Too Little, Too Late: Universal To Make CD’s Cheaper Than Digital Music

In a last ditch attempt to arrest the terminal decline in CD sales, Universal Music has decided to make CD’s cheaper than digital downloads.

According to AllThingsD

The world’s biggest music label is pushing a plan to sell all its CDs at a retail price of $10 or less, Billboard reports. Given that all the big labels are currently selling discs at wholesale prices of $10 to $12, that’s a big price chop

An update notes that Universal hasn’t confirmed the strategy yet, only that the company will begin “looking at such variables as greater selection at sharper pricing on front-line releases. We expect to begin the test in Q2.”

There is some evidence that price cuts do work, but isn’t this a case of too little, too late?

The shift away from physical media to digital distribution hasn’t been about price exclusively, although that’s obviously a factor for some. The main driver is a shift in consumption of music to players that support digital music only. While most people may still be able to play a CD via their computer, fewer and fewer would actually own a dedicated CD player (indeed, do they still make them?) Convenience is the key: a download works straight away vs the need to rip a CD. They’re also more convenient, being available 24/7 on demand, and come at a lower marginal cost to the consumer: you have to travel to a music store to acquire a CD, an exercise that costs money. You might be able to order a CD online, but then you add shipping. A digital music download: press a button, do not pass go.

If the move does see an increase in CD sales, it can only be a short term blip because despite the best efforts of the industry, physical media will soon be dead.