by Mike Masnick

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

Subscribe: RSS

View by: Time | Thread

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Use markdown for basic formatting. HTML is no longer supported.
  Save me a cookie
Follow Techdirt
Techdirt Gear
Shop Now: I Invented Email
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Report this ad  |  Hide Techdirt ads
Recent Stories
Report this ad  |  Hide Techdirt ads


Email This

This feature is only available to registered users. Register or sign in to use it.