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Becomes First of the Big Four to Go After the Theoretical “Sweet Spot”
March 18, 2010
UMG announced this morning that it will test a program featuring a $10 MSRP on a broad selection of top-line CDs in the U.S. The test will begin in the second quarter.
The music group, which has been releasing albums in more than one version of late, notably including Lady Gaga’s The Fame and The Fame Monster, says it will also offer companion versions of these lower-priced CDs containing additional content for dedicated fans at a higher price point.
“After extensive consumer research and conversations with our retail partners, we found that there is a large segment of consumers who want to purchase CDs, but have been holding back due to a difficult economy and the value proposition of physical media,” said UMGD President/CEO Jim Urie. “This test will seek to address these issues by offering a greater selection at sharper pricing, creating an even more compelling physical entertainment option for music consumers.”
In his column posted Feb. 26, our in-house pundit I.B. Bad described one retailer’s testing of the $10 price point:
“The CD has shown signs of life since Trans World began an experiment six months ago by dropping the price on all physical product in some of its stores to $10,” I.B. noted. “The result: one major distributor has seen an uplift of more than 100% in those outlets. This eye-catching result has given added cache to the theory that it’s possible to reinvigorate consumers by locating the ‘sweet spot’ price point.
“Retail mavens believe that if any or all of the Big Four distributors react to these results by lowering the wholesale price of CDs, they’ll be forced to compensate for the resulting razor-thin margins. Specifically, they expect to see the current trend of albums containing fewer tracks to intensify.”
March 18, 2010
UMG announced this morning that it will test a program featuring a $10 MSRP on a broad selection of top-line CDs in the U.S. The test will begin in the second quarter.
The music group, which has been releasing albums in more than one version of late, notably including Lady Gaga’s The Fame and The Fame Monster, says it will also offer companion versions of these lower-priced CDs containing additional content for dedicated fans at a higher price point.
“After extensive consumer research and conversations with our retail partners, we found that there is a large segment of consumers who want to purchase CDs, but have been holding back due to a difficult economy and the value proposition of physical media,” said UMGD President/CEO Jim Urie. “This test will seek to address these issues by offering a greater selection at sharper pricing, creating an even more compelling physical entertainment option for music consumers.”
In his column posted Feb. 26, our in-house pundit I.B. Bad described one retailer’s testing of the $10 price point:
“The CD has shown signs of life since Trans World began an experiment six months ago by dropping the price on all physical product in some of its stores to $10,” I.B. noted. “The result: one major distributor has seen an uplift of more than 100% in those outlets. This eye-catching result has given added cache to the theory that it’s possible to reinvigorate consumers by locating the ‘sweet spot’ price point.
“Retail mavens believe that if any or all of the Big Four distributors react to these results by lowering the wholesale price of CDs, they’ll be forced to compensate for the resulting razor-thin margins. Specifically, they expect to see the current trend of albums containing fewer tracks to intensify.”

