The Rapid Start & End of the CD

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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.

2024-08-24

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