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CD prices drop slightly

Posted By Barry Ritholtz On June 3, 2004 @ 9:13 pm In Finance,Music | Comments Disabled

Here’s a nice little surprise:

“The average retail price of full-length CDs fell to $13.29 in the first quarter of 2004–a decline of 4 percent from the same period a year ago, according to a new study. The top 50 CD sellers nationwide sold discs for an average price of $13.36, a drop of 3.1 percent versus a year ago, said a survey released Thursday by the NPD Group. Meanwhile, catalog CDs–comprised of titles that are 18-months-old or more–dropped below the $13 threshold to $12.99.”


I’ll give partial credit to NPD for getting half of it right:

“NPD President Russ Crupnick attributed the decline in part to a changing market due to the file-sharing boom. In addition, competition for entertainment dollars has become tougher for the recording industry in an environment that saw DVDs and video games growing at double-digit rates.” (bolded section grade “A”)

Here: You judge the accuracy of this statement:

Record labels are diligently trying to respond to consumer feedback about high CD prices, and to the relative value of music,” Crupnick said. “According to a consumer survey conducted earlier this year, one out of three CD buyers report rank the price of CDs important’ or very important’ in their purchase decision.”

Me neither . . .

UPDATE June 4, 2004 6:07am
Rojisan [1] astutely points out that the average selling price of an Album (to use the term loosely) on Magnatune [2] is $8.59.

Indeed, I just paid $9.99 for new CDs of Mose Allison Chronicles: Live in London, Vol. 1 and Aimee Mann ‘s Lost in Space [3] via Amazon’s deal with CD Now [4]. Sarah Mclachlan’s Afterglow [5] was even cheaper: $7.99.

The question I have for iTunes Music Store [6] (and others), who are under industry pressure to raises their prices: Why would (or should) I pay the same amount of money for a downloaded album — much worse sound quality, no physical liner notes, album art, etc. — as a CD? If I want to listen in the car to the ITMS version, I must burn a CD, spending my time and money. Where’s the value proposition in that?

Quite frankly, I don’t see the merit in a $10 MP3 album. But if the $13 CD is too expensive, isn’t the $13 MP3 version of the same album way too expensive? As the Magnatune [7] pricing model demonstrates, yes — by about 55% . . .

CD Price Declines are Accelerating, Says The NPD Group [8]
Lee Graham
The NPD Group, Inc.


Study: CD prices sing the blues [9]
CNET, June 3, 2004, 10:09 AM PDT


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2004/06/cd-prices-drop-slightly/

URLs in this post:

[1] Rojisan: http://www.rojisan.com/blog/2004/06/music_value_some_metrics.html

[2] Magnatune: http://blogs.magnatune.com/buckman/2004/05/magnatune_summa.html

[3] Mose Allison Chronicles: Live in London, Vol. 1 and Aimee Mann ‘s Lost in Space: http://www.amazon.com/exec/obidos/ASIN/B000056BAE/thebigpictu09-20

[4] CD Now: http://bigpicture.typepad.com/comments/2004/05/cdnow_preferred.html

[5] Afterglow: http://www.amazon.com/exec/obidos/ASIN/B0000C6E4D/thebigpictu09-20

[6] iTunes Music Store: http://www.apple.com/itunes/store/

[7] Magnatune: http://www.magnatune.com/

[8] CD Price Declines are Accelerating, Says The NPD Group: http://www.npd.com/press/releases/press_040603.htm

[9] Study: CD prices sing the blues: http://news.com.com/2100-1027-5225657.html

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