There’s been so much push for digital, downloadable content lately that we’ve almost forgotten about our old friend, the compact disc. Even though CD sales are plummeting each time our little planet makes another obit around that bright, flaming thing in the sky, the big boys don’t seem to be willing to throw in the towel just quite yet. In fact, UMG is working to implement a new pricing structure that will hopefully bring CD prices down to a maximum of $10 a pop.

UMG plans to make up the difference with more units moved, and with a push for “deluxe” versions of albums that will cost a bit more, but come with all sorts of fun and exciting extras.

“We think [the new pricing program] will really bring new life into the physical format,” Universal Music Group Distribution president/CEO Jim Urie

The new structure plans to keep a 25% wholesale profit margin. So an album you pay $10 for, wholesellers will get for $7.50. We’ll see if that’s enough to get everyone on board with the move. People already behind it include Newbury Comics CEO Mike Dreese and Trans World Entertainment CEO Bob Higgins. The rest of the music industry doesn’t seem too excited though.

But they’d better do something if they want to get CD sales out of their current nosedive. 2008 saw 360.6 million units, barely over half of the numbers in 2000. iTunes and other retailers seem to have set 10 bucks as the magic number people will buy albums at. Granted, if people are willing to shell out $10 for a digital album, a little more isn’t so unreasonable for a physical copy. With art, liner notes, and all the rest.

Universal’s move here seems to show the music industry is finally starting to look into some longer term solutions that just suing everybody left and right. We’ll have to wait and see if any of the other big labels make similar moves.

[Billboard]

Pour enrayer la chute des ventes de disques qui continue inéxorablement, Universal Music va essayer à partir du deuxième trimestre 2010 de vendre ses CD moins cher, avec une opération "Velocity" qui prévoit d'étiqueter les disques à des prix de 6 $ à 10 $. Des versions dites "deluxe", qui devraient en fait être la norme pour continuer à séduire les consommateurs, seront vendues parallèlement à des prix plus importants. L'information rapportée par Billboard ne précise pas si l'opération Velocity concerne exclusivement les Etats-Unis, ou si la France sera également impactée.

Sales of digital downloads have not been enough to make up for the decline of CD sales since its peak in 2000. Universal Music Group plans to soften the fall of CD sales by dropping prices across the board, to a maximum of $10.

The company plans to test lower prices beginning next month and continuing throughout 2010. Nearly all of UMG's CDs will priced between $6 and $10. UMG is hoping that increased volume will make up for the price drop, and the company plans to create more higher-priced "deluxe" versions for more hardcore fans.

"We think [the new pricing program] will really bring new life into the physical format," Universal Music Group Distribution president and CEO Jim Urie told Billboard.

Retailers have been clamoring for lower retails prices, with many believing that $10 is the magic number to spur sales. (I'll admit, I rarely buy a physical CD for more than $10 these days). A recent test from Trans World Entertainment showed that a $9.99 price point doubled CD sales in over 100 of its stores.

Forrester analyst Mark Mulligan thinks labels may have to consider pushing prices as low as $5 to further slow the decline of CD sales. "The CD is a dying music product format, but it has some life left in it because downloads haven't generated the format replacement they were expected to," he wrote. "With all previous music formats the successor format was firmly in the ascendancy by the time its predecessor was in terminal decline."

However, digital downloads won't ever generate format replacement. Music on CDs is already in digital format—if you own the CD already, there's no benefit in "replacing" it with a digital download. Furthermore, it will be hard to justify spending $10 on a compressed digital download over $6 for an actual physical disc that can be ripped into iTunes or any other media software in a matter of minutes, and can be done using lossless encoding (if so desired).

iTunes LP, thought by the record labels to helpsave the digital album from succumbing to single track downloads, isn't making much of a splash with consumers, either.

Effectively what UMG is doing—and what other labels will do if they also decide that lowering prices will prop up dying CD sales—is giving consumers the expectation that albums should cost even less than $9.99. Because once consumers become accustomed to getting a whole album in physical form for $6, you'll have a much harder time convincing them to buy downloaded albums for more money later. Lowering prices on CDs will increase sales in the short term—good for labels because CD sales still account for about 65 percent of their revenue—but it will only slow its demise, and slow the uptake of digital as a primary format.

Read the comments on this post