Universal to slash US CD prices

Prices cut by up to 31 per cent

By Tony Smith, 4th September 2003

'Top five' music label Universal Music Group (UMG) is to slash CD prices by up to 31.5 per cent in the US in a bid to persuade punters to start buying them again, the company said yesterday.

The price cut will come next month. Wholesale prices will be reduced "significantly", the company said, to ensure store prices of around $13, down from the $17, $18 and $19 price bands full-price discs current retail for in the US.

Stores will still be able to set their own pricing - potentially using the reduction in wholesale prices to boost their own margins - but competition should prevent that from becoming a widespread practice.

UMG said it will boost its advertising spend to help let music buyers know what new albums are on offer.

The move is clearly intended to persuade listeners to come back to record stores rather than download songs from the Internet. But equally it's about trying to win back buyers who'd rather spend money on a DVD or computer game, which are increasingly being perceived by consumers as offering better value for money than CDs do.

As far as piracy goes, UMG is clearly taking the advice of the Malaysian government, which a few months back told CD and DVD makers to cut their prices if they wanted consumers to choose official product over illegal copies.

Will the other labels follows suit? Since there's little direct competition between them - artists sign to specific labels, after all - there's no need for EMI, BMG, Warner and Sony to match UMG's new pricing, but we're sure they'll be watching to see the effect on sales of UMG product. ®

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