Universal to reduce CD prices

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zonelistener

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If find this news ironic on the same day we get news that Ticketmaster wants to "auction" the best seats off.

World's largest CD company promises cheaper discs
Alex Veiga, AP
Published September 4, 2003

LOS ANGELES -- Universal Music Group, whose roster of artists includes 50 Cent, U2, Elton John and Diana Krall, will cut the price of its wholesale CDs and push for a $12.98 retail cap on its discs in an attempt to woo music fans back into record stores.

The world's largest recording company hopes retailers, who have suffered as industrywide music sales dropped 31 percent the last three years, will follow its lead and pass on the savings to consumers.

Universal hopes the actual retail price of most of its CD will end up about $10 or less, comparable to the $9.99 retail price that music fans enjoyed in the early 1990s, at the height of a price war between the recording companies.

``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,'' said Jim Urie, president of Universal Music & Video Distribution. ``We are confident this pricing approach will drive music fans back into retail stores.''

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

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 today.

Kevin Milligan, vice president of merchandising at Torrance, Calif.-based record retailer Wherehouse Entertainment Inc., said he had not received notice from Universal, 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.

Officials at the National Association of Recording Merchandisers did not return calls Wednesday. Officials at EMI, BMG and Warner Music Group declined to comment; Sony Music Group officials could not be reached.

Universal'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.

The price changes would go into effect by Oct. 1.

The decision to cut prices underscores how badly the industry has been hurting, said Josh Bernoff, an analyst with Forrester Research, Inc. ``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 and is expected to take legal action against hundreds of suspected file-swappers this month.

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.''
Click to expand...
 
Their must be a new "format" about to be introduced to the market that will make cds go the way of wax. They're just clearing house.
 
:applaud:...don't suppose it will effect me, but I just get happy when I see the words reduce prices in the same sentence:applaud:
The "we shouldn't really be charging this much for CD's debate has been going on in Australia for years, I wish they would bloomin' hurry up and agree. We pay $30 for a new release.....which is why I don't get CD's until a year or two after they are released:(
 
So we should thank them? Those prices are still expensive.
 
anitram said:
So we should thank them? Those prices are still expensive.
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They arent too bad actually. $12.99 will be the retail cap, so most likely some places will sell them for cheaper than that.
 
Popmartijn said:
U2?

Just a suggestion...

:D
Click to expand...


oh right...i forgot about them. what songs do they sing again?


that reminds me. S.T.U.N. is on universal. possibly the worst band i've ever seen :down:
 
This is the result of file sharing which is essentially stealing. Obviously people bitch and complain about paying 20 dollars for a CD when they can get it for free and at the same quality off the internet. But 20 dollars is not a lot for a CD.

The fact of the matter is that CDs are cheaper than they were 15 years ago. I bought my first CDs at about 15 dollars a pop back in 1988. Add inflation and the price of those CD's today is about 23 dollars. So CD's today are in fact cheaper than they were years ago. The same thing goes for Cassettes. A Cassette 15 years ago was about 10 dollars and today with inflation would cost 15 dollars, but most sale at about 12 or 13 dollars. Fact is that consumers actually have had it good.

The problem is that what most people want is music for free and the internet and file sharing has allowed that to happen. Thats the reason people have suddenly stopped buying large numbers of CDs. Its not the price, because 20 dollars for a CD and 13 dollars for a cassette is cheaper than what people payed 10 and 15 years ago when you adjust the figures for inflation.

Artist are the ones that will be hurt by this. Whether your U2 or an 18 year old in a new rock band, your profit per disk sold just got cut 35%. That might be ok if you have a good royalty rate and sell a million albums, but if you have a low royalty rate and only sell 25,000 albums, your going to be sleeping on someones sofa and using food stamps.
 
STING2 said:
This is the result of file sharing which is essentially stealing. Obviously people bitch and complain about paying 20 dollars for a CD when they can get it for free and at the same quality off the internet. But 20 dollars is not a lot for a CD.

The fact of the matter is that CDs are cheaper than they were 15 years ago. I bought my first CDs at about 15 dollars a pop back in 1988. Add inflation and the price of those CD's today is about 23 dollars. So CD's today are in fact cheaper than they were years ago. The same thing goes for Cassettes. A Cassette 15 years ago was about 10 dollars and today with inflation would cost 15 dollars, but most sale at about 12 or 13 dollars. Fact is that consumers actually have had it good.

The problem is that what most people want is music for free and the internet and file sharing has allowed that to happen. Thats the reason people have suddenly stopped buying large numbers of CDs. Its not the price, because 20 dollars for a CD and 13 dollars for a cassette is cheaper than what people payed 10 and 15 years ago when you adjust the figures for inflation.

Artist are the ones that will be hurt by this. Whether your U2 or an 18 year old in a new rock band, your profit per disk sold just got cut 35%. That might be ok if you have a good royalty rate and sell a million albums, but if you have a low royalty rate and only sell 25,000 albums, your going to be sleeping on someones sofa and using food stamps.
Click to expand...


Oddly enough, in my own personal experience I've found that all the people I've met who have the largest cd collections seem to download the most music too. Just my 2 cents.
 
"Oddly enough, in my own personal experience I've found that all the people I've met who have the largest cd collections seem to download the most music too. Just my 2 cents."

If that were the case across the board, CD sales would be booming rather than declining. The decline in sales coincides with the start of widespread downloading and file sharing. All this with the price of CD and tapes being cheaper than they were years ago once you adjust for inflation.
 
I dont get the point of them being cheaper than they used to be, that's fairly normal. DVD players used to cost $1000, now they're under $100. Inflation happened in that segment of the industry too. Any item in the technology industry will usually lower in price over time.

Cd's cost next to nothing to produce, and most artists get next to nothing for actual album sales.

There is easily just as much evidence that the decline in sales is related to high prices as there is to file sharing. Saying the internet is the one and only cause seems odd to me.
 
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STING2 said:
"Oddly enough, in my own personal experience I've found that all the people I've met who have the largest cd collections seem to download the most music too. Just my 2 cents."

If that were the case across the board, CD sales would be booming rather than declining. The decline in sales coincides with the start of widespread downloading and file sharing. All this with the price of CD and tapes being cheaper than they were years ago once you adjust for inflation.
Click to expand...

CD sales were booming when Napster was booming. At the height of its success the music industry had the highest sales. The decline in sales coincides with the harsh actions the music industry started against Napster, together with a rise in prices (and a drop in quality?).

C ya!

Marty
 
u2popmofo,

"I dont get the point of them being cheaper than they used to be, that's fairly normal. DVD players used to cost $1000, now they're under $100. Inflation happened in that segment of the industry too. Any item in the technology industry will usually lower in price over time."

This is very true. But by 1994, the industry had completed converted to CDs, yet the price of CDs continued to drop when you count inflation. Once the industry has converted to a certain format, the drop in price because of technology is more available is no longer a factor.


"Cd's cost next to nothing to produce, and most artists get next to nothing for actual album sales."

This is not true at all. It is expensive to record an album, distribute it, and promote it, on a global scale. There are people all the way down the line from the artist to the local record store that sales the album that deserve to make money.

"There is easily just as much evidence that the decline in sales is related to high prices as there is to file sharing. Saying the internet is the one and only cause seems odd to me"

Once again, CDs and Tapes for that matter were more expensive, 5, 10 and 15 years ago. Under what basis can you see that CDs are high priced? People had no problem buying CD's 5 and 10 years ago at prices at inflation adjusted prices of 22 and 23 dollars. Now CDs are 20 dollars and people are complaining that their too high priced. That does not make any sense.

Once again, people are attempting to justify their downloading and filesharing by claiming that CD's are overpriced which is false. The same people were going out in droves to stores to buy CD's when file sharing technology was either not available or not as widely available as it is today. Certainly CD's seem overpriced when you can get it for free through the internet. Anything is overpriced when you can find a way to get it for free.
 
Popmartijn,

"CD sales were booming when Napster was booming. At the height of its success the music industry had the highest sales. The decline in sales coincides with the harsh actions the music industry started against Napster, together with a rise in prices (and a drop in quality?)."

Napster was not booming in 1997. Its boom period started in 1999 and coincided with the strong music market. It was in 2000 that the industry started to crack down on Napster. Sales in the music industry were up until about 2001. Each year since 2000, the number of people having the ability to use the internet, the number of people with file sharing capabilities, and downloading of songs from other Napster like sites, has grown steadily. The steady growth in this technology has coinsided with a decrease in record sales.

Most people are motivated by economics rather than politics when they make their purchases. The fact of the matter is that if people can get something for free without paying for it, that is what they are going to do.

The Music industry was doing well in the late 90s and Napster was a new program. Despite Napster success at the time, its a fraction of the files sharing and downloading that occurs in total today. More people have access to all this technology today than they did 3 years ago which is why record sales have declined.
 
what exactly are people downloading? if you assume the majority of downloads are of the popular acts that would gain record high album sales on major labels if they were not readily accessible on the internet, then it would be nice to think that partially it's due to the fact that the general public isn't dumb enough to spend money on that crap. maybe they deem it good enough for a listen or two, but not worth their hard-earned cash. but in truth, there is a lot of other, lesser-known, harder-to-find-depending-one-what-country-you-live-in music being downloaded as an alternative to purchasing the music--a temporary solution. you also have b-sides and bootleg trading via the internet, sometimes it's virtually impossible to find a single, or it doesn't make sense to buy a cd with two or three songs on it (especially when one's on the album or on the radio all the time) when the price adds up to the cost of a full album after import/shipping fess are added.

unemployment is a factor personally when it comes to purchasing cds. i don't have a job, i don't have money to spend on music. i don't think i'm the only person in this category. in fact, i know i'm not.
 
Don't blame napster for this. Blame large scale warehouses like Best Buy and the like who have always sold CD's for that price when mall record stores gouged us for 18, if we'd pay it, which I never did. I have heard reports that large numbers of small time or private owned music stores were run out of business by downloading. I think it was the price undercutting by the stores who were selling in such bulk, and selling other things besides CDs, and could afford to. Circuit City and Best buy can sell for less because they sell so many, and they have the sales of computers, appliances, and stereos to offset any losses. Even Wal Mart sells for less because they can. Stores that sell only music have to keep prices high to make a living. But when no one buys them, they go under. This price cut should help them. The industry had to come to their senses.
 
Tabby said:
Don't blame napster for this. Blame large scale warehouses like Best Buy and the like who have always sold CD's for that price when mall record stores gouged us for 18, if we'd pay it, which I never did.
Click to expand...

I am cofused by your statement here.

Did someone previously blame Napster for the REDUCTION in the price of CDs (as if the pirce in CDs going down is a bad thing)? As consumers....let's BLAME people for the cost of CDs going down.

"Yeah you big jerks....making prices of CDs go down....what's wrong with you guys? Keep them at those unbelievable prices. Yeah Yeah Yeah!!!" :mad:

Is this what you are saying? :confused:
 
STING2 said:

Once again, people are attempting to justify their downloading and filesharing by claiming that CD's are overpriced which is false.
Click to expand...

Apparently Universal completely disagrees with you here. Otherwise, they wouldnt have decided to drop their own cd prices. Apparently they have come to the conclusion that they will be able to sell more cd's if they actually lower their prices, thus proving the point that cd's were overpriced.

If you honestly think they decided to lower prices because they were 'forced into it', you're not only fooling yourself, buy attempting to fool anyone and everyone who has ever bought a cd in their life. Not only does Universal agree that cd's were overpriced, but the US government themselves held a general inquiry into the pricing of cd's by recording industry and came to the conclusion they were completely overpriced. In August 2000, 28 US states filed suit against the 5 biggest record companies and retailers accusing them of fixing CD prices. This suit passed, and actually won.

Regardless, major chains have been selling cd's for those prices for the last 3 to 4 years, and have received record amounts of sales. I find it offensive to music fans to hear the Recording Industry blame their own fans for declining sales. How does one possibly think that a good way to help bring sales back up is to attack their own fans/customers with lawsuits and scare tactics? I have a hard time with any industry/company/person who cannot face up to their own problems, but must CONSTANTLY blame their own customers.

This is the exact same industry that blamed tape trading/recording devices in the 1980's as the cause of declining cassette tape sales, and tried to use the exact same scare tactics/law suits. The music industry completely lost that battle, failing to prove anything to the US Supreme Court who ruled that tape trading was fine, and not a threat the the music industry.

It seems that the recording industry has never been able to face up to the fact that their own product is overpriced, which is more than a little aggravating to the people who keep their industry afloat.
 
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STING2 said:
But 20 dollars is not a lot for a CD.
Click to expand...

Sure it is.

$20 USD = approximately $30 Canadian. No CD costs that much and only lunatics here would pay that for it. Even HMV sells their CDs largely in the $15-$18 range, Canadian, which is about $10-$12 US. You can get them even cheaper the week of release at places like Best Buy.

$20 is clearly a lot for a CD because the only ones I see in that range are imports.
 
u2popmofo,

"Apparently Universal completely disagrees with you here. Otherwise, they wouldnt have decided to drop their own cd prices. Apparently they have come to the conclusion that they will be able to sell more cd's if they actually lower their prices, thus proving the point that cd's were overpriced."

"If you honestly think they decided to lower prices because they were 'forced into it', you're not only fooling yourself, buy attempting to fool anyone and everyone who has ever bought a cd in their life. Not only does Universal agree that cd's were overpriced, but the US government themselves held a general inquiry into the pricing of cd's by recording industry and came to the conclusion they were completely overpriced. In August 2000, 28 US states filed suit against the 5 biggest record companies and retailers accusing them of fixing CD prices. This suit passed, and actually won."

First, there is no such thing as a set price for a CD. The Market determines what the price is. If I want to sell my CD for 40 dollars, there is nothing wrong with that. There is something wrong though with someone copying my CD and distributing to thousands or more people through the internet there by robbing potential sales of the product.

Universal is cutting the price of CDs because consumers are successfully circumventing the process of getting music by going through th internet. Album sales have fallen every year for the past 3 years by 10% to 15% each year. This means there is a lot more product lying around not being sold. In order to sell off this excess product plus new product, prices had to be cut. But the reason for the decrease in sales is not that CDs have all of a sudden become more expensive, its because consumers have suddenly discovered they can get what they want for free through the internet.

Lets do the math again. CD's were 15 dollars in 1988. Thats 23 dollars today when you adjust for inflation. With CD's being 20 dollars now, this means that if anything, CD's are underpriced.

CDs were 16 dollars in 1992. Again more expensive in 1992 then 2003. There were no complaints in 1988, 1992, or 1996 about the price of CD's. Albums sales reached record levels proving that if anything, CD's were underpriced.

It has only been since the widespread use of CDR's, Files Sharing, and downloading through the internet that the complaints about CD prices have all of a sudden come about. This starting in 1998-1999. Yet, despite these factors, CD's have continued to drop in price despite the fact that the technology was commonplace and had virtually replaced records and tapes by 1994.

"Regardless, major chains have been selling cd's for those prices for the last 3 to 4 years, and have received record amounts of sales. I find it offensive to music fans to hear the Recording Industry blame their own fans for declining sales. How does one possibly think that a good way to help bring sales back up is to attack their own fans/customers with lawsuits and scare tactics? I have a hard time with any industry/company/person who cannot face up to their own problems, but must CONSTANTLY blame their own customers."

I have a hard time with consumers who refuse to see that file sharing and downloading albums for free with no reduction in sound quality is essentially stealing. It is cutting into the profits of record companies and artist. There will be less money to promote rock bands that often take more money and time to break. Instead, more and more, record companies will have to turn to the quick and easy buck, in order to insure profits. Simply not enough money coming in to support possibly the next U2 or REM.

Thats another thing consumers don't understand, the cost involved with making a CD, distributing it and promoting it. It goes far beyond the physical cost of making the CD in the factory.


"This is the exact same industry that blamed tape trading/recording devices in the 1980's as the cause of declining cassette tape sales, and tried to use the exact same scare tactics/law suits. The music industry completely lost that battle, failing to prove anything to the US Supreme Court who ruled that tape trading was fine, and not a threat the the music industry."

The current situation is completely different for two reasons. #1 One can obtain an un-degraded copy of an album through file sharing. In the early 1980s with home taping, there was always degraded sound quality. Because of this, consumers back then were still more likely to go out and by the best quality for the music they wanted.

#2 the internet did not exist back then. Now someone can buy music and share it with potentially thousands of people and allow them to copy it without any degraded sound quality. In the early 80s, you the most one could do is give a degraded copy of a new album to a handful of friends. Consumers have caught onto this. Its easy, free, the same sound quality, and you don't have to leave your bedroom or basement to get it.

If you understand these two factors, then you will understand why albums sales have been on the decline since 1999/2000.

"It seems that the recording industry has never been able to face up to the fact that their own product is overpriced, which is more than a little aggravating to the people who keep their industry afloat."

How can something be overpriced when it costs less than it did 5 years before? In real terms, CD's have gone down in price every year? At what point did they become "overpriced"?
 
Also, while the drop in prices will initially cause a little pick up in the business, it will not last over the longterm. As long as people can continue to get what ever new product they want for free, album sales will continue to decline.
 
all I know is that they wouldn't reduce the prices if they wouldn't make a healthy profit after the reduction

perhaps they even managed to calculate that having more people pay for cheaper cd's might make you more money
 
Hello,

We had this discussion about file sharing and sales many times before. It's too late here to react on everything (I need to get some sleep) and besides, everything has been said before.

So I'll just mention some links, which say enough I think.

The Recording Industry is Trying to Kill the Goose That Lays the Golden Egg
http://www.bricklin.com/recordsales.htm

Study: File sharing boosts music sales
http://news.com.com/2100-1023-898813.html
(although I'm sure there are RIAA or IFPI sponsored studies that tell the contrary)

For an artist's point of view:
Janis Ian: "THE INTERNET DEBACLE - AN ALTERNATIVE VIEW"
http://www.janisian.com/article-internet_debacle.html

Janis Ian: "FALLOUT - a follow up to The Internet Debacle"
http://www.janisian.com/article-fallout.html

I'll look for more sites tomorrow, if I still have the links on my laptop.

C ya!

Marty
 
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