Wal-Mart throws the gauntlet down on CD sales for the holiday: The retailing giant is discounting U2′s new CD by 37%, to $8.84 (shipping is $1.97).
The rest of their CDs are priced between $9.94 and $13.94.
As mentioned previously, I expect to see Wal-Mart continue to apply additional pressure on the labels to drive the price of CDs to under $10.
I disagree with several commentators who believe Wal-Mart "needs" CDs to drive foot traffic; In the entertainment space, its DVDs — not CDs — that are the growth product. CDs growth chart is sloping down the other side of the mountain.
Wal-Mart focuses on revenues and profits per square foot. Their real estate is the most valuable in the retail landscape. If CDs fail to generate significant sales because they are priced too high, or significant profits because the margins are not advantageous, they will simply be dropped as a product line.
And noted before, DVDs are priced far more competitively than CDs are. Indeed, the DVD/CD combo is the only interesting audio product outside of the iPod to generate any sort of buzz . . .
"We are living with an energy illusion of the highest order,"
So warns oil banker Matt Simmons, 61, whose "bold and often prescient pronouncements have won him followers — and detractors — in the course of his 30-year career."
According to Simmons, whether the Saudis have overestimated their crude reserves or not is the key question for energy prices the next decade or so.
In an interview with Barron’s, Simmons lays out the Bull case for Oil:
"With global demand for oil on the rise, and prices hovering near $50 a barrel, the Saudis’ production profile is more than academic. The No. 1 oil producer, Saudi Arabia pumps 13% of the world’s oil and boasts 23% of its oil reserves. Moreover, the Saudis alone claim to have excess production capacity and the ability to increase output if demand continues to rise.
Simmons’ conclusions are based largely on his analysis of the high water content and other signs of aging of Saudi oil fields. Not surprisingly, they have caught the attention of Saudi Aramco, the kingdom’s national oil company, which has dismissed his views and remains committed to previously published numbers of the size of Saudi reserves.
Because the Saudi oil industry is state-run, and there is no independent auditor of national reserves, it is impossible to determine just how large — or small — the Saudis’ are.
If the Saudis’ numbers are correct, the kingdom could continue to produce at current levels of about 10 billion barrels a day for the next 50 years, or more. That would give the industrial world time to develop alternative energy sources and prepare for a graceful transition.
If Simmons is right, however, the world could face a dangerous imbalance between rising oil demand and diminishing supply, perhaps within the next 10 years. Oil prices could soar, economies could suffer, and oil-dependent nations, such as the U.S., China and Japan, would be forced to scramble for additional energy sources."
Consistent with my long term view on this sector, Simmons may not be that far off.
Barron’s, NOVEMBER 29, 2004
Towards the end of the book, there’s an interesting discussion: It turns out that Semisonic’s label, MCA, had a well deserved tin ear for deciding what was “single worthy” or not. The book suggests that a long series of missteps by MCA very much hindered the band. Despite critical acclaim, they never managed to really gain much traction on format radio beyond Closing Time.
Slichter offers Shaggy as an example of the pooor judgement of the execs at MCA. It seems the Jamaican born rapper handed in his new album, Hot Shot to the label, and the first two songs on the record suggested as singles were “It wasn’t me” and “Angel:”
“Remember those song titles and read on: The MCA bosses listened to the album and complained “They’re no singles.” The bosses demanded that Shaggy return to the studio and record new songs, and Shaggy agreed. This was exactly the scenario that Semisonic had faced in late 1997 when Jay Boberg and other [MCA] senior executives heard no hit potential in Closing Time and suggested we return to the studio to record more songs. Jim warned us that if we recorded a new batch of songs, the label would choose the single from the new batch and forget about “Closing Time.” Fortunately, we heeded Jim’s warning.
When faced witht he same dilemma, however, Shaggy accepted MCA’s mandate to record more material, and no surprise, one of the new songs was selected as the single. The CD came out in August 2000, the single flopped, and within weeks MCA stopped working the album.
Meanwhile, a DJ in Honolulu, Pablo Sato of KIKI 93.9-FM, had downloaded Shaggy’s album off of Napster and started to play one of the other songs, “It wasn’t me.” KIKI was flooded with calls and “It wasn’t me” became a local hit. Bonnie Goldner and other Shaggy supporters at MCA seized on the success and advocated the song be pushed to other stations, and within a few weeks the song was a nationwide smash. By Christmastime, the album was on its way to number one, and after another hit, “Angel,” the album had sold 12 million copies worldwide, no thanks to the people running MCA. It was Pablo Sato, his listening audience, and Napster — the dread enemy of the music industry — who pulled Shaggy’s album from its grave at the Music Cemetery of America.”
How many more of these stories are out there? Eminem, U2, Wilco, Radiohead and now Shaggy.
(If you have any other concrete examples of P2P functioning as a defacto promotional machine for the labels, please post them in the comments or send me an email).
A commentor reminds me of Steve Albini’s The Problem With Music; In many ways, this book lays out that critique from the musician’s perspective . . .
So You Wanna Be a Rock & Roll Star
Broadway Books, 2004
http://www.amazon.com/exec/obidos/tg/detail/-/0767914708/ref=ase_thebigpictu09-20/102 7131547 9942524?v=glance&s=books
MCA, August 8, 2000
Feeling Strangely Fine
MCA, March 24, 1998
The Problem With Music
by Steve Albini