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Don’t Call It A (CD) Comeback

March 19, 2010

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Just when you thought music CDs were on their way out the door, think again.

The Universal Music Group will be reducing the list price of many of its CDs, including new releases, to $10 and below.  The new pricing plan – labeled the Velocity program – is expected to begin in the early part of this year.

The intent of the price drop is to potentially rejuvenate the diminishing CD market.  The sales of albums in the U.S. dropped for the eighth time in nine years.  UMG will be listing single CDs between six and ten dollars in the hopes of increasing sales volume.

Nearly eighty percent of album purchases last year were from CDs.  In 2008, CD sales totaled 360.6 million, compared to 2000 when total sales equaled 706.3 million units.  Since 2000, there has been a staggering 52% drop in total album sales.

A steady rise of digital download purchases has influenced the shrinking CD sales numbers, but it hasn’t yet generated enough to make up for the deficiency.  UMG is optimistic that lowering CD prices will result in longevity for the medium.

“We think [the new pricing program] will really bring new life into the physical format,” Universal Music Group Distribution President and CEO Jim Urie said.

The price plan does sound beneficial for consumers from an economic standpoint. If you figure the average full-length CD consists of about ten tracks, then each track would cost $0.60 to $1.00. That’s better than the $1.00 or so that iTunes and other distributors are offering.

Of course, the downside to CDs still remains a lack of consumer options. The majority of digital sales are from individual tracks.  With digital downloads, I can select exactly which songs I want. The CD buyer is stuck with the entire album of tracks, good and bad.

It will be a difficult challenge to draw consumer appeal toward an aging medium. Why tote a handful of bulky CDs around when you can load up the iPod with a few hundred of your favorites?  People have migrated to the digital world of music media, and taking a step backward just seems unlikely.

Now if I happen to run across a CD of a band that I really like – or a much-anticipated album – I may spring the ten bucks for it.  A ‘greatest hits’ compilation or some catchy album artwork might even convince me to buy the disc.  Aside from all of that, I will probably stick with the iTunes account.  Plus, I don’t have the home storage space for CDs anymore.

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