The Wal-Mart Effect: Can They Change CD Pricing?

from the changing-world... dept

Love 'em or hate 'em, Wal-Mart may be the next biggest force in changing how the recording industry works. We've already talked about how music retailers may be the real bottleneck to changing how the recording industry views its business model. However, Wal-Mart isn't like any other music retailer. To them, selling music is a loss-leader to help them sell consumer electronics. However, Wal-Mart also has such a dominant spot in the market that they can force companies to make massive changes (see what they did with barcodes, and what they're doing with RFID). So, now, they're actively trying to force the price down on CDs, saying they want to be able to sell most CDs for less than $10. They're already taking a loss on CD sales, but want that loss to be much smaller -- and if they don't get it, they're threatening to give up more shelf space to DVDs and video games (the real threats to CD sales). This is interesting for a variety of reasons. First, Universal tried to drop prices last year, but many retailers rebelled, and none of the other major labels followed. What may also be interesting is how this impacts the idea of "the long tail". As Chris Anderson has shown, there's plenty of money to be made in selling less popular things, and here's Wal-Mart suggesting they may shrink inventory even more. Already, they only offer less than 10% the inventory of a Tower Records, and they're threatening to cut that even further. All that really means is it will open up more opportunities for those focusing on selling within the long tail, rather than worrying about how Wal-Mart competes with them.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Brice Tebbs, Oct 13th, 2004 @ 5:40pm

    Hardware Vs Software

    My local walmart sells portable cd players for under 10$. Makes sense to me that CDs would be the same.

    reply to this | link to this | view in thread ]

  2. identicon
    Anonymous Coward, Oct 14th, 2004 @ 8:32am

    Re: Hardware Vs Software

    Who the hell goes to Walmart for music ?

    Limited choices,
    further limited by Walmart's censorship.

    You get what you pay for.

    reply to this | link to this | view in thread ]

  3. identicon
    Greeter, Oct 14th, 2004 @ 8:54am

    No Subject Given

    Walmart does it for the kids.

    The thousands of underage immigrant ones they employ.

    reply to this | link to this | view in thread ]

  4. identicon
    Anonymous Coward, Feb 13th, 2013 @ 9:52am


    reply to this | link to this | view in thread ]

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