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Universal Music cuts CD prices to $10 max

Posted at 19 March 2010 14:02 CEST by Jared Newman

Starting next month, music fans will rarely pay more than $10 for a CD published by Universal Music Group.

The record label announced that it will test across-the-board price cuts for the rest of the year, selling CDs for suggested prices of $6 to $10, Billboard reports. The lower prices will even apply to new releases, though there will be some exceptions. Jim Urie, UMG’s distribution president and chief executive, said he hopes the price cuts will give CD sales a much-needed boost.

Though the so-called “Velocity” program is a trial run, it just might work. Trans World Entertainment, which operates FYE and other retail stores, recently began testing the $10 CD model at 100 stores. Sales doubled, and that’s partly why UMG is trying out lower prices.

But so far, UMG is going it alone, as other major labels question the decision. Billboard says some executives were “annoyed” with the move, and others are nervous. Said one unnamed major label executive: “Why does Universal feel the need to get below $10?”

At the risk of sounding silly, I’m reminded of the story behind Subway’s $5 foot-long sandwiches. It started when one franchisee in Florida tested the idea on a slow weekend, and sales suddenly went through the roof. But for a while, Subway executives scoffed at the idea, failing to see how a lower profit margin would result in bigger profits. Of course, you know the rest: Subway eventually tried the campaign nationwide, it became a huge success, and other fast food chains had to scramble to offer their own cheap deals. So, why does Universal feel the need to go below $10? Because it works.

It’s not as if the move has no precedent. Full albums typically sell for $10 on iTunes, and with people increasingly relying on MP3s for their computers and portable devices, it’s tough for CDs to complete. Yes, CDs carry extra costs, such as packaging and distribution, but those are small prices to pay if labels can get consumers to spend $10 on an entire album instead of $1 on a single song.

I applaud UMG’s decision, because I actually still enjoy the concept of a whole album and prefer to have a lossless copy of my music stored away. If UMG finds success with this test, other labels will have to wake up and follow along.

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There are 6 comments

DukeNukem
MyCE Resident Commenter
Posted on: 19 Mar 10 14:16
    “Why does Universal feel the need to get below $10?”

    To stay in business, ya dumb turd. It's about time someone figured this out. It should have happened 5 years ago. Now if we can get DVDs to $10 for new releases I would expect a HUGE drop in illegal downloading. I think most people prefer physical media over having it on their HDD.

    If there's anyone still visiting this site, please feel free to add your 2 cents.

    Anyone? Hello?

    Bueller...
    redk9258
    MyCE Junior Member
    Posted on: 19 Mar 10 15:16
      $10 is reasonable for a new release. Now if they would start mastering the CDs without maximum volume and destroying the sound quality, I might start buying them again. Hell, they could re-remaster them with all of the dynamic range in the original recording and label it "True Sound" or something.

      Oh and another thing, stop with the cheap, crappy packaging. Use plastic jewel boxes! I won't buy a CD in digi-pak packaging.
      Zod
      MyCE Resident
      Posted on: 19 Mar 10 16:34
        if dvd's cost 15 or less.. and thats for a 100 million dollar budget movie, and a cd's the same price, something is wrong.

        I think it makes sense to drop the price of cd's.

        If they do stuff like this with online music as well.. like 99 cents a track, or 9.99 for the whole cd. it might help.

        dvd's have been dropping in price alot though.. 10 dollars might not be enough.
        SithTracy
        MyCE Senior Member
        Posted on: 21 Mar 10 01:36
          I might be more inclined to purchase a CD for 10 bucks (or less) for a band or song I heard once and sort of liked to see if the rest is worth it.... Basically, I am reluctant to spend 15+ for one song and I don't usually purchase singles from the iTunes (or equivalent) store. I think another thing that started this is the Wal-Mart exclusive that AC/DC, Kiss, and Miley Cirus (I have two girls... ugh). I hate Wal-mart, but as a KISS fan, I had to go in that darn store to get a two disc + DVD for $12... that was a pretty good deal (too bad the CD gets little play and was average at best). I don't like to see stuff be store exclusive. I don't think Wal-Mart is the lone culprit... Target and Best Buy have some of the same stuff going on.

          A DVD/Blu-Ray movie should really not cost more than a single movie ticket... Honestly, how often do we replay DVD's as apposed to CD's (well... the music obtained from a CD)... I rip everything for a portable player or the car for the commute. Truth be told I am one that would prefer movie/music data be streamed/stored to hard disc, but that is a little ways off for mainstream. Most people like something they can hold in their hands.
          Blu-rayFreak
          MyCE Resident
          Posted on: 21 Mar 10 16:33
            I'd definitely be more inclined to buy a music CD at $10. I always thought paying $20 for a CD was too expensive, and it looks like Universal Music has finally figured that out...
            DukeNukem
            MyCE Resident Commenter
            Posted on: 22 Mar 10 17:49
              Now, if they can get all Blu-ray movies down to under $15 then I'd get on board.
              ____________________________________
              A Life? Cool! Where can I download one of those?

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