By 1996, LG alone had 10% of the CD-ROM market. ## Conclusion The record labels made record profits during the CD era. Thanks in part to a new round of favorable deals made with the artists ...
As well as thanks to an anti-competitive price-fixing deal within the industry in the mid-1990s that artificially kept CD prices high. Gross, oligopoly. Glad we fixed that, am I right? But change again was in the mix. All these peripheral CD-ROM drives made it possible for PCs to read an audio CD. You can play a CD’s music on a PC’s speakers,
or encode that music into files that you can then share to friends or strangers via the internet. In June 1999, Napster launched and the rest is history.
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