Universal Music Group, World's Largest Music Company, Dramatically Reduces CD Prices

Vivendi Universal press release via PRNewswire ^ | 09/03/2003

[GeneD]

UMG Institutes a $12.98 Manufacturer Suggested Retail Price on Virtually all Top Line CDs

NEW YORK and SANTA MONICA, Calif., Sept. 3 /PRNewswire/ -- Universal Music Group (UMG) announced today an aggressive plan to significantly reduce the cost consumers pay for CDs by decreasing its wholesale prices and by instituting a $12.98 Manufacturer Suggested Retail Price (MSRP) on virtually all top line CDs in the U.S.

UMG will introduce a new pricing policy with the aim of bringing music fans back into retail stores and driving music sales. The program, which will begin in the fourth quarter of 2003, will eliminate $16.98, $17.98 and $18.98 equivalent MSRPs. UMG believes retailers will begin offering the lower priced CDs to consumers as soon as October 1, 2003.

As part of this new policy, UMG's labels plan to significantly increase their direct-to-consumer advertising to raise music fans' awareness of the artists and their music.

Concurrently, UMG will also reduce its wholesale price on cassettes so its MSRP for top line releases will be $8.98.

UMG's roster includes such renowned artists as Ashanti, Mary J. Blige, blink-182, Bon Jovi, Mariah Carey, Sheryl Crow, Dr. Dre, Eminem, 50 Cent, Enrique Iglesias, India.Arie, Elton John, Diana Krall, Nelly, No Doubt, Puddle of Mudd, Reba McEntire, Stevie Wonder, Sting, t.A.T.u., Texas, Shania Twain and U2. The new pricing policy will also apply to UMG's historic catalog of recordings which includes artists such as ABBA, Louis Armstrong, James Brown, Eric Clapton, Patsy Cline, John Coltrane, Ella Fitzgerald, Jimi Hendrix, Billie Holiday, Antonio Carlos Jobim, Bob Marley, Nirvana, The Police, Rod Stewart, The Who, Hank Williams and the Motown catalog, which includes The Four Tops, Marvin Gaye, The Supremes and The Jackson Five.

"Our new pricing policy will allow us to take the initiative in making music the best entertainment value and most compelling option for consumers," said Doug Morris, Chairman and CEO, Universal Music Group. "UMG is responsible for almost 30% of all album sales in the U.S. so we are uniquely positioned to try this new strategy. We strongly believe that when the prices are dramatically reduced on so many titles, we will drive consumers back to stores and significantly bolster music sales."

"Music fans will benefit from the price reductions we are announcing today," said Jim Urie, President, Universal Music & Video Distribution. "Our new pricing model will enable U.S. retailers to offer music at a much more appealing price point in comparison to other entertainment products. We are confident this pricing approach will drive music fans back into retail stores."

About Universal Music Group Universal Music Group is the world's leading music company with wholly-owned record operations or licensees in 71 countries. Its businesses also include Universal Music Publishing Group, one of the industry's largest global music publishing operations. Universal Music Group consists of record labels Decca Record Company, Deutsche Grammophon, Interscope Geffen A&M Records, Island Def Jam Music Group, Lost Highway Records, MCA Nashville, Mercury Records, Mercury Nashville, Philips, Polydor, Universal Music Latino, Universal Motown Records Group, and Verve Music Group as well as a multitude of record labels owned or distributed by its record company subsidiaries around the world. The Universal Music Group owns the most extensive catalog of music in the industry, which is marketed through two distinct divisions, Universal Music Enterprises (in the U.S.) and Strategic Marketing and Commercial Affairs (outside the U.S.). Universal Music Group also includes eLabs, a new media and technology division.

Universal Music Group is a unit of Vivendi Universal, a global media and communications company.

For further information please contact: Bob Bernstein of Universal Music Group, NY: +1-212-331-2569, or LA: +1-310-865-0589; or Peter LoFrumento of Peter LoFrumento Associates, +1-212-621-6065, for Universal Music Group.

SOURCE Universal Music Group

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[Nephi]

Cool. They're half way to reality.

[Steely Glint]

Well, darn. Who said the music companies were too dumb to ever learn? :)

[Pyro7480]

I like your tagline (classic Goldwater). Now all they have to do is produce something worth listening to.

[Leroy S. Mort]

Still about eight bucks too high, but a move in the right direction.

[KantianBurke]

cd's going between $5-$8 would put them back into whats called "a legitimate asking price."

[zarf]

Get real, the price is Still too high; $10.00 is critical mass.

[Cooter]

CDs => $12.98
Cassettes => $8.98

Why the price difference still? Aren't CDs actually cheaper to manufacture?

[Nephi]

Thanks. I was thinking of changing it to, "Compassionate conservatism - What are you gonna do, vote for Nikita Dean?"

[Prodigal Son]

Yep. $12.98 is still expensive.

[RiVer19]

Exactly. I buy "just released" CD's at Wal-Mart for $10. I wouldn't pay more than that except for VERY rare circumstances. Usually I buy through half.com these days to get the best prices (and no ebay bull). They still don't understand do they.

[upchuck]

...instituting a $12.98 Manufacturer Suggested Retail Price (MSRP) on virtually all top line CDs in the U.S.

Let's be generous and say there are about three songs on any CD that make you want to buy the CD. That works out to $4.33/song (13/3).

Still too high.

Hey UMG, wanna make TONS of money? Create a website with every song ever sung by your many slaves. Let me choose what I wanna download for $1 apiece. You're gonna make a lot of money doing this!

I forsee a day when CDs will be passse. The song company's like UMG will post new songs to their website for download. And they'll charge a premium for new songs. Older songs will cost less. Like books on Amazon.com.

The day is coming. The sooner RIAA, et al get their head out of their collective ass and realizes this, there better off we'll all be.

[CdMGuy]

Well, well, well. A record company finally has to admit that their record prices are too high. A 5 year old could have told them that shortly after they came out with CDs. If they had lowered their prices years ago, then music listeners would not have wasted their time downloading music. Now, they have created a monster for themselves, and it may be too late to get the genie back into the bottle. As to the price, $8 to $10 bucks a CD is reasonable. Anything above that is a rip-off.

[stainlessbanner]

We are confident this pricing approach will drive music fans back into retail stores."

Bwaaahaahaahaa

[jae471]

Capitalism.

And yes, CDs are cheaper to manufacture.

I don't have a problem with them charging more for CDs. Most people are willing to pay the $4.00 premium for the conviences of a CD. Like I said, simple capitalism -- supply and demand. And demand for CDs is much higher than that of a tape.

Frankly, I'm still suprised they still sell tapes.

[Moonman62]

UMG's roster includes such renowned artists as Ashanti, Mary J. Blige, blink-182, Bon Jovi, Mariah Carey, Sheryl Crow, Dr. Dre, Eminem, 50 Cent, Enrique Iglesias, India.Arie, Elton John, Diana Krall, Nelly, No Doubt, Puddle of Mudd, Reba McEntire, Stevie Wonder, Sting, t.A.T.u., Texas, Shania Twain and U2. The new pricing policy will also apply to UMG's historic catalog of recordings which includes artists such as ABBA, Louis Armstrong, James Brown, Eric Clapton, Patsy Cline, John Coltrane, Ella Fitzgerald, Jimi Hendrix, Billie Holiday, Antonio Carlos Jobim, Bob Marley, Nirvana, The Police, Rod Stewart, The Who, Hank Williams and the Motown catalog, which includes The Four Tops, Marvin Gaye, The Supremes and The Jackson Five.

Looking through their list of stars, I am struck by the decency of yesterday's stars to take themselves out at an early age. Imagine what a better world it would be if Madonna and Michael Jackson had choked on their vomit 20 years ago.

[azcap]

This just means the bootleggers will save $5 on their originals.

[Leroy S. Mort]

Get real, the price is Still too high; $10.00 is critical mass.

I think $5 is critical mass. Thats why I said the price is still 8 bucks too high.

[azcap]

A $5 price would take a huge chunk out of bootlegging and file sharing. Some kids and foreign markets would still do it but most of the "honest" people (the guy in the cubicle next to you, your mom, your pastor)who do it now would be less inclined to bother with the hassle. The real psychological barrier is $10 - until they break the three digit barrier $9.99 none of these price changes will have any effect on the market.

[Afronaut]

Frampton Comes Alive
Peter Frampton

List Price:		$24.98
Price:		$24.98

Availability: Usually ships within 4 to 5 days