March 18, 2010


Universal Music Group on Thursday said it would cut the prices on most CDs to $10 or less. Known as the Velocity program, it would see album prices range between $6 and $10. The label would count on sales volume, as well as costlier deluxe versions, to make up for the lower 25 percent profit margin.

The company characterized it as a way of reversing years of declining CD sales by competing more closely with digital, where $10 has been the most common price for several years.

"We think it will really bring new life into the physical format," the company's distribution CEO Jim Urie said.

Controversially, however, it doesn't expect to do the same for online sales and could lead to a situation where albums at Amazon, iTunes and other major Internet music stores are actually more expensive than their physical counterparts.

Some albums have sold in digital form $8 in recent months but could see little to no cost advantage over Velocity, which doesn't have a set starting date.

Critics have warned that price cuts have typically been ineffective. Universal was one of the first to get closer to the $10 mark for CDs but has had little success in reversing the overall tide of music.

Agencies representing music labels have often blamed it on piracy, but the music itself and a shift towards buying single tracks over whole albums has also been considered a factor by outsiders.



http://www.ipodnn.com/art...d.pricing/

too little too late. they've already made people embrace downloading,
even if they were dubious of quality or legal issues at first.

now a whole new generation doesn't care about physical product at all
anymore.

if they'd started selling a physical cd for $ 7.- when napster first
appeared, they would have been able to make a lot of people say "nah,
i'll rather have the real album instead of a download".

it might have changed the way things ended up being how they are now.
who cares at this point? i used to buy cds religiously but now i don't
care anymore at all, not even with prince releases. a download, legal
or illegal, will suit me just fine.

perhaps it will have some impact. who knows. if i knew for certain that
for every $ 10 cd i buy in a store, the artist gets like, say $ 7,- i'd
still buy cds by people i really love. but in this climate?

There might be some interesting logic in this. It's conjecture on my part, but here is what I immediately thought.

Let's establish a few things first:
1) The first week CDs are released, they're usually at a really low sale price, sometimes right about 9.99 or 10.99. So let's say $10-11, MAYBE 12 in some places.
2) The second week and beyond, the price goes back into the regular range of $12-14.
3) Usually within a month or five weeks, after the price went back up, it goes on sale again for as little as $8-10.

So having said that.
If Universal is keeping track in research, perhaps they're noticing that they are selling more albums during those lower price point periods, whether it's week 1, or week 5, or week 10, or the numerous other times a CD goes on sale. They are taking notice, that retailers are also moving more product during those weeks of a product being on sale.

So what does that possible dictate as a new approach to selling CDs in a quick-to-find-it-online-for-free society? Sell the CD at a lower price over all, and perhaps you will pick up more purchasers overall, not just on key point weeks of sale pricing.

This seems logical in general, especially when you walk into near-mafia run organizations like TransWorld Entertainment (which runs Record Town, FYE, Coconuts, Strawberries, etc) and they've raised the price to within a couple of dollars of $20. TWE's justification for raising pricing a few years ago is that profits are dropping so they need to recoup that cost - they've just priced themselves right out of the market as a retailer. Target and Walmart and KMart recoup that lost business.

IF that's true logic in the lower pricing theory, Universal is smart to target not just a genre demographic, but rather a wallet demographic. The smaller the digit on an item, the better chance to have to sell it.

But of course $4.99 can't even move the piles of Lotusflow3r on the Target shelves. No idea is perfect.

If they wanna make me happy, sell them for $3.

Of course the other logic is to not try highway robbery with the public and make it attractive to buy a CD rather than financially push them into feeling like they need to download an album to save money.

they're about ten years too late

SoulAlive said:

For real!

JackieBlue said:

SoulAlive said:

More like 15.

Timmy84 said:

When are they going to realize that CD's/Pop music today has NO value.

When was the last classic album, i.e. "Pink Floyd - "Dark Side Of The Moon," Marvin Gaye - "What's Going On," Nirvana - "Nevermind," just name a few. You can't tell me Susan Boyle is a classic album, just because it sold a million copies!

Unfortunately the older catalog is getting lost is the mix. They're are younger folks working at these majors who never heard of the MEGA artists from the 80's, 70's, 60's.....nor do they care. They will never treat the artists that made the music industry with the respect they deserve, unless they are told to do so.

What was once a creative art form, is now a mere novelty. Pop CD's now are just souvenirs, like a Ringling Bros. circus program. The true musicians and business savvy musicians know this, and that's why they are walking away from the majors. The majors go after young folks that are just interested in the fame, star status and trying to live the life of the rich and famous. The give them bum deals and "hope" the music flies. All you need is a mic, auto-tune and a PC or Mac.
Slap on a costume and some make up, create a scandal and boom...you're a star! That's pretty much the most creative thing about these young artist.

If they go as low as $5.99, will it really make a difference? It's all about the content and the quality of the product. I understand the need for profit, but please, this is not the break we need.

The CD saved the industry from the crash of 1979 - 1981. The industry hit an all time low at during that period. The CD came along and literally saved the industry from going way under. Thank goodness for an enormous back catalog of titles for consumers to replace their worn out LP' and Tapes. Now the CD is killing it faster than it came in. In the late 80', if you just asked for a record deal, they would hand you one without hearing a note because CD's were selling like crazy.

Music today just burns out way too quickly.

Micheal Jackson shot a bullet is his career when he dubbed himself the King of Pop. Who would want to be King looking at the Pop charts today.

Timmy84 said:

Umm didn't they do this like back in '02 with certain retailers?

tricky2 said:

I feel the same. Many people see music as product or novelty too much. Their principle to think a thing is filled with words like marketing, sales channeling, price, profit, product life cycle ... etc. Where is the art?

In relation to this, I'm skeptical about how Prince treats his music recentry. Distributing the album for free or almost free in the name of promotion but do not perform songs from it much at the concert? Taking a exclusive distribution contract including very low pricing strategy while asking his fan ridicurous price for official download?

I see culculation about short-term profit may match but it must not be all if it's about the art
[Edited 3/28/10 1:23am]

This is an interesting piece of news. I'm sure it will make a difference when it comes to downloading music from different channels for free. I have to admit, I have done that myself but only if a certain song is simply unavailable elsewhere. I have never downloaded entire albums.

I'm a part of a generation who used to buy vinyl albums in the 80's and I liked reading the sleeve notes and looking at artwork and photos. I actually found Sade's new album "Soldier.." in a record store, AS AN LP! The cover is so cool and it reminded me of the feeling when I used to buy albums when I was younger. It was so exciting.

The same goes for CD covers too. If the lyrics are printed on the sleeves then I will read them, with or without music in the background. I like looking at artwork too, that's a whole profession representing right there. An album also represents where that particular band, artist or musician is at the moment and what the concept of an album is all about.

Albums are too expensive these days so it will be interesting to see if people will change their behaviour as music consumers.

MrGravyLumps said:

Price of domestically manufactured CD is protected by law in Japan. The retail price is fixed by record company and retailers are unable to discount for the first year at least. (The same goes for some imports that are officially distributed by branch office of the foreign record company.)

Then, the price for the first year is very high. The typical fixed price for newly released single CD package is:

$32 for domestic artist
$27 for foreign artist
(reference) $18 for imports by foreign artist (not fixed and can vary)

Those are culculated with the ratio of $ 1 = JPY 93)


I feel it's more ridiculous here in Japan
[Edited 3/28/10 4:38am]

tricky2 said:

IstenSzek said:

Once again its a clueless move that its main goal is to make Universal look like they care about "music" and its preservation. The first issue with this is what they did years back in 2003-04 when they cut the list price of cd's by $2, they did it to look like heroes of the day and challenged other labels to do it. Well the only issue here was they cut and forced stores to sell $2 cheaper BUT they didnt lower the wholesale price to stores, and that is why you lost your "real" music retailers and now are left with Walmart and Target.

Second issue and the most important one is the MINDSET of labels hasnt changed, they think dropping cd's to $10 will help but that is nothing but a publicity stunt. The whole mindset now needs to change to even make MUSIC interesting to people longterm anymore. The way of marketing now is SELL NOW SELL NOW, well thats all fine, but none of the artists build catalog, and CATALOG my friends is what has always kept the business going, and IM SORRY but you cannot tell me that an album like "Led Zeppelin 4" and its catalog value is in the same boat as Fall Out Boy debut album, i mean lets get real here, when the mindset is to only SELL NOW then its over. And we all know this is true, look at half the posts on this forum that always talk about some artist only selling _____ in a _____ weeks, that is the label mentality, this thinking is 1998-2000 thinking when Backstreet Boyz were selling a million a day, but lets be real again, what is the shelf life of their catalog?

To put this even more in perspective i read an article on the Group ABBA and the article pointed out that ABBA's catalog sells 3-4 million units a year worldwide, now this is a group that hasnt had a record in almost 30 years, do you think the catalogs of Rihanna and Kesha are gonna sell 3 million a year worldwide 30 years from now? If you do, then please pass the weed you are smoking.

tricky2 said:

You hit the nail on the head. Music has no value because you know that they dont put any real time or effort in the music or lyrics. All I see when I visualize music production today is a kid sitting behind a computer who couldn't play a real instrument to save his life.

elem55 said:

The whole mindset of "burning out way too quickly" came from the intro of Soundscan, yes folks that is where the shit started. That system just like a tv ratings system is why you get what you get.As its been said time and again, had artists like Prince,Elton,U2 and so many others that did not "sell" out the box come out today, they'd be done with this kind of thinking. Just like today and wiht tv shows, you better get the ratings now, there is no room to build an audience, that kind of thinking only worked in the 70's and 80's thats long gone, thats why Snooki is your tv star of the day.

tricky2 said:

typical nostalgic snobbery. Classic albums come out often still to this day. Radiohead's in Rainbows sticks out the most to me, not just classic music, but also made a huge statement. You could have gotten their music for free off their website, but a month later it still went NUMBER 1 on the billboard charts. Some people think CDs are dead, but I still love them and if they start going lower I'll be heading out for CDs more often.

tricky2 said:

seriously? I'm really tired of people thinking the only music coming out today is that of the pop 100. Not only do I think Pop is heading in an exciting direction into this new decade but also small time labels are coming out with the best bands on the scene right now.

People are constantly willing to pronounce the time of death of music, thats foolish, I look forward to what's coming next.

This does nothing for me; A LOT of 60s, 70s and 80s CLASSIC ALBUMS have been sold by 7,95 or even 6,95 since the early 00s...

RKJCNE said:

I dont think its pronoucing the death of music, music will always be there, but the industry that we all think of is gone. Regardless of what people think about today or yesterday, no matter what CASH is the only way to survive, a label cannot hold on today by losing money, that is the big picture that no one is dealing with, and the whole mumbo jumbo about the "internet" being a well of creativity is nothing more than an ad for the internet, its simply not true, sure you are going to find something, i can find something buried on an indie label everyday that is owned by a major just as quick. But what no one gets is the mindset of business, thats the big picture, not a debate on who had the better era of artists, i mean we can go on all day on who sucks and whos great. But the mindset of how to do business is what kills it, and it will kill it in the end, but in reality in needs to hit the bottom and crash and burn to realize this and then just build up again the old way. You have to invest in tomorrow, who is gonna sell for me long term not just this month, who will people actually care about long term, you cant have Catalog sales from artists with no catalog.

Now the example of RadioHead is totally of a different mindset, this is a band with a loyal following, like a Pearl Jam or REM. This is a band and the others that will do it with or without labels because they already reaped rewards of a Label and the old way of thinking.