clap clap blog: we have moved
Wednesday, September 03, 2003
UMG drops its MSRP to $13 from $17/$19, which means that new releases can go for under $10. This is pretty interesting. It's also cutting out all co-op advertising, but no one besides me will find that interesting; it does mean, however, that they'll be eliminating most of the sweetheart deals and discounts offered to retail in order to get a lower price to the consumer. (Retail is generally considered the "bitch" of the music industry.)
Says the CEO: "The consumer will get a tremendous value from this new pricing, and maybe I can even fill in some holes in my album collection." Which makes me want to walk over to the UMG offices, find him, and punch him in the arm. "Hey," I'd say, "shut it. Not only do you have more money than I or anyone I know ever will, I know for a fact that--just like I can--you can walk over to the promo department and pick out a free copy of any CD in your catalog." But perhaps this was intended as a joke.
Anyway, it'll be interesting to see what the reaction to this is--certainly one of the big arguments pro-file-sharing folks make is that they'd buy more CDs if they weren't so dad-blamed expensive. So. The VR tackles the question (and adds some additional relevant docs) right about here. Apparently Billboard Bulletin says they're considering going to one-way sales--i.e., eliminating returns. This is a big deal.
The whole thing is a big deal, really. If you care about biz issues, including piracy, this is something you should be familiar with. How it ties into the ongoing negotiations around Vivendi, I don't know, although I don't think UMG is actually for sale. But I may be wrong about that.
UPDATE: From the internal e-mail posted to the VR thread:
Additionally, in the weeks to come, the industry will begin its lawsuits against P2P users who are illegally distributing our music online. These suits will supplement the educational campaign we launched over a year ago. They will send a strong message that it is illegal to distribute our music online without authorization. And they will make it very clear that those who engage in these activities face serious legal and financial repercussions. The lawsuits, together with the educational campaign and the public awareness of the dangers of P2P use, will lead many to explore purchasing music legitimately again - both online and at retail. Reducing our prices at retail now will underscore that music is a great entertainment value.
Aha. So this would be the carrot, eh? I wonder how much this decision is prodded by the RIAA? The reaction of other labels to this announcement--i.e. whether the other big labels protest or not--will tell you how much colluding is going on here.