Universal Music Cutting CD Prices, Years Too Late
Instapundit links to this this Yahoo! News story via this blog:
Universal Music Group, the world's largest record company, on Wednesday said it will cut list prices on compact discs by as much as 30 percent in an effort to boost sales that have been stymied by free online music-sharing services such as Kazaa.Starting in October, Universal, the home to such artists as Mary J. Blige (news), U2 and Elton John (news), will trim its prices on most of its CDs to $12.98 from its current $16.98-$18.98 range of prices.
"Our research shows that the sweet spot is to sell our records below $12.98,' said Universal Music president Zach Horowitz. "We're confident that when we implement this we will get a dramatic and sustained increase."
However, Glennie then notes
"Research?" I'll bet some marketing consultant charged them a lot more than it costs to read Fritz's blog. . . .
Wrong, wrong, wrong. I've sat in hundreds of 'marketing' meetings and I know exactly what happened. All the chiefs and their main sidekick indians were sitting around a long-ass conference table like they have every week for years, kvetching about declining revenues. Then, during the open discussion, some incredibly senior sales rep from Minneapolis puts out his Marlboro, streches his legs, and pulls out a spreadsheet showing the bigwigs what he's been telling them for five years: Electric Fetus has been selling shitloads-- shitloads of the U2 back catalog at $9.99, whereas they couldn't give them away when the sticker said $16.99. One of the biggest bigwigs, who's at the end of his emotional rope, not to mention his contract, says, "Fuck it. Let's reduce 'em all. Best idea I ever had."
$13 is the magic number for new releases, and you can sell ANYTHING for $9.99, especially if it's a catalog reissue with hastily chosen and poorly mastered "bonus tracks". Once you see this in action, as I have, it becomes a matter of elementary psychology and pure god-given revelation. I cannot believe that it's taken the industry as a whole this long to figure this out. Unless I'm smarter than most people in the music industry. After all, I was smart enough to get out, right?
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I avoid the ten dollar rack
I avoid the ten dollar rack because I know that I will buy anything. Bands I've never heard of but that have cool names. Albums that have one song I heard on the radio. That album that you need for the sake of completeness, but will never listen to.
They could clear the shelves if they lowered it to $5. I'd buy them all.
Aha.... but if they were $5,
Aha.... but if they were $5, I personally would start to ask what was wrong with them. A $5 cd? What... is there a remastered version out? Does this have all the liners? Is this a bootleg?
But at $9.99, you retain the illusion of fair value, at a price low enough not to notice how much it hurts.