Universal Music Label get a clue

Sales of physical albums have steadily decreased over the past half decade, and now one major label is hoping to stem the decline by adopting a daring new strategy: lowering the price of CDs. Universal Music Group has revealed a plan to reduce the wholesale cost of their albums in order to decrease the retail price of single-disc albums to $10 or less, Billboard.biz reports. Under the new plan, sales of CDs will only boast a 25 percent profit margin, but UMG hopes the increase of CD sales volume will help reinvigorate their revenues.
While some may deem UMG’s strategy as “too little, too late,” the move does put the price of physical discs in line with what digital music services like iTunes charge for full album downloads, making physical discs a more attractive option. “We think it will really bring new life into the physical format,” Universal Music Group Distribution president/CEO Jim Urie said. UMG revealed that they plan on selling more deluxe editions of albums, however those discs will carry a higher price tag.
While retailers are applauding the move, Billboard.biz writes that the other major labels aren’t too pleased with UMG’s price shift. “Why does Universal feel the need to get below $10?,” a distributor at a competing major wondered. However, there is precedent for UMG believing their new strategy will work: When Trans World Entertainment, who runs music stores like f.y.e. and Wherehouse Music, tested out a $9.99 price plan, CD sales jumped 100 percent.

SMART move. This had needed to be done for a loooooooooong time. I hope it works

I hope it works!

but it is a little late in the game...

That maybe true TZ, but if FYE's success proves anything is if you give people a good and fair price for CD's they will buy the physical product. I agree with both you and rex they should have done this years ago, now alot of their potential customers have gotten out of the habit of buying CD's but who knows this may stop some of the bleeding.

Sounds like a good idea (though one that comes way later than it should've)... so exactly what labels fall under the "Universal Music Group" umbrella? There were so many label mergers back in the early '00s that I've kinda lost track.

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but who knows this may stop some of the bleeding.

If it slows down the "disappearance" of cd's then i'm all for it.

Excellent idea ! Most cds I've seen as brand new are right around $17.99 or so.I can't even remember when I was willing to pay that much for new music (I'd wait til I could get a used one on the cheap). Now, that's almost a 2 for 1 deal. Hopefully it's successful and everyone else will follow suit.

Fat Freddy wrote:

Sounds like a good idea (though one that comes way later than it should've)... so exactly what labels fall under the "Universal Music Group" umbrella? There were so many label mergers back in the early '00s that I've kinda lost track.

I have no idea, like you said labels started merging etc in rapid numbers during the last ten years.

I think its a good plan

007 wrote:

Excellent idea ! Most cds I've seen as brand new are right around $17.99 or so.

Which is ridiculous, especially when it comes to back-catalog stuff that's been around for years and years. A few months back I was in an F.Y.E. (unfortunately, it was not one of the stores using the experimental $9.99-for-everything pricing plan mentioned in this article) and as we looked thru the stacks we even remarked to each other, "Who the hell is dumb enough to pay $18.99 for KILL'EM ALL or RIDE THE LIGHTNING after all these years??"

....and where will the public find these discs? There aren't any music stores left...and the music sections is places like Wal-Mart and Target are a joke.

If they had done this around 2003 when iTunes was really taking off I think it would have made a significant impact. They didn't, the retail stores died off because of it...

Of course people shop online, that's a given, but sometimes in our "instant gratification culture" they might prefer to get something new to listen to immediately (download) instead of waiting for the physical product to ship.

Lowering the cost could slow things down a little, but I think the forward momentum is heading downhill too fast for it to have any significant impact.

detuned wrote:

....and where will the public find these discs? There aren't any music stores left...and the music sections is places like Wal-Mart and Target are a joke.

If they had done this around 2003 when iTunes was really taking off I think it would have made a significant impact. They didn't, the retail stores died off because of it...

Of course people shop online, that's a given, but sometimes in our "instant gratification culture" they might prefer to get something new to listen to immediately (download) instead of waiting for the physical product to ship.

Lowering the cost could slow things down a little, but I think the forward momentum is heading downhill too fast for it to have any significant impact.

Yeesh, way to go, Captain Bringdown. Though seriously, I agree with you... this move is like closing the barn doors after the horses have all run off, so to speak.

Anyway, if anybody's curious about how many labels fall under the UMG umbrella (like I was) our good friends at Wikipedia have provided a lengthy list herein:
http://en.wikipedia.org/wiki/List_of_Universal_Music_Group_labels

You maybe right detuned and I am convienced you are right if they had changed their pricing structure in 2003 they would not be facing the disaster that they created.

But the demand for music is greater than it has ever been, ipods, Guitar Hero, etc, the need for people to own things, may translate to desire to own a physical CD. Like you stated detuned it may be the case of a little too little too late. We have a whole generation of consumers who never got into the habit of buying CD's and feel that they are entitled to get their music for free. Again if record labels had done what movie studios did with DVD's, the major movie studios did not stubbornly hold on to higher prices to sell DVD's and record labels should have followed suite.

Coincidentally, "The Onion" just posted this story which ties nicely into this discussion.

REPORT: MUSIC INDUSTRY MADE $18 IN 2009

NEW YORK - The Recording Industry of America announced Tuesday that the combined revenue brought in by Warner, Sony, EMI, Universal, and countless independent labels in 2009 totaled $18. "The music industry is back," RIAA representative Doug Fowley said. "Not only was Kenny Chesney's Greatest Hits CD purchased at a Knoxville, TN Borders for $12.99, but we also had two songs downloaded through iTunes, and our ringtone sales reached three." Fowley added that as long as no one returns or exchanges the CD, the music industry would continue to be a vital and creative force in American culture.

Cheaper CDs will bad for the resale value of my collection...

...but great for expanding it.

Here's hoping.

Troublezone wrote:

Quote :

but who knows this may stop some of the bleeding.

If it slows down the "disappearance" of cd's then i'm all for it.

me too. I am tired of paying a ton of money for one cd.

Looking on Wikipedia for artists that are apart of UMG, there aren't many metal bands on the label. Of course, it is Wikipedia, and I did rush through the list. However, if it causes other labels to follow suit, then I'm for it.

I like this, but like it's already been said: too little, too late. Unless you hit a big box store, CD haves been hovering close for $20 for 15 years or more now, it's ridiculous that the price has never budged. I never understood why labels have stood defiant with high prices in the face of low digital prices and piracy.

Metal Misfit wrote:

I like this, but like it's already been said: too little, too late. Unless you hit a big box store, CD haves been hovering close for $20 for 15 years or more now, it's ridiculous that the price has never budged. I never understood why labels have stood defiant with high prices in the face of low digital prices and piracy.

because they are starting to realize the people who actually buy the music are us old guys...

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....and where will the public find these discs? There aren't any music stores left...

There is still F.Y.E. and the possibility of new stores opening or Tower coming back after the economy is back to normal... There are still some mom and pop independent stores around if you live in a big city.

Now that i think of it... maybe the "green/enviromental" movement may be behind the downfall of physical cd's. They started with that cardboard crap packaging and now they want everyone to download to eliminate the use of paper and plastic.

I heard there may be plans to eliminate newspapers as well.

Troublezone wrote:

I heard there may be plans to eliminate newspapers as well.

Don't say that. I work for a frickin' newspaper, and I'm too old to learn a new trade.

Troublezone wrote:

Now that i think of it... maybe the "green/enviromental" movement may be behind the downfall of physical cd's. They started with that cardboard crap packaging and now they want everyone to download to eliminate the use of paper and plastic.

I heard there may be plans to eliminate newspapers as well.

It's getting outa hand, really.

Oh and hopefully this will bring back/bring in a few record stores. I miss being able to rumage for CD's to buy.

Fat Freddy wrote:

Troublezone wrote:

I heard there may be plans to eliminate newspapers as well.

Don't say that. I work for a frickin' newspaper, and I'm too old to learn a new trade.

It's something i read a while back. Hopefully it doesn't happen anytime soon.