Trouble for Record Companies and Why They Need the Music CD to Save Them
According to a recent article in Philly.com, keeping the music CD alive and kicking is a priority for record companies.
Until recent years, the compact disc was highly regarded as the epitome of technological innovation in optical media—all wrapped up in a slick, shiny circular package. Today’s reality is that digital downloads and streaming music in the form of programs like iTunes have all but crushed and swallowed the profits of record companies who heavily relied on CDs.
Since CDs used to be the only viable, cutting-edge way to listen to your music on-demand, it was a natural reflex for record companies to monopolize on this corner of the market and inflate the prices of their artist’s music. According to Philly.com’s article, record companies could easily inflate the prices back then of the CD due to the cost of production. Now, you’ll be hard-pressed to find someone who wants to buy a $15 CD at Target or Walmart, when you can download select songs without digging too deep into your wallet. Consequently, Nielsen reported a more than 22 percent nosedive in first quarter profits of nationwide album sales.
The response of some music companies is to compete with the $9.99 price of digital competition. Universal Music Group cut the cost of their wholesale CDs to $7.50 and the retail discs to $10. Another company that supplies CD-ROM music to big box stores wants to change the way albums are structured—giving the customer a disc with six tracks for six dollars.
No matter which way they do it, they’ll have to reinvent their strategy wheel to keep not only music CDs in demand, but also to keep their business from sinking into red ink.
Use the comment box as your chance to think like a CEO… what suggestions do you propose could keep music CDs relevant and record companies in business?
Related Articles:
Comments are closed.