UMG To Price New CDs Under $10
marmoset writes "Perhaps a decade late, Universal Music Group has decided to try out sub-$10 CD pricing in the US. 'Beginning in the second quarter and continuing through most of the year, the company's Velocity program will test lower CD prices. Single CDs will have the suggested list prices of $10, $9, $8, $7 and $6.'" CD retailers are not convinced the price cuts will work out. For one thing it depends on whether other major labels follow suit, but the article notes that "executives at the other majors were nervous about the UMG move" and "privately, some appeared annoyed."
the article notes that "executives at the other majors were nervous about the UMG move" and "privately, some appeared annoyed."
You don't say. You mean to tell me that they might have to price their music competitively? That they might have to take a pay cut in order to compete in the market? That their 'silent agreement' of what all music should cost among the biggest labels is no more?
Music record contracts really annoy me in this respect. They are nothing but middlemen when it comes to publishing music. I understand their role in promoting and paying upfront cash for studio time but their role as publishers is leech at best.
If bands had the ability to pit manufacturers against each other in publishing their CDs and albums (and also if the band could decide what percentage they needed from sales) then we would see prices dramatically plummet. Look at CDBaby and think how inexpensive it could get if that kind of market was where we bought all our CDs. And in a capitalistic world, that's how it is supposed to work. But no, acts have contracts and the most popular acts love how the labels shove only those acts down our throats. The music industry is a sorry state right now and rarely do we hear news like this. At least UMG appears to be slowly realizing that it's adapt-or-die time.
My work here is dung.
You mean it doesn't cost $20.00 to make a CD? Really?
I remember CDs. They made such pretty coffee coasters after I burned all their music to my MP3 player.
Please do not read this sig. Thank you.
25 years too late. Oh well, better late than never.
Burns: We're building a casino!
McAllister: Arrr. Give me 5 minutes.
I get them for 0$ in pirate bay, how do you compete with that!?
...when they still existed. I remember having the option between a $13 CD or an $8 "inferior" cassette version, so I picked the cassette. I didn't see why I should have to pay a $5 premium for the disc version.
Now it appears the same pricing has come to CDs. Why pay $13 for a CD when I can just download my favorite 2-3 songs at about $3. The internet is forcing music companies to drop the pricetag for the "inferior" CD format to about $8.
Why inferior?
CDs aren't portable. And take-up a lot of space.
"I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
You'd think the music companies would have at least one economist on staff who could explain to them, slowly and gently, that under certain circumstances it is actually possible to make more money when each individual unit is priced lower. It really takes some stubborn failure of logic to prioritise your sale price above your actual monetary returns.
Of course, it's also possible that the music quality will just decline to compensate for the drop in price.
Security through promiscuity is no better than security through obscurity.
If given a music CD, what would be the first thing you'd do with it? Play it or burn it? (Or give it back with an apology of "this is not a format I support any more"?)
If your only tool is a hammer, every problem becomes a nail.
Sell them $99 or $0.01, I am not willing to pay for middlemen more than the final artist will get. I think I'll wait for flattr.
The Wise adapts himself to the world. The Fool adapts the world to himself. Therefore, all progress depends on the Fool.
Quickly followed by
"[Sales of CDs] which [are] down 15.4% so far this year. Album sales were down 18.2% last year, and 19.7% in 2008, "
I swear, Thick as a Brick should be a Jethro Tull song, not a description of record company executives....
"Seven Deadly Sins? I thought it was a to-do list!"
I'll be honest. I'm usually more of a singles person than an album person.
However, when the album and digital copy are near the same price, the physical copy provides a long lasting backup (pressed CDs last longer than burnt), and I have a lossless copy that I can legally use, rip to lossless on my PC, and not have to go on a tracker and seed until my eyeballs fall out of my head for the ratio...it makes sense for a number of albums.
Weird Al Yankovic stated that he was happy for either avenue his customers used to buy music, but his take per track on iTunes was about two cents a track and his take on CDs was about 26 cents- which is pretty major if you want to support the artist.
Anyhow, it's a good move by UMG, albeit overdue. I think it's like the MPAA- the "boston strangler" of VHS turned out to be a major blessing and boon to their business. Hopefully other companies follow suit.
This would have been a great strategy for the late 1990's, when the CD was still a relevant media (and, for that matter, when consumers were demanding that prices be lowered, both through their words and through their actions -- which the industry by and large ignored completely).
I'm not sure I'd call CDs relevant still. We've moved on to solid state media, writeable storage decoupled from the content. You could discount 8-track tapes and they wouldn't sell today. CD's don't have the same analog appeal that vinyl records to, either. I expect that eventually they'll just stop making CDs, and all music will be distributed via the network.
This price reduction merely indicates that we're a little bit closer to that day. I doubt it'll do much to boost sales at this point.
You see? You see? Your stupid minds! Stupid! Stupid!
If I was a used CD retailer, I'd be scared right now. You're probably selling the CD for less anyways, but with the price difference being much less, you might lose a lot of your customers since the price of a new CD that supports the artist and is in immaculate physical condition is only a few bucks more.
Competition is always good though, and I'm sure used stores will be fine.
Speaking of businesses being threatened, I don't see the "as a record store owner, my business faces ruin" troll yet.
In Hong Kong a typical release CD of some local artist costs around USD 10 already. That's been since I moved here 7, 8 years ago. Older releases cost less. Import from US is typically USD 8-12 for a CD.
Now there are a few differences: the entertainment world lives on a smaller budget and the top artists are at a level that wouldn't even make it into American Idol. That says more about the cantopop than about American Idol.
Movies on DVD cost about USD 20 (new releases), older movies are sold at far cheaper prices. On VCD one can buy a movie for a few dollars.
The above prices are for the official media, not for the pirated ones. Those are far cheaper.
Still I think US$10 for a CD is overpriced. Pirated CD's are selling for well under USD 1 each. So that is a $9.something mark-up for what? Recording and artist's share?
Both pirated CD's and official CD's have to be manufactured and distributed. That incurs costs that are independent of the content. The only difference is the actual recording and the marketing. Even the shops selling pirated disks are in the same expensive locations as the official outlets, so even there is no difference: they both have to make the same profit to survive. Both shop's suppliers have to run their trucks and pay their drivers and workers and run their CD/DVD machines.
Official releases have better quality CD (technical: play guaranteed, last longer than a few years) and come in jewel case instead of paper sleeve. That may add $0.20-0.30 to manufacturing. Even when selling at USD 2.50 each the label should be able to make a USD 1.00 gross profit on each. And at that price level it becomes vending machine material, and volume may skyrocket due to all those impulse buys. Sell a million disks, make a million in gross profit. If a million dollars is not enough to cover recording, marketing, and a fat profit, then you're doing something terribly wrong.
Doesn't this just imply collusion, when we have executives at other companies "annoyed" when UMG lowers prices? What right do they have to tell UMG what prices to set?
If the other music groups complain or retaliate in any way, doesn't that constitute illegal price fixing?
Welcome to the 21st century. *cough*
Am I the only one that read that and said "Oh, so the album CDs will still be 25 bucks?"
Even when selling at USD 2.50 each the label should be able to make a USD 1.00 gross profit on each.
The songwriter (who is often not the recording artist) would disagree with that. The US copyright royalty board has set a statutory rate of about 9 cents per track split between the songwriter and his music publisher, tied to the Consumer Price Index.
Do they mean like a regular album? Did they ever release singles that are the equivalent of 45rpm records? Don't look at me like that.
Did they ever release a single song CD to promote the song as a single? Maybe that partly explains why they missed the boat. They were saying buy the whole thing, can't have just a taste for under $5. Hello, anybody home. This is the 80s calling, we want our business model back.
Every time the price of music comes up, I read dozens of comments that say, in a nutshell, that the music industry 'doesn't get it'. And yet, they're still up to their necks in money. While the music industry (and the film industry) seem to be doing everything in their power to resist the onslaught of the internet, their continued profits would argue that their resistance is not exactly futile.
What's a CD? Some sort of offline backup of the originally seeded songs?
'The tyrant will always find pretext for his tyranny.' - Aesop's Fables
If artists make 13 times more money on CDs than they do on itunes, what does that tell you about efficiencies in the music marketplace?
Nothing.
To judge efficiencies, I’d have to also know how many CDs were sold vs. how many digital downloads were sold.
Alexander Peter Kristopeit bought his basement from his mommy for one dollar.
CD's priced at $9.99, $8.99, $7.99, $6.99, and $5.99 would sell a lot better.
I remember MP3s. They made a nice way to conveniently transport your music until they were first replaced by better lossy formats, and then made obsolete by lossless formats that take advantage of the abundance of cheap storage.
Do what thou wilt shall be the whole of the Law
There are quite a few artists whose new albums I want to pay $20 for. The majority however is cheap cookie-cutter crap.
what is the price of buggy whips nowadays?
Quidquid latine dictum sit, altum sonatur.
Weird Al Yankovic stated that he was happy for either avenue his customers used to buy music, but his take per track on iTunes was about two cents a track and his take on CDs was about 26 cents- which is pretty major if you want to support the artist.
Of course, if you're buying tracks off the CDs they don't make any more, it's the difference between some profit and none.
Former US House candidate, TN-5
I buy about 100-150 CDs each year, and the only ones which come shrink wrapped are local bands who self-publish. The rest of my CDs all come used -- local shops, eBay, amazon, GoodWill, friends, whatever. I've got a long list of music I'd like to own, and I'm in no hurry to buy any particular album, so I rarely pay more than $3 for a CD (including shipping). Since I listen to music from mp3 files 100% of the time, a slightly damaged jewel case or booklet doesn't matter to me.
It costs me less to own more, I'm not giving any money to the MPAA, and I'm not involved in creating more plastic waste -- we Americans own enough crap already. If this helps depress the price of used CDs too, that's ab-fab!
Support a few technologists in Washington.
Archive to FLAC and put it away for storage, like I do with all my cd's. With a proper lossless archive like FLAC, you forever have the option to convert to any lossy format you chose, for a perfect "first generation" copy. On your main computer, of course, you can just load the entire FLAC archive into your music player and play off that.
Why mess around with buying mp3's when you can get the real thing? I keep a running list of albums I might want to buy, and every few months I order a batch of about 10 used cd's from a used cd store like this. It's not hard to choose between $5 for the real deal and $10 for mp3's (which, no matter how good the sound quality, can never be bit-for-bit identical to the original WAV files on the original disc).
I see this as a really important shift.
Previously, the CD was the premium format, with all it's uncompressed audio glory. And it is fairly portable, playable in most consumer electronic devices found in the living room or car.
The MP3/AAC format was the discount format. Compressed with some audio loss, and playable in less devices. Also encumbered in some cases with DRM.
The premium format carried a 50% markup, with most MP3 albums costing around $10, and CD's costing around $15.
With CD's potentially costing LESS than MP3/AAC formats, this signifies the market is placing premium on the MP3/AAC format over the CD. This could be because the format is now supported in more devices, or consumers find it friendlier to deal with, perhaps because there's no need to fight the packaging then burn it on your own.
That's not the worst.
What about things like 40 y.o. Beatles albums? Wasn't everyone paid properly already?
Perhaps not... I mean, it seems that Paul McCartney is still unable to afford buying meat, after all those years!
Except for the DRM, which Mr. Jobs has mostly figured out, physical media has no reason to exist. It's a shame that the most popular formats are so compressed, but that will improve with more bandwidth and Moore's law. Ultimately, the quality of your DAC and transducers (i.e. speakers) determines the quality of your playback level. Vinyl has a certain appealing sound characteristic when enough money is spent on the playback but will never become mainstream again, relegated to hobby status.
I hate being bipolar; it's awesome!
It tells nothing about the efficiencies in the music marketplace. It tells a lot about music labels contracts, though.
$0.09 for royalties
A CD usually has more than one song on it. For a 12-song album, this would be $1.08. So we're left with $4.80, and as NeoSkandranon alluded, some of this is spent on producing promotional short films and buying 4-minute ad slots on radio stations in major markets.
I'm usually more of a singles person than an album person.
Noooooooooooooooo...don't say that here, you'll just summon a horde of incredibly annoying self-annointed music geeks who will annoy us all by explaining how for the bands THEY like the whole album is good. If you're unlucky you'll get a few links to a bunch of truly awful whiny hipster bands with ironic band names who all sound pretty much the same, like they first picked up their instruments yesterday.
From what I've been seeing, I've noted that a number of musicians that I listen to have gone to a "pay what you want" price for their CDs. They used to sell them for $15 a pop, but have switched to "There's a pile of CDs in the back of the room. Pay what you can, I suggest $15" model.
Of course, these are small-time artists in the independent world, so they have the flexibility to set their own prices.
One of the performers doing this has said that he is making more of a profit every night because more people are giving something. (Granted, the profit margin is smaller, but he's making it up in volume.)
--You will rephrase your request for me to go to hell. Goto statements are not acceptable programming constructs
It's not really clear by the sumamry if they mean single CDs as in a "single" (1-3 songs promoting the "big" song on the album) or single as in one disk in the case, as opposd to a 2 disk set
UMG to price new CDs Under $10
Single CDs will have the suggested list prices of $10, $9, $8, ...
Which of these prices do you think will be most common? Kind of like how iTunes just had tons of those $0.69 songs.
Or too little too late. Even if the record companies had reduced CD prices to more reasonable levels 10 years ago, I don't think things would be much different today. I haven't listened to a CD in a long time. Why would I want to be constantly shuffling CDs in an out of a CD player when I can rip everything to my hard drive or MP3 player and have hundreds of hours of music easily availble. Things have changed. Just as nobody uses 8-Track tapes anymore, the use of physical media is declining.
CDs are the new buggy whips.
I read that to mean an album that is on a single CD. Albums that span more than one disk, or are bundled with extra content, will still be a premium product.
I use irony whenever I can, but my shirts are still wrinkled...
Though it may be too late to save the industry, I'll buy some at the lower price points just to get the point across that price has been a major factor. When CDs first came out, they were around $15, and I remember all the talking heads noting how much cheaper they would be to produce once volumes were high enough. Well, volume went up, but so did prices. I'm going to vote with my pocketbook, and will hopefully send a message.
I use irony whenever I can, but my shirts are still wrinkled...
For my brother who is about 10 years younger than me, gaining new music was a trivial matter. Click > Click > Wait > Enjoy. All it costs him is the time it takes to start the download and space on a hard drive.
Back in my day all we had for fun was a cliff and we had to buy or steal CDs. Do chores > Get allowance > take 45m train ride > find CD > come home > enjoy. Buying A meant not getting B (yet). If i didn't like A, i was still out the money. For me it was a big deal, a decision rather than a mere choice.
i wonder how this colored the significance of music for us. i don't know what it means or if it means anything at all. From my perspective it seems considerable. When you essentially have all the music ever made on your hard drive or a download away... it seems more disposable. It's a bundle of file and folder names. i look at my 300+ CDs and can almost feel what they cost me, i know when and where i bought them, i know what it feels like to move that damn shelf, the feeling of the case being cracked and the annoyance of the music skipping because the slot feeder has damaged it.
Anyone else thinking about this sort of thing. /ties another onion to his belt
Utilizing the synergization of benchmark e-solutions to pre-workaround action items!
I wonder whether it will turn out that these CDs have subpar track counts and playing time.
In the very early days of CDs it was common for a CD to have the same tracks and playing time as its LP counterpart--about forty minutes, tops. The days of the 72-minute de facto standard didn't come until much later.
"How to Do Nothing," kids activities, back in print!
Piracy works for the good of most! Thanks, Bram Cohen! Not that I condone or would ever steal anyone's IP.
Damping absorbs vibrations. Dampening is caused by moisture.
I've been asking for this for a LONG time. I'm one of those audio snobs that wants the highest possible quality for his music. I don't like 128k or 192k mp3s. I want a CD and a hifi sound system in my car and at home. I love buying CDs, but given you can't return it if you don't like it and you can't really listen to it in the store before you check out, I think $6.99 is my sweet spot for the impulse buy.
Better late than never UMG.
What does the fact that a $15-20 charge on a piece of plastic that costs $0.30 to make and provides $0.26 to the artist tell you?
Two of my imaginary friends reproduced once
Yea, everyone's on the lossless format bandwagon now. It's so nice to be rid of mp3s.
to mutate and pervert a woody allen quote:
"you're a music company. if you want to sell more records, make better music."
Here in Germany they still expect me to pay 13-16 euro for most new cds. Mind you according to Google, that's 17,65$ to 21,65$...
And they seem honestly surprised why I'm not willing to pay that much...
Go see a band at a nightclub. It's not unusual for locals at the "CD release party" to give the CD away for free (well, subsidized by their potion of the door charge). Selling CDs for $5 or $10 is most typical. I've seen as high as $12 by touring bands, but they have fuel expenses and that's the top end of the spectrum.
Sounds like UMG is just adjusting to what's normal and expected. The market already told 'em, years ago, that an average of under $10 is the right price.
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
One interesting question is whether the $10 disks would be proper CDs, capable of having the trademarked Compact Disc Digital Audio logo, or whether they'd be bastardized pseudo CDs with weirdo copy protection (and ergo NOT authorized to have the Compact Disc Digital Audio logo), which don't play in lots of devices. The invisible cost of nonstandard disks would make them quite unattractive to many.
Those who can make you believe absurdities can make you commit atrocities. - Voltaire
The real issue that musicians and the companies fail to realize is that it's dirt cheap to set up a decent recording studio these days and even cheaper to pay for the bandwidth to distribute the product. For that matter the band can burn you a disc and mail it for less than $10.
Sony did this already but the problem is that while they lowered the list price substantially, they only lowered the actual wholesale cost a tiny bit so a CD that has a list price of 9.99 actually costs the retailer 8.69. The upshot is that nobody can stay in business by selling these CDs at or below the list price. The record store I manage has to sell the 9.99 list price Sony CDs at 12.99 to make enough money to justify carrying them. Other record companies, when they set the list price at 10 bucks, set the wholesale cost at somewhere between 6 and 7 bucks, which is fair and reasonable. Sony basically just changed their list prices without changing the wholesale prices so they could claim that they responded to customers complaints about pricing, while forcing retailers to either price things above list price and look like they are the ones screwing the customer, or not carry them at all. Hopefully UMG isn't going to be following this pattern of behavior, and will let retailers actually carry and sell their releases for a fair price.
I find that I'm buying mre DVDs butusually it's the DVDs that are in the bin that are between $5-12, they're old but they're good. It would be the same for cds but I find I don't really even download anymore. I have a nice collection of music I like and haven't found anything that's come out in the last few years that really interests me beyond the occational listen on the radio.
It will work, but the music industry as a whole just needs to step up the quality of music being made.
... until they let me mail in my gas and parking receipt and get reimbursed for the trip to the b&m.
The multiple references to "burning" an already "burned" CD clearly shouts that people really forgot how CDs work.
Time to move on with Mp3 and probably in future get a better format, not travel back to CD and Vinyl.
-- It is the mark of an educated mind to be able to entertain a thought without accepting it. -- Aristotle
Not even the youngest generation. Napster took off about 11 years ago. Many kids just graduating college and entering the workforce probably never bought a CD during their teenage years.
Anyone else remember when CDs first came out they were 12.99. People wanted to know why something that cost less to produce than a cassette tape cost more to purchase, and the industry was promising that prices would drop to 10 or below after they paid for the new manufacturing setups?
Yeah. F-You recording industry. Making enemies of your customers is what brought you to where you are today. I will dance happily on your grave.
Were they these silvery disks from the last millennium?
I don’t have a player or even a drive for those anymore. Seriously. Does anyone still buy those?
Any sufficiently advanced intelligence is indistinguishable from stupidity.
Why on earth do you guys call "burn" to the process of "un-burning" media from a CD??
Depending on what crap they put on the CD's i might buy it, but seeing what crap there's out there, i'm not holding my breath. (just google brokencyde if you want a lobotomy)
I'll make sure to support UMG more than the other twats. I do like to still buy CDs because I can convert them to MP3, OGG or whatever and have a back-up straight away. When I don't buy CDs, I go for Amazon which has the best digital system so far.
Have you tried to by a CD player lately. My last look for one turned up about 3 in the shop, compared to about 30 MP3 docks. If you can't buy the hardware to play the things why would you buy them?
... "We don't expect to make any more money on CDs than we did before they became affordable because we've slashed the floor space devoted to CDs to the bone and nobody goes into that part of the store anymore. At least those that're even able to find where we've hidden it. Besides, we already make a lot more on crappy over-priced, replacement earpods that break in a couple of months than we expect to make on CDs. So we'll be devoting a lot more space to those products than we will for CDs."
CUR ALLOC 20195.....5804M
26 cents per track. Perhaps I didn't make it clear.