"Faaaascinating."
Posted on 09/03/2003 9:06:42 PM PDT by Bloody Sam Roberts
LOS ANGELES, Sept. 3 — The world’s largest recording company said Wednesday it would slash wholesale CD prices in hopes of reviving music sales, which have dropped 31 percent industrywide in the last three years.
UNIVERSAL MUSIC GROUP said it would cut the suggested sale price on a majority of its CDs by $6 to $12.98. The company hopes retailers will follow its lead and drop their CD prices to around $10 or less. The price changes would go into effect by Oct. 1.
“We expect (this) will invigorate the music market in North America,” UMG Chairman and CEO Doug Morris said in a conference call Wednesday.
It was not immediately clear how retailers would respond to the move. Company officials said they had not discussed the pricing strategy with retailers, who would be notified formally on Thursday.
Officials at the National Association of Recording Merchandisers did not return calls Wednesday.
Kevin Milligan, vice president of merchandising at Torrance, Calif.-based record retailer Wherehouse Entertainment Inc., said he had not received notice from UMG, but that in general, the move is good news for consumers.
“Whether it will ultimately be good news for retail? I think it’s still up in the air,” he said.
Traditional music retailers such as Tower and Wherehouse have been suffering as large stores such as Best Buy, Target and Wal-Mart Stores Inc. can afford to sell music at a loss, covered by sales of more profitable items.
UMG’s current wholesale price for a CD album is $12.02, with a manufacturer suggested retail price of $18.98.
Under the new pricing structure, the wholesale price would be $9.09. The wholesale price for CDs by a handful of performers, including Eminem and Shania Twain, would be about a dollar more, said Jim Urie, president of Universal Music & Video Distribution.
The company also said it would cut wholesale prices on cassettes and change the suggested retail price to $8.98. Latin recordings and multiple disk packages or CD box sets would not be included in the pricing change.
“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,” Urie said. “We are confident this pricing approach will drive music fans back into retail stores.”
Officials at EMI, BMG and Warner Music Group declined to comment. Sony Music Group officials could not be reached immediately.
UMG also said it would no longer give retailers co-op advertising or discounts, which are common in exchange for favorable product positioning at stores.
Josh Bernoff, an analyst with Forrester Research, Inc. said the decision to cut prices underscores how badly the industry has been hurting.
“That is very significant. That’s basically saying ‘we give up’,” Bernoff said.
Revenue from album sales has declined from $14.6 billion in 1999 to $12.6 billion in 2002, according to the Recording Industry Association of America, a trade group that represents the largest recording companies.
The recording industry blames its sales slump largely on illegal music swapping over peer-to-peer networks. The industry has begun to aggressively target people who share music using software by Kazaa and others.
But industry critics say the record companies have, for more than a decade, ignored the effects of soaring CD prices on sales. They also contend the artistic quality of music has deteriorated.
(Excerpt) Read more at msnbc.com ...
"Faaaascinating."
I guess it just takes some folks a while to admit they're wrong.
Duh! They're finally getting it. I was at Tower Records the other day. CDs are now selling for $25 ($24.99). I bought a bunch of videos instead for $10 each ($9.99), which they're phasing out.
If the CD market has collapsed, it's due to their own greed.
I wonder which artists they represent?
If all the music companies followed suit, and CDs went down to $10, I'd buy a ton of them. As it is now, I rarely buy CDs.
I hope the music companies are reading this.
Disagree. (My musician brother hates me.)
But industry critics say the record companies have, for more than a decade, ignored the effects of soaring CD prices on sales. They also contend the artistic quality of music has deteriorated.
Yes and Yes. Why I still own more LP's than CD's.
CDs are cheaper to produce than cassette tapes but tapes still sell for less. We are still being ripped off.
I will continue to enjoy my old stuff.
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