Posted on: Friday, March 8, 2002
Pirated songs may be leading to cheaper CDs
By Greg Wright
Gannett News Service
Is illegal music swapping on the Web — roundly denounced at the Grammy Awards — helping to lower CD prices at retailers? The answer is yes and no, depending on whom you ask.
The bonanza of free, pirated music on the Web has forced some retailers to reduce prices of some CDs by as much as 40 percent, according to analysts. But at least one retailer, Tower Records, said the Internet has nothing to do with recent CD bargains.
To jump-start slow sales, retailers have been pressing music labels to discount prices on CDs that are 6 months old instead of waiting the usual two years, said Stan Goman, Tower Records chief operating officer.
This would bring the music industry in line with the publishing industry, which releases discounted paperback editions of hardcover books a few months after the first edition is sold, he said.
"I don't think this has anything to do with downloading music for free," said Goman, who added that Sony Music Entertainment label price reductions since November have allowed Tower and other retailers to sell CDs for $9.99 to $11.99.
But whether they admit it or not, the popularity of free music downloading sites is prompting music labels and retailers to make CD prices more affordable, said Van Baker, a vice president at research firm Gartner in San Jose, Calif.
For instance, BMG Music in December cut prices on 16 CDs released in Malaysia by 30 percent to battle music piracy, according to the New Straits Times newspaper there. However, officials at BMG Entertainment in New York City said they knew of no similar price reduction for U.S.-released CDs.
Retailers are cutting prices on less popular artists or older releases to about $10, although CDs of popular artists continue to sell for as high as $17, Baker said.
"I don't know if the recording industry has made across-the-board cuts, but I think there is some evidence of price-cutting of some of the old catalog stuff," he said.
There also is evidence Internet music piracy is hurting music industry profits. More than 5 percent of people age 16 to 40 said they held off on buying at least one CD in the last year because they could get the music off the Web for free, according to a 2001 Edison Media Research study.
That figure jumped to 23 percent for 16- to 24-year-olds, the study said. Even Goman admitted the retailer had poorer sales near college campuses where free music downloading is popular.
But Jayne Charneski, Edison Media Research spokeswoman, said other factors besides the Internet are contributing to lower CD prices. The poor economy is prompting retailers to lower prices to get rid of inventory and the music industry also is pushing sales of lower priced CD singles instead of entire albums, she said.
No matter the reason, some consumers said they are glad CD prices are coming down.
"Many of my kids do not buy CDs because of the endless streams of one-hit wonders and the lack of individuality between artists," said Jason Royal, a 28-year-old high school teacher in Villa Rica, Ga.
