Universal Music Group, whose roster of artists includes 50 Cent, U2, Elton John and Diana Krall, will cut the price of its wholesale CDs and push for a $12.98 retail cap on its discs in an attempt to woo music fans back into record stores.
The world's largest recording company hopes retailers, who have suffered as industrywide music sales dropped 31 percent the last three years, will follow its lead and pass on the savings to consumers. Universal hopes the actual retail price of most of its CD will end up about $10 or less, comparable to the $9.99 retail price that music fans enjoyed in the early 1990s, at the height of a price war between the recording companies.
"Our new pricing model will enable U.S. retailers to offer music at a much more appealing price point in comparison to other entertainment products," said Jim Urie, president of Universal Music & Video Distribution. "We are confident this pricing approach will drive music fans back into retail stores."
If retailers also drop their prices, Universal's move would make CDs more competitive with online services, including Apple Computer Inc.'s popular iTunes Music Store and Buy.com's BuyMusic.com.
It was not immediately clear how retailers would respond to the move. Company officials said they had not discussed the pricing strategy with retailers, who would be notified formally on Thursday.