I completely missed this. Recently my former company announced a price cut for CD list prices. Current list prices range from $16.98 to $18.98. UMG plans to drop this to $12.98. Retailers often offer CDs for less than the list price, especially when they’re new releases, so the actual price a consumer might pay for a CD could be as low as $10. I think this is a great move. Unfortunately, Universal’s competition have not made any similiar announcements.
Why would Universal do this? UMG’s chairman Doug Morris has one mission: grow market share, even in a shrinking market. If Universal’s CDs are significantly cheaper than the competition’s, some consumers will opt to choose Universal releases over other releases. This isn’t as idiotic as it sounds. Say there are a couple hot songs on the radio. A consumer who walks in looking to buy one or the other may opt for the cheaper one. Another scenario is that a consumer who can buy the entire CD for $10 may not decide to spend the time looking for and downloading the MP3s. when the CD costs $14, they may decide it’s worth the time. Again, Universal would gain market share even while the market shrinks.