News Article

Slipped Discs

Universal Music cuts CD prices by 30 percent. Starting with the new Ludacris disc, CDs from the world's biggest label will retail for $12.98 or less

50 Cent | MAKES SENSE 50 will cost fewer cents under Universal's cost-cutting plan
MAKES SENSE 50 will cost fewer cents under Universal's cost-cutting plan

Good news for those old-fashioned folks who still collect music on CDs instead of MP3 files: prices for discs by some of your favorite artists are about to drop at least 30 percent. In a move to curtail the long, industry-wide sales slump that the labels blame on downloading, Universal Music Group, the world's largest label, announced Wednesday that it's slashing prices on all new CDs, with a suggested retail price ceiling of $12.98. The price cuts begin Sept. 29 with the release of Ludacris' ''Chicken & Beer.''

Currently, CDs cost as little as 75 cents to manufacture, Universal's distribution president Jim Urie tells the Washington Post, but they ship to stores at a wholesale price of $12.02 and retail for as much as $18.98. That price markup is the reason a lot of file-swappers would rather download individual songs than buy CDs. Under the new price structure, the wholesale price will drop to $9.09, freeing retailers to sell them for as little as $9.99, the same price it costs to download a whole album on Apple's iTunes service.

Universal, whose artists include 50 Cent, Eminem, Shania Twain, and U2, controls 30 percent of the CD market. So if its price cut experiment succeeds in making up in volume what it's losing in wholesale revenues, it may start a price war that would force the other four major labels to follow suit.

Originally posted Sep 04, 2003