Re: Universal Music to Cut CD Prices to Under $13

[dt king]

"John LeBlanc" > wrote in message
...
> "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. "
>
>
http://news.yahoo.com/news?tmpl=story2&cid=769&u=/nm/20030903/music_nm/media_universalmusic_dc_4&printer=1
>
>
> All in all, I don't think this was the appropriate response to
> unauthorized downloading.

Just a guess, but I'd bet that that's not their full reason for doing it.
However, no reason not to use the press release as another chance to blame
downloading for the sales drop.

dtk

[John LeBlanc]

"dt king" > wrote in message
hlink.net...

> Just a guess, but I'd bet that that's not their full reason for doing it.
> However, no reason not to use the press release as another chance to blame
> downloading for the sales drop.

Well, the article does quote "some music executive":

"This doesn't have as much impact as it looks," one record executive said. "The
labels were offering some discount programs to the retailers that would now end.
So it's not entirely clear how much of a change there is for retailers'
margins."

One thing that's going to change retailers' margins is the loss of co-op
dollars. Co-op is a great idea, although it's been my experience that most
retailers fullfil the absolute minimum requirements which often turn a radio or
television ad mostly into an ad for the retailer. Even though the reduction in
wholesale price per unit is far greater than the co-op dollars the retailer
would get, it will be an effing miracle if any of those shifted dollars get
routed back into advertising.

So think about this: if ad dollars get pulled, who gets pinched? Radio. Ironic,
isn't it?

Also, I found it odd (incredible, really) that a rep from Circuit City stated
their buyers hadn't talked to Universal yet about the deal. While CC isn't
Wal-Mart, they do give up an awful lot of retail square footage for CDs.

I always considered Doug Morris is a very sharp cookie, but -- if this story is
accurate -- in my opinion this doesn't make him look too sharp.

John