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UMG To Price New CDs Under $10 362

Posted by kdawson
from the too-little-too-late dept.
marmoset writes "Perhaps a decade late, Universal Music Group has decided to try out sub-$10 CD pricing in the US. 'Beginning in the second quarter and continuing through most of the year, the company's Velocity program will test lower CD prices. Single CDs will have the suggested list prices of $10, $9, $8, $7 and $6.'" CD retailers are not convinced the price cuts will work out. For one thing it depends on whether other major labels follow suit, but the article notes that "executives at the other majors were nervous about the UMG move" and "privately, some appeared annoyed."
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UMG To Price New CDs Under $10

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  • I Am Shocked! (Score:5, Insightful)

    by eldavojohn (898314) * <eldavojohn@gmFREEBSDail.com minus bsd> on Friday March 19, 2010 @10:18AM (#31536716) Journal

    the article notes that "executives at the other majors were nervous about the UMG move" and "privately, some appeared annoyed."

    You don't say. You mean to tell me that they might have to price their music competitively? That they might have to take a pay cut in order to compete in the market? That their 'silent agreement [slashdot.org]' of what all music should cost among the biggest labels is no more?

    Music record contracts really annoy me in this respect. They are nothing but middlemen when it comes to publishing music. I understand their role in promoting and paying upfront cash for studio time but their role as publishers is leech at best.

    If bands had the ability to pit manufacturers against each other in publishing their CDs and albums (and also if the band could decide what percentage they needed from sales) then we would see prices dramatically plummet. Look at CDBaby and think how inexpensive it could get if that kind of market was where we bought all our CDs. And in a capitalistic world, that's how it is supposed to work. But no, acts have contracts and the most popular acts love how the labels shove only those acts down our throats. The music industry is a sorry state right now and rarely do we hear news like this. At least UMG appears to be slowly realizing that it's adapt-or-die time.

    • Re:I Am Shocked! (Score:4, Insightful)

      by Registered Coward v2 (447531) on Friday March 19, 2010 @10:38AM (#31537254)

      If bands had the ability to pit manufacturers against each other in publishing their CDs and albums (and also if the band could decide what percentage they needed from sales) then we would see prices dramatically plummet. Look at CDBaby and think how inexpensive it could get if that kind of market was where we bought all our CDs. And in a capitalistic world, that's how it is supposed to work. But no, acts have contracts and the most popular acts love how the labels shove only those acts down our throats. The music industry is a sorry state right now and rarely do we hear news like this. At least UMG appears to be slowly realizing that it's adapt-or-die time.

      We'll bands do have the ability to do that - it's just that an unknown band has to decide - do it myself or go with a label that may turn me into a hit? Most decide the later.

      I'm not surprised that they are revising their pricing model - CD sales in the US are still significant (65% of sales) and with WalMart selling the highest share at 20% and driving pricing down to less than $10/Cd anyway all they are doing is giving in to the inevitable.

      • Re:I Am Shocked! (Score:5, Interesting)

        by Rich0 (548339) on Friday March 19, 2010 @03:10PM (#31542200) Homepage

        Well bands do have the ability to do that - it's just that an unknown band has to decide - do it myself or go with a label that may turn me into a hit? Most decide the later.

        I don't think it is just whether the label turns the band into a hit. There is also what I'd call risk equalization.

        If you strike out on your own the business model is simple. Either you lose a fair amount of money (whatever you spent on promotion/production/etc), or you strike it enormously rich (probably slowly since you won't have much capital). 99.99999% of the time you lose the fair amount of money.

        If you sign with a record label the business model is also simple. You will not lose any money under any circumstances. You will definitely get to keep your advance, which for a 20-year-old artist is a fair chunk of cash. Most likely that will be the end of it, but there is a modest chance that you could make a little more money, and a very very small change that you'll be a mega hit and outlast your contract and be able to be super-rich.

        Essentially record labels take money from the people who are hits and spread it out among those who don't become hits (while keeping 90% of the money for themselves). They also take all the risk - they're the only ones putting out hard cash.

        For a new band they have the choice of making taking a $100k advance RIGHT NOW, or seeing how many CDs they can sell on their own - without serious promotion. Making even $100k selling CDs on your own is EXTREMELY difficult - especially without any capital investments. Sure, signing the deal means that you could end up getting $120k instead of $25M, but most likely it means you'll get $100k instead of ending up with a crate full of CDs and T-Shirts that you can't sell while you work at the pizza place down the street.

        Don't get me wrong - the whole industry needs a major overhaul. However, most people critical of the RIAA miss the fact that it does provide one valuable service to the new artist, and that is the key to their success.

    • by Jurily (900488)

      People still buy CD's?

      • by Rogerborg (306625)
        At the time of writing, yes, but ask again later.
      • Re:I Am Shocked! (Score:4, Insightful)

        by White Shade (57215) on Friday March 19, 2010 @10:56AM (#31537678)

        For less than $10 I'd buy a lot more cd's than I do now. $9 to download an album, or $8-10 to get the better quality hard copy, it's a no-brainer.

        • Re: (Score:3, Interesting)

          Actually I'm of the opposite mindset. Not only do the downloaded versions not have to be ripped, but they cannot contain trojans from Sony. That's been one of the reasons I haven't bought any physical CD's in a very long time.

          For me, the whole Sony problem was not academic as I was one of the people who had the rootkit. I wasted a lot of time researching and removing it and finally just wiped the system and started over -- with a Mac.
  • Shocking (Score:5, Funny)

    by kseise (1012927) on Friday March 19, 2010 @10:18AM (#31536724)
    You mean it doesn't cost $20.00 to make a CD? Really?
    • Re:Shocking (Score:5, Funny)

      by Aphoxema (1088507) * on Friday March 19, 2010 @10:35AM (#31537180) Homepage Journal

      It actually costs 40 dollars but the labels are so generous they were paying 50% of the cost out of pocket. Their hearts grew even bigger thanks to everyone being so happy with them, so they decided to pay 75%. Soon they'll just start handing them out for free!

      I love our music industry, they're so nice to us little, unimportant people!

    • Re: (Score:3, Interesting)

      by Life2Short (593815)
      I can remember the first CD's I bought in the early 1980s. The price was much higher than vinyl, but there were a number of advantages: easier playback, no wear to CDs, etc. The other "comfort" was that I was paying higher prices for CD's because I was an early adopter of the format. As the format became more mainstream, the price would drop. Shyaaa, right...
      • Re: (Score:3, Informative)

        by c6gunner (950153)

        To be fair, CD prices have dropped, especially if you consider inflation. How much were you paying for your vinyl records in 1985? When we account for the rate of inflation, paying $20 US for a CD today is equivalent to paying about $10 back then. The average price of a CD today - roughly $13 - is equivalent to about $6.50 in 1985. Were your records were much cheaper than that?

        • Re:Shocking (Score:4, Insightful)

          by Life2Short (593815) on Friday March 19, 2010 @12:13PM (#31539396)
          True, with inflation the price of the CD has probably dropped somewhat since the early 80s. But compare that price drop with price drop of the CD player. I think you could argue that the savings in terms of reproduction costs, recording costs, packaging, etc. have not been passed on to the CD cost the way they were for the CD player. My first CD player had no features and cost >$500. I could buy one today that was a quarter of the size and a fifth of the price with LOTS of programming features and a remote control. The CD I buy today is cheaper to reproduce, cheaper to record, and cheaper to package (remember the big boxes they came in during the 80s?) but I don't pay a fifth of the price.
      • Re: (Score:3, Insightful)

        by bennomatic (691188)
        I read an interesting article in Wired a few years back--gee, maybe more than a decade ago--that put an interesting spin on the decision not to drop CD prices.

        The idea is that as the cost to produce the new medium dropped, they could take that overhead and invest it in riskier artists. Where they used to only risk a contract with a band that might sell 100,000 LPs, they could now act like indy labels and take on bands that might only sell 10,000 CDs.

        Doing so, according to the article, led in part to
  • by gestalt_n_pepper (991155) on Friday March 19, 2010 @10:19AM (#31536748)

    I remember CDs. They made such pretty coffee coasters after I burned all their music to my MP3 player.

    • Re: (Score:3, Funny)

      by Pojut (1027544)

      Especially the AOL ones...they seemed to soak up more liquid than any of the others.

      Remember: if it ain't an AOL disc, it ain't worth jack!

    • Re:CDs! How *quaint* (Score:5, Interesting)

      by eldavojohn (898314) * <eldavojohn@gmFREEBSDail.com minus bsd> on Friday March 19, 2010 @10:25AM (#31536930) Journal

      I remember CDs. They made such pretty coffee coasters after I burned all their music to my MP3 player.

      I believe the correct verb you're looking for is 'ripped.' But before you go on about how 'quaint' CDs are, keep in mind how nice it is to own something physical. You have, as a physical object, evidence of your licensing of personal enjoyment of that media. I do buy $5 albums on Amazon MP3 but I feel almost like I somehow receive less rights or a watered down licensing of that album as opposed to if I had purchased the album. If you find this concept quaint then why are vinyl sales slowly rising [latimes.com]?

      My favorite form of purchasing these albums is vinyl + lossless digital download. A lot of the indie record labels are adopting this method and you pay a $1 or $2 premium on the CD or vinyl album in order to have the music now with the physical artifact shipped to you later. I purchased my Cloud Cult albums in this manner and also She and Him. Instant gratification and I don't even have to take the album out of its wrapper. Don't expect the major labels or even Amazon to warm up to this idea though ... it's far too empowering for the consumer.

      • by Jaysyn (203771)

        If you find this concept quaint then why are vinyl sales slowly rising [latimes.com]?
         

        Because the dynamic range of vinyl albums can't be compressed as much as they are on a CD resulting in better sounding music?

        • by geekmux (1040042) on Friday March 19, 2010 @10:50AM (#31537546)

          If you find this concept quaint then why are vinyl sales slowly rising [latimes.com]?

          Because the dynamic range of vinyl albums can't be compressed as much as they are on a CD resulting in better sounding music?

          Uh, that may be true, but it would also require that the overprocessed, overmodulated, autotuned, beatbox crap they're calling "music" these days be worth a shit to press onto vinyl. In most cases, vinyl is nothing more than turd polish.

        • Re: (Score:3, Informative)

          by Hatta (162192)

          Sure it can. It just usually isn't. The dynamic range of vinyl is less than that of CDs, so if you had an uncompressed (dynamic range) digital music file, you'd have to compress it more to put it on vinyl than on a CD. If you chose to compress it even further, you could do it on either vinyl or CDs.

      • by somersault (912633) on Friday March 19, 2010 @10:42AM (#31537364) Homepage Journal

        I don't even have to take the album out of its wrapper.

        Yeah, that sounds really worth the extra money. I have barely any space to store my DVDs and blu-rays in my flat right now. I'm glad I could shove all my CDs into my mum's attic. I used to have some kind of sentimental attachment to them, but that starting going after Amazon began offering cheap MP3 albums, and completely evaporated last time I had to move flat. Storing and moving CDs and DVDs is a real pain - and records would be even worse in terms of space - not to mention more fragile. I don't see anything empowering about needing to keep highly inefficient backups of what is essentially just something you want to hear - not something you need to look at or touch.

        • Re: (Score:3, Insightful)

          by c6gunner (950153)

          I don't see anything empowering about needing to keep highly inefficient backups of what is essentially just something you want to hear - not something you need to look at or touch.

          Ah! You hit the nail square on the head, and didn't even realize it. People keep vinyl records not because they need to look at them or touch them, but because they want others to look at them. It's like the people who have a bookshelf stacked with all sorts of classic literature, none of which has ever been opened. It's all about appearance.

      • by maxume (22995) on Friday March 19, 2010 @10:47AM (#31537464)

        Vinyl sales are rising because people are fools.

        (There is some chance that the audio never experiences any filtering and the frequency response of the entire chain of analog equipment is such that there is no cutoff of high frequencies, and that the ears listening can hear the high frequencies, and that there isn't any dust on the record and that the record hasn't been worn by previous playback, but it isn't really all that likely)

        • Re: (Score:3, Funny)

          by vertinox (846076)

          Vinyl sales are rising because people are fools.

          I recently went into a local indie record store a few months ago and saw a stack of new cassette tapes for sale at the register.

          And I was like: "Hah! Did someone find these in an old factory somewhere unopened?"
          Indie store guy: "No, these are brand new from a local artist."
          Me: "Ummm... Why?"
          Indie store guy: "Yeah its a new hot trend for local bands to make cassette tapes now instead of releasing them on CD or Vinyl"
          Me: "Ok... But can you even buy cassette play

      • by Rogerborg (306625)

        You have, as a physical object, evidence of your licensing of personal enjoyment of that media

        Not necessarily: you could have shoplifted it. Actually, given the RIAA's attitude to its customers, they'd likely assume that until proven otherwise.

        why are vinyl sales slowly rising?

        From your link: "To be fair, the number is still tiny compared to overall album sales."

        Pop quiz: is the increase in vinyl sales larger than the decrease in CD sales?

        • by twistedsymphony (956982) on Friday March 19, 2010 @11:04AM (#31537864) Homepage

          You have, as a physical object, evidence of your licensing of personal enjoyment of that media

          Not necessarily: you could have shoplifted it. Actually, given the RIAA's attitude to its customers, they'd likely assume that until proven otherwise.

          I'd rather they assumed I shop-lifted it than I downloaded it... the penalties are less severe for shop-lifters.

      • Re: (Score:3, Interesting)

        by Aphoxema (1088507) *

        [...] before you go on about how 'quaint' CDs are, keep in mind how nice it is to own something physical. You have, as a physical object, evidence of your licensing of personal enjoyment of that media.

        Though the short life expectancy of CDs appears to have been greatly exaggerated, they do have a finite lifespan while music in a more transient form can happily be saved from one hermetically sealed hard disk to the next. Either way, all the CRC checks in the world can't guarantee immortality of any data.

        Speaking of transient... I've lived most of my teens going from one place to the next, often losing or giving away my possessions in the process. Those quaint, physical goods meant bullshit to me sleeping

      • why are vinyl sales slowly rising?

        In my view, from the situation in NL:
        A. People like you who want to have something physical even though you "don't even have to take the album out of its wrapper". Which means it's going where, exactly? On the wall? Into a filing cabinet of some sort? A box in the attic? I suppose maybe 50 years down the road if the indie band got big the vinyl might hold some great resale value, especially if it's still in mint wrapped condition. I guess that might form a sub-section

      • Re:CDs! How *quaint* (Score:5, Interesting)

        by jayme0227 (1558821) on Friday March 19, 2010 @10:53AM (#31537620) Journal

        If you find this concept quaint then why are vinyl sales slowly rising [latimes.com]?

        Probably for the same reason that young people prefer MP3s to higher quality music. [slashdot.org] People grow up listening to music in a certain way and the cracks and pops of vinyls, much in the same way as the sizzle sounds of MP3s, are what the listener expects to hear in the music. Because they expect to hear it, the music doesn't sound "right" when they hear high quality recordings without it. So now that baby boomers are reaching retirement age, they look back at what they loved when they are younger and buy old vinyls.

      • Re:CDs! How *quaint* (Score:4, Informative)

        by MBGMorden (803437) on Friday March 19, 2010 @10:54AM (#31537640)

        If you find this concept quaint then why are vinyl sales slowly rising?

        Even the link you quoted shows that ALL forms of music - CD's, digital, AND vinyl - are rising in sales. Vinyl also, despite "rising" sales, is still not really selling in any significant amounts.

        As the article pointed out, Taylor Swift's latest album sold nearly twice as many copies in six months as the ENTIRE SALES VOLUME of vinyl records in a year.

        Vinyl is making about as much of a comeback as any other retro tech - some people are clinging to it, but you're dreaming if you think that there's going to be some mass movement back to the format.

      • Re: (Score:3, Insightful)

        by RapmasterT (787426)
        Vinyl is rising because it bottomed out and is doing the proverbial "dead man bounce".

        The reason some people like vinyl better than digital, is because it sounds "warmer", which is just a positive spin on "muddled" or "lower dynamic range". They complain that digital sounds too harsh.

        The unpleasant truth though is LIVE music is harsh, that's the sound you don't like. You just won't find self-proclaimed audiophiles proudly saying "I don't like how live music sounds, so I prefer it run through a disto
    • by Anonymous Coward on Friday March 19, 2010 @10:38AM (#31537252)

      Audio CDs aren't quaint. They're reliable read-only long term storage media for losslessly encoded music. The data is unencumbered by DRM, you can lend CDs to your friends, you can sell CDs and you can listen to your CDs on as many devices as you like. I don't pay for downloads. I pay for CDs or get my music for free.

      • by afidel (530433)
        I can do all that with Amazon MP3's (well perhaps not lend them legally) without the inconvenience of physical media and with the ability to easily have a backup (Mozy for the win).
    • CD's are much prettier coasters after you burn them in the microwave.

    • I remember MP3s. They made a nice way to conveniently transport your music until they were first replaced by better lossy formats, and then made obsolete by lossless formats that take advantage of the abundance of cheap storage.

  • 25 years too late. Oh well, better late than never.

  • 0$ (Score:2, Interesting)

    by krapski (1478035)
    I get them for 0$ in pirate bay, how do you compete with that!?
    • Its like Canadian complaining that there isn't any caribou when he visits miami. Obviously the miami supermarkets are crazy to offer so much chicken and so little caribou. How will they ever survive?
    • by afidel (530433)
      That $0 comes with a !=0 chance of a six figure lawsuit attached.
  • Just like cassettes (Score:4, Interesting)

    by commodore64_love (1445365) on Friday March 19, 2010 @10:22AM (#31536832) Journal

    ...when they still existed. I remember having the option between a $13 CD or an $8 "inferior" cassette version, so I picked the cassette. I didn't see why I should have to pay a $5 premium for the disc version.

    Now it appears the same pricing has come to CDs. Why pay $13 for a CD when I can just download my favorite 2-3 songs at about $3. The internet is forcing music companies to drop the pricetag for the "inferior" CD format to about $8.

    Why inferior?

    CDs aren't portable. And take-up a lot of space.

    • by Pojut (1027544) on Friday March 19, 2010 @10:24AM (#31536878) Homepage

      CDs aren't portable. And take-up a lot of space.

      My binder with 300+ death metal CDs and the jewel case inserts in it from high school would agree with you -_-;;

      • by ajlitt (19055)

        I have about the same number in a random collection of CD binders. They take up a tiny fraction of the space on my shelves, the rest being populated by books. In digital form, those books would all fit on just a few CDs. By the OP's suggestion I should ditch all my books and scan/torrent/rebuy them in PDF.

        • By the OP's suggestion I should ditch all my books and scan/torrent/rebuy them in PDF.

          No, he didn't come out and say that. He said that the prices of CDs have dropped because they are an inferior medium (decidedly by the consumer's purchasing habits). Inferior because they take up space and aren't portable relative to an electronic copy. You could follow that your books are an inferior medium to ebooks, but there are a few kinks with ebooks left to work out, namely how the reading feels with books v ebooks.

        • Re: (Score:2, Insightful)

          by Jer (18391)

          By the OP's suggestion I should ditch all my books and scan/torrent/rebuy them in PDF.

          You make it sound like that's a ridiculous suggestion, when in fact there are a lot of people who want to do exactly that.

          Well, maybe not PDF. But something like that.

      • Re: (Score:3, Interesting)

        I gave up on binders because they seem to damage CDs once the plastic in them starts to age and harden. It's usually subtle "pin-holes" in the disc when held up to the light, and it doesn't always audibly affect the sound, but it's still extremely disappointing. My collection is too big and represents too much cash outlay over time to risk it.

        I still make a lot of use of CDs, but always burned ones. I keep the original in its jewel case on the shelf.

    • by floatednerd (1667997) on Friday March 19, 2010 @10:28AM (#31537002) Homepage
      Maybe I'm going into the future kicking and screaming... but I don't feel like I "own" a song unless I have it on CD (or cassette, vinyl, etc). From my point of view, CDs are the "superior" product verses the MP3 from iTunes or Amazon.
      • by jedidiah (1196)

        Yes. A CD is a token of ownership. While the CD certainly isn't convenient
        to deal with, it's easy enough to convert into an mp3. Once you have that
        then how to you tell your own copy from someone elses? How do you prove
        you really have the rights to that file? You can't really. If it's a DRM
        server or your sales history at Amazon, your still dependent on data on
        some server somewhere to validate your right to that file.

        • by andi75 (84413)

          Why would I need to validate that it's mine? It's not like the RIAA has a right to search my mp3 player and demand that I produce a licence for all songs on it.

      • Re: (Score:3, Interesting)

        by clone53421 (1310749)

        Why would I want to “own” a song? I just want to listen to it.

        • Re: (Score:3, Insightful)

          Ownership confers upon you the right to listen to that song for your whole life. - Perhaps I'm in the minority on this but I still listen to tapes or records that were purchased 30-50 years ago, and every listen costs me nothing.

      • by Yaa 101 (664725)

        Nothing keeps you from burning that song to CD.

    • Ok, but you have a physical copy that hasn't been compressed to 256kb/s or lower MP3/ACC files, the disc will last hundreds if not thousands of years, and best of all you can do whatever you want with it.

      CD's are cheaper in the UK than downloads. £5-£7 for the CD album, whereas on iTunes it can be £6.99 to £8.99. I think it is great he USA have matched our prices.

      • by tomhudson (43916)

        the disc will last hundreds if not thousands of years

        Even if it did, that wouldn't matter - how much longer do you think spinning optical media readers will be around?

        Audio went from 12" 78 rpm to 10" 78 rpm to 12" 33-1/3 rpm and 7" 45rpm disks to tape, which went from reel-to-reel to 8 track to cassette to DAT, to hard drive/flash memory.

        CD *tried* to go from 5" redbook to SACD (failed) and mini-cd singles (failed).

        Video recording went from celluloid to reel-to-reel tape to tape cassettes / dvd / h

    • by whisper_jeff (680366) on Friday March 19, 2010 @10:44AM (#31537410)
      Did you seriously just write "CDs aren't portable"? Really? I know nerds have the stigma of being out of shape, but really?
      • by omnichad (1198475)

        I think they mean entire collections of CD's, as opposed to an iPod or a portable hard drive.

      • Re: (Score:3, Insightful)

        by jandrese (485)
        Well, lets compare. Say you have an iPod that can hold 20,000 songs. Assume an average album is 12 songs. That's 1,667 albums. A CD weighs about 16g. Your collection of music weighs about 26kg. Compared to the 140g iPod that's substantial. It gets worse if you're carrying them with the booklets and inside the jewel case, then the weight goes up to about 60g per album, for a total weight of right about 100kg. When your jogging music is a 4 man lift, I wouldn't call it portable anymore.
  • by TACD (514008) on Friday March 19, 2010 @10:24AM (#31536882) Homepage

    You'd think the music companies would have at least one economist on staff who could explain to them, slowly and gently, that under certain circumstances it is actually possible to make more money when each individual unit is priced lower. It really takes some stubborn failure of logic to prioritise your sale price above your actual monetary returns.

    Of course, it's also possible that the music quality will just decline to compensate for the drop in price.

    • Re: (Score:2, Funny)

      by Anonymous Coward

      Of course, it's also possible that the music quality will just decline to compensate for the drop in price.

      No, no that's not possible.

    • Re: (Score:3, Insightful)

      by HeckRuler (1369601)
      Not so much in the long run when you've got a monopoply of a few oligarchs who all collude to keep prices high. Now that one of the prisoners has come face to face with his dilema, he's breaking ranks and diving for some quick cheap cash.

      Of course, it's also possible that the music quality will just decline to compensate for the drop in price.

      HAHAHAHAHA, oh that's a good one. A decline in music quality? You think that corporate profits influence musicians in ANY way? And I don't think that the quality of pop music has to drop very far before it becomes noise.

  • by thered2001 (1257950) on Friday March 19, 2010 @10:25AM (#31536914) Journal
    If given a music CD, what would be the first thing you'd do with it? Play it or burn it? (Or give it back with an apology of "this is not a format I support any more"?)
  • Sell them $99 or $0.01, I am not willing to pay for middlemen more than the final artist will get. I think I'll wait for flattr.
  • by edremy (36408) on Friday March 19, 2010 @10:28AM (#31536992) Journal
    ""Why does Universal feel the need to get below $10?" a senior distribution executive at a competing major asked. "

    Quickly followed by

    "[Sales of CDs] which [are] down 15.4% so far this year. Album sales were down 18.2% last year, and 19.7% in 2008, "

    I swear, Thick as a Brick should be a Jethro Tull song, not a description of record company executives....

  • by Coopjust (872796) on Friday March 19, 2010 @10:28AM (#31537006)
    I'll be honest. I'm usually more of a singles person than an album person.

    However, when the album and digital copy are near the same price, the physical copy provides a long lasting backup (pressed CDs last longer than burnt), and I have a lossless copy that I can legally use, rip to lossless on my PC, and not have to go on a tracker and seed until my eyeballs fall out of my head for the ratio...it makes sense for a number of albums.

    Weird Al Yankovic stated that he was happy for either avenue his customers used to buy music, but his take per track on iTunes was about two cents a track and his take on CDs was about 26 cents- which is pretty major if you want to support the artist.

    Anyhow, it's a good move by UMG, albeit overdue. I think it's like the MPAA- the "boston strangler" of VHS turned out to be a major blessing and boon to their business. Hopefully other companies follow suit.
    • If I was a used CD retailer, I'd be scared right now. You're probably selling the CD for less anyways, but with the price difference being much less, you might lose a lot of your customers since the price of a new CD that supports the artist and is in immaculate physical condition is only a few bucks more.

      Competition is always good though, and I'm sure used stores will be fine.

      Speaking of businesses being threatened, I don't see the "as a record store owner, my business faces ruin" troll yet.
    • If artists make 13 times more money on CDs than they do on itunes, what does that tell you about efficiencies in the music marketplace?

      • Re: (Score:3, Insightful)

        by clone53421 (1310749)

        Nothing.

        To judge efficiencies, I’d have to also know how many CDs were sold vs. how many digital downloads were sold.

  • Too late (Score:4, Interesting)

    by Junior J. Junior III (192702) on Friday March 19, 2010 @10:29AM (#31537026) Homepage

    This would have been a great strategy for the late 1990's, when the CD was still a relevant media (and, for that matter, when consumers were demanding that prices be lowered, both through their words and through their actions -- which the industry by and large ignored completely).

    I'm not sure I'd call CDs relevant still. We've moved on to solid state media, writeable storage decoupled from the content. You could discount 8-track tapes and they wouldn't sell today. CD's don't have the same analog appeal that vinyl records to, either. I expect that eventually they'll just stop making CDs, and all music will be distributed via the network.

    This price reduction merely indicates that we're a little bit closer to that day. I doubt it'll do much to boost sales at this point.

  • by wvmarle (1070040) on Friday March 19, 2010 @10:35AM (#31537192)

    In Hong Kong a typical release CD of some local artist costs around USD 10 already. That's been since I moved here 7, 8 years ago. Older releases cost less. Import from US is typically USD 8-12 for a CD.

    Now there are a few differences: the entertainment world lives on a smaller budget and the top artists are at a level that wouldn't even make it into American Idol. That says more about the cantopop than about American Idol.

    Movies on DVD cost about USD 20 (new releases), older movies are sold at far cheaper prices. On VCD one can buy a movie for a few dollars.

    The above prices are for the official media, not for the pirated ones. Those are far cheaper.

    Still I think US$10 for a CD is overpriced. Pirated CD's are selling for well under USD 1 each. So that is a $9.something mark-up for what? Recording and artist's share?

    Both pirated CD's and official CD's have to be manufactured and distributed. That incurs costs that are independent of the content. The only difference is the actual recording and the marketing. Even the shops selling pirated disks are in the same expensive locations as the official outlets, so even there is no difference: they both have to make the same profit to survive. Both shop's suppliers have to run their trucks and pay their drivers and workers and run their CD/DVD machines.

    Official releases have better quality CD (technical: play guaranteed, last longer than a few years) and come in jewel case instead of paper sleeve. That may add $0.20-0.30 to manufacturing. Even when selling at USD 2.50 each the label should be able to make a USD 1.00 gross profit on each. And at that price level it becomes vending machine material, and volume may skyrocket due to all those impulse buys. Sell a million disks, make a million in gross profit. If a million dollars is not enough to cover recording, marketing, and a fat profit, then you're doing something terribly wrong.

    • Even when selling at USD 2.50 each the label should be able to make a USD 1.00 gross profit on each.

      The songwriter (who is often not the recording artist) would disagree with that. The US copyright royalty board has set a statutory rate of about 9 cents per track split between the songwriter and his music publisher, tied to the Consumer Price Index.

      • by wvmarle (1070040)

        Then where does the rest of the money go?

        USD 10 retail price

        20% for the shop: USD 2, shop pays distributor $8 each.

        $0.50 each for distribution (let's be generous), USD 7.50 to the CD manufacturer.

        $1.50 for manufacturing of the disk, case, booklet (I'm in a generous mood tonight), $6.00 left.

        $0.09 for royalties: $5.91 gross profit for label? For recording costs? Marketing costs? Even liberally applying other costs on the CD process there is stil a lot of money unaccounted for.

        Besides I wonder wtf some

  • price fixing? (Score:4, Insightful)

    by eagl (86459) on Friday March 19, 2010 @10:37AM (#31537238) Journal

    If the other music groups complain or retaliate in any way, doesn't that constitute illegal price fixing?

  • Welcome to the 21st century. *cough* [independent.co.uk]

  • Am I the only one that read that and said "Oh, so the album CDs will still be 25 bucks?"

    • by keeboo (724305)
      That's not the worst.
      What about things like 40 y.o. Beatles albums? Wasn't everyone paid properly already?

      Perhaps not... I mean, it seems that Paul McCartney is still unable to afford buying meat, after all those years!
  • Huh? (Score:3, Funny)

    by Fnord666 (889225) on Friday March 19, 2010 @10:49AM (#31537524) Journal
    What's a CD? Some sort of offline backup of the originally seeded songs?
  • There are quite a few artists whose new albums I want to pay $20 for. The majority however is cheap cookie-cutter crap.

  • I buy about 100-150 CDs each year, and the only ones which come shrink wrapped are local bands who self-publish. The rest of my CDs all come used -- local shops, eBay, amazon, GoodWill, friends, whatever. I've got a long list of music I'd like to own, and I'm in no hurry to buy any particular album, so I rarely pay more than $3 for a CD (including shipping). Since I listen to music from mp3 files 100% of the time, a slightly damaged jewel case or booklet doesn't matter to me.

    It costs me less to own more,

  • by BlueBoxSW.com (745855) on Friday March 19, 2010 @11:03AM (#31537852) Homepage

    I see this as a really important shift.

    Previously, the CD was the premium format, with all it's uncompressed audio glory. And it is fairly portable, playable in most consumer electronic devices found in the living room or car.

    The MP3/AAC format was the discount format. Compressed with some audio loss, and playable in less devices. Also encumbered in some cases with DRM.

    The premium format carried a 50% markup, with most MP3 albums costing around $10, and CD's costing around $15.

    With CD's potentially costing LESS than MP3/AAC formats, this signifies the market is placing premium on the MP3/AAC format over the CD. This could be because the format is now supported in more devices, or consumers find it friendlier to deal with, perhaps because there's no need to fight the packaging then burn it on your own.

Nothing is easier than to denounce the evildoer; nothing is more difficult than to understand him. - Fyodor Dostoevski

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