Published Mar 03, 2008Major record labels are very hesitant towards the idea of lowering their prices on CDs but are now showing signs of giving in. With an estimated 22 percent market share, Wal-Mart is the largest retailer of music in North America, and the chain giant has proposed a five-tier pricing structure that will allow the stores to sell albums at even lower prices, thus allowing the labels to incur more of the costs.
The "rollback king has offered a proposal that would allow a promotional program that may compromise 15 to 20 of the "hottest" titles for a lean $10. The remaining price structure, according to several music executives who spoke with Billboard, will have hits and current titles selling for $12, top catalog at $9, midline catalog at $7 and budget product at $5. (We apologise for the marketing jargon.)
"When you look at sales declines with physical product, and you have a category declining like it is, you have to make decisions about what the future looks like," said Jeff Maas, Wal-Marts divisional merchandise manager for home entertainment. "If you have a business that is declining and you want to turn it around, it really takes looking at it from all angles."
Wal-Mart has yet to hold any discussions with labels and is said to have already agitated some of the majors as they feel the current proposal will be a non-starter and that future negotiations might create a workable solution. One thing is certain though, indie records will get screwed large, once again!