musicNEWS:
Universal To Slash CD Prices
09-05-03
Keavin
.
Universal Records believes that high CD prices
may be part of the reason overall music sales have dropped 31 percent over
the past three years. Instead of placing all the blame on illegal downloading
(they have the RIAA for that), they are instead taking some drastic action
in the form of slashing the suggested retail price of CDs, in hopes of
boosting sales.
On Wednesday, Universal Music Group announced
that on October 1st, it would cut the suggested retail price on a majority
of their CD catalog by $6 to $12.98.
UMG currently wholesales CDs at $12.02.
The current average suggested retail price is $18.98. On October 1st, the
wholesale price on most titles (excluding the most popular) will drop to
$9.09. The bigger selling artist would have a wholesale price around $10.00.
UMG also plans to slash wholesale prices
on cassettes so they can offer them at a suggested retail prince of $8.98.
The hope is that the already suffering
retailers will drop prices even more, so that CDs will average about $10
each. That may be a tough sell since major CD retailers are struggling
to make ends meet at the moment. Some are on the brink of following The
Wherehouse into bankruptcy.
"Whether it will ultimately be good news
for retail? I think it's still up in the air," Kevin Milligan, vice president
of merchandising for Wherehouse Entertainment Inc., told AP.
Another big blow in the short run to retailers,
UMG said it would no longer give retailers co-op advertising or discounts
in exchange for favorable product positioning in stores.
But this may end up being a smart move
on UMG’s part. AP reports that the San Francisco based consumer marketing
research firm, Odyssey, conducted a survey earlier this year that found
“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.
"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," the managing director of
Odyssey, Sean Baenen, told AP. "All the data suggests that quality and
price are major factors to the equation."
All speculation aside, time will tell if
this move will help UMG return to a nice bottom line.
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