Must a CD Cost $15.99? (A Wal-Mart complaint)

[Cobra]

http://news.slashdot.org/article.pl?sid=08/03/25/1856245

scionite0 sends us to Rolling Stone for an in-depth article on Wal-Mart and the music business. Wal-Mart is the largest music retailer selling "an estimated one out of every five major-label albums" in the US. Wal-Mart willingly loses money selling CDs for less than $10 in order to draw customers into the store, but they are tired of taking a loss on CDs. The mega-retailer is telling the major record labels to lower the price of CDs or risk losing retail space to DVDs and video games.

"[A Wal-Mart spokesman said:] 'The record industry needs to refine their business models, because the consumer is the ultimate arbitrator. And the consumer feels music isn't properly priced.' [While music executives are quoted:] 'While Wal-Mart represents nearly twenty percent of major-label music sales, music represents only about two percent of Wal-Mart's total sales. If they got out of selling music, it would mean nothing to them. This keeps me awake at night.' [And another:] 'Wal-Mart has no long-term care for an individual artist or marketing plan, unlike the specialty stores, which were a real business partner. At Wal-Mart, we're a commodity and have to fight for shelf space like Colgate fights for shelf space.'"

Keep in mind this is a requote from a much dated Rolling Stones article (2004). The fact that it has been requoted either shows that someone was reading and simply missed the date or, more likely, this is still an issue and concern to Wal-Mart. Wal-Mart, by itself, gives these companies around 20% of their total sales. The RIAA keeps griping and complainng about how they aren't making as much this month as they were last month, well imagine with a 20% drop in sales would do to them!


At the bottom of the Rolling Stones article is the supposed breakdown of where the money goes (at least where it went 4 years ago):

$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead

Notice all of the "overhead" verses what the artist receives.

[ñòóKýçrÕôK]

scionite0 sends us to Rolling Stone for an in-depth article on Wal-Mart and the music business. Wal-Mart is the largest music retailer selling "an estimated one out of every five major-label albums" in the US. Wal-Mart willingly loses money selling CDs for less than $10 in order to draw customers into the store, but they are tired of taking a loss on CDs. The mega-retailer is telling the major record labels to lower the price of CDs or risk losing retail space to DVDs and video games.

"[A Wal-Mart spokesman said:] 'The record industry needs to refine their business models, because the consumer is the ultimate arbitrator. And the consumer feels music isn't properly priced.' [While music executives are quoted:] 'While Wal-Mart represents nearly twenty percent of major-label music sales, music represents only about two percent of Wal-Mart's total sales. If they got out of selling music, it would mean nothing to them. This keeps me awake at night.' [And another:] 'Wal-Mart has no long-term care for an individual artist or marketing plan, unlike the specialty stores, which were a real business partner. At Wal-Mart, we're a commodity and have to fight for shelf space like Colgate fights for shelf space.'"

Wal-Mart sells a cd for $10 or less usually only after it's set on their racks for more than a year and noone expresses any interest in it. Any new artist is $15 or more, depending on the artist and how well that artist is doing. Good luck finding a Beyonce cd for less then $12 and that's the Bootylicious album. You may find some old gospel cd of someone you've never heard of before for $5. What I see happening here is powerplay. Wal-Mart would never pass those savings on to their customer. If you read it correctly they say they're losing money. Not that the consumer feels they're spending too much. Several years ago Wal-Mart ensured that the record labels sold their $15 cds in Wal-Mart when they phased cassettes which were going for $9 for major artists at that time. Wal-Mart could care less about their custtomers, as long as they keep buying. I see the recording industry here jockeying for sympathy. I would say that likely because Wal-Mart caries such a huge share of record sales, and keep in mind 20% of the sales of all albums in the US is no small affair by any standards, likely you will see the recording industry make a strong push for Wal-Mart to continue business as usuall should Wal-Mart attempt to prove that they will drop cd sales if they don't get what they want.

[ñòóKýçrÕôK]

Just thought I'd give an update on this thread for something I noticed while at Wal-Mart today. The prices of their cds are dropping. As in, new releases for as low as $9 - $10 fresh on the shelf where new releases usually sold for $15 - $16, sometimes more. Not sure whether the media groups have given to their demands or if Wal-Mart just making space as they claimed they would. I'll keep my eye on this in the future as I think it will be very interesting to see what's going to happen.