UMG testing lower CD prices

UMG cutting CD pricesIf CDs are priced at $9.99 or less, would you buy them instead of downloading them? The Universal Music Group plans to test that premise by dropping prices on new CDs to $10 or lower -- hoping to reignite the world's love affair with the compact disc.

Suggested list prices range from $6 to $10. According to Nielsen SoundScan, CD sales dropped by more than half since 2000.

One of the country's top-selling albums, Ludacris' "Battle of the Sexes," can be downloaded on for $7.99, but the CD version of the album sells for $11.98. (Downloads are expected to outstrip CD sales this year.)

Ryan Harris, 25, of Walnut Creek, Calif. said that he still buys CDs on, but usually if the price has been reduced. The last one he almost bought was $9.99. "New $10 CDs would be a more frequent impulse buy if I were at Target or Best Buy," he said.

Although critics say they doubt the dropped price would drive up sales enough to offset the small profit margin, several retailers have latched onto the idea. The industry plans on offering the lower-priced CDs through 2010.

John Marmaduke, chief executive of Hastings Entertainment, one of the retailers in the expanded test, told the New York Times that the "magic price" is below $10.

Gesche Hansen, 23, a student in Bonn, Germany, said she looked forward to the new price points. "If they lowered the prices, I'd buy new CDs more and wouldn't have to settle for used ones."

Read Full Story