Are CDs becoming increasingly obsolete?

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No

There's some value in having an actual physical item rather than something intangible on a hard drive. I believe fans of bands and collectors will always want to be able to buy a CD. 

Yes

While I like a physical copy of my music as much as the next person for various reasons, artwork, lyrics booklet, tangibility etc, the CD is not the optimum format for this.  It is easily damaged, replicated and, like mp3s, digital.  I predict that they will die out while there will still be a viable market for vinyl.  The argument for convenience becomes meaningless when you consider how much more convenient digital music files are compared to CDs and vinyl offers a unique listening experience and much more scope for artwork.  Digital music will become the normal accepted format with vinyl retaining a small but profitable market for those who want more than just the nice sounds.  

sadly i think they are becoming obsolete.

the disc formatted is flawed, and mp3 is instant and convienent. i dont know why though, but i still keep buying cds! i think i still really value the pleasure of the material quality of cds - looking at the album art, reading the sleave notes, track listing, words, curling up and enjoying the whole expericence of the album. i download stuff too obviously, but special albums i still ike to have cds of. this is probably very archaic of me.