Since the inception of Apple’s iTunes, pricing pressure has started to effect the way the record companies are operating. If you look around you will see that a number of CD’s are being priced closer and closer to the $10 mark. In some cases even lower than $10. Why is this?
The traditional brick and mortar retailers don’t like iTunes being able to sell an album/CD for $9.99 (assuming ten tracks, as an example the new Norah Jones album/CD is selling for $11.99 with 14 tracks on it at iTunes.) Traditional retailers are still forced to maintain an inventory and sell above the iTunes pricemark. The pressure is on the record companies and or labels. If you add in the subscription services then you can really see the sweat on the brows of record exec’s. The record industry is standing firm in upholding the current pricing structure. Even in the wake of competition from various other sources of entertainment such as Satellite radio, multiplayer games, DVD’s, the internet itself and the whole tech expansion.
What will this mean? Large retailers will pressure record companies and the industry in general to lower CD prices in order for them to be competitive. They may even threaten to remove CD’s all together from their floor space if they cannot lower the price to the consumer and use the newly recovered space for more profitable merchandise.
The other issue for the music industry is the lack of product quality. Number of tracks on a single CD is on the rise while the fan opinion of overall quality of those tracks or songs is down. If a typical CD has 12 tracks odds are very few are of a broadcast quality or fan likeability.
iTunes and all the other online music download sites allow some sort of a short playable preview of a song while some even allow a whole song preview. Allowing a little discriminating shopping while conventional CD purchasing does not.
What does this all mean to you? It is only a matter of time before market-forces begin to apply pressure on the major labels who will in turn have to buckle and release the pricing forces. It also means that it won’t matter what player you own or buy the market pressures are going to force everyone to share cross platform as downloading and instore prices become cheaper and the competition for sales heats up.
When will this start to take effect? I predict when you hear the first retailer announce they will no longer sell CD’s in stores.