Universal's Price Drops Not So Universally Dropped

from the let's-try-this-again... dept

Last month, Universal Music Group got all sorts of attention when they announced that they were going to lower their CD prices dramatically – the first major label to lower CD prices since the introduction of the CD format. There were articles about how this was a reaction to online file sharing and wondering when other labels would follow suit. Well, now that we’re approaching the October deadline when those “cheap” Universal CDs are supposed to hit the shelves, it appears there’s been a little snag. Turns out that the music retailers who actually sell the CDs are pissed off at Universal for announcing such low prices and have forced Universal to back down on the promise. Of course, this isn’t getting as much press coverage as the initial price drop. They’re still recommending that the stores price them lower, but won’t put their own price stickers on the CDs. Interestingly, the article also notes that to get these lowered prices, retailers had to (and did!) agree to give Universal’s CDs increased shelf space in their stores. Retailers basically had no choice. If they balked, then all Universal CDs would be priced much much higher than the stores that agreed to the deal.

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Comments on “Universal's Price Drops Not So Universally Dropped”

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Ed Halley says:

No Subject Given

Such is the problem with retail: manufacturers cannot dictate shelf pricing. Nintendo is just another example of a company who tried otherwise. Of course at first you would think that retailers in question would have a hard time offering a WORSE price than the one on the sticker, but they’d also face issues if they offered BETTER prices on promotions, too.

Munich says:

Re: Big Article in WSJ Last Week

> this isn’t getting as much press coverage as
> the initial price drop

For the local press, definitely. However, the WSJ did a lengthy piece last week discussing the Universal pricing moves, the squeeze it is putting on stores, the likely movement of more CD sales to mass retailers (Walmart) at the expense of the local store (like the one in the movie “Hi Fidelity”) as a result, the fact that other companies haven’t followed yet, how fighting file sharing was a part of this strategy, and other tidbits. Seems like the WaPo just picked up on this piece.

The WSJ article is likely posted, but they require a paid subscription to get to their articles.

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