Music giant plans to drop CD prices.... will the others?

[BigDaddy]

http://news.com.com/2100-1027_3-5071138.html

[Rogue588]

...and...is it too little, too late...?

Universal Music Slashing CD Prices

LOS ANGELES (AP) - The world's largest recording company said Wednesday it would slash wholesale CD prices in a bid to revive lagging 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 or other record companies would respond to the move, which comes as music sales are picking up on the Internet with Apple Computer Inc.'s breakthrough 99-cent-a-song offering. 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.

"This is something that the industry has failed to address ... You could make downloading music go away tomorrow and the industry would still face challenges,'' said Sean Baenen, managing director of Odyssey, a consumer marketing research firm in San Francisco. "All the data suggests that quality and price are major factors to the equation.''

In a survey conducted this year by Odyssey, 53 percent of U.S. consumers age 16 and older said they did not buy more cassettes and CDs because they have become too expensive. The survey had a 2 percent margin of error.

If retailers also drop their prices, Universal's move would make CDs more competitive with online services, including Apple's popular iTunes Music Store and Buy.com's BuyMusic.com.

Those services allow consumers to purchase and download individual tracks - usually for 99 cents - or albums for about $10. The buyer then can burn it to a compact disc or transfer it to a supported music player. A number of companies also provide music downloads for a monthly fee.

UMG will need a "meaningful'' lift in sales to offset the price cut, said Zachary Horowitz, president and COO.

"The challenge at retail has been keeping people coming to the stores to support the music and artists they love,'' Horowitz said. "We're confident from our research we'll get ... a very dramatic and sustained increase.''

[Venom]

too little too late? 13 bucks is still much for me, for most artists and for taking risks on new stuff. 7 to 9.

[mdc3000]

Well, since the average new artist album is going to cost 7-10 bucks, I think this is great... I download music, but I ALWAYS buy CDs...so for me, this is great news, now I'll save a few bucks buying the product I was going to buy anyhow!

MATT

[Groucho]

I'm sure this will stop the file-sharers dead in their tracks. I mean, between $12.98 and free...who wouldn't choose $12.98?

[Giantrobo]

I see your point Groucho but it's a start.

[darqleo]

CDs should be $10 flat fee.

[Josh-da-man]

What they really need is tiered pricing, where catalog titles sell for reduced prices.

So they release new stuff for $12.98, knock the price of 2-4 year old CDs down to $9.95, and stuff older than that down into the $5.98-$7.98 range.

[The Bus]

People are stealing music because it is unfairly priced. I mean who wants to pay $17.98 for the new Fabolous (not that I would buy Fabolous, but still...)?

But with an MSRP of $12.98, they are still more likely to actually sell these things at $7.99 to $11.99, which is a few dollars cheaper than what's around now. If someone has a choice between buying a CD at $9 or downloading an incorrectly named, poorly encoded, incomplete version they have to hunt down from Kazaa... I'd pick the CD, and a lot of other people would too.

Music piracy is here to stay. The RIAA and its companies (and its artists) need to focus on providing quality products at a fair price to reduce piracy's impact.

[The Bus]

http://dvdtalk.com/forum/showthread....hreadid=315522

[costanza187]

its a step in the right direction

[Groucho]

Originally posted by The Bus
People are stealing music because it is unfairly priced.

B.S. People are stealing music because it's easy and free. Even if CD's were $5 a pop, people would still steal music.

[GuessWho]

I guess I'm lucky to have a local store where all new releases are 9.99 and catalog titles are 12.99

[fuzzbox]

My only worry is that all this move will do is reduce the price point that the big boxes sell their CDs for at a loss. Instead of BB and CC having CDs for $12.99 the first week while the specialty stores have them at $14.99, the big boxes will have them at 9.99 and the specialty stores have them at 12.99. Not that there's anything wrong with that...

...but I guess this move isn't an attempt to help out the small stores as much as it is to just get record sales back up, is it?

-jason

[Meatpants]

Merge!

[cungar]

Originally posted by Venom
too little too late? 13 bucks is still much for me, for most artists and for taking risks on new stuff. 7 to 9.

But then you never intended to pay for your music anyway did you?

[grunter]

Want to increase CD sales?

HOW ABOUT PUTTING OUT SOME FRICKEN' MUSIC SOMEONE WANTS TO HEAR?????

I'm a CD junkie. I'll admit it. I have roughly over 5000 of those bright, shiny silver discs - all legal, legitimate copies, mind you. And not that half-assed downloaded MP3 shiznit.

I used to frequent the music shops every Tuesday without fail, even to peruse minor titles and pick up something new. But that habit has dwindled over the past couple of years as record companies have adopted the film industry's "mega-hits-to-the-exclusion-of-all-else" mentality.

We no longer have mid-tier talent. It's no longer supported. You either sell a million out of the gate or your career is over. Minus those pesky dinosaur acts that keep churning out sub-par garbage and trading on past glories.

The record industry - perhaps more now than ever - is treading water on disposable television karaoke hacks, repetitive, unimaginative lazy rap and re-packaged greatest hits compilations.

WHERE ARE THE NEW ARTISTS?

Actually, let me correct that - as there are some "new" artists breaking here and there even in this stifled Clear Channel hell that we've found ourselves trapped in.

WHERE ARE THE NEW ARTISTS WHOSE CAREERS WILL SPAN PAST 1 OR 2 MODERATELY SUCCESSFUL CHART-TOPPERS?

Where are the Led Zep's, the Stones, the U2's of today? Huh? Where are they?

You can't tell me that music of that caliber isn't being produced out there - someplace. WHERE THE HELL IS IT?

[Josh-da-man]

Originally posted by grunter

The record industry - perhaps more now than ever - is treading water on disposable television karaoke hacks, repetitive, unimaginative lazy rap and re-packaged greatest hits compilations.

WHERE ARE THE NEW ARTISTS?

Actually, let me correct that - as there are some "new" artists breaking here and there even in this stifled Clear Channel hell that we've found ourselves trapped in.

WHERE ARE THE NEW ARTISTS WHOSE CAREERS WILL SPAN PAST 1 OR 2 MODERATELY SUCCESSFUL CHART-TOPPERS?

Where are the Led Zep's, the Stones, the U2's of today? Huh? Where are they?

Our marketing research has shown that the typical music consumer is interested in purchasing r&b and hip-hop-flavored pop music produced by attractive caucasian men and women between the ages of 16 and 24 who affect urban and latino mannerisms and speech patterns. As such, that is where the bulk of our talent development efforts will be allocated. Thank you for your inquiry, and please remember that the new Justin Timberlake CD will be released early next year.

[Scorpio]

Originally posted by GuessWho
I guess I'm lucky to have a local store where all new releases are 9.99 and catalog titles are 12.99

I just spent $200 in Rolling Stone on Sunday.

I am a CD junkie, to cop Grunter's statement, and I think this is fantastic. I remember when Best Buy used to have an amazing selection and little of it was over $13. Here's to those halcyon days again.

[Thunderball]

I'm excited oiver this, as I've recently begun buying CDs again. Unfortunately the things I'm buying arent even RIAA labels

[Kaffe_02]

I think loweing the prices is a really good move. I would always rather by a CD and get a good source than try to find one on a P2P that has been ripped and encoded at a good bitrate and doesnt have any skips in it. If I can spend $10 or less on a CD I will be much more inclined to purchase it than to down load the one or two songs that id want to listen to

[raiders757]

Lowering the price of CD's is a step in the right direction. Now if they will addmitt that they rip off thier artist's, and do something to make recording contracts more fair, I might start buying again.

I'm still angree about the payola that is going on with clearchannel, and the lack of fair promotion for other forms of music other than Hip Hop, and pop cheese. These survays, that the recording industry claim to useing to base thier missinformation off of, need to be ****** canned.

Fair promotion for all music forms, the end of payola, lower CD cost's($9.99), and fair contracts, as well as fair song ownership(copyrights) . That's all I ask from the big 5 to become a regular custamer once again.

Then we can go to work on clearchannel, Ticketbastard, and the entire concert industry, which reeks of pure ****** .

[SmackDaddy]

I may actually start buying again. For the last several years the only CD's I've picked up are Rush and Liz Phair releases (odd pairing I know). The only reason for this? The ridiculous prices for CD's. Looks like I may finally start to fill out my collection with some catalog titles and not have to go into debt!

[Venom]

Originally posted by cungar
But then you never intended to pay for your music anyway did you?

it's about spending money, it's about wasting money. of the 600 cds i own, their is a large percentage of them that i never would of bought had i been able to hear them first. artists i know and like alot i have no problem getting their cd the day of release without hearing it. but i'd rather be exposed to bands i don't know but 12$ is too much of a risk. i'm not a big downloader, i do it, and have no guilt whatsoever but i'd always rather have the actual cd with the art and all. so when i find something i like i usually get it.

[Captain Harlock]

Originally posted by grunter
Want to increase CD sales?

HOW ABOUT PUTTING OUT SOME FRICKEN' MUSIC SOMEONE WANTS TO HEAR?????

I'm a CD junkie. I'll admit it. I have roughly over 5000 of those bright, shiny silver discs - all legal, legitimate copies, mind you. And not that half-assed downloaded MP3 shiznit.

I used to frequent the music shops every Tuesday without fail, even to peruse minor titles and pick up something new. But that habit has dwindled over the past couple of years as record companies have adopted the film industry's "mega-hits-to-the-exclusion-of-all-else" mentality.

We no longer have mid-tier talent. It's no longer supported. You either sell a million out of the gate or your career is over. Minus those pesky dinosaur acts that keep churning out sub-par garbage and trading on past glories.

The record industry - perhaps more now than ever - is treading water on disposable television karaoke hacks, repetitive, unimaginative lazy rap and re-packaged greatest hits compilations.

WHERE ARE THE NEW ARTISTS?

Actually, let me correct that - as there are some "new" artists breaking here and there even in this stifled Clear Channel hell that we've found ourselves trapped in.

WHERE ARE THE NEW ARTISTS WHOSE CAREERS WILL SPAN PAST 1 OR 2 MODERATELY SUCCESSFUL CHART-TOPPERS?

Where are the Led Zep's, the Stones, the U2's of today? Huh? Where are they?

You can't tell me that music of that caliber isn't being produced out there - someplace. WHERE THE HELL IS IT?

Grunter you hit the nail right on the head.

I've been saying the same thing for a while now. Give me something worth buying at a decent prices and I will gladly buy it. I'm 30 years old. I'm not going to buy Britney Spears or Christina Augulera CD's. Not gonna happen.

One of the things also is that there's alot more competition for your entertainment dollar now than there was about 5-10 years ago. In the past week I have purchased two video games (Socom and Tenchu for the PS2) and a new DVD player. That's money I could have spent on CD's but I chose not to. I knew that when I bought SOCOM that I was going to get a game that I could get about 50-60 hours of entertainment from. As opposed to a CD that has roughly 45 minutes of entertainment on it, factoring the throw away tracks, that gets whiddled down to about 12-14 minutes. Same with DVD's. Alot of people feel now that there are better entertainment values than CD's. So what's next? Is the RIAA going to sue Sony and send me a cease and desist demanding I throw out my PS2 because it's cutting into their profits?

The only problem is I can see the RIAA pressuring the other labels not to lower their prices because that will look like "admitting defeat". And we all know how people hate to admit they are wrong.