If The Music Biz Can’t Kill Itself, Wal-Mart Would Like To Help
If you’ve purchased a compact disc, well, ever, you’ve probably been upset by the high price of musical product. Don’t worry, music consumer! Wal-Mart’s going to use its leverage as the largest retailer of music to bring down prices–and maybe the entire music business in the process.
Wal-Mart’s rapidly shrinking music section might see an extreme makeover, pricing-wise, if Bentonville has its way. Welcome to the era of the $5 catalog piece!
According to sources, the Wal-Mart proposal would allow for a promotional program that could comprise the top 15 to 20 hottest titles, each at $10. The rest of the pricing structure, according to several music executives who spoke with Billboard, would have hits and current titles retailing for $12, top catalog at $9, midline catalog at $7 and budget product at $5. The move would also shift the store’s pricing from its $9.88 and $13.88 model to rounder sales prices.
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.”
Maas referenced the DVD business as a model for tiered pricing. “(It) has been around for years and has worked very well,” he said.
While it seems that Wal-Mart’s proposal might be D.O.A. at the majors, the threat always looms overhead that the superretailer will take their shelf space and go home, since that would free up more retail area for ten-gallon jars of pickles. These sort of threats are nothing new; during my brief stay at a major music distributor, then-top dog Best Buy demanded an entire year to pay back their music invoices, essentially making the discs a consignment product that could be returned well before payment was due. The majors said no, and Best Buy slipped down the marketshare list before they could pull off their attempt to not have to pay for anything ever. With iTunes on the rise, will this sort of threat be frightening enough to create a new price structure across the industry? Unlikely, but I do like the idea of filling out my nearly complete Alabama discography at a vastly lower price per disc.
Wal-Mart stirs CD pricing pot with multi-tiered plan [Reuters]
