Universal lowers CD prices to up sales

View of the headquarters of the German subsidiary of Universal Music, the world's largest music company, in Berlin.

TEXT OF STORY

Kai Ryssdal: Any chance you remember the last time you bought an actual, physical compact disc? yeah, fewer and fewer among us can, especially younger music listeners. They generally like to download their music instead of schlepping to a record store. And CD sales are down almost 16 percent so far this year. That's on top of huge drops in years immediately past.

But now one major label has plans to try and sell some more of them, as Marketplace's Rico Gagliano reports.


RICO GAGLIANO: Today, Universal Music Group announced a new recommended retail price for many of its CDs -- $10 apiece. Universal says this is just a short-term test for now, to begin in the second quarter of the year. But retailers hope ten-buck discs are here to stay.

JOE GOLDMARK: That's a good thing.

Joe Goldmark is a partner in Amoeba Music, a chain of three music superstores in California.

GOLDMARK: Hopefully that will drive some customers into the stores. I think it's a little overdue.

Overdue because music lovers have long been able to download albums for around ten bucks. Industry experts do expect the lower prices to boost sales -- at least for a while.

Mark Mulligan is with Forrester Research.

MARK MULLIGAN: There have been numerous trials in the U.S. and in Europe, from other labels as well, which has shown that reducing the price of CDs does drive spending.

In fact, Universal and other major labels recently did a trial run. They put $10 discs in the racks at mall-based music chain FYE. Sales reportedly went up 100 percent. Even so, Mulligan warns CDs are inevitably dying, and the only reason labels want to prolong the death is because music downloading is still a relatively small segment of the business.

MULLIGAN: Digital music has grown very strongly in percentage terms, but it's grown so strongly because it's so small.

Amoeba Music's Joe Goldmark agrees cheap new CDs won't rescue retail stores. He says Amoeba stays afloat by selling used discs, memorabilia, DVDs, and offering one physical music format that's actually growing in sales: Good, old-fashioned vinyl records.

In Los Angeles, I'm Rico Gagliano for Marketplace.

About the author

Rico Gagliano is the host of Dinner Party Download.

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