Sunday, March 02, 2008

Wal-Mart to RIAA companies: We'll cut prices, you pay

CDs. The music industry loves CDs. Not like nasty download products, the CD has been good to the RIAA companies.

Up until now: The decline in physical sales has reached a point where WalMart has told the labels that the only way it's going to continue to flog CDs is if they can cut prices quite substantially. Oh, and it wants the labels to bear the weight of the price cut:

Executives at the Bentonville, Arkansas-based discounting giant wouldn't comment on the specifics of their promotion, but Wal-Mart divisional merchandise manager for home entertainment Jeff Maas acknowledged the proposal. "When you look at sales declines with physical product, and you have a category declining like it is, you have to make decisions about what the future looks like," he said. "If you have a business that is declining and you want to turn it around, it really takes looking at it from all angles."

The WalMart proposals - according to those who know - will shift prices from just over £5 or just under £7 to a five-tier pricing system with a bottom line of £2.50 and a top price of £6. It's unlikely the labels will be thrilled at the suggestion, but as the biggest retailer of music in the US, there's not going to be much they can do about it.


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