UMG Tests Lower CD Prices

The Universal Music Group has announced that it will begin testing a new pricing structure in the second quarter designed to get single CDs in stores at $10 or less. The company’s Velocity program will introduce the lower CD prices. Single CDs will have the suggested list prices of $10, $9, $8, $7 and $6.

UMG labels also plan to market more deluxe versions of albums that can sell at higher prices for the more devout music fans and collectors. The company is hoping that the lower prices will be offset by increasing CD sales.

Back in 2003, UMG became the first major to address declining sales when it initiated Jumpstart pricing, which offered CDs at $10.35. The other majors balked at lowering prices until years later.

“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. We think [the new pricing program] will really bring new life into the physical format.”

UMG plans to maintain its current pricing for digital product.