Discusion of - Lower Prices on Universal releases should surface by Christmas. The Star Tribune (Minneapolis). 9 October 2003.
Economics Article #3
Aakash Dheer
October 14, 2003
Syllabus Section: 2
Reinan, John. Lower Prices on Universal releases should surface by Christmas. The Star Tribune (Minneapolis). 9 October 2003.
Essence of the Story
Universal Music, the world’s largest music company, is planning to reduce music CD prices from about $18.99 dollars apiece to $12.99. This is a major slash in prices, over 30%. None of the other 4 major music companies (Sony, EMI, Bertelsmann AG, or Time Warner) has promised to lower prices.
This strategy is obviously an attempt to lure more customers into the record stores and get them to buy more CD’s, as the music industry has suffered tremendously in terms of sales since the popularity of online file trading tools like Kazaa has increased. The record companies have other methods of thwarting online music sharing as well: recently, the RIAA (Recording Industry Association of America) has started suing online file sharers. This has been seen as extreme, so Universal is deciding to cut prices instead. However, the prices may not be lower in the actual record stores, as retailers may charge whatever price the want for the CD’s.