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Thursday, September 04, 2003

CD Prices on the Way Down?

Returning to a theme I posted on earlier in the week, now it seems the price of CD's is coming down. About time, but there may be more to come, and, in the long run, the physical may be dead here:

attered by online piracy, the Universal Music Group, the world's largest record company, said yesterday that it would cut prices on compact discs by as much as 30 percent in an aggressive attempt to lure consumers back into record stores. The deep price cut — the only one to apply to new CD's since the format was introduced in the early 1980's — represents a gamble by Universal that more consumers will buy more CD's once the price dips below $13. It also reflects the profound degree to which Internet file-trading has managed to undermine the music business, Universal executives said.

"We are in the middle of a terrible situation where our music is being stolen," said Doug Morris, chairman of Universal, which includes labels like A&M and Island Def Jam and artists like Eminem, Elton John and U2. "We need to invigorate the market, and as an industry leader we felt we had to be bold and make a move." Under the new pricing scheme, Universal would lower its wholesale price on a CD to $9.09 from $12.02. The company said it expected retail stores to lower CD prices to $12.98, from the $16.98 to $18.98 they now charge, and perhaps to as low as $10. When CD's first arrived on the market they cost $15.98, and have climbed from there.

The result could be a broadening of the music market, which has contracted as prices have increased. Music consumers have complained for years that CD prices are too high, and many people who copy music online without paying for it cite high prices as the main reason. "Music is not supposed to be an elitist product," said Josh Bernoff, an analyst at Forrester Research. "We're not talking about Lexus here. It's better to have more people buying music at a lower price than to have it priced out of the market."
Source: New York Times

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