The Truth Behind The Fall Of Physical Media

If you have viewed a small handful of YouTube videos extolling the virtues, or outright insisting upon the morality of physical media over streaming, you know there are many, many pundits riding that bandwagon right now. Blame the algorithm for such a force-feeding based upon a passing curiosity.

But blame also these content creators who, to a soul, get the fundamental facts wrong. If you listen to their spiel for enough of a time, you’d presume that the world was waking up to the extreme quality bump-up of vinyl records and even “the lowly” compact disc above that of streaming. Consumers are becoming aware of the revelation that ownership of the media protects one from suddenly lost or altered content, and in the generative artificial intelligence (A.I.) landscape we now reside in, this is more important than ever.

To be fair, there’s some credibility to the claims. Even with new so-called lossless streaming options, LPs and CDs still have the capacity for more and better audio quality, although these subtleties are regularly only heard by audiophile obsessives. Recent reports have indicated that while vinyl LPs have indeed enjoyed a surge of sales interest, roughly 50% of purchasers don’t even own a turntable. They listen to the streams and hang the records on the walls as art.

Similarly, audiences seem to only care about movie and television edits or removal from streaming after the fact, the absence driving the interest rather than the interest being offended by the absence.

I am in the weird position of caring both about audio/video quality and the preservation of a medium in its original form, so I totally buy into the talking points of the physical media bros. (They frequently are bros, by the way.) These are not incorrect, per se. But the forward momentum of physical media has nothing to do with quality or even collectability.

It has everything to do with the economy and bubbles.  

2008 – The Economic Downturn

In the run-up to the 2008 economic downturn, before the housing bubble burst, lots of people had lots of compact discs. They might not have been listening to them on a regular basis, but they kept them for the most part, ripping the audio and using iPods as the dominant media mode.  

Those CDs were displayed in their homes and condos, and for many, those housing options were secured by subprime mortgages operating way above their earnings means to pay them back. Consumers were very happy to consume and to revel in that conspicuous consumption via listening rooms in McMansions.

But then the housing market bubble, inflated by those inherently busted mortgages, burst, leaving many homes “underwater.” That meant in part that values dropped significantly, but the mortgage costs did not, and because the individuals engaging with the subprimes were already in over their heads with the voodoo economics of adjustable rates, they couldn’t pay.

Many had to sell off those homes and condos at steep losses because they could not afford to stay.

The Quality vs. Reality Sham

These individuals wound up as roommates with others, typically in similar financial straits. Many more had to move back in with family, back into childhood rooms or basements and attics they had since grown out of. Suddenly, there was no room for binders full of movies or CDs. A lot of discs were sold off. Many more were dumped in the trash, all for the brutal realities of the lack of space.

Thus, the promise of having all your albums and movies in the cloud, and later on a streaming service, is less about convenience over quality and more about trauma response. I think if you had a chance to speak with people who had to toss a decade or more of their stuff because of their now restrictive lifestyle needs, they would tell you, yes, the CDs sounded better. Yes, the DVDs looked better. Yes, they wished they still had them but you play the hand you are dealt.

Things have changed. Consumers have become more comfortable with having all their entertainment on their smartphones. Several are back in housing spaces that allow for more stuff. They have bigger televisions, but a wide margin would tell you they watch more on their phones than not. They, and their kids, have bought into the vinyl revival but for the adults it is an exercise in comforting nostalgia, and for the kids it is the equivalent of a trading card, poster, or other press items to signify one’s fandom. It is all form and little function.

But surely, the bad old bubble days are behind us, right?

Toil And Trouble

Let’s go back to the issue of generative A.I., the dominance of A.I. slop in the entertainment and information distribution we find ourselves in, and the disturbing similarities between 2008 and 2026 we have to confront. If you have grown sick of the A.I. pill being shoved into everything you swallow lately, that’s more than sensitivity. This is not something that is poised to take over our lives, it has already.

Worse, this economic overheating and multi-trillion valuations for A.I. developers and microchip makers are emerging from very creative and untrustworthy accountancy. In 2008, it was mortgages given to loan-holders who looked, only on paper, as if they could ever pay them back, not in actual paychecks and savings accounts. In 2026, it is a convoluted cycle of self-dealing which is propping up company earnings that don’t materialize, even with the most creative P&L statements.

I could phrase the explainer in terms of ChatGPT, NVIDIA, and the like, but this is still a music-oriented platform, so let me use a fictional analogy to lay it out for you.

Taylor Swift writes and records a new album. Universal Music distributes the album on vinyl and CD. Swift proceeds to buy up all those physical assets, but instead of reposting those sales as corporate internal acquisitions, they are logged simply as sales. That makes her sales numbers look great and delivers a profit to Universal.

Universal then buys the physical assets from Swift with the vague veneer of needing more copies because the demand for the new album is so high. These sales are also logged as new sales, even though they are little more than the transfer of pre-sold product. Universal logs the numbers as profit even though it is also the purchaser. And then, Swift buys the product back yet again, increasing the numbers on paper when in reality, all anyone is doing is moving the same million around over and over again.

Qualification one: No, Swift and Universal are NOT doing this.

Qualification two: No, this is not a clean, apples-to-apples comparison to what the A.I. developers and hardware makers are doing, but it is very close. Ed hands Joe a dollar. Joe has a dollar. Joe hands it back to Ed and writes down that he now has two dollars. Ed hands back to Joe, who now says he, too, has two dollars. On and on they go, reporting mutual millionaire status when, in physical cash, it’s just one dollar bill going around and around. That’s the present bubble being overblown.

Both the A.I. companies and the hardware manufacturers will say this is about asserting dominance in the arms race that is Artificial Intelligence, and in the end, we’ll all be better off for letting them do whatever they do…which sounds like what the guillotine sharpener says before someone locks your head in the stocks beneath the blade.

It is only a matter of time before someone will demand to know how much money is ACTUALLY there versus how much the platforms and chip makers REPORT is there. It won’t be a government entity. It will probably be a coalition of shareholders who want to be sure their money isn’t funny. That’s when the phantoms will scatter, and all that is left are hard numbers based on physical assets. Banks and stock markets in their overheated forms will have to face up to the fact that what they said they had in the coffers and what they really have are two vastly different things.

When you con the economics, you con the banks, the loans and mortgages issued by the banks, the jobs that depend on the banks, and the liquidity of the money the banks say they have. If you told everyone you have a million dollars but only have a dollar you circulated a million times, your bubble bursts. Everything is affected by that.

Physical Media

To wrap it all up, the pundits seem intent on leading wayward flocks back to the light that physical media is better in nearly every qualitative way. Physical media IS better in these ways.

Those who rely on streaming have gotten used to the convenience of it. Many don’t have the nerdy faculties to realize streaming’s limitations, but those who do readily admit the shortcomings.

They came to streaming largely due to real-world constraints – actual physics and limits in living dimensions that forced then not to “own nothing and be happy,” but to own nothing to prepare should the proverbial crap once again hit the proverbial fan.

Much like the subprime mortgage debacle of 2008, the overblown self-dealing of the A.I. market and tech bros is once more the crap. The eventual consequences of revealing the shady economics behind their quick, precarious ascent are the fans.

Where will we live when it all goes splat? With whom shall we live once it comes to pass? Will they refuse our stack of vinyl LPs of The Life Of A Showgirl, in every colorway imaginable, when we have to move into their guest room?