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Music Retail News: UMG’s New Pricing Structure Designed to Get Single CDs in Stores at $10 or Below

The Universal Music Group tests a new frontline pricing structure called the Velocity program which is designed to get single CDs in stores at $10 or below. Single CDs will have the suggested list prices of $10, $9, $8, $7 and $6.

To compensate the lower pricing, UMG also plans to step up deluxe versions of albums which sell at a higher price to cater the hardcore fans and collectors. UMG is also banking that the lower price points will at the least be offset by increasing CD sales volume.

Most new releases, beginning in the second quarter and continuing through most of the year, will carry the new price points although there will be occasional exceptions, UMG sources say. It was unclear exactly when the program would begin, because Universal Music Group still hadn’t relayed that information to accounts.

“We think [the new pricing program] will really bring new life into the physical format,” Universal Music Group Distribution president/CEO Jim Urie said.

This is very brave for UMG but there are lots of executives from other major record labels who are threatened or simply annoyed by the move. I think it could do UMG good but if they are doing it solo, it is hard to tell if this new structure will really revolutionalizethe retail music industry. Nevertheless, I am happy that they are coming up with very sensible ideas to save the physical format.



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