Shock! Price Matters – At Least in Music

The NY Times is reporting that Universal Music Group will begin widespread testing of a $10 or less price point for CDs, using random samples at major retailers. Why are they willing to do this?

CD sales had doubled at stores involved in a much more limited test of the pricing strategy. [Said the head of distribution,] “the casual fan isn’t willing to pay $15 dollars for a regular CD.”

Wow! You mean if you price things more reasonably, people purchase them instead of copying them? And a lower price raises sales? I’m being sarcastic, but I’m mostly surprised that a big company is willing to act on these colloquial bits of wisdom. It’s unusual for an entertainment conglomerate to change direction, especially in today’s market, where big companies are trying to raise pricing, not drop it.

But as one store chain CEO says, “Lower prices are something that consumers and retailers have been asking for years.” I fervently hope that the experiment works out as well as they anticipate. I know that I’m happy to purchase albums, once I’ve had a chance to sample them and at a reasonable price.

The article continues, “Deluxe versions of albums, which have extras songs or features, will continue to sell at a higher price.” That makes sense. Those who know the artist or want the extras, let them have an alternate purchase. Those who want to sample or just get the basics, give them a choice to do so. That’s what it’s all about — options for the consumer.

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6 Responses to “Shock! Price Matters – At Least in Music”

  1. Marc-Oliver Frisch Says:

    In Britain, 2009 was the first year in which online music sales made up for losses in physical record sales. A few years down the road, the record market may look drastically different than it does now.

    Music files are generally cheaper than CDs, and people who are in it for the experience of enjoying a physical record are starting to switch back to vinyl.

    If those trends continue, more artists may start wondering what they need labels for.

    Alienating record buyers with high prices is really the last thing record companies want to be doing right now. Not that this has every stopped them from alienating record buyers, but maybe it’s starting to sink in that the reality of the market has not shifted in their favor recently.

  2. Paul O'Brien Says:

    The music industry’s fundamental problem for years has been a refusal to accept that music simply isn’t worth what they want to charge for it – to the point where they’ve managed to make piracy seem more morally legitimate. Disingenuous as many of the pro-piracy arguments are, they wouldn’t have the same emotional currency if people thought that the price of music was reasonable in the first place.

    What the music industry needs to do is get its head around what music is REALLY worth to consumers, and not merely what they’d like it to be worth – and adjust to the fact that music is fundamentally a service industry, and that the commodification of music in the 20th century was a technological blip in the wider scheme of things. The future of legitimate music is more likely to be realistically-priced subscription services: what you’re paying for is ease of use and security from viruses rather than the music as such.

  3. Marc-Oliver Frisch Says:

    I’ve been buying more music than ever before in the last two years, for two simple reasons: Emusic and Amazon’s DRM-less mp3 store.

    At the same time, the number of CDs I’ve bought has dropped to zilch, except for some Beatles and Zappa stuff that’s not available as digital files.

    To be honest, no price drop in the world will make me switch back to CDs.

  4. Johanna Says:

    I like CDs. It’s harder to lose them (speaking as someone who had a major hard drive crash last year). It’s easier to travel with them, since there’s no worrying about whether they’re charged or not. You can lend them or borrow them. You can see what the singer is actually saying in the lyrics and liner notes. You can sell them when you’re tired of them and buy them used if you want to sample cheaply. I doubt I’ll ever switch to the all-digital life.

  5. Thad Says:

    It’s a nice idea but from my perspective it’s too little too late. Would have been all over this in 1999, but I quit buying new albums from RIAA affiliates when they started suing 12-year-olds.

    I’m not about to fall into the fanboy mistake of assuming I represent the mainstream — I’m sure the mainstream is far less concerned about the politics of the situation than I am — but on the other hand, I don’t think the mainstream is that interested in physical media anymore, either.

    This is one of those situations where, IMO, it’s too late for the music industry but the TV industry can still learn from it. Cable’s pricing scheme is, quite simply, unsustainable; I will never again pay for a lineup where I have to subscribe to Fox News in order to get Comedy Central.

    Hulu’s a good start but the networks are utterly schizophrenic on their support of it. It was initially integrated with Boxee, but then the networks pulled the plug; similarly, Viacom’s just pulled out of Hulu and not provided an alternative that’s nearly as good. (It took me 10 minutes to find the full version of a long Daily Show interview last week, and it was only 2 days old.) My take is that the networks want to let people watch TV on their desktop computers, but the idea of people hooking computers up to their TV’s and watching THAT way still terrifies them.

    Thing is, it would be utterly trivial for any of the major networks to have some programmers put together something as fully-featured as XBMC and as automatic as SABNZBD+, and much, MUCH easier to use. People would pay for that. But it won’t happen — they’re going to cling to the cable tier structure and try to force it on a generation that will never subscribe to that model.

  6. James Schee Says:

    The price drop doesn’t really matter to me. Even at $10 I doubt there are 10 songs at one time from a current artist on an all new CD I’d want.

    That has been one of the great things about the digital age, you can get the songs you like from an artist. Sample their unreleased as singles stuff, which you can quickly tell why it wasn’t released as such too often. Without cluttering up the home with a bunch of stuff.

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