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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.
...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.
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!
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.
If the other music groups complain or retaliate in any way, doesn't that constitute illegal price fixing?
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.