CD Prices On The Rise Again

[Jahfin]

From RollingStone.com:
http://www.rollingstone.com/news/story? ... on=single1

Universal promised $12.98 CDs. So why is D12 almost $20?

Last fall, music giant Universal announced a sweeping plan to cut the price of new records by thirty percent -- with some CDs selling for just $12.98. But anyone checking out racks at a music store will see recent releases from Universal artists such as D12, Hoobastank and Kanye West still selling for $14.99 to $18.98.

In April, Universal officially raised its suggested retail prices by one dollar. The company thought its gamble of charging less would spark massive sales. It didn't. The price cuts only hurt profitability. "We didn't get the increased sales we needed," says Jim Urie, president of Universal Music and Video Distribution. But he points out that Universal still offers the lowest prices among the major labels.

Universal's effort has also been thwarted by some retailers. Physically repricing millions of records at many chains is a time-consuming process. And many indie retailers had refused to go along with the plan, since it eliminated some advertising dollars that Universal had offered in exchange for premium placement. Sources say roughly half of music stores have adopted the price cuts.

While the albums topping the charts aren't yet a bargain, the back catalog of CDs that have been out for longer than eighteen months have helped overall prices inch down. At this time last year, the average full-length CD sold for $13.79; today, it's $13.29, according to marketing-information firm NPD MusicWatch. In early May, Warner Music announced a new plan to market some old titles for $9.98 to $11.98, including artists such as Madonna, Missy Elliott and Prince. For music shoppers looking for deals, the oldies are the only place to go.

Despite the imperative of making CD prices compete with free music on the Net and other entertainment options such as DVDs and video games, many retailers and labels have resisted the chance to cut prices. Right now, retailers, who are benefiting from a nine percent climb in music sales so far this year, have little incentive to drop prices on the best sellers. "If you have a hot new release like Usher, people are going to pay $18.99," says Clark Benson, CEO of the market-research firm Almighty Institute of Music Retail.

But big retailers such as Best Buy and Wal-Mart continue to gain market share by selling records for less than $10. "We continue to hear from consumers that CDs are too expensive," says Gary Arnold, senior vice president of entertainment at Best Buy. "The music industry needs to think with consumer glasses on."

Rival labels are not only hesitant to cut prices but may even be raising them. News reports have suggested that some labels want to boost the price of singles from ninety-nine cents to $1.25 at Apple's iTunes Music Store, though Apple denies it. But prices for some albums have climbed at iTunes, going beyond the usual $9.99 price per CD -- N.E.R.D.'s Fly or Die and Pink Floyd's The Dark Side of the Moon now sell for $13.99 and $14.99, respectively. Apple CEO Steve Jobs says labels could make more money selling full albums for $9.99 than one or two choice cuts for ninety-nine cents each. "We see prices of albums coming down and not going up," says Jobs.

WARREN COHEN
(Posted May 18, 2004)

[Bob Roberts]

Join BMG and shop at Walmart. That's what I do. I purchased Bob Marley's box set from BMG for $23 last night online.

[Fins in Low Places]

Better yet, I buy used for a lot of my music. Bob, have you tried Disc Exchange in K-ville? Their new prices weren't that bad when I was in school, and they always had a great used selection. I also do the BMG thing and wait for one of their free shipping deals. If I do buy something when it is released it is usually at Best Buy/Circuit City. It is NEVER at Wal Mart. That place should be avoided like the plague!!!!!

[Key Lime Lee]

FYI record clubs screw the artists out of royalties. Great for consumers, bad for artists.

I personally won't shop Walmart because I don't like their practice of demanding edited versions of records. But that's just me.

[rednekkPH]

FYI record clubs screw the artists out of royalties.

How so, Lee? I'm not very familiar with how they work.

[CRC Parrothead]

FYI record clubs screw the artists out of royalties. Great for consumers, bad for artists.

I haven't been in one of those damn things in years, but I am curious how they get away with screwing the artists out of royalties?

[CRC Parrothead]

Oh gawd!! I'm thinking like Frank again!!

[rednekkPH]

Oh gawd!! I'm thinking like Frank again!!

Very good. My plan for world dominance has come one step closer to fruition.

[Elrod]

I like getting my music at www.cdbaby.com or directly from the artist.

[Key Lime Lee]

Most record clubs have relationships with record companies. The accounting of sales is suspect, to put it mildly. For example, when you get your 10 free CDs for a penny, those somehow get classified as "promotional giveaways" and as such, are not subject to royalty payments. Multiply that times 1000s of customers and it gets to be substantial.

Even on regular sales throuh the club, the royalty rate is usually contractually lower than on mainstream retail sales.

Not entirely clear why artists should have to forego their paychecks to help a record club sell records but then, this is the business where artists often have to sue their own labels just to get an even remotely honest audit of the royalties owned them.

[rednekkPH]

Thanks Lee. Yeah, that does s*** for the artists.

[Jahfin]

I also don't purchase CDs at Wal-Mart if I can help it. I suggest supporting your local indie record stores if you can. The prices may sometimes be higher but their selection is usually much wider, the staff more knowledgeable and you're helping out the little guy. Unfortunately where I live indie stores don't seem to last very long so I end up either buying online or purchasing from Circuit Shitty which has a surprisingly large selection and very reasonable prices. Yep, they're one of the large corporations that are probably no different than Wally World but in the long run I'm left very little or other choice.

[Key Lime Lee]

Yep, they're one of the large corporations that are probably no different than Wally World but in the long run I'm left very little or other choice.

Well, except for the part where they don't shoulder the artists with their own concervative christian agenda...

Sometimes you have to go to the big companies - they're the only ones with the buying power to deal with the labels and distributors. If a mom and pop store says they won't carry any UNI product, no one in the business cares. But if Best Buy or Circuit City says it, they'll throw a fit but eventually work with them.

[creeky]

For a new release at a discount store - ie Kmart - we can get one for 24.95, but the going price here is 29.99 or higher

(Buffett new releases are a LOT higher )