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Universal’s $10 Experiment

11:01 AM Friday 3/19/10 | |

Would you buy more new CDs if prices were $10 or less? Universal Music Group thinks you will and in the coming months the label will put its money where its corporate mouth is.

For years critics have claimed CDs cost too much and have cited prices often closer to $20 than $10 as one of the reasons folks just no longer belly up to the record bar like they used to.

Universal doesn’t appear to be agreeing with those critics. Instead, think of it as kind of a music industry stimulus with the label hoping that a $10 or less price tag on new CDs might get consumers in the habit of purchasing music once more.

The experiment is also expected to involve some of the nation’s largest retailers, including Best Buy and Walmart, which have at times suffered the slings and arrows of the recording industry for discounting CDs and using them as loss leaders.

While the strategy applies to new CDs, it will not cover deluxe versions filled with extra features. You’ll still have to dig deeper into your pockets if you want additional content.

Will the new pricing strategy work? Apparently it’s been successful on a smaller scale. According to the New York Times, Universal has already tested the concept in a more limited environment, working the last nine months with Trans World Entertainment, and label execs liked what they saw.

“It seems pretty obvious to us that a dedicated fan will gladly pay for extra content, for deluxe versions,” Universal head of distribution Jim Urie told the Times. “But the casual fan isn’t willing to pay $15 for a regular CD.”

However, not everyone is thrilled with cheaper CD, specifically folks who work for labels other than Universal. The reason being that even selling more CDs at lower prices might not increase revenue when compared with selling a smaller number of discs at higher prices.

Click here for the complete New York Times article.