Proposes five-tiered pricing plan that would allow it to sell albums at even lower prices and require the labels to bear more of the costs.The world's largest music retailer has more bad news for the music industry and this time it's that it's demanding a five-tiered pricing plan similar to the one it currently has with DVDs. Some speculate that it will remove music entirely if they refuse. Already suffering from slumping physical CD sales and ever present illegal file-sharing, the news comes at a difficult time for an industry trying to stay afloat. But, it will be a difficult choice considering that Wal-Mart comprises some 20% of the domestic music market. "The decision might come down to: Do we give up 20 percent of our business (i.e., Wal-Mart) in order to not lose the entire business?" says one music exec. The Wal-Mart proposal consists of a promotional program that could comprise the top 15 to 20 hottest titles, each at $10. The rest of the pricing structure would apparently have hits and current titles retailing for $12, top catalog at $9, midline catalog at $7 and budget product at $5. The move would also shift the store's pricing from its $9.88 and $13.88 model to rounder sales prices. The reason for the move is that slumping CD sales have forced Wal-Mart to recognize the reality that the music industry seems unwilling to face - the music biz is changing. "When you look at sales declines with physical product, and you have a category declining like it is, you have to make decisions about what the future looks like," said Wal-Mart's Jeff Maas, divisional merchandise manager for home entertainment. "If you have a business that is declining and you want to turn it around, it really takes looking at it from all angles." He cited DVDs as a model for tiered pricing. "(It) has been around for years and has worked very well," he said. One music label executive said that "This sounds like the Hail Mary pass, and if it doesn't work, they could be out of the music business; or maybe they reduce music down to a couple of racks" from the 4,000 titles carried by Wal-Marts with larger selections." One thing's for sure, and that's that the music industry, whether it likes it or not, may be forced to embrace the future of music distribution whether it likes it or not. With illegal file-sharing as rampant as they claim you'd think they'd be interested in increasing demand for physical CDs vis a vis cheaper prices. I guess not. Maybe Wal-Mart's not such a bad guy after all. [Via AP] |
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No, its a business move. When you have a product way overpriced its phased out to a degree or disounted to spurr sales.
Was being sarcastic. Just love it when the RIAA is forced to eat more crow.