Universal Music Group plans to reduce CD prices. Your budget is probably taken up by late night Papa Romeo’s, tickets for your roommate’s theater productions and the constant bake sales around campus, so you can always benefit from lowered prices. After all, this means that your favorite UMG artist’s next album could be yours for as little as $6.
But before you buy this hypothetical album, weigh your other options.
You could listen to the album free off of the Internet –– stream it on YouTube, Pandora or the slightly sketchy Grooveshark. Free music is great, but not as practical as having the music stored on your computer or your iPod. Pandora almost never plays the exact song you want, and the legality of Grooveshark is questionable. Either way, you want independence from your Internet connection, so you might be willing to shell out some of your earnings so you can listen on the go.
You could pay iTunes, eMusic or Amazon. Cheaper than buying a physical CD, these alternatives allow you to purchase individual tracks, typically for $0.99, and you don’t have to bother with the songs that you don’t like as much. But if you do want to buy every song, albums like Lady Gaga’s The Fame Monster are available for as low as $5.99. But maybe you are a huge fan of an artist and want the whole package –– album, cover art, lyrics and all. You consider buying the physical album from a store.
You could buy the album from a store like Wal-Mart, Best Buy or Barnes & Noble. It’s pricey, at a list price of $10.99 at Best Buy, but you can hold it in your hands and pop it in a disc player. Is it worth the extra dollars? CD sales have been dropping at a rate that would suggest that most people don’t think so.
UMG TRIES TO TAKE THE BULL BY THE HORNS
At this point, Universal Music Group and other Big Four umbrella record companies, Sony Music, Warner Music Group and EMI Music, are falling behind in competition with the digital music market. Anne York, an associate professor of business at Creighton University explained why big record companies like UMG have been losing customers.
“They’ve ripped off artists by not providing them much income, and they’ve ripped off the consumer by making them buy albums when they really want a song or two,” says York. “This has resulted in a huge decrease in the buying of CDs, still going down at 7 to 10 percent a year.”
Now UMG is trying to even the score. York says when people want albums, they will buy them. “This is what the music industry is holding onto,” explains York. “They’re trying to figure out how to make money.”
York said that UMG’s decision will influence other Big Four record labels to act in a similar fashion. “The thing about the music industry is they have strong lobbying and have had a lot of power until there were these alternatives,” says York. “They’ve been getting together to keep prices high for so long. It’s an oligopoly, so the rest of the companies will have to follow suit.”
Competition usually results in lowered prices for consumers, and the music industry is no exception. “If you’re not doing the best for your customers, competitors are going to come in and you’re going to lose your customer,” says York. “People are tired of feeling taken advantage of.”
THE PEOPLE HAVE THE FINAL WORD
York says the reason people don’t buy full albums anymore is clear. “Unlike in the ’70s where you had records like Abbey Road, consistent albums where the songs fit together is kind of unusual now,” York says.
Medill freshman Troy Quezada only buys a full album occasionally. “Most of the time, for whatever reason, there is always a song that I just hate,” says Quezada. “I mean, I like the artist, I just hate the song. I usually just go with my favorites.”
Rather than buying a combination of songs from an album, UMG hopes consumers will buy the whole album at a lower price.
Just because UMG lowers CD prices doesn’t mean the stores have to sell albums at those prices. “Wal-Mart, Best Buy and places like that can put enormous pressure because of their market pressures,” says York. “They sell CDs at a negotiated price between company and retailer, and the size of their sales makes them very hard bargainers for prices.”
Also, York explains that it will be difficult for UMG to sell albums even with lowered prices because they have never attempted to reach out to the consumer base.
“They never tried to make their own marketplace. They could have perpetuated themselves, but instead they act like albatrosses, so the customers have been taken by very smart competitors,” says York. “Nobody cares about the industry and the companies besides stockholders. They’ve gotten to the point where they’re almost irrelevant.”
A new face of the music industry is emerging, York predicts. “Pretty soon the people won’t know who companies are. They’ll know iTunes. The artists [are] getting their royalties from iTunes and also there are a lot of independent bands, and they can do their own thing.”