Major retailers such as Wal-Mart, Best Buy and Circuit City are selling some new releases for less than $10, a price not seen consistently in a decade.
Universal Music Group, the world’s biggest music company with artists such as Eminem (news – web sites), Shania Twain and Jay-Z, has cut wholesale and suggested list prices on most new releases by 24% to 31% for retailers who agree to certain conditions.
But holiday shoppers will need to check around to get the best deals, because prices are still all over the map. Consumers can find a $6 price difference on the same CD. The lowest prices are often limited to promotion periods, before they’re jacked up. Many niche, classic or classical CDs are still listed as high as $18.99. The lowest CD prices are found online, before shipping and handling; the highest are often at bookstores.
The online-piracy-ravaged music business needs to woo music fans back into stores – particularly now. The holiday season generated a third of the U.S. music industry’s $12.6 billion in sales last year.
Music executives blame rampant piracy and file sharing across “peer-to-peer” networks, such as Kazaa, for a staggering 31% sales drop in the last three years. Piracy now costs artists and record labels $700 million per year, according to Forrester Research, and the industry has started suing individual users who share files.
But lost in the furor about piracy is the fact that many consumers are buying less music because they believe CD prices are too high. Some have shifted their entertainment dollars to competitors, such as DVDs and video games.
“Many consumers perceive CDs as less valuable than they used to be,” says Josh Bernoff, music analyst for Forrester Research. “They’re livid over having to pay $18 for a CD with only two good tracks.”
James Larson, manager of the independent Sounds music store in Manhattan’s Greenwich Village neighborhood, thinks a move toward lower prices is overdue. “A lot of customers are coming in and asking about it (Universal’s plan),” he says. “There’s no reason why CDs should be $20; that’s ridiculous. This will deter them from burning” (their own CDs).
Thanks in part to the UMG program, bargain hunters have been able to find Jay-Z’s million-seller, The Black Album, for as little as $9.99 on sale at Circuit City. Other releases, such as Bon Jovi’s This Left Feels Right, Sheryl Crow’s The Very Best of Sheryl Crow and Ludacris’ Chicken N’ Beer have sold for as little as $9.88 at Wal-Mart and $9.99 at Best Buy and Tower. When they revert to non-promotional, everyday prices, these CDs typically sell for $11.99 to $13.99.
Shoppers have not seen the magic number of $9.99 this often since the price wars of the early 1990s, music experts say. The number of units selling for less than $10 has almost doubled, to nearly 9% in October vs. 5% in the fourth quarter of 2001, according to music tracker Russ Crupnick of NPD MusicWatch
“There’s a lot of action in pricing from retail. There’s more records on sale for $9.99,” notes Alain Levy, chief executive of EMI Music.
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