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tj2001cobra · 09-04-2003, 05:32 AM

Article can be found here: http://www.usatoday.com/money/media/...cdprices_x.htm

NEW YORK — In a move that could lower music CD prices across the board, Universal Music Group (UMG), the world's largest music company, will cut the suggested retail price for its top-line CDs to $12.98 from the current $16.98 to $18.98, effective Sept. 29.
The cut by the company, which has contracts with artists such as Eminem, 50 Cent, Mary J. Blige and Shania Twain, is an effort to revive sales, which have dropped 30% industrywide over the past three years. U.S. sales in 2002 dropped 8% to $12.6 billion, according to the Recording Industry Association of America (RIAA).

"We expect this will invigorate the music market in North America," said Doug Morris, UMG chairman and CEO. "This will allow retailers (to sell) for $10 or less if they so choose."

The wholesale price on most CDs will drop to $9.09 from $12.02, with some top artists, such as Eminem, at $10.10. UMG expects retailers, who set final prices, to start selling CDs for about $12 on Oct. 1 and hopes they will go as low as $10.

"We've tracked this carefully. There's no question: The consumer responds when we get to that sweet spot of $11 to $12 per CD," says Jim Urie, president of Universal Music & Video Distribution. Executives at the other four major music companies — Warner, EMI, BMG and Sony — declined to comment.

In addition to the price cuts, UMG will replace ad subsidies for retailers with more ads for its own products to lure music fans back into stores. The company also is cutting the suggested retail for cassettes to $8.98.

The price cuts are also the music industry's latest attempt to slow illegal file sharing by consumers. The RIAA has served more than 1,300 subpoenas to identify traders and expects to file lawsuits as early as this week. Record companies are losing $700 million a year to piracy, says Josh Bernoff, media and entertainment analyst at Forrester Research.

Forrester released a study Tuesday predicting an even bigger drop in CD sales as Internet music file-sharing keeps gaining ground on the flagging CD, CNN.com said.

"It's disgraceful that people are losing their jobs and stores are closing," Morris says. "As the leader in the industry, we feel we should pave the way with a plan that, if it's successful, will become permanent."

It remains to be seen whether the cuts will be enough to persuade young consumers to buy CDs. Discounters such as Wal-Mart already discount CDs to about $13.

Michael Goodman, an analyst with Yankee Group, warned that if retailers refuse to pass on their full savings to consumers, "They could exacerbate a bad situation."

And Bernoff warns that lowering prices will not solve the long-term problem of file sharing: "This price reduction may stem the tide of losses in the short term. But in the long run, the only solution is to provide music online for people who want music online. That's the future, not CDs."

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Excellent. It's about time....

09-04-2003, 05:32 AM	#1 (permalink)
tj2001cobra Insane Location: Austin, Texas .. Y'all	CD Prices to drop up to $6 Article can be found here: http://www.usatoday.com/money/media/...cdprices_x.htm NEW YORK — In a move that could lower music CD prices across the board, Universal Music Group (UMG), the world's largest music company, will cut the suggested retail price for its top-line CDs to $12.98 from the current $16.98 to $18.98, effective Sept. 29. The cut by the company, which has contracts with artists such as Eminem, 50 Cent, Mary J. Blige and Shania Twain, is an effort to revive sales, which have dropped 30% industrywide over the past three years. U.S. sales in 2002 dropped 8% to $12.6 billion, according to the Recording Industry Association of America (RIAA). "We expect this will invigorate the music market in North America," said Doug Morris, UMG chairman and CEO. "This will allow retailers (to sell) for $10 or less if they so choose." The wholesale price on most CDs will drop to $9.09 from $12.02, with some top artists, such as Eminem, at $10.10. UMG expects retailers, who set final prices, to start selling CDs for about $12 on Oct. 1 and hopes they will go as low as $10. "We've tracked this carefully. There's no question: The consumer responds when we get to that sweet spot of $11 to $12 per CD," says Jim Urie, president of Universal Music & Video Distribution. Executives at the other four major music companies — Warner, EMI, BMG and Sony — declined to comment. In addition to the price cuts, UMG will replace ad subsidies for retailers with more ads for its own products to lure music fans back into stores. The company also is cutting the suggested retail for cassettes to $8.98. The price cuts are also the music industry's latest attempt to slow illegal file sharing by consumers. The RIAA has served more than 1,300 subpoenas to identify traders and expects to file lawsuits as early as this week. Record companies are losing $700 million a year to piracy, says Josh Bernoff, media and entertainment analyst at Forrester Research. Forrester released a study Tuesday predicting an even bigger drop in CD sales as Internet music file-sharing keeps gaining ground on the flagging CD, CNN.com said. "It's disgraceful that people are losing their jobs and stores are closing," Morris says. "As the leader in the industry, we feel we should pave the way with a plan that, if it's successful, will become permanent." It remains to be seen whether the cuts will be enough to persuade young consumers to buy CDs. Discounters such as Wal-Mart already discount CDs to about $13. Michael Goodman, an analyst with Yankee Group, warned that if retailers refuse to pass on their full savings to consumers, "They could exacerbate a bad situation." And Bernoff warns that lowering prices will not solve the long-term problem of file sharing: "This price reduction may stem the tide of losses in the short term. But in the long run, the only solution is to provide music online for people who want music online. That's the future, not CDs." ----------------------------------------------------------------------- Excellent. It's about time....