The CEO & chairman of EMI Music, Alain Levy told an audience at the London Business School on Friday that the CD as we know it is dead.

According to Levy, record companies won’t be able to market CDs any longer without including ‘value added material’ and will have to make CDs a more attractive purchase to the consumer. “We have to be much more innovative in the way we sell physical content,” he said.

Levy noted that physical media still has a place, but it isn’t going to have it for very long. “You’re not going to offer your mother-in-law iTunes downloads for Christmas,” he said.

Should we take this with a pinch of salt? Sales figures provided by the IFPI (PDF) don’t quite support his claim. CD sales accounted for more than 70% of total international music sales in the first half of 2006, while digital music sales were still at about 11%.

He also talked about why EMI was the only one of the ‘Big Four’ record companies that hadn’t jumped on the YouTube bandwagon and signed the contract. “The terms they were offering weren’t acceptable,” Levy was quoted saying. EMI isn’t out of the race yet. They are “continuing to hold talks with Google Inc on an advertising-revenue sharing partnership with the community video Web site YouTube.”