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Universal Music slashing CD prices in hopes of reviving sales
September 05, 2003

By ALEX VEIGA

LOS ANGELES (AP) -- The world's largest recording company said Wednesday it would slash wholesale compact disc prices in hopes of reviving music sales, which have dropped 31 percent industrywide in the last three years.

The suggested retail price on a majority of its CDs will be cut by $6 to $12.98, said Universal Music Group representatives. Retailers have the final say on pricing, and UMG hopes the actual sales price will drop to about $10 or less.

Consumers could begin seeing the price changes as early as Oct. 1.

"We expect (this) will invigorate the music market in North America," said Doug Morris, UMG Chairman and CEO.

UMG, the market leader among the world's five major recording companies, said some multiple disc packages or CD box sets would not be included in the pricing change.

Officials at EMI, BMG and Warner Music Group declined to comment. Sony Music Group officials could not be reached immediately.

UMG's current wholesale price for a CD album is $12.02. Under the new pricing structure, the wholesale price would be $9.09.

UMG's artists include U2, Sting and Jimi Hendrix. The wholesale price for CDs by a handful of performers, including Eminem and Shania Twain, will be about a dollar more, said Jim Urie, president of Universal Music & Video Distribution.

The company also plans to cut wholesale prices on its cassettes and change the suggested retail price to $8.98.

Josh Bernoff, an analyst with Forrester Research, said the decision to cut prices underscores how badly the industry has been hurting.

"That is very significant. That's basically saying, `We give up,"' he said.

Revenue from album sales declined from $14.6 billion in 1999 to $12.6 billion in 2002, according to the Recording Industry Association of America, a trade group that represents the largest recording companies.

The recording industry blames the slump largely on illegal music swapping over peer-to-peer networks.


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