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ivan@stellysee.de
| From | "bryan" <munki100@pacbell.net> |
| Subject | when will those new lower UMG list prices kick in? |
| Date | Thu, 25 Sep 2003 18:09:14 -0700 |
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> I wonder when those new lower UMG
> list prices are supposed to kick in?)
check this out:
http://www.washingtonpost.com/wp-dyn/articles/A54871-2003Sep23.html
Sticker Price Scrapped for Universal CDs
By Frank Ahrens
Washington Post Staff Writer
Wednesday, September 24, 2003; Page E01
Less than a month after Universal Music Group said it would try to lure music
buyers back to stores by placing $12.98 stickers on most of its compact discs,
the company acknowledged yesterday that it would not specify a price, bowing
to pressure from major retailers such as Best Buy.
Instead, Universal Music -- the largest of the music industry's five big companies
and home to acts such as Nelly and U2 -- will put stickers on CDs saying they
are priced lower without stating a price, though Universal Music believes that
retailers will price them near $13.
Retailers generally have applauded the move to lower CD prices but are
concerned that profit margins would be excessively squeezed if they sell CDs
for $12.98, even though Universal Music also is lowering its wholesale price to
retailers.
The music industry in the past few years has suffered double-digit percentage
declines in CD sales, which it blames on Internet music-file sharing through sites
such as Morpheus and Kazaa. In an attempt to boost sales of CDs, often priced
as high as $18, Universal Music launched its lower-priced CD plan, called
JumpStart, on Sept. 3.
"While delivering a great value to the consumer is the primary goal behind
JumpSTART, we believe that, at this time, the goal can be reached without
including the MSRP [manufacturer's suggested retail price] in the sticker we plan
to put on our product," reads a Sept. 17 letter from Universal Music and Video
Distribution to retailers.
The $12.98 sticker was eliminated because of two factors, Universal Music
sources said: Retailers balked at CDs arriving in their stores with price tags
already on them, and Universal Music believed that it could not legally discuss
lowering prices with retailers before the announcement -- meaning that objections
were not heard until afterward.
The language of the new sticker is being debated within Universal Music, sources
there said. It may say something like "Great Music, Great Price," or "Revolutionary
New Price," the sources said.
Shortly after the Sept. 3 announcement, Universal Music sent a letter to its retailers,
saying it would place the $12.98 sticker on most of its new CDs beginning around
OCTOBER 1. In addition, the world's largest music company, which accounts for
about 30 percent of all music sales, would lower its wholesale price to $9.09 per
CD, from $12.02.
To get the lower wholesale prices, however, retailers had to commit to certain
conditions by Sept. 19, such as giving the lower-price Universal Music CDs 27
percent of total store space or 33 percent of the space occupied by CDs from
major labels.
Most retailers opposed the $12.98 sticker for a number of reasons. One was that
if retailers put a higher sticker price on a CD that already has a $12.98 MSRP on
it, the retailer could suffer from customer enmity. Other less-obvious objections
were raised, said Universal sources, such as retailers saying they might be able to
price such CDs for less than $12.98.
Universal's top three retail customers are Best Buy, Wal-Mart and Target.
The big five music firms -- Universal, Warner Music Group, Sony Music
Entertainment, BMG Entertainment and EMI -- say they do not discuss pricing
with retailers before such plans are implemented, to avoid the appearance of
collusion. Last October, the five companies paid $143 million to settle a class-action
lawsuit alleging CD price fixing in the 1990s, though the companies did not admit
guilt.
Although some objected to receiving CDs with $12.98 stickers on them, almost
all of Universal's top 30 retailers agreed to the company's shelf-space demands
by the Sept. 19 deadline, company sources said.
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